Universal Health Services, Inc. (UHS) Earnings & Analysis

Latest quarter

Universal Health Services reported Q2 FY2026 revenue of $4.6 billion, up 8.27% from Q2 FY2025, and said it exceeded the consensus revenue estimate of $4.5 billion. The company reported adjusted EPS, as the consensus counts it, of $5.98, compared with the consensus estimate of $5.66.

The company reported diluted EPS of $5.98 for Q2 FY2026, up 10.1% from $5.43 a year earlier. UHS said same-facility acute-care net revenue rose 8.2%, while same-facility behavioral-health net revenue rose 7.4%; acute-care adjusted admissions increased 2.9% and behavioral-health adjusted patient days increased 1.4%.

The company reported a gross margin of 90.9%, compared with 90.2% in Q2 FY2025, while operating margin was 11.1%, compared with 11.7%. UHS reported free cash flow of $215.7 million, compared with $283.0 million a year earlier. Steve Filton said adjusted EBITDA less noncontrolling interests included a $100 million Florida DPP benefit that had not been included in the original outlook.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Marc Miller said Q2 acute-care volumes rebounded, behavioral-health volumes remained consistent with recent trends, and exchange trends progressed in line with UHS’s expectations. He said UHS added 177 licensed beds across three hospitals during the quarter, representing a 2.5% increase in same-facility bed capacity, as the company invests to expand inpatient and outpatient access.

Miller said UHS opened the Alan B. Miller Medical Center in Palm Beach Gardens in May and expected the pending Talkspace acquisition to close in mid-August. He said the acquisition would add virtual services to UHS’s behavioral-health continuum. Miller also said UHS accelerated share repurchases to $320 million in Q2 from $127 million in Q1.

Filton said same-facility acute-care admissions rose 2.9%, with emergency-department visits up 4% and surgeries down 0.8%. He said acute-care revenue per adjusted admission increased 3.0% on a reported basis, while salaries, wages and benefits per adjusted admission rose 2.7% and supply expense per adjusted admission declined 2.5%. Filton said Medicare and managed-Medicare volumes grew more quickly, managed-care volume excluding exchanges grew modestly, and Medicaid volume was slightly lower.

Filton said exchange volumes fell about 15% from Q2 FY2025 and estimated a roughly $20 million Q2 impact, in line with expectations. He said the full-year pre-tax impact from exchange trends was expected to be about $85 million. When asked about behavioral-health volume, Filton said outpatient demand had grown at about the same pace as inpatient demand, rather than at the higher pace UHS had originally anticipated.

On Cedar Hill Regional Medical Center in Washington, D.C., Filton said emergency-room volumes had been busy but the local area lacked an established physician base. He said UHS expected Cedar Hill to reach break-even during Q4 2026, while acknowledging that the pace and conditions of recertification for the Texas behavioral-health facility could not yet be predicted. Filton said the Texas facility was expected to incur operating losses of $5 million to $10 million per quarter for the remainder of 2026 while UHS pursued recertification.

Filton said UHS raised its professional and general liability expense estimate because third-party actuaries identified higher claim severity across healthcare settings. He said the company was pursuing productivity, revenue-cycle and technology initiatives, while behavioral-health outpatient expansion also addressed demand and payer mix.

Guidance

UHS lowered its FY2026 adjusted EBITDA less noncontrolling interests outlook by approximately $50 million at the midpoint from its prior outlook, to $2.6 billion to $2.7 billion. Filton said UHS reduced its same-facility acute-care adjusted-admissions outlook to 1.5% to 2.5% and its behavioral-health adjusted-patient-days outlook to 1.0% to 2.0%, from a prior 2% to 3% range for both measures. The company increased its FY2026 professional and general liability expense estimate by approximately $50.0 million and now expects about $1.5 billion of net benefit from Medicaid supplemental funding.