Universal Health Realty Income Trust (UHT) Earnings

Management highlights

### Capacity Expansion and Footprint Growth - Added 177 licensed beds across 3 existing acute care hospitals in Q2 2026, representing a 2.5% increase to same-facility bed capacity to meet strong local demand - Officially opened the Alan B. Miller Medical Center in Palm Beach Gardens, FL in May 2026; achieved Joint Commission accreditation for Stenovo Hospital in July 2026 - Continued advanced integration planning for the pending Talkspace acquisition, expected to close in mid-August 2026. This acquisition will create the nation's first end-to-end continuum of behavioral healthcare, adding national virtual services to UHS's existing inpatient, residential and in-person outpatient offerings **Financial and Capital Deployment** - Accelerated share repurchases to $320 million in Q2 2026, up from $127 million in Q1 2026. Management views the current discounted share price as a compelling capital deployment opportunity and intends to remain highly active in the repurchase program - Ended Q2 2026 with $139 million in cash, $4.85 billion in total debt, and a net leverage ratio of 1.8x, with $1.27 billion in available revolving credit capacity, supporting strong balance sheet flexibility - Cash flow from operating activities was $443 million in Q2 2026, down from $549 million YoY; capital expenditures totaled $228 million in the quarter, driven by de novo openings and capacity expansions **Quality and Accountability** - Increased reserves for professional and general liability, and updated loss projections for two underperforming de novo assets, reflecting a commitment to transparency and accountability - UHS maintains a 46-year track record of strong quality and safety performance across its acute care and behavioral health divisions, with quality care delivery as a core purpose **Strategic Direction** - Strategy remains focused on investing in high-growth markets, expanding patient access to care, operating efficiently, and creating long-term value for patients, employees, and shareholders

Guidance

- Full-year 2026 same-facility acute care adjusted admissions guidance revised to 1.5% to 2.5%, down from the prior 2% to 3% range, reflecting YTD performance - Full-year 2026 same-facility behavioral health adjusted patient day guidance revised to 1.0% to 2.0%, down from the prior 2% to 3% range, reflecting YTD performance - Updated full-year 2026 guidance calls for ~7% revenue growth, 3% EBITDA less NCI growth, and 6% EPS growth at the midpoint - Updated adjusted EBITDA less NCI guidance range is 2.61 billion to 2.72 billion, a $50 billion decrease from the prior midpoint of 2.66 billion - Full-year pre-tax impact from ACA exchange volume reduction is now projected at ~$85 million, within the upper half of the original guidance range, up from the prior $75 million estimate - The full-year net benefit from Medicaid supplemental funding is now projected at $1.5 billion, a $150 million increase from prior guidance, driven by the newly approved Florida DPP program and growth in other state programs - Professional and general liability full-year expense estimates increased by $50 million, split evenly between the two segments, reflecting industry-wide higher claims severity - The Texas behavioral health facility under recertification is expected to generate $50 million in full-year 2026 adverse impact, including lost budgeted earnings and operating losses through the end of the year - The Cedar Hill Regional Medical Center de novo in Washington, D.C. is now expected to reach breakeven in Q4 2026, pushing the full-year net positive tailwind from $50 million to $20 million, compared to original guidance

Segment performance

**Acute Care Segment**: On a same-facility basis: - Adjusted admissions increased 2.9% YoY, with 1.4% growth YTD through Q2 2026 - Emergency department visits increased 4% YoY; surgeries decreased 0.8% YoY, with improved sequential trends - Net revenue increased 8.2% YoY (5.9% excluding health plan impact); revenue per adjusted admission increased 3.0% reported (2.7% excluding out-of-period Medicaid benefits) - Salaries, wages, and benefits per adjusted admission increased 2.7% YoY; supply expense per adjusted admission decreased 2.5% YoY - Segment EBITDA increased 8.2% YoY (6.3% excluding out-of-period supplemental program benefit) - A $7 million net out-of-period benefit from Medicaid supplemental payments was recorded in Q2 2026 Acute care contributed 71.2% of total Q2 2026 segment revenue (calculated from total net segment revenue of ~$5.02 billion and acute care net revenue of ~$3.58 billion). **Behavioral Health Segment**: On a same-facility basis: - Net revenue increased 7.4% YoY; adjusted patient days increased 1.4% YoY, with 1.5% growth YTD through Q2 2026 - Revenue per adjusted patient day increased 6.1% YoY (5.3% excluding out-of-period supplemental benefit) - Salaries, wages, and benefits per adjusted patient day increased 4.8% YoY, with headcount growth moderating to 2% from 3% in Q1 2026 - Segment EBITDA increased 9.0% YoY (5.7% excluding out-of-period supplemental benefit) - An $18 million net out-of-period benefit from Medicaid supplemental payments was recorded in Q2 2026 - The San Antonio, TX behavioral hospital under recertification generated $10 million in pre-tax Q2 2026 losses and is excluded from same-facility results Behavioral health contributed 28.8% of total Q2 2026 segment revenue.

