What Management Said
Read the full Q2 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. During the quarter, we also benefit from the approval of the Florida DPP program for 2025, which was not contemplated in our original outlook. These new beds represent a 2.5% increase to our same facility bed capacity and position us to respond to strong demand in these communities. Within our behavioral health segments, we continue to make strong progress in our integration planning for the pending Talkspace acquisition, which we expect to close in mid-August of this year.
We have a 46-year track record of strong quality and safety performance across both our behavioral health and acute care divisions. The recent dislocation in our share price represents a compelling opportunity to deploy capital and retire UHS shares at heavily discounted levels. Given the strength of our balance sheet and the confidence we have in our ability to generate cash flow, we intend to remain highly active with our share repurchase program at these levels. I want to emphasize that our strategy remains steadfast: to invest in high-growth markets, expand access to care, operate efficiently, and create long-term value for patients, employees, and shareholders.
I remain very optimistic about our long-term outlook, given the quality and strength of our portfolio, the experience of our management team, and the underlying demand characteristics of the markets that we serve. The company reported adjusted EPS of $5.98 for the Q2 of 2026, representing growth of 12% on a year-over-year basis. Q2 adjusted EBITDA less NCI was $678 million, representing growth of 5% on a year-over-year basis. At the segment level, on a same-facility basis, adjusted admissions at our acute care hospitals increased 2.9% as compared to the Q2 of 2025.
What went well
- Adjusted EPS was $5.98, up 12% year-over-year, with adjusted EBITDA less NCI of $678 million, up 5%.
- Acute care volumes rebounded, with same-facility adjusted admissions up 2.9% year-over-year (a sequential improvement from Q1) and broad-based geographically, while ED visits rose 4%.
- The quarter benefited from approval of the Florida DPP program for 2025 (a ~$100 million out-of-period benefit not in original guidance).
- UHS accelerated share repurchases to $320 million (1.89 million shares) versus $127 million in Q1, viewing the share-price dislocation as a compelling opportunity.
- Expense management was strong, with acute-care supply expense per adjusted admission down 2.5% and contract labor down 20 bps to 2.5% of acute revenue; behavioral headcount growth moderated to 2%.
- The company added 177 licensed beds across three hospitals (~2.5% same-facility capacity) and opened the de novo Alan B. Miller Medical Center in Palm Beach Gardens, which achieved Joint Commission accreditation in July.
What went wrong
- Excluding the $100 million out-of-period Florida DPP benefit, Q2 adjusted EBITDA less NCI fell short of internal expectations by ~$63 million.
- The shortfall reflected ~$28 million of higher professional and general liability reserves, ~$20 million from the San Antonio (Laurel Ridge) behavioral facility, and ~$15 million from a slower Cedar Hill (Washington, D.C.) de novo ramp.
- Full-year adjusted EBITDA less NCI guidance was cut ~$50 million to a $2.66 billion midpoint, as ~$150 million more Medicaid supplemental benefit was offset by ~$200 million of adverse items.
- The San Antonio behavioral facility stopped receiving reimbursement at the end of April (recertification expected in 2027) and will run ~$5-10 million quarterly losses versus ~$25 million of 2025 EBITDA.
- Acute-care surgeries declined 0.8% year-over-year amid continued shift to outpatient/ASC settings, and exchange volumes fell ~15% with lost exchange coverage converting almost one-for-one into self-pay/uninsured.
