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Universal Health (UHS) Q2 Earnings Beat, Boosts '23 EPS View
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Universal Health Services, Inc. (UHS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.53, which beat the Zacks Consensus Estimate by 2%. The bottom line climbed 15% year over year.
Net revenues amounted to $3,548 million, which rose 6.8% year over year in the quarter under review. The top line outpaced the consensus mark by 1.3%.
The strong quarterly results of UHS were supported by a growing patient base at its acute care and behavioral health care facilities, which led to strong segmental contributions. Higher adjusted patient days also provided an impetus to the results. However, the upside was partly offset by escalating salaries, wages and benefits expense.
Universal Health Services, Inc. Price, Consensus and EPS Surprise
Adjusted earnings before interest, taxes, depreciation & amortization (EBITDA), net of net income attributable to noncontrolling interests (NCI), improved 11.3% year over year to $425.9 million in the second quarter, higher than our estimate of $401.8 million. The metric does not consider the impact of other (income) expenses, net.
Total operating costs of $3,268 million increased 5.8% year over year 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 second quarter, adjusted admissions (adjusted for outpatient activity) advanced 7.7% year over year on a same-facility basis. Adjusted patient days rose 6.9% year over year. Net revenues stemming from Universal Health’s acute care services improved 9.7% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions grew 3.3% year over year on a same-facility basis in the quarter under review. Our estimate indicated the metric to witness 5.4% year-over-year growth. Meanwhile, adjusted patient days inched up 1.5% year over year. On a same-facility basis, net revenues derived from the behavioral healthcare services of UHS increased 7.8% year over year.
Financial Update (as of Jun 30, 2023)
Universal Health exited the second quarter with cash and cash equivalents of $79.5 million, which plunged 22.7% from the level at 2022 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 $946 million at the second-quarter end.
Total assets of $13,732.3 million increased 1.8% from the 2022-end figure.
Long-term debt amounted to $4,605.1 million, which declined 2.6% from the figure as of Dec 31, 2022. Short-term debt totaled $111.4 million.
Total equity increased 2.7% from the 2022-end level to $6,128.8 million.
In the first half of 2023, UHS generated cash flows from operations of $653.7 million, which climbed 36.7% from the prior-year comparable period. The growth came on the back of favorable other working capital accounts.
Share Repurchase Update
Universal Health bought back shares worth roughly $113.4 million in the second quarter. It had a leftover repurchase capacity of around $755 million as of Jun 30, 2023.
2023 Guidance Revised
On the basis of the financial performance observed in the first half of 2023, management hiked the lower end of its 2023 outlook range for certain metrics.
Management presently forecasts net revenues to be between $14,130 million and $14,330 million for this year, compared with the earlier range of $14,044-$14,314 million. The midpoint of the revised outlook implies 6.2% growth from the 2022 reported figure.
Adjusted EBITDA, net of NCI, is estimated within $1,696-$1,756 million, compared with the previous view of $1,662-$1,753 million. The midpoint of the updated guidance suggests 3.9% improvement from the 2022 figure.
UHS projects adjusted EPS in the range of $9.85-$10.50, compared with the prior view of $9.50-$10.50 for 2023. The midpoint of the revised forecast indicates a rise of 3% from the 2022 figure.
Depreciation and amortization are currently anticipated at $584.7 million. Interest expenses are estimated at around $199 million.
Earlier, capital expenditures were expected within $725 million and $875 million for 2023.
Of the Medical sector players that have reported second-quarter 2023 results so far, the bottom-line results of Elevance Health, Inc. (ELV - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Abbott Laboratories (ABT - Free Report) beat the respective Zacks Consensus Estimate.
Elevance Health reported second-quarter 2023 adjusted net income of $9.04 per share, which outpaced the Zacks Consensus Estimate by 2.5%. The bottom line improved 13.4% year over year. ELV’s operating revenues, which amounted to $43,377 million, rose 12.7% year over year in the quarter under review. The top line surpassed the consensus mark by 4.5%. Medical membership of Elevance Health totaled around 48 million as of Jun 30, 2023, which increased 2% year over year in the second quarter. Overall premiums grew 10.6% year over year to $36,589 million in the quarter under review.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate of $1.32 by 7.6%. The bottom line improved 24.6% year over year. ISRG reported revenues of $1.76 billion, up 15.4% from the prior-year quarter’s number. On a constant currency (cc) basis, revenues were up 17% year over year. The top line beat the consensus estimate by 1.4%. Adjusted operating income totaled $617.6 million, up 16.3% year over year. Revenues at the Instruments & Accessories segment totaled $1.08 billion, indicating a year-over-year improvement of 20.2%.
Abbott Laboratories reported second-quarter 2023 adjusted earnings of $1.08 per share, which topped the Zacks Consensus Estimate by 3.8%. However, the adjusted figure declined from the prior-year quarter’s levels by 24.5%. Second-quarter worldwide sales of $9.98 billion were down 11.4% year over year on a reported basis. The top line exceeded the consensus estimate by 2.9%. ABT reported an adjusted operating profit of $2.04 billion in the quarter under review, down 29.2% year over year. Also, the adjusted operating margin contracted 517 bps to 20.4%. Established Pharmaceuticals segment’s product sales increased 5.2% on a reported basis (up 12.6% on an organic basis) to $1.29 billion.
