Shares of Universal Health Services (UHS) have gained 0.1% over the past four weeks to close the last trading session at $181.58, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $233.79 indicates a potential upside of 28.8%.The mean estimate comprises 14 short-term price targets with a standard deviation of $23.42. While the lowest estimate of $198 indicates a 9% increase from t ...

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Group 1 - Universal Health Services, Inc. (UHS) will have its Executive Vice President and Chief Financial Officer, Steve Filton, participate in a fireside chat at the KeyBanc Capital Markets Virtual Healthcare Forum on March 18, 2025 [1] - A live webcast of the presentation will be available on the company's website, with a replay accessible for 90 days after the conference for those unable to attend live [2] - UHS is one of the largest providers of hospital and healthcare services in the United States, operating acute care hospitals, behavioral health facilities, outpatient facilities, and ambulatory care access points across the U.S., Puerto Rico, and the United Kingdom [3]

Universal Health Services, Inc. (NYSE:UHS) Q4 2024 Earnings Call February 27, 2025 10:00 AM ET Company Participants Steve Filton - Executive Vice President and Chief Financial Officer Marc Miller - Chief Executive Officer Conference Call Participants Andrew Mok - Barclays Ben Hendrix - RBC Capital Markets Ann Hynes - Mizuho Justin Lake - Wolfe Research Pito Chickering - Deutsche Bank Joanna Gajuk - Bank of America Stephen Baxter - Wells Fargo Sarah James - Cantor Fitzgerald AJ Rice - UBS Michael Ha - Baird ...

Financial Data and Key Metrics Changes - The company reported net income attributable to Universal Health Services per diluted share of $4.96 for Q4 2024, with adjusted net income per diluted share at $4.92 [6] - Adjusted admissions to acute care hospitals increased by 2.2% year-over-year, while same facility net revenues in the acute care segment rose by 8.7%, driven by a 5.3% increase in net revenue per adjusted admission [6] - Operating expenses were well managed, with premium pay declining from $153 million in Q1 2022 to $60 million in Q4 2024, consistent with the previous two quarters [7] - Cash generated from operating activities was $658 million in Q4 2024, compared to $452 million in Q4 2023, and $2.067 billion for the full year 2024, up from $1.268 billion in 2023 [9] Business Line Data and Key Metrics Changes - Same facility revenues at behavioral health hospitals increased by 11.1%, primarily due to an 8.7% increase in revenue per adjusted patient day [8] - The company opened West Henderson Hospital in Las Vegas in late 2024 and plans to open Cedar Hill Medical Center in Washington DC soon, expecting these facilities to be EBITDA positive in 2025 [10] Market Data and Key Metrics Changes - The company experienced a $35 million increase in reserves for self-insured professional and general liability claims due to unfavorable trends [9] - The company had $1.17 billion of available borrowing capacity under its $1.3 billion revolving credit facility as of December 31, 2024 [12] Company Strategy and Development Direction - The company aims for mid-single-digit EBITDA growth in 2025, with expectations of stable salary and wage trends [13] - There is a focus on expanding outpatient presence and broadening the continuum of care, with significant investments in technology for behavioral hospitals [14] - The company acknowledges uncertainty in the political environment regarding Medicaid reimbursement, which could impact future forecasts [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in solid demand for behavioral services, forecasting same facility adjusted patient day growth of 2.5% to 3% in 2025 [14] - The company anticipates a more stable operating environment in 2025, with reduced pressures on operating expenses compared to previous years [21] - Management noted that the current political climate has created uncertainty, particularly regarding Medicaid reimbursement [15] Other Important Information - The company repurchased $599 million of its own shares in 2024, representing approximately 32% of shares outstanding since January 1, 2019 [11] - The company expects total consolidated Medicaid supplemental payments to decrease slightly compared to 2024 [13] Q&A Session Summary Question: What is driving the higher underlying growth in 2025 despite state supplemental payments forecasted to be down year over year? - Management indicated that core EBITDA growth is driven by solid volume growth, robust pricing, and effective expense control [20] Question: Why is the guidance range wider than usual? - Management acknowledged that items beyond their control, such as government reimbursement changes, contributed to the wider range [24] Question: What is the main reason for the decline in DPP payments? - The decline is primarily due to recognizing DPP payments related to prior periods in 2024 [29] Question: How adequate are the malpractice reserves? - Management stated that they have moved towards the higher end of the range for reserves, hoping for conservatism built into those reserves [32] Question: What are the drivers for the acceleration in behavioral same store patient days? - Management noted that the decline in outpatient day volumes in December was temporary and expects growth to rebound [39] Question: What is the expected impact of the flu season on Q1? - Management indicated that while the flu season has been busy, it typically does not significantly impact earnings [131] Question: What is the targeted leverage ratio? - Management stated that they historically operate at a leverage level in the high twos, approaching three [60] Question: What is the expected contribution from DPP programs in guidance? - Management estimated that about half of the DPP money is in the forecast, with some programs still pending approval [95]

