Financial Data and Key Metrics Changes - The company reported net income attributable to UHS per diluted share of $5.43 for Q2 2025, with adjusted net income per diluted share at $5.35 after adjustments [5][6] - Adjusted admissions to acute care hospitals increased by 2% year-over-year, while surgical volumes decreased slightly [5] - Same facility net revenues in the acute care hospital segment increased by 5.7% compared to Q2 2024, excluding the impact of the insurance subsidiary [5][6] - Cash generated from operating activities decreased by $167 million to $9 million in Q2 2025 compared to $1,076 million in Q2 2024 [8] - The company repurchased approximately 1.9 million shares at a total cost of about $332 million since 2019, representing 34% of outstanding shares [9] Business Line Data and Key Metrics Changes - Same facility net revenues at behavioral health hospitals increased by 5.4%, driven by a 4.2% increase in revenue per adjusted day [7] - Adjusted patient days in behavioral health were up 1.2% compared to the prior year's second quarter [8] - Operating expenses on a same facility basis increased by 3.1% year-over-year, excluding the impact of the insurance subsidiary [6] Market Data and Key Metrics Changes - The company noted a cannibalization impact on same facility volumes and revenues from the newly opened West Henderson Hospital [6] - The performance of the Las Vegas and District of Columbia markets showed some economic softness, impacting overall volumes [91] Company Strategy and Development Direction - The company is focusing on outpatient growth, aiming to capture a larger share of the outpatient behavioral care market [25][26] - New developments include a 96-bed behavioral hospital in Grand Rapids, Michigan, and a 41-bed substance use disorder treatment center in South Carolina, among others [12][13] - The company is also expanding its Signet Behavioral Health Network in the UK, adding six new facilities and 137 beds [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to potential Medicaid revenue reductions starting in 2028, emphasizing strategic shifts in the behavioral business [17][19] - The company anticipates that the impact of the One Beautiful Bill Act on Medicaid revenues will be manageable, with ongoing discussions with state representatives [20][21] - Management acknowledged challenges in the startup of Cedar Hill Regional Medical Center but remains optimistic about long-term prospects [11][30] Other Important Information - The company spent $5 million on capital expenditures in 2025, with 25% allocated to new replacement facilities in California and Florida set to open in 2026 [8] - The company has approximately $1 billion of available borrowing capacity under its revolving credit facility [9] Q&A Session Summary Question: Impact of Medicaid changes on EBITDA - Management indicated that reductions from Medicaid changes will not begin until 2028, allowing time to adjust business strategies, particularly in the behavioral segment [17][18] Question: Behavioral patient days split - Management noted that adjusted patient days have grown faster than unadjusted patient days, indicating outpatient growth is a significant opportunity [24][25] Question: Update on Cedar Hill's accreditation status - Management acknowledged startup losses of $25 million in Q2 for Cedar Hill, with another $25 million expected in the second half of the year, pending Medicare certification [30] Question: Behavioral pricing growth - Management confirmed that behavioral pricing growth has outperformed expectations, with a breakdown of 4.2% increase in pricing and 1.2% in adjusted patient days [50][52] Question: Long-term margin targets - Management expressed confidence in maintaining long-term margin targets despite upcoming challenges, emphasizing flexibility in programming adjustments [96][98] Question: Labor market challenges - Management reported that while wage inflation has decelerated, staffing challenges persist in certain markets, particularly in behavioral health [68][70]

Financial Data and Key Metrics Changes - The company reported net income attributable to UHS per diluted share of $5.43 for Q2 2025, with adjusted net income per diluted share at $5.35 after adjustments [4][6] - Adjusted admissions to acute care hospitals increased by 2% year-over-year, while surgical volumes decreased slightly [4] - Same facility net revenues in the acute care hospital segment increased by 5.7% compared to Q2 2024, excluding the impact of the insurance subsidiary [4] - Cash generated from operating activities decreased by $167 million to $909 million in Q2 2025 compared to $1,076 million in Q2 2024 [6] - The company spent $500 million on capital expenditures, with 25% allocated to new replacement facilities in California and Florida [6] Business Line Data and Key Metrics Changes - Same facility EBITDA increased by 10% in the acute care segment, driven by solid revenue and effective expense controls [5] - In the behavioral health segment, same facility net revenues increased by 5.4%, with a 4.2% increase in revenue per adjusted day [5] - Adjusted patient days in the behavioral health segment were up 1.2% compared to the prior year's second quarter [6] Market Data and Key Metrics Changes - The West Henderson Hospital, opened in late 2024, had a cannibalization impact on same facility volumes and revenues [5] - The company noted a slight decrease in surgical volumes, indicating potential market challenges [4] Company Strategy and Development Direction - The company is increasing its EPS guidance for 2025 by 7% to $20.50 per diluted share, driven by increased DPP reimbursement [10] - The company is focusing on outpatient growth in the behavioral segment, with plans to open 10-15 new outpatient facilities annually [42] - The company is developing new behavioral health hospitals in various locations, including Michigan and Pennsylvania, to expand its service offerings [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects for the Cedar Hill Regional Medical Center despite initial startup challenges [11] - The company anticipates potential changes to Medicaid programs that could impact future revenues, with a projected reduction in net benefits starting in 2028 [8] - Management emphasized the ability to pivot and adapt to changes in the operating environment, drawing on past experiences during the pandemic [17][20] Other Important Information - The company repurchased approximately 1.9 million shares at a cost of $332 million since 2019, representing about 34% of outstanding shares [7] - The One Beautiful Bill Act includes significant changes to the Medicaid program, which may impact future revenues [8] Q&A Session Summary Question: Impact of Medicaid changes on EBITDA - Management confirmed the projected reduction of $360 million to $400 million in net benefits starting in 2028, with strategies to offset this through operational adjustments [15][17] Question: Behavioral health volume growth - Management noted that outpatient growth is a significant opportunity, with adjusted patient days growing faster than inpatient days [21][24] Question: Cedar Hill's startup losses - Management acknowledged $25 million in startup losses for Cedar Hill in Q2, with another $25 million expected in the second half of the year, but expressed optimism for future profitability [26][30] Question: Outpatient behavioral growth strategy - Management detailed plans to enhance outpatient services through step-down and step-in business models, aiming to capture a larger share of the outpatient market [38][42] Question: Labor market challenges - Management indicated that while wage inflation has slowed, staffing challenges persist, particularly in the behavioral segment [66][68] Question: DPP program updates - Management provided updates on ongoing discussions with CMS regarding the approval of DPP programs, emphasizing the potential for new programs despite legislative changes [70][72]