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Universal Health (UHS) Down 2% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Universal Health Services, Inc. (UHS - Free Report) . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Universal Health Beats on Q1 Earnings, Misses Revenues
Universal Health reported first-quarter 2017 adjusted earnings of $2.10 per share that surpassed the Zacks Consensus Estimate by 1.9%. Earnings also improved 6% over the prior-year quarter on the back of higher revenues.
Net revenue increased 6.7% year over year to $2.61 billion but missed the Zacks Consensus Estimate by 1.5%.
Segment Update
Acute Care Hospitals: Adjusted admissions and adjusted patient days increased 5.1% and 1.7%, respectively, over the prior-year quarter. Net revenue from acute care services climbed 4.8% to $1.4 billion in the first quarter.
On a same facility basis, operating margin deteriorated by 140 basis points over the last-year quarter to 19.7%.
The provision for doubtful accounts at acute care hospitals totaled nearly $181 million, up 28.6% year over year.
Universal Health is well known for providing care to deprived patients at low costs. This quarter too, the company provided ‘charity care and uninsured discounts’ of approximately $416 million, up 20.6% year over year.
Behavioral hospitals: On a same facility basis, adjusted admissions increased 2.4% while adjusted patient days increased 0.2%, both on a year-over-year basis. On a same facility basis, net revenue increased 1.4% to $1.2 billion year over year during the first quarter.
The operating margins of 25.6% deteriorated 190 basis points over the last-year quarter.
Provision for doubtful accounts decreased 18% year over year to $162.8 million. Operating charges of $2.2 billion were up 8.4% year over year owing to an increase in salaries, wages and benefits, other operating expenses, supply expenses, depreciation and amortization.
Financial Update
As of Mar 31, 2017, the company had cash and cash equivalents of nearly $63 million, up 85% from year-end 2016.
Total assets amounted $10.4 billion as of Mar 31, 2017, up 1.2% from year-end 2016.
The company managed to lower its debt burden, as evidenced by long-term debt of $3.8 billion as of Mar 31, 2017 that declined 6.8% from year-end 2016.
Buyback Program
In Feb 2016, the board of directors authorized a $400 million increase to Universal Health’s stock repurchase program, which increased the aggregate authorization to $800 million from the previous authorization of $400 million during third-quarter 2014.
Concurrently, during the first quarter, the company repurchased 103,948 shares at an aggregate cost of $11.2 million. Since the inception of the program on Mar 31, 2017, Universal Health bought back approximately 4.49 million shares at an aggregate cost of approximately $525.3 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter compared to three upward.
Universal Health Services, Inc. Price and Consensus
At this time, Universal Health's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been trending downward for the stock. However, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Universal Health (UHS) Down 2% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Universal Health Services, Inc. (UHS - Free Report) . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Universal Health Beats on Q1 Earnings, Misses Revenues
Universal Health reported first-quarter 2017 adjusted earnings of $2.10 per share that surpassed the Zacks Consensus Estimate by 1.9%. Earnings also improved 6% over the prior-year quarter on the back of higher revenues.
Net revenue increased 6.7% year over year to $2.61 billion but missed the Zacks Consensus Estimate by 1.5%.
Segment Update
Acute Care Hospitals: Adjusted admissions and adjusted patient days increased 5.1% and 1.7%, respectively, over the prior-year quarter. Net revenue from acute care services climbed 4.8% to $1.4 billion in the first quarter.
On a same facility basis, operating margin deteriorated by 140 basis points over the last-year quarter to 19.7%.
The provision for doubtful accounts at acute care hospitals totaled nearly $181 million, up 28.6% year over year.
Universal Health is well known for providing care to deprived patients at low costs. This quarter too, the company provided ‘charity care and uninsured discounts’ of approximately $416 million, up 20.6% year over year.
Behavioral hospitals: On a same facility basis, adjusted admissions increased 2.4% while adjusted patient days increased 0.2%, both on a year-over-year basis. On a same facility basis, net revenue increased 1.4% to $1.2 billion year over year during the first quarter.
The operating margins of 25.6% deteriorated 190 basis points over the last-year quarter.
Provision for doubtful accounts decreased 18% year over year to $162.8 million. Operating charges of $2.2 billion were up 8.4% year over year owing to an increase in salaries, wages and benefits, other operating expenses, supply expenses, depreciation and amortization.
Financial Update
As of Mar 31, 2017, the company had cash and cash equivalents of nearly $63 million, up 85% from year-end 2016.
Total assets amounted $10.4 billion as of Mar 31, 2017, up 1.2% from year-end 2016.
The company managed to lower its debt burden, as evidenced by long-term debt of $3.8 billion as of Mar 31, 2017 that declined 6.8% from year-end 2016.
Buyback Program
In Feb 2016, the board of directors authorized a $400 million increase to Universal Health’s stock repurchase program, which increased the aggregate authorization to $800 million from the previous authorization of $400 million during third-quarter 2014.
Concurrently, during the first quarter, the company repurchased 103,948 shares at an aggregate cost of $11.2 million. Since the inception of the program on Mar 31, 2017, Universal Health bought back approximately 4.49 million shares at an aggregate cost of approximately $525.3 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter compared to three upward.
Universal Health Services, Inc. Price and Consensus
Universal Health Services, Inc. Price and Consensus | Universal Health Services, Inc. Quote
VGM Scores
At this time, Universal Health's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been trending downward for the stock. However, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.