What Management Said
Read the full Q1 2026 transcript ↗In addition, we may reference during today's call measures such as EBITDA, adjusted EBITDA, adjusted EBITDA net of NCI, and adjusted net income attributable to UHS, which are non-GAAP financial measures. Adjusted EBITDA net of NCI increased 8.4%, and adjusted EPS increased 16.1% as compared to the first quarter of 2025. Talkspace successful payer-driven business model aligns well with our strategy to increase access to a full spectrum of outpatient services and diversify our behavioral payer mix. We plan to share more details about the impact of the transaction after closing, but I'd like to highlight two primary benefits for the acquisition.
First, from a strategic perspective, Talkspace represents a multi-year value creation opportunity underpinned by access to new sources of outpatient revenue growth. Second, from a financial perspective, we expect the deal to be accretive to earnings during the first 12 months post-closing, and we expect it to be increasingly accretive thereafter. By Year 3 post-closing, we expect the effective EBITDA multiple for the Talkspace transaction to be in the single-digit range. From a growth perspective, we met our internal same-facility revenue growth and earnings objectives in the first quarter, despite a more dynamic operating backdrop.
In the operational domain to impact quality and patient experience, and in the administrative domain to increase efficiency. We deployed and scaled a total of eight different use cases of AI solutions into our revenue cycle operations that are now yielding significant benefit on a go-forward basis. After adjusting for the impact of the items reflected on the supplemental schedule as included with the press release, our adjusted EPS was $5.62 for the first quarter. We estimate acute care volumes during the first quarter of 2026 were impacted by approximately 200 basis points due to weaker flu and respiratory activity and winter weather in certain markets.
What went well
- First quarter revenue grew 9.6%, adjusted EBITDA net of NCI increased 8.4%, and adjusted EPS increased 16.1% versus the first quarter of 2025, with reported adjusted EPS of $5.62.
- Acute care same-facility segment EBITDA grew 11.7%, with same-facility net revenues up 8.2% (up 6.2% excluding the health plan) and revenue per adjusted admission up 6.3% reported (4.9% excluding roughly $30 million of prior-period Nevada supplemental benefit).
- The company announced the Talkspace acquisition on March 9, adding a virtual behavioral platform with 6,000 licensed professionals across all 50 states, which it expects to be accretive to earnings within the first 12 months post-closing and to reach a single-digit effective EBITDA multiple by year three.
- Behavioral health same-facility net revenues increased 7.3% and segment EBITDA rose 8.4%, supported by a 5.8% increase in revenue per adjusted patient day and a 1.6% increase in adjusted patient days.
- Cash generated from operating activities rose to $402 million from $360 million in the prior-year first quarter, and the company repurchased 675,000 shares for $127 million with $1.3 billion of authorization remaining.
- Cost control was strong, with acute salaries/wages/benefits per adjusted admission up only 3.1%, contract labor down 40 basis points to 2.3% of acute revenue, and behavioral wage growth per adjusted patient day moderating to roughly 6% from the 7%-8% level seen in 2025.
- Nevada acute admissions rebounded about 1.5%, emergency department visits rose approximately 2%, and higher-acuity service lines including cardiology, orthopedics, and neurology showed positive trends.
What went wrong
- Acute care same-facility adjusted admissions were flat year over year, with volumes estimated to be hurt by approximately 200 basis points from weaker flu and respiratory activity and winter weather in certain markets.
- Winter weather is estimated to have reduced first-quarter behavioral health volume growth by roughly 40 to 50 basis points.
- Health insurance exchange adjusted admissions declined about 5% (with the effective decline management booked closer to low double digits due to expected unpaid premiums), creating a roughly $15 million first-quarter impact against a reiterated $75 million full-year pre-tax headwind.
- Core acute care EBITDA growth was only in the low-single-digit range excluding DPP, and management acknowledged the company was not yet at the embedded 5% core growth target in the quarter.
- The expected improvement at the Cedar Hill facility in Washington, D.C. is now viewed as more back-end loaded than originally contemplated due to weather and other dynamics.
