Revenue rose 8.3% to $4.64B and EPS 10.1% to $5.98, but net income grew just 1.5%: buybacks and a $100M prior-period Florida Medicaid payment drove the headline, and full-year EPS guidance was cut 2.6%.
Revenue
$4.6B
+8.3% YoY
Net income
$358M
+1.5% YoY
Diluted EPS
$5.98
+10.1% YoY
Operating margin
11.1%
How UHS compares with Health Care peers
Figure
UHS
Peer median
Rank
Revenue growth (YoY)
+8.3%
+7.3%
24th of 53
Operating margin
11.1%
15.1%
35th of 53
EPS growth (YoY)
+10.1%
+15.1%
30th of 48
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Health Care companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Universal Health Services (UHS), which runs acute-care hospitals and one of the largest networks of psychiatric (behavioral health) hospitals in the US, grew second-quarter 2026 revenue 8.3% to $4.638 billion. Diluted EPS rose 10.1% to $5.98, but net income attributable to UHS rose only 1.5%, to $358.4 million. The difference comes from buybacks: the diluted share count fell 7.8%. Pre-tax income also got a $100 million one-time lift from a Florida Medicaid payment that relates to October 2024–September 2025. Management still lowered its full-year earnings forecast, and the cut would have been larger without that payment.
At a glance
+1.5% net income vs +10.1% EPS. Profit barely grew. Almost all of the per-share gain came from buying back stock: the average diluted share count fell from 65.0 million to 59.9 million.
$72 million net prior-period benefit. A $100 million Florida Medicaid catch-up payment, minus a $28 million increase to malpractice reserves, was about 15% of the quarter's $479 million pre-tax income.
Full-year adjusted EPS guidance cut 2.6% at the midpoint, to $22.28–$23.65 from $22.64–$24.52. The new range already includes the Florida payment, which was not in the original forecast.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Net revenues
$4,638.0M
$4,283.8M
+8.3%
Income from operations
$516.7M
$500.3M
+3.3%
Operating margin
11.1%
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Acute care same-facility revenue per adjusted admission
—
—
+3.0%
Behavioral same-facility adjusted admissions
—
—
+0.5%
Behavioral same-facility revenue per adjusted admission
—
—
+7.1%
"Same facility" counts only hospitals UHS ran in both years, so openings and closures don't distort the comparison. An "adjusted admission" adds outpatient visits to overnight inpatient stays, which gives a fuller measure of patient volume. Operating margin is the share of revenue left after the costs of running the hospitals, before interest and tax. Source: Q2 2026 Form 10-Q and the July 27, 2026 earnings release.
Two businesses growing in different ways
Acute care: more patients, flat margin. Same-facility acute revenue rose 8.2% to $2.508 billion. Volume was the main driver this quarter. Adjusted admissions rose 2.9%, inpatient admissions rose 1.5%, and length of stay held at 4.7 days. Pricing and mix (revenue per adjusted admission) added another 3.0%. Labor was a smaller share of revenue: salaries, wages and benefits rose 5.7%, less than revenue, and fell to 39.5% of revenue from 40.5%. "Other operating expenses" rose 15.9% and absorbed that gain. Of the $107 million increase:
$53 million came from UHS's own commercial health insurer, whose medical costs rose 30.6% because it has more members.
$22 million came from hospital-based physician costs (emergency room, anesthesiology, radiology), up 12.4%.
$17 million was the acute share of the malpractice reserve increase.
Same-facility acute pre-tax margin was therefore 9.8%, compared with 9.9% a year earlier. Across the whole acute segment, pre-tax income was flat at $228 million. The $17 million same-facility gain was cancelled out by start-up losses at the Alan B. Miller Medical Center in Palm Beach Gardens, Florida, which opened this quarter.
Behavioral health: higher prices on flat volume. Same-facility behavioral revenue rose 7.4% to $1.929 billion. Admissions barely moved (adjusted admissions +0.5%). Nearly all the growth came from revenue per adjusted admission, up 7.1%. Same-facility pre-tax income rose 9.0% to $427 million, and pre-tax margin widened to 22.2% from 21.8%. Labor still takes a much bigger share of revenue here than in acute care: 52.8%, down from 53.4%. Pay per full-time-equivalent employee rose 4.2% and headcount rose 2.0%. The flat admissions line matters because this segment has long been held back by staffing. The 10-Q says that at some behavioral facilities UHS "w[as] unable to fill all vacant positions and, consequently, we were required to limit patient volumes."
