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UNIVERSAL HEALTH SERVICES INC (UHS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong EPS and margin expansion: diluted EPS $4.80 (+25.7% YoY) and adjusted EPS $4.84; EBITDA net of NCI margin rose to 14.7% from 13.7% YoY. EPS beat consensus by ~$0.48; EBITDA beat as well, while revenue was modestly below consensus (see Estimates Context). Management reiterated full‑year 2025 guidance. *
  • Consolidated net revenues were $4.100B (+6.7% YoY), driven by acute same‑facility revenues +6.5% and behavioral same‑facility revenues +5.5%; behavioral volumes were muted by leap day and winter weather but pricing remained strong.
  • Operating discipline and labor normalization persisted: other operating expenses on a same‑facility basis were well‑managed; premium pay ran ~$63M, broadly consistent with recent quarters.
  • Cash from operations declined to $360M (vs $396M YoY) due to timing of Medicaid supplemental cash receipts; Nevada’s program was reapproved and ~$82M cash related to Q1 revenues was received in April.
  • Capital deployment remains assertive: $239M capex and 1.0M share repurchases ($180.6M) in Q1; $1.02B revolver capacity available; share repurchase guidance ($600M for 2025) remains intact and potentially trending higher.

What Went Well and What Went Wrong

What Went Well

  • Acute segment delivered robust same‑facility performance: adjusted admissions +2.4%, net revenue per adjusted patient day +4.7%, driving same‑facility revenue +6.5% and segment income expansion. “For the first quarter of 2025, our solid acute care revenues, combined with effective expense controls, resulted in a 21% increase in EBITDA (ex Medicaid supplement).”
  • Behavioral pricing remained strong: net revenue per adjusted day +5.8% with same‑facility revenues +5.5%, offsetting volume headwinds; management expects full‑year behavioral patient day growth of 2.5%–3%.
  • New facilities ramping: West Henderson Hospital posted a modestly positive EBITDA in its first full quarter; Cedar Hill Regional Medical Center opened with strong demand in emergency services.

What Went Wrong

  • Behavioral volumes were pressured by leap‑year comp and atypical winter weather (school closures and outpatient program impacts), requiring an implied step‑up to meet full‑year volume targets.
  • Cash flow timing headwinds: CFFO fell to $360M (vs $396M YoY) due to delayed Medicaid supplemental cash receipts despite revenue recognition; Nevada cash arrived in April.
  • Flu season mix muted procedural volumes in acute care, partially crowding out higher‑acuity surgical cases; management sized incremental profit from excess flu at ~$7–$8M, noting limited overall earnings impact.

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$3.844 $3.963 $4.114 $4.100
Diluted EPS ($)$3.82 $3.80 $4.96 $4.80
EBITDA net of NCI ($USD Millions)$525.9 $528.6 $620.2 $603.9
Adjusted EBITDA net of NCI ($USD Millions)$525.8 $526.5 $614.6 $598.2
EBITDA margin net of NCI (%)13.7% 13.3% 15.1% 14.7%

Segment breakdown (net revenues and income from operations – All services basis):

Segment MetricQ1 2024Q1 2025
Acute Net Revenues ($USD Millions)$2,185.1 $2,349.2
Acute Income from Operations ($USD Millions)$207.4 $254.8
Behavioral Net Revenues ($USD Millions)$1,656.1 $1,747.6
Behavioral Income from Operations ($USD Millions)$320.3 $337.7

KPIs and balance sheet/cash metrics:

KPIQ1 2024Q4 2024Q1 2025
Cash Flow From Operations ($USD Millions)$396.4 $658.4 $360.0
Capital Expenditures ($USD Millions)$208.5 $245.9 $239.0
Days Sales Outstanding (days)54 50 53
Debt ($USD Millions)$4,861.8 $4,504.5 $4,649.7
Debt / Total Capitalization (%)43.7% 40.3% 40.7%
Share Repurchases (Shares / $USD Millions)—1.25M / $249.6 ~1.0M / $180.6
Revolver Availability ($USD Billions)—$1.17 $1.02

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenuesFY 2025$17.020B–$17.364B $17.020B–$17.364B; reiterated on call Maintained
Adjusted EBITDA net of NCIFY 2025$2.357B–$2.484B $2.357B–$2.484B; reiterated Maintained
Diluted EPSFY 2025$18.45–$19.95 $18.45–$19.95; reiterated Maintained
Capital ExpendituresFY 2025$850M–$1,000M $850M–$1,000M; pacing $239M in Q1 Maintained
Share RepurchasesFY 2025~$600M (management assumption) Tracking slightly above pace after Q1 $180M; no formal change Maintained
DividendQ1 2025—$0.20/share payable Mar 17, 2025 Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Supplemental Medicaid programs (DPP)2024 recognized out‑of‑period net reimbursements; 2025 guide assumes slight decline vs 2024; Tennessee/DC excluded pending approval. Nevada program reapproved; ~$82M gross payment received in April tied to Q1 revenues; Tennessee/DC approvals still expected; guidance excludes them. Stabilizing approvals; timing noise persists; cash timing improves in Q2.
Behavioral volume and pricingSame‑facility BH revenues +10–11% in late 2024 with strong pricing; 2025 guide assumes 2.5–3% patient day growth and 3–4% price. Q1 volumes muted by leap day/weather; March reacceleration; management still targets 2.5–3% for the year; pricing +5.8% QoQ. Volume recovery expected into 2H; pricing robust, moderating gradually.
Acute acuity/flu seasonQ4 commentary: sustained margin progress; premium pay ~$60M. Flu season increased medical mix, dampening procedures; incremental profit ~$7–$8M; premium pay ~$63M. Mix normalizes post‑Q1; labor costs steady.
Tariffs and supply chain2024 caution on macro/tariffs; multi‑year contracts insulate. ~75% of supplies insulated (North America and pharma); monitoring vendor behavior; limited current pressure. Low near‑term impact; vigilant monitoring.
New hospitalsWest Henderson opened late 2024; Cedar Hill opening expected in early 2025; EBITDA positive expected in 2025. West Henderson EBITDA positive in Q1; Cedar Hill showing strong ED demand; some cannibalization expected. Positive early ramp; modest same‑store optics.