- Q2 operating cash flow dropped sharply to $44.3 million from $549 million a year earlier.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Full-year adjusted EBITDA less NCI | FY2026 | $2.61B-$2.72B ($2.66B midpoint; -~$50M) |
| Full-year revenue growth | FY2026 | ~7% at the midpoint |
| Full-year EPS growth | FY2026 | ~6% at the midpoint |
| Acute-care same-facility adjusted admissions growth | FY2026 | 1.5%-2.5% (midpoint 50 bps lower) |
| Behavioral same-facility adjusted patient-day growth | FY2026 | 1.0%-2.0% (midpoint 100 bps lower) |
| Exchange pre-tax impact | FY2026 | ~$85M (upper half) |
| Medicaid supplemental net benefit | FY2026 | ~$1.5B (+~$150M) |
| Full-year share repurchases | FY2026 | will meet or exceed $800M-$900M |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Adjusted EPS | $5.98 (+12%) | Operational improvement plus accelerated buybacks. |
| Adjusted EBITDA less NCI | $678M (+5%) | Acute and behavioral revenue growth and expense management, aided by the Florida DPP benefit but offset by ~$63M of adverse items. |
| Acute-care same-facility net revenue | +8.2% (+5.9% ex-health plan) | Volume rebound plus 3.0% revenue per adjusted admission growth; health plan revenue grew ~35%. |
| Acute-care same-facility adjusted admissions | +2.9% | Broad-based volume rebound; higher-acuity urology, neurology and cardiology strength. |
| Acute-care same-facility segment EBITDA | +8.2% (+6.3% ex out-of-period) | Volume and rate growth with well-managed labor and supply costs. |
| Behavioral same-facility net revenue | +7.4% | 6.1% revenue per adjusted patient day and 1.4% adjusted patient-day growth. |
| Behavioral same-facility segment EBITDA | +9.0% (+5.7% ex out-of-period) | Rate growth and moderating headcount/labor cost growth. |
| Acute-care surgeries (same-facility) | -0.8% | Continued outpatient/ASC shift, though improved sequentially from Q1. |
| Operating cash flow | $44.3M (down from $549M) | Timing of payments; net leverage 1.8x with $139M cash and $4.85B total debt. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Talkspace acquisition / outpatient behavioral | Pending acquisition | Expected to close mid-August; integration planning advanced; creates the first end-to-end behavioral continuum (inpatient, in-person outpatient, national virtual) with a panel of 6,000+ therapists to capture step-down and geographically constrained patients and accelerate outpatient growth over 12-18 months. | — |
| De novo hospital ramps | Cedar Hill (DC) and Palm Beach Gardens opening | Cedar Hill ramping slower than expected (physician-base buildup) but improved ~$15M YoY, targeted to break even by year-end; Palm Beach Gardens opened in May with in-line ~$15M Q2 start-up losses, on track with original guidance. | — |
| Capacity expansion / capital allocation | Organic growth emphasis | Added 177 beds at three existing high-demand facilities (Lakewood Ranch FL, Henderson NV, Rancho Springs CA) expected to ramp fast; continued investment in ~40 freestanding EDs (5-10 more in development), ASCs, and behavioral Thousand Branches clinics; active buybacks amid share dislocation. | — |
| Medicaid supplemental payments & OBBBA | Reliant on state DPP/supplemental programs | Full-year net supplemental benefit raised to ~$1.5B (Florida DPP a driver); preparing for OBBBA-driven Medicaid reimbursement reductions starting 2028 via expense management, revenue-cycle initiatives and a shift toward less Medicaid-centric outpatient/behavioral services (more Medicare/managed-care centric). | — |
| Health-insurance exchange headwind | Anticipated volume decline | Exchange volumes fell ~15% (below the >25% original forecast) but nearly all lost coverage converted directly to self-pay/uninsured rather than employer/commercial coverage, raising the full-year impact estimate to ~$85M (upper half of range). | — |
| Professional & general liability / malpractice | Rising reserves | ~$28M reserve increase in the quarter reflecting an industry-wide rise in claim severity (not UHS-specific), using third-party actuarial estimates; managing via risk-management programs while the industry lobbies for tort reform. | — |
| Professional fees / physician subsidies | Sharp 2023-2024 increases | Now running at an inflationary-to-slightly-higher ~7-9% annual increase, managed by hiring hospital-based physicians, rebidding contracts and limiting expensive locums coverage. | — |
Q&A Summary
Ann Hynes (Mizuho) asked whether the acute-care volume change reflects non-ACA base-business pressure.
