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. Adjusted EBITDA net of NCI increased 10%, and adjusted EPS increased 20% as compared to the fourth quarter of 2024. For the full year 2025, revenue growth was 10%, adjusted EBITDA net of NCI increased 15%, and adjusted EPS increased 31%. Our fourth quarter and full-year performance were highlighted in particular by continued strong expense management in acute care, sequential volume improvements in behavioral health, solid pricing across both segments, and significant share repurchase activity.

We strengthened our growth agenda with the addition of new inpatient capacity, while also intensifying our focus in the outpatient arena through the addition of new service locations across both segments. In our behavioral segment, we've taken a disciplined approach to new bed capacity during 2025, as we devoted more resources to accelerate our outpatient behavioral strategy. From a technology perspective, we've deployed AI and advanced technologies in 2 primary domains within our business: in our operations to impact quality and patient experience, and in our administrative operations to increase efficiency. On the administrative side, we enhanced our acute care revenue cycle operations by deploying AI-based solutions to improve documentation and streamline our claims appeals process.

Over the next several quarters, we will be rolling out process improvements and new technologies in our behavioral health revenue cycle operations. I'll now turn the call over to Steve Filton for more details on the quarter and our financial outlook for 2026. I will highlight a few financial and operational trends and outline our 2026 financial guidance before opening the call up to questions. Acute care same-facility revenue per adjusted admission increased by 5.4% during the fourth quarter of 2025.

What went well
  • Fourth-quarter revenue grew 9%, adjusted EBITDA net of NCI increased 10%, and adjusted EPS increased 20% versus the fourth quarter of 2024, with adjusted EPS of $5.88.
  • Full-year 2025 results were strong, with revenue up 10%, adjusted EBITDA net of NCI up 15%, and adjusted EPS up 31%.
  • Acute care same-facility segment EBITDA grew 10.4% in the fourth quarter with a 50 basis point margin improvement to 14.8%, and full-year same-facility acute EBITDA margin improved 150 basis points to 15.8%.
  • Behavioral health same-facility net revenues increased 7.2%, supported by a 5.6% rise in revenue per adjusted patient day and a 1.5% increase in adjusted patient days, with segment EBITDA up 6.9% in the quarter and 7.8% for the full year.
  • The company repurchased 4.65 million shares for $899 million during 2025 (including 1.46 million shares in the fourth quarter) and ended the year with $1.425 billion of buyback authorization remaining.
  • Behavioral volumes showed sequential improvement in each quarter of 2025, exiting the year within reach of the 2%-3% target, and supply expense was tightly controlled (up only 1.8% in the quarter) with contract labor down 20 basis points to 2.4% of acute revenue.
  • Cedar Hill Regional Medical Center achieved accreditation, positioning it as an expected ~$50 million tailwind in 2026, and excluding the softer Las Vegas market acute volumes would have grown about 1%.
What went wrong
  • Acute care same-facility adjusted admissions were flat year over year, dragged by softness in the Las Vegas market including lower respiratory case levels that management viewed as somewhat transitory.
  • Behavioral health expenses grew slightly faster than revenue due to 3.1% headcount growth and 7.3% total same-facility labor expense growth per adjusted day in markets constrained by staffing.
  • Full-year cash generated from operating activities declined to $1.9 billion from $2.1 billion in 2024, impacted by a $50 million increase in receivables at recent de novo hospitals and $145 million tied to the timing of Medicaid supplemental payments.
  • The 2026 outlook embeds an approximately $75 million adverse pre-tax impact from health insurance exchange reductions, concentrated in acute care.
  • The 2026 outlook includes a roughly $35 million behavioral headwind from new California psychiatric staffing regulations effective June 1, 2026, with a ~$30 million ongoing annual cost thereafter.
  • Management expects same-facility volume growth to be below the 2%-3% range in the first quarter of 2026, primarily due to winter storms affecting behavioral health and the D.C. acute operations.

Guidance Changes

MetricPeriodCurrent guidance
Revenue (FY2026)Full year 2026$18.4B-$18.8B (6%-8% growth)
Adjusted EBITDA net of NCI (FY2026)Full year 2026$2.64B-$2.79B (2%-8% growth)
Adjusted EPS (FY2026)Full year 2026$22.64-$24.52 (4%-13% growth)
Same-facility volume growth, both segmentsFull year 20262%-3% (Q1 likely below range on winter storms)
Capital expenditures (FY2026)Full year 2026$950M-$1.1B
Health insurance exchange pre-tax impactFull year 2026~$75M adverse; exchange volumes assumed down 25%-30%
California behavioral staffing regulation impactFY2026 / ongoing~$35M adverse in 2026; ~$30M ongoing annually thereafter
Medicaid supplemental payments net benefitFull year 2026$1.36B (up ~$23M vs 2025; includes new Nevada program)
Acute pricing growth assumptionFull year 20263%-4%
Behavioral pricing growth assumptionFull year 20262%-3%
Core consolidated growthFull year 2026~5%
Share repurchase targetFull year 2026$800M-$900M range at a minimum

