With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

Fortune Sector Leaders: Health Care

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-270-Universal Health Service

The company provides hospital and health care services in the United States, United Kingdom, and Puerto Rico, operating more than 400 acute care hospitals and other facilities.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-281-Universal-Health-Services

The medical management company operates 400 clinics and other health care facilities across the U.S. and U.K.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Universal Health Services is one of the largest providers of hospitals and health care services in the U.S. Since its founding in 1979, the health care giant operates more than 400 acute-care hospitals, behavioral health facilities, emergency departments, and ambulatory surgery centers across the U.S. and the United Kingdom. Universal Health Services also offers an insurance plan, the Prominence Health Plan, including Medicare Advantage plans for members in Florida, Nevada, and Texas. The company served over 3.5 million patients in 2024, operating with nearly 100,000 employees globally. In 2024, the company was ranked by Fortune as one of the World’s Most Admired Companies.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Q3 2024

Universal Health Services (UHS): Company Profile, Stock Price, News, Rankings

legacy

Universal Health Services

universal health services

Good day, and thank you for standing by. Welcome to the Q2 twenty twenty five Universal Health Services Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steve Fulton, Executive Vice President and CFO. Please begin.

Thank you, and good morning. Mark Miller is also joining us this morning. We both welcome you to this review of Universal Health Services results for the second quarter ended 06/30/2025. During the conference call, we'll be using words such as believes, expects, anticipates, estimates and similar words that represent forecasts, projections and forward looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward looking statements, I recommend a careful reading of the section on risk factors and forward looking statements and risk factors in our Form 10 ks for the year ended 12/31/2024, and our Form 10 Q for the quarter ended 03/31/2025.

We'd like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company reported net income attributable to UHS per diluted share of $5.43 for the 2025. After adjusting for the impact of the items reflected on the supplemental schedule included with the press release, our adjusted net income attributable to UHS per diluted share was $5.35 for the quarter ended 06/30/2025. During the 2025, on a same facility basis, adjusted admissions to our acute care hospitals increased 2% over the second quarter of the prior year and surgical volumes were down slightly. Still, same facility net revenues in our acute care hospital segment increased by 5.7% during the 2025 as compared to last year's second quarter after excluding the impact of our insurance subsidiary.

We note that West Henderson Hospital, which opened in late twenty twenty four, has had a certain cannibalization impact on the division's same facility volumes and revenues. Meanwhile, operating expenses continued to be well managed. Other operating expenses on the same facility basis increased 3.1 over last year's second quarter, again, after excluding the impact of our insurance subsidiary. For the 2025, our solid acute care revenues combined with effective expense controls resulted in a 10% increase in same facility EBITDA. During the 2025, excluding the impact of the Tennessee Medicaid directed payment program, same facility net revenues at our behavioral health hospitals increased by 5.4%, driven by a 4.2% increase in revenue per adjusted day.

Adjusted patient days were up 1.2% compared to the prior year's second quarter. Our cash generated from operating activities decreased by $167,000,000 to $9.00 $9,000,000 during the 2025 as compared to $1,076,000,000 during the same period in 2024. We expect to collect the $58,000,000 of Tennessee Direct Payment Program receivables in the third quarter. The new hospitals in Las Vegas and the District Of Columbia contributed $35,000,000 to the receivable increase. In the 2025, we spent $5.00 $5,000,000 on capital expenditures, 25% of which related to the two newreplacement facilities in California and Florida, both set to open in the 2026.

During the 2025, we also acquired one point nine million of our own shares at a total cost of approximately $332,000,000 Since 2019, we have repurchased approximately 34% of the company's outstanding shares. As of 06/30/2025, we had approximately $1,000,000,000 of aggregate available borrowing capacity pursuant to our $1,300,000,000 revolving credit facility. The recently enacted One Beautiful Bill Act includes several significant changes in the Medicaid program, including changes to state directed payment programs and provider taxes. Beginning with the twenty twenty eight state fiscal years and primarily phased in over a five year period through 02/1932, these program changes will limit both the level of payment and the amount of provider tax assessment that states are permitted to utilize to finance the non federal share of their respective Medicaid supplemental payments. The legislation provides for different limits depending on whether states have previously expanded their Medicaid eligible population as permitted under the Affordable Care Act.

