Universal Health Services Q3 2024 Financial Results

Universal Health Services (NYSE: UHS) has disclosed its third-quarter 2024 financial results, reporting a net income of $3.80 per diluted share and an adjusted net income of $3.71 per share. The company has seen acute care volumes stabilize, with a slight increase in adjusted admissions and an 8.6% revenue growth, excluding its insurance subsidiary. The earnings call revealed upcoming facility openings and moderate growth expectations in acute care revenues. Despite the impact of a recent hurricane and increased corporate expenses, UHS is pursuing strategic investments and operational improvements to drive future growth.

Key Takeaways

• UHS reported a net income of $3.80 per diluted share, with adjusted net income at $3.71.
• Acute care volumes increased by 1.5% year-over-year, with overall revenue up by 8.6%.
• EBITDA for acute care hospitals rose by 36%, with behavioral health facilities seeing a 10.5% revenue increase.
• Upcoming facility openings in Las Vegas, D.C., and Florida are expected to contribute to future growth.
• The company anticipates moderate acute care revenue growth and aims for 3% same-store patient day growth in behavioral health by the end of 2024.
• Capital expenditures focused on facility expansions and share repurchases, with limited M&A opportunities.

Company Outlook

• UHS expects 6% to 7% revenue growth in acute care.
• Behavioral health segment is projected to experience mid-to-upper single-digit revenue growth in 2025.
• The company plans to expand outpatient and telehealth services due to rising demand.

Bearish Highlights

• Acute care volume growth was only 1.5% for the quarter, below expectations.
• Corporate expenses increased due to losses from debt refinancing and legal settlements.
• Labor shortages and Medicaid disenrollments present challenges to volume recovery.

Bullish Highlights

• Improved operating income in acute care hospitals and increased revenue in behavioral health.
• Strategic facility investments and expansions are underway.
• Management expects continued margin recovery and benefits from Medicaid program expansions.

Misses

• The impact of a hurricane led to increased staffing costs and affected volumes in Georgia and South Carolina.
• Legal and regulatory challenges continue to pose risks, particularly in behavioral health.

Q&A Highlights

• Executives discussed the impact of government regulations on appeals and denials in behavioral health.
• There is no change to the revised 2024 guidance, which includes a $20 million supplemental increase.
• The implementation of electronic medical records (EMR) in behavioral health is expected to improve efficiency.

Universal Health Services has reported its third-quarter 2024 earnings, showing signs of growth and stability. With a net income of $3.80 per diluted share, the company's financial health appears robust, supported by a year-over-year increase in acute care volumes and a significant rise in EBITDA for acute care hospitals. Despite some setbacks, including the effects of a hurricane and increased corporate expenses, UHS is optimistic about its future, focusing on strategic investments and improvements in operational capacity to drive growth.