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Universal Health Services, Inc. Reports Financial Results For Three And Nine Months Ended September 30, 2012 And Revises 2012 Full Year Guidance

October 30, 2012
KING OF PRUSSIA, Pa., Oct. 30, 2012/PRNewswire/ --

Consolidated Results of Operations, As Reported – Three and nine-month periods ended September 30, 2012 and 2011:
Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $71.8 million, or $.73 per diluted share, during the third quarter of 2012 as compared to $85.1 million, or $.86 per diluted share, during the comparable quarter of 2011.  Net revenues increased 1% to $1.68 billion during the third quarter of 2012 as compared to $1.66 billion during the third quarter of 2011. 

Reported net income attributable to UHS was $308.0 million, or $3.15 per diluted share, during the first nine months of 2012 as compared to $302.9 million, or $3.06 per diluted share, during the comparable period of 2011.  Net revenues increased 2% to $5.20 billion during the first nine months of 2012 as compared to $5.10 billion during the comparable period of 2011. 

Consolidated Results of Operations, As Adjusted – Three and nine-month periods ended September 30, 2012 and 2011:
For the three-month period ended September 30, 2012, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule"), was $88.6 million, or $.91 per diluted share. There were no such adjustments required to our reported net income attributable to UHS for the third quarter of 2011.    

As reflected on the Supplemental Schedule, included in our reported results during the third quarter of 2012, was an aggregate net unfavorable after-tax impact of $16.8 million, or $.18 per diluted share, consisting of: (i) an after-tax charge of $18.1 million ($29.2 million pre-tax), or $.19 per diluted share, resulting from the write-off of deferred financing costs related to the portion of our Term Loan B credit facility that was extinguished during the third quarter of 2012, and; (ii) a favorable after-tax impact of approximately $1.3 million, or $.01 per diluted share, related to the incentive income and expenses recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals (as discussed below in Accounting for HITECH Act incentive income and EHR expenses). 

For the nine-month period ended September 30, 2012, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $308.4 million, or $3.15 per diluted share. There were no such adjustments required to our reported net income attributable to UHS for the first nine months of 2011.    

As reflected on the Supplemental Schedule, included in our reported results during the first nine months of 2012 was a net aggregate favorable after-tax impact of approximately $400,000 consisting of the following:

  • an unfavorable after-tax charge of approximately $3.6 million recorded in connection with the implementation of EHR applications as discussed below in Accounting for HITECH Act incentive income and EHR expenses;
  • a favorable after-tax impact of $18.8 million resulting from an aggregate cash payment of approximately $36 million received by us in connection an agreement entered into with the United States Department of Health and Human Services, the Secretary of Health and Human Services, and the Centers for Medicare and Medicaid Services (referred to collectively as "HHS").  After reductions for estimated related expenses and the portion attributable to third-party non-controlling ownership interests, this agreement, which was part of an industry-wide settlement with HHS related to litigation that was pending for several years contending that acute care hospitals in the U.S. were underpaid from the Medicare inpatient prospective payment system during a number of prior years, favorably impacted our pre-tax consolidated financial results by $30.2 million during the first quarter of 2012;
  • a favorable after-tax impact of $4.3 million recorded during the first quarter of 2012 representing the 2011 portion of the net Medicaid supplemental reimbursements earned pursuant to the Oklahoma Supplemental Hospital Offset Payment Program ("SHOPP");
  • an aggregate unfavorable after-tax impact of $5.1 million recorded during the first quarter of 2012 resulting from: (i) the revised Supplemental Security Income ratios utilized for calculating Medicare disproportionate share hospital reimbursements for federal fiscal years 2006 through 2009 ($2.4 million unfavorable after-tax impact), and; (ii) the write-off of receivables related to revenues recorded during 2011 at two of our acute care hospitals located in Florida resulting from reductions in certain county reimbursements due to reductions in federal matching Inter-Governmental Transfer funds ($2.7 million unfavorable after-tax impact);
  • a net favorable after-tax impact of $3.4 million consisting primarily of the 2011 portion of net Medicaid supplemental revenues recorded during the second quarter of 2012, and;
  • an unfavorable after-tax charge of $18.1 million resulting from the above-mentioned write-off of deferred financing costs related to the portion of our Term Loan B credit facility that was extinguished during the third quarter of 2012.

