Universal Health Services (UHS) stock plunged 5.84% in pre-market trading on Friday, following the release of its fourth quarter 2024 earnings results and 2025 guidance that disappointed investors on several fronts.

In the Q4 2024 earnings call, UHS highlighted robust revenue growth across both its acute care and behavioral health segments, driven by a combination of higher admissions/volumes and strong pricing. However, increased legal reserves for unfavorable liability claims weighed on profitability during the quarter.

Looking ahead to 2025, UHS expects mid-single digit EBITDA growth, but projected a slight decline in supplemental Medicaid payments compared to 2024 levels. The company cited uncertainty around government approval processes for certain state programs as a key risk factor.

CFO Steve Filton noted that while acute care margins are improving, some structural headwinds like higher physician costs could keep them below pre-pandemic levels for now. The behavioral health business is seeing normalization in staffing and labor expenses, contributing to strong margin expansion.

Overall, while UHS is benefiting from healthy demand trends, the tempered 2025 outlook and lingering policy uncertainty appear to have sparked investors' concerns, leading to the pre-market sell-off in the stock.