We cannot predict, among other things, that this legislation will ultimately be implemented as enacted or if certain states may attempt to implement countermeasures to mitigate its impact. Our current projected twenty twenty five full year net benefit from previously approved state Medicaid supplemental programs is approximately $1,200,000,000 At this time, assuming no changes to our Medicaid revenues or other changes to related state or federal programs, we estimate that commencing with the twenty twenty eight state fiscal years, our aggregate net benefit will be reduced on an annually increasing and relatively pro rata basis by approximately $360,000,000 to $400,000,000 in 02/1932. Given the various uncertainties, including the evolving state by state interpretations and computations related to the legislation, our forecasted estimates are subject to change potentially by material amounts. Our future operating results potentially starting in 2026 may also be impacted by other factors which are more difficult to predict, such as the impact of Medicaid work requirements, which may decrease Medicaid enrollment and factors that could unfavorably impact insurance exchange enrollment such as the scheduled expiration of insurance exchange subsidies. I'll now turn the call over to Mark Miller, President and CEO, for closing comments.

Thanks, Steve. So based primarily on the increased DPP reimbursement, we are increasing our midpoint of our 2025 EPS guidance by 7% to $20.5 per diluted share, up from $19.2 per diluted share previously. Medicaid supplemental programs in Washington DC and other potential programs that are not yet fully approved are not included in our revised guidance. We remain pleased with the performance of West Henderson Hospital, which produced a positive EBITDA in the second quarter. At the same time, we acknowledge the significant drag created by the recently opened Cedar Hill Regional Medical Center in Washington, D.

C. Timing of hospital certification and other startup issues proved a bit more challenging than we anticipated, but demand, especially for emergency services, has been very encouraging. Although recovery to expected results will continue into the back half of this year, we remain confident in the positive long term prospects for the facility that prompted our development partnership with the District of Columbia. De novo growth continues in our behavioral segment. We recently opened a 96 bed behavioral hospital in Grand Rapids, Michigan, which is a joint venture with Trinity Health Michigan, and a 41 bed substance use disorder and dual diagnosis treatment center in Mount Pleasant, South Carolina.

In addition, we are developing a 144 bed behavioral health hospital in Bethlehem, Pennsylvania, which is a joint venture with the Lehigh Valley Health Network and is expected to open later this year, as well as a 120 bed behavioral health hospital in Independence, Missouri, which is expected to open in late twenty twenty six. In addition, we are also continuing to grow our Signet Behavioral Health Network in The UK, which has added six new facilities and 137 beds so far this year. At this time, we're pleased to answer your questions.

And our first question will be coming from Pito Chickering of Deutsche Bank. Your line is open.

Hey, good morning guys and thanks for taking my questions. Just want to circle back on, I think you said $360,000,000 to $400,000,000 of net impact in 2032 with a current law in place. I just want make sure that those numbers make sense and if you're sort of talking about sort of losing sort of $380,000,000 sort of EBITDA over that time period, just curious what your views are to offset that with core ops and how you view that impacting your sort of core growth rate with those headwinds?

Yes. So, Pito, obviously, those reductions don't begin, as we know, materially until 2028. So, we certainly have time to think about strategically how we might alter our business approach, particularly in the behavioral business where we can alter the structure of our programs, not necessarily cater to as many Medicaid centric programs, etcetera. Additionally, obviously, there could be, as we noted in the remarks, new DPP programs approved during that time. Finally well, maybe not finally, but I think it's also possible, as we noted in our remarks, that some of the changes are not ultimately implemented.

