Universal Health Services (UHS) KeyBanc Annual Healthcare Forum 2025 summary

Portfolio strategy and integration

• Diversification into behavioral health began in the 1980s as a response to changes in Medicare and Medicaid reimbursement, providing risk mitigation through countercyclical business segments.

• Acute and behavioral segments have historically operated separately, but recent years have seen increased integration due to recognition of the interrelation between physical and mental health.

• Synergies exist in markets where both segments operate, particularly through referrals from acute care emergency rooms to behavioral hospitals.

• A significant presence in both segments positions the company to play a unique role in population health management as this trend grows.

Financial performance and outlook

• 2024 saw EBITDA growth over 20% in both segments, exceeding guidance, driven by Medicaid supplemental payments and a return to historical business models.

• Expense pressures from COVID, such as wage inflation and premium pay, have largely stabilized, marking 2024 as the first truly post-COVID year.

• The expectation is for continued mid-to-upper single-digit same-store revenue growth and margin expansion, barring external pressures.

Margin recovery and expense management

• Consolidated margins are expected to return to or exceed pre-COVID (2019) levels within the next few years, with behavioral margins already at or above those levels.

• Acute care margins are likely to remain below pre-COVID due to persistent physician expense increases and a structural shift from inpatient to outpatient care.

• Physician expense pressures have stabilized, with emergency and anesthesiology costs now baked in; radiology is a new but manageable pressure point.