Universal Health (UHS) Q2 Earnings Beat, Revenues Down Y/Y

Universal Health Services, Inc. UHS reported second-quarter 2020 adjusted earnings of $2.93 per share, which outpaced the Zacks Consensus Estimate by 463.5%. The bottom line also improved 6.2% year over year.

Lower costs and net revenue recognition of around $218 million related with various governmental stimulus programs benefited the results.

Quarterly Operational Update

Net revenues declined 4.4% year over year to $2.7 billion. The downside can primarily be attributable to significant reduction in patient volumes at the company’s acute care and behavioural health care facilities in April on account of the COVID-19 pandemic. Nevertheless, patient volumes have somewhat recovered in May and June due to easing of stay-at-home restrictions. Moreover, net revenues outpaced the Zacks Consensus Estimate by 12.4%.

Total operating expenses of $2.4 billion at the end of the second quarter declined 5.5% year over year, primarily due to lower salaries, wages and benefits, other operating expenses, and supplies expense.

Segment Update

Acute Care Hospitals

Adjusted admissions and adjusted patient days were down 24.8% and 18.1%, respectively, from the prior-year quarter. Net revenues (on a same facility basis) decreased 3.5% year over year, including government stimulus revenues of around $157 million.

Behavioral Hospitals

On same-facility basis, adjusted admissions and adjusted patient days were down 15.4% and 10.4%, respectively, on a year-over-year basis. Net revenues were down 3.8% during the quarter under review on same-facility basis, including government stimulus revenues of around $61 million.

Universal Health Services, Inc. Price, Consensus and EPS Surprise

Universal Health Services, Inc. Price, Consensus and EPS Surprise

Universal Health Services, Inc. price-consensus-eps-surprise-chart | Universal Health Services, Inc. Quote

Financial Update

As of Jun 30, 2020, the company had cash and cash equivalents of nearly $539.6 million, up 780.8% from the year-end 2019-level.

Total assets were $12.1 billion as of Jun 30, 2020, up 4.1% from the figure as of 2019 end.

The company’s long-term debt was $ 3.4 billion, down 11.5% from the figure as of Dec 31, 2019.

In the first half of 2020, net cash provided by operating activities totaled $1.5 billion, which soared 115.8% year over year. This can primarily be attributed to favourable change arising from the Medicare accelerated payments and deferred governmental stimulus grants, favorable change in accounts receivable and favorable change in accrued and deferred income taxes.

Zacks Rank

Universal Health currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the medical sector players that have reported second-quarter results so far, UnitedHealth Group Incorporated UNH and HCA Healthcare, Inc. HCA beat the Zacks Consensus Estimate for earnings, while that of Encompass Health Corporation EHC missed the same.

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