Universal Health Services Q1 2025: Unpacking Contradictions in Volume Growth, Medicaid Impact, and Labor Costs

Behavioral volume growth expectations, impact of Medicaid redeterminations, managed care relationship and payer behavior, impact of flu season on acuity and margins, and labor cost trends are the key contradictions discussed in Universal Health Services' latest 2025Q1 earnings call.



Financial Performance and Adjusted Earnings:
- Universal Health Services, Inc. reported net income attributable to UHS per diluted share of $4.80 for Q1 2025, with adjusted net income of $4.84 per diluted share.
- The solid performance was driven by effective expense controls and strong acute care revenues.

Behavioral Health Segment Trends:
- Same-facility net revenues at Universal Health Services' behavioral health hospitals increased by 5.5% in Q1 2025.
- The increase was driven by a 5.8% increase in revenue per adjusted day, despite flat adjusted patient days.
- Weather conditions and the extra leap day in 2024 impacted patient day growth, but a reacceleration in patient day growth was observed in March.

Capital Expenditures and Share Repurchase:
- The company spent $239 million on capital expenditures and acquired 1 million of its own shares at a cost of approximately $181 million.
- Since January 2019, approximately 30.3 million shares have been repurchased, representing 33% of shares outstanding.
- The share repurchase strategy is an active part of the company's capital deployment, driven by market conditions and share price softness.

Supply Chain and Operating Expenses:
- Operating expenses on a same facility basis increased by 2.6% over last year's first quarter, excluding the impact of the insurance subsidiary.
- Effective management of supply chain costs and active expense controls, including better contractual pricing and product replacements, contributed to improved supply leverage.