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Universal Health (UHS) Q4 Earnings Beat on Solid Segments
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Universal Health Services, Inc. (UHS - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of $3.02, which surpassed the Zacks Consensus Estimate by 2% and our estimate of $2.77. Additionally, the bottom line grew 2.4% year over year.
The quarterly results of UHS were aided by improved patient volumes at its acute care and behavioral health care facilities. However, the upside was partly offset by an elevated expense level related to salaries, wages and benefits, which might have cropped up from the shortage of nurses and other medical personnel throughout the United States.
Quarterly Operational Update
Net revenues of Universal Health advanced 5.2% year over year to $3,447 million in the quarter under review. The top line beat the consensus mark by 1.3% and our estimate of $3,389.1 million.
Adjusted earnings before interest, taxes, depreciation & amortization (EBITDA), net of net income attributable to noncontrolling interests (NCI), amounted to $471.7 million. The metric does not consider the impact of the provision for asset impairment and other (income) expense, net. The figure improved 4.3% year over year and outpaced our estimate of $444.2 million.
Total operating costs escalated 7.6% year over year to $3,185.6 million in the fourth quarter mainly due to increased salaries, wages and benefits, other operating expenses, and depreciation and amortization.
Universal Health Services, Inc. Price, Consensus and EPS Surprise
Adjusted admissions (adjusted for outpatient activity) grew 5.5% year over year on a same-facility basis in the quarter under review, while adjusted patient days inched up 1.6% year over year. Net revenues derived from Universal Health’s acute care services witnessed a 2.6% year-over-year uptick on a same-facility basis.
Behavioral Health Care Services
In the fourth quarter, adjusted admissions inched up 0.7% year over year on a same-facility basis. Adjusted patient days advanced 2% year over year. Net revenues stemming from behavioral health care services of UHS rose 4.3% year over year.
Financial Update (as of Dec 31, 2022)
Universal Health exited the fourth quarter with cash and cash equivalents of $102.8 million, which declined 10.8% from the figure in 2021 end.
As part of the $1.2-billion revolving credit facility of UHS, net of outstanding borrowings and letters of credit, there remains an aggregate available borrowing capacity of $886 million at the fourth-quarter end.
Total assets of $13,494.2 million increased 3.1% from the 2021-end level.
Long-term debt amounted to $4,726.5 million, up 14.1% from the figure as of Dec 31, 2021. Short-term debt was at $81.4 million.
Total equity of $5,965.4 million fell 3.7% from the figure in 2021 end.
During 2022, net cash provided by operating activities climbed 12.7% from the 2021-end level to $996 million. The growth came on the back of a favorable change from the early return of Medicare-accelerated payments received in 2020 and repaid in first-quarter 2021.
Share Repurchase Update
Universal Health bought back shares worth roughly $107.2 million in the fourth quarter. It had leftover funds of around $947 million under its repurchase authorization as of Dec 31, 2022.
2023 Guidance
Management estimates net revenues between $14,044 million and $14,314 million, which indicates an improvement of around 4.8%-6.8% from the 2022 figure of $13,399.4 million.
Adjusted EBITDA, net of NCI, is anticipated within $1,662-$1,753 million, the midpoint of which suggests a 2.7% growth from the 2022 figure of $1,662 million.
UHS projects adjusted EPS in the range of $9.50-$10.50 for 2023, the mid-point of which implies 1.2% growth from the 2022 figure of $9.88.
Depreciation and amortization is estimated at $594.4 million. Interest expenses are projected at around $198 million. Capital expenditures are expected within $725-$875 million.
Zacks Rank
Universal Health currently has a Zacks Rank #4 (Sell).
Of the other Medical sector players that have reported fourth-quarter results so far, the bottom lines of DexCom, Inc. (DXCM - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Encompass Health Corporation (EHC - Free Report) beat the Zacks Consensus Estimate.
DexCom reported fourth-quarter 2022 adjusted EPS of 34 cents, beating the Zacks Consensus Estimate of 26 cents by 30.8%. The company had recorded an adjusted loss of 1 cent per share in the prior-year quarter. Total revenues grew 17% (20% on an organic basis) to $815.2 million on a year-over-year basis and beat the Zacks Consensus Estimate by 2.2%. Revenues at the Sensor and other revenues segment (88% of total revenues) climbed 19% on a year-over-year basis to $714.8 million. DXCM reported an operating margin (as a percentage of revenues) of 15.4%, expanding significantly year over year.
Tenet Healthcare’s fourth-quarter 2022 adjusted earnings of $1.96 per share surpassed the Zacks Consensus Estimate by 54.3%. However, the bottom line dropped 27.4% year over year. Net operating revenues of THC improved 2.6% year over year to $4,990 million in the quarter under review. The top line beat the consensus mark of $4,905 by 1.7%. Adjusted EBITDA dipped 11.8% year over year to $897 million. Net operating revenues of the Hospital Operations and Other segment totaled $3,840 million in the fourth quarter, which declined 1.8% year over year.
Encompass Health reported fourth-quarter adjusted EPS of 88 cents, which outpaced the Zacks Consensus Estimate by 3.5%. The bottom line climbed 31.3% year over year. Net operating revenues of $1,137.3 million improved 9.1% year over year in the quarter under review. The top line beat the consensus mark by 1.5%. Net patient revenues per discharge grew 2.2% year over year. Adjusted EBITDA of EHC rose 16.4% year over year to $232.7 million in the quarter under review. The improvement can be attributed to growing revenues coupled with reduced usage of contract labor.
