Good morning, and welcome to Universal Health Services' third quarter 2026 earnings conference call. I am Darren Lehrich, Vice President of Investor Relations. With me this morning are our President and CEO, Marc Miller, and our Chief Financial Officer, Steve Filton. Marc and Steve will offer some remarks about the quarter, and then we will open up to Q&A. During today's conference call, we will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast projections and forward-looking statements.

For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, we recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31st, 2025, and in our Form 10-Q for the quarter ended June 30, 2026. In addition, we may reference measures during today's call, such as EBITDA, adjusted EBITDA, adjusted EBITDA net of NCI, and adjusted net income attributable to UHS, which are non-GAAP financial measures. Information and reconciliations of these non-GAAP financial measures to net income attributable to UHS can be found in yesterday's press release and in our supplemental materials on our website. With that, let me now turn it over to Marc for some introductory remarks.

Thank you, Darren. Good morning, and thank you for joining today's call. I will begin with our key takeaways from the quarter, performance relative to our expectations, the principal operating drivers, and progress on our strategic priorities before Steve reviews the detailed financial results and our outlook. Overall, underlying performance in the third quarter reflected sequential improvement in several acute care demand remained behavioral health volumes demonstrated an increase relative to recent quarters, and labor trends continued to moderate.

Expense management remained disciplined overall. Health insurance exchange trends were consistent with our expectations. Steve will provide the reported financial results and segment metrics in his remarks. Third quarter results included certain items that were not reflected in the outlook we provided with our second quarter results in July. These items included the benefit from the expansion of existing Medicaid supplemental programs in several states, partially offset by other non-recurring litigation and transaction costs, which Steve will take you through in a moment.

Against that backdrop, I want to highlight three operating and strategic priorities: acute care capacity and outpatient access points, integrating Talkspace, and advancing the recertification process at Laurel Ridge Treatment Center in Texas. First, our recent investments acute care inpatient capacity helped us meet favorable demand in our markets. The additional 177 beds added during the second quarter are expected to continue ramping through year-end.

We also expanded our outpatient portfolio by opening one freestanding emergency department in the third quarter and another FED that recently opened during the fourth quarter. In addition, our ambulatory development pipeline is expected to add several outpatient access points over the coming quarters. The key takeaway is that these investments are performing well, broadening access, and supporting growth. We expect their contribution to build over time as the new capacity matures.

Second, behavioral health, we completed the Talkspace acquisition on August 17 and began executing the integration plan. We intend to discuss anticipated synergies in greater detail when we provide 2027 guidance in February. For the balance of 2026, we are taking a phased approach centered on three integration workstreams. The first, deploying a technology platform and tools that enable smoother transitions of care and greater continuity of outpatient care for UHS patients.

Number two, establishing referral flow processes to Talkspace from behavioral health acute care facilities for both individual therapy and medication management services. And three, developing more flexible market-based outpatient offerings, initially emphasizing a virtual intensive outpatient program or IOP, offerings designed to address strong demand in this area. We expect these initiatives to support the acquisition's long-term benefits over the next 12-24 months.

Our priorities are to expand access to outpatient mental health services and strengthen our outpatient growth profile. The key takeaway is that our integration is underway, and the expected benefits will develop in phases as technology, new referral pathways, and service offerings are enhanced through our integration efforts. We will provide further updates as the integration progresses and the rollout expands across our operations.

Third, at Laurel Ridge, our San Antonio team continues to work productively with regulatory authorities and the local community towards recertification, which we currently expect during 2027. The facility's third quarter financial impact was consistent with the assumptions in our updated July outlook. In closing, I want to thank the UHS team for its continued dedication to our mission to provide quality care. Our strategy remains consistent, invest in attractive markets, expand access to care, operate efficiently, and create long-term value for patients, employees, and shareholders.

