Could you highlight 2-3 meaningful AI use cases and elaborate on the opportunities you see for deployment?

Marc Miller explained that 8 AI solutions have been deployed in revenue cycle operations, yielding significant benefits. For 2026, the focus is on clinical operations with partners like Hippocratic AI to improve efficiency and patient experience. “we've deployed and scaled a total of 8 different use cases of AI solutions into our revenue cycle operations. And we've already seen, like I said, significant benefits already, and I think this is going to continue and multiply going forward.”

Given the $46 million of out-of-period Medicaid supplemental payments in Q1, how will the company achieve the 5% core growth expectation for the remainder of the year?

Steve Filton confirmed the Q1 DPP was within expectations and outlined drivers for the full-year ramp: new facility contributions (Florida, Cedar Hill, 178 new beds), continued behavioral outpatient growth, and moderating wage pressures. He reiterated confidence in achieving the 5% core growth target. “I think our overall results were within our expectations. And I think that implies that we expect a ramp in our earnings as the year goes on to get to that core level growth of 5% that's embedded in our guidance.”

How are bad debt reserve trends evolving with Medicaid redetermination and ACA subsidies, and does guidance assume a deterioration in collectibility?

Steve Filton stated that an additional reserve was recorded for HICS patients likely to lose coverage, reflecting a conservative position. He reiterated the full-year $75 million impact from HICS, primarily due to higher bad debt and uncompensated care. “we also recorded an additional reserve because we believe that some of those HICS patients who are presenting themselves as having X coverage will later be deemed not to have coverage because they fail to make their premium payments.”

UHS

Universal Health Services (UHS) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Health Care· Apr 28, 2026

Source: earnings call transcript

Executive summary

Universal Health Services Q1 FY26 — Strong Performance with Talkspace Acquisition and AI Integration

Universal Health Services delivered strong financial results in Q1 FY26, marked by significant revenue and earnings growth, alongside the strategic acquisition of Talkspace to bolster its behavioral health outpatient strategy. The company is actively integrating AI solutions to drive efficiency and enhance patient experience. Despite facing seasonal volume headwinds and ongoing shifts in health insurance exchange dynamics, management reiterated its full-year guidance, anticipating a ramp-up in earnings from new facility contributions and moderating wage pressures.

Highlights

Revenue growth for the first quarter was 9.6%.
Adjusted EBITDA net of NCI increased 8.4% in Q1 FY26.
Adjusted EPS increased 16.1% in Q1 FY26.
Talkspace acquisition expected to be accretive to earnings within 12 months post-closing, reaching a single-digit effective EBITDA multiple by year 3.
Cash generated from operating activities was $402 million, up from $360 million during the same period last year.

Concerns

Acute care volumes were impacted by approximately 200 basis points due to weaker flu and respiratory activity and winter weather.
Behavioral health volume growth was impacted by approximately 40 to 50 basis points due to winter weather.
Health insurance exchange trends are estimated to have a $15 million impact in Q1, with a reiterated full-year $75 million pretax impact.
Medicaid utilization saw slight declines in Q1.
Professional fees are rising at the high end of the single-digit range.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 financial and operating forecasts	Reiterated high materiality	FY26	High
Talkspace acquisition earnings accretion	Accretive to earnings medium materiality	First 12 months post closing	High
Talkspace acquisition effective EBITDA multiple	Single-digit range medium materiality	Year 3 post closing	High
Health insurance exchange trends pretax impact	$75 million high materiality	Full year 2026 · FY26	High
Florida 2025 supplemental program benefit	Estimated $50 million benefit medium materiality	2025 program · FY25	Medium
New Florida hospital operating performance	Operating loss for the year low materiality	FY26	High
Share buyback target	$800 million to $900 million medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Acute Care Hospitals Same-facility net revenues increased 8.2%, or 6.2% excluding the impact of the health plan. Volumes were impacted by weaker flu/respiratory activity and winter weather. Positive trends observed in cardiology, orthopedics, and neurology service lines. Adjusted admissions: unchangedAdjusted admissions (ex-flu/weather impact): approximately 200 bps higherNevada market adjusted admissions: increased approximately 1.5%Emergency department visits: increased approximately by 2%Revenue per adjusted admission: increased 6.3%Revenue per adjusted admission (ex-supplemental program): up 4.9%Salaries, wages and benefits expense per adjusted admission: increased 3.1%Supply expense per adjusted admission: increased 3.5%Contract labor: 2.3% of revenues (40 bps lower year-over-year)	increased 8.2%	8.2%	—	11.7% growth in same-facility segment EBITDA
Behavioral Health Same-facility net revenues increased 7.3%. Volume growth was impacted by winter weather. Wage pressures are moderating, with salaries, wages, and benefits per adjusted patient day increasing by approximately 6% year-over-year, down from 7-8% in 2025. Revenue per adjusted patient day: 5.8% increaseAdjusted patient days: 1.6% increaseAdjusted patient days (ex-winter weather impact): approximately 40 to 50 bps higherRevenue per adjusted patient day (ex-supplemental payments): increased 4.9%Segment EBITDA (ex-supplemental payments): increased 4.3%Salaries, wages and benefits per adjusted patient day: increased by approximately 6%	increased 7.3%	7.3%	—	8.4% in same-facility segment EBITDA

Deals & partnerships

Talkspace Acquisition of a virtual outpatient behavioral health care platform, expanding UHS's continuum of services.

