Universal Health Services: A must-read company overview (Part 1 of 18)
Introduction
Universal Health Services (UHS) is one of the largest for-profit hospital management companies in the US. With headquarters in King of Prussia, Pennsylvania, the company owns and operates 25 acute care hospitals, 197 behavioral health facilities, and three surgery centers in 37 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. The company also has one of the highest market capitalizations in the US for-profit hospital industry, amounting to around $10.87 billion.
History
Universal Health Services was founded by Chairman and CEO Alan B. Miller, with seed capital of $3.95 million in 1978. Following its initial public offering (or IPO) in 1981, the company began expanding its network by acquiring five non-profit hospitals. In 1983, Universal Health Services acquired Qualicare, which included 11 acute care hospitals and four behavioral health hospitals, marking its entry in the psychiatric healthcare market. In 1987, the company created Universal Health Realty Income Trust, the first REIT in the healthcare industry.
With the company’s strategic acquisitions and excellent service, Universal Health Services’ revenues rose from $2.3 billion in 1996 to $5 billion in 2008. In 2010, the company acquired Psychiatric Solutions, one of the largest behavioral health operators in the US. This helped Universal Health Services’ revenues cross the $7 billion mark.
Share price performance
The graph above shows that Universal Health Services (UHS) has consistently provided good returns. Its performance even surpassed that of the Health Care Select Sector SPDR ETF (XLV) in the latter half of 2014.
On an annualized basis, the company delivered returns of 23.8% from April 2011 to December 2014. In the same timeframe, peers like Community Health Systems (CYH), HCA Holdings (HCA), and LifePoint Hospitals (LPNT) each delivered annual returns of 8.5%, 23.8%, and 16.4%, respectively.
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