We believe or some have speculated that Congress particularly extended these cuts for a period of time to give it some room to come back and tweak if they had to. But if the cuts remain in place and are enacted as the bill lays out, we certainly feel like there are things that we can do both from, again, shifting revenues sort of sources of revenues, particularly in the behavioral division, cost cutting initiatives, etcetera. And I'll remind that I know some of our peers have made the same point five years ago when the pandemic hit and did so with very little notice. We specifically and we as an industry pivoted fairly quickly and fairly dramatically in terms of headcount reductions, capital spending reductions, etcetera, and a whole host of initiatives to react to what at the time was an extremely dramatic and largely unexpected reduction in revenues. So again, I think we have great confidence in our ability to shift and be flexible, especially with several years of notice and preparation that we'll have this time around.

Me just add on. Me, Peter, let me add on to this as well. So Steve laid out in his prepared remarks, you know, the worst case scenario, and which we obviously, you know, want to be transparent, and that's what the numbers are today. I don't expect that that's what will happen in a number of ways. So Steve mentioned a couple of things that we'll pivot, and we'll make moves that are necessary.

In talking with all of the folks down in DC, representatives from many of the states that we cover, they are starting to recognize, even right now, what they passed simply can't be left as is because the effect on some of the health care programs in their states, and not just in a place like UHS, but these not for profit hospitals in their states could be detrimental. So they're already talking about what needs to be done to make sure that programs aren't closing, shifts aren't taken, things like that. So I fully expect that this is a floor that is a well, it is what it is today, but I expect this will get better. We anticipate that there will be changes made because we think they have to be. So while I think this is a worst case scenario, again, I'll point out, he mentioned 2028, Steve did, and 02/1932.

We're going to do a lot to make sure that we don't hit these numbers that we just talked about. So I just wanted to give a little context and perspective to that.

Great. Thanks so much. Then sort of a follow-up here looking at the behavioral. Can you sort of talk about the split between the hospital patient days and behavioral versus outpatient? Sort of what you saw this quarter, what you assumed the back half of the year and kind of how you're going to be improving the outpatient side of behavioral? Thanks so much.

Yes. So in the table towards the back of the press release, we disclosed year over year growth in ADC. And then, of course, in the body of the press release, we disclosed adjusted patient days. Adjusted patient days have grown faster in the second quarter than unadjusted patient days, indicating that outpatient is growing faster than inpatient, which was not the case in Q1. We talked about that at some length in the first quarter.

We talked about our focus on outpatient growth. And I think as we think about getting closer to the 2.5% to 3% adjusted patient day target that we've been talking about for some time, I think we believe that growth in outpatient is a significant opportunity for us. A number of the insurance companies, as they've been talking about their increase in medical loss ratios, have pointed to the increase in spending on behavioral care. And while they don't provide this level of detail, we believe that a significant chunk of that increase is in outpatient. And we are determined to get a larger share of that, I'll call it, outpatient pie as we go forward.

So focus on outpatient, and we've talked about this, I think, our last couple of conference calls, is a significant focus of ours, made some progress in Q2 and anticipate making further progress in the back half of the year and, quite frankly, years to come

Our next question will be coming from Andrew Moff of Barclays. Your line is open, Andrew.

Hi, good morning. Question on Cedar Hill. You called out $25,000,000 of start up losses in the quarter. Can you update us on the latest accreditation status of that hospital? What's baked into guidance for the back half of the year? And how are you thinking about profitability now?

So again, I think our mistake when it comes to Cedar Hill was we were too optimistic about how quickly we'd obtain Medicare certification. And just as a little bit of background for people who may not fully understand, until a hospital gets what's called deemed status or Medicare certification, they're not able to bill for or collect from Medicare. And a number of commercial payers generally follow that. And honestly and usually Medicaid follows that. In the case of Cedar Hill specifically, we've already gotten the District of Columbia to agree, to pay us back to when they deemed us to be ready for the Joint Commission survey, which results in Medicare certification.