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Universal Health (UHS) Q4 Earnings Beat on Solid Segments
Universal Health Services, Inc. (UHS - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of $3.02, which surpassed the Zacks Consensus Estimate by 2% and our estimate of $2.77. Additionally, the bottom line grew 2.4% year over year.
The quarterly results of UHS were aided by improved patient volumes at its acute care and behavioral health care facilities. However, the upside was partly offset by an elevated expense level related to salaries, wages and benefits, which might have cropped up from the shortage of nurses and other medical personnel throughout the United States.
Quarterly Operational Update
Net revenues of Universal Health advanced 5.2% year over year to $3,447 million in the quarter under review. The top line beat the consensus mark by 1.3% and our estimate of $3,389.1 million.
Adjusted earnings before interest, taxes, depreciation & amortization (EBITDA), net of net income attributable to noncontrolling interests (NCI), amounted to $471.7 million. The metric does not consider the impact of the provision for asset impairment and other (income) expense, net. The figure improved 4.3% year over year and outpaced our estimate of $444.2 million.
Total operating costs escalated 7.6% year over year to $3,185.6 million in the fourth quarter mainly due to increased salaries, wages and benefits, other operating expenses, and depreciation and amortization.
Universal Health Services, Inc. Price, Consensus and EPS Surprise
Universal Health Services, Inc. price-consensus-eps-surprise-chart | Universal Health Services, Inc. Quote
Segmental Update
Acute Care Hospital Services
Adjusted admissions (adjusted for outpatient activity) grew 5.5% year over year on a same-facility basis in the quarter under review, while adjusted patient days inched up 1.6% year over year. Net revenues derived from Universal Health’s acute care services witnessed a 2.6% year-over-year uptick on a same-facility basis.
Behavioral Health Care Services
In the fourth quarter, adjusted admissions inched up 0.7% year over year on a same-facility basis. Adjusted patient days advanced 2% year over year. Net revenues stemming from behavioral health care services of UHS rose 4.3% year over year.
Financial Update (as of Dec 31, 2022)
Universal Health exited the fourth quarter with cash and cash equivalents of $102.8 million, which declined 10.8% from the figure in 2021 end.
As part of the $1.2-billion revolving credit facility of UHS, net of outstanding borrowings and letters of credit, there remains an aggregate available borrowing capacity of $886 million at the fourth-quarter end.
Total assets of $13,494.2 million increased 3.1% from the 2021-end level.
Long-term debt amounted to $4,726.5 million, up 14.1% from the figure as of Dec 31, 2021. Short-term debt was at $81.4 million.
Total equity of $5,965.4 million fell 3.7% from the figure in 2021 end.
During 2022, net cash provided by operating activities climbed 12.7% from the 2021-end level to $996 million. The growth came on the back of a favorable change from the early return of Medicare-accelerated payments received in 2020 and repaid in first-quarter 2021.
Share Repurchase Update
Universal Health bought back shares worth roughly $107.2 million in the fourth quarter. It had leftover funds of around $947 million under its repurchase authorization as of Dec 31, 2022.
2023 Guidance
Management estimates net revenues between $14,044 million and $14,314 million, which indicates an improvement of around 4.8%-6.8% from the 2022 figure of $13,399.4 million.
Adjusted EBITDA, net of NCI, is anticipated within $1,662-$1,753 million, the midpoint of which suggests a 2.7% growth from the 2022 figure of $1,662 million.
UHS projects adjusted EPS in the range of $9.50-$10.50 for 2023, the mid-point of which implies 1.2% growth from the 2022 figure of $9.88.
Depreciation and amortization is estimated at $594.4 million. Interest expenses are projected at around $198 million. Capital expenditures are expected within $725-$875 million.
Zacks Rank
Universal Health currently has 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 other Medical sector players that have reported fourth-quarter results so far, the bottom lines of DexCom, Inc. (DXCM - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Encompass Health Corporation (EHC - Free Report) beat the Zacks Consensus Estimate.
DexCom reported fourth-quarter 2022 adjusted EPS of 34 cents, beating the Zacks Consensus Estimate of 26 cents by 30.8%. The company had recorded an adjusted loss of 1 cent per share in the prior-year quarter. Total revenues grew 17% (20% on an organic basis) to $815.2 million on a year-over-year basis and beat the Zacks Consensus Estimate by 2.2%. Revenues at the Sensor and other revenues segment (88% of total revenues) climbed 19% on a year-over-year basis to $714.8 million. DXCM reported an operating margin (as a percentage of revenues) of 15.4%, expanding significantly year over year.
Tenet Healthcare’s fourth-quarter 2022 adjusted earnings of $1.96 per share surpassed the Zacks Consensus Estimate by 54.3%. However, the bottom line dropped 27.4% year over year. Net operating revenues of THC improved 2.6% year over year to $4,990 million in the quarter under review. The top line beat the consensus mark of $4,905 by 1.7%. Adjusted EBITDA dipped 11.8% year over year to $897 million. Net operating revenues of the Hospital Operations and Other segment totaled $3,840 million in the fourth quarter, which declined 1.8% year over year.
Encompass Health reported fourth-quarter adjusted EPS of 88 cents, which outpaced the Zacks Consensus Estimate by 3.5%. The bottom line climbed 31.3% year over year. Net operating revenues of $1,137.3 million improved 9.1% year over year in the quarter under review. The top line beat the consensus mark by 1.5%. Net patient revenues per discharge grew 2.2% year over year. Adjusted EBITDA of EHC rose 16.4% year over year to $232.7 million in the quarter under review. The improvement can be attributed to growing revenues coupled with reduced usage of contract labor.