Universal Health Services ((UHS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Universal Health Services (UHS) painted a mixed picture for investors. On the one hand, the company showcased impressive growth in earnings per share (EPS) and revenue, alongside strategic advancements in hospital openings and share repurchase programs. However, challenges such as increased reserves, legal settlements, and modest growth in the behavioral health segment tempered the overall positive sentiment.
Significant EPS Increase
UHS reported a remarkable 53% increase in adjusted net income attributable to the company, reaching $5.69 per share compared to the third quarter of 2024. This substantial growth in EPS highlights the company’s robust financial performance and strategic execution.
Revenue Growth
The third quarter of 2025 saw UHS achieve a 13.4% year-over-year revenue growth, driven by solid pricing strategies and modest improvements in volume. This growth underscores the company’s ability to capitalize on market opportunities and enhance its financial standing.
D.C. Medicaid Program Benefit
A significant contributor to UHS’s financial performance was the $90 million net benefit recognized from the District of Columbia supplemental Medicaid program during the third quarter. This benefit played a crucial role in bolstering the company’s revenue figures.
New Hospital Openings Progress
Progress in the development of West Henderson Hospital and Cedar Hill Regional Medical Center was highlighted, with Cedar Hill achieving accreditation and expected to break even by the end of the year. These developments signify UHS’s commitment to expanding its healthcare infrastructure.
Share Repurchase Program
The Board’s authorization of a $1.5 billion increase to the stock repurchase program, bringing the total authorization to $1.759 billion, reflects UHS’s confidence in its financial health. Since 2019, the company has repurchased about 36% of its outstanding shares, demonstrating a strong commitment to returning value to shareholders.
Increased Liability Reserves
The earnings guidance was negatively impacted by additional professional and general liability reserves. This increase in reserves highlights potential risks and challenges that UHS faces in managing its liabilities.
Legal Settlement Impact
An $18 million legal settlement adversely affected UHS’s financial performance, pointing to the ongoing legal challenges the company must navigate.
Behavioral Health Volume Challenges
The behavioral health segment experienced only modest volume growth of 1.3%, with labor tightness in some markets affecting capacity. This challenge underscores the need for strategic adjustments in this segment to drive future growth.
Pending Medicaid Approvals
Potential Medicaid program benefits in Florida and Nevada remain pending CMS approval, which could influence future revenue streams. These pending approvals highlight the regulatory hurdles that UHS must overcome to fully realize its revenue potential.
Forward-Looking Guidance
Looking ahead, UHS has increased its 2025 EPS guidance by 6% to $21.80 per diluted share, reflecting strong operational performance and increased supplemental reimbursements. The company anticipates further volume improvements in behavioral health and plans to expand its outpatient access points and new hospital projects. These forward-looking statements indicate UHS’s strategic focus on growth and expansion.
In summary, Universal Health Services’ earnings call revealed a mixed outlook, with significant financial growth and strategic advancements being tempered by challenges in liability management and modest growth in certain segments. Investors should watch for the company’s ability to navigate these challenges while capitalizing on its growth opportunities.