Acute Care Services – Three and nine-month periods ended September 30, 2012 and 2011:
During the third quarter of 2012, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased 1.7% and adjusted patient days decreased 1.0%, as compared to the third quarter of 2011. Net revenues at these facilities decreased 0.4% during the third quarter of 2012 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 1.3% while net revenue per adjusted patient day increased 0.6% during the third quarter of 2012 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin at our acute care hospitals decreased to 13.4% during the third quarter of 2012 as compared to 14.8% during the third quarter of 2011. We define operating margin as net revenues less salaries, wages and benefits, other operating expenses and supplies expense (excluding the impact of the items mentioned above and excluding the EHR impact, as indicated on the Supplemental Schedule).

During the first nine months of 2012, at our acute care hospitals on a same facility basis, adjusted admissions decreased 0.3% and adjusted patient days increased 0.3%, as compared to the comparable nine-month period of 2011. Net revenues at these facilities decreased 0.5% during the first nine months of 2012 as compared to the comparable period of 2011.  At these facilities, net revenue per adjusted admission decreased 0.2% while net revenue per adjusted patient day decreased 0.7% during the first nine months of 2012, as compared to the comparable period of 2011. On a same facility basis, the operating margin at our acute care hospitals decreased to 16.2% during the first nine months of 2012, as compared to 17.8% during the comparable nine-month period of 2011.

We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues or in accounts receivable, net. Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $259 million and $246 million during the three-month periods ended September 30, 2012 and 2011, respectively, and $840 million and $708 million during the nine-month periods ended September 30, 2012 and 2011, respectively.

Behavioral Health Care Services – Three and nine-month periods ended September 30, 2012 and 2011:
During the third quarter of 2012, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.6% while adjusted patient days increased 0.7%, as compared to the third quarter of 2011. Net revenues at these facilities increased 3.4% during the third quarter of 2012, as compared to the comparable quarter in 2011. At these facilities, net revenue per adjusted admission increased 0.7% while net revenue per adjusted patient day increased 2.6% during the third quarter of 2012 over the comparable quarter in 2011. The operating margin at our behavioral health care facilities owned during both periods increased to 27.8% during the third quarter of 2012, as compared to 26.5% during the third quarter of 2011. 

During the first nine months of 2012, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 5.0% while adjusted patient days increased 1.2%, as compared to the comparable period of 2011. Net revenues at these facilities increased 4.2% during the first nine months of 2012, as compared to the comparable period of 2011. At these facilities, net revenue per adjusted admission decreased 0.7% while net revenue per adjusted patient day increased 2.9% during the first nine months of 2012 over the comparable period of 2011. The operating margin at our behavioral health care facilities owned during both periods increased to 27.8% during the first nine months of 2012, as compared to 26.7% during the comparable period of 2011. 

Accounting for HITECH Act incentive income and EHR expenses:
The health information technology provisions of the American Recovery and Reinvestment Act (referred to as the "HITECH Act") established criteria related to the "meaningful use" of electronic health records ("EHR") for acute care hospitals and established requirements for the Medicare and Medicaid EHR payment incentive programs.    

During 2011, we began implementing EHR applications at certain of our acute care hospitals and will continue to do so, on a hospital-by-hospital basis, until completion which is scheduled to occur by the end of June, 2013. As of September 30, 2012, EHR applications have been implemented at eleven of our acute care hospitals, the majority of which occurred during the second and third quarters of 2012.  Our acute care hospitals will be eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, assuming they meet the "meaningful use" criteria.  Eight hospitals met the "meaningful use" criteria during the first nine months of 2012 and one additional hospital may qualify by the end of 2012.

