The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how hospital chains stocks fared in Q2, starting with Universal Health Services (NYSE: UHS).
Hospital chains operate scale-driven businesses that rely on patient volumes, efficient operations, and favorable payer contracts to drive revenue and profitability. These organizations benefit from the essential nature of their services, which ensures consistent demand, particularly as populations age and chronic diseases become more prevalent. However, profitability can be pressured by rising labor costs, regulatory requirements, and the challenges of balancing care quality with cost efficiency. Dependence on government and private insurance reimbursements also introduces financial uncertainty. Looking ahead, hospital chains stand to benefit from tailwinds such as increasing healthcare utilization driven by an aging population that generally has higher incidents of disease. AI can also be a tailwind in areas such as predictive analytics for more personalized treatment and efficiency (intake, staffing, resourcing allocation). However, the sector faces potential headwinds such as labor shortages that could push up wages as well as substantial investments needs for digital infrastructure to support telehealth and electronic health records. Regulatory scrutiny, and reimbursement cuts are also looming topics that could further strain margins.
The 4 hospital chains stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.8%.
Luckily, hospital chains stocks have performed well with share prices up 10.9% on average since the latest earnings results.
Universal Health Services (NYSE: UHS)
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.
Universal Health Services reported revenues of $4.28 billion, up 9.6% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a satisfactory quarter for the company with a decent beat of analysts’ full-year EPS guidance estimates but a slight miss of analysts’ same-store sales estimates.
Universal Health Services scored the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 16.8% since reporting and currently trades at $181.08.
Is now the time to buy Universal Health Services? Access our full analysis of the earnings results here, it’s free.
Best Q2: Tenet Healthcare (NYSE: THC)
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Tenet Healthcare reported revenues of $5.27 billion, up 3.3% year on year, outperforming analysts’ expectations by 2.3%. The business had a very strong quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ full-year EPS guidance estimates.
Tenet Healthcare scored the highest full-year guidance raise among its peers. The market seems content with the results as the stock is up 3.1% since reporting. It currently trades at $180.23.
Is now the time to buy Tenet Healthcare? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Acadia Healthcare (NASDAQ: ACHC)
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ: ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Acadia Healthcare reported revenues of $869.2 million, up 9.2% year on year, exceeding analysts’ expectations by 3.2%. Still, it was a mixed quarter as it posted a miss of analysts’ full-year EPS guidance estimates.
Acadia Healthcare delivered the biggest analyst estimates beat but had the weakest full-year guidance update in the group. Interestingly, the stock is up 3.8% since the results and currently trades at $22.61.
Read our full analysis of Acadia Healthcare’s results here.
HCA Healthcare (NYSE: HCA)
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
HCA Healthcare reported revenues of $18.61 billion, up 6.4% year on year. This result surpassed analysts’ expectations by 0.7%. Aside from that, it was a satisfactory quarter as it also produced an impressive beat of analysts’ full-year EPS guidance estimates but a slight miss of analysts’ same-store sales estimates.
HCA Healthcare had the weakest performance against analyst estimates among its peers. The stock is up 19.9% since reporting and currently trades at $409.10.
Read our full, actionable report on HCA Healthcare here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
