Universal Health Services Third-Quarter Profit Falls To $308.7 Million Despite 5.3% Sales Growth
Hospital operator UHS posted $5.22 a share against $5.86 a year earlier, with a $26 million reserve increase tied mainly to a tentative abuse settlement.
Universal Health Services, which runs acute care hospitals and behavioral health facilities, said Tuesday that third-quarter net income attributable to UHS fell to $308.7 million, or $5.22 per diluted share, from $373.0 million, or $5.86, a year earlier. Net revenues rose 5.3% to $4.733 billion.
Sales up, margins down
Operating charges grew faster than revenue: $4.279 billion against $3.974 billion a year earlier, per the income statement. Income from operations fell to $454.4 million from $521.7 million.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, net of noncontrolling interests) fell to $624.6 million from $670.6 million. Its margin slipped to 13.2% from 14.9%.
For the first nine months, net income attributable to UHS was $1.016 billion, or $16.86 per diluted share, against $1.043 billion, or $16.07. Revenues rose 7.7% to $13.867 billion. Nine-month operating cash flow rose 14.9% to $1.481 billion.
A $21 million net swing from unforecast items
About $21 million of net favorable items were not in the company's 2026 forecast. They were $47 million from higher Medicaid supplemental payments, mainly in Washington, D.C. and California, offset by a $26 million increase in self-insured liability reserves.
The company said the reserve increase was due primarily to a tentative settlement reached in the quarter in the Cumberland Hospital litigation. The third quarter of 2025 had carried its own net favorable items of about $55 million.
The Cumberland settlement
The lawsuits, filed in Richmond, Virginia, allege inappropriate sexual contact during medical exams by Dr. Daniel Davidow, an independent contractor and former medical director at Cumberland Hospital for Children and Adolescents. In September 2024 a jury found him and Cumberland liable to three plaintiffs, awarding $60 million in compensatory damages and $180 million in trebled damages. The court cut punitive damages to a combined maximum of $1.05 million. About 53 more claimants have claims pending.
In August 2026 UHS reached a tentative settlement covering current claimants. Terms are confidential, and the company said it believes a substantial portion is covered by excess insurance. Final release agreements and certain court approvals are still needed.
Buybacks and the business
UHS bought back 1.35 million shares for about $242.1 million in the quarter, an average of about $179 a share. About $735.4 million of repurchase authorization remained at September 30.
Behavioral health same-facility revenue rose 4.0% in the quarter, and acute care same-facility revenue rose 4.7%. Acute care revenue per adjusted admission fell 1.7%. UHS completed its acquisition of Talkspace in August 2026.
UHS holds its earnings call at 8:00 a.m. ET on Wednesday.
Sources
- 8-K Filing — UNIVERSAL HEALTH SERVICES INC (UHS) — SEC EDGAR
- Exhibit uhs-ex99_1.htm — UNIVERSAL HEALTH SERVICES INC 8-K exhibit — SEC EDGAR
- Universal Health Services, Inc. Announces Financial Results — globenewswire.com