So we have been getting paid for Medicare for Medicaid, rather. Awaiting the Joint Commission survey, we believe it is imminent, could occur this week, could and we hopefully occur next week. Once we get that certification, then that becomes the effective date that we're able to bill. It will take us obviously some time to get the bills out and collect, but that becomes the effective date. The delicate balance that a facility goes through sort of in these early times is, we're not necessarily trying to promote all the surgical, elective, procedural business that we might otherwise because we're not necessarily getting paid for it.

So most of the activity at the facility right now is emergency room activity, which, as I think Mark noted in his comments, has been quite busy and encouraging that there is great demand for the hospital in this location. But once we get our certification, we'll begin to build up more surgical and procedural volume and round out services that are being offered by the hospital. So we have a $25,000,000 loss or EBITDA drag in Q2. Embedded in our guidance in the back half of the year is another $25,000,000 drag for the back half of the year. So some improvement, but recognizing that there will be a ramp up once we get our certification.

And then I think the general sense is that by the time we get to 2026, the facility will be back on a course of ramping up to kind of divisional wide profitability after twelve or eighteen months of additional operations.

Great. And maybe just a quick follow-up on that. Like outside of the discrete items related to state directed payments in Cedar Hill, the EBITDA guidance looks largely unchanged. One, do I have that right? And two, what are the offsetting positives allowing you to keep the underlying EBITDA intact despite the soft behavioral quarter? Thanks.

Yes. So I think if you go through the math, there's roughly $185,000,000 of new DPP revenues in that $1,200,000,000 that I alluded to earlier from our last disclosure last quarter. Offsetting that is roughly $50,000,000 in the Cedar Hill drag, the 25,000,000 in the second quarter and the 25,000,000 in the back half of the year. And then a bit more of a drag in terms of scaling back our behavioral projections for the back half of the year, largely because we are falling short of that volume target that was originally embedded in our guidance. I mean that's those are basically the significant pieces of the guidance revision.

And one moment for our next question. Our next question will be coming from Jason Kasolra of Guggenheim. Your line is open.

Thanks. Good morning. Maybe just to piggyback on the outpatient behavioral commentary. I mean, you were talking about getting a bigger share of the outpatient pie. I guess, how would you see that unfolding?

Is this more de novo build out? You've got less than 2x leverage ratio currently. You've talked about a number of de novo bills and JVs in your prepared remarks. I guess I'm just hoping you can give us any color on a pathway to grabbing more outpatient share. Thanks.

Yes. We've talked about this, I think, in some detail in the last couple of calls, happy to sort of revisit the issue. Generally, we generate outpatient revenues in behavioral in two very broad ways. One is step down business. We refer to it as step down business.

These are patients who are inpatients in our facilities, but when they are discharged, they require further less intense care and will go into programs that we either describe as intensive outpatient or partial hospitalization. Often, those programs are offered by us on our campus, etcetera. And as you might expect, we control or are able to refer many of those patients to our own programs. Although many of them also leave and go elsewhere, and we're focused on keeping as many of those patients in our programs, both because we think clinically that's most effective for them. There's a lot of continuity with our medical professionals, etcetera.

So that's something that we can do immediately and just do a better job of controlling that patient flow. But the other aspect of outpatient revenue and behavioral is what we described as step in business. These are patients who enter the behavioral system in an outpatient program. Very often, it's a freestanding outpatient program, located on the campus of an acute behavioral hospital. We have found that there is a large number of patients who are often not comfortable with their first sort of experience in behavioral care being on the campus of an acute behavioral hospital.

And so we are establishing a larger footprint in freestanding behavioral hospitals that are located generally not on the campuses of our existing hospitals. Those hospitals, the capital investment in those outpatient facilities is not great. They're generally leased facilities in a storefront or that sort of setting. Maybe there's $1,000,000 of capital on average in each of those. The bigger issue is just really staffing them with the therapists and creating a flow of patients.

So we intend to open ten fifteen of those new outpatient facilities a year over the next several years and increase our presence both in the step in business and do a better job in the step down business.

