Universal Health Services Q1 Earnings Call Highlights

Key Points

• Q1 results: Revenue rose 9.6%, adjusted EBITDA increased 8.4% and adjusted EPS climbed 16.1%, with net income attributable to UHS of $5.65 per diluted share and adjusted EPS of $5.62.
• Talkspace acquisition: UHS calls Talkspace a market-leading virtual outpatient behavioral platform that should accelerate its outpatient strategy, be accretive within 12 months and reach a single-digit effective EBITDA multiple by year three while enabling bidirectional referral synergies.
• Operations and balance sheet: Acute volumes were pressured by weak flu and winter weather but higher acuity and pricing lifted revenue per admission, behavioral care is shifting toward outpatient with ongoing staffing investments, and UHS generated $402M of operating cash flow, repurchased $127M of stock and expanded credit capacity while expecting only a modest leverage uptick for the Talkspace deal.

Universal Health Services NYSE: UHS reported first-quarter 2026 results that management said reflected steady operating performance and cash flow generation despite seasonally challenging volume trends, while also highlighting progress on outpatient behavioral health initiatives and technology-enabled efficiency efforts.

Revenue increased 9.6% versus the first quarter of 2025, while adjusted EBITDA net of noncontrolling interests rose 8.4% and adjusted EPS increased 16.1%, President and CEO Marc Miller said on the company’s earnings conference call. CFO Steve Filton said UHS posted net income attributable to UHS of $5.65 per diluted share and adjusted EPS of $5.62.

Talkspace acquisition framed as strategic accelerator

Miller spent a portion of his remarks on UHS’s announced acquisition of Talkspace, which he described as “an established market leader in virtual outpatient behavioral healthcare” with a network of 6,000 licensed professionals serving all 50 states. Miller said UHS believes Talkspace has a “best-in-class virtual platform” and that its payer-driven business model aligns with UHS’s efforts to expand outpatient services and diversify its behavioral payer mix.

Management positioned the deal as a way to accelerate a broader “end-to-end continuum of behavioral healthcare services,” spanning lower-acuity outpatient offerings through residential and inpatient care. Miller cited potential opportunities to develop higher-acuity virtual offerings, including virtual intensive outpatient programs, and described “bidirectional revenue synergy opportunities” intended to connect UHS patients to virtual services and Talkspace patients to higher levels of care.

On the financial impact, Miller said the company expects the deal to be accretive to earnings during the first 12 months post-closing and “increasingly accretive thereafter.” He also said UHS expects the effective EBITDA multiple to be in the single-digit range by year three after closing. In response to an analyst question, Miller said the company’s confidence is based on its review of Talkspace’s business model, the company’s recent progress, and what UHS believes Talkspace could achieve over the next 24 months on a standalone basis, with additional upside after combining resources.

Acute care: volumes pressured by flu and weather; pricing and acuity helped

Filton said same-facility adjusted admissions at acute care hospitals were unchanged year over year. He estimated acute care volumes were impacted by roughly 200 basis points due to weaker flu and respiratory activity and winter weather in certain markets. He noted Nevada rebounded “slightly,” with adjusted admissions up about 1.5% year over year.

Same-facility emergency department visits increased about 2%, and Filton said UHS saw positive trends in higher-acuity inpatient service lines, including cardiology, orthopedics and neurology. Those mix and acuity dynamics also showed up in pricing comparisons. Filton told analysts that lower flu volume—generally a lower-acuity category—meant that “by definition, the patients that we had this year were of a higher acuity,” which helped revenue per admission.

Same-facility net revenues in the Acute Care Hospital segment increased 8.2% in the quarter and were up 6.2% excluding the impact of the company’s health plan, Filton said. Same-facility revenue per adjusted admission rose 6.3% on a reported basis and increased 4.9% excluding approximately $30 million of prior-period supplemental program net benefit related to the expanded 2025 Nevada program.

On profitability, Filton said the company managed operating expenses across labor and supplies, with same-facility acute care salaries, wages and benefits expense per adjusted admission up 3.1% and supply expense per adjusted admission up 3.5%. Contract labor was 2.3% of acute care segment revenues, down 40 basis points year over year. Same-facility acute care segment EBITDA increased 11.7%.

When asked to “parse out” the effect of weather, flu and supplemental payments on acute care profitability, Filton said that core acute care EBITDA growth was “in the low-single digit range.” In a separate exchange on underlying results, Filton acknowledged that excluding supplemental payments and other items, the company was “not at that core 5% growth” in the quarter, but reiterated confidence in achieving full-year guidance as volumes improve and new capacity ramps.

Behavioral health: outpatient focus, staffing investments and demand shift

In behavioral health, Filton said same-facility net revenues increased 7.3%, driven by a 5.8% increase in revenue per adjusted patient day and a 1.6% increase in adjusted patient days. He estimated winter weather reduced behavioral health volume growth by roughly 40 to 50 basis points. Same-facility Behavioral Health segment EBITDA increased 8.4%.

