UHS(US:UHS)2025-07-29 15:02Financial 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]