Universal Health Services, Inc. (UHS Quick QuoteUHS - Free Report) is poised to surpass fourth-quarter 2023 earnings expectations. The results, to be announced on Feb 27, after the closing bell, are anticipated to reflect sustained growth in admissions and patient days, contributing to its performance.

What Do the Estimates Say?

The Zacks Consensus Estimate for fourth-quarter earnings per share of $3.02 is in line with the year-ago quarter. The consensus mark has remained stable over the past week. The consensus estimate for fourth-quarter revenues of $3.7 billion indicates a 6.1% increase from the year-ago reported figure.

Universal Health beat the consensus estimate for earnings in all the trailing four quarters, with the average surprise being 5.5%. This is depicted in the graph below:

What the Quantitative Model Suggests

Our proven model predicts a likely earnings beat for Universal Health this time around as well. 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, which is precisely the case here.

Earnings ESP: Universal Health has an Earnings ESP of +2.76%. This is because the Most Accurate Estimate is currently pegged at $3.10 per share, higher than the Zacks Consensus Estimate of $3.02. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Universal Health currently has a Zacks Rank #2.

Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at UHS’ previous-quarter performance first.

Q3 Earnings Rewind

The hospital company reported adjusted earnings of $2.55 per share for the previous quarter, beating the Zacks Consensus Estimate by 9%, thanks to an expanding patient base at its acute care and behavioral healthcare facilities. Increased same-facility-adjusted patient days also contributed positively to the outcomes. Nevertheless, the upside was partly offset by rising expenses related to salaries, wages and benefits.

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

Factors Driving Q4 Performance

During the fourth quarter, Universal Health's revenues are expected to have benefitted from rising patient volumes and expanded surgical procedures. Robust performances from the Acute Care Hospital Services and Behavioral Health Care Services segments are likely to have bolstered UHS' quarterly results.

Results of the Acute Care Hospital Services unit are expected to have benefited on the back of sustained demand for its services and an increase in admissions. The Zacks Consensus Estimate for the segment’s net revenues indicates a rise of more than 6% year over year. Our model estimate for same-facility adjusted admissions in acute care hospitals suggests 6% growth from the prior-year quarter’s reported figure. Also, the consensus mark for operating income from the segment suggests 146.6% year-over-year growth.

The Behavioral Health Care Services segment is anticipated to have received a boost from increased adjusted patient days in the upcoming quarter. The persistent rise in mental health issues among Americans is projected to uphold strong demand for Behavioral Health Care Services.

The Zacks Consensus Estimate for net revenues in the Behavioral Health Care Services unit indicates nearly 7% growth, whereas our model predicts a more than 9% increase. Our estimate for same-facility adjusted admissions in behavioral health facilities hints toward a 7% year-over-year rise. Our model estimate for adjusted patient days suggests a 3.5% increase from a year ago. Also, the consensus mark for operating income from the segment suggests 1.1% year-over-year growth.

The above-mentioned factors are likely to have positioned the company for year-over-year growth and an earnings beat. However, Universal Health’s margins are expected to have taken a hit from higher salaries, wages and benefits, supplies expenses and other operating costs in the to-be-reported quarter, partially offsetting the upside.

We expect salaries, wages and benefits to increase more than 6% year over year, while our estimate for supplies expense suggests nearly 4% year-over-year growth. Our model estimate for total operating expenses suggests a nearly 5% increase from the year-ago period.

Other Stocks That Warrant a Look

Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:

Esperion Therapeutics, Inc. (ESPR Quick QuoteESPR - Free Report) has an Earnings ESP of +24.53% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Esperion Therapeutics’ bottom line for the to-be-reported quarter indicates a 30.3% improvement from the year-ago period. ESPR beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 7.5%.

Amarin Corporation plc (AMRN Quick QuoteAMRN - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #3.

The Zacks Consensus Estimate for Amarin’s bottom line for the to-be-reported quarter improved by a penny over the past month. During this time, it has witnessed one upward revision against none in the opposite direction. AMRN beat earnings estimates in each of the past four quarters, with an average surprise of 175%.

argenx SE (ARGX Quick QuoteARGX - Free Report) has an Earnings ESP of +26.78% and is a Zacks #3 Ranked player.

The Zacks Consensus Estimate for argenx’s earnings per share for the to-be-reported quarter has improved by 6 cents over the past month. During this time, it has witnessed three upward estimate revisions and no movement in the opposite direction. ARGX beat earnings estimates in three of the past four quarters and met once, with the average surprise being 42.7%.

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