As reflected on the Supplemental Schedule, our consolidated results of operations for the three-month period ended September 30, 2012 includes the favorable after-tax impact of approximately $1.3 million, or $.01 per diluted share, recorded in connection with the implementation of EHR applications. This favorable impact, which on a pre-tax basis amounted to $2.2 million, net of $1.1 million attributable to third-party, non-controlling ownership interests, consists of $10.6 million of EHR incentive income offset by $2.8 million of salaries, wages, benefits and other operating expenses and $4.5 million of depreciation and amortization expense.  The EHR incentive income recorded during the third quarter of 2012 consists of state Medicaid EHR incentive payments attributable to seven acute care hospitals that met the "meaningful use" criteria during the quarter. 

As reflected on the Supplemental Schedule, our consolidated results of operations for the nine-month period ended September 30, 2012 includes an after-tax charge of approximately $3.6 million, or $.04 per diluted share, recorded in connection with the implementation of EHR applications. This charge, which on a pre-tax basis amounted to $5.9 million, net of $800,000 attributable to third-party, non-controlling ownership interests, consists of $12.5 million of EHR incentive income offset by $11.1 million of salaries, wages, benefits and other operating expenses and $8.1 million of depreciation and amortization expense. 

Revised 2012 Full Year Guidance:
The operating trends and financial results experienced by our behavioral health facilities met our expectations during the first nine months of 2012.  However, against the backdrop of a continued sluggish economic recovery, the operating trends and financial results experienced by our acute care hospitals were below our expectations for the third quarter of 2012 and those trends are expected to continue during the fourth quarter of this year.  Based upon our consolidated financial results experienced during the first nine months of 2012, and most notably the results experienced by our acute care hospitals during the third quarter of 2012, our revised estimated range of adjusted net income attributable to UHS, for the year ended December 31, 2012 is $4.00 to $4.10 per diluted share. This revised guidance, which excludes the favorable EHR impact mentioned above and the impact of the other items reflected on the Supplemental Schedule for the nine months ended September 30, 2012, represents a decrease of approximately 6% from the previously provided range of $4.25 to $4.35 per diluted share.    

This guidance range also excludes the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits and other material amounts that may be reflected in our financial statements that relate to prior periods. It is also subject to certain conditions including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures.

The operating pressures that we continue to experience in many of our acute care markets has increased the volatility of the financial results of our acute care hospitals making estimation of future results more challenging.  However, we continue to actively and aggressively respond to these challenges through strategic initiatives and operational enhancements such as physician recruitment and integration and implementation of expense controls and other operating efficiencies.             

Conference call information:
We will hold a conference call for investors and analysts at 9:00 a.m. Eastern Time on October 31, 2012. The dial-in number is 1-877-648-7971. 

A live broadcast of the conference call will be available on our website at www.uhsinc.com.  A replay of the call will follow shortly after conclusion of the live call and will be available for one full year.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
Universal Health Services, Inc. ("UHS") is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide and in Puerto Rico and the U.S. Virgin Islands.  It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information on the Company, visit our web site: .

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2011 and in Item 2-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2012), may cause the results to differ materially from those anticipated in the forward-looking statements.  Many of the factors that will determine our future results are beyond our capability to control or predict.  These statements are subject to risks and uncertainties and therefore actual results may differ materially.  Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof.  We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

During the first quarter of 2012, we adopted the Financial Accounting Standards Board's Accounting Standards Update No. 2011-07, "Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities," which required health care entities to change the presentation in their statement of operations by reclassifying the provision for bad debts associated with patient service revenue from an operating expense to a deduction from patient service revenue (net of contractual allowances and discounts). As a result, the provision for doubtful accounts for our acute care and behavioral health care facilities is reflected as a deduction for net revenues in the accompanying consolidated statements of income for the three and nine-month periods ended September 30, 2012 and 2011. The adoption of this standard had no impact on our financial position or results of operations.