Talkspace is an established market leader with a network of 6,000 licensed professionals serving all 50 states. It has a payer-driven business model. The acquisition was announced on March 9.

Risks & headwinds

Weaker flu and respiratory activity and winter weather impact on volumes Q1 FY26

Acute care volumes impacted by approximately 200 basis points; behavioral health volumes impacted by approximately 40 to 50 basis points.

Mitigation:Expect same-facility growth to be more balanced between volume and pricing as the year progresses.

Health insurance exchange trends and uncompensated care Q1 FY26 and full year 2026

$15 million impact in Q1 FY26; full year $75 million pretax impact reiterated. Exchange adjusted admissions declined approximately 5%.

Mitigation:Recorded additional reserve for HICS patients likely to lose coverage; investments in revenue cycle efficiency to keep pace with aggressive payer behavior.

California nurse staffing ratio requirements Go into effect June 1

Not quantified, but noted as a significant operational change.

Mitigation:Making good progress year-to-date and remain on track with assumptions contemplated in the 2026 outlook.

Professional fee pressures from hospital-based physicians Ongoing

Rising at the high end of the single-digit range.

Mitigation:Being more competitive in terms of going out for coverage and trying to reduce the number of locums physicians.

What to watch in Q2 FY26

Core EBITDA growth ramp

Remainder of FY26

Current low single-digit range for acute core EBITDA in Q1

Target core level growth of 5% for full year

Why it matters

Management expects a significant ramp-up in core EBITDA growth to meet full-year guidance, driven by new facility contributions and moderating wage pressures.

I think our overall results were within our expectations. And I think that implies that we expect a ramp in our earnings as the year goes on to get to that core level growth of 5% that's embedded in our guidance.

Find out whether UHS delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide a sense of what the core EBITDA grew on the acute side, parsing out the impact of DPP, weather, and flu?

Steve Filton stated that core EBITDA growth for the acute care segment was in the low single-digit range, acknowledging the complexity of parsing out various impacts.

“Yes. I think it was in the low single-digit range, A.J.”

asked by Albert Rice · answered by Steve Filton

3 min read 6 chapters

Detailed narrative

Talkspace Acquisition & Outpatient Strategy Expansion

Universal Health Services announced the acquisition of Talkspace, a market leader in virtual outpatient behavioral health care with a network of 6,000 licensed professionals. This strategic move accelerates UHS's ability to create an end-to-end continuum of behavioral health services, from virtual outpatient to residential and inpatient care.

The acquisition is expected to be accretive to earnings within 12 months post-closing and achieve a single-digit effective EBITDA multiple by year 3, driven by new outpatient revenue growth opportunities and bidirectional synergies, such as developing higher acuity virtual intensive outpatient programs (IOPs).

AI and Technology Adoption for Efficiency and Quality

UHS is actively implementing enterprise-level AI solutions across its operations, focusing on both administrative efficiency and clinical quality/patient experience. In 2025, eight different AI use cases were deployed and scaled in revenue cycle operations, already yielding significant benefits. For 2026, the focus shifts to clinical operations, with several new use cases being designed and built in partnership with Hippocratic AI.

These initiatives are expected to incrementally improve margins over time and have a real impact on quality and patient experience.

Q1 Volume and Pricing Dynamics

The first quarter saw strong pricing contributions in both acute care and behavioral health segments, contributing to a 9.6% overall revenue growth. However, acute care volumes were negatively impacted by approximately 200 basis points due to weaker flu and respiratory activity and winter weather, while behavioral health volumes saw a 40-50 basis point impact from weather.

Management anticipates same-facility growth to become more balanced between volume and pricing as the year progresses, expecting volume recovery after the seasonal impacts of Q1.

Medicaid Supplemental Payments and Core Growth Outlook

UHS recorded significant prior-period Medicaid supplemental program net benefits in Q1, including approximately $30 million related to the expanded 2025 Nevada program and $46 million from combined Nevada and Ohio out-of-period payments. While these were within expectations, management acknowledged that core EBITDA growth, excluding these non-recurring items, was in the low single digits for acute care.

The company expects a ramp-up in core earnings growth throughout the year, driven by the continued ramp-up of new facilities, growth in behavioral outpatient services, and moderating wage pressures.

Health Insurance Exchange Trends and Uncompensated Care

Health insurance exchange adjusted admissions declined approximately 5% in Q1, leading to an estimated $15 million impact. UHS reiterated its full-year $75 million pretax impact from exchange trends, which assumes declines will steepen as the year progresses. The company has taken a conservative accounting position by recording an additional reserve for HICS patients who may not sustain premium payments, reflecting an effective HICS volume decline in the low double digits, largely impacting bad debt and uncompensated care.

Capital Investments and Facility Expansion

UHS spent $217 million on capital expenditures in Q1 FY26, continuing its investment in strategic growth. Key projects include a 156-bed de novo hospital in Florida scheduled to open in May, and 178 new beds across two bed towers and a replacement hospital project in existing markets (California, Las Vegas, Florida) going online in Q2.

In behavioral health, a 144-bed de novo joint venture hospital opened in Pennsylvania in early Q1, with another 120-bed de novo hospital planned for Missouri later this year.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.