Universal Health Services Q2 2025: Key Contradictions in Growth Expectations and Revenue Projections

Behavioral volume growth expectations, Nevada DPP payment clarification, impact of One Big Beautiful Bill Act on Medicaid Revenue, acute care revenue growth expectations, and behavioral pricing growth expectations are the key contradictions discussed in Universal Health Services' latest 2025Q2 earnings call.



Revenue and EPS Guidance:
- Universal Health Services reported a net income attributable to UHS per diluted share of $5.43 for Q2 2025, with adjusted net income of $5.35 per share.
- The company increased its midpoint of 2025 EPS guidance by 7% to $20.50 per diluted share, driven by increased DPP reimbursement.
- This is despite ongoing challenges like the performance issues with Cedar Hill Regional Medical Center.

Behavioral Health Segment Performance:
- Same-facility net revenues in the behavioral health segment increased by 5.4%, driven by a 4.2% increase in revenue per adjusted day and a 1.2% increase in adjusted patient days.
- Outpatient focus is emphasized as a key area for growth, contributing to the increase in revenues.
- Staffing constraints are acknowledged as a challenge, impacting operational efficiency.

Acute Care Revenue Growth:
- Adjusted admissions to acute care hospitals increased 2.0% over the prior year, and same-facility net revenues grew by 5.7%.
- The increase is attributed to effective expense controls and a focus on pricing, despite some cannibalization from West Henderson Hospital.
- Payer mix benefits, including a decline in Medicaid volume and an increase in Commercial and Exchange volume, contributed to favorable pricing dynamics.

Impact of Legislation on Medicaid Programs:
- New legislation limits state-directed payment programs and provider taxes, potentially reducing Universal Health Services' aggregate net benefit by $360 million to $400 million by 2032.
- The company anticipates strategic adjustments in the behavioral business, possibly involving a shift away from Medicaid-centric programs.
- The impact is projected to be felt from 2028 onwards, giving the company time to adjust its business model.