We remain mindful of execution requirements and the ever-evolving operating environment, and we believe the strength of our portfolio, the experience of our management team, and underlying demand in our markets, continue to position us well over the long term. With that, I will turn the call over to Steve for additional detail on the quarter.

Thanks, Marc. I will organize my remarks in four parts: reported results and unusual items, segment performance, cash flow and capital allocation, and our 2026 outlook. Starting with reported results, the company reported adjusted EPS of $5.22 for the third quarter of 2026, representing a decline of 8% year-over-year. Third quarter adjusted EBITDA less NCI was $625 million as compared to $671 million in the third quarter of 2025.

The net out-of-period DPP headwind in the quarter was $37 million when considering amounts recognized for the Washington, D.C. program approved in the third quarter of 2025, netted against out-of-period amounts recognized in this year's third quarter. To distinguish reported results from underlying performance in the third quarter of 2026, three specific items not contemplated in our annual adjusted EBITDA less NCI guidance provided in July, produced a net favorable impact of $12 million. These items were $47 million of supplemental Medicaid benefits, not included in our July forecast, $26 million of additional professional and general liability reserves, primarily associated with the tentative settlement of a litigation matter related to our Cumberland facility in Virginia, and $8.5 million of transaction-related costs associated with the Talkspace acquisition.

Excluding these items, adjusted EBITDA less NCI was below our internal expectations despite modest sequential improvement. The shortfall primarily reflected a slower than expected ramp-up at our de novo hospitals and softer than expected surgical trends. Turning to segment performance. On a same-facility basis, adjusted admissions at acute care hospitals increased 4.9% compared with the third quarter of 2025. Volume performance was broad-based geographically and also benefited from capacity additions at three hospitals during the second quarter of 2026. acute care emergency department visits increased 4.6%, while same-facility surgeries decreased 0.7% compared with the third quarter of 2025.

Inpatient and outpatient surgical cases declined at similar levels in the quarter. Inpatient medical admissions significantly outpaced surgical admissions, which negatively skewed pricing trends in the quarter. By service line, we experienced strength in cardiology, neurology, and urology similar to recent quarters. By payer class, adjusted admissions growth for Medicare and Managed Medicare was above acute care segment average.

Volume growth for Medicaid, Managed Medicaid, and Managed Care, excluding exchanges, was positive in the quarter, although below the segment average. On a same-facility basis, net revenue in acute care segment during the third quarter of 2026 increased 4.7%. Excluding the impact of our health plan, acute care net revenue increased 3.1%. acute care same-facility revenue per adjusted admission decreased by 1.7% during the third quarter of 2026 on a reported basis and was slightly positive when excluding the net headwind from out-of-period Medicaid supplemental benefits and the shift in exchange to uninsured volumes.

We estimate acute care rate growth was approximately 3% and consistent with recent quarters after adjusting for these factors and normalizing for the higher inpatient medical versus surgical mix. Operating expenses continued to be well managed across labor, supply, and other expense categories. acute care salaries, wages, and benefits expense per adjusted admission increased 2.1%, and supply expense per adjusted admission decreased 2.3% over last year's third quarter. Other operating expenses increased primarily due to our health plan, which experienced revenue growth of approximately 25% in the third quarter. acute care segment EBITDA declined 4.5% in the third quarter of 2026.

Excluding the out-of-period supplemental program benefit from both periods, third quarter acute care segment EBITDA increased 2.9%. In acute care segment, the net out-of-period headwind related to supplemental payments was $29 million, comprised of $26 million in the third quarter of 2026 from expanded funding under existing programs, primarily in Washington, D.C., and California, compared with $55 million of out-of-period amounts in the third quarter of 2025 related to the Washington, D.C., program approved last year. For the third quarter of 2026, we estimate that health insurance exchange trends had an impact of slightly less than $25 million, which was consistent with the updated outlook provided in July.