The segment total grew less, with pre-tax income up only 3.8% to $411 million. The gap is mostly Laurel Ridge Treatment Center in San Antonio, a 330-bed facility. CMS terminated its Medicare provider agreement effective April 30, 2026, and a court denied UHS's request to block the termination. Laurel Ridge earned about $23 million pre-tax in 2025. It has reapplied for certification and UHS expects "operating losses and cash flow deficits" while that is pending. In July, Utah also revoked the licenses of both Provo Canyon School campuses (about $2 million of 2025 pre-tax income), and UHS is appealing.
What the headline numbers hide
The EPS growth is almost all buybacks. Net income attributable to UHS rose $5 million (1.5%) while EPS rose 10.1%. UHS spent $320 million buying back 1.89 million shares in Q2 and $448 million on open-market buybacks in the first half. The lower share count accounts for roughly 8.5 points of the 10.1% EPS gain. Tax did not help: the effective tax rate rose to 23.9% from 23.4%. Interest expense rose 13% to $40 million.
Both years include large Medicaid payments. Q2 2026 had a $100 million Florida directed-payment benefit (net of provider taxes) that relates to October 2024–September 2025. It was booked because CMS approved a larger program in April 2026. Q2 2025 also had about $101 million of incremental supplemental Medicaid payments, including $58 million from Tennessee. The underlying trend is therefore not hidden by a big one-off in only one year. The problem is that both years depend on state supplemental programs, which the 2025 federal budget law (OBBBA) will shrink. UHS estimates its annual net benefit from these programs falls by about $500 million by 2032, starting in 2028. The 2026 net benefit is about $1.52 billion.
UHS reports no adjustments for Q2 2026. Adjusted EPS equals GAAP EPS at $5.98, even though the quarter includes the $100 million Florida benefit and the $28 million reserve charge ($17 million acute, $11 million behavioral). Q2 2025 adjusted EPS was $5.35, after removing a $0.07 mark-to-market gain on Premier shares and a $0.01 tax item.
Cash conversion is fine, but receivables are rising. First-half operating cash flow was $845 million, 1.17 times net income of $723 million, but $64 million below last year. The main reason was a $207 million negative swing in working capital from the timing of supplier payments. Days sales outstanding (how long customers take to pay, on average) rose to 56 from 50, so receivables grew faster than revenue.
Buybacks exceeded free cash flow. First-half capital spending was $445 million, which leaves about $400 million of free cash flow (operating cash flow minus capital spending). UHS spent $485 million on share repurchases, including shares withheld for employee taxes, and borrowed $300 million more on its term loan.
Takeaway: In the core hospitals, higher pricing grew profit, but higher physician fees, malpractice reserves and new-hospital start-up losses absorbed most of that gain. Buybacks, not operating growth, produced the 10% EPS increase. Guidance fell 2.6% even though the new range includes a $100 million Florida payment the original range did not.
Outlook
Management's revised 2026 forecast, compared with the February forecast:
Revised (July 2026)
Original (Feb 2026)
Midpoint change
Net revenues
$18.501–$18.762B
$18.417–$18.789B
+0.2%
Adjusted EBITDA, net of NCI
$2.610–$2.717B
$2.641–$2.789B
-1.9%
Adjusted EPS (diluted)
$22.28–$23.65
$22.64–$24.52
-2.6%
UHS attributes the revision to operating trends and changes in certain Medicaid supplemental programs. First-half adjusted EPS was $11.60, so the new range implies $10.68–$12.05 for the second half. The release says no Florida benefit beyond September 30, 2025 is in the forecast, because CMS has not approved the larger program for later periods. That is a possible upside if approval comes.
Our read: the risks for the rest of 2026 are mostly outside day-to-day hospital operations.
Refinancing: the $700 million of 1.65% notes due September 1, 2026 must be refinanced. UHS itself expects "significantly higher interest rates."
Acquisition: the Talkspace deal, to be funded with a $400 million delayed-draw term loan, was expected to close in Q3.
Laurel Ridge: how long the facility stays out of Medicare and Medicaid.
ACA premium credits: the enhanced subsidies expired and enrollment is already down. UHS expects this to raise uncompensated care.
In Q3, watch behavioral same-facility admissions: pricing alone won't keep driving that segment's growth. Also watch whether the acute segment's growth in "other operating expenses" (15.9% this quarter) slows once the reserve charge is no longer in the comparison.