- Weather caused roughly $5 million to $7 million of impact, largely in the D.C. market where burst pipes forced bed closures that management said cannot be recovered.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue (FY2026) | Full year 2026 | $18.4B-$18.8B (reiterated) |
| Adjusted EBITDA net of NCI (FY2026) | Full year 2026 | $2.64B-$2.79B (reiterated) |
| Adjusted EPS (FY2026) | Full year 2026 | $22.64-$24.52 (reiterated) |
| Same-facility volume growth, both segments | Full year 2026 | 2%-3% (reiterated; Q1 below range on seasonal factors) |
| Health insurance exchange pre-tax impact | Full year 2026 | ~$75M adverse (reiterated) |
| Talkspace deal accretion | First 12 months post-closing | Accretive to earnings, increasingly accretive thereafter; single-digit effective EBITDA multiple by year 3 |
| Share repurchase | Full year 2026 | Expect to remain active throughout 2026 including around Talkspace closing |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Revenue (Q1) | +9.6% | Growth across both segments driven by pricing and health plan growth |
| Adjusted EBITDA net of NCI (Q1) | +8.4% | Efficiency initiatives and expense discipline offsetting soft seasonal volumes |
| Adjusted EPS (Q1) | +16.1% | EBITDA growth plus share repurchase; reported adjusted EPS $5.62 |
| Acute same-facility net revenues (Q1) | +8.2% | Pricing/acuity gains and health plan growth; +6.2% excluding health plan |
| Acute same-facility segment EBITDA (Q1) | +11.7% | Strong expense management plus prior-period Nevada supplemental benefit |
| Acute revenue per adjusted admission (Q1) | +6.3% | Higher acuity mix (lower flu), Nevada supplemental; +4.9% excluding ~$30M supplemental |
| Behavioral same-facility net revenues (Q1) | +7.3% | 5.8% revenue per adjusted patient day and 1.6% patient day growth |
| Behavioral same-facility segment EBITDA (Q1) | +8.4% | Pricing and moderating wage growth; +4.3% excluding prior-period supplemental payments |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Outpatient behavioral strategy | Building out Thousand Branches freestanding clinics and step-down/step-in programs organically | Accelerated dramatically via the announced Talkspace acquisition to create an end-to-end behavioral continuum from virtual outpatient to inpatient | — |
| AI and technology adoption | In 2025 deployed and scaled eight AI use cases in revenue cycle operations | For 2026 shifting focus to clinical operations with new use cases built with Hippocratic AI; expected incremental to margins over time | — |
| Medicaid supplemental payments (DPP) | Large prior-year programs (Tennessee, D.C.) recognized after Q1 2025 | $46 million of out-of-period Nevada/Ohio DPP recorded in Q1 2026, all within guidance; Florida ~$50M program still pending, California uncertain | — |
| Health insurance exchange headwind | Assumed 25%-30% exchange volume decline for the full year | 5% reported Q1 decline booked at a higher effective rate; still expects steepening as the year progresses toward 25%-30% | — |
| Behavioral labor and wages | 2025 behavioral salary/wage expense up ~8% including heavy headcount investment | Moderated to ~6% in Q1 2026 with less aggressive hiring and improving turnover; expects further moderation | — |
| Capital allocation | Low leverage (just under 2x) prioritizing buybacks and CapEx | Expanded credit facilities by $900M; Talkspace lifts leverage only to just over 2x, leaving room for buybacks, CapEx, and other M&A | — |
Q&A Summary
Can you parse core acute EBITDA growth given weather/flu headwinds versus DPP variance?
Management said core acute EBITDA growth was in the low-single-digit range in the quarter.
Can you highlight the most meaningful AI use cases being deployed?
Focus is on administrative efficiency (eight revenue cycle use cases already yielding benefits, better denials management) and patient-facing/clinical experience; little in the clinical space yet but expected down the line.
Is roughly $120M-$130M of year-over-year Medicaid supplemental benefit fair, and how do you bridge to 5% core growth?
Filton agreed the characterization was accurate, said excluding the $46M out-of-period DPP gives a good run rate, and that earnings will ramp through the year via new facilities (Florida, 178 new beds), Cedar Hill, behavioral outpatient, volume recovery, and moderating behavioral wages.
What drove behavioral volume growth excluding weather and its sustainability?
Two drivers: 2025 staffing investments now enabling higher patient demand capture, and increasing focus on capturing outpatient demand; management sees an upward-climbing trajectory.
How are bad debt and collectibility trending amid Medicaid disenrollment and ACA subsidy expiration?
HIX decline drove additional reserves for patients likely to lose coverage; the $75M full-year negative estimate holds and will grow as the year progresses; otherwise only slight payer mix shifts and no big changes in denials.
What drove stronger-than-expected acute pricing and why moderation ahead?
Lower flu/respiratory mix raised average acuity, and healthy increases in cardiology, orthopedics, and neurology helped acuity and pricing.
How should we treat DPP, exchange, California staffing, and flu/weather in the core growth math, and was there anything non-recurring in Q1 2025?
All items were known and included in guidance; results were consistent with internal expectations; Cedar Hill/Florida still expected to be a wash for the year though Cedar Hill improvement is more back-end loaded.
What is your current outlook for Medicaid volumes and payer mix for the year?
Slight Medicaid utilization declines in Q1, consistent with expectations; no major payer mix changes expected other than the HIX dynamic.
How did Thousand Branches inform the Talkspace deal and what gives confidence in the single-digit multiple?
Thousand Branches did not drive Talkspace; the opportunity arose independently, and confidence in the future single-digit multiple comes from Talkspace's strong standalone growth plus UHS-driven revenue synergies over the next couple of years.
How is the HIX 5% Q1 decline reconciled with the 25%-30% full-year assumption?
The effective decline booked was closer to low double digits (10%-12%); the number is expected to increase through the year, and reaching 25%-30% remains possible though not achieved in Q1.
More on Universal Health Services Inc
Reported 2026-04-28 · figures from the Universal Health Services Inc Q1 2026 earnings call.
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