UHS grows profit, even as DOJ settlement fund hits $90 million

Universal Health Services grew its third-quarter profit by nearly 22% year-over-year, the investor-owned hospital chain announced Thursday.

The King of Prussia, Pa.-based company reported $171.7 million in net income during the quarter, up from $141.2 million during the same period in 2017. Net revenue rose by 4.2% to $2.65 billion, compared with $2.54 billion in the prior-year period.

UHS' revenue fell just short of the consensus estimate among analysts who report their predictions to Zacks Investment Research, which pegged the company's third-quarter revenue at $2.7 billion, or year-over-year growth of 5.5%. Zacks predicted net revenue in acute care would be $1.4 billion, while behavioral health would total $1.2 billion, or year-over-year growth of 5% and 3.8%, respectively.

The company's third-quarter results include a $48 million pre-tax addition to the reserve it established in connection with the Department of Justice investigation into its behavioral health operations. When the company reported its second-quarter earnings in July, the reserve contained $43 million. As of Sept. 30, the reserve was up to roughly $90 million, the company said Thursday. The government is investigating whether hospitals submitted false claims for services.

UHS reported earnings before interest, taxes, depreciation and amortization of $377.7 million during the third quarter, up nearly 4% compared with $363.4 million during the prior-year quarter.

Adjusted admissions to UHS' acute-care hospitals increased 1.5% on a same-facility basis. Net revenue per adjusted admission grew 6.6%, higher than in previous quarters. Adjusted admissions to UHS' behavioral health facilities rose 4.7% on a same-facility basis while net revenue per adjusted admission declined 1.9%.

Admissions also fell below Zacks' estimates. The firm predicted same-facility acute admissions would grow 3.7% year-over-year, and same-facility behavioral health admissions by 3.4%.

UHS' share price was down slightly at Thursday's market close, ending 0.4% lower at $121.55.