Given the guidance revision, what are the specific drivers for the expected acceleration in underlying EBITDA growth in the second half of the year?

Steve Filton cited new capacity (177 beds) ramping up, Cedar Hill reaching breakeven (swing from $25M loss in Q3 last year), moderating headcount/labor cost growth in Behavioral Health, and easier comparisons in Nevada (seasonally softer trends in H2 2025). “One, which we referenced in our prepared remarks, was the new capacity. We added 177 beds across 3 markets in our acute facilities during the second quarter. Those projects will continue to ramp up as the year goes on.”

If the Florida DPP program is renewed for FY26, will its sizing be similar to FY25, and are there other DPP opportunities in 2026?

Steve Filton stated they are uncertain about the impact of a 2026 program and have not included it in guidance. He mentioned a recent California program approval (not material) and other states contemplating programs, but none are currently material or included in guidance. “I don't think we think that has a material impact on us. There are a couple of other states that are contemplating either new programs or expanded programs. I don't know that any of them at this point would be material and certainly none of them are included in our guidance.”

How do current behavioral volumes compare to internal expectations, especially after headcount increases, and is the outpatient shift still the primary driver?

Steve Filton noted the 1-2% volume range is consistent with recent quarters, though they initially expected higher growth based on outpatient demand. Outpatient growth has been slower than imagined. The Talkspace acquisition is expected to be a significant accelerant for outpatient growth by providing virtual options and therapist capacity. “I think it's just growing a little bit slower than we originally imagined. As we, I think, talked about in the last couple of calls, we do expect the acquisition of Talkspace to be a significant accelerant to our outpatient growth.”

UHS

Universal Health Services (UHS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Jul 28, 2026

Source: earnings call transcript

Executive summary

Universal Health Services Q2 FY26 — Strong Acute Care Rebound, Strategic Capacity Expansion, and Share Buyback Acceleration

Universal Health Services delivered a mixed Q2 FY26, marked by a strong rebound in Acute Care volumes and strategic capacity expansions, alongside accelerated share repurchases. However, the quarter's adjusted EBITDA fell short of internal expectations due to increased professional liability reserves and operational challenges at specific facilities, leading to a revised full-year outlook. The company remains committed to investing in high-growth markets and expanding access to care, with the pending Talkspace acquisition poised to enhance its behavioral health outpatient offerings.

Highlights

Adjusted EPS grew 12% year-over-year to $5.98 in Q2 FY26.
Acute Care same-facility adjusted admissions increased 2.9% year-over-year, with net revenue up 8.2%.
Behavioral Health same-facility net revenue increased 7.4%, driven by a 6.1% increase in revenue per adjusted patient day.
Accelerated share repurchases to $320 million in Q2 FY26, with $978 million remaining authorization.
Added 177 licensed beds in Acute Care, a 2.5% increase in same-facility capacity, and opened Alan B. Miller Medical Center in Palm Beach Gardens.

Concerns

Q2 adjusted EBITDA less NCI fell short of internal expectations by approximately $63 million due to higher professional liability reserves, San Antonio facility losses, and slower Cedar Hill ramp-up.
Full-year adjusted EBITDA less NCI guidance reduced by $50 million at the midpoint, primarily due to $200 million of adverse items.
Increased professional and general liability expense estimate for FY26 by $50 million, reflecting industry-wide higher claim severity.
San Antonio behavioral facility incurred $10 million in pretax losses in Q2 FY26 and expects $5 million-$10 million quarterly losses for the rest of 2026 due to recertification issues.
Acute Care and Behavioral Health full-year volume guidance fine-tuned downwards, reflecting recent performance.