Filton said acute volumes trended ~2% in the first half with continued shift of elective/outpatient procedures to ASCs and freestanding imaging, and that UHS was simply being respectful of first-half performance by lowering the back-half admission midpoint despite a pleasing Q2 rebound.
Andrew Mok (Barclays) asked what drives the implied back-half EBITDA acceleration.
Filton cited ramping of the 177 new beds, Cedar Hill improving toward break-even (versus a $25M Q3 2025 loss), moderating behavioral headcount/labor growth, and easier Nevada comps in the back half.
Matthew Gilmore (KeyBanc) asked about the Florida DPP sizing for 2026 and other DPP opportunities.
Filton said UHS has not recorded or guided any 2026 DPP benefit given uncertainty, would book it if approved, and that other state programs (e.g., a recent California approval) are not expected to be material; he could not yet size the San Antonio recertification ramp.
Jason Cassorla (Guggenheim) asked how behavioral volumes compared to expectations and about malpractice reserve headwinds.
Filton said the 1-2% behavioral range is consistent with recent quarters (outpatient growing about as fast as inpatient, slower than hoped, with Talkspace expected to accelerate it), and that malpractice increases reflect an industry-wide rise in claim severity using third-party actuaries, hard to predict but partly addressed via risk management and tort-reform lobbying.
Pito Chickering (Deutsche Bank) asked about emergent versus elective surgery mix and outpatient shift.
Filton said UHS does not track elective versus non-elective but overall surgeries were down 0.8% (inpatient up, outpatient slightly down), performing better than peers thanks to targeted investment in revenue-producing equipment like robotics and advanced imaging, and that it combats the ASC shift by investing in its own ASCs and outpatient capacity.
Ryan Langston (TD Cowen) asked why ED growth (~4%) outpaced inpatient admissions and to size buybacks.
Filton attributed it to patients using ERs for primary-care-type visits (a long-standing phenomenon) and said UHS does not report intra-quarter buybacks but entered the year targeting $800-900M and will meet or exceed that.
A.J. Rice (UBS) asked how UHS is preparing for 2028 OBBBA supplemental-payment reductions and about uncompensated care.
Filton cited strong expense management, technology/revenue-cycle investments (an acute review with a consultant yielding measurable gains, now extending to behavioral), and a shift toward less Medicaid-centric outpatient/behavioral services; on payer mix he noted exchange declines converting almost one-for-one to self-pay, driving the $10M higher exchange impact.
Craig Hettenbach (Morgan Stanley) asked about Talkspace integration readiness and outpatient investments.
Filton said Talkspace addresses geographic and therapist-capacity limits on step-down care via a 6,000+ therapist panel and virtual options, and that freestanding EDs (~40 operating) have been among UHS's best investments over the past decade.
Ben Hendrix (RBC) asked about higher professional fees/subsidies for radiology, anesthesiology and hospitalists.
Filton said the sharp 2023-2024 increases have moderated to an ~7-9% annual pace embedded in guidance, managed by hiring, rebidding contracts and limiting locums.
Andrew Cooper (Raymond James) asked about the Cedar Hill drag and the 177-bed ramp, plus capital-allocation changes.
Filton said Cedar Hill's drag is a lack of established physician base (not demand, given strong ER volumes) improving toward year-end break-even, whereas the 177 beds are additions to proven-demand facilities that will ramp much faster; capital allocation stays organic/outpatient-focused with active buybacks, largely unchanged by OBBBA.
Benjamin Rossi (JPMorgan) asked about the Palm Beach Gardens ramp/DPP eligibility and denial trends.
Filton said the Florida DPP was a 2025 program so the new hospital (opened July) is not eligible, with the ~$15M Q2 drag in line and ramp on track, and that denial and payer-behavior trends showed no significant change as UHS invests in revenue-cycle initiatives to stay even with aggressive payers.
More on Universal Health Services Inc
Reported 2026-07-28 · figures from the Universal Health Services Inc Q2 2026 earnings call.
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