Acute, behavioral revenue gains push Universal Health Services to $262M Q1 profit

Editor's note: This story has been updated with comments and numbers from Thursday's earnings call.

Universal Health Services handily outpaced analyst estimates during the first quarter amid revenue and volume improvements across its acute and behavioral care businesses alike.

In top-line earnings numbers released Wednesday, the King of Prussia, Pennsylvania-based for-profit shared net income of $261.8 million ($3.82 per diluted share) during the opening frame of 2024, up from $163.1 million ($2.28 per diluted share) a year prior.

Net revenues across the company rose 10.8% year over year to $3.84 billion, which was about $70 million above Seeking Alpha’s estimate.

"It was a successful quarter, both in terms of the third-party expectations as well as our own," Chief Financial Officer Steve Filton told investors Thursday.

Across its 27 acute care hospitals and other related locations, UHS’ earnings release outlined same-facility year-over-year increases across adjusted admissions (4.5%) and adjusted patient days (3.4%).

The uptick in visits brought substantially more funds, with UHS reporting same-facility net revenues rising by 9.6%, net revenue per adjusted admission growing by 4.6% and net revenue per adjusted patient day increasing by 5.8%.

Within its 333 inpatient behavioral health facilities and other portions of its behavioral business, UHS saw same-facility adjusted admissions dip by 0.8% while adjusted patient days rose by 2%.

Still, same-facility net revenues were 10.4% higher than last year’s first quarter as net revenue per adjusted admission jumped by 11.2% and net revenue per adjusted patient day rose 8.2%.

"Both of our business segments have experienced a significant increase in Medicaid supplemental payments, which are helping to compensate for several years of inadequate reimbursement levels that [have] failed to keep up with the costs we had to incur to properly care for our patients," CEO Marc Miller told investors Thursday. "Overall, we're pleased with the first quarter results." 

The quarter's year-over-year increases in operating expenses were "primarily driven by physician expense," which Filton said was "like 12% or 13% in the first quarter. The company still expects to rise about 5% or 6% for the year with a flatter tail across sequential quarters, he said.

Net cash provided by operating activities rose $106 million year over year to $396 million in the first quarter. UHS also noted that it has repurchased 700,000 of its shares for about $125.1 million and warned that a to-be-finalized nine-figure jury award against one of its subsidiaries could have a material effect on the broader company.

The company is coming off a $717.8 million net profit across all of 2023, when its net revenues grew 6.6% over the prior year. It employs roughly 96,700 people and reaches 39 states, Washington, D.C., Puerto Rico and the U.K.