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Universal Health (UHS) Q3 Earnings Miss Mark, Decline Y/Y

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Universal Health Services, Inc. (UHS - Free Report) reported third-quarter 2021 adjusted earnings of $2.67 per share, which missed the Zacks Consensus Estimate by 4.3%. The bottom line decreased 7.3% year over year.

Results were hurt by escalating expenses and a weak performance by its Behavioral Health Care Services segment.

While adjusted admissions on same facility basis at the company’s Acute Care Hospital Services segment climbed 12.4% year over year in the third quarter, the same for Behavioral Health Care Services segment dipped 2.7% year over year.

Quarterly Operational Update

Net revenues of $3.2 billion improved 8.3% year over year. The top line met the consensus mark.

Total operating costs rose 10.9% year over year to $2.8 billion in the second quarter, mainly due to increased salaries, wages and benefits, other operating expenses, supplies expense, depreciation and amortization.

Segmental Update

Acute Care Hospital Services

On same facility basis, adjusted patient days increased 10.9% year over year in the third quarter. Net revenues improved 13.1% year over year in the quarter on same facility basis from the company’s acute care services.

Behavioral Health Care Services

In the quarter under review, adjusted patient days on same facility basis slid 2.1% year over year. Net revenues drawn from the company’s behavioral health care services inched up 2% year over year.

Financial Update (as of Sep 30, 2021)

Universal Health exited the third quarter with cash and cash equivalents of $190 million, down 84.5% from the level at 2020 end.

The company had no borrowings outstanding and $1.196 billion of available borrowing capacity, net of outstanding letters of credit.

Total assets of $12.8 billion fell 4.7% from the figure as of Dec 31, 2020.

The company’s long-term debt totaled $3.7 billion, which increased 5.3% from the 2020-end level.

During the first nine months of 2021, net cash provided by operating activities of $562 million plunged 74.7% from the year-ago comparable period’s figure.
This was mainly due to an unfavorable change stemming from the repayments of Medicare accelerated payments, unfavorable change in accounts receivable and accrued and deferred income taxes, etc.

Share Repurchase Update

In the third quarter, the company bought back 2.78 million shares worth $419.1 million.

As of Sep 30, 2021, the company had an aggregate stock buyback plan of $3.7 billion, which was originally approved by its board of directors in various increments since 2014.

Zacks Rank

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

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

Other Medical Sector Releases

Of the medical sector players that have reported second-quarter results so far, the bottom-line results of Tenet Healthcare Corporation (THC - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Anthem, Inc. (ANTM - Free Report) beat the Zacks Consensus Estimate.