UNIVERSAL HEALTH SERVICES, INC. (UHS): what the price requires
The current priced-in claim for UNIVERSAL HEALTH SERVICES, INC. (UHS) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/UHS
Headline
| Field | Value |
|---|---|
| Ticker | UHS |
| Company | UNIVERSAL HEALTH SERVICES, INC. |
| Current price | $153.44/sh |
| Composition | Medicare 11% / Managed Medicare 12% / Medicaid 15% / Managed Medicaid 14% / Managed Care (HMO and PPOs) 28% / UK Revenue 6% / Other patient revenue and adjustments, net 7% / Other non-patient revenue 6% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.1% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| cohort percentile (of 112 peers) | 0 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.58x | 5 | justifies |
| Earnings | 0.70x | 5 | justifies |
| Relative | 0.21x | 5 | justifies |
| Growth | 0.85x | 2 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.9%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| DCF Exit Multiple | Growth | $265.05 | 0.58x | yes | Exit EV/EBITDA: 4.0x / 5.7x / 7.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $339.42 | 0.45x | yes | P/E 13.29x (blended: static sector reference 18x + trailing (TTM) 6x), scenarios: 11.0x / 13.3x / 15.6x (bear / base = reference held flat / bull), EV/EBITDA 9.48x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $266.61 | 0.58x | yes | BV/sh $121.05, ROE (TTM) 20.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $391.90 | 0.39x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $136.40 | 1.12x | yes | Rev $17.8B, growth 10% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $838.25 | 0.18x | yes | EPS $23.95, growth 35% (input: historical EPS growth), PEG=0.18 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $219.15 | 0.70x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.49B × (1−24%) / WACC 5.9% → EPV (no growth) |
| Residual Income | Asset | $377.05 | 0.41x | yes | BV $121.05 + 5yr PV of (ROE (TTM) 20.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $255.40 | 0.60x | yes | √(22.5 × EPS $23.95 × BVPS $121.05) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $425.83 | 0.36x | yes | EBITDA $2.67B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $66.68 | 2.30x | yes | FCF $912.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $49.75 | 3.08x | yes | SBC-adj FCF $0.82B (FCF $0.91B − SBC $0.10B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $772.79 | 0.20x | yes | EPS $23.95 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $59.75 | 2.57x | yes | BV $121.05 × (ROIC 2.9% / WACC 5.9%) |
| P/Sales Sector | Relative | $720.00 | 0.21x | yes | Revenue $17.76B × sector P/S 2.5x |
| PEG Fair Value | Relative | $898.13 | 0.17x | yes | EPS $23.95 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $258.92 | 0.59x | yes | EPS $23.95 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $4.7b |
| Net debt / NOPAT (after-tax) | 3.09x |
| Net debt / operating income (pre-tax) | 2.36x |
| Interest coverage | 13.1x |
| Share count CAGR (buyback) | -5.1% |
| Burning cash | no |
Bullet Takeaways
- Universal Health Services runs two hospital businesses, acute care and behavioral health, with acute care, outpatient, and commercial insurer revenue making up roughly 57% of consolidated net revenues, per the filing, and behavioral health the rest.
- The striking fact is the valuation gap: the stock trades at a fraction of where the standard methods land even as Q1 2026 revenue grew 9.6% and EPS rose 16.1% to $5.62, a growth profile the price does not reflect.
- The risk that explains the discount is reimbursement: a large share of revenue comes from government Medicaid and Medicare programs, where rate and supplemental-payment policy is set by states and Washington, not by UHS.
Bull Case
The counterintuitive thing about Universal Health Services is that it is growing at a double-digit clip while priced like a company in decline. Q1 2026 revenue rose 9.6% to $4.49 billion, EPS grew 16.1% to $5.62, beating expectations, and adjusted EBITDA reached $658.3 million at a 14.6% margin. Both engines fired: same-facility acute care revenue grew 8.2% and behavioral health grew 7.3%. Yet the stock trades well below where every family of valuation method lands. That is not the pattern of an overvalued stock; it is the pattern of a profitable, growing business the market is discounting for reasons external to its operations.
The two-segment structure is a genuine diversifier. The 10-K shows acute care hospitals, outpatient facilities, and commercial insurer revenue at roughly 57% of consolidated net revenues, with behavioral health making up the balance, and the geographic base concentrated in large markets, the filing noting that a significant portion of revenue comes from facilities in "Texas, Nevada and California". Behavioral health is the structurally advantaged half: demand for mental-health and addiction treatment has risen secularly, capacity is scarce, and UHS is one of the largest operators in the country. Owning a scarce-supply behavioral franchise alongside a scale acute-care business gives UHS a mix most hospital operators lack.
Management is treating the cheap stock as an opportunity. UHS repurchased 675,000 Class B shares in Q1 2026 at around $189, and the share count has been shrinking about 5% a year, an aggressive buyback that retires shares well below the value the methods assign. Cash from operations rose to $402 million in the quarter, and the company is adding the Talkspace virtual-therapy platform, expected to be accretive within twelve months of closing, extending behavioral health into telehealth. A business growing earnings double digits, buying back stock at a discount to intrinsic value, and expanding its best segment is doing exactly what a shareholder would want at this price.
