Universal Health Services (UHS) TD Cowen 46th Annual Health Care Conference summary

Financial performance and earnings trends

• Sequential EBITDA in acute care declined by $45 million in Q4, mainly due to non-recurring items and lower supplemental payments, but underlying performance was relatively flat after adjustments.

• Acute care volumes were higher sequentially, but softer than planned, impacting typical seasonal uplift.

• Unrealized gain from Hippocratic AI investment increased its value from $20 million to $110 million, recognized in Q4 P&L.

• Malpractice reserves increased by $45 million in 2025, with ongoing actuarial reviews and guidance for higher-than-inflation expense growth in 2026.

• Leverage ratio remains low (1.7–1.8), with ongoing active share repurchases and flexibility for M&A or capital deployment.

Volume and growth outlook

• Guidance for 2026 includes 2%-3% adjusted admissions growth in acute and behavioral segments.

• Behavioral segment FTEs grew over 4% in 2025, positioning for volume growth as staffing constraints ease.

• Outpatient behavioral volumes are expected to outpace inpatient, with investments in new facilities and incentives for outpatient growth.

• Acute care contract pricing is moderating to 3%-4% increases, after a period of higher post-COVID rates.

Regulatory and reimbursement environment

• Estimated $75 million impact from APTC expiration, with 25%-30% of exchange patients expected to lose coverage, mostly becoming uninsured.

• Florida state-directed payment program could provide $45–$50 million benefit if approved; California program faces significant CMS objections and uncertainty.

• California staffing regulations for behavioral hospitals postponed to June 1, with preparations underway and negative impact included in guidance.