Hospital management company Universal Health Services (NYSE: UHS) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.4% year on year to $4.50 billion. The company’s full-year revenue guidance of $17.38 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $5.69 per share was 15.4% above analysts’ consensus estimates.

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Company Overview

With a network spanning 39 states and three countries, Universal Health Services (NYSE: UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Universal Health Services’s sales grew at a decent 8.4% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Universal Health Services’s annualized revenue growth of 10.1% over the last two years is above its five-year trend, suggesting some bright spots.

Universal Health Services also reports same-store sales, which show how much revenue its established locations generate. Over the last two years, Universal Health Services’s same-store sales averaged 3% year-on-year growth. Because this number is lower than its revenue growth, we can see the opening of new locations is boosting the company’s top-line performance.

This quarter, Universal Health Services reported year-on-year revenue growth of 13.4%, and its $4.50 billion of revenue exceeded Wall Street’s estimates by 2.8%.

Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and suggests the market is forecasting success for its products and services.

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Operating Margin

Universal Health Services’s operating margin has risen over the last 12 months and averaged 9.9% over the last five years. Although its profitability is still mediocre, we can see its decent revenue growth is giving it operating leverage as it scales. This gives it a shot at higher long-term profits if it can keep expanding.

Analyzing the trend in its profitability, Universal Health Services’s operating margin of 11.5% for the trailing 12 months may be around the same as five years ago, but it has increased by 3.6 percentage points over the last two years. This dynamic unfolded because its sales growth gave it operating leverage and shows it has some momentum on its side.

This quarter, Universal Health Services generated an operating margin profit margin of 11.6%, up 1.9 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Universal Health Services’s EPS grew at a spectacular 15% compounded annual growth rate over the last five years, higher than its 8.4% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Universal Health Services’s earnings quality to better understand the drivers of its performance. A five-year view shows that Universal Health Services has repurchased its stock, shrinking its share count by 25.3%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q3, Universal Health Services reported adjusted EPS of $5.69, up from $3.71 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Universal Health Services’s full-year EPS of $20.80 to grow 4.7%.

Key Takeaways from Universal Health Services’s Q3 Results

We enjoyed seeing Universal Health Services beat analysts’ full-year EPS guidance expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its same-store sales slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 6.4% to $227.80 immediately after reporting.

Universal Health Services put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.