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What's in Store for Universal Health's (UHS) Q3 Earnings?

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Universal Health Services, Inc. (UHS - Free Report) is slated to report third-quarter 2021 results on Oct 26, after the closing bell. The company’s earnings beat estimates in each of the trailing four quarters, the average being 29.01%.

In the last reported quarter, it reported adjusted earnings of $3.76 per share, which surpassed the Zacks Consensus Estimate by 36.7%. The bottom line improved 28.3% year over year. Results were driven by an uptick in revenues and solid segmental outcomes, partly offset by escalating operating costs.

Factors to Note

Universal Health’s third-quarter revenue results are likely to reflect the benefits of improving patient volumes including acute and behavioral patient days, emergency room visits and resumption of elective or scheduled procedures. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $3.1 billion, which indicates growth of 8.3% from the prior-year quarter’s reported figure.

Strong performances at the Acute Care Hospital Services and Behavioral Health Care Services segments might have contributed to the to-be-reported quarter’s top line as well. Increased admissions are likely to have driven performances at both the segments in the third quarter.

The consensus mark for net revenues at the Acute Care Hospital Services and Behavioral Health Care Services segments suggests a rise of 13.7% and 3.8%, respectively, from the corresponding year-ago quarter’s reported figures.

While the Zacks Consensus Estimate for patient days in Acute Care Hospitals indicates a 5.9% improvement from the prior-year period’s reported figure, the consensus estimate for the same at Behavioral Health Centers implies growth of 1.6% from the prior-year quarter’s reported number. The metric is expected to have gained from rebounding patient volumes in the to-be-reported quarter.

The consensus mark for average licensed beds at Acute Care Hospitals indicates growth of 1% from the prior-year quarter’s reported figure. The same for Behavioral Health Centers’ average licensed beds suggests an improvement of 2.6% from the year-ago quarter’s reported number.

The company is likely to have continued with its share buyback policy, which in turn, might have provided an extra cushion to its performance.

However, Universal Health might have encountered elevated costs due to higher salaries, wages and other operating expenses. These costs are likely to have weighed on the to-be-reported quarter’s bottom line.  

The Zacks Consensus Estimate for third-quarter earnings stands at $2.79, which suggests a decline of 3.1% from the prior-year quarter’s reading.

What Our Quantitative Model Predicts

The proven Zacks model does not conclusively predict an earnings beat for Universal Health this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Universal Health has an Earnings ESP of -0.29%. This is because the Most Accurate Estimate of $2.78 is pegged lower than the Zacks Consensus Estimate of $2.79. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Universal Health currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks worth considering from the medical space with the perfect mix of elements to surpass estimates in their upcoming releases are as follows.

Acadia Healthcare Company, Inc. (ACHC - Free Report) has an Earnings ESP of +3.00% and a Zacks Rank #3, currently.

Molina Healthcare, Inc. (MOH - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 3, presently.

MEDNAX, Inc. (MD - Free Report) has an Earnings ESP of +4.41% and is Zacks #3 Ranked, presently.