Why Universal Health Services, Inc. Stock Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Universal Health Services (NYSE: UHS  ) , a hospital management corporation, climbed by as much as 11% today after the company reported a surge in second-quarter revenue in its Q2 earnings release.

So What: Universal's net revenue overall surged by 10% year-over-year in the second quarter, helping lift Universal's 2014 to a first-half net revenue gain of 7.5%. Admissions have spiked according to the company, and an increasing number of patients with insurance helped push down bad debt by nearly 30% for the quarter. Not all of the earnings report was positive, however: Universal posted a significant hike in expenses, outpacing revenue growth with a 12.8% jump in Q2. That helped weigh down the company's net profit, which hung flat year-over-year.

Now What: Even with expenses jumping, investors rallied around this stock after Universal raised its full-year earnings outlook significantly. The company now projects 2014 diluted EPS of between $5.55 and $5.85, up from an earlier guidance of between $4.80 and $5.10.

The launch of Obamacare looks to have played a big part of bringing in more admissions, particularly as adjusted, same-facility admissions jumped by more than 3% for the quarter. Bringing down bad debt is a key strength of Universal's Q2, and with the company's operating margins still in double-figure percentages, this corporation's looking strong heading into the latter half of 2014.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3045118, ~/Articles/ArticleHandler.aspx, 12/18/2014 12:47:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement