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Why Is Universal Health Services (UHS) Up 11.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 11.9% 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 Q2 Earnings Beat on Acute Care Strength
Universal Health Services reported second-quarter 2024 adjusted earnings per share (EPS) of $4.31, which beat the Zacks Consensus Estimate by 27.9%. The bottom line rose 70.4% year over year from the year-ago period.
Net revenues amounted to $3.9 billion in the quarter under review, which rose from $3.6 billion a year ago. The top line outpaced the consensus mark by 1.5%.
The strong quarterly results of UHS were aided by continued growth in admissions at its acute care facilities, resulting in substantial contributions from the segment. Higher 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 higher expenses related to salaries, wages and benefits.
Quarterly Operational Update
Adjusted EBITDA net of NCI rose 35.9% year over year to $578.7 million in the second quarterand came higher than our estimate of $472.7 million.
Total operating costs of $3.47 billion increased 6.2% year over year but missed our estimate of $3.48 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 second quarter, adjusted admissions (adjusted for outpatient activity) increased 3.4% year over year on a same-facility basis but missed our growth estimate of 5.4%. Adjusted patient days rose 1.6% year over year. Net revenues stemming from Universal Health’s acute care services improved 6.6% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions declined 0.4% year over year on a same-facility basis in the quarter under review. Meanwhile, adjusted patient days increased 1.4% year over year, lower than our model estimate of 1.9%. On a same-facility basis, net revenues derived from the behavioral healthcare services of UHS increased 11% year over year.
Financial Update (as of Jun 30, 2024)
Universal Health exited the second quarter with cash and cash equivalents of $128.8 million, which increased from $119.4 million at 2023-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 $1.02 million at the second-quarter end.
Total assets of $14.07 billion inched up from the 2023-end figure of $13.97 billion.
Long-term debt amounted to $4.4 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 $6.6 billion.
In the second quarter of 2024, UHS generated cash flows from operations of $679.3 million, which increased from the prior-year quarter of $362.9 million. The growth came on the back of higher net income.
Share Repurchase Update
Universal Health bought back shares worth roughly $70 million in the second quarter. The company increased its share repurchase authorization by $1 billion and had a leftover repurchase capacity of around $1.2 billion as of Jul 24, 2024.
2024 Guidance Revised
Management increased its net revenue guidance between $15.565 billion and $15.753 billion for 2024.The midpoint of the outlook implies 9.6% growth from the 2023 reported figure.
Adjusted EBITDA, net of NCI, is now estimated to be in the range of $2.154-$2.226 billion. The midpoint of the guidance suggests a 25.7% improvement from the 2023 figure. UHS increased its adjusted EPS guidance in the range of $15.4-$16.2. The midpoint of the forecast indicates a rise of 49.9% from the 2023 figure.
Depreciation and amortization is now anticipated to be $592.5 million. Interest expenses are estimated at around $195.7 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 estimates review.
The consensus estimate has shifted 24.9% due to these changes.
VGM Scores
At this time, Universal Health Services has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Universal Health Services has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Universal Health Services (UHS) Up 11.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Universal Health Services (UHS - Free Report) . Shares have added about 11.9% 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 Q2 Earnings Beat on Acute Care Strength
Universal Health Services reported second-quarter 2024 adjusted earnings per share (EPS) of $4.31, which beat the Zacks Consensus Estimate by 27.9%. The bottom line rose 70.4% year over year from the year-ago period.
Net revenues amounted to $3.9 billion in the quarter under review, which rose from $3.6 billion a year ago. The top line outpaced the consensus mark by 1.5%.
The strong quarterly results of UHS were aided by continued growth in admissions at its acute care facilities, resulting in substantial contributions from the segment. Higher 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 higher expenses related to salaries, wages and benefits.
Quarterly Operational Update
Adjusted EBITDA net of NCI rose 35.9% year over year to $578.7 million in the second quarterand came higher than our estimate of $472.7 million.
Total operating costs of $3.47 billion increased 6.2% year over year but missed our estimate of $3.48 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 second quarter, adjusted admissions (adjusted for outpatient activity) increased 3.4% year over year on a same-facility basis but missed our growth estimate of 5.4%. Adjusted patient days rose 1.6% year over year. Net revenues stemming from Universal Health’s acute care services improved 6.6% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions declined 0.4% year over year on a same-facility basis in the quarter under review. Meanwhile, adjusted patient days increased 1.4% year over year, lower than our model estimate of 1.9%. On a same-facility basis, net revenues derived from the behavioral healthcare services of UHS increased 11% year over year.
Financial Update (as of Jun 30, 2024)
Universal Health exited the second quarter with cash and cash equivalents of $128.8 million, which increased from $119.4 million at 2023-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 $1.02 million at the second-quarter end.
Total assets of $14.07 billion inched up from the 2023-end figure of $13.97 billion.
Long-term debt amounted to $4.4 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 $6.6 billion.
In the second quarter of 2024, UHS generated cash flows from operations of $679.3 million, which increased from the prior-year quarter of $362.9 million. The growth came on the back of higher net income.
Share Repurchase Update
Universal Health bought back shares worth roughly $70 million in the second quarter. The company increased its share repurchase authorization by $1 billion and had a leftover repurchase capacity of around $1.2 billion as of Jul 24, 2024.
2024 Guidance Revised
Management increased its net revenue guidance between $15.565 billion and $15.753 billion for 2024.The midpoint of the outlook implies 9.6% growth from the 2023 reported figure.
Adjusted EBITDA, net of NCI, is now estimated to be in the range of $2.154-$2.226 billion. The midpoint of the guidance suggests a 25.7% improvement from the 2023 figure. UHS increased its adjusted EPS guidance in the range of $15.4-$16.2. The midpoint of the forecast indicates a rise of 49.9% from the 2023 figure.
Depreciation and amortization is now anticipated to be $592.5 million. Interest expenses are estimated at around $195.7 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 estimates review.
The consensus estimate has shifted 24.9% due to these changes.
VGM Scores
At this time, Universal Health Services has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Universal Health Services has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.