Management Commentary

  • “We are pleased with our first quarter operating results, which on a consolidated basis exceeded our internal expectations… we feel confident in our underlying businesses and… reiterate our full year earnings guidance.” — Marc Miller, CEO
  • “We did receive $82 million of payments related to the Nevada supplemental program in April that were related to revenues recorded in the first quarter.” — Steve Filton, CFO
  • “West Henderson Hospital in Las Vegas opened in late 2024 and posted a modestly positive EBITDA in the first quarter. Cedar Hill Regional Medical Center… has experienced strong demand for its emergency services from the outset.” — Marc Miller
  • On tariffs: “About 3/4 of our supply chain purchases are insulated from tariffs… we’re not really getting any [vendor cancellation] feedback yet.” — Steve Filton

Q&A Highlights

  • Behavioral cadence: Q1 headwinds (leap day/weather) imply a step‑up to reach 2.5–3% full‑year patient day growth; management confident in recovery as comps ease.
  • DPP specifics: Nevada’s $82M was gross (not net of provider tax); Tennessee/DC approvals still anticipated; 2025 guide excludes both.
  • Acute mix and flu: Flu added ~$7–$8M profit but procedurals softer; expect mix normalization as the year progresses.
  • Premium labor and wages: Premium pay ~$63M; labor market stabilization continues; wage inflation moderated; productivity initiatives persist.
  • Exchange volumes: Acute exchange admissions up ~20% YoY for industry peer; UHS similar; exchange now ~6% of adjusted admissions; limited pricing/profitability impact.

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $4.84 actual vs $4.356 estimate (beat); Revenue $4,099.7M actual vs $4,154.6M estimate (miss); EBITDA $603.2M actual vs $566.5M estimate (beat). *
MetricQ1 2025 Consensus*Q1 2025 Actual
Primary EPS4.3559*4.84
Revenue ($USD Millions)4,154.6*4,099.7
EBITDA ($USD Millions)566.5*603.9
EPS – # of Estimates15*—
Revenue – # of Estimates15*—

Values retrieved from S&P Global. Actuals per company filings.

Implications: We highlight a quality beat driven by expense control and pricing; slight revenue shortfall reflects behavioral volume timing and acute procedural mix; estimate revisions likely tilt upward for margins/EPS while revenue stays near prior tracks given guidance reiteration.

Key Takeaways for Investors

  • Margin trajectory intact: continued labor normalization, disciplined ops, and strong behavioral pricing support sustained margin expansion; Q1 margin beats underscore quality.
  • Behavioral volumes should re‑accelerate into Q2/Q3 as leap‑year/weather comps fade; pricing tailwinds persist though may moderate gradually.
  • Medicaid DPPs: cash timing headwinds should reverse (Nevada paid); Tennessee/DC remain upside optionality not in guidance; legislative risk warrants monitoring.
  • Acute mix normalization post‑flu with procedural recovery expected; watch same‑store optics given new hospital cannibalization.
  • Capital allocation: active buybacks and robust capex pipeline continue; leverage metrics healthy with >$1B revolver capacity.
  • Narrative catalysts: guidance reaffirmation, DPP approvals, continued operating cost control are positive stock reaction drivers; any adverse policy action on provider taxes would be a key downside risk.
  • Near‑term trading: favor margin and EPS revisions over top‑line; medium‑term thesis supported by behavioral pricing strength, acute footprint growth, and disciplined capital deployment.

Notes and Cross-References

  • 8‑K Item 2.02 incorporated the earnings press release and added “gross revenue” detail omitted from the original release.
  • Q1 2025 consolidated results detail: net revenues $4,099.7M; net income attributable to UHS $316.7M; diluted EPS $4.80; adjusted EPS $4.84; EBITDA net of NCI $603.9M; adjusted EBITDA net of NCI $598.2M.
  • Liquidity and buybacks: Revolver availability $1.02B; Q1 repurchases ~1.0M shares/$180.6M; authorization ~$643.7M remaining.
  • Dividend: $0.20/share declared for payment Mar 17, 2025.

*Values retrieved from S&P Global.