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Universal Health Services (UHS) Up 0.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Universal Health Services due for a pullback? 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 catalysts.
Universal Health Q4 Earnings Beat, Revenues Up Y/Y
Universal Health reported fourth-quarter 2020 adjusted earnings of $3.59 per share, which surpassed the Zacks Consensus Estimate by 24.7%. Further, the bottom line improved 28.7% year over year. The company’s results reflect higher revenues, partly offset by escalating costs.
While adjusted admissions on a same facility basis at the company’s acute care hospital services segment declined 14.5% year over year in the fourth quarter, the same for behavioral health care services segment slumped 9.2% year over year.
Quarterly Operational Update
Net revenues improved 6.6% year over year to $3.1 billion primarily attributable to higher revenues reported across the company’s acute care and behavioural health care facilities. Also, the company’s top line outpaced the Zacks Consensus Estimate by 4.1%.
Total operating expenses of $2.7 billion in the fourth quarter increased 4.6% year over year due to rise in salaries, wages and benefits, other operating expenses, supplies expense, depreciation and amortization, and lease and rental expense.
Segment Update
Acute Care Hospital Services
In the quarter under review, adjusted patient days on same facility basis slid 2.2% from the prior-year quarter. Net revenues (on a same facility basis), including the favorable impact of the CARES Act and other grant revenues, improved 9.5% year over year.
Behavioral Health Care Services
On same facility basis, adjusted patient days were down 5.9% year over year. Net revenues improved 3% year over year during the quarter on same facility basis including the positive impact of the CARES Act and other grant revenues.
Financial Update
As of Dec 31, 2020, the company had cash and cash equivalents of $1.2 billion, which increased to nearly 20-fold from 2019 end. Total assets were $13.5 billion as of Dec 31, 2020, which grew 15.5% from the figure as of 2019 end. The company’s long-term debt was $3.5 billion, down 9.6% from the figure as of Dec 31, 2019.
During 2020, net cash provided by operating activities totaled $2.3 billion, which surged 64.1% year over year. This can primarily be attributed to a favorable change from the Medicare accelerated payments, a positive change from the payment deferral of the employer's share of Social Security taxes, a positive change in accrued insurance expense and a favorable change in accrued and deferred income taxes, etc.
Share Repurchase and Dividend Update
Due to the COVID-19 pandemic induced market volatilities, the company had temporarily suspended its share buyback activities and quarterly dividend payments in April 2020. Once approved by the board of directors, the company intends to recommence share buybacks in second-quarter 2021. Recently, its board of directors have also approved a quarterly dividend of 20 cents per share, which will be paid on Mar 31, 2021 to shareholders of record as of March 15.
Full-Year Update
During 2020, the company’s adjusted net income came in at $11.12 per share, which improved 11.3% year over year. Net revenues for the year rose 1.6% year over year to $11.6 billion.
2021 Projections
Following the company’s fourth-quarter results, Universal Health issued its outlook for 2021. Net revenues for the current year are anticipated between $12.13 billion and $12.36 billion. Adjusted EPS-diluted per share is anticipated to be $10.05-$11.05. Management expects capital expenditures between $850 million and $1 billion. The company projects interest expense of $93.5 million for 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -11.88% due to these changes.
VGM Scores
Currently, Universal Health Services has a nice Growth Score of B, a grade with the same score on the momentum front. 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Universal Health Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Universal Health Services (UHS) Up 0.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Universal Health Services due for a pullback? 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 catalysts.
Universal Health Q4 Earnings Beat, Revenues Up Y/Y
Universal Health reported fourth-quarter 2020 adjusted earnings of $3.59 per share, which surpassed the Zacks Consensus Estimate by 24.7%. Further, the bottom line improved 28.7% year over year. The company’s results reflect higher revenues, partly offset by escalating costs.
While adjusted admissions on a same facility basis at the company’s acute care hospital services segment declined 14.5% year over year in the fourth quarter, the same for behavioral health care services segment slumped 9.2% year over year.
Quarterly Operational Update
Net revenues improved 6.6% year over year to $3.1 billion primarily attributable to higher revenues reported across the company’s acute care and behavioural health care facilities. Also, the company’s top line outpaced the Zacks Consensus Estimate by 4.1%.
Total operating expenses of $2.7 billion in the fourth quarter increased 4.6% year over year due to rise in salaries, wages and benefits, other operating expenses, supplies expense, depreciation and amortization, and lease and rental expense.
Segment Update
Acute Care Hospital Services
In the quarter under review, adjusted patient days on same facility basis slid 2.2% from the prior-year quarter. Net revenues (on a same facility basis), including the favorable impact of the CARES Act and other grant revenues, improved 9.5% year over year.
Behavioral Health Care Services
On same facility basis, adjusted patient days were down 5.9% year over year. Net revenues improved 3% year over year during the quarter on same facility basis including the positive impact of the CARES Act and other grant revenues.
Financial Update
As of Dec 31, 2020, the company had cash and cash equivalents of $1.2 billion, which increased to nearly 20-fold from 2019 end. Total assets were $13.5 billion as of Dec 31, 2020, which grew 15.5% from the figure as of 2019 end. The company’s long-term debt was $3.5 billion, down 9.6% from the figure as of Dec 31, 2019.
During 2020, net cash provided by operating activities totaled $2.3 billion, which surged 64.1% year over year. This can primarily be attributed to a favorable change from the Medicare accelerated payments, a positive change from the payment deferral of the employer's share of Social Security taxes, a positive change in accrued insurance expense and a favorable change in accrued and deferred income taxes, etc.
Share Repurchase and Dividend Update
Due to the COVID-19 pandemic induced market volatilities, the company had temporarily suspended its share buyback activities and quarterly dividend payments in April 2020. Once approved by the board of directors, the company intends to recommence share buybacks in second-quarter 2021. Recently, its board of directors have also approved a quarterly dividend of 20 cents per share, which will be paid on Mar 31, 2021 to shareholders of record as of March 15.
Full-Year Update
During 2020, the company’s adjusted net income came in at $11.12 per share, which improved 11.3% year over year. Net revenues for the year rose 1.6% year over year to $11.6 billion.
2021 Projections
Following the company’s fourth-quarter results, Universal Health issued its outlook for 2021. Net revenues for the current year are anticipated between $12.13 billion and $12.36 billion. Adjusted EPS-diluted per share is anticipated to be $10.05-$11.05. Management expects capital expenditures between $850 million and $1 billion. The company projects interest expense of $93.5 million for 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -11.88% due to these changes.
VGM Scores
Currently, Universal Health Services has a nice Growth Score of B, a grade with the same score on the momentum front. 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Universal Health Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.