Guidance & targets

Category	Target	Timeline	Confidence
Adjusted EPS	6% growth high materiality	FY26	High
Revenue growth	7% growth high materiality	FY26	High
Adjusted EBITDA less NCI growth	3% growth high materiality	FY26	High
Adjusted EBITDA less NCI	$2.61 billion to $2.72 billion high materiality	FY26	High
Acute Care adjusted admissions growth	1.5% to 2.5% medium materiality	FY26	Medium
Behavioral Health adjusted patient days growth	1.0% to 2.0% medium materiality	FY26	Medium
Full-year pretax exchange impact	Approximately $85 million medium materiality	FY26	High
Medicaid supplemental funding net benefit	Approximately $1.5 billion high materiality	FY26	High
Texas behavioral health facility impact	$50 million medium materiality	FY26	High
Cedar Hill Regional Medical Center tailwind	$20 million medium materiality	FY26	High
Professional and general liability expense increase	Approximately $50 million medium materiality	FY26	High
San Antonio behavioral facility recertification	Anticipated in 2027 medium materiality	CY27 · FY27	Medium
Talkspace acquisition closure	Mid-August of this year high materiality	Q3 FY26	High
Share repurchase activity	Remain highly active high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Acute Care Volume performance improved sequentially from Q1 FY26 and was broad-based geographically. Payer mix trends consistent with recent quarters, with stronger growth in Medicare and Managed Medicare, modest growth in managed care (excluding exchanges), and slightly lower Medicaid volumes. Experienced positive trends in higher acuity inpatient service lines like urology, neurology, and cardiology. Same-facility adjusted admissions growth: +2.9% YoYSame-facility emergency department visits growth: +4% YoYSame-facility surgeries growth: -0.8% YoYSame-facility net revenue growth (excluding health plan): +5.9% YoYSame-facility revenue per adjusted admission growth (reported): +3.0% YoYSame-facility revenue per adjusted admission growth (excluding net out-of-period Medicaid supplemental benefits): +2.7% YoYSame-facility salaries, wages, and benefits expense per adjusted admission growth: +2.7% YoYSupply expense per adjusted admission growth: -2.5% YoYContract labor as % of revenue: 2.5%Contract labor change: 20 bps lower YoYSame-facility segment EBITDA growth (excluding out-of-period supplemental program benefit): +6.3% YoY	Increased 8.2%	+8.2%	—	EBITDA growth 8.2%
Behavioral Health Headcount growth moderated to 2% from 3% sequentially. Remains on track with $35 million impact from California nurse staffing ratio requirements. Same-facility revenue per adjusted patient day growth: +6.1% YoYSame-facility adjusted patient days growth: +1.4% YoYSame-facility revenue per adjusted patient day growth (excluding net benefit from out-of-period supplemental payments): +5.3% YoYSame-facility segment EBITDA growth (excluding net benefit from out-of-period supplemental payments): +5.7% YoYSalaries, wages, and benefits per adjusted patient day growth: +4.8% YoYHeadcount growth: 2%	Increased 7.4%	+7.4%	—	EBITDA growth 9.0%

Deals & partnerships

Talkspace Integration planning for pending acquisition to accelerate presence in outpatient market and create end-to-end continuum of behavioral health care services.

Within our Behavioral Health segment, we continue to make strong progress in our integration planning for the pending Talkspace acquisition, which we expect to close in mid-August of this year. Talkspace represents not only a unique opportunity for us to accelerate our presence in the outpatient market, but also creates the nation's first end-to-end continuum of behavioral health care services, from acute inpatient and residential services, inpatient, in-person, outpatient care and soon with Talkspace virtual services nationally.

Risks & headwinds

Higher Professional and General Liability Reserves Q2 FY26 and ongoing for FY26

$28 million impact in Q2 FY26; $50 million increase for full year FY26

Mitigation:Internal risk management programs to reduce negative outcomes; industry lobbying for malpractice and tort reform.

San Antonio Behavioral Facility Recertification Issues Q2 FY26 through 2027 (recertification anticipated)

$10 million pretax losses in Q2 FY26; expected $5 million to $10 million operating losses per quarter for H2 FY26; loss of $30 million in earnings originally budgeted for FY26

Mitigation:Working towards recertification; facility will operate with limited patient census in the interim.

Slower Ramp-up of Cedar Hill Regional Medical Center Ongoing through FY26 (breakeven expected Q4 FY26)

$15 million impact in Q2 FY26 (relative to original expectations); full-year tailwind adjusted from $50 million to $20 million

Mitigation:Building up the physician component in the region; long-term view of prospects remains positive.

Health Insurance Exchange Volume Decline and Shift to Self-Pay Q2 FY26 and ongoing for FY26

Exchange volumes declined approximately 15% YoY in Q2 FY26; full-year pretax impact estimated at $85 million (up from $75 million)

Mitigation:Monitoring trends and acknowledging the shift; no explicit mitigation strategy stated beyond this.

