Hospital company Universal Health Services announced Monday that it is lowering its profit expectations for the full year, blaming changes to Medicaid supplemental payment programs — a move that rattled investors and pushed its stock down almost 8% in extended trading.
Medicaid supplemental payment programs are designed to give hospitals additional funding above standard Medicaid rates, helping cover the cost of treating low-income patients.
The King of Prussia, Pennsylvania-based company now expects full-year adjusted earnings to fall between $22.28 and $23.65 per share. That is a step down from its earlier projection of $22.64 to $24.52 per share.
The forecast cut comes as the healthcare industry faces broader uncertainty over enhanced Affordable Care Act subsidies. With those subsidies having expired, more patients are finding themselves without insurance coverage, which is raising concerns about higher uncompensated-care costs for hospitals nationwide.
Universal Health is not alone in this situation. Larger competitor HCA Healthcare also reduced its annual profit forecast earlier this month, citing a growing number of uninsured patients — many of whom dropped their coverage under ACA, also known as “Obamacare,” plans.
Despite the dimmed outlook, Universal Health posted some encouraging operational numbers. Same-facility adjusted admissions at its acute care hospitals climbed 2.9% during the second quarter, while behavioral health facility admissions edged up 0.5%.
The company reported an adjusted profit of $5.98 per share for the second quarter, narrowly beating the analyst consensus estimate of $5.96 per share, according to data from LSEG. Quarterly net revenue increased 8.3% to $4.64 billion, topping analyst expectations of $4.58 billion.