Okay. Got it. Helpful. And maybe just as a follow-up. For the acute care business, can you talk about volume growth trends across payer cohorts in the quarter?

What type of volume growth you saw against for commercial, Medicare, Medicaid, exchange? And if payer mix was a benefit in the quarter, could would you expect that where your payer mix kind of came in this quarter, would you expect that to persist at least through the remainder of this year? Or are there puts and takes there? Just any color would be helpful. Thanks.

Yes. What I would first say is that we said in our or I said in our prepared remarks that acute care revenue exclusive of our insurance subsidiary grew by 5.7% year over year in the second quarter. That's pretty much spot on with what our guidance presumed. We talked about 5%, 6%, 7% Q2 revenue growth of 6% at the midpoint. We're kind of running right there.

I think without the cannibalization of our same facility revenues that we're getting from West Henderson, we'd be right there, maybe in the low 6s. So we're, I think, kind of right where we thought. In the second quarter, I think we were skewed a little bit more to pricing than to volume, but generally spot on. To your point, I think the pricing benefit in Q2 was a bit payer mix driven. As I think a number of our peers have commented as well, we saw a little bit less Medicaid volume and a little bit more commercial exchange volume in particular, and I think that drove somewhat more favorable pricing.

But again, I'll make the point that we probably were a little less bullish about how some of the we considered sort of extraordinary acute care revenue growth numbers that we and others have been putting up over the last several years would start to moderate. I think that's been true in the first half of this year. And so in our minds, the acute business is sort of growing very much in line with our expectations.

Thank you. And our next question will be coming from Benjamin Rossi of JPMorgan. Your line is open.

Hey, good morning. Thanks for taking the question here. So behavioral pricing continued to outperform during the quarter and growing just under 7% for the first half of the year versus your original growth range that you previously outlined in the 4% to 5% range. Is there any way to frame the breakdown here between rates, acuity and contributions from incremental supplemental payments? And then what does your back half guidance contemplate regarding growth as you progress towards your now revised goals on the volume side?

So in our prepared remarks, I said that excluding the Tennessee impact and we exclude Tennessee because I think that's an incremental benefit in the quarter. We don't exclude the other $43,000,000 of DBP in the quarter because if you go back to the second quarter of last year, there was a $35,000,000 unexpected benefit in the states of Washington and Idaho. And so those two, in our minds, offset. But excluding the Tennessee Directed Payment, we said that revenues increased by 5.4%, and that's basically broken down between a 4.2% increase in pricing and a 1.2% increase in adjusted patient days. As you know, I mean, we said in our guidance that pricing we assumed would be in that 4% to 5% range.

We've generally been outpacing that. The second quarter moderated a little bit, but I would say that 4% to 5% is what we believe the sustainable pricing growth in behavioral is, at least for the intermediate term. And the 1.2% volume growth is what we think or where we think is the opportunity to improve, particularly again on the outpatient side of things.

Great. Appreciate the color. And just as a follow-up, taking a look at your average length of stay in acute, seeing that down both annually and on a sequential basis, could you just walk us through some of the drivers of that deceleration and maybe where you see room to bring that down further? And are you seeing any variation in length of stay trends across your payer classes between Medicaid, Medicare and commercial, particularly among your exchange populations?

Yeah, I mean, of stay peaked during the pandemic when it was driven much higher by the high acuity of COVID patients in particular, and it's been coming down steadily since then. I think we believe that there still is some room for length of stay to be further reduced. I think probably the biggest challenge we have in reducing length of stay further is placement of patients into subacute facilities that could be skilled nursing facilities, nursing homes, home health programs. Often there is a sort of a scarcity or a lack of availability in those programs. I don't know that it really varies by payer.

I think sometimes it's an obstacle for us because the payers don't have all of the subacute providers in a geography in their networks, that can be challenging. But yes, I I think we continue to believe that length of stay has some room I'm not going to say material amount but some incremental room to improve from where it currently is.