As mentioned above, our acute care hospitals may qualify for EHR incentive payments upon implementation of an EHR application assuming they meet the "meaningful use" criteria. However, there can be no assurance that we (our acute care hospitals) will ultimately qualify for these incentive payments and, should we qualify, we are unable to quantify the amount of incentive payments we may receive since the amounts are dependent upon various factors including the implementation timing at each hospital. Should we qualify for incentive payments, there may be timing differences in the recognition of the incentive income and expenses recorded in connection with the implementation of the EHR application which may cause material period-to-period changes in our future results of operations. Hospitals that do not qualify as a meaningful user of EHR by 2015 are subject to a reduced market basket update to the inpatient prospective payment system standardized amount in 2015 and each subsequent fiscal year. Although we believe that our acute care hospitals will be in compliance with the EHR standards by 2015, there can be no assurance that all of our facilities will be in compliance and therefore not subject to the penalty provision of the HITECH Act.

We believe that operating income, operating margin, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and earnings before interest, taxes, depreciation and amortization ("EBITDA"), which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of items that are nonrecurring or non-operational in nature including items such as, but not limited to, costs related to extinguishment of debt, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods.  To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2011 and Report on Form 10-Q for the quarterly period ended June 30, 2012. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability.  Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies.  Investors are encouraged to use GAAP measures when evaluating our financial performance.         

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Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

               
 

Three months

 

Nine months

 

ended September 30,

 

ended September 30,

 

2012

 

2011

 

2012

 

2011

               

Net revenues before provision for doubtful accounts

$1,869,263

 

$1,814,686

 

$5,718,676

 

$5,553,268

  Less: Provision for doubtful accounts

188,910

 

152,011

 

522,203

 

456,042

Net revenues

1,680,353

 

1,662,675

 

5,196,473

 

5,097,226

               

Operating charges:

             

   Salaries, wages and benefits

838,075

 

828,606

 

2,565,052

 

2,492,570

   Other operating expenses

362,687

 

343,873

 

1,059,048

 

1,030,492

   Supplies expense

191,747

 

198,794

 

594,924

 

603,657

   EHR incentive income

(10,551)

 

-

 

(12,506)

 

-

   Depreciation and amortization

77,032

 

73,170

 

221,807

 

213,828

   Lease and rental expense

23,481

 

22,704

 

70,906

 

68,501

   Costs related to extinguishment of debt

29,170

 

-

 

29,170

 

-

 

1,511,641

 

1,467,147

 

4,528,401

 

4,409,048

               

Income from operations

168,712

 

195,528

 

668,072

 

688,178

               

Interest expense, net

45,207

 

48,452

 

137,805

 

154,677

               

Income before income taxes

123,505

 

147,076

 

530,267

 

533,501

               

Provision for income taxes

42,132

 

52,234

 

188,880

 

192,638

               

Net income

81,373

 

94,842

 

341,387

 

340,863

               

Less:  Income attributable to

             

noncontrolling interests

9,556

 

9,788

 

33,402

 

37,967

               

Net income attributable to UHS

$71,817

 

$85,054

 

$307,985

 

$302,896

               
               
               
               
               
               

Basic earnings per share attributable to UHS (a)

$0.74

 

$0.87

 

$3.18

 

$3.10

               

Diluted earnings per share attributable to UHS (a)

$0.73

 

$0.86

 

$3.15

 

$3.06

 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

               
 

Three months

 

Nine months

 

ended September 30,

 

ended September 30,

 

2012

 

2011

 

2012

 

2011

               

(a) Earnings per share calculation:

             
               

Basic and diluted:

             

Net income attributable to UHS

$71,817

 

$85,054

 

$307,985

 

$302,896

Less: Net income attributable to unvested restricted share grants

(85)

 

(165)

 

(379)

 

(440)

Net income attributable to UHS - basic and diluted

$71,732

 

$84,889

 

$307,606

 

$302,456

               

