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Universal Health (UHS) to Post Q4 Earnings: What's in Store?

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Universal Health Services, Inc. (UHS - Free Report) is set to report fourth-quarter 2021 results on Feb 24, after the closing bell.

The medical care facility provider reported adjusted earnings of $2.67 per share in the third quarter, missing the Zacks Consensus Estimate of $2.79 due to escalating expenses and a weak performance of its Behavioral Health Care Services unit, partially offset by higher adjusted admissions on a same facility basis at the Acute Care Hospital Services unit.

Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share of $2.83 suggests a 21.2% decrease from the prior-year figure of $3.59. No estimate revision has been witnessed by the company in the past week. The consensus estimate for fourth-quarter revenues of $3.1 billion indicates a 1.9% increase from the year-ago reported figure.

Universal Health beat the consensus estimate for earnings in three of the prior four quarters and missed once, with the average surprise being 17.6%. This is depicted in the graph below:

Factors to Note

Universal Health’s fourth-quarter results are likely to reflect the benefits of improving patient volumes including acute and behavioral patient days, emergency room visits, and the resumption of elective or scheduled procedures. Increased admissions are likely to have driven its performance in the fourth quarter. The Zacks Consensus Estimate for admissions in the Acute Care Hospital indicates a 7.7% year-over-rise in the fourth quarter. The consensus mark for admissions in Behavioral Health Centers signals a 2.8% increase from the year-ago level.

While the Zacks Consensus Estimate for patient days in Acute Care Hospitals indicates a 0.5% improvement, the same at Behavioral Health Centers implies growth of 0.9% from the prior-year 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 1.5% from the prior-year reported figure. The same for Behavioral Health Centers’ average licensed beds suggests an improvement of 0.8% from the year-ago reported number.

The consensus mark for net revenues at the Acute Care Hospital Services and Behavioral Health Care Services segments suggests a rise of 3.5% and 1.3%, respectively, from the corresponding year-ago reported figures.

While the factors mentioned above are expected to benefit Universal Health’s fourth-quarter results, certain headwinds were faced by the company, making an earnings beat uncertain. This might have also resulted in a year-over-year decline in profits. The consensus mark for the average length of stay at Acute Care Hospitals indicates a 9.4% decrease from the year-ago level. The Zacks Consensus Estimate for hospitals owned and leased for Behavioral Health Centers signals a 0.6% year-over-year decline.

Also, 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.

Earnings Whispers

Our proven 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 chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at $2.83 per share.

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 #3.

Stocks to Consider

While an earnings beat looks uncertain for Universal Health, here are some companies from the Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Vir Biotechnology, Inc. (VIR - Free Report) has an Earnings ESP of +32.05% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vir Biotechnology’s bottom line for the to-be-reported quarter suggests an increase of 413.3% year over year.

Moderna, Inc. (MRNA - Free Report) has an Earnings ESP of +1.90% and is a Zacks #3 Ranked player.

The Zacks Consensus Estimate for Moderna’s earnings per share for the to-be-reported quarter is pegged at $9.83, implying a massive improvement from the year-ago loss of 69 cents.

Clover Health Investments, Corp. (CLOV - Free Report) has an Earnings ESP of +12.66% and is a Zacks #3 Ranked player. CLOV’s fourth-quarter results are expected to gain from Medicare Advantage membership growth.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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