Risks & headwinds

- Ongoing shift of low-acuity outpatient and elective surgical procedures to alternate site settings (ASCs, freestanding imaging centers) creates ongoing volume pressure for acute care inpatient surgical services - The San Antonio, TX behavioral health facility stopped receiving government and managed care reimbursement in late April 2026, and will not regain reimbursement until recertification is obtained in 2027. It expects to generate $5 million to $10 million in quarterly operating losses through the end of 2026 while operating with limited census - The Cedar Hill Regional Medical Center de novo in Washington, D.C. is ramping slower than originally expected, primarily due to the need to build an established local physician base and reorient patient utilization patterns, pushing breakeven to Q4 2026 later than originally planned - Industry-wide trend of increasing professional and general liability claims severity has driven repeated reserve increases in recent years, with a $50 million full-year 2026 increase recorded. While the industry is lobbying for tort reform at the state and federal level, the timing and impact of reform is uncertain, and structural higher reserve increases may continue - Scheduled 2028 reductions in Medicaid supplemental reimbursement under the OBBA legislation will create a headwind to future growth, though management is undertaking initiatives to offset this impact - Declines in ACA exchange volumes have translated directly to a one-for-one increase in self-pay/uncompensated care volumes, increasing the company's uncompensated care burden more than originally expected - Outpatient behavioral health volume growth has been slower than management originally projected, even after adding headcount to expand capacity - Regulatory and certification risk for facilities can lead to extended periods of lost revenue and operating losses, as demonstrated by the San Antonio facility situation

Analyst Q&A

• Q: The downward revision to acute care volume guidance—Is this driven by non-ACA base business pressure? What is driving this trend? /

  A: The revision is simply a practical reflection of first half 2026 performance, which has trended near 2% adjusted admission growth. The primary underlying driver is a continued shift of elective and outpatient procedures to alternate site settings like ASCs and freestanding imaging centers. Management remains pleased with the Q2 volume and surgical rebound, and only slightly lowered the full-year midpoint to reflect YTD results.

• Q: What drives the projected EBITDA growth acceleration in the second half of 2026 following the guidance revision? /

  A: Four main factors drive the acceleration. First, the 177 new beds added in Q2 2026 will continue to ramp through the second half, and initial openings have already shown strong demand. Second, Cedar Hill's performance will continue to improve, creating a large positive YoY swing compared to last year's large Q3 2025 losses. Third, behavioral health labor cost growth will continue to moderate as headcount growth slows from 3% in Q1 to 2% in Q2. Fourth, 2025 had unusually soft seasonal performance in Nevada in the second half, creating easier YoY comparisons for 2026.

• Q: Will the 2026 Florida DPP program deliver similar benefit if renewed, and are there other DPP opportunities left in 2026? How will the San Antonio facility ramp after recertification? /

  A: Management cannot estimate the size of any 2026 Florida DPP benefit, so no benefit has been recorded or included in guidance. While other states are considering new or expanded DPP programs, none are currently expected to be material and none are included in guidance. For San Antonio, management cannot yet predict recertification timing, conditions or ramp pace, but notes the facility holds ~half of the market's behavioral beds, has strong community support, and expects demand will support a relatively quick ramp once recertified.

• Q: Why was behavioral health volume guidance revised? What is the demand outlook, and will malpractice reserve increases be a structural ongoing headwind? /

  A: The 1% to 2% volume range just reflects the trend of the past several quarters; outpatient growth has been slower than originally expected even after adding headcount. The upcoming Talkspace acquisition, expected to close in August, will add a 6,000-therapist panel and virtual care capacity to accelerate outpatient growth, and management may update the outlook after integration progresses. For malpractice reserves, increases are driven by industry-wide higher claims severity, not UHS-specific issues. While the company has strong internal risk management programs, broader market trends are out of its control, and tort reform progress is unpredictable. The company uses third-party actuaries to set reserves twice yearly, and follows their recommendations.

• Q: How is UHS preparing for the scheduled 2028 OBBA Medicaid supplemental payment reductions, and is there an increased uncompensated care burden from exchange volume declines? /

  A: UHS is building on ongoing expense efficiency initiatives, including supply cost control and productivity improvements. It is also investing in AI and other technology to improve revenue cycle management, with a completed review for acute care yielding measurable results and an upcoming behavioral health review underway. UHS is also shifting growth focus to less Medicaid-dependent outpatient services, especially in behavioral health, where outpatient care is more heavily weighted to Medicare and managed care. For exchange volumes, the decline in exchange coverage translated almost directly to a one-for-one increase in self-pay volumes, which increased the projected full-year impact by $10 million to $85 million, higher than original expectations that only 10-20% of people losing exchange coverage would become uninsured.