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Universal Health Services (UHS) Up 7.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 7.2% in that time frame, outperforming 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 Q1 Earnings Beat on Rising Patient Days
Universal Health reported first-quarter 2024 adjusted earnings per share (EPS) of $3.70, which beat the Zacks Consensus Estimate by 17.8%. The bottom line rose 58.1% year over year from the year-ago period.
Net revenues amounted to $3.8 billion in the quarter under review, which rose from $3.5 billion a year ago. The top line outpaced the consensus mark by 2%.
The strong quarterly results of Universal Health were supported by a growing patient base at its acute care facilities, resulting in substantial contributions from the segment, and increased same-facility-adjusted patient days also contributed positively to the outcomes. However, the upside was partly offset by lower admissions in its behavioral healthcare facilities and rising expenses related to salaries, wages and benefits.
Quarterly Operational Update
Adjusted EBITDA net of NCI rose 24.9% year over year to $525.8 million in the first quarter and came higher than our estimate of $463.1 million.
Total operating costs of $3.5 billion increased 8.3% year over year and came in higher than our estimate of $3.4 billion. The figure rose due to higher salaries, wages and benefits, other operating expenses, supplies costs and lease and rental expenses.
Segmental Update
Acute Care Hospital Services
In the first quarter, adjusted admissions (adjusted for outpatient activity) advanced 4.5% year over year on a same-facility basis. Adjusted patient days rose 3.4% year over year. Net revenues stemming from Universal Health’s acute care services improved 9.6% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions declined 0.8% year over year on a same-facility basis in the quarter under review. Meanwhile, adjusted patient days increased 2% year over year, lower than our model estimate of 2.4%. On a same-facility basis, net revenues derived from the behavioral healthcare services of Universal Health increased 10.4% year over year.
Financial Update (as of Mar 31, 2024)
Universal Health exited the first quarter with cash and cash equivalents of $112.1 million, which decreased from $119.4 million at 2023-end. As part of the $1.2 billion revolving credit facility of Universal Health, net of outstanding borrowings and letters of credit, there remains an aggregate available borrowing capacity of $733 million at the first-quarter end.
Total assets of $14.05 billion inched up from the 2023-end figure of $13.97 billion.
Long-term debt amounted to $4.7 billion, which decreased from $4.8 billion as of Dec 31, 2023. Current maturities of long-term debt totaled $127.5 million.
Total equity increased from the 2023-end level of $6.2 billion to $6.3 billion.
In the first quarter of 2024, Universal Health generated cash flows from operations of $396.4 million, which increased from the prior-year quarter of $290.8 million. The growth came on the back of higher net income.
Share Repurchase Update
Universal Health bought back shares worth roughly $125.1 million in the first quarter. It had a leftover repurchase capacity of around $298 million as of Mar 31, 2024.
2024 Guidance
Management earlier expected net revenues between $15.411 billion and $15.706 billion for 2024. The midpoint of the outlook implies 8.9% growth from the 2023 reported figure.
Adjusted EBITDA, net of NCI, was estimated to be in the range of $1.931-$2.019 billion. The midpoint of the guidance suggests a 13.4% improvement from the 2023 figure. Universal Health projects adjusted EPS in the range of $13-$14. The midpoint of the forecast indicates a rise of 28.1% from the 2023 figure.
Depreciation and amortization were anticipated to be $605.2 million. Interest expenses are estimated at around $196.3 million. Capital expenditures are expected to be between $850 million and $1 billion for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Universal Health Services has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 upward for the stock, and the magnitude of these revisions has been net zero. 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 7.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 7.2% in that time frame, outperforming 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 Q1 Earnings Beat on Rising Patient Days
Universal Health reported first-quarter 2024 adjusted earnings per share (EPS) of $3.70, which beat the Zacks Consensus Estimate by 17.8%. The bottom line rose 58.1% year over year from the year-ago period.
Net revenues amounted to $3.8 billion in the quarter under review, which rose from $3.5 billion a year ago. The top line outpaced the consensus mark by 2%.
The strong quarterly results of Universal Health were supported by a growing patient base at its acute care facilities, resulting in substantial contributions from the segment, and increased same-facility-adjusted patient days also contributed positively to the outcomes. However, the upside was partly offset by lower admissions in its behavioral healthcare facilities and rising expenses related to salaries, wages and benefits.
Quarterly Operational Update
Adjusted EBITDA net of NCI rose 24.9% year over year to $525.8 million in the first quarter and came higher than our estimate of $463.1 million.
Total operating costs of $3.5 billion increased 8.3% year over year and came in higher than our estimate of $3.4 billion. The figure rose due to higher salaries, wages and benefits, other operating expenses, supplies costs and lease and rental expenses.
Segmental Update
Acute Care Hospital Services
In the first quarter, adjusted admissions (adjusted for outpatient activity) advanced 4.5% year over year on a same-facility basis. Adjusted patient days rose 3.4% year over year. Net revenues stemming from Universal Health’s acute care services improved 9.6% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions declined 0.8% year over year on a same-facility basis in the quarter under review. Meanwhile, adjusted patient days increased 2% year over year, lower than our model estimate of 2.4%. On a same-facility basis, net revenues derived from the behavioral healthcare services of Universal Health increased 10.4% year over year.
Financial Update (as of Mar 31, 2024)
Universal Health exited the first quarter with cash and cash equivalents of $112.1 million, which decreased from $119.4 million at 2023-end. As part of the $1.2 billion revolving credit facility of Universal Health, net of outstanding borrowings and letters of credit, there remains an aggregate available borrowing capacity of $733 million at the first-quarter end.
Total assets of $14.05 billion inched up from the 2023-end figure of $13.97 billion.
Long-term debt amounted to $4.7 billion, which decreased from $4.8 billion as of Dec 31, 2023. Current maturities of long-term debt totaled $127.5 million.
Total equity increased from the 2023-end level of $6.2 billion to $6.3 billion.
In the first quarter of 2024, Universal Health generated cash flows from operations of $396.4 million, which increased from the prior-year quarter of $290.8 million. The growth came on the back of higher net income.
Share Repurchase Update
Universal Health bought back shares worth roughly $125.1 million in the first quarter. It had a leftover repurchase capacity of around $298 million as of Mar 31, 2024.
2024 Guidance
Management earlier expected net revenues between $15.411 billion and $15.706 billion for 2024. The midpoint of the outlook implies 8.9% growth from the 2023 reported figure.
Adjusted EBITDA, net of NCI, was estimated to be in the range of $1.931-$2.019 billion. The midpoint of the guidance suggests a 13.4% improvement from the 2023 figure. Universal Health projects adjusted EPS in the range of $13-$14. The midpoint of the forecast indicates a rise of 28.1% from the 2023 figure.
Depreciation and amortization were anticipated to be $605.2 million. Interest expenses are estimated at around $196.3 million. Capital expenditures are expected to be between $850 million and $1 billion for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Universal Health Services has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 upward for the stock, and the magnitude of these revisions has been net zero. Notably, Universal Health Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.