Financial Performance - Reported net income attributable to Universal Health Services (UHS) for Q4 2024 was $332.4 million, or $4.96 per diluted share, a significant increase from $216.4 million, or $3.16 per diluted share in Q4 2023, representing a 53.8% increase[1]. - For the full year 2024, reported net income attributable to UHS was $1.142 billion, or $16.82 per diluted share, compared to $717.8 million, or $10.23 per diluted share in 2023, marking a 59.0% increase[6]. - Net income attributable to UHS for Q4 2024 was $332.397 million, compared to $216.378 million in Q4 2023, marking a year-over-year increase of 53.8%[35]. - For the twelve months ended December 31, 2024, net income attributable to UHS reached $1.142 billion, up from $719.307 million in 2023, representing a growth of 58.7%[35]. - Adjusted net income attributable to UHS for the same period was $1,128,135, up 52.7% from $739,365 in 2023[43]. Revenue Growth - Net revenues for Q4 2024 increased by 11.1% to $4.114 billion, compared to $3.704 billion in Q4 2023[1]. - Full year net revenues for 2024 rose by 10.8% to $15.828 billion, up from $14.282 billion in 2023[6]. - Total revenues for UHS in the fourth quarter of 2024 reached $4,113,722, a 11.1% increase compared to $3,703,546 in the same quarter of 2023[49]. - For the twelve months ended December 31, 2024, net revenues for All Acute Care Hospital Services reached $8,922.3 million, a 10.4% increase from $8,081.4 million in 2023[52]. - Net revenues for the three months ended December 31, 2024, increased to $1,792.7 million, a 10.9% rise from $1,615.5 million in the same period of 2023[56]. EBITDA and Cash Flow - Adjusted EBITDA net of noncontrolling interests for Q4 2024 was $614.6 million, up from $473.4 million in Q4 2023, reflecting a 29.8% increase[5]. - EBITDA for the year ended December 31, 2024, was $2,247,864, reflecting a 31.1% increase from $1,713,629 in 2023[49]. - Net cash provided by operating activities for the full year 2024 was $2.067 billion, a substantial increase of $799 million from $1.268 billion in 2023[15]. Shareholder Returns - The company repurchased approximately 1.25 million shares at a cost of $249.6 million during Q4 2024, and approximately 2.98 million shares for $598.5 million throughout the full year 2024[19]. Forecasts and Projections - The 2025 forecasted range for net revenues is between $17.020 billion and $17.364 billion, with adjusted EBITDA net of noncontrolling interests projected between $2.357 billion and $2.484 billion[23]. - The forecasted EPS-diluted for 2025 is expected to be between $18.45 and $19.95 per share[23]. - Estimated net revenues for 2025 are projected to be between $17.020 billion and $17.364 billion, reflecting an increase of 7.5% to 9.7% compared to 2024's net revenues of $15.828 billion[30]. - Adjusted EBITDA net of NCI for 2025 is expected to range from $2.357 billion to $2.484 billion, representing a growth of 4.9% to 10.6% over the 2024 figure of $2.246 billion[30]. - Diluted EPS is forecasted to be between $18.45 and $19.95, indicating an increase of 11.1% to 20.1% from the adjusted net income of $16.61 per diluted share for 2024[30]. Operational Metrics - Revenue per adjusted admission for acute care services increased by 5.3% in the fourth quarter of 2024 compared to the same period in 2023[49]. - Operating expenses for Same Facility Acute Care Hospital Services totaled $1,976.9 million, representing 89.4% of net revenues, compared to 92.8% in the prior year[51]. - Income from operations for Same Facility Acute Care Hospital Services increased to $233.9 million, or 10.6% of net revenues, up from $147.3 million, or 7.2% of net revenues, in the same quarter last year[51]. - The number of hospitals owned and leased increased to 28, a 3.7% rise from 27 in the previous year[59]. - Average licensed beds in acute care facilities increased to 6,707, a 0.5% increase from 6,674 in the prior year[59]. Challenges and Risks - A significant portion of revenues is derived from government programs, which are subject to regulatory changes that could materially impact future results[32]. - The company faces potential adverse effects from increased interest rates, which have raised interest expenses and reduced free cash flow[32]. - Interest expense for the twelve months ended December 31, 2024, was $186.109 million, a decrease from $206.674 million in 2023, indicating a reduction of 9.9%[35].

