Universal Health Services (UHS) investor relations material

Policy and regulatory impacts

• Medicaid work requirements are difficult to quantify, with potential impacts starting in 2027 and some states possibly implementing earlier; acute care is more exposed than behavioral, but overall impact is uncertain.

• Supplemental payment cuts are projected at $360–$400 million by 2032, beginning in 2028 and ramping up incrementally over 10 years; Congress may modify or mitigate these cuts in the future.

• The DC Directed Payment Program was approved, expected to provide an $85–$90 million net benefit effective October 2024, likely recognized in Q3 earnings.

• State-level provider rate reductions are being discussed, but states are taking a wait-and-see approach and may seek alternative ways to support hospitals.

• Proposition 35 in California could provide incremental funding for behavioral hospitals, but timing and magnitude remain uncertain, with no material impact expected before 2026.

Strategic responses and operational planning

• Cost-cutting and revenue-shifting initiatives are being planned to offset supplemental payment cuts, drawing on agility demonstrated during the COVID-19 response.

• Behavioral segment has more flexibility to manage patient mix and focus on less Medicaid-centric programs if profitability declines.

• Industry and state hospital associations are in ongoing discussions with states about relief measures, but no specific commitments have been made.

• The company is prepared to adjust strategies as policy changes unfold, with most major impacts not expected for at least one to three years.

Volume trends and growth outlook

• Acute care is achieving sustainable mid-single-digit revenue growth (5–7%), with about 3% adjusted admission growth, which is expected to continue.

• Behavioral patient day growth has been slower than anticipated but is improving; the goal is to exit the year near the 2.5–3% target.

• Labor scarcity, especially for nurses and mental health technicians, continues to constrain behavioral volumes, though incremental improvements are being made.

• Outpatient behavioral demand is growing, and expanding presence in this segment is a future focus to capture more market share.