Exchange volumes declined 17% from the third quarter of 2025, accompanied by a similar increase in the number of self-pay volumes. At Palm Beach Gardens, acute care de novo hospital remains in the early stages of ramping volumes across multiple service lines. Startup losses improved each month during the third quarter. While the ramp at this facility remains gradual, the progression supports our expectation for continued improvement as we enter Florida's seasonally busier winter period.

In Washington, D.C., Cedar Hill Regional Medical Center operating losses were similar on a sequential basis, excluding supplemental payments. We continue to support the build-out of primary care and specialty physician practices in the community around the hospital and in our MOB. Because these practices remain at varying stages of developing their patient bases within the community, we now expect the hospital to reach operational break even in the first half of 2027, compared with our prior expectations of the fourth quarter of 2026.

Taken together, Palm Beach Gardens and Cedar Hill are progressing, but their pace of maturation remains an important factor in the timing of margin improvement for acute care segment. Turning behavioral health, third quarter same-facility net revenue increased 4.0%, supported by a 2.1% increase in same-facility revenue per adjusted patient day and a 2.1% increase in same-facility adjusted patient days. Volumes improved modestly compared with recent quarters, reflecting steady demand and greater emphasis on the continuum of outpatient levels of care.

Included in our behavioral health segment results are Talkspace and an acquisition we completed in our U.K. operations in July, offset by startup losses associated with two de novo projects and ongoing operating losses at Laurel Ridge while we work towards recertification. Given the mid-quarter closing, Talkspace's contribution to third-quarter earnings was immaterial. In behavioral health segment, the net out-of-period headwind related to supplemental payments was approximately $8 million in the third quarter of 2026, due primarily to the new Washington, D.C., program benefit in the third quarter of 2025.

For the third quarter of behavioral health segment same-facility salaries, wages, and benefits per adjusted patient day increased 3.6% over the prior year, improving further on a sequential basis due to continued moderation in headcount growth. Turning to cash flow and capital allocation, third quarter cash generated from operating activities was $637 million, compared with $381 million during the same period last year. During the third quarter of 2026, we spent $214 million on capital expenditures, and we anticipate capital expenditures to be slightly below $1 billion for the full-year of 2026.

As several acute care de novo and expansion projects are now completed, we expect CapEx to moderate towards $800 million beyond 2026. During the third quarter of 2026, we acquired 1.35 million of our own shares at a total cost of $242 million, bringing year-to-date share repurchases to a total of $690 million. As of September 30, 2026, we had $735 million repurchase authorization available pursuant to our stock buyback program, and we expect to remain active with share repurchase for the foreseeable future.

From a balance sheet perspective, we ended the quarter with cash of $169 million, total debt of $5.7 billion and leverage of 2.17x. Total debt reflects the August refinancing of our September 2026 debt maturity and incremental borrowings associated with the Talkspace acquisition. As of September 30, 2026, we had approximately $1.2 billion of additional borrowing capacity available pursuant to our revolving credit facility.

We remain committed to maintaining leverage within our target range of 2x-3x. Finally, turning to our 2026 outlook, we are reiterating the financial and operating forecast ranges issued with our second quarter results in July. Based on year-to-date trends through the third quarter and the ongoing ramp of acute care hospitals in Washington, D.C., and Palm Beach Gardens Hospital, Florida, we currently expect results to be towards the lower end of these ranges.

The reiterated ranges reflect continued underlying operating improvement, balanced against the pace of de novo facility ramp-ups and the other near-term variables discussed today. Operator, that concludes our prepared remarks, and we would be pleased to answer questions at this time.

Yeah. I would just remind everybody, AJ, that consistent with prior years, we plan to issue our full comprehensive 2027 guidance in February when we report our fourth quarter results. We feel good about the core elements of our 2026 growth algorithm guidance in both segments, which we went through last quarter. Outside of that, we can point to a few items, a couple of which you mentioned, in terms of material headwinds and tailwinds as we begin to think about 2027.

