Universal Health shares fall following 3Q report

Universal Health Services shares fall following 3Q report showing revenue, bad debt boosts

• On 11:56 am EDT, Friday October 30, 2009

NEW YORK (AP) -- Shares of hospital operator Universal Health Services Inc. fell Friday, despite a mostly positive third-quarter profit report showing admissions growth and revenue increases.

But, both charity care costs and bad debt grew in at the company's acute care facilities. Bad debt refers to patients' bills that are unlikely to be repaid.

The stock fell $3.04, or 5 percent, to $57.68 in late morning trading. Shares have traded between $30.43 and $66.64 over the last 52 weeks.

On Thursday, the company said profit rose 38 percent to $51.1 million, or $1.03 per share, from $37 million, or 73 cents per share, a year ago. Revenue rose 4 percent, to just under $1.3 billion from $1.24 billion.

Analysts polled by Thomson Reuters expected profit of 88 cents per share on revenue of $1.28 billion.

Admissions at behavioral health hospitals grew 2.1 percent, and revenue per adjusted patient day increased 2.2 percent. At its acute care hospitals, adjusted admissions rose a half-percent while revenue per adjusted admission increased 2.6 percent.

Meanwhile, the company said its acute care hospitals saw a 10 percent boost in charity care costs to $169 million.

"The continued economic weakness continues to drive higher levels of uncompensated care and pressure certain markets in particular, but the overall balance in our acute portfolio and the very steady performance of our behavioral segment has contributed to another very satisfying performance this quarter," said CEO Alan B. Miller, in a statement.

The company, based in King of Prussia, Pa., boosted its full-year profit outlook. It now expects profit from continuing operations between $4.65 and $4.80, up from a prior range of $4.40 to $4.55.

Lazard Capital Markets analyst Thomas Gallucci upgraded the stock to "Hold" from "Sell," saying the company followed through on positive investor sentiment by reporting strong profit results.

While he said the company's bad debt was worse than he anticipated, Universal Health continues to drive better earnings than initially expected.

Buzz up!