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The call presented a largely positive operational and financial picture: solid top-line growth (revenue +9.6%), strong adjusted EBITDA and EPS growth, healthy operating cash flow, active share repurchases, and a strategically significant, expectedly accretive Talkspace acquisition that accelerates outpatient behavioral capabilities. Offsetting these positives were near-term volume headwinds driven by weaker flu season and winter weather, a meaningful and evolving HIX (exchange) headwind with conservatively reserved bad debt exposure (management reiterated a $75 million full-year impact), tougher prior-period supplemental payment comparisons that pressured core EBITDA in the quarter, and ongoing behavioral staffing/wage pressures and first-year losses at de novo hospitals. Overall, management reiterated guidance and emphasized expense discipline, margin initiatives (including AI), and M&A integration plans, and the balance of strong financial metrics and strategic actions outweighs the identified near-term headwinds.
Management reiterated the full‑year 2026 financial and operating forecast established Feb. 25 and said it will re‑evaluate guidance at Q2 in July, while explicitly embedding a $75 million pretax headwind from expected HIX declines; they also expect the Talkspace acquisition to be earnings‑accretive within the first 12 months and to result in an effective EBITDA multiple in the single digits by year three. Key capital and liquidity metrics: Q1 share repurchases totaled 675,000 shares for $127 million, $1.3 billion of repurchase authorization remained as of 3/31/26, annual buyback targets remain at least $800–$900 million, credit capacity was expanded by $900 million in late April (revolver capacity now $1.5 billion with $373 million outstanding), and leverage is expected to move from just under 2x to just over 2x with the Talkspace deal. Operational and margin assumptions called out include behavioral wage growth of ~6% in 2026 (down from 7–8% in 2025), California nurse‑staffing assumptions on track for the June 1 effective date, the new 156‑bed Florida de novo likely to have a first‑year operating loss, and DPP dynamics (including $46 million of out‑of‑period DPP in Q1) reflected in the company’s outlook. Q1 performance that underpins the guidance: revenue +9.6%, adjusted EBITDA net of NCI +8.4%, adjusted EPS $5.62 (GAAP diluted EPS $5.65), acute same‑facility revenue +8.2% (6.2% excl. health plan), acute revenue per adjusted admission +6.3% (4.9% excl. ~ $30M prior‑period supplemental), same‑facility acute EBITDA +11.7%, behavioral same‑facility revenue +7.3% with revenue per adjusted patient day +5.8% (4.9% excl. prior‑period supplemental) and same‑facility behavioral EBITDA +8.4%; additional liquidity/flow metrics: cash from operations $402 million and Q1 capex $217 million, with an estimated ~$15 million HIX impact in Q1 and exchange adjusted admissions down ~5%.
Consolidated revenue grew 9.6% year-over-year in Q1 2026. Adjusted EBITDA (net of NCI) increased 8.4% and adjusted EPS rose 16.1% versus Q1 2025. Reported net income attributable to UHS per diluted share was $5.65 and adjusted EPS was $5.62.
Acute care same-facility net revenues increased 8.2% (6.2% excluding health plan impact). Same-facility revenue per adjusted admission rose 6.3% (4.9% after excluding ~$30M prior-period supplemental program benefit). Same-facility acute segment EBITDA grew 11.7%.
Behavioral health same-facility net revenues increased 7.3% with same-facility revenue per adjusted patient day up 5.8% and adjusted patient days up 1.6%. Same-facility behavioral segment EBITDA increased 8.4% (normalized core behavioral EBITDA growth ~4.3% after excluding prior-period supplemental payments).
Announced acquisition of Talkspace (network of ~6,000 clinicians across all 50 states). Management expects the deal to be accretive to earnings in the first 12 months post-close and increasingly accretive thereafter, with an expected effective EBITDA multiple in the single digits by year three. Strategic rationale includes accelerating virtual outpatient capabilities and bidirectional revenue synergies (e.g., virtual IOPs).
Operating cash flow for Q1 2026 was $402 million versus $360 million in Q1 2025. Capital expenditures were $217 million for the quarter. The company repurchased 675,000 shares for $127 million in Q1 and has $1.3 billion of repurchase authorization remaining; management reiterated an annual buyback target of at least $800–$900 million.
Expanded aggregate credit facility capacity by $900 million to support the pending Talkspace transaction and M&A flexibility. Revolver borrowings were $373 million as of 03/31/2026 and revolver capacity was expanded to $1.5 billion.
Same-facility acute salaries, wages and benefits expense per adjusted admission rose 3.1% and supply expense per adjusted admission rose 3.5%, while contract labor in acute was 2.3% of segment revenues (40 bps lower Y/Y). Management emphasized expense control, pricing contribution, and operational efficiency driving results.
Deployed and scaled eight AI use cases in revenue cycle operations in 2025 (improving denials management and revenue capture). 2026 roadmap focuses on clinical AI use cases (patient experience and hospital-level efficiency) with partners such as Hippocratic AI; management expects incremental margin and quality benefits over time.
Good day, and thank you for standing by. Welcome to the First Quarter 2026 Universal Health Services, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session. To ask a question during the session, please press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again.
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Darren Lehrich, Vice President of Investor Relations. Please go ahead.
Thanks, Daniel. Good morning, and welcome to Universal Health Services, Inc. first quarter 2026 earnings conference call. With me this morning are our President and CEO, Marc D. Miller, and our Chief Financial Officer, Steve G. Filton. Marc D. Miller and Steve G.
Filton will provide prepared remarks, and then we will open it up to Q&A. During today's conference call, we will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecasts, projections, and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, we recommend a careful reading of the section on forward-looking statements and risk factors in our Form 10-Ks for the year ended December 31, 2025. 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 fin...