The biggest swing factors, I think, in 2027 relate to improvements at facilities that are incurring operating losses during 2026, particularly the Laurel Ridge San Antonio facility that we talked about and the acute care de novos that we mentioned in our prepared remarks. Cumulatively, these facilities are expected to contribute operating losses of $80 million-$100 million in 2026, and we believe there is potential to recover at least a meaningful portion of those losses in 2027 as we anticipate making further operational progress at the de novo facilities over the next several quarters and regaining certification at the San Antonio facility. As it relates to San Antonio, I would just note we're making progress towards recertification and remain confident that we'll achieve that in 2027, giving us a path to rebuild census in a deliberate manner.

On the headwind side, and I think you mentioned a couple of these things, the biggest swing factors relate to regulatory changes that continue to play out in the operating environment, particularly the impact from the exchanges, the potential impact of Medicaid work requirements, and the initial impact of reductions to Medicaid supplemental funding. We also had a material amount of prior year DPP benefit in calendar year 2026 that will not repeat in 2027. As it relates to Medicaid supplemental payments, we estimate the 2027 headwind will be approximately $175 million-$200 million.

This primarily includes prior year amounts that we recorded in 2026 for DPP programs in Florida, Nevada, Ohio, California, and Washington, D.C., as well as approximately $10 million of impact during the fourth quarter 2027 from the initial provider tax portion of the OB3 funding cuts. As it relates to the exchanges, annualizing the second half 2026 run rate would create a $15 million headwind in 2027. Further changes in exchange enrollment could increase that number, and we'll have greater insight into that following the open enrollment period.

As it relates to Medicaid work requirements, it's difficult to provide an estimate on the potential impact because the implementation timing may lag up to six months in certain states. More importantly, the state-specific regulatory guidance related to the medical frailty exceptions remains a key open item. Our baseline assumption is that the impact of Medicaid work requirements will be primarily concentrated in Medicaid expansion states, and that a vast majority behavioral health patients and a meaningful portion of acute care patients could be exempt from work requirements because their diagnoses meet the medical frailty exemption.

As investors develop estimates on work requirements, it's worth noting from a volume perspective, Medicaid volumes in expansion states represented approximately 15% of our acute care segment adjusted admissions and 30% of behavioral health segment patient days. Broadly, I think as most investors know, Medicaid revenue per unit of volume is lower than other payers. So as you do those calculations, you should keep those in mind.

Yeah, I think from our perspective, AJ, the trend towards a slightly weaker surgical mix is an acceleration of existing trends that we have seen for some time. That is the continued shift of procedures, both in and outpatient procedures, out of the hospital, in and outpatient services, and into alternative settings, whether they are ASCs or physician offices. We really see this in particular in certain service lines.

GI, as an example, we have seen just an accelerated shift of procedures, both in and outpatient, into alternative settings and out of the hospital. A number of orthopedic procedures as well. We mentioned in our prepared remarks some of the service lines that have been performing fairly robustly. Those included cardiology, neurology, and urology. But yeah, I think, again, in our minds, what we are just seeing is this accelerated shift of procedures into these alternative settings.

Yeah. I will address Cedar Hill first. Cedar Hill in Washington, D.C., opened in April of 2025. I think as we have been commenting consistently since that opening, it opened with a busy emergency room activity, and emergency room activity has remained busy since its opening. What has lagged has been a busier surgical and procedural schedule. I think the reason for that primarily is a lack of physician infrastructure in that part of the Washington, D.C., market.

For years, and this is for those of you familiar with Washington, D.C., and Ward 7 and 8, there was really a lack of quality healthcare, and patients were leaving Ward 7 and 8 to get their healthcare elsewhere in the city. As a consequence, doctors really were not locating in Ward 7 and 8. Doctor offices were not. As we indicated in our prepared remarks, we have addressed that by working with a number of different physicians and physician groups to establish practices in Ward 7 and 8, within Ward 7 and 8, in the MOB adjacent to our hospital, et cetera.

