Universal Health Services (NYSE:UHS) shares drop on guidance reduction; EPS rise tied to share repurchases
28 July 2026
2 mins read

Universal Health Services (NYSE:UHS) shares drop on guidance reduction; EPS rise tied to share repurchases

NEW YORK, July 27, 2026, 18:09 EDT — U.S. cash market finished; after-hours trade remains active.

  • UHS shares dropped roughly 5% in after-hours trading following a cut to its 2026 profit outlook.
  • The midpoint for revenue increased by 0.2%, while the midpoint for adjusted EPS declined by 2.6%.
  • Calculated results show that nearly 85% of the quarterly EPS increase was due to a lower number of diluted shares.

Shares of Universal Health Services declined around 5% to $151.21 in after-hours trading. The hospital operator lowered its yearly profit outlook due to uncertainty about Medicaid reimbursement. The stock had previously dropped close to 8%.

The decline wiped out nearly all progress made since July 17. Shares of UHS climbed 3.0% over the past week and advanced another 2.3% on Monday, reaching $159.31. The S&P 500 was little changed, ticking up 0.02%.

Universal Health Services (NYSE:UHS) shares drop on guidance reduction; EPS rise tied to share repurchases

The shift in guidance clarifies the turnaround. UHS increased its revenue midpoint by 0.2%, but lowered the EBITDA midpoint by 1.9%. The midpoint for adjusted EPS declined 2.6%.

The company now expects adjusted EPS in the range of $22.28 to $23.65, compared with its earlier guidance of $22.64 to $24.52. Projected revenue has been updated to between $18.50 billion and $18.76 billion.

The quarter highlighted the impact of share buybacks. Net income rose by 1.5%, while diluted earnings per share increased 10.1%. Diluted weighted shares were down 7.8%.

MetricQ2 2026Q2 2025Calculated change
Revenue$4.638 billion$4.284 billionup 8.3%
Net income attributable to UHS$358.4 million$353.2 millionup 1.5%
Reported diluted EPS$5.98$5.43up 10.1%
Diluted weighted shares59.9 million65.0 milliondown 7.8%
Adjusted EBITDA margin14.6%15.0%down 40 basis points

With last year’s share count, quarterly EPS would have reached approximately $5.52, about eight cents higher than the prior year on a constant-share basis. Calculations show that the lower share count accounted for nearly 85% of the reported EPS increase.

UHS acquired 1.89 million shares for $320.3 million over the quarter, paying an average price of approximately $169 per share. As of late Monday, the stock quote was nearly 11% lower than that average. At June 30, $977.6 million remained available for repurchase authorization.

Demand remained strong. Adjusted admissions for acute care climbed 2.9%, and behavioral admissions edged up 0.5%. Revenue per adjusted admission in behavioral services rose 7.1%.

Adjusted EBITDA increased by 5.4% to $677.9 million, while its margin slipped to 14.6% from 15.0%. Revenue advanced 8.3% to $4.64 billion.

The quarter slightly surpassed Wall Street expectations. Adjusted earnings per share reached $5.98, edging above the LSEG consensus of $5.96. Revenue also came in ahead of the $4.58 billion projection.

The results showed a net pretax gain of $72 million. This reflected a $100 million advantage from Florida Medicaid that offset a $28 million rise in liability reserves. UHS has not projected any additional benefit from Florida past September 2025.

The difference in valuations is still significant. UHS ended Monday trading at 6.7 times its trailing earnings. HCA Healthcare was at 13.4 times, and Tenet Healthcare was at 12.7 times.

Cash conversion declined. Operating cash flow for the first half dropped 7% to $845 million. Capital expenditure guidance stays unchanged at $950 million to $1.1 billion.

Management meets with investors at 9 a.m. EDT Tuesday. Discussion topics will likely include Florida reimbursement, margins, and the speed of the share buyback. UHS projects its takeover of Talkspace (NASDAQ:TALK) will be finalized in the third quarter.

Risks: Securing CMS approval may postpone supplemental Medicaid payments. Liability reserves face the potential of another increase, and significant capital expenditures restrict operational flexibility. The acquisition of Talkspace introduces additional financing and integration uncertainties.

Volume increased during the quarter, but the updated outlook indicates a smaller share of that revenue could flow through to earnings.

What caused UHS shares to decline following the company’s earnings report on Monday?

