Universal Health Services, Inc. Class B Wells Fargo 21st Annual Healthcare Conference

I will make a few introductory comments, and then Darren, over to you. It just feels like ages ago at this point, but a quick recap of Q2. I think we were pleased in Q2 with the rebound in volumes in both of our segments. Solid expense control in both of our segments. We had the benefit of the Florida Developmental Disabilities Defendant Program, the 2025 calendar year program that was approved, and we recognized that benefit in the second quarter. We had also some unfavorable discrete items, which I am sure we will get into in the Q&A. As a result, we lowered the midpoint of our EBITDA as NCI guidance by about 3% at the midpoint, which now leaves us with a projection of growth for the year compared to last year of about 3% of EBITDA as NCI line.

The other significant developments, I think post second quarter, were we closed the Talkspace acquisition, and we completed a $1.1 billion bond issuance, both in the mid-August timeframe. We talked about Talkspace at some length, but I will just remind people, very excited about the opportunities that Talkspace creates for us. Again, I am sure we will get into more of that. Talkspace will add about $250 million in annual outpatient revenue to our behavioral results. We have said previously that in the first 12 months, we expect the Talkspace results to be slightly accretive. I think for the balance of 2025, it will likely be immaterial. We are very excited about the Talkspace acquisition.

The access to their panel of 6,000 therapists, I think, really creates an accelerated opportunity for us to grow our outpatient business, which has really been a focus of our behavioral division for certainly the last several years, and really creating the first sort of end-to-end continuum of behavioral care that really exists in the industry. It is really unparalleled. I will pause there, Steve, and answer whatever questions.

Yeah. So as part of our second quarter commentary, we reduced slightly the volume guidance for both segments by about 50 basis points. The midpoint of our acute volume projection growth, adjusted admission growth, went from 2.5% to 2%. Really, as I think your question suggests, in our minds, it was just an acknowledgment and sort of a clarification of the fact that with adjusted admissions in the first half of the year growing by 1.4%, even though the second quarter was stronger, 2% seemed a more reasonable sort of target for the full year. Generally, we feel like volumes are pretty solid, and in line with historical volumes. I'd make the point that, over the last decade, our acute care-adjusted admissions have grown between 2% and 2.5% on average over a 10-year period. So, adjusting to the 2% is still well within range.

We like the markets we're in. We like the overall demand environment. Feel pretty good about it.

Yeah. Putting the exchange dynamics to the side, which we'll probably talk about separately.

Yeah. I think outside of that, there haven't been significant changes to payer mix.

I think in the first half of the year, we saw a bit of an increase in Medicare and managed Medicare, a bit of a decrease in Medicaid and managed Medicaid, and commercial volumes fairly stable. We didn't really have a specific guide in the back half of the year to payer mix dynamics, but expect them to essentially be relatively consistent with the trends we've been seeing.

I think as you noted, our overall surgical volumes were down 0.8% in the second quarter, and that was actually an improvement over the prior period, sequentially an improvement over the prior period. We were pleased, as you suggested or noted, that inpatient volumes were up in the more sort of acute procedures. I think we feel like that's potentially a reflection of the investments that we've made in inpatient surgeries, whether that's robotics or other equipment upgrades, et cetera. We have not historically sort of disclosed elective versus non-elective or parse surgical growth out between elective and non-elective, but we do keep track of it and have not really noticed any significant issues in that regard.