And our next question will be coming from Craig Hettenbach of Morgan Stanley. Your line is open, Craig.

Yes, thank you. Just following up on behavioral, and I know there's been back and forth with the payers on price and access. I'm just curious on just a longer term basis, do you think some of that normalizes in terms of the contribution between volume and price? Or how are you thinking about that?

Yes. So I think what we've consistently said, is that the way we think about the long term model of the behavioral business is that 6%, 78%, I'll call it 7% at the midpoint is the reasonably expected revenue growth rate. And that would be made up of 4% to 5% price and 2.5%, 3% volume. We've generally been hitting those price targets and frankly, in most periods exceeding the price targets. It's the volume that has been the bugaboo for us.

We've improved, as I said, from the first quarter and expect improvement in the back half of the year. But again, I'll call it that 6.5%, 7% revenue growth skewed a little bit more to pricing than to volume as sort of being the model that we're expecting in the behavioral business for, I'll call it, the intermediate future.

Got it. And appreciate all the color and detail on the one big beautiful bill in terms of impact. When I think about potential offsets, how are you thinking about just kind of leveraging technology and AI kind of where are things today and how could that kind of ramp as a potential offset in the coming years?

Sure. I mean, obviously, it is always our goal to be as efficient and productive as possible and to the degree that technology, whether that's AI or other kinds of technology, help us do that, we're certainly open to that. The AI discussion, I think, could be a whole separate discussion in a separate call, but I'll just briefly say that we're experimenting with uses of AI and things like revenue cycle, where certain tasks like denial management and denial appeals, etcetera. We know that the payers for some time have been using AI to generate things like denials and patient status changes, etcetera. And I think we're developing sort of countermeasures to that using AI more productively, etcetera, than I think humans can actually do that.

From a clinical perspective, one of the early experiments we've done is using AI to follow-up with patients on their post discharge instructions. So an AI generated entity will call a patient and make sure that they've followed up with the appropriate doctor appointments and they filled their prescriptions and they're following their diet, whatever the post discharge instructions are. And we have found in the early stages that that's very been very well received and efficient. Again, it frees up a clinical person, generally a nurse, would otherwise be making that call. So yes, I mean, I think that AI and technology tools in general are certainly one way that we envision becoming more productive over the next several years.

And one moment for our next question. Our next question will be coming from AJ Rice of UBS. Your line is open, AJ.

Thanks. Hi, everybody. Maybe a couple questions. First on, obviously, the managed care space has been quite disrupted the last few years and culminating this year. Just wondering if you see that impacting discussions with the MCOs at all on either Medicare Advantage, commercial, whatever.

And I'd ask that both from the behavioral perspective and the commercial perspective, you know, where are you at? Is rate updates consistent terms that you're seeing being asked for, the percent of business getting done for this year, next year and the following year?

AJ, I mean, I think our experience has been and I think it's been alluded to in some previous questions. On the behavioral side, we've gotten pretty strong managed care increases over the last seven years, largely, I think, because the payers are struggling with access to behavioral facilities. I think there's a scarcity, particularly of inpatient behavioral beds, that payers are challenged by. Where I think we probably feel the impact of the managed care industry's challenges the most is in sort of the day to day revenue cycle interactions we have with payers. We can I don't know that we've seen an enormous increase in the level of denials or patient status changes?

But if you talk to anybody who works in our revenue cycle and either behavioral or acute, they'll just describe to you what is sort of a daily slog of having to counter aggressive behavior on the part of payers all the time and denials and denial appeals and appeals of patient status changes, that sort of thing. We've invested, I think, a lot. We've had some pretty significant third party consulting reviews of our revenue cycle practices to allow us to improve people, process, technology, so that we're trying to be able to counter the payers in sort of the aggressive behavior we have found in those areas. I don't know that it's incrementally more materially different than it has been, but it's certainly been this way for some time now.