But those practices are relocating and they are developing, but they are in different stages of development, and that takes some time. I think that has been the major issue in terms of the timing of the development of Cedar Hill. Structurally, I think we believe that all the things that we thought about, what would make this hospital successful are still there and will do so, just taking somewhat longer. The other nuanced comment that I will make, and I think I made it last quarter as well as it relates to Cedar Hill, is that the arrangement we had with the district in entering the Cedar Hill partnership with the district was that they would build and essentially finance the construction of Cedar Hill.

So, the absolute amounts of earnings, the absolute margins that we are going to have to achieve at Cedar Hill to get to our sort of target rates of return will be less than in those hospitals where we have built and invested the hundreds of millions of dollars to build the hospital. As far as the facility in Palm Beach Gardens goes, I think that honestly, one of the biggest challenges we had at its opening was that we opened in the beginning of the summer, which is a difficult time to open, as you might imagine, in South Florida. It was not our original intent.

We had originally planned to open earlier and take advantage of the busy season in Florida, but construction delays sort of made that impossible. I think by opening in the summertime, we got off to a bit of a slower start, but expect the facility, and I think again, in our prepared comments, we indicated the facility is getting better, volumes are increasing every month, and we expect that to accelerate as the busy season sort of ramps up in Florida over the next several months. I will reiterate the same comment.

No, structurally, I think everything we believed about the potential success of that hospital is still consistent with our original views, just taking a little bit longer to ramp up than we originally anticipated.

Yeah, we're confident that we're going to be back online sooner than later, but we don't have an exact date in 2027. We're still working with all the regulatory agencies. Things are going well. That will be back to where we were, we expect in 2027, but I can't give you an exact date. As far as the numbers go, Justin, when we first announced the loss of certification at Laurel Ridge, we disclosed that last year, the pre-tax income at that facility was in the $20 million-$25 million range.

We've talked about incurring since it has lost its certification, but has continued to treat a small number of patients, that we expect it will lose $5 million or $10 million a quarter, each quarter that we remain open without certification. We've talked about Cedar Hill over the last several quarters, losing roughly $10 million a month. As far as the Palm Beach Gardens Hospital, you can pretty much get that from looking at the difference between our same-store acute results and our acute care results. It lost about $15 million in this quarter. Expected to improve a little bit in Q4 and then continue to improve gradually from there.

Yeah. I think a little bit different story in the two segments. I think in the behavioral segment, we talked, over the course of several quarters, that we had sort of invested in, I am going to describe it as outsized headcount growth, because we have discussed, I think for quite some time, that in some of our behavioral facilities and markets, our volume growth was muted because of a constraint in staffing. Not enough nurses or therapists or the non-professional techs that are important to care in the behavioral segment.

But as we have accomplished that, I think headcount growth has continued to decelerate. It decelerated in the third quarter. I think it rose by about 1.5%. I think going forward, headcount growth in the behavioral segment will largely be aligned with volume growth. That has been a benefit and an improvement in behavioral health segment. I think in the acute segment, as your question sort of alluded to, we have seen a fairly significant reduction in temporary and traveling labor.

I think that has risen, in the most recent quarter, by 3%, so it is well controlled. I think wage inflation has certainly come down from its heights during the pandemic to something in the 3%-3.5% range in both segments.

So, what we said originally, Matt, when we disclosed the Talkspace acquisition is that our expectation in the first 12 months of ownership, which would be into the third quarter of next year, was that the transaction would be slightly accretive. There is a very small amount of overhead and cost savings, sort of duplicative cost savings as we combine two public companies. But the vast majority of synergies are revenue synergies, and the opportunity that combining the lower acuity population, patient population that Talkspace has and the higher acuity patient population that UHS has really creates this robust continuum of care that really does not exist anywhere else in the behavioral space.