Continued Shift to Outpatient Procedures Ongoing

Acute Care same-facility surgeries decreased 0.8% YoY

Mitigation:Investing in ambulatory surgery centers, expanding own outpatient surgical capacity, investing in revenue-producing equipment (robotics, advanced imaging).

OBBA Legislation Impact on Medicaid Reimbursement Beginning 2028

Not quantified for UHS specifically, but noted as a future pressure

Mitigation:Strong expense management, technology investments for productivity and revenue cycle, managing exposure to Medicare in Behavioral Health by emphasizing outpatient growth.

What to watch in Q3 FY26

Talkspace Acquisition Closure & Integration

Q3 FY26

Current Integration planning in progress, expected to close mid-August.

Target Acquisition closed, initial integration steps outlined, and early impact on outpatient growth discussed.

Why it matters

This acquisition is expected to significantly accelerate UHS's outpatient behavioral health presence and create an end-to-end continuum of care, impacting future growth.

Within our Behavioral Health segment, we continue to make strong progress in our integration planning for the pending Talkspace acquisition, which we expect to close in mid-August of this year.

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

Q&A highlights

Is the fine-tuning of Acute Care volume guidance due to non-ACA related pressure in the base business, and what are the drivers?

Steve Filton stated the adjustment reflects first-half performance and a continued shift of elective/outpatient procedures to alternate sites (ASCs, freestanding imaging). He noted Q2 volumes and surgical volumes rebounded, and the company is pleased with overall Q2 growth.

“I think we're seeing continued shift of certain elective and outpatient procedures into alternate site settings, ASCs, freestanding imaging, et cetera. And I think that's the primary contribution.”

asked by Ann Hynes · answered by Steve Filton

2 min read 6 chapters

Detailed narrative

Capacity Expansion & De Novo Hospitals

UHS added 177 licensed beds across three Acute Care hospitals in Q2 FY26, representing a 2.5% increase in same-facility bed capacity. The Alan B. Miller Medical Center in Palm Beach Gardens, Florida, opened in May and achieved Joint Commission accreditation in July, with start-up losses in line with expectations.

Cedar Hill Regional Medical Center in Washington, D.C., continues to ramp slower than expected, with its breakeven now anticipated in Q4 FY26, impacting the full-year tailwind from $50 million to $20 million.

Behavioral Health Strategy & Talkspace Integration

The company is making strong progress in integrating the pending Talkspace acquisition, expected to close in mid-August. This acquisition aims to accelerate UHS's presence in the outpatient market and create an end-to-end continuum of behavioral health services, from inpatient to virtual care. Management believes Talkspace's panel of over 6,000 therapists will address capacity limitations for follow-up care and accelerate outpatient growth.

Medicaid Supplemental Funding

The approval of the Florida DPP program for 2025, not originally contemplated, provided a significant benefit in Q2 FY26. The full-year Medicaid supplemental funding net benefit is now expected to be approximately $1.5 billion, an increase of $150 million from the prior outlook, with over one-fifth derived from state-based programs not subject to OBBA legislation.

Professional & General Liability Reserves

UHS increased its professional and general liability reserves by $28 million in Q2 FY26, contributing to a $50 million increase for the full year. This reflects industry-wide trends of higher claim severity across all healthcare settings and is based on semiannual third-party actuarial reviews.

San Antonio Behavioral Facility Challenges

A behavioral health hospital in San Antonio, Texas, is undergoing recertification, leading to a halt in reimbursement since April. The facility incurred $10 million in pretax losses in Q2 FY26 and is expected to incur $5 million to $10 million in quarterly losses for the remainder of 2026. Recertification is anticipated in 2027, and the facility will operate with limited patient census in the interim.

Capital Allocation & Share Repurchase

UHS accelerated its share repurchase activity in Q2 FY26, buying back 1.89 million shares for $320 million, compared to $127 million in Q1 FY26. With $978 million of authorization remaining, the company intends to remain highly active, viewing the current share price as a compelling opportunity. Capital allocation continues to emphasize organic capital spending, outpatient investments (freestanding EDs, behavioral clinics), and share repurchases.

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