雅虎香港財經 Universal Health Services (UHS) Up 12.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Universal Health Services (UHS). Shares have added about 12.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Universal Health Services due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Universal Health's Q4 Earnings Beat on Adjusted Admissions
Universal Health reported fourth-quarter 2023 adjusted earnings per share (EPS) of $3.13, which beat the Zacks Consensus Estimate by 3.6%. The bottom line climbed 3.6% year over year from the year-ago period.
Net revenues amounted to $3.7 billion in the quarter under review, which rose from $3.4 billion a year ago. The top line outpaced the consensus mark by 1.3%.
The strong quarterly results of UHS were supported by a growing patient base at its acute care and behavioral health care facilities, resulting in substantial contributions from these segments, and increased same-facility-adjusted patient days also contributed positively to the outcomes. Nevertheless, the upside was partly offset by rising expenses related to salaries, wages and benefits.
Quarterly Operational Update
Adjusted EBITDA net of NCI rose 0.4% year over year to $473.4 million in the fourth quarter and came higher than our estimate of $446.9 million.
Total operating costs of $3.4 billion increased 5.9% year over year and came in higher than our estimate of $3.3 billion. The figure rose due to higher salaries, wages and benefits, other operating expenses, supplies costs and lease and rental expenses.
Segmental Update
Acute Care Hospital Services
In the fourth quarter, adjusted admissions (adjusted for outpatient activity) advanced 5.6% year over year on a same-facility basis. Adjusted patient days rose 4.3% year over year. Net revenues stemming from Universal Health’s acute care services improved 9.7% year over year on a same-facility basis.
Behavioral Health Care Services
Adjusted admissions grew 1.4% year over year on a same-facility basis in the quarter under review. Meanwhile, adjusted patient days inched up 1.1% year over year, lower than our model estimate of 3.5%. On a same-facility basis, net revenues derived from the behavioral healthcare services of UHS increased 7.2% year over year.
Full-Year Update
In 2023, net revenues of $14.3 billion increased from $13.4 billion in 2022.
For the full-year 2023, the company reported adjusted EPS of $10.54, which increased from $9.88 in 2022.
Financial Update (as of Dec 31, 2023)
Universal Health exited the fourth quarter with cash and cash equivalents of $119.4 million, which increased from $102.8 million at 2022-end. As part of the $1.2 billion revolving credit facility of UHS, net of outstanding borrowings and letters of credit, there remains an aggregate available borrowing capacity of $701 million at the fourth-quarter end.
Total assets of $14 billion increased from the 2022-end figure of $13.5 billion.
Long-term debt amounted to $4.8 billion, which increased from the figure of $4.7 billion as of Dec 31, 2022. Current maturities of long-term debt totaled $126.7 million.
Total equity increased from the 2022-end level of $6 billion to $6.2 billion.
In 2023, UHS generated cash flows from operations of $1.3 billion, which increased from the prior-year quarter of $1 billion. The growth came on the back of favorable other working capital accounts.
Share Repurchase Update
Universal Health bought back shares worth roughly $157.3 million in the fourth quarter. It had a leftover repurchase capacity of around $423 million as of Dec 31, 2023.
2024 Guidance
Management expects net revenues between $15.411 billion and $15.706 billion for 2024. The midpoint of the outlook implies 8.9% growth from the 2023 reported figure.
Adjusted EBITDA, net of NCI, is estimated to be in the range of $1.931-$2.019 billion. The midpoint of the guidance suggests a 13.4% improvement from the 2023 figure. UHS projects adjusted EPS in the range of $13-$14. The midpoint of the forecast indicates a rise of 28.1% from the 2023 figure.
Depreciation and amortization are anticipated to be $605.2 million. Interest expenses are estimated at around $196.3 million. Capital expenditures are expected to be between $850 million and $1 billion for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 10.78% due to these changes.
VGM Scores
Currently, Universal Health Services has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Universal Health Services has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Universal Health Services is part of the Zacks Medical - Hospital industry. Over the past month, Community Health Systems (CYH), a stock from the same industry, has gained 24.1%. The company reported its results for the quarter ended December 2023 more than a month ago.
Community Health Systems reported revenues of $3.18 billion in the last reported quarter, representing a year-over-year change of +1.2%. EPS of -$0.41 for the same period compares with $1.50 a year ago.
For the current quarter, Community Health Systems is expected to post a loss of $0.19 per share, indicating a change of +55.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -8.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Community Health Systems. Also, the stock has a VGM Score of B.
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Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
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