Universal Health (UHS) Gains From Solid Segmental Performance
Universal Health Services, Inc. UHS remains well-poised for growth on the back of solid top-line growth, strong segmental contributions and sound financial position. A strong 2023 outlook reinforces the growth prospects of the stock.
Let’s delve deeper.
Earnings Surprise History
Universal Health boasts a solid earnings surprise record. Its earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 4.68%.
Solid 2023 Outlook
UHS boasts an impressive business outlook for 2023. Revenues are anticipated to be between $14,130 million and $14,330 million, the midpoint of which indicates an improvement of 6.2% from 2022 reported figure.
Adjusted EBITDA, net of NCI is estimated to be between $1,696 million and $1,756 million, the midpoint of which implies a rise of 3.9% from 2022 figure.
Adjusted earnings per share is projected to be in the range of $9.85-$10.50, the midpoint of which suggests 3% growth from the reported figure of 2022.
Sustained Top-Line Growth
Growing patient volumes, higher patient days and an expansive care network contribute to the revenue growth of Universal Health. The resumption of pent-up elective procedures are likely to boost patient volumes for healthcare facility operators in the days ahead.
Solid contributions from the Acute Care Hospital Services and Behavioral Health Care Services units of Universal Health provide an impetus to its top-line growth. The diversified treatment network of UHS comprised 358 inpatient facilities and 42 outpatient and other facilities stretched throughout 39 states, Washington, D.C., the U.K. and Puerto Rico as of Jun 30, 2023.
Expansion Initiatives
UHS focuses on an expansion strategy in the form of acquiring, constructing or leasing other hospital facilities. This, in turn, has empowered it to enter new markets and boost healthcare delivery capabilities. The healthcare services provider also resorts to the launching of services, advancement of existing ones and recruitment of able physicians.
Though such growth-related efforts result in significant investments and escalates costs for Universal Health, the same is expected to sustain its long-term growth.
Sound Financial Position
For pursuing uninterrupted growth initiatives, a sound financial position is necessary and that’s the exact case with Universal Health. It boasts sufficient cash reserves and solid cash-generating abilities. It has an aggregate leftover borrowing capacity of $946 million as part of the $1.2 billion revolving credit facility as of Jun 30, 2023. A strong financial stand also enables UHS to engage in the prudent deployment of capital.
Similar to Universal Health, other medical stocks such as Tenet Healthcare Corporation THC, HCA Healthcare, Inc. HCA and Encompass Health Corporation EHC pursue continuous expansion plans for bolstering their healthcare portfolios.
Tenet Healthcare resorts to acquisitions and partnerships in a bid to expand its scale of business, operating capacity and geographical presence. THC operated an expansive care network of 61 hospitals and other outpatient facilities of around 110 as of Jun 30, 2023.
HCA Healthcare is committed to undertaking acquisitions, which have led to the addition and expansion of facilities across several markets as well as boosted patient volumes. HCA operated 182 hospitals and roughly 2,300 ambulatory sites of care, across 20 states and the U.K. as of Jun 30, 2023.
Encompass Health follows an active expansion endeavor throughout the year in the form of disclosing plans to set up inpatient rehabilitation hospitals across different U.S. communities and inaugurating the same within a reasonable time period. These efforts have bolstered its medical service offerings, business scale and nationwide presence. As of Jun 30, 2023, EHC operated 158 hospitals across 37 states and Puerto Rico.
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Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
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