Weighted average number of common shares - basic

96,817

 

97,397

 

96,701

 

97,447

               

Basic earnings per share attributable to UHS:

$0.74

 

$0.87

 

$3.18

 

$3.10

               

Weighted average number of common shares

96,817

 

97,397

 

96,701

 

97,447

Add: Other share equivalents

794

 

1,201

 

1,010

 

1,461

Weighted average number of common shares and equiv. - diluted

97,611

 

98,598

 

97,711

 

98,908

               

Diluted earnings per share attributable to UHS:

$0.73

 

$0.86

 

$3.15

 

$3.06

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule")

For the three months ended September 30, 2012 and 2011

(in thousands, except per share amounts)

(unaudited)

               
               
               

Calculation of "EBITDA"

               
 

Three months ended

 

Three months ended

 

September 30, 2012

 

September 30, 2011

               
               

Net revenues before provision for doubtful accounts

$1,869,263

     

$1,814,686

   

  Less: Provision for doubtful accounts

188,910

     

152,011

   

Net revenues

1,680,353

 

100.0%

 

1,662,675

 

100.0%

               

Operating charges:

             

   Salaries, wages and benefits

838,075

 

49.9%

 

828,606

 

49.8%

   Other operating expenses

362,687

 

21.6%

 

343,873

 

20.7%

   Supplies expense

191,747

 

11.4%

 

198,794

 

12.0%

   EHR incentive income

(10,551)

 

-0.6%

 

-

 

0.0%

 

1,381,958

 

82.2%

 

1,371,273

 

82.5%

               

Operating income/margin ("EBITDAR")

298,395

 

17.8%

 

291,402

 

17.5%

               

   Lease and rental expense

23,481

     

22,704

   

   Income attributable to noncontrolling interests

9,556

     

9,788

   
               

Earnings before, depreciation and amortization, interest expense, and income taxes ("EBITDA")

265,358

 

15.8%

 

258,910

 

15.6%

               

   Depreciation and amortization

77,032

     

73,170

   

   Costs related to extinguishment of debt

29,170

     

-

   

   Interest expense, net

45,207

     

48,452

   
               

Income before income taxes 

113,949

     

137,288

   
               

Provision for income taxes

42,132

     

52,234

   

Net income attributable to UHS

$71,817

     

$85,054

   
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Three months ended

 

Three months ended

 

September 30, 2012

 

September 30, 2011

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:

             

Net income attributable to UHS

$71,817

 

$0.73

 

$85,054

 

$0.86

Plus/minus adjustments:

             

  Costs related to extinguishment of debt, net of income taxes

18,126

 

0.19

       

Adjusted net income attributable to UHS - including Electronic Health Records ("EHR") impact

$89,943

 

$0.92

 

$85,054

 

$0.86

               

Plus/minus impact of EHR implementation: 

             

EHR-related incentive income, pre-tax

(10,551)

           

EHR-related salaries, wages and benefits, pre-tax

2,779

           

EHR-related other operating costs, pre-tax

(82)

           

EHR-related depreciation & amortization, pre-tax

4,575

           

EHR-related minority interest in earnings of consolidated entities, pre-tax

1,122

           

Income tax provision on EHR-related items 

817

           

After-tax impact of EHR-related items

(1,340)

 

(0.01)

 

-

 

-

Adjusted net income attributable to UHS

$88,603

 

$0.91

 

$85,054

 

$0.86

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule")

For the nine months ended September 30, 2012 and 2011

(in thousands, except per share amounts)

(unaudited)

               
               
               

Calculation of "EBITDA"

               
 

Nine months ended

 

Nine months ended

 

September 30, 2012

 

September 30, 2011

               
               

Net revenues before provision for doubtful accounts

$5,718,676

     

$5,553,268

   

  Less: Provision for doubtful accounts

522,203

     

456,042

   

Net revenues

5,196,473

 

100.0%

 

5,097,226

 

100.0%

               

Operating charges:

             

