UNIVERSAL HEALTH SERVICES INC

Universal Health Services, Inc. operates in the healthcare industry, principally through owning and operating acute care hospitals, outpatient facilities, and behavioral health care facilities. As of February 25, 2026, the company owned and/or operated 375 inpatient facilities and 168 outpatient and other facilities located in 40 states, Washington, D.C., the United Kingdom, and Puerto Rico. The company's acute care facilities include 29 inpatient acute care hospitals, 35 free-standing emergency departments, and 13 outpatient centers and 1 surgical hospital. Its behavioral health care facilities comprise 346 inpatient facilities and 119 outpatient facilities, with 182 inpatient and 110 outpatient facilities in the U.S., 161 inpatient and 2 outpatient facilities in the U.K., and 3 inpatient and 7 outpatient facilities in Puerto Rico.

The healthcare industry is highly competitive, and the company faces competition from other hospitals, including those owned by tax-supported governmental agencies or nonprofit corporations that may be supported by endowments and charitable contributions and exempt from property, sales, and income taxes. The company's ability to negotiate favorable service contracts with purchasers of group health care services affects its competitive position. The company's growth strategy includes selective expansion through the acquisition of additional facilities, and it competes for acquisitions with other for-profit healthcare companies, private equity and venture capital firms, as well as not-for-profit entities.

The company generates revenue by providing healthcare services through its acute care hospitals and outpatient facilities and behavioral health care facilities. Net revenues from acute care hospitals, outpatient facilities, and the commercial health insurer accounted for approximately 57% of consolidated net revenues during each of 2025 and 2024, while net revenues from behavioral health care facilities and the commercial health insurer accounted for approximately 43% during each of those years. The company receives payments for services from private insurers including managed care plans, the federal government under the Medicare program, state governments under Medicaid programs, and directly from patients.

The company's acute care hospitals provide services including general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services, and behavioral health services. The company's behavioral health care facilities located in the U.K. generated net revenues of approximately $1.001 billion ¹ in 2025 and $880 million ² in 2024. Total assets at the U.K. behavioral health care facilities were approximately $1.531 billion ³ as of December 31, 2025 and $1.358 billion ⁴ as of December 31, 2024.

The company's acute care hospitals and outpatient facilities and commercial health insurer accounted for approximately 57% of consolidated net revenues during each of 2025 and 2024. The behavioral health care facilities and commercial health insurer accounted for approximately 43% of consolidated net revenues during each of 2025 and 2024. The company's behavioral health care facilities located in the U.K. generated net revenues of approximately $1.001 billion ⁵ in 2025 and $880 million ⁶ in 2024.

During 2025, the company repurchased approximately 4.65 million ⁷ shares at an aggregate cost of approximately $899.3 million ⁸ (average price of $193.38 ⁹ per share). In October 2025, the Board of Directors authorized a $1.5 billion ¹⁰ increase to the stock repurchase program. As of December 31, 2025, the company had an aggregate available repurchase authorization of approximately $1.425 billion ¹¹. The company also paid dividends of $0.80 ¹² per share during the year ended December 31, 2025. The company holds approximately 5.7% ¹³ of the outstanding shares of Universal Health Realty Income Trust and earned an advisory fee of approximately $5.6 million ¹⁴ during 2025.

For the year ended December 31, 2025, total net revenues were $17.364 billion ¹⁵, compared to $15.828 billion ¹⁶ in 2024. Income from operations was $1.994 billion ¹⁷ in 2025 versus $1.682 billion ¹⁸ in 2024. Net income attributable to UHS was $1.372 billion ¹⁹ in 2025, compared to $1.023 billion ²⁰ in 2024. Diluted earnings per share was $16.58 ²¹ in 2025 versus $12.09 ²² in the prior year.

The company's growth strategy includes selectively seeking opportunities to expand its base of operations by acquiring, constructing, or leasing additional hospital facilities, committed to a program of rational growth around its core businesses. In recent years, the behavioral health services segment has focused on efforts to partner with non-UHS acute care hospitals to help operate their behavioral health services through arrangements including hospital purchases, leased beds, and joint venture operating agreements. The company also seeks to increase operating revenues and profitability of owned hospitals by introducing new services, improving existing services, physician recruitment, and applying financial and operational controls.

