Updated from Oct. 20
Universal Health Services
has lost its immunity to the downturn plaguing the hospital sector.
After holding up longer than most, Universal Health finally saw patient admissions falter in the latest quarter. The slowdown, including a full 1% drop in acute-care admissions, led the company to a rare earnings miss Monday evening. Its shares fell 6% Tuesday.
The Pennsylvania-based hospital chain reported a third-quarter profit of 72 cents a share, 4 cents shy of consensus expectations. Earnings were still up 11% from a year ago. But the same company posted a 35% bottom-line surge when toppling Wall Street estimates this time last year.
Even last quarter -- when industry giants
were disappointing investors -- Universal Health managed to at least keep acute-care admissions steady while hiking profits by 19% and beating the Street by two pennies. But the industry slowdown has finally taken its toll on both of the company's key businesses. In addition to the 1% slump in acute-care admissions, Universal Health posted just a modest 1% growth in admissions to its behavioral care facilities. A year ago, the company was pointing to its "location in rapid-growth communities and continuing investment in modern technology" as reasons for its robust 7.9% and 6.4% admission jumps at acute and behavioral facilities, respectively.
For now, anyway, the company has at least dodged another problem ravaging the sector. HCA -- and, more recently,
-- have found themselves writing off huge sums of debt owed by a growing pool of uninsured patients. Universal Health's latest earnings report showed no similar writedown. Indeed, the company's "provision for doubtful accounts" actually declined slightly to $62.2 million from $62.5 million a year ago.
Universal Health's overall results could prove troubling to some industry watchers, however. The company is among the first in a long line of hospital chains to release earnings reports that are being closely monitored for signs of industry weakness.
The stock dropped $2.73 Tuesday to $45.95.