Universal Confirms Bad Debt Trends

Universal Health Services UHS reported adequate second-quarter results, and we're leaving our fair value estimate unchanged for now, but we'll revisit our assumptions once the company's upcoming 10-Q filing is available. Universal's uninsured admissions rose more than twice as fast as insured admissions, lifting both the charity care and bad debt provisions as a percentage of gross revenue. Rural hospital operator LifePoint LPNT also reported rapid second-quarter uninsured admission growth, but Universal serves larger markets so we believe that this persistent problem continues to affect the entire industry. However, we have already projected rising bad debt throughout the year so this adverse trend is already factored into our fair value estimate. In fact, if bad debt stabilizes at current levels we'll need to raise our fair value estimate slightly.