Headquartered in King of Prussia, PA, Universal Health Services Inc. (UHS - Free Report) reported third-quarter 2016 adjusted earnings of $1.60 per share, missing the Zacks Consensus Estimate by 7 cents. However, earnings improved 4.5% on a year-over-year basis.
The year-over-year upside was driven by almost an 8.2% increase in revenues to around $2.40 billion, which beat the Zacks Consensus Estimate of $2.39 billion.
Of late, the market sentiments for Universal Health have not been very impressive, as the company represents a negative one-year return of 1.3%, lower than the S&P 500’s 2.4% over the same time frame.
Business Highlights
Net revenues from acute care services increased 9% during the third quarter of 2016. Notably, same facility revenues from acute care hospitals and adjusted admissions increased by 4.6% on a year-over-year basis. Meanwhile, adjusted patient days increased 3.8%. Net revenue per adjusted admission surged 3.2%, while net revenue per adjusted patient day was up 4% on a year-over-year basis.
Universal Health has been a pioneer in providing care to deprived patients at low costs. Even in this quarter, the company provided ‘charity care and uninsured discounts’ of approximately $370 million compared with $322 million in the year-ago quarter.
Coming to behavioral hospitals, same facility revenues improved 2.7% in the quarter. Adjusted admissions increased 1.3% while adjusted patient days climbed 1.1% compared to the same quarter last year. Net revenue per adjusted admission inched up 1.2%, while net revenue per adjusted patient day was up 1.5% on a year-over-year basis.
Margin Details
Earnings before, lease and rental expense, depreciation and amortization, interest expense, and income taxes ("EBITDAR") expanded 150 basis points (bps) to 16.8% in the quarter.
Salaries, wages & benefits, as a percentage of revenues, expanded 20 bps to 47.7% in the reported quarter. Other operating expenses, as a percentage of revenues, inched up 10 bps to 24.8% on a year-over-year basis.
However, supplies expenses, as a percentage of revenues, contracted 20 bps to 10.7% Lease and rental expenses, as a percentage of revenues, declined 10 bps to 1% on a year-over-year basis.
On a same facility basis, operating margin at acute care hospitals decreased 60 bps to 14.7%. Operating margin at behavioral health care facilities contracted 140 bps to 26%. As a result, consolidated operating margin deteriorated 110 bps to 16.8% in the reported quarter.
Buyback Program
In Feb 2016, Universal Health announced a new share repurchase program worth $400 million, which raised the total authorization to $800 million. During second-quarter 2016, the company bought back 458,410 shares at an aggregate cost of $56.6 million.
In the last quarter, the company repurchased 235,352 shares at an aggregate cost of $29.1 million.
Guidance
Universal Health narrowed the upper end of its full-year earnings guidance by almost 2%.
For the full year, the company expects earnings in the band of to $7.16 to $7.43 per diluted share, compared with the previously estimated range of $7.12 to $7.58.
Notably, this range raises the lower end of the previously guided range by approximately 1%.
Zacks Rank & Key Picks
Currently, Universal Health carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader medical sector are Intuitive Surgical Inc. (ISRG - Free Report) , AngioDynamics Inc. (ANGO - Free Report) and Glaukos Corporation (GKOS - Free Report) . Notably, all the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Intuitive Surgical has a long-term expected earnings growth rate of approximately 26.7%. The stock represents an impressive one-year return of 11.35%.
AngioDynamics has a long-term expected earnings growth rate of 15.00%. The company posted a solid one-year return of almost 30%.
Glaukos Corporation recorded a stellar one-year return of almost 69.9 %. Notably, the company posted positive surprises in the past four quarters, the average being 110.93%.
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Headquartered in King of Prussia, PA, Universal Health Services Inc. (UHS - Free Report) reported third-quarter 2016 adjusted earnings of $1.60 per share, missing the Zacks Consensus Estimate by 7 cents. However, earnings improved 4.5% on a year-over-year basis.
The year-over-year upside was driven by almost an 8.2% increase in revenues to around $2.40 billion, which beat the Zacks Consensus Estimate of $2.39 billion.
Of late, the market sentiments for Universal Health have not been very impressive, as the company represents a negative one-year return of 1.3%, lower than the S&P 500’s 2.4% over the same time frame.
Business Highlights
Net revenues from acute care services increased 9% during the third quarter of 2016. Notably, same facility revenues from acute care hospitals and adjusted admissions increased by 4.6% on a year-over-year basis. Meanwhile, adjusted patient days increased 3.8%. Net revenue per adjusted admission surged 3.2%, while net revenue per adjusted patient day was up 4% on a year-over-year basis.
Universal Health has been a pioneer in providing care to deprived patients at low costs. Even in this quarter, the company provided ‘charity care and uninsured discounts’ of approximately $370 million compared with $322 million in the year-ago quarter.
Coming to behavioral hospitals, same facility revenues improved 2.7% in the quarter. Adjusted admissions increased 1.3% while adjusted patient days climbed 1.1% compared to the same quarter last year. Net revenue per adjusted admission inched up 1.2%, while net revenue per adjusted patient day was up 1.5% on a year-over-year basis.
Margin Details
Earnings before, lease and rental expense, depreciation and amortization, interest expense, and income taxes ("EBITDAR") expanded 150 basis points (bps) to 16.8% in the quarter.
Salaries, wages & benefits, as a percentage of revenues, expanded 20 bps to 47.7% in the reported quarter. Other operating expenses, as a percentage of revenues, inched up 10 bps to 24.8% on a year-over-year basis.
However, supplies expenses, as a percentage of revenues, contracted 20 bps to 10.7% Lease and rental expenses, as a percentage of revenues, declined 10 bps to 1% on a year-over-year basis.
On a same facility basis, operating margin at acute care hospitals decreased 60 bps to 14.7%. Operating margin at behavioral health care facilities contracted 140 bps to 26%. As a result, consolidated operating margin deteriorated 110 bps to 16.8% in the reported quarter.
Buyback Program
In Feb 2016, Universal Health announced a new share repurchase program worth $400 million, which raised the total authorization to $800 million. During second-quarter 2016, the company bought back 458,410 shares at an aggregate cost of $56.6 million.
In the last quarter, the company repurchased 235,352 shares at an aggregate cost of $29.1 million.
Guidance
Universal Health narrowed the upper end of its full-year earnings guidance by almost 2%.
For the full year, the company expects earnings in the band of to $7.16 to $7.43 per diluted share, compared with the previously estimated range of $7.12 to $7.58.
Notably, this range raises the lower end of the previously guided range by approximately 1%.
Zacks Rank & Key Picks
Currently, Universal Health carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader medical sector are Intuitive Surgical Inc. (ISRG - Free Report) , AngioDynamics Inc. (ANGO - Free Report) and Glaukos Corporation (GKOS - Free Report) . Notably, all the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Intuitive Surgical has a long-term expected earnings growth rate of approximately 26.7%. The stock represents an impressive one-year return of 11.35%.
AngioDynamics has a long-term expected earnings growth rate of 15.00%. The company posted a solid one-year return of almost 30%.
Glaukos Corporation recorded a stellar one-year return of almost 69.9 %. Notably, the company posted positive surprises in the past four quarters, the average being 110.93%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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