Bear Case
The bear case for a hospital operator is the sector cycle, and for UHS that cycle runs through reimbursement rather than economic demand. A large share of UHS's revenue comes from government payers: the 10-K notes payments from "state governments under their respective Medicaid programs and directly from patients", alongside Medicare and commercial insurers under agreements that pay "amounts different from our established rates". That is the structural exposure. UHS does not set the prices for a big portion of its business; states and the federal government do, through Medicaid rates, Medicare schedules, and supplemental-payment programs that can be expanded or cut with the political cycle. The stock's deep discount to the value methods is the market pricing the risk that a policy shift compresses those payments, and that risk is real and recurring.
The earnings have a cyclical and policy-dependent quality that argues against extrapolating the current strength. Hospital margins are sensitive to volume, labor cost, and payer mix, and the quarter itself showed the volatility: acute care volumes were dented by roughly 200 basis points from weaker flu and respiratory activity and winter weather. Strong quarters and weak quarters alternate with the respiratory season and the labor market, and behavioral-health margins depend on staffing a workforce that is in chronic short supply. The price embeds a return UHS can reach, but the methods land so far above the price precisely because the market doubts the durability of the payer environment that produces those returns.
Geographic concentration sharpens the policy risk. With a significant portion of revenue in Texas, Nevada, and California, a change in any one of those states' Medicaid programs or supplemental-payment arrangements would hit UHS disproportionately. State budgets are under pressure, and Medicaid is often the first line item legislators target. The bear case is not that UHS is mismanaged or overvalued on its numbers; it is that the numbers themselves rest on a reimbursement framework that sits outside the company's control and that history shows can change quickly. A stock that looks cheap on every method while the operator grows double digits is usually cheap for a reason the methods cannot see, and here that reason is the government's hand on the revenue line.
Valuation
Universal Health Services is the rare name where every family of valuation method lands above the price, most of them far above it. The relative-multiple methods put fair value at several times the price, the asset-value and earnings-power methods land at roughly double it, and even the growth methods sit above. This is not a growth bet the market is paying up for; it is a value situation where the price refuses to credit the demonstrated economics.
The concrete question is why the discount exists, because the methods agreeing on cheapness is itself the signal that something external is being priced. The answer is reimbursement risk. The market is applying a large discount for the possibility that Medicaid and Medicare policy, supplemental payments, and payer mix compress UHS's margins, and that discount is what separates the price from where the methods land. The relevant peer comparison is to other acute-care and behavioral-health operators, against which UHS trades at a low multiple, consistent with the whole sector carrying a policy-risk discount rather than UHS being uniquely cheap. The bet for a buyer is that the reimbursement environment proves more stable than the discount implies.
Solvency is a source of strength here, not a worry, and it closes the section. Net debt of about $4.7 billion sits at roughly 2.3 times trailing operating income, with interest coverage above 13 times and a share count shrinking about 5% a year. The balance sheet comfortably supports the aggressive buyback and the Talkspace acquisition. The decisive point is therefore not financial risk but policy risk: the price is paying for the reimbursement framework to deteriorate, and the value case is the wager that it holds, in which case a double-digit grower buying back stock at a fraction of intrinsic value rewards the patient holder.
Catalysts
Q1 2026 was a clear beat across the board. Revenue rose 9.6% to $4.49 billion, ahead of the $4.39 billion forecast, and EPS of $5.62 beat the $5.44 estimate and grew 16.1% year over year. Same-facility acute care revenue grew 8.2% and behavioral health 7.3%, with adjusted EBITDA of $658.3 million at a 14.6% margin, above the $628.5 million analysts expected. Acute care volumes were held back roughly 200 basis points by weak flu and respiratory activity and winter weather.
Capital deployment and strategy reinforced the quarter. Cash from operations rose to $402 million, the company repurchased 675,000 Class B shares at around $189, and it is advancing the Talkspace acquisition, expected to be accretive to earnings within twelve months of closing. Management also pointed to AI initiatives aimed at operational efficiency and patient experience.
The catalysts to watch are the policy ones: Medicaid rate and supplemental-payment developments at the state and federal level, which drive the discount the stock carries, alongside the seasonal acute-care volume recovery as respiratory activity normalizes and the behavioral-health staffing and demand trends. The Talkspace integration is the company-specific item, but the variable with the most leverage on the thesis remains the reimbursement environment.
Peer Cohorts (Per Segment, With Filing Citations)
Acute Care Hospital Services (reported)
- HCA (HCA Healthcare, Inc.)
- (no filing in the citation store)
- THC (TENET HEALTHCARE CORP)
- (no filing in the citation store)
- EHC (Encompass Health Corporation)
- (no filing in the citation store)
Behavioral Health Care Services (reported)
- ACHC (Acadia Healthcare Company, Inc.)
- (no filing in the citation store)
- EHC (Encompass Health Corporation)
- (no filing in the citation store)
- SEM (SELECT MEDICAL HOLDINGS CORP)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
UHS Q1 2026 results, 2026 · UHS Q1 2026 disclosures, 2026 · UHS Q1 2026 earnings call, 2026