The company is responding to the trend of payers demanding a shift to ambulatory or outpatient care by emphasizing the expansion of outpatient services. In response to cost containment pressures, the company continues to implement programs at its facilities designed to improve financial performance and efficiency while continuing to provide quality care, including more efficient use of professional and paraprofessional staff, monitoring and adjusting staffing levels and equipment usage, improving patient management and reporting procedures, and implementing more efficient billing and collection procedures. The company also continues to emphasize innovation in its response to rapid changes in regulatory trends and market conditions.

The company has experienced inflationary pressures, primarily in personnel costs, although those pressures have moderated more recently. The company has implemented various productivity enhancement programs and cost reduction initiatives including team-based patient care initiatives, efforts to reduce utilization of and rates paid for premium pay labor, consolidation of medical supply vendors, review and reduction of clinical variation, and various other efforts to increase productivity and reduce costs including investments in new information technology applications. The company has been requesting and negotiating increased rates from commercial insurers to defray increased costs of providing patient care.

The company provides capital resources as well as a variety of management services to its facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing, and public relations. The company has made significant investments in technology to adopt and utilize electronic health records and to become meaningful users of health information technology. The company continues to regularly review and enhance its IT systems and cybersecurity controls.

During 2025, the company repurchased approximately 4.65 million ²³ shares at an aggregate cost of approximately $899.3 million ²⁴ under its stock repurchase program. In October 2025, the Board of Directors authorized a $1.5 billion ²⁵ increase to the stock repurchase program. As of December 31, 2025, the company had an aggregate available repurchase authorization of approximately $1.425 billion ²⁶. The company paid dividends of $0.80 ²⁷ per share during the year ended December 31, 2025. The company's capital expenditure program is described as adequate to expand, improve, and equip its existing hospitals.

Legislation adopted on July 4, 2025 (the One Big Beautiful Budget Act) attaches work and community service requirements to Medicaid eligibility and places limits on provider fees used to increase federal Medicaid funding to states. Under current law, the company estimates that, commencing with the 2028 state fiscal years, its aggregate annual net benefit will be reduced, on an annually increasing and relatively pro rata basis, by approximately $432 million ²⁸ to $480 million ²⁹ by 2032. The legislation also eliminates certain insurance exchange premium tax credits beyond 2025, and exchange enrollment is expected to be adversely impacted.

The company's $700 million ³⁰, 1.65% ³¹ senior notes mature on September 1, 2026. Market interest rates have increased significantly since the notes were issued in 2021, and the company expects to refinance them at significantly higher interest rates, which will significantly increase interest expense and decrease net income attributable to UHS. Significant tariffs or other restrictions on imported pharmaceutical ingredients, medical devices, and medical equipment could escalate costs and disrupt supply chains. The company's commercial insurance coverage for the period commencing in March 2025 contains less favorable terms than previous years, including coverage exclusions for incidents involving sexual molestation or abuse, higher premiums, and potentially lower aggregate limitations.

A significant portion of revenue is produced by facilities in Texas, Nevada, and California, which on a combined basis contributed 16% ³², 17% ³³, and 11% ³⁴ of consolidated net revenues, respectively, during 2025, making the company particularly sensitive to regulatory, economic, and competitive conditions in those states. Legislation adopted on July 4, 2025 is estimated to reduce the company's aggregate annual net benefit by approximately $432 million ³⁵ to $480 million ³⁶ by 2032. The company receives annual Medicaid revenues of approximately $100 million ³⁷ or greater from each of 14 states, and most of these programs are approved on a year-to-year basis with no assurance of continuation. The company faces material litigation exposure, including a jury verdict against UHS Delaware for $500 million ³⁸ in punitive damages (expected to be reduced to a maximum of approximately $14 million ³⁹ under Nevada law) and a verdict against Cumberland Hospital for $60 million ⁴⁰ in compensatory damages, $180 million ⁴¹ in trebled damages, and $120 million ⁴² in punitive damages (reduced to a combined maximum of $1.05 million ⁴³). As of December 31, 2025, the company had approximately $4.0 billion ⁴⁴ of goodwill recorded on its consolidated balance sheet.

Management's message emphasizes the company's mission to provide superior quality healthcare services that patients recommend, physicians prefer, purchasers select, employees are proud of, and investors seek for long-term returns. The company is committed to a philosophy of self-determination for both the company and its hospitals. Management highlights a disciplined program of rational growth around core businesses, while retaining the missions of the hospitals it manages and the communities it serves. The company continues to examine its facilities and consider divestiture of those that do not have the potential to contribute to its growth or operating strategy. Management also emphasizes the importance of innovation in response to rapid changes in regulatory trends and market conditions while fulfilling commitments to patients, physicians, employees, communities, and stockholders.