Financial Performance - Universal Health Services (UHS) reported revenue of $4.11 billion for the quarter ended December 2024, reflecting an 11.1% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $4.92, up from $3.13 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $3.99 billion, resulting in a surprise of +2.99% [1] - The company delivered an EPS surprise of +17.42%, with the consensus EPS estimate being $4.19 [1] Key Metrics - Behavioral health services generated net revenues of $1.79 billion, surpassing the average estimate of $1.74 billion by three analysts, representing an 11% increase year-over-year [4] - Acute care hospital services reported net revenues of $2.32 billion, compared to the average estimate of $2.26 billion, also reflecting an 11.1% year-over-year change [4] - Operating income for Behavioral Health Care Services was $361.04 million, exceeding the two-analyst average estimate of $329.70 million [4] - Operating income for Acute Care Hospital Services was $218.84 million, compared to the estimated $198.43 million by two analysts [4] Stock Performance - Shares of Universal Health Services have returned +0.2% over the past month, while the Zacks S&P 500 composite experienced a -2.3% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1 - Universal Health Services (UHS) reported quarterly earnings of $4.92 per share, exceeding the Zacks Consensus Estimate of $4.19 per share, and up from $3.13 per share a year ago, representing an earnings surprise of 17.42% [1] - The company posted revenues of $4.11 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.99%, compared to year-ago revenues of $3.7 billion [2] - UHS has outperformed the S&P 500 with a 5.3% increase in shares since the beginning of the year, while the S&P 500 gained 1.3% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $4.11 on revenues of $4.08 billion, and for the current fiscal year, it is $17.69 on revenues of $16.64 billion [7] - The Zacks Industry Rank for Medical - Hospital is currently in the bottom 33% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Financial Performance - Net revenues from acute care hospitals and outpatient facilities accounted for 56% of consolidated net revenues in 2024, compared to 57% in 2023[15] - Behavioral health care facilities generated net revenues of approximately $880 million in 2024, up from $761 million in 2023[16] - The company receives approximately $100 million or greater in annual Medicaid revenues from multiple states, including Texas, Nevada, and California[127] - Changes in government reimbursement programs could materially affect the company's financial position and results of operations, particularly with potential reductions in federal Medicaid funding[126] - The Budget Control Act mandates a 2% reduction in all Medicare payments, extended through 2032, which could materially affect future results of operations[152] - Medicaid disproportionate share hospital allotments will be reduced by $8 billion annually starting in 2025, impacting states with significant Medicaid revenue, particularly Texas[153] - The Inflation Reduction Act allows CMS to negotiate prices for certain drugs under Medicare, starting with 10 high-cost drugs in 2026, which may affect future revenue streams[163] Operational Expansion - The company operates 359 inpatient facilities and 60 outpatient and other facilities across 39 states, Washington, D.C., the U.K., and Puerto Rico[15] - The company is committed to acquiring, constructing, or leasing additional hospital facilities to expand operations and access new markets[23] - The introduction of new services and improvement of existing services aim to increase operating revenues and profitability of owned hospitals[24] - The company emphasizes the expansion of outpatient services in response to cost containment pressures and technological developments[26] - The company aims to expand its operations through selective acquisitions of hospitals, facing significant competition from other healthcare entities and private equity firms[99] Compliance and Regulatory Environment - The company is subject to various laws and regulations that could impact operations, including compliance with Medicare and Medicaid requirements[31] - The anti-kickback statute allows for civil penalties of up to $100,000 per violation, with potential increases to $250,000 for individuals and $500,000 for organizations[45] - Violations of the federal False Claims Act can result in liabilities of up to three times the actual damages sustained by the government, plus mandatory civil penalties for each false claim[50] - The Health Insurance Portability and Accountability Act (HIPAA) imposes civil penalties for prohibited conduct, including billing