UHS Raises Revenue Guidance for 2025 Amid Strong Acute Care Performance

Universal Health Services (UHS) has increased its financial forecast for 2025 following a robust third-quarter performance, driven by strong demand in its acute care business and a newly approved Medicaid supplemental payment program. The for-profit healthcare operator now anticipates annual revenues between $17.3 billion and $17.4 billion, up from its previous projection of $17.1 billion to $17.3 billion.

Q3 Financial Highlights and Growth Drivers

UHS reported a 13.4% year-over-year increase in third-quarter revenues, reaching $4.5 billion. Net income for the quarter surged by 44% to $373 million compared to the same period last year. The company attributed this growth to several factors:

• A $90 million boost from Washington D.C.'s recently approved Medicaid supplemental payment program
• Strong acute care volumes, with same-facility adjusted admissions increasing by 2% year-over-year
• Behavioral health services showing modest growth, with same-facility adjusted admissions rising 0.5%

Marc Miller, President and CEO of UHS, highlighted the recent Medicare certification of the Cedar Hill Regional Medical Center in Washington, D.C., following a Joint Commission survey. This certification allows the facility to receive government funds, with UHS expecting to "break even or better" on the hospital by year-end.

Strategic Developments in Acute and Behavioral Health

Acute Care Expansion

UHS continues to expand its acute care portfolio, with plans to open the Alan B. Miller Medical Center in Palm Beach Gardens, Florida, in spring 2026. This addition will complement the company's existing network of 29 inpatient acute hospitals.

Behavioral Health Realignment

The company is addressing slower growth in its behavioral health division by realigning its portfolio to meet increasing demand for outpatient care. UHS CFO Steve Filton acknowledged that the current portfolio is heavily skewed towards inpatient services, with 345 inpatient facilities compared to only 100 outpatient access points.

To capture more "step-in" patients who prefer freestanding outpatient settings, UHS is opening 10 new clinics this year without inpatient hospital branding. The company aims to grow adjusted patient days in its behavioral health segment by 2% to 3% in 2026, a target that was initially set for 2025 but has been delayed due to slower-than-expected progress in addressing labor challenges.

Regulatory and Market Challenges

UHS executives addressed several headwinds during their earnings call:

• Upcoming changes to Medicaid state supplemental payment programs could result in a reduction of $420 million to $470 million in state-directed payments by 2032, due to caps included in the One Big Beautiful Bill Act.
• Potential expiration of enhanced COVID-era Affordable Care Act subsidies could lead to annual losses of $50 million to $100 million in Texas and Florida markets if Congress does not act to extend them.
• Ongoing labor challenges in the behavioral health division, including difficulties in recruitment and retention, continue to impact growth targets.

Despite these challenges, UHS expects to net $1.3 billion from state supplemental payment programs across 2025, underscoring the importance of these revenue sources for hospital operators.