Universal Health Services, Inc. ($UHS) Stock: Shares Decline Over 6%

TLDR

UHS stock fell 6.6% to $176.98 following mixed Q1 2025 earnings. Net income per diluted share reached $4.80; adjusted earnings stood at $4.84. Acute care hospital revenues rose 5%, but cash from operations declined to $360 million. Behavioral health revenues increased 5.5%, but patient days remained flat. Share repurchases worth $181 million completed; $1.02 billion borrowing capacity available.

Universal Health Services, Inc. (NYSE: UHS) stock fell 6.6% as of writing to $176.98 in morning trading on concerns over mixed Q1 2025 results.

Universal Health Services, Inc. (UHS)

The company, set to report its next earnings between July 22 and July 28, 2025, posted a net income of $4.80 per diluted share in its previous quarter, with an adjusted figure of $4.84. While hospital revenues improved, cash flow shortfalls and market uncertainties weighed on investor sentiment.

Acute Care and Behavioral Health Performance

The company’s acute care hospital operations showed strength in the quarter. Same facility net revenues rose by 5.0%, with adjusted admissions increasing by 2.4%. Revenue per adjusted day in behavioral health facilities improved by 5.8%, and same facility net revenues for this segment climbed 5.5%.

Despite these revenue gains, patient days in behavioral health were flat year-over-year. The company attributed this to the extra leap day in 2024 and winter weather disruptions, which skewed the comparison base.

Profitability and Expense Management

Operating expenses increased modestly by 2.6% on a same facility basis, indicating controlled cost management relative to revenue growth. EBITDA rose 21% after excluding Medicaid supplemental payments. Notably, the newly opened West Henderson Hospital in Las Vegas achieved a positive EBITDA contribution in Q1 2025.

On the downside, cash from operating activities dropped to $360 million from $396 million in the prior-year quarter. Delayed Medicaid supplemental payments negatively affected cash flow. Capital expenditures for the period totaled $239 million.

Capital Allocation and Market Outlook

UHS repurchased 1 million shares at a cost of approximately $181 million during the quarter. The company maintained a strong liquidity position with $1.02 billion in available borrowing capacity as of March 31, 2025.

Analysts remain cautiously optimistic. The average price target among 16 analysts stands at $224.65, suggesting a potential upside of over 30%. However, current market performance lags the S&P 500, with UHS showing a 1-year return of -5.25% against the index’s 12.33%.

Looking Ahead

Uncertainty persists regarding Medicaid supplemental payments and the external operating environment. These factors, alongside mixed cash flow trends, may influence future stock performance despite revenue strength in core operations.

The next earnings report, scheduled between July 22 and July 28, 2025, could offer more clarity on these concerns.

 

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