Universal Health quarterly net up, beats Street

• On 5:10 pm EDT, Thursday October 29, 2009

CHICAGO (Reuters) - Hospital operator Universal Health Services Inc (NYSE:UHS - News) reported higher quarterly net earnings on Thursday as revenue rose slightly, operating margins improved while costs were cut.

Third-quarter net earnings were $51.07 million, or $1.03 per diluted share, in the third quarter, compared with $36.99 million, or 73 cents per diluted share, in the year-ago period.

Analysts had expected earnings of 88 cent per share, on average, according to Thomson Reuters I/B/E/S.

Revenue rose to $1.295 billion in the quarter from $1.244 billion a year ago.

The provision doubtful accounts, or bad debt, rose to $141.09 million in the quarter from $125 million in the year ago period.

In a telephone interview, Chief Financial Officer Steve Filton said he expects bad debt to continue to rise.

"It's difficult to predict, but my best guess is that, as long as there's unemployment, we'll see a gradual increase," Filton said.

But even in Las Vegas, Universal Health's biggest market, where economic weakness is pronounced, the company performed well, as it held the line on spending, he said.

Filton said he has noticed that capital spending among hospitals has started to thaw a bit, although he said he expects hospital CFOs to remain somewhat cautious.

(Reporting by Debra Sherman; editing by Andre Grenon)

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