That is the opportunity. As far as the timing of it, I think we will begin to realize that, and we said this in our prepared remarks, in the first 12-24 months of ownership, so beginning in the back half of next year. As we, I think, noted in our remarks, I think we will be more specific about that and how much of that we have included in our guidance when we present guidance in February. But as Marc indicated in his remarks, we are certainly beginning to focus on those revenue synergies and create all the changes and policies and procedures and infrastructure and technology that we will need to execute on those synergies next year.

Yeah. So again, in the remarks, I think we called out three items that I think are putting pressure on that revenue per adjusted admission metric in the quarter. I think you ticked through them. One is the impact of the exchanges. While that is playing out, I think consistent with our expectations, it is certainly a drag compared to last year. Then there is the out-of-period DPP, which we talked about, and then the med surg mix pressure, which we talked about.

We think the med surg mix pressure probably reduces the growth in revenue per adjusted admission by about 100 basis points. We think if we adjust for all three of those items, revenue per admission would have been up in the 3% range, which is within the range that we have talked about as the sustainable going forward range for pricing.

I think it is pretty broad-based geographically. We talked a little bit about payer mix in our remarks. I think Medicare is growing faster than the divisional average. Medicaid and commercial are both positive, but growing a little bit slower than the divisional average. We have seen an increase in self-pay or uncompensated care, largely sort of a one-for-one swap in the decline for exchanges. I think the only other geographic note I would make, and it is probably more of a fourth quarter note, is that last year, we had a pretty soft fourth quarter in the Vegas market.

They had a very light flu season in a year in which almost everybody else had a pretty acute flu season. So I think we are thinking about that as a bit of a tailwind for us in the fourth quarter. Otherwise, the strength in acute volumes has been pretty broad geographically.

First, Kevin, I would say I do not think it is the inpatient-only dynamic. When we looked at the procedures covered by the inpatient-only regs, I think we concluded that most of our procedures that fall into those categories were procedures that had more than a two-midnight stay and appeared to us to be more acute than would allow them to really be transferred or evolved into outpatient procedures. I do not know that I have a great explanation for exactly why we, and I think the industry in general, has seen this acceleration in certain procedures to outpatient.

I will describe one of the challenges we see, and I will use GI as an example, is that as more and more GI procedures are being done outside of the hospital and largely in physician offices and in ASCs, we have found it difficult even to get GIs to cover our emergency rooms. We either cannot get them to do it at all, or the expense of doing it and the cost of doing it is really sort of outsized. As a consequence, in some of our facilities, even our emergency room visits that are GI-related are being diverted to someplace else because we just do not have the coverage.

I think there is a bit of a compounding effect that as more and more of these procedures, elective procedures, move into outpatient settings in some of these areas, and again, I think GI sort of stands out for us, even the emergency procedures that would have traditionally come to our emergency rooms are being diverted elsewhere.

No, I think in the last quarter, we sort of laid out our growth algorithms for the two segments. acute care, we are talking about 1.5%-2.5% adjusted admission growth. For the year, I think we are averaging slightly above that, I think 2.6% for the year, and then 2%-3% pricing growth. As I mentioned in my previous response, we believe if you sort of adjust for all these exogenous factors, we are running at around that 3% in the quarter, so at the low end of that range.

On the behavioral side, we modified our growth algorithm, our adjusted patient day growth algorithm, to 1%-2% last quarter. And I think we are running for the year in the 1.7% range, so kind of towards the higher end of that range. Then 2%-3% pricing in behavioral, and I think we are running within that range in behavioral as well.

This is Marc. As we are integrating Talkspace, one of the big things when we talk about the continuum, Talkspace was acquiring patients in a distinct way, having nothing to do with patients coming from behavioral health settings, primarily. That opportunity now exists for us to send patients, refer patients over to Talkspace who are already in our ecosystem, whether in our outpatient settings or in our inpatient settings.

Conversely, we have an opportunity now, and we are just starting to see this, where there are patients that are in that Talkspace ecosystem, that if they need further care, a higher level of care, they are getting directly referred now to us. Within our own system here. Those opportunities did not exist on either end previously. They exist now. And we are just starting to see some of that come to fruition. I cannot give you exact numbers yet, but we feel like we are off to a good start.

The Talkspace folks have been very encouraged by the way that this has been set up thus far. Again, we are only into this for a few months, but the teams are working very well together. We are very optimistic going forward that this is going to make a real difference for us and for their business.

You are talking about non-Talkspace?

Yeah. Look, we've always had a robust outpatient business, especially with our intensive outpatients, some of our partial hospitalization programs. But we're trying to expand even those in some of our locations where we didn't have it at all, or we didn't have it as much. We're certainly focused on that. We also have what we've talked about in previous quarters, Thousand Branches, which has been a newer effort in the last couple of years to expand into different areas in outpatient.

That's been going well. And we see further opportunities on the horizon to continue that expansion. As far as other tuck-ins, other acquisitions, we're constantly looking. We're contacted often about that, and if something makes sense price-wise, we'll certainly pursue it. But right now, I think that we're moving in the right direction in the areas that I just mentioned.

No, I think, Jason, to a large degree you've answered your own question. I think that Laurel Ridge is probably the single biggest drag on the behavioral earnings improvement. Beyond that, as I said earlier, as we think about revenue growth from a volume pricing perspective, I think we're running towards the high end of our range for expected volumes. Towards the lower end of our range in pricing, I think some of that is a reflection of the fact that over the last several years, pricing has been very robust.

Some of that has been the benefit of DPP, but even when you exclude that, our pricing and our contractual pricing has been very robust as we've been getting contractual price increases from payers, particularly Managed Medicaid payers who had not given us increases for several years. Unfortunately, obviously, after several years of that, we've started to anniversary some of that benefit and the pricing, I think, has been moved into that 2%-3% range. But I think we're fairly confident that we'll be able to sustain that, and as we go into next year, those comparisons will become easier.

Yeah. So, as far as the headwinds in 2028 and beyond, we've been disclosing those estimates in our SEC filings really since the passage of OB-3. We'll update those with our current filing. But they shouldn't be terribly different from what we've been disclosing to date. As far as the $10 million specific headwind in the fourth quarter of 2027, Jason, I don't have that detail in front of me, but happy to discuss that offline at some point.

The answer, Andrew, is that's not a sort of conscious swap on our part. We didn't make a conscious decision to increase volumes but decrease procedural volumes. Most of our medical volumes honestly come through the emergency room. So those are patients who come to us. Procedural volumes tend to be more elective. We have done a lot of things to continue to build on procedural volumes, including investments in technology and things like robotics and things like OR capacity, et cetera.

That's paid off in the service lines that we mentioned earlier. The other issue, I think, is, and I think Marc talked about in his prepared remarks, we continue to try and increase our outpatient access points. That includes things like FEDs, freestanding emergency departments, it includes physician offices. All those things are designed to create more referrals into our procedural volumes. Attempting to do that as well.

Again, I would just emphasize the fact that we're looking to do both, to grow volumes overall, but also absolutely to grow surgical and procedural volumes to the extent that we can. We're not making a choice of medical admissions over surgical admissions.

Yeah. I would just clarify a little bit, Ben, your comment. As we go from $1 billion a year roughly that we've been spending on CapEx to $800 million going forward, that's largely because these large de novo projects that we've had over the last several years, the Palm Beach Gardens Hospital, the Riverside County, California replacement facility, West Henderson. We don't really have any full-scale de novo projects, and that's largely contributing to the decline.

You characterized $800 million as maintenance capital. I think that's a bit of an exaggeration. We sort of, I think, consider maybe 2% of our revenues to be devoted to maintenance capital. So something in that $250 million-$300 million range. So there's another $400 million, $500 million, $550 million of expansionary capital in the $800 million. And that's new capacity, new beds, new ORs, new ERs, robotics in acute care segment.

