- Price
- $185.10
- Fair value
- $212.00
- Discount
- 12.7%
- Uncertainty
- High
- LSEG rating
- 2.67
- Moat
- Narrow
- Next earnings
- 2026-10-27
- Next earnings is estimate
- No
- Company name
- Universal Health Services
- Sector
- Hospitals & behavioral health
- About
- Universal Health Services (UHS) owns and operates hospitals and other health care facilities. It has two segments, Acute Care Hospital Services and Behavioral Health Care Services. At June 30, 2026, it operated 30 inpatient acute care facilities, 346 inpatient behavioral health facilities and about 170 outpatient and other facilities in 40 states, Washington, D.C., Puerto Rico and the United Kingdom. Revenue was about $17.4 billion in 2025, and UHS has more than 102,000 employees. Medicare, Medicaid and state supplemental payment programs pay for a large part of its services. In August 2026, UHS bought Talkspace, a virtual behavioral health company with about 6,000 licensed professionals.
- Thesis
- The market prices UHS for the risk that government payments to hospitals will fall. The One Big Beautiful Bill Act of July 2025 adds work requirements to Medicaid and limits the provider fees that states use to fund supplemental payments. UHS receives Medicaid revenue of about $100 million or more each year from each of 15 states and Washington, D.C., and most of these programs are approved one year at a time. In Q2 2026, a $100 million benefit from the Florida Medicaid directed payment program helped results, but CMS has not approved the larger program for periods after September 30, 2025. UHS lowered its 2026 adjusted EPS guidance to $22.28 to $23.65 from $22.64 to $24.52. Regulators also ended the Medicare agreement of the Laurel Ridge behavioral facility in Texas and revoked the licenses of the Provo Canyon School campuses in Utah in 2026. For the gap to close, three things must be true. Volumes and revenue per admission must keep growing in both segments, as in Q2 2026, when same facility revenue rose 8.2% in acute care and 7.4% in behavioral health. Results must stay near the revised 2026 guidance without new large cuts to state payment programs. The Talkspace purchase must add to behavioral growth without large costs. The Q3 2026 report on October 27, 2026 gives the first test. The 2027 guidance in late February 2027 shows how management expects the payment changes to affect earnings. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a cut to Medicaid supplemental payments, which UHS cannot control.
- Risks
- Medicaid and state supplemental payment programs are a large part of revenue, and most programs are approved one year at a time. The One Big Beautiful Bill Act limits the provider fees that fund these payments and adds work requirements that can reduce Medicaid enrollment. Lower payments reduce earnings directly.
Regulators took action against behavioral facilities in 2026. CMS ended the Medicare and Medicaid agreement of Laurel Ridge Treatment Center in Texas, and Utah revoked the licenses of the Provo Canyon School campuses. More actions can cause lost revenue, legal costs and harm to the company's name.
UHS is self-insured for much of its professional and general liability. It increased this reserve by $28 million in Q2 2026. Large claims or jury awards can cause new charges.
UHS paid about $835 million for Talkspace with borrowed money. If virtual behavioral health grows more slowly than expected, the purchase adds debt without the expected growth.
- Balance sheet
- Cash: $139M
Debt: $4.9B
Net debt: $4.7B
Interest cover: 13×
Undrawn credit line: $1.3B, to September 2029
Debt due within 12 months: $772M
UHS funds its operations with senior secured notes, term loans and a $1.5 billion revolving credit facility. At June 30, 2026, total debt was $4.85 billion and cash was $139 million. Debt due in the next 12 months was $772 million, which included $700 million of 1.650% senior secured notes due September 1, 2026. The revolving credit facility had $1.272 billion available after $225 million of borrowings and letters of credit, and it matures on September 26, 2029. Interest cover is income from operations divided by interest expense for the first six months of 2026. After June 30, UHS borrowed $400 million under a delayed draw term loan and more under the revolving credit facility to buy Talkspace for about $835 million. On August 20, 2026, it issued $1.1 billion of senior secured notes due 2031 and 2036. Debt is therefore higher than at June 30.
As of 2026-06-30.
- Checkpoints
- Oct 27, 2026: Q3 2026 earnings: volumes and guidance. Pending. Watch: Same facility revenue growth in both segments and 2026 guidance kept within the revised range pass; a new guidance cut or new large payment cuts fail.
Feb 2027 (estimate): 2026 results and 2027 guidance. Pending. Watch: 2027 guidance for adjusted EPS growth despite the Medicaid changes passes; guidance for lower adjusted EPS fails.
- Recent events
- 2026-08-20: UHS completed the sale of $600 million of 5.500% senior secured notes due 2031 and $500 million of 6.000% senior secured notes due 2036.
2026-08-17: UHS completed the purchase of Talkspace for $5.25 per share, or about $835 million. It borrowed $400 million under a delayed draw term loan and more under its revolving credit facility to pay for it.
2026-07-27: UHS reported Q2 2026 results. Net revenues rose 8.3% to $4.638 billion, and net income was $358.4 million, or $5.98 per diluted share. The results included a $100 million benefit from the Florida Medicaid directed payment program and a $28 million increase in the reserve for liability claims. UHS lowered its 2026 adjusted EPS guidance to $22.28 to $23.65. It bought back 1.890 million shares for about $320.3 million in the quarter.
2026-07-21: UHS amended its credit agreement to add a $700 million delayed draw term loan with a maturity of 364 days. It can use the loan to repay its $700 million of 1.650% senior secured notes due September 1, 2026.
2026-07-17: The Utah Department of Health and Human Services revoked the license of the Provo campus of the Provo Canyon School, after it revoked the license of the Springville campus on July 6, 2026. UHS had to discharge the remaining patients by mid-August 2026, and it filed appeals.