Okay. Maybe just also ask you about labor. Any updated thoughts on both lines of business with respect to things like wage rates, use of contract labor turnover, etcetera? And I know particularly with behavioral, your biggest challenge you talk about in trying to get back to your or get to your growth targets there has seemed to be getting the staffing. Any update or thought on that?

Yeah. So I I mean, I think from a labor or wage inflation perspective, obviously, wage inflation has decelerated significantly from its peaks during the pandemic. Maybe decelerating is not the right choice of words, but it's accelerating at a much lower rate than it had been during the height of the pandemic. I think we find that in both of our segments. I think we find the use of temporary traveling nurses to be lower again in both segments.

But you are correct that we continue in the behavioral business in certain geographies, in certain markets to be hampered or for at least our volumes to be hampered by our inability to hire all the staff that we need. And it's not it's often nurses, but sometimes that could be therapists. Therapists, I mentioned earlier, could be or hiring a therapist could be an obstacle to building out outpatient. But it also can even be the nonprofessional people, the people we call mental health technicians. So we've done a great deal in the last several years to improve our recruiting, but also and I think almost probably more importantly, the recruit recruit our retention to make sure that when we hire people, they feel properly trained, we feel that they're properly trained to maximize the safety and quality of care to our patients, but also for them to feel comfortable in delivering that care and so that they're wanting to stay at the facility for longer periods of time, etcetera, and result in longer tenured employees.

So we continue to invest in that. And it remains a challenge. It's still a tight labor market. And again, I do think while it is not the pervasive issue that it was at the height of the pandemic, is staffing, you know, scarcity. It continues to be an issue in some markets in some geographies.

Okay. Maybe just if I can squeeze one more in there. On your DPP comments, you had I know a lot of states or or there are some states scrambling to still get credit under the big beautiful bill before the window shuts, and Washington DC was a big one for you that was still pending. Any update there? And then, with respect to your long term impact of the, big beautiful bill, you said 380,000,000, exposure.

Any way to break that down between acute and behavioral exposure?

Yes. So the $3.80 is about or is at the midpoint of the range that we gave, which is $3.80 is about 60% behavioral and 40% acute. As far as your other question about other programs, the DC program has been pending approval for a number of months now. We don't necessarily have any inside information. We do get sort of periodic updates from the district itself where the district provides it to the hospital association and we get through them.

And they say they continue to have ongoing conversations with CMS, which I think is fairly typical, meaning CMS questions, they ask for data, they provide it, they sometimes reach out to us, the hospitals for help in providing that data. We provided data. The district continues to believe that the program that they've submitted meets the criteria of CMS in other programs that have been previously approved, and they continue to expect the program to be approved, although they don't really estimate a timeframe. There are other states that we understand have either submitted preprints or intend to. I think it's worth noting that the bill doesn't preclude new programs.

It just suggests that any new programs after the passage of the bill are subject to the caps in the bill, whether they're the provider tax caps or the reimbursement caps. But it's entirely possible that there are states who can still submit new programs even now that the bill hasn't been passed.

And our next question will be coming from Matthew Gillmer of KeyBanc. Your line is open, Matthew.

Hey, thanks. Steve, you made a comment about West Henderson cannibalizing some of the same store growth on the acute side. Are you able to quantify what that impact would be? Or just give us some sense for the drag on the same store?

Yes. Hard to do in an absolute precise way, Matthew. But I think the way we look at it is we look at the ZIP codes that West Henderson is getting patients from and sort of triangulate and say, these are the likely ZIP codes that prior to West Henderson opening would have gone to either Henderson Hospital or one of our other hospitals. We think that, that impact is maybe fifty, sixty basis points from an adjusted mission perspective and kind of a similar impact on revenues. So again, best guess, that's not a perfect or completely precise estimate, but that's our best guess.

And then following up on some of the expense management discussion, I wanted to see if there was anything to report with respect to professional fees and physician expenses. I think you had most recently said that you were expecting that to be up 5% and it was stable, but just curious. So, there's any progress there or sort of incremental pressures for certain specialties.

