Financial Data and Key Metrics Changes - The company reported adjusted net income attributable to UHS of $5.69 per share, a 53% increase from Q3 2024 [5][12] - Revenue growth for Q3 2025 was 13.4% year over year [5] - The midpoint of 2025 adjusted EPS guidance was increased by 6% to $21.80 per diluted share from $20.50 [7] Business Line Data and Key Metrics Changes - In the acute care segment, same facility adjusted admissions increased by 2.0% year over year, with net revenues increasing by 12.8% [13][14] - Behavioral health segment same-facility net revenues increased by 9.3% on a reported basis, driven by a 7.9% increase in revenue per adjusted patient day [15][16] Market Data and Key Metrics Changes - The company recognized approximately $90 million of net benefit from the District of Columbia Supplemental Medicaid Program during Q3 2025, with $73 million recognized in acute care results [12][13] - The percentage of total adjusted admissions from exchange patients was in the 6 to 6.5% range, with an increase noted [24] Company Strategy and Development Direction - The company is focusing on expanding its outpatient services, operating 45 outpatient access points and planning to open 10 step-in programs this year [9][10] - The next de novo acute care hospital opening is scheduled for spring 2026 in Palm Beach Gardens, Florida, with significant community interest [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for Cedar Hill Regional Medical Center, expecting it to break even in Q4 2025 and improve in 2026 [7][40] - The company anticipates further volume improvements in the behavioral health segment, targeting 2% to 3% growth in adjusted patient days [16][61] Other Important Information - The company spent $734 million on capital expenditures in the first nine months of 2025, with a significant portion related to new hospital projects [17] - The board authorized a new $1.5 billion increase to the stock repurchase program, bringing the total authorization to $1.759 billion [17] Q&A Session Summary Question: Update on pending Medicaid approvals in Florida and Nevada - Management indicated that Florida's pending plan could result in about a $47 million annual benefit, while Nevada's could add approximately $30 million, pending CMS approval [23] Question: 2025 guidance breakdown - The guidance increase was attributed to $140 million of increased DPP, with $90 million recorded in Q3 and $25 million expected in Q4, offset by malpractice and legal settlement costs [29][30] Question: Behavioral health business and state budget impacts - Management noted that while managed care players are aggressive in utilization management, they have not seen significant changes in payer behavior, and state budget cuts have not materially affected their operations [33][34] Question: Performance of West Henderson Hospital - West Henderson Hospital has been performing well, contributing positively to EBITDA since opening, though it has slightly impacted same-store adjusted admissions [38] Question: Trends in outpatient surgical initiatives - Outpatient surgical trends improved slightly over the prior year, with case mix up slightly, indicating a return to more normal levels [44][46] Question: Future margin trends - Management expressed confidence in achieving sustainable margins, with expectations for continued growth in both acute and behavioral segments [100]

Financial Data and Key Metrics Changes - The company reported adjusted net income attributable to UHS of $5.69 per share, a 53% increase from Q3 2024 [5][12] - Revenue growth for Q3 2025 was 13.4% year-over-year [5] - The midpoint of 2025 adjusted EPS guidance was increased by 6% to $21.80 per diluted share from $20.50 [7] Business Line Data and Key Metrics Changes - In the acute care segment, same facility adjusted admissions increased by 2.0% year-over-year, with net revenues increasing by 12.8% [13][15] - Behavioral health segment same-facility net revenues increased by 9.3% on a reported basis, driven by a 7.9% increase in revenue per adjusted patient day [16] - Operating expenses per adjusted admission in acute care increased by 4.0% year-over-year, while same-facility EBITDA margin increased by 190 basis points to 15.8% [15] Market Data and Key Metrics Changes - The company recognized approximately $90 million of net benefit from the District of Columbia Supplemental Medicaid Program during Q3 2025 [12][19] - The projected full-year net benefit from various approved Medicaid programs for 2025 is $1.3 billion [19] Company Strategy and Development Direction - The company is focusing on expanding its outpatient services, with 45 outpatient access points and plans to open 10 step-in programs this year [9][10] - The next acute care hospital opening is scheduled for spring 2026 in Palm Beach Gardens, Florida, with significant community interest [8] - The company aims to prioritize excess free cash flow for share buybacks and dividends in the absence of compelling acquisition opportunities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the Cedar Hill facility due to community support and demand for services [7][8] - The company expects further volume improvements in the behavioral health segment, targeting 2%-3% growth in adjusted patient days [17][64] - Management noted that while labor tightness persists, hiring trends have improved steadily throughout the year [17][52] Other Important Information - The company has repurchased approximately 36% of its outstanding shares since 2019 and paid approximately $340 million in dividends [18] - The Board of Directors authorized a new $1.5 billion increase to the stock repurchase program, bringing total authorization to $1.759 billion [18] Q&A Session Summary Question: Update on pending Medicaid approvals in Florida and Nevada - Management estimates a potential $47 million annual benefit from Florida and approximately $30 million from Nevada, pending CMS approval [24] Question: 2025 guidance increase breakdown - The guidance increase is primarily due to $140 million of increased DPP, with $90 million recorded in Q3 and $25 million expected in Q4, offset by malpractice reserve increases and legal settlements [31] Question: Performance of West Henderson and Cedar Hill - West Henderson has been performing well with positive EBITDA since opening, while Cedar Hill is expected to break even in Q4 and improve in 2026 [40][41] Question: Trends in surgical volumes - Outpatient surgical trends increased slightly, with cardiology services performing particularly well [45][94] Question: Behavioral health supply-demand dynamics - Management noted labor scarcity in some markets but believes that increased focus on outpatient services will help capture more demand [52][76] Question: Capital allocation and leverage ratios - The company intends to continue share repurchases and is comfortable with current leverage ratios, prioritizing investments with compelling returns [100][66]