UHS finished Monday at $159.31, rising 2.29% ahead of its earnings release. The S&P 500 edged up just 0.02%, with UHS outperforming the index. After hours, quotes fluctuated between $151 and $152, marking a decline of about 5%. The main focus is on the revised guidance. The next key event is the conference call at 9:00 a.m. ET on Tuesday. MarketWatch

Were Wall Street forecasts surpassed by second-quarter earnings?

Universal Health Services (UHS) posted net income of $358.4 million, with diluted earnings per share at $5.98. The company reported revenue of $4.638 billion, up 8.3% from $4.284 billion. Analyst consensus for EPS ranged from about $5.91 to $5.94, and revenue estimates were around $4.58 billion. One initial feed listed “$5.35” as adjusted EPS, but UHS clarified $5.35 referred to the adjusted EPS for the second quarter of 2025. PR Newswire

By what amount did UHS cut its forecast for 2026?

The company now projects revenue between $18.501 billion and $18.762 billion, compared with a previous forecast of $18.417 billion to $18.789 billion. Adjusted EBITDA is revised to a range of $2.610–$2.717 billion, down from $2.641–$2.789 billion. Adjusted EPS guidance shifts to $22.28–$23.65, from $22.64–$24.52. According to management, the midpoints for EBITDA and EPS declined by 1.9% and 2.6%, respectively, while the revenue midpoint increased 0.2%. PR Newswire

What portion of the quarter resulted from atypical Medicaid payments?

Florida’s directed-payment program contributed a net pre-tax benefit of $100 million. This was partially offset by a $28 million rise in liability reserves. The total positive pre-tax effect was approximately $72 million. Neither item was included in UHS’s initial February outlook. Future benefits from Florida after September 30, 2025 remain omitted unless CMS grants approval. PR Newswire

Which segment of hospitals reported stronger underlying demand?

Same-facility acute-care adjusted admissions increased by 2.9%. Adjusted patient days were up 3.1%, with revenue per admission rising 3.0%. Acute-care same-facility revenue climbed 8.2% from a year earlier. Behavioral adjusted admissions edged higher by 0.5%, though revenue per admission in behavioral rose 7.1%. Revenue for behavioral same-facility operations advanced 7.4%. The results indicate that pricing and reimbursement contributed most to growth in behavioral revenue. PR Newswire

Do cash flow and share buybacks continue to benefit shareholders?

Operating cash flow for the first half reached $845 million, down $64 million from the $909 million in the same period a year earlier. UHS bought back 2.565 million shares for $447.5 million, averaging about $174 per share. As of June 30, $977.6 million remained authorized for repurchases. The average buyback price was above both Monday’s closing and after-hours prices. PR Newswire

Is UHS in a strong position to fund the Talkspace acquisition?

UHS has agreed to acquire Talkspace for $5.25 per share, valuing the company at an enterprise worth $835 million. The deal is still on track to close in the third quarter, pending regulatory approvals and other conditions. As of June 30, UHS reported $1.272 billion in available revolver capacity. A delayed-draw loan of $400 million is anticipated to help finance the transaction’s completion. Additionally, a separate $700 million facility may be used to refinance notes due September 1. Liquidity seems sufficient; however, the cost of financing remains a key issue. Talkspace Investors

Is UHS considered undervalued following its drop after earnings?

With shares ending Monday at $159.31, the updated midpoint EPS equates to roughly 6.9 times earnings. Trading around $151–$152 in after-hours, the multiple moves to about 6.6 times. The regular session close was 35.3% beneath the 52-week high of $246.33. Despite the low multiple, valuation concerns remain. Issues around Medicaid, uninsured care and liability reserves provide reasons for the discount. MarketWatch

What points should investors pay attention to during Tuesday’s conference call?

The key question is why EPS guidance dropped even with a $72 million gain. Investors are also seeking clarity on behavioral admissions, which increased by just 0.5%. Management should comment on upcoming payments in Florida and explain the $28 million reserve hike. Details about Talkspace timing, financing expenses, and the intended earnings impact are also crucial. Updates regarding uninsured volumes could impact UHS and other hospital stocks. PR Newswire

Khadija Saeed is a financial markets reporter at TS2.tech, specializing in stocks, technology and emerging industries. She studied economics and finance at the London School of Economics and previously worked in market research before moving into financial journalism. Her coverage focuses on the companies, innovations and economic trends influencing global investors. Follow Khadija Saeed on Google News.

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