   Salaries, wages and benefits

2,565,052

 

49.4%

 

2,492,570

 

48.9%

   Other operating expenses

1,059,048

 

20.4%

 

1,030,492

 

20.2%

   Supplies expense

594,924

 

11.4%

 

603,657

 

11.8%

   EHR incentive income

(12,506)

 

-0.2%

 

-

 

0.0%

 

4,206,518

 

80.9%

 

4,126,719

 

81.0%

               

Operating income/margin ("EBITDAR")

989,955

 

19.1%

 

970,507

 

19.0%

               

   Lease and rental expense

70,906

     

68,501

   

   Income attributable to noncontrolling interests

33,402

     

37,967

   
               

Earnings before, depreciation and amortization, interest expense, and income taxes ("EBITDA")

885,647

 

17.0%

 

864,039

 

17.0%

               

   Depreciation and amortization

221,807

     

213,828

   

   Costs related to extinguishment of debt

29,170

     

-

   

   Interest expense, net

137,805

     

154,677

   
               

Income before income taxes 

496,865

     

495,534

   
               

Provision for income taxes

188,880

     

192,638

   

Net income attributable to UHS

$307,985

     

$302,896

   
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Nine months ended

 

Nine months ended

 

September 30, 2012

 

September 30, 2011

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:

             

Net income attributable to UHS

$307,985

 

$3.15

 

$302,896

 

$3.06

Plus/minus adjustments:

             

  Medicare Rural Floor settlement, net of income taxes

(18,753)

           

  Oklahoma SHOPP Medicaid reimbursements related to prior years, net of income taxes

(4,329)

           

  Impact of revised SSI ratios and write-off Florida county receivables, net of income taxes

5,149

           

  Net Medicaid reimbursements related to prior years, net of income taxes

(3,417)

           

  Costs related to extinguishment of debt, net of income taxes

18,126

           

Subtotal after-tax adjustments to net income attributable to UHS

(3,224)

 

(0.03)

 

-

 

-

Adjusted net income attributable to UHS - including Electronic Health Records ("EHR") impact

$304,761

 

$3.12

 

$302,896

 

$3.06

               

Plus/minus impact of EHR implementation: 

             

EHR-related incentive income, pre-tax

(12,506)

           

EHR-related salaries, wages and benefits, pre-tax

10,722

           

EHR-related other operating costs, pre-tax

314

           

EHR-related depreciation & amortization, pre-tax

8,102

           

EHR-related minority interest in earnings of consolidated entities, pre-tax

(775)

           

Income tax provision on EHR-related items 

(2,217)

           

After-tax impact of EHR-related items

3,640

 

0.03

 

-

 

-

Adjusted net income attributable to UHS

$308,401

 

$3.15

 

$302,896

 

$3.06

 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

               
 

Three months

 

Nine months

 

ended September 30,

 

ended September 30,

 

2012

 

2011

 

2012

 

2011

               

Net income

$81,373

 

$94,842

 

$341,387

 

$340,863

Other comprehensive income (loss):

             

   Unrealized derivative gains (loss) on cash flow hedges

(45)

 

(21,360)

 

1,782

 

(39,636)

   Amortization of terminated hedge

(84)

 

(84)

 

(252)

 

(252)

Other comprehensive (loss) income before tax

(129)

 

(21,444)

 

1,530

 

(39,888)

Income tax (benefit) expense related to items of other comprehensive income (loss)

(47)

 

(8,214)

 

585

 

(15,270)

Total other comprehensive (loss) income, net of tax

(82)

 

(13,230)

 

945

 

(24,618)

               

Comprehensive income

81,291

 

81,612

 

342,332

 

316,245

Less: Comprehensive income attributable to noncontrolling interests

9,556

 

9,788

 

33,402

 

37,967

Comprehensive income attributable to UHS

$71,735

 

$71,824

 

$308,930

 

$278,278

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

             
     

September 30,

   

December 31,

     

2012

   

2011

Assets

           

Current assets:

           

    Cash and cash equivalents

 

$

25,652

 

$

41,229

    Accounts receivable, net

   

1,042,535

   

969,802

    Supplies

   

97,013

   

96,775

    Deferred income taxes

   

123,131

   

108,324

    Other current assets

   

93,022

   

99,859

    Assets of facilities held for sale

   

107,071

   

48,916

          Total current assets

   

1,488,424

   

1,364,905

             

Property and equipment

   

5,240,909

   

5,106,160

Less: accumulated depreciation

   

(1,924,833)

   

(1,818,180)

     

3,316,076

   

3,287,980

             

Other assets:

           

    Goodwill

   

2,594,740

   

2,627,602

    Deferred charges

   

87,092

   

111,780

    Other

   

294,734

   

272,978

   

$

7,781,066

 

$

7,665,245

             

Liabilities and Stockholders' Equity

           

Current liabilities:

           

    Current maturities of long-term debt

 

$

2,499

 

$

2,479

    Accounts payable and accrued liabilities

   

810,963

   

832,125

    Federal and state taxes

   

6,774

   

-

    Liabilities of facilities held for sale

   

18,112

   

2,329

          Total current liabilities

   

838,348

   

836,933

             

Other noncurrent liabilities

   

408,535

   

401,908

Long-term debt

   

3,440,962

   

3,651,428

Deferred income taxes

   

195,692

   

209,592

             

Redeemable noncontrolling interest

   

234,056

   

218,266

             

UHS common stockholders' equity

   

2,608,782

   

2,296,352

Noncontrolling interest

   

54,691

   

50,766

          Total equity

   

2,663,473

   

2,347,118

             
   

$

7,781,066

 

$

7,665,245

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Nine months

 

ended September 30,

 

2012

 

2011

       

Cash Flows from Operating Activities:

     

  Net income

$341,387

 

$340,863

  Adjustments to reconcile net income to net 

     

   cash provided by operating activities:

     

   Depreciation & amortization

227,641

 

220,208

   (Gain) loss on sale of assets

(945)

 

164

   Stock-based compensation expense

16,189

 

13,434

    Costs related to extinguishment of debt

29,170

 

-

  Changes in assets & liabilities, net of effects from

     

   acquisitions and dispositions:

     

    Accounts receivable

(86,821)

 

(103,700)

    Accrued interest

11,901

 

13,143

    Accrued and deferred income taxes 

(260)

 

102,949

    Other working capital accounts 

(42,916)

 

(74,342)

    Other assets and deferred charges

25,959

 

20,215

    Other 

5,833

 

4,146

    Accrued insurance expense, net of commercial premiums paid

66,752

 

71,186

    Payments made in settlement of self-insurance claims

(58,884)

 

(45,764)

          Net cash provided by operating activities

535,006

 

562,502

       

Cash Flows from Investing Activities:

     

   Property and equipment additions, net of disposals

(282,191)

 

(195,404)

   Proceeds received from sale of assets and businesses

56,194

 

23,682

   Acquisition of property and businesses

(25,092)

 

(8,599)

   Costs incurred for purchase and implementation of electronic health records application

(41,854)

 

(27,874)

   Return of deposit on terminated purchase agreement

6,500

 

-

          Net cash used in investing activities

(286,443)

 

(208,195)

       

Cash Flows from Financing Activities:

     

   Reduction of long-term debt

(1,127,829)

 

(267,539)

   Additional borrowings

906,000

 

36,000

   Financing costs

(8,257)

 

(23,559)

   Repurchase of common shares

(9,676)

 

(44,532)

   Dividends paid

(14,519)

 

(14,638)

   Issuance of common stock

3,828

 

3,596

   Profit distributions to noncontrolling interests

(13,687)

 

(33,962)

          Net cash used in financing activities

(264,140)

 

(344,634)

       

(Decrease) increase in cash and cash equivalents

(15,577)

 

9,673

Cash and cash equivalents, beginning of period

41,229

 

29,474

Cash and cash equivalents, end of period

$25,652

 

$39,147

       

Supplemental Disclosures of Cash Flow Information:

     

  Interest paid

$104,560

 

$120,712

       

  Income taxes paid, net of refunds

$187,899

 

$89,268

 

   

       Universal Health Services, Inc.

