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UNIVERSAL HEALTH SERVICES INC (UHS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid growth and beats: net revenues rose 9.6% YoY to $4.284B, GAAP diluted EPS was $5.43, and adjusted EPS was $5.35, aided by ~$101M net pre-tax incremental Medicaid reimbursements; EBITDA net of NCI reached $651.4M and adjusted EBITDA net of NCI was $642.9M .
  • Versus S&P Global consensus, adjusted EPS $5.35 beat by ~8%, revenue $4.284B beat by ~1%, and EBITDA $652.3M beat by ~6% (consensus EPS $4.96*, revenue $4.239B*, EBITDA $617M*) .
  • Management raised 2025 guidance across net revenues, adjusted EBITDA, and adjusted EPS to $20.00–$21.00 (from $18.45–$19.95), reflecting Tennessee and other Medicaid supplemental payment programs; the midpoint EPS increase is ~7% .
  • Acute care remained steady despite minor cannibalization from the West Henderson Hospital, while behavioral pricing was strong though volume growth lagged targets; Cedar Hill Regional Medical Center incurred a ~$25M Q2 loss with ~$25M expected in H2 .
  • Capital deployment: $150.8M repurchased in Q2 (875K shares), $331.5M YTD; dividend of $0.20 per share declared for September 16, 2025 .

Consensus figures marked with *: Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Robust consolidated execution: net revenues +9.6% YoY to $4.284B, adjusted EPS $5.35, and adjusted EBITDA net of NCI $642.9M, with operational expense control improving margins .
  • Behavioral pricing strength: same-facility behavioral revenue per adjusted admission +8.6% and per adjusted patient day +7.8% YoY; income from operations margin ~21% on a same-facility basis in Q2 .
  • Guidance raised: “we are increasing our midpoint of our 2025 EPS guidance by 7% to $20.50 per diluted share” (CEO Marc Miller) as Medicaid DPP approvals increased visibility .

What Went Wrong

  • Behavioral volume below plan: same-facility adjusted patient day growth was only +1.2% YoY (vs. an internal 2.5–3.0% target), prompting a back-half guide moderation for behavioral volumes .
  • Cedar Hill drag: ~$25M pre-tax loss in Q2 and ~$25M projected in H2 as Medicare certification timing and startup issues delayed ramp of surgical/procedural volumes .
  • Acute cannibalization: West Henderson Hospital modestly pressured same-store growth (50–60 bps impact estimate), and Nevada macro softness weighed on volumes .

Financial Results

Consolidated results vs prior periods and estimates

MetricQ4 2024Q1 2025Q2 2025YoY (Q2)Consensus (Q2)Beat/Miss
Net Revenues ($USD Billions)$4.114 $4.100 $4.284 +9.6% $4.239*Beat
GAAP Diluted EPS ($)$4.96 $4.80 $5.43 +27% n/an/a
Adjusted EPS ($)$4.92 $4.84 $5.35 +24% $4.956*Beat
EBITDA net of NCI ($USD Millions)$620.2 $603.9 $651.4 +14% $617.1* (EBITDA)Beat
Adjusted EBITDA net of NCI ($USD Millions)$614.6 $598.2 $642.9 +11% n/an/a

Consensus figures marked with *: Values retrieved from S&P Global.

Segment performance (as reported)

SegmentNet Revenues ($USD Millions) Q2 2024Net Revenues ($USD Millions) Q2 2025Income from Operations Margin Q2 2024Income from Operations Margin Q2 2025
Acute Care (All)$2,178.686 $2,401.034 9.8% 9.4%
Behavioral Health (All)$1,726.032 $1,880.076 20.8% 21.1%

Same-facility KPIs

KPIAcute Care Q2 YoYBehavioral Q2 YoY
Adjusted Admissions+2.0% +0.4%
Adjusted Patient Days+1.1% +1.2%
Revenue per Adjusted Admission+3.8% +8.6%
Revenue per Adjusted Patient Day+4.7% +7.8%

Additional operating/financial KPIs

KPIQ4 2024Q1 2025Q2 2025
Cash Flow From Operations ($USD Millions)$658.4 $360.0 $549.0
Capital Expenditures ($USD Millions)$245.9 $239.0 $266.0
Days Sales Outstanding (DSO) (Days)50 53 50
Debt / Adjusted EBITDA (x, latest 4 qtrs)2.01 2.01 1.92
Shares Repurchased (QTD, shares/$)1.25M / $249.6M ~1.0M / $180.6M 0.875M / $150.8M

Guidance Changes

MetricPeriodPrevious Guidance (Feb 26, 2025)Current Guidance (Jul 28, 2025)Change
Net RevenuesFY 2025$17.020B – $17.364B $17.096B – $17.312B Maintained/Refined (narrowed midpoint)
Adjusted EBITDA net of NCIFY 2025$2.357B – $2.484B $2.458B – $2.543B Raised
Adjusted EPS – dilutedFY 2025$18.45 – $19.95 $20.00 – $21.00 Raised
Interest ExpenseFY 2025 (model set)$150.3M $147.2M Lower
Provision for Income TaxesFY 2025 (model set)$376.8M – $407.3M $407.8M – $428.2M Higher
Other (income) expense, netFY 2025 (model set)$(9.9)M $(18.4)M More other income
DividendQ3 2025 Pay Daten/a$0.20/share payable Sep 16, 2025 Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Medicaid supplemental payments/DPPExpected slight decline in 2025 due to prior-period catch-ups; Tennessee & DC not in guide; strong bipartisan state support ~$101M net pre-tax incremental reimbursements in Q2 (TN + others); FY EPS raised; long-run legislation (“One Beautiful Bill Act”) could reduce net benefit by ~$360–$400M by 2032; management sees offsets and potential tweaks Near-term tailwind; long-term risk with mitigation plans
Behavioral outpatient expansionBuilding freestanding outpatient footprint; target 10–15 new centers per year; pricing strong, volumes lag target Outpatient growth outpaced inpatient in Q2; focus on “step-down” and “step-in” programs; volumes expected to improve in H2 Positive progress; continued build-out
AI/technologyEHR rollouts; patient monitoring automation Revenue cycle AI for denials; post-discharge follow-ups via AI; ER coding efficiency partners (e.g., Hippocratic AI) Expanding applications
LaborWage inflation moderating; premium pay ~$60M/Q Continued moderation; staffing remains a constraint in some BH markets (nurses, therapists, techs) Improving but still tight in BH
Payer mixExchange volumes up; not materially impacting profitability Slight mix shift toward commercial/exchange; supports pricing Favorable
New hospitals rampWest Henderson EBITDA-positive early; Cedar Hill opening in spring 2025 Cedar Hill ~$25M Q2 loss and ~$25M H2 drag; Medicare certification imminent; ER demand strong; West Henderson cannibalization ~50–60 bps on same-store Mixed: short-term drag; long-term positive
Tariffs/macroTariff impact limited due to multiyear fixed-price contracts No material impact observed; monitoring Stable

Management Commentary

  • “We are increasing our midpoint of our 2025 EPS guidance by 7% to $20.50 per diluted share, up from $19.20... Medicaid supplemental programs... are not included in our revised guidance.” — Marc Miller, CEO .
  • “Excluding the Tennessee directed payment, same-facility behavioral net revenues increased by 5.4%, driven by a 4.2% increase in pricing and a 1.2% increase in adjusted patient days.” — Steve Filton, CFO .
  • “Our mistake... Cedar Hill was we were too optimistic about how quickly we’d obtain Medicare certification... we have a $25M loss in Q2 and another ~$25M drag in H2.” — Steve Filton .
  • “We intend to open 10–15 new outpatient behavioral facilities a year… increase our presence both in the step-in business and do a better job in the step-down business.” — Steve Filton .
  • “We’re experimenting with uses of AI in revenue cycle… and post-discharge follow-up… well received and efficient.” — Steve Filton .

Q&A Highlights

  • DPP headwinds and offsets: Worst-case cuts phased 2028–2032 (~$360–$400M 2032 impact), with flexibility to pivot programming and cost structure; expectation that policy may be tweaked over time .
  • Behavioral volumes: Outpatient growth accelerating; focus on capturing “step-down” and “step-in” flows; staffing constraints persist in some markets .
  • Cedar Hill ramp: Medicare certification imminent; ER demand robust; ~$25M Q2 loss and ~$25M H2 impact; normalization expected through 2026 .
  • Acute cannibalization: West Henderson impact estimated at ~50–60 bps on same-store adjusted admissions and revenues .
  • Payer mix/pricing: Slight mix shift toward commercial/exchange supporting pricing; behavioral contractual rate increases remain durable .

Estimates Context

  • Q2 2025 comparison: Adjusted EPS $5.35 vs consensus $4.96*; revenue $4.284B vs $4.239B*; EBITDA $652.3M vs $617.1M* — broad-based beats that, coupled with raised FY guidance, imply upward estimate revisions for FY 2025 EPS and EBITDA trajectories .
  • Street may re-calibrate behavioral volume assumptions (below plan in H1) and incorporate Cedar Hill startup losses, while raising consolidated estimates for adjusted EPS and EBITDA following incremental DPP reimbursements and management guidance uplift .

Consensus figures marked with *: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad beat and guidance raise: Strong Q2 execution with incremental DPP benefits and disciplined costs; raised FY 2025 adjusted EPS ($20–$21) is a key catalyst .
  • Acute steady, behavioral pricing strong: Behavioral pricing power remains robust; watch for outpatient ramp and staffing progress to drive volumes closer to 2.5–3.0% target .
  • Cedar Hill short-term drag: Expect ~$25M H2 drag before ramp; Medicare certification timing is the milestone to unlock procedural volumes .
  • Policy overhang manageable near term: DPP programs boosting 2025; long-run federal changes could trim benefits, but management outlines offsets and strategic pivots .
  • Capital returns: Ongoing repurchases ($150.8M Q2; $331.5M YTD) and declared dividend support total return; leverage trending below 2x Adjusted EBITDA .
  • Trading lens: Near-term sentiment likely supported by beats and guidance raise; monitor H2 behavioral volumes, Nevada macro softness, and Cedar Hill milestones for trajectory clarity .

Consensus figures marked with *: Values retrieved from S&P Global.