for medically unnecessary products or services[52] - Noncompliance with environmental regulations can lead to civil penalties of up to $25,000 per day and criminal penalties of up to $50,000 per day[57] - The Patient Safety and Quality Improvement Act of 2005 establishes a confidential reporting structure for medical errors, which is legally protected from disclosure[56] - State laws similar to the anti-kickback statute impose criminal and civil penalties for improper payments to physicians for referrals[46] - The company is subject to various government investigations and litigation, which may result in significant penalties and adverse publicity[62] - The IRS has issued guidance that could affect the tax-exempt status of not-for-profit entities involved in joint ventures with for-profit hospitals[65] - Compliance with HIPAA and HITECH requirements may result in greater obligations to report breaches of unsecured patient data[54] - The company has developed a comprehensive ethics and compliance program to meet federal guidelines and industry standards[63] - The company is subject to a highly regulated business environment in the U.K., which could lead to substantial penalties for non-compliance[70] - The company faces potential liabilities due to non-compliance with HIPAA regulations, which may require costly electronic media security systems and new business practices[170] - The company is involved in ongoing legal actions, including multi-plaintiff lawsuits with potential damages exceeding $360 million related to allegations against an independent contractor[179] - The company is subject to extensive federal, state, and local regulations, and failure to comply could lead to substantial penalties and adverse effects on operations[174] Workforce and Employee Engagement - As of December 31, 2024, the company had approximately 99,000 total employees, with about 86,000 in the U.S. and 13,000 in the U.K.[71] - The company conducted an Employee Engagement Survey with a participation rate of 72%, where 83% of staff felt included in their teams[76] - In 2024, the company held 12 workshops, certifying 137 individuals as Service Excellence Facilitators to promote a culture of service excellence[74] - The company expanded recruitment efforts, resulting in 89% of employees being very satisfied or satisfied with the overall recruitment process[75] - Approximately 970 employees are unionized across three hospitals, with various unions representing different employee groups[72] Environmental and Technological Initiatives - The company has implemented smart building technology in approximately 75% of its acute care hospitals to monitor energy efficiency[90] - The U.K. facilities achieved net zero carbon for direct and indirect emissions by 2035 and net zero carbon emissions in the supply chain by 2040[96] Financial Investments and Liabilities - As of December 31, 2024, the company held approximately 5.7% of the outstanding shares of Universal Health Realty Income Trust, earning an advisory fee of approximately $5.5 million in 2024[100] - The company's pre-tax share of income from the Trust was $1.1 million in 2024, with dividends received amounting to $2.3 million for both 2024 and 2023[102] - The carrying value of the company's investment in the Trust was $5.8 million as of December 31, 2024, with a market value of $29.3 million on the same date[102] - Aggregate rent payable to the Trust for various medical centers was approximately $21.2 million in 2024, up from $20.6 million in 2023[107] - The company has a master lease for the McAllen Doctor's Center with an initial minimum rent of $624,000 annually, effective from August 2023[114] - The financial liability related to real estate asset exchanges with the Trust was $73.8 million as of December 31, 2024[106] - The company has the option to renew leases for various medical centers, with annual rent increases of 2% to 2.75% scheduled through the lease terms[111][113] - The company is involved in a joint venture operating Clive Behavioral Health, with annual rental payments of approximately $2.8 million in 2024[109] Market and Economic Conditions - The company is particularly sensitive to regulatory, economic, and competitive conditions in the states where it operates, which could disproportionately affect overall business results[125] - Increased competition from other healthcare providers may lead to a decline in patient volume and adversely affect the company's business[133] - The company faces significant increases in hospital-based physician-related expenses, particularly in emergency room care and anesthesiology, which could impact future results of operations[140] - The trend toward value-based purchasing may negatively impact