Behavioral volumes and the fate of hundreds of millions in state-directed Medicaid payment gains were on analysts’ minds during Universal Health Services’ first-quarter earnings call.
The acute and behavioral health center operator reported late Monday $316.7 million in net income attributable to the company ($4.80 per diluted share; $4.84 per diluted share after adjustments), which was up from the $261.8 million ($3.82 per diluted share) of 2024’s first quarter. Net revenues rose 6.7% year over year to $4.1 billion.
However, same-facility adjusted admissions at the company’s behavioral healthcare facilities fell 1.6% while adjusted patient days rose just 0.3% compared to the prior year’s first quarter.
Executives attributed the shortcomings to 2024’s extra leap year day and “challenging winter weather conditions … in certain markets.” Specifically, the dips in volumes were seen across UHS’ outpatient program and adolescent behavioral care business, which are respectively impacted by travel difficulties and school closures, rather than inpatient behavioral volumes. The company’s heads also noted that the volumes had started to pick up somewhat during the tail end of the quarter and that they were still targeting a 2.5% to 3% rise in behavioral patient days for the year.
Analysts and investors on the company’s Tuesday morning earnings call seemed skeptical of the “pretty big implied step-up” that would be necessary to reach that full-year target. They wondered whether the uptick in March had continued into April and whether changes in broader demand or partners’ referral patterns were also at play.
UHS Chief Financial Officer Steve Filton broadly sought to assuage the concerns. Demand is still solid, referral behaviors are still intact and labor scarcity that capped earlier years’ potential for growth has largely improved, he said
“April is a little bit hard to say because, obviously we had Easter and spring break,” Filton said. “But it feels like recent volumes give us confidence that 2.5% to 3% should be achievable for the full year.”
The other major issues of the Q&A were tied to policy changes and their impacts on UHS’ revenues.
The company attributed a dip in cash generated from operating activities (from $396 million in the first quarter of 2024 to $360 million in the first quarter of 2025) in part due to “delays in receipt of funds in connection with certain Medicaid supplemental payments in various states,” and noted that $82 million received in April from Nevada’s supplemental program were related to first-quarter revenues (not inclusive of provider tax paid during the first quarter).
The new administration had put a pause on state-directed payments when it came into office, Filton explained, but UHS is “encouraged that after what seemed like a full pause in new approvals and reapprovals … a number of programs have been reapproved” while other new programs not affecting UHS have also been approved.
UHS receives funds through several state supplemental payment programs, most notably Texas. In 2024, the total supplemental Medicaid revenues totaled $1.55 billion, for an aggregate net benefit of $1.01 billion after subtracting UHS’ provider taxes (which in part support the state-directed payments).
In 2025, UHS has estimated that it would receive around the same amounts—$1.54 billion in total revenues and $997 million aggregate net benefit, according to annual financial filings. However, the initial delay in new approvals and broader movement in Washington, D.C., around reforming those payments had sparked concerns among investors.
The resumed approvals seem to suggest that the Centers for Medicare & Medicaid Services will be approving programs “in the normal course,” Filton said, and, while UHS is “still compiling” early data, the $997 million benefit “has not changed in any material way” so far.
However, he acknowledged that UHS is viewing federal legislation actions to limit the programs “separately.” Though estimating the exact impact of go-to reforms, such as lowering the provider tax cap from 6% to 5% is hard to estimate, Filton noted that some major markets for UHS like Texas and Florida are already below 6%, so “the impact would be limited in those states. But again, those calculations can be pretty complicated.”
On tariff mitigation, a mainstay of this quarter’s earnings call, Filton said about three-quarters of UHS’ supply chain purchases are currently insulated from tariffs.
However, he also noted that the company has started to see additional “fees, or stipends, or I’m not even sure how to describe them” on invoices from vendors with fixed contractual prices.
“We’ve been sort of ignoring those because we believe they’re not part of the contract,” he said. “We continue to monitor any vendors who would tell us that they’re considering cancellation of contracts or they’re finding availability of products problematic. We’re not really getting any of that feedback yet but certainly preparing if we do for … other sourcing alternatives, other pricing alternatives, etc. But, at the moment, it feels like there’s not a great deal of pressure.”
Within UHS’ acute care business, the company outlined a 2.4% increase in same-store adjusted admissions and a 0.3% rise in adjusted patient days compared to the prior year’s first quarter. On a same-facility basis, net revenue per adjusted income rose 2.5% and net revenue per adjusted patient day rose 4.7%.
Acute care net revenues rose 7.5% overall while same-store total net revenues from acute care services grew 6.5%. Total operating expenses fell from 90.5% of net revenues in the first quarter of 2024 to 89.2% of net revenues in the first quarter of 2025, with salaries, wages and benefits falling from 39.4% to 38.8%.
Within the behavioral care unit, total net revenue grew 5.5% while same-facility net revenues rose 5.5% year over year. Net revenue per adjusted admission rose 7.2%, and net revenue per adjusted patient day grew by 5.8% year over year. Total operating expenses as a percentage of net revenue fell slightly from 80.3% to 80%.
“We feel confident in our underlying businesses, and based on current reimbursement and operating cost levels, reiterate our full year earnings guidance,” CEO Marc Miller said during the call.
UHS’ shares dipped somewhat Tuesday morning but were roughly even with their opening price as of the afternoon.
UHS operates 29 inpatient acute care hospitals, 334 inpatient behavioral health facilities and 60 outpatient and ambulatory locations across 39 states. It reported $15.8 billion of net revenues across 2024 as well as $1.1 billion net income attributable to the company.