Yes. I mean, I think that as you described it, in our guidance, we assume that after fairly dramatic increases in those physician expenses in the last couple of years that our assumption in 2025 was that they would increase by roughly the overall inflation rate, 5% or 6%, something like that. And I think that's been the case. We continue to feel pressure from different physician groups around the country. I think a number of our peers have suggested that after the initial pressures over the last several years have come from ER doctors and anesthesiologists, more recently, we're seeing more radiologists asking for increased subsidies, something that, quite frankly, we hadn't seen in years.

We've seen that same dynamic, although we've been able to continue to operate within that sort of 5% growth dynamic. It has not really changed.

And our next question will be coming from Sarah James of Cantor Fitzgerald. Sarah, your line is open.

Thank you. You've talked a lot about the opportunity for growth in outpatient behavioral. Given what that implies for mix, is two point five percent to three percent adjusted admission for behavioral volume still the right long term target or the right target for 25 given year to date performance? And can you speak to how inpatient behavioral specifically has been doing year to date versus your expectations?

Yes. I mean, so I think the focus there is, obviously, what we're seeing, I think, in behavioral is payers trying to shift more patients from the inpatient setting to the outpatient setting. Obviously, that's a dynamic that we've certainly not new. We've seen it in the acute space for a decade or two already. It's not new to the behavioral space either, but I think there's more of an emphasis on it.

And to be fair, I think our business has been an inpatient centric business for most of its history. We have always had an outpatient presence, but I don't know that our focus has been as intense as it is currently, in part to take advantage of that shift. So I think that one of the reasons why it has been difficult for us to reach that 2.5% to 3% target that has been elusive, and we certainly acknowledge it's been elusive, is that there's been a shift to outpatient, and we've been not necessarily capturing what I would describe as our fair share of that outpatient business. Our focus has clearly changed. Like I said, we've seen sequential improvement from Q1 to Q2, both in overall adjusted patient days, but specifically in outpatient.

I think we believe we'll continue to see improvement over the balance of the year and do believe that over the long term, that 2.5% to 3% adjusted patient day growth target is a reasonable target for this business, that the demand is there. We just have to be able to service it in the right setting with the right staff, etcetera.

And our next question will be coming from Ryan Langston of TD Cowen. Your line is open, Ryan.

Great, thanks. Appreciate your commentary

Hospital, but maybe can you just more broadly give us an update how Nevada and the Las Vegas markets are doing in terms of volume trends, payer mix, any other data you're able to share?

Yes. I mean, think we've seen a little bit of slowdown in our Nevada volumes. There's been, I think, great deal written in recent months about the overall Nevada economy and Las Vegas economy slowing down a bit. We're seeing some impact from that.

But as I said, even if you exclude the cannibalization from West Henderson or just exclude West Henderson's ER volumes, like our overall ER volumes are up slightly, not by a great deal. Yes, I mean, Vegas' performance, while still very solid and while Wes Henderson's performance is extremely positive, we are seeing a little bit of pressure from some of the economic softness in the market.

Okay, great. And just one follow-up. Net leverage continues to come down even with the increases at least year over year in share repos and capital spending.

I guess, you remind us how we should think about capital deployment strategy and if we should maybe just expect this to continue to come down through the back half of the year?

Yes. So in our initial 2025 guidance, we guided to a share repurchase number in the 600 to $700,000,000 range. And that was really the free cash flow that we were anticipating in that original guidance. Obviously, the revised guidance presumes a higher level of free cash flow.

And I think it's reasonable to assume that, that incremental free cash flow will likely be dedicated to an elevated level of share repurchase. It's possible that as we evaluate what we think to be a pretty compelling share price at the moment, that we'll decide to be even more aggressive from a share repurchase perspective. But again, at a minimum, I think it's at least safe to assume that as our free cash flow increases, that incremental amount will be dedicated to additional share repurchase.

Universal Health Services (UHS) Q2 2025 Earnings Call Transcript

Company Participants