I think an emphasis on, and we've touched on this in other ways in our comments here, an emphasis on outpatient growth and outpatient access points in both of the segments. Yeah, I think the primary driver of the decline is just not having any of these big de novo projects in the pipeline over the next several years. But it certainly doesn't indicate an unwillingness on our part to continue to reinvest in the business strategically in the areas that we think will drive growth in the future.

Scott, I think what we've said historically is that the SDP payments are split pretty evenly between the two segments. I think the reductions are similarly split.

Yeah. You described the health plan as an MA plan. It is largely an MA plan. About 90% of its revenue comes from MA, but it does have about a 10% commercial mix as well. We talked about in 2026, a $25 million, roughly, tailwind from improvements at the health plan, and I think we are largely tracking to that. I think next year, there'll be sort of the normal amount of growth as the revenue has grown, but not expecting a material impact up or down in terms of our earnings in 2027 as a result of the health plan.

Obviously, the health plan, from our perspective, continues to provide a significant benefit to acute care hospitals. We operate the plan only in those markets in which we acute care hospitals.

Yeah. We think that historically the plan has operated with either low negative single-digit margins or low positive single-digit margins. I think the improvement from last year is because the plan is operating in low positive single digit margins, and I think that is our expectation that it will continue to do so over the next couple of years.

Yeah. Ben, look, I think you have done a decent job of framing your question around the things that we have already discussed. As we think about the challenges that will come, especially from OB-3 in the next few years, whether that is Medicaid work requirements in 2027 and 2028 or the Medicaid supplemental reductions mostly in 2028 and beyond. A number of things that we are trying to address. Technology developments, we have talked in previous quarterly calls about the things that we are doing in revenue cycle to improve revenue cycle performance.

We had a very large third-party consulting exercise in acute care revenue cycle in the last 18 months or so. We are undergoing a similar exercise in behavioral, developing technology, AI, and otherwise, to help us do that, developing technology, AI, and otherwise, to help us control length of stay, better control length of stay in acute care. I think you alluded to this in your question, a lot of the outpatient emphasis in behavioral, whether that is Talkspace or Thousand Branches or just the efforts within our existing facilities, really have the double benefit of meeting demand where patients are looking for it in the outpatient setting.

But it also, as we build outpatient, we are really shifting our payer mix away from Medicaid and more to commercial and Medicare because that is where we think the growth is, and that helps us avoid some of these Medicaid cuts. So doing all those things, again, in terms of their specific impact and their specific impact in 2027, I think we will provide more color on that in February.

Steven, I think we have time for one more question.

Yeah. Sarah, what we've said this year is we expected an $85 million negative impact from the reduction in exchange coverage. $35 million of that was in the first half of the year, $50 million was in the second half of the year. We're assuming that at a minimum, the $50 million is the run rate into next year. That's where the $15 million headwind comes from. Then what we further said is that to the degree that there are further reductions in exchange volumes next year, that could create an incremental headwind, but we really won't know that until some of that enrollment data becomes more widely available.

Yeah. Sarah, I think the way it will be reflected will be an increase in outpatient activity at both UHS and at Talkspace. Today, our outpatient visits, I think in the third quarter, grew by about 3%. I think Talkspace, just on an organic basis on their own, their visits or procedures or units increased by 5%. I think our expectation is that both of those numbers will accelerate as a result of the merger and the continued integration of the two platforms.

Yeah, that's I think what will provide the proof of concept. I think as we said earlier, not going to see a ton of that in the first 12 months, but beginning, I think in the next 12 months after that, we'll start to see that benefit, and I think it will continue to be sustainable for many years beyond that.

Thanks, Steven. Thank you everyone for participating in today's call and for your interest in UHS. Have a great rest of your day.