2023-03-23 06:45:00 ET
Universal Health Services (NYSE: UHS) may be a good find for bargain hunters after a market sell-off triggered by a sharp decrease in fourth-quarter and full-year 2022 net income.
The quarterly profitability plunge to $174.8 million, down almost 27% year over year, appears to be largely the result of a one-time event: the hospital chain's decision to close its 282-bed acute care Desert Springs Hospital in Las Vegas this month. The company's operating expenses appear to have been growing faster than revenue across all of its acute care facilities, reaching $7.2 billion in 2022, or 94.3% of net revenues, compared with $6.4 billion, or 89.6% of net revenues, in 2021.
Because of the hospital shutdown, the company took a pre-tax asset impairment charge of $57.6 million. CEO, President, and Director Marc Miller said in a Feb. 28 conference call that most of the hospital's employees will be transferred to other facilities. This may be a hint that the company is not planning a massive transition out of acute care -- it had 27 other inpatient acute care hospitals -- despite its decision to focus on growth in behavioral healthcare. Still, it should be noted that this is the fourth impairment charge UHS has had to absorb over the past five years, which could explain investors' caution with this stock.
For further details see:
Is Universal Health Services Stock a Bargain Following Hospital Closure?