Highlights

  • Universal Health Services shows 29.66% basic EPS growth, a P/E of 7.61, PEG of 0.52.
  • Third quarter net revenues were $4.733 billion, up 5.3%, against $4.495 billion.
  • Third quarter net income attributable to UHS was $308.7 million, against $373.0 million.
  • The company repurchased 3.915 million shares for $689.6 million in nine months.

Growth, P/E and PEG sit side by side at Universal Health Services (NYSE:UHS), an undervalued growth stock: basic earnings per share grew 29.66% over one year, the trailing twelve-month P/E ratio is 7.61 and the PEG ratio, on an expected basis, is 0.52, with shares trading at USD 172.18 on October 28, 2026, down 2.90%. In its latest disclosures, the hospital and behavioral health services operator completed its Talkspace acquisition in August, reached a tentative settlement of the Cumberland Litigation in August, and reported third quarter 2026 net income attributable to UHS of $308.7 million on October 27.

Headquartered in King of Prussia, Pennsylvania, and incorporated in Delaware, Universal Health Services provides hospital and healthcare services through its subsidiaries. As of September 30, 2026, it operated 30 inpatient acute care facilities, 388 inpatient behavioral health facilities and 169 outpatient and other facilities, with locations in 40 states, Washington, D.C., Puerto Rico, Ireland and the United Kingdom. It reports acute care services and behavioral health care services, and employs more than 102,000 people.

Growth: Third Quarter Earnings, Revenues and Patient Volumes

Net income attributable to UHS was $308.7 million in the third quarter of 2026 against $373.0 million a year earlier, and $1.016 billion for the nine months against $1.043 billion. Basic earnings per share were $5.25 against $5.92 for the quarter and $16.98 against $16.27 for the nine months. Diluted earnings per share were $5.22 against $5.86 for the quarter.

Net revenues increased 5.3% to $4.733 billion in the quarter and 7.7% to $13.867 billion for the nine months. The quarter included a pre-tax benefit of $47 million, net of provider taxes, from higher Medicaid supplemental payments, mainly in Washington, D.C. and California, and a pre-tax charge of $26 million for higher professional and general liability reserves, due primarily to the Cumberland settlement.

On a same facility basis, acute care adjusted admissions rose 4.9%, net revenue per adjusted admission fell 1.7% and net revenues rose 4.7%. Behavioral health adjusted admissions rose 2.5% and net revenues rose 4.0%. Adjusted EBITDA net of NCI, a non-GAAP measure, was $624.6 million against $670.6 million.

Valuation: P/E of 7.61, PEG of 0.52 and Cash Generation

The P/E ratio of 7.61 is measured on trailing twelve-month earnings, and the PEG ratio of 0.52 on expected growth. Net cash provided by operating activities increased 14.9% to $1.481 billion for the nine months, against $1.290 billion. Adjusted net income, a non-GAAP measure, was $1.014 billion, or $16.83 per diluted share, against $1.030 billion, or $15.87. UHS common stockholders' equity was $7,596,849 thousand at September 30, 2026.

Capital Deployment: Repurchases, Talkspace and Debt

UHS repurchased 1.35 million shares of Class B Common Stock for approximately $242.1 million in the third quarter, and 3.915 million shares for approximately $689.6 million in the nine months. Approximately $735.4 million of repurchase authorization remained at September 30, 2026. Chief Financial Officer Steve Filton said on the call that the company expects to remain active with repurchases for the foreseeable future.

Acquisitions of businesses and property used $1,002,852 thousand of cash in the nine months. Additional borrowings were $1,800,040 thousand and repayments of long-term debt were $828,487 thousand. Long-term debt was $5,627,528 thousand, and cash and cash equivalents were $168,749 thousand. Under the $1.5 billion revolving credit facility, $1.187 billion of borrowing capacity was available.

Disclosed Risks and Outlook

Net interest expense was $56,277 thousand in the quarter against $38,431 thousand. The company cited Medicaid and Medicare payment changes, the July 4, 2025 legislation adding Medicaid work requirements and limiting provider fees, tariffs, litigation outcomes and the Talkspace integration as factors that could affect results.

In the Cumberland Litigation, a 2024 jury verdict awarded three plaintiffs combined compensatory damages of $60 million and an additional $180 million in trebled damages; punitive damages were reduced to a combined maximum of $1.05 million. About 53 additional claimants have pending claims. The tentative settlement, subject to final release agreements and certain court approvals, has confidential terms, and the company believes a substantial portion is covered by commercial excess insurance.

On the third quarter call, management said adjusted EBITDA net of NCI was below its internal expectations, citing slower de novo hospital ramp-ups and softer surgical trends. It reiterated its 2026 forecast ranges from July, with results expected toward the lower end, and expects Laurel Ridge recertification during 2027. It estimated a 2027 Medicaid supplemental payment headwind of approximately $175 million to $200 million and plans to issue 2027 guidance in February.