Core margin still heading in the wrong direction; Lower PT to $191

Research evidence excerpt

Core margin still heading in the wrong direction; Lower PT to $191

ey Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull,

Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 28

Jul 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either

three-months’ or one-years’ time. View explanation of Options Probabilities methodology here

BULL CASE $334.00 BASE CASE $191.00 BEAR CASE $96.00

7.5X EV/EBITDA on 2027 bull case EBITDA 5.5X EV/EBITDA on 2027 base case EBITDA 4.5X EV/EBITDA on 2027 bear case EBITDA

Our bull case is based on a 7.5X EV/EBITDA Our base case is based on a 5.5X EV/EBITDA Our base case is based on a 4.5X EV/EBITDA

multiple on 2027 EBITDA of $3,049mn, multiple on 2027 EBITDA of $2,745mn, multiple on 2027 EBITDA of $2,258mn,

reflecting EBITDA margins of 15.1%. On a reflecting EBITDA margins of 14.2%. On a reflecting EBITDA margins of 12.1%. On a

forward 12 month basis our target multiple NTM basis, our target multiple is 6X, or 2x forward 12 month basis our target multiple

is ~9X bull case, which is in line with the turn below the stock's historical median due is 4.2X bear case EBITDA, slightly below the

stock's peak multiple over the past decade. to weak margins in acute, disappointing historical trough multiple in a scenario

We estimate a 3.4% CAGR in adjusted behavioral health volumes and uncertainty where margins deteriorate and deeper cuts

admissions and 4.2% in revenue per adjusted around supplemental payments in the to supplemental payments take hold. We

admissions from '25 to '27 in our Bull base OBBBA. We estimate a 2% CAGR in adjusted estimate a 0.9% CAGR in adjusted