revenues if the company fails to meet expected quality standards[148] - The nationwide shortage of nurses and other clinical staff has led to increased labor costs, which could adversely affect the company's results of operations[143] - The company’s revenues and patient volumes are significantly dependent on the employment status of individuals, with worsening economic conditions potentially leading to a higher number of uninsured patients[195] - The company continues to see rising costs in construction materials and labor, which could adversely affect the cash flow return on investment for capital projects[198] - The company’s ability to pass on increased costs associated with providing healthcare is limited due to various federal, state, and local laws, impacting financial performance[197] - The company’s future results could be adversely impacted by cybersecurity incidents, which may incur substantial costs and affect operations[192] Shareholder Actions - The company repurchased approximately 3.0 million shares of Class B Common Stock at an aggregate cost of approximately $599 million during 2024, with an available repurchase authorization of approximately $824 million as of December 31, 2024[203] - The company’s stock repurchase program may be suspended or eliminated, which could negatively affect stock price[204]

Consolidated Financial Results - The reported net income attributable to Universal Health Services, Inc. (UHS) for Q4 2024 was $332.4 million, or $4.96 per diluted share, compared to $216.4 million, or $3.16 per diluted share in Q4 2023, reflecting a significant increase [1][6] - Net revenues for Q4 2024 increased by 11.1% to $4.114 billion, up from $3.704 billion in Q4 2023 [1][6] - For the full year 2024, reported net income attributable to UHS was $1.142 billion, or $16.82 per diluted share, compared to $717.8 million, or $10.23 per diluted share in 2023 [6][10] Adjusted Financial Metrics - Adjusted net income attributable to UHS for Q4 2024 was $329.9 million, or $4.92 per diluted share, compared to $214.9 million, or $3.13 per diluted share in Q4 2023 [2][7] - For the full year 2024, adjusted net income attributable to UHS was $1.128 billion, or $16.61 per diluted share, compared to $739.4 million, or $10.54 per diluted share in 2023 [7][10] Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) - EBITDA net of noncontrolling interests for Q4 2024 was $620.2 million, compared to $476.9 million in Q4 2023 [5][10] - Adjusted EBITDA net of noncontrolling interests for Q4 2024 was $614.6 million, up from $473.4 million in Q4 2023 [5][10] - For the full year 2024, EBITDA net of noncontrolling interests was $2.248 billion, compared to $1.714 billion in 2023 [10][10] Acute Care Services Performance - In Q4 2024, adjusted admissions at acute care hospitals increased by 2.2%, while adjusted patient days increased by 0.1% compared to Q4 2023 [11][12] - Net revenue per adjusted admission increased by 5.3%, and net revenue per adjusted patient day increased by 7.5% in Q4 2024 compared to Q4 2023 [11][12] - For the full year 2024, net revenues from acute care services increased by 8.5% compared to 2023 [12] Behavioral Health Care Services Performance - In Q4 2024, adjusted admissions at behavioral health care facilities increased by 2.0%, and adjusted patient days increased by 1.6% compared to Q4 2023 [13][14] - Net revenue per adjusted admission increased by 8.7%, and net revenue per adjusted patient day increased by 9.1% in Q4 2024 compared to Q4 2023 [13][14] - For the full year 2024, net revenues from behavioral health care services increased by 10.7% compared to 2023 [14] Cash Flow and Liquidity - Net cash provided by operating activities for the full year 2024 was $2.067 billion, compared to $1.268 billion in 2023, reflecting a $799 million increase [16] - As of December 31, 2024, UHS had $1.17 billion of aggregate available borrowing capacity under its revolving credit facility [17] Stock Repurchase Program - During Q4 2024, UHS repurchased approximately 1.25 million shares at an aggregate cost of approximately $249.6 million [19] - For the full year 2024, UHS repurchased approximately 2.98 million shares at an aggregate cost of approximately $598.5 million [19][20] 2025 Operating Results Forecast - UHS forecasts net revenues for 2025 to be between $17.020 billion and $17.364 billion, representing an increase of 7.5% to 9.7% over 2024 [24][26] - Adjusted EBITDA net of noncontrolling interests is estimated to be between $2.357 billion and $2.484 billion, reflecting an increase of 4.9% to 10.6% over 2024 [24][26] - The forecasted EPS-diluted range for 2025 is estimated to be between $18.45 and $19.95, representing an increase of 11.1% to 20.1% over 2024 [24][26]