   
   

  Supplemental Statistical Information

   
     

                   (un-audited)

       
                   
                   
         

 % Change 

 

 % Change 

   
         

Quarter Ended

 

9 months ended

   

Same Facility:

       

9/30/2012

 

9/30/2012

   
                   

Acute Care Hospitals

                 

Revenues

       

-0.4%

 

-0.5%

   

Adjusted Admissions

       

-1.7%

 

-0.3%

   

Adjusted Patient Days

       

-1.0%

 

0.3%

   

Revenue Per Adjusted Admission

       

1.3%

 

-0.2%

   

Revenue Per Adjusted Patient Day

       

0.6%

 

-0.7%

   
                   
                   

Behavioral Health Hospitals

                 
                   

Revenues

       

3.4%

 

4.2%

   

Adjusted Admissions

       

2.6%

 

5.0%

   

Adjusted Patient Days

       

0.7%

 

1.2%

   

Revenue Per Adjusted Admission

       

0.7%

 

-0.7%

   

Revenue Per Adjusted Patient Day

       

2.6%

 

2.9%

   
                   
                   
                   
                   

UHS Consolidated

   

Third Quarter Ended

 

Nine months Ended

     

9/30/2012

 

9/30/2011

 

9/30/2012

 

9/30/2011

                   

Revenues

   

$1,680,353

 

$1,662,675

 

$5,196,473

 

$5,097,226

EBITDA   (1)

   

265,358

 

258,910

 

885,647

 

864,039

EBITDA Margin (1)

   

15.8%

 

15.6%

 

17.0%

 

17.0%

                   

Cash Flow From Operations

   

162,144

 

206,726

 

535,006

 

562,502

Days Sales Outstanding

   

57

 

51

 

55

 

50

Capital Expenditures  

   

99,840

 

79,164

 

282,191

 

195,404

                   

Debt 

           

3,443,461

 

3,687,741

Shareholders Equity

           

2,608,782

 

2,221,382

Debt / Total Capitalization

           

56.9%

 

62.4%

Debt / EBITDA  (2)

           

2.96

 

3.42

Debt / Cash From Operations  (2)

           

4.99

 

5.55

                   
                   

Acute Care EBITDAR Margin  (3) 

   

13.4%

 

14.8%

 

16.2%

 

17.8%

Behavioral Health EBITDAR Margin  (3) 

 

27.8%

 

26.5%

 

27.8%

 

26.7%

                   
                   

(1)  Net of Minority Interest 

                 

(2)  Latest 4 quarters

                 

(3)  Before Corporate overhead allocation and minority interest. Before Adjustments shown on the Supplemental Schedule 

 

 

UNIVERSAL HEALTH SERVICES, INC.

 

SELECTED HOSPITAL STATISTICS

 

FOR THE THREE MONTHS ENDED

 

SEPTEMBER 30, 2012 AND 2011

                   
                   
 

AS REPORTED:

               
                   
                   
     

ACUTE (1)

 

BEHAVIORAL HEALTH

     

09/30/12

09/30/11

%  change

 

09/30/12

09/30/11

%  change

                   
 

Hospitals owned and leased

 

25

25

0.0%

 

175

178

-1.7%

 

Average licensed beds

 

5,704

5,739

-0.6%

 

19,177

19,372

-1.0%

 

Patient days

 

273,361

279,322

-2.1%

 

1,289,975

1,291,753

-0.1%

 

Average daily census

 

2,971.3

3,036.1

-2.1%

 

14,021.5

14,040.8

-0.1%

 

Occupancy-licensed beds

 

52.1%

52.9%

-1.5%