Core Insights - Universal Health Services, Inc. (UHS) reported strong second-quarter 2025 results with adjusted earnings per share (EPS) of $5.35, exceeding estimates by 10.3% and reflecting a year-over-year increase of 24.1% [1][9] - Net revenues grew by 9.6% year over year to nearly $4.3 billion, surpassing the consensus mark by 1.5% [1][2] Financial Performance - Adjusted EBITDA, net of non-controlling interests (NCI), was $642.9 million, an improvement of nearly 11.1% year over year, exceeding the estimate of $602.8 million [3] - Total operating costs increased by 9% year over year to $3.8 billion, driven by higher salaries, wages, benefits, and other operating expenses [3][7] - Cash flows from operations were $549 million, a decline of 19.2% from the previous year [7] Segment Performance - Acute Care Hospital Services saw adjusted admissions rise by 2% on a same-facility basis, with net revenues increasing by 7.9% [4] - Behavioral Health Care Services experienced a 0.4% increase in adjusted admissions and an 8.9% rise in net revenues on a same-facility basis [5] Balance Sheet and Debt - As of June 30, 2025, UHS had cash and cash equivalents of $137.6 million, up from $126 million at the end of 2024 [6] - Total assets increased to $15 billion from $14.5 billion at the end of 2024, while long-term debt rose by 1.7% to $4.5 billion [6][7] - Total equity increased to $7.1 billion from $6.7 billion at the end of 2024 [7] Share Repurchase and Guidance - UHS repurchased shares worth $150.8 million in the second quarter, with a remaining repurchase capacity of approximately $492.9 million [10] - The company raised its full-year EPS guidance to $20-$21, reflecting improved revenue and EBITDA expectations [9][11]

Summary of Universal Health Services (UHS) FY Conference Call - June 09, 2025 Company Overview - **Company**: Universal Health Services (UHS) - **Industry**: Healthcare, specifically acute care and behavioral health services Key Points Industry and Market Dynamics - 2024 is viewed as a transition year post-COVID, with 2025 expected to be the first full post-COVID year [2] - Acute care metrics are returning to pre-COVID levels, with mid-single-digit revenue growth projected at around 6% [3] - Adjusted admission growth is expected to be between 2.5% to 3.5%, with pricing growth contributing similarly [3] - The industry is experiencing a catch-up in procedures that were postponed during the pandemic, leading to softer procedural volumes compared to previous years [4] Financial Performance - Revenue growth is described as sustainable, with well-controlled expenses leading to increasing EBITDA and margins [7] - Wage inflation has decelerated, and the use of temporary labor has significantly reduced, contributing to better expense management [6] - The company aims to return acute care margins to pre-pandemic levels within the next 18 to 24 months [32] Operational Insights - Length of stay for patients remains above pre-COVID levels, with opportunities to reduce it further, primarily hindered by challenges in discharging patients to subacute settings [10][12] - The company is actively working on partnerships with subacute providers to improve patient discharge processes [17] Growth and Expansion - UHS is in a period of expansion, adding approximately 300 beds in 2025 and another 300 in 2026, which is expected to contribute to future admissions growth [18][19] - New hospitals typically take 18 to 24 months to ramp up to divisional average performance, with some exceptions in high-demand areas like Las Vegas [20][21] Pricing and Revenue Outlook - Contractual pricing is stable, with annual increases in the 4% to 5% range, although payer behavior regarding denials and nonpayment remains a concern [27][28] - The company anticipates a return to pre-COVID margins of 16% to 16.5% in the acute care segment within the next 18 to 24 months [30] Behavioral Health Segment - The behavioral health business is expected to achieve a volume growth trajectory of 2% to 3%, supported by increasing demand for mental health services [33] - Labor shortages have impacted the ability to meet patient needs, but improvements are anticipated as staffing levels stabilize [34] - The company is expanding its outpatient services to capture a larger share of the growing demand in behavioral health [39] Future Considerations - The company is cautious about the sustainability of high pricing levels in the behavioral health market, anticipating a potential moderation as volumes increase [48] - EBITDA margins in the behavioral segment are currently at the upper end of historical ranges, with room for further expansion if revenue growth continues [52] Regulatory Environment - Ongoing discussions regarding the DPP (Direct Payment Program) and its implications for reimbursement rates are being monitored closely [56][57] Financial Projections - The company estimates a potential impact of $95 million from changes in ACA subsidies, reflecting the uncertainty in the regulatory landscape [59] This summary encapsulates the key insights and projections discussed during the UHS FY Conference Call, highlighting the company's strategic focus on recovery, growth, and operational efficiency in the post-COVID landscape.