UHS Stock Forecast & Price Target

Universal Health Services Inc. reported a 21% year-over-year growth in adjusted EBITDA for its Acute Care Hospital Services segment, primarily due to robust topline growth and effective cost management, leading to a 150 basis point expansion in the same-store adjusted EBITDA margin to 15.7%. The Behavioral Health Services segment also saw positive performance, with same-store revenue growth of 5.5% and an increase in adjusted EBITDA margin by 40 basis points to 23.0%. Additionally, management expressed optimism regarding the approval of new programs in non-UHS states, which may further enhance revenue opportunities moving forward.

Universal Health Services faces significant challenges that contribute to a negative outlook, primarily due to anticipated volume and margin headwinds that could lead to earnings being approximately 5% lower than current estimates for FY25. The company has reported a decline in critical metrics, with adjusted admissions down 1.6% and adjusted patient days decreasing by 0.3%, indicating weakened demand in its behavioral health services segment. Furthermore, despite a modest revenue growth rate of 2.5% per adjusted admission, the enterprise multiple of around 6.0x reflects trough levels consistent with last year's performance, signaling persistent market concerns over the firm’s financial stability.