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Universal Health (UHS) Q2 Earnings Beat, Boosts '23 EPS View
Universal Health Services, Inc. (UHS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.53, which beat the Zacks Consensus Estimate by 2%. The bottom line climbed 15% year over year.
Net revenues amounted to $3,548 million, which rose 6.8% year over year in the quarter under review. The top line outpaced the consensus mark by 1.3%.
The strong quarterly results of UHS were supported by a growing patient base at its acute care and behavioral health care facilities, which led to strong segmental contributions. Higher adjusted patient days also provided an impetus to the results. However, the upside was partly offset by escalating salaries, wages and benefits expense.
Universal Health Services, Inc. Price, Consensus and EPS Surprise
Universal Health Services, Inc. price-consensus-eps-surprise-chart | Universal Health Services, Inc. Quote
Quarterly Operational Update
Adjusted earnings before interest, taxes, depreciation & amortization (EBITDA), net of net income attributable to noncontrolling interests (NCI), improved 11.3% year over year to $425.9 million in the second quarter, higher than our estimate of $401.8 million. The metric does not consider the impact of other (income) expenses, net.
Total operating costs of $3,268 million increased 5.8% year over year 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 second quarter, adjusted admissions (adjusted for outpatient activity) advanced 7.7% year over year on a same-facility basis. Adjusted patient days rose 6.9% year over year. Net revenues stemming from Universal Health’s acute care services improved 9.7% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions grew 3.3% year over year on a same-facility basis in the quarter under review. Our estimate indicated the metric to witness 5.4% year-over-year growth. Meanwhile, adjusted patient days inched up 1.5% year over year. On a same-facility basis, net revenues derived from the behavioral healthcare services of UHS increased 7.8% year over year.
Financial Update (as of Jun 30, 2023)
Universal Health exited the second quarter with cash and cash equivalents of $79.5 million, which plunged 22.7% from the level at 2022 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 $946 million at the second-quarter end.
Total assets of $13,732.3 million increased 1.8% from the 2022-end figure.
Long-term debt amounted to $4,605.1 million, which declined 2.6% from the figure as of Dec 31, 2022. Short-term debt totaled $111.4 million.
Total equity increased 2.7% from the 2022-end level to $6,128.8 million.
In the first half of 2023, UHS generated cash flows from operations of $653.7 million, which climbed 36.7% from the prior-year comparable period. The growth came on the back of favorable other working capital accounts.
Share Repurchase Update
Universal Health bought back shares worth roughly $113.4 million in the second quarter. It had a leftover repurchase capacity of around $755 million as of Jun 30, 2023.
2023 Guidance Revised
On the basis of the financial performance observed in the first half of 2023, management hiked the lower end of its 2023 outlook range for certain metrics.
Management presently forecasts net revenues to be between $14,130 million and $14,330 million for this year, compared with the earlier range of $14,044-$14,314 million. The midpoint of the revised outlook implies 6.2% growth from the 2022 reported figure.
Adjusted EBITDA, net of NCI, is estimated within $1,696-$1,756 million, compared with the previous view of $1,662-$1,753 million. The midpoint of the updated guidance suggests 3.9% improvement from the 2022 figure.
UHS projects adjusted EPS in the range of $9.85-$10.50, compared with the prior view of $9.50-$10.50 for 2023. The midpoint of the revised forecast indicates a rise of 3% from the 2022 figure.
Depreciation and amortization are currently anticipated at $584.7 million. Interest expenses are estimated at around $199 million.
Earlier, capital expenditures were expected within $725 million and $875 million for 2023.
Zacks Rank
Universal Health currently carries a Zacks Rank #2 (Buy). 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 2023 results so far, the bottom-line results of Elevance Health, Inc. (ELV - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Abbott Laboratories (ABT - Free Report) beat the respective Zacks Consensus Estimate.
Elevance Health reported second-quarter 2023 adjusted net income of $9.04 per share, which outpaced the Zacks Consensus Estimate by 2.5%. The bottom line improved 13.4% year over year. ELV’s operating revenues, which amounted to $43,377 million, rose 12.7% year over year in the quarter under review. The top line surpassed the consensus mark by 4.5%. Medical membership of Elevance Health totaled around 48 million as of Jun 30, 2023, which increased 2% year over year in the second quarter. Overall premiums grew 10.6% year over year to $36,589 million in the quarter under review.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate of $1.32 by 7.6%. The bottom line improved 24.6% year over year. ISRG reported revenues of $1.76 billion, up 15.4% from the prior-year quarter’s number. On a constant currency (cc) basis, revenues were up 17% year over year. The top line beat the consensus estimate by 1.4%. Adjusted operating income totaled $617.6 million, up 16.3% year over year. Revenues at the Instruments & Accessories segment totaled $1.08 billion, indicating a year-over-year improvement of 20.2%.
Abbott Laboratories reported second-quarter 2023 adjusted earnings of $1.08 per share, which topped the Zacks Consensus Estimate by 3.8%. However, the adjusted figure declined from the prior-year quarter’s levels by 24.5%. Second-quarter worldwide sales of $9.98 billion were down 11.4% year over year on a reported basis. The top line exceeded the consensus estimate by 2.9%. ABT reported an adjusted operating profit of $2.04 billion in the quarter under review, down 29.2% year over year. Also, the adjusted operating margin contracted 517 bps to 20.4%. Established Pharmaceuticals segment’s product sales increased 5.2% on a reported basis (up 12.6% on an organic basis) to $1.29 billion.