Universal Health Services, Inc. (NYSE:UHS) is positioned for robust expansion due to its impressive revenue growth, notable contributions from various segments, and stable financial position. The stock’s positive outlook for 2023 further bolsters its growth potential.
A Closer Look at Earnings Track Record
Universal Health boasts a strong track record of exceeding earnings expectations. In each of the last four quarters, its earnings have surpassed the Zacks Consensus Estimate, with an average surprise of 4.68%.
Positive 2023 Growth Projection
UHS holds a favorable business outlook for 2023. The company expects its revenues to fall within the range of $14.13 billion to $14.33 billion, indicating a 6.2% improvement from the reported figure in 2022. The projected range for adjusted EBITDA, net of NCI, is between $1.696 billion and $1.756 billion, with the midpoint suggesting a 3.9% increase from 2022. Anticipated adjusted earnings per share fall in the bracket of $9.85 to $10.50, with the midpoint signifying a 3% growth from the 2022 reported figure.
Consistent Revenue Growth
Universal Health’s revenue growth is propelled by rising patient numbers, increased patient days, and an extensive care network. The revival of postponed elective procedures is expected to further elevate patient volumes for healthcare facility operators in the foreseeable future. The Acute Care Hospital Services and Behavioral Health Care Services units of Universal Health significantly contribute to its revenue growth. The company’s diversified treatment network includes 358 inpatient facilities and 42 outpatient and other facilities spread across 39 states, Washington, D.C., the U.K., and Puerto Rico as of June 30, 2023.
Expansion Strategies
UHS is committed to its expansion strategy, involving the acquisition, construction, or leasing of hospital facilities. This approach enables the company to enter new markets and enhance its healthcare delivery capabilities. Additionally, UHS focuses on introducing new services, improving existing ones, and recruiting skilled physicians. While such growth-oriented endeavors entail substantial investments and increased costs, they are expected to sustain Universal Health’s long-term growth trajectory.
Strong Financial Position
A solid financial position is crucial for sustaining uninterrupted growth initiatives, and Universal Health meets this requirement. The company possesses substantial cash reserves and robust cash-generating capabilities. Since June 30, 2023, it had an available borrowing capacity of $946M as part of its $1.2B revolving credit facility. This strong financial footing empowers UHS to make prudent capital deployments.
Featured Image: Unsplash @ Ani Kolleshi