Performance Breakdown

MetricYoYNote
Revenue (Q4) +9% Growth across both segments; +10% for full-year 2025
Adjusted EBITDA net of NCI (Q4) +10% Expense management and pricing; +15% for full-year 2025
Adjusted EPS (Q4) +20% EBITDA growth plus significant share repurchase; +31% full-year 2025
Acute same-facility net revenues (Q4) +6.9% Pricing and acuity; +5.2% excluding insurance subsidiary
Acute same-facility segment EBITDA (Q4) +10.4% Revenue growth plus reduced contract labor and strong supply chain management
Acute revenue per adjusted admission (Q4) +5.4% Steady acuity increase
Behavioral same-facility net revenues (Q4) +7.2% 5.6% revenue per adjusted patient day and 1.5% patient day growth
Behavioral same-facility segment EBITDA (Q4) +6.9% Revenue growth partly offset by headcount investment in constrained markets

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Outpatient behavioral strategyOperated ~100 outpatient access points, building Thousand Branches step-in modelNow 119 outpatient behavioral locations (10 new Thousand Branches centers in 2025), on track for at least 10 more in 2026; outpatient ~10% of behavioral revenue
AI and technology adoptionEarly administrative and revenue-cycle deployments plus post-discharge follow-upFully rolled out agentic AI for post-discharge care; 2026 focus on behavioral patient-safety tech and behavioral revenue-cycle AI, partnering with Hippocratic AI
Medicaid supplemental payments (DPP)2025 net benefit ~$1.3B; D.C. program recognized in Q32026 net benefit projected at $1.36B including a newly approved Nevada program; Florida (~$45M-$50M) still pending, California more uncertain
DPP durability / OB3 legislationReductions begin 2028, ramping to $420M-$470M by 2032Reimbursement intact through 2027; outpatient growth (more commercial mix) positioned as a natural hedge against 2028+ reductions
Behavioral volume recoveryVolumes muted by staffing scarcity; sub-2% growth2025 headcount investment (3.5%-4% FTE growth) gives confidence in reaching the 2%-3% patient day target in 2026
Capital allocation and leverageActive buybacks with leverage at low end of 2x-3x targetLeverage at multi-year lows; intends to keep flexibility for M&A rather than lever down further, continuing aggressive buybacks

Q&A Summary

What pricing is embedded in the 2%-3% volume guidance for each segment?
Acute pricing assumed 3%-4% (in line with the ~4% ten-year average, supported by acuity); behavioral pricing 2%-3%, somewhat lower than recent years as contract price increases anniversary.
How and over what timeframe does AI translate into financial impact?
Early efforts are administrative (revenue cycle, claims appeals, coding) plus AI post-discharge calls that reduce headcount and readmissions; benefits are real but hard to precisely quantify, and the company sees itself in early innings.
What surgical versus medical volume and Nevada growth are assumed for 2026?
Surgical volume was positive in Q4 but grows slightly slower than overall; Nevada grew in line with the division in 2025 (hurt by soft tourism) and is assumed to see an uptick in 2026 as convention bookings and stable employment support the market.
What are you seeing on exchange volume and bad-debt visibility given unpaid premiums?
A 25%-30% exchange volume decline is assumed based on CBO projections; early declines are understated because insurers do not report until premiums lapse, creating reimbursement risk that management believes it has accounted for, with more clarity over coming months.
Why does the mid-year California staffing regulation not annualize to a larger run-rate headwind?
The rule requires a higher-licensed staff mix (more RNs) rather than more total headcount; 2026 includes one-time recruiting/training and census disruption costs, so the ongoing ~$30M cost is actually lower than the partial-year $35M.
With 2%-3% volume and decelerating pricing, can behavioral still expand margins?
Yes; 4%-6% revenue growth should exceed operating cost growth as 2025 headcount investment moderates, and faster-growing higher-margin outpatient business further supports margin expansion.
Where do the pending Florida and California supplemental programs stand, and what about Rural Health Transformation funding?
Florida (~$45M-$50M) is expected to be approved eventually though delayed; California faces more hurdles and is not quantified; rural funding is not expected to be material given few qualifying facilities.
Given the lowest leverage in over a decade, is there a point where you stop deleveraging and shift to repurchases?
Ideal leverage is 2x-3x; the company is at the low end intentionally to preserve M&A flexibility, expects buybacks to remain compelling, and does not expect leverage to go lower or to lever up absent compelling M&A.
How durable is long-term behavioral pricing as DPP reductions approach in 2028?
Reimbursement remains intact and has been rising near-term; the company intends to capture the benefit while planning for a less profitable Medicaid scenario, using outpatient growth (more commercial mix) as a natural hedge.
How should we think about 2026 cash flow given the AR drag from supplemental programs?
Cash flow from operations historically runs ~75%-80% of operating income less NCI, which remains the view for 2026 despite normal timing issues in receivable collection.

More on Universal Health Services Inc

Reported 2026-02-26 · figures from the Universal Health Services Inc Q4 2025 earnings call.

See how VectorShift works for your firm

Request Demo