Universal Health Grows On Acquisitions, Rising Debt A Drag
Zacks Investment Research | Jun 18, 2017 09:08PM ET
Universal Health Services, Inc.'s (NYSE:UHS) inorganic strategies substantially make it well positioned for long-term growth. Universal Health has been witnessing revenue growth for a long time, primarily driven by its frequent and strategic acquisitions and mergers. In 2016, the company acquired the adult services division of Cambian Group.
Universal Health specializes in providing care to underprivileged patients at low costs. Its acute care platform has been delivering strong underwriting results. Continuing the trend, in the first quarter of 2017, net revenue from acute care hospitals increased 4.8% year over year to $1.4 billion, accounting for 53.8% of the total revenue.
The company’s solid behavioral platform also continues to impress. In fact, behavioral facility acquisitions help Universal Health win market share in the fast growing addiction and mental health disorder market. In the first quarter of 2017, the segment’s revenues (46.2% of total revenue) rose 1.4% year over year to $1.2 billion.
The stock currently has a trailing 12-month P/B ratio of 2.32. This is at the lower end of its range of 2.20 to 3.61 in the same time frame. Moreover, it compares favorably with the market at large, as the current P/B ratio for the S&P 500 is at 3.64. This suggests that the company is undervalued compared to its peers.
However, year to date, the stock has lost 13.2%, underperforming the Zacks categorized Zacks Investment Research
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