Excluding prior-period supplemental payments, Filton said revenue per adjusted patient day would have increased 4.9% and segment EBITDA would have risen 4.3%.

Management emphasized two themes in the behavioral segment: staffing and a shift toward outpatient demand. Filton said UHS invested heavily in behavioral staffing in 2025 to improve flexibility and take on patient demand, and he said those efforts are “beginning to affect itself or reflect itself.” He also said the company is increasingly focused on outpatient growth as more demand shifts toward outpatient delivery, noting UHS is working to capture that demand through initiatives such as freestanding outpatient locations and, following closing, the Talkspace platform.

On labor trends, Filton said behavioral health salaries, wages and benefits per adjusted patient day increased about 6% year over year in the quarter, moderating from the 7% to 8% increases experienced during 2025. He added that UHS expects wage pressures in behavioral to moderate further as 2026 progresses and said turnover remains high but has shown “measurable progress.”

Filton also addressed California nurse staffing ratio requirements that take effect June 1, saying the company is making “good progress” and remains on track with the assumptions in its 2026 outlook.

Payer and policy dynamics: HIX headwind reiterated; supplemental payments and guidance unchanged

On health insurance exchange (HIX) trends, Filton said exchange-adjusted admissions declined about 5% in the quarter, but UHS recorded additional reserves based on expectations that some patients presenting as having exchange coverage may later be determined not to have coverage due to unpaid premiums. Filton said the reserve reflected an effective decline “probably something in the low double digits,” and management reiterated the full-year estimate of a $75 million pre-tax impact, assuming declines steepen over the year.

Outside of HIX, Filton described payer mix changes as modest, citing slight increases in uninsured and Medicare utilization and a slight decrease in Medicaid utilization. He also said the company is not seeing a material increase in denials, adding that revenue cycle investments in technology, personnel and process are helping UHS “keep pace with potentially more aggressive behavior on the part of the payers.”

Filton discussed Medicaid supplemental payments, confirming that $46 million of combined Nevada and Ohio out-of-period payments were recorded in the quarter and stating that the company’s supplemental payment recognition was within expectations and embedded in guidance. He said excluding the out-of-period amount provides a better run rate for the rest of the year.

On pending state programs, Filton said there is “a high level of confidence” among Florida providers—based on feedback from the state—that Florida’s pending 2025 program is likely to be approved, though timing is uncertain. He said UHS has been estimating about a $50 million benefit, adding that the ultimate benefit could be “measurably higher” once details are finalized. For California, he said the outlook for a renewed or expanded program is “much less certain,” and UHS has not estimated a benefit.

Filton said UHS is reiterating the 2026 forecast first provided on Feb. 25 and plans to reevaluate guidance with second-quarter earnings in July.

Cash flow, capital spending, repurchases and balance sheet actions

UHS generated $402 million of operating cash flow in the first quarter, up from $360 million in the prior-year period, Filton said. Capital expenditures were $217 million.

On facility development, Filton said the acute care segment continues to invest in a 156-bed de novo hospital in Florida scheduled to open in May, as well as two bed towers and a replacement hospital project totaling 178 beds expected to come online in the second quarter. In behavioral health, UHS opened a 144-bed de novo joint venture hospital in Pennsylvania early in the first quarter and plans to open a 120-bed de novo hospital in Missouri later in 2026.

The company repurchased 675,000 shares for $127 million during the quarter. Filton said UHS had $1.3 billion of repurchase authorization remaining as of March 31 and expects to remain active with buybacks throughout 2026, including around the Talkspace closing. He also said the Talkspace acquisition is not expected to significantly increase leverage, describing a move from “a little under two times” to “a little over two times.”

Filton added that UHS expanded the aggregate capacity of its credit facilities by $900 million in late April to provide flexibility for the Talkspace transaction, potential acquisitions and capital returns. As of March 31, UHS had $373 million outstanding on its revolving credit facility, with borrowing capacity recently expanded to $1.5 billion.

About Universal Health Services NYSE: UHS

Universal Health Services, Inc NYSE: UHS is one of the largest diversified health care management companies in the United States, offering a broad spectrum of services through its acute care hospital and behavioral health segments. The company operates general acute care hospitals, surgical hospitals and ambulatory centers, as well as inpatient and outpatient behavioral health facilities. Its network provides emergency and specialized medicine, diagnostic imaging, laboratory services, advanced surgical care and rehabilitation, complemented by a comprehensive array of behavioral services including psychiatric treatment, addiction programs and developmental disabilities care.

In the acute care segment, UHS's facilities deliver services ranging from emergency department treatment and intensive care to maternity care and outpatient surgery.

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