Executive Summary

UHS delivered a clean beat on revenue and earnings: Q3 revenue $4.50B vs $4.36B est*, and adjusted EPS $5.69 vs $4. offence $4.95 est*, with Adj. EBITDA well ahead of Street as well ($~671M vs $611M est*) .*
Mix of tailwinds/offsets: $90M net benefit from a newly approved D.C. Medicaid directed payment program and solid pricing in both segments were partially offset by a $35M pre‑tax malpractice reserve increase .
FY25 guidance raised across the board: net revenue to $17.306–$17.445B, Adjusted EBITDA (net of NCI) to $2.569–$2.619B, and Adjusted EPS to $21.50–$22.10 (midpoints +1.0%, +3.9%, and +6.4% vs prior) .
Capital returns accelerating: Board approved an incremental $1.5B buyback authorization (total remaining authorization $1.759B); UHS repurchased 1.315M shares for ~$234M in Q3 and 3.19M YTD for ~$566M .
Near‑term stock catalysts: raised FY guide and expanded buyback; improving acute margins and expected Cedar Hill breakeven by Q4 with 2026 tailwind; watch policy risk tied to Medicaid supplemental program reforms and work requirements .

What Went Well and What Went Wrong

What Went Well

Acute care outperformance with margin expansion: same‑facility net revenue +12.8% YoY on 2.0% adjusted admissions and double‑digit price/mix; EBITDA margin uplift supported by expense control .
- “Our solid acute care revenues combined with effective expense controls resulted in a 190 bps increase YoY in same‑facility EBITDA margin to 15.8% (ex‑D.C. prior period impact)” — CFO Steve Filton .
Behavioral pricing resilience and modest volume improvement: same‑facility revenue +9.3% YoY driven by +7.9% revenue per adjusted patient day; adjusted patient days +1.3% with hiring improving and margins stable .
Capital allocation discipline and authorization: +$1.5B buyback approval; 1.315M shares repurchased in Q3 for ~$234M; $965M undrawn revolver capacity at 9/30/25 .

What Went Wrong

Non‑recurring reserve drag: $35M pre‑tax charge to increase self‑insured professional and general liability reserves due to unfavorable claims trends .
Behavioral volumes still below the company’s 2–3% target: management now expects the lower end near‑term, citing lingering labor tightness in some markets and outpatient competitive fragmentation .
Policy overhang: OB3 reforms are expected to gradually reduce Medicaid supplemental net benefit by ~$420–$470M by 2032 (updated range) absent mitigation; exchange subsidy lapse could skew payer mix and demand patterns .

Financial Results

Consolidated actuals (GAAP revenue; non‑GAAP adjusted EPS and EBITDA metrics where noted)

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($B)	$3.963	$4.284	$4.495
Adjusted EPS (diluted) ($)	$3.71	$5.35	$5.69
EBITDA net of NCI ($M)	$528.6	$651.4	$684.2
Adjusted EBITDA net of NCI ($M)	$526.5	$642.9	$670.6
EBITDA margin net of NCI (%)	13.3%	15.2%	15.2%
Adjusted EBITDA margin net of NCI (%)	13.3%	15.0%	14.9%

Segment net revenue and margins (All facilities)

Segment	Q3 2024 Net Revenue ($M)	Q3 2025 Net Revenue ($M)	Q3 2024 Op Margin	Q3 2025 Op Margin
Acute Care (All)	$2,253.8	$2,630.1	8.9% (op inc/net rev)	11.4%
Behavioral Health (All)	$1,706.6	$1,860.3	18.6%	18.7%

Key operating KPIs (same‑facility YoY trends by quarter)

KPI (same‑facility)	Q1 2025	Q2 2025	Q3 2025
Acute: Adjusted admissions YoY	+2.4%	+2.0%	+2.0%
Acute: Adjusted patient days YoY	+0.3%	+1.1%	+0.4%
Acute: Rev/adjusted admission YoY	+2.5%	+3.8%	+9.8%
Acute: Rev/adjusted patient day YoY	+4.7%	+4.7%	+11.5%
Behavioral: Adjusted admissions YoY	−1.6%	+0.4%	+0.5%
Behavioral: Adjusted patient days YoY	−0.3%	+1.2%	+1.3%
Behavioral: Rev/adjusted admission YoY	+7.2%	+8.6%	+8.8%
Behavioral: Rev/adjusted patient day YoY	+5.8%	+7.8%	+7.9%
Days Sales Outstanding	53	50	55
Cash from Ops (YTD, $M)	$360	$909	$1,290
Capex (YTD, $M)	$239	$505	$734

Notes:

Q3 included $90M net D.C. Medicaid directed payment benefit (mainly acute), and a $35M pre‑tax malpractice reserve increase .
Management clarified acute pricing excluding DPP/insurance subsidiary impacts was ~+5% in Q3; reported +9.8% reflects supplemental and other items .

Guidance Changes

Metric	Period	Previous Guidance (7/28/25)	Current Guidance (10/27/25)	Change
Net Revenues	FY 2025	$17.096–$17.312B	$17.306–$17.445B	Raised (midpoint +1.0%)
Adjusted EBITDA, net of NCI	FY 2025	$2.458–$2.543B	$2.569–$2.619B	Raised (midpoint +3.9%)
Adjusted EPS (diluted)	FY 2025	$20.00–$21.00	$21.50–$22.10	Raised (midpoint +6.4%)

Drivers of the raise: +$140M higher DPPs (incl. $115M from D.C. program split Q3/Q4), offset by −$35M malpractice and −$18M legal settlement (3Q) per CFO bridge .

Earnings Call Themes & Trends

Topic	Q1 2025 (Apr)	Q2 2025 (Jul)	Q3 2025 (Oct)	Trend
Medicaid supplemental (DPP)	Awaiting TN & DC approvals; 2025 DPP ~flat YoY; focus on volume as long‑term driver	TN approved; FY25 DPP ~$1.2B; OB3 could reduce by ~$360–$400M by 2032	FY25 DPP now ~$1.3B incl. D.C.; OB3 impact updated to ~$420–$470M by 2032	Higher near‑term DPP; longer‑term headwind increasing
Acute volumes/pricing	Acute same‑facility +5% revenue; expense control; flu mix muted surgeries; sustainable pricing ~2.5–3%	Acute revenue +5.7% ex‑insurance; cannibalization from West Henderson; pricing mix favorable	Acute strong: +12.8% same‑facility revenue; ~5% core price ex DPP/insurance; margin up	Improving
Surgical trends	Softer early year; flu impact	Outpatient surgical volumes down slightly	Outpatient surgeries up slightly YoY in Q3; case mix +30 bps	Stabilizing to improving
New hospitals	West Henderson positive EBITDA early; Cedar Hill startup drag	West Henderson strong; Cedar Hill −$25M in Q2 and 2H drag	West Henderson continues strong; Cedar Hill −$25M Q3, breakeven expected Q4, tailwind 2026	Ramp improving
Behavioral volumes & outpatient	Target 2–3% adj patient day growth; staffing constraints	Volumes modest (+1.2% APD); pricing strong; outpatient focus (step‑in/Thousand Branches)	APD +1.3% with 2–3% target at low end; outpatient expansion continues; hiring improving	Gradual improvement
Capital allocation	$600–$700M buybacks planned; leverage prudence	Elevated buybacks with FCF; consider more if compelling	Additional $1.5B authorization; prioritize buybacks/dividends absent M&A	More aggressive repurchases
Macro/policy	Tariff risks limited; watch Medicaid reforms	Managed care environment tightening on RCM; OB3 details	No material tariff impact; OB3 estimates updated; exchange mix ~6–6.5%	Policy monitoring

Management Commentary

CEO Marc Miller: “We reported adjusted net income attributable to UHS of $5.69 per share…Our third quarter performance reflects continued growth in our acute care operating environment, modest volume improvement in our behavioral health segment, and solid pricing across both segments.”
CFO Steve Filton: “We recognize approximately $90 million of net benefit during the third quarter of 2025 from the District of Columbia Supplemental Medicaid Program…our solid acute care revenues combined with effective expense controls resulted in a 190 basis point increase year over year in same-facility EBITDA margin.”
On new facilities: “West Henderson Hospital’s been performing well…positive EBITDA ever since it opened…Cedar Hill…we expect them to break even in Q4 and improve into next year.”
On behavioral strategy: “We are on track to open 10 of these step-in programs this year…under our new Thousand Branches Wellness brand…designed to accelerate outpatient growth and diversify our payer mix.”

Q&A Highlights

DPP outlook and bridge to guidance: +$140M DPP uplift (D.C. $115M across Q3/Q4), −$35M malpractice, −$18M legal settlement; higher end achieved with both segments running 5–7% same‑store revenue growth .
Pending DPPs: Florida (~~$47M) and Nevada (~~$30M) pending CMS approval; combined ~$75–$80M potential upside if approved .
Acute pricing sustainability: core sustainable acute pricing ~3%; Q3’s near‑10% price was boosted by DPP and revenue cycle initiatives .
Behavioral volumes: near‑term expectation at low end of 2–3% APD growth; labor markets improving; outpatient expansion to capture demand .
Capital allocation: buybacks favored; may lever modestly if compelling; undrawn liquidity remains ample .

Estimates Context

Quarterly results vs. S&P Global consensus

Metric	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual	Q3 2025 Estimate	Q3 2025 Actual
Revenue ($M)	4,154.6*	4,099.7*	4,239.2*	4,283.8*	4,356.5*	4,495.2*
Primary EPS (diluted) ($)	4.356*	4.84*	4.956*	5.35*	4.952*	5.69*
EBITDA ($M)	566.5*	603.2*	617.1*	652.3*	611.5*	676.7*

Q3 2025: Revenue beat; EPS beat; EBITDA beat.
Q2 2025: Revenue beat; EPS beat; EBITDA beat.
Q1 2025: Revenue slight miss; EPS beat; EBITDA beat.

*Values retrieved from S&P Global.

Key Takeaways for Investors

Acute segment is the near‑term engine: double‑digit price/mix, improving surgical trends, and expanding margins are driving upside; core price growth expected to normalize to ~3% ex‑DPP .
Behavioral pricing still strong; volumes improving slowly: APD growth returned positive with stable margins; execution on outpatient “step‑in” footprint and staffing remains the gating factor .
2025 guidance raised with clear bridge: higher supplemental Medicaid (D.C.) more than offsets reserve and legal headwinds; upside scenarios hinge on sustaining 5–7% same‑store growth in both segments .
Capital returns are a bigger part of the story: new $1.5B authorization plus strong FCF support continued buybacks; leverage remains conservative with ample liquidity .
Watch the policy tape: OB3 reforms imply a gradual ~$420–$470M reduction in DPP benefit by 2032 absent mitigation; management plans to pivot mix, grow outpatient, and work pricing/efficiency levers to offset .
Near‑term catalysts: Cedar Hill breakeven by Q4 and West Henderson ramp should add to 2026 earnings tailwind; any additional CMS approvals (FL/NV DPPs) could add incremental upside .
Risks: Medicaid and exchange policy changes, malpractice trends (reserve increase), and payer utilization management/RCM friction could pressure growth or working capital .

UNIVERSAL HEALTH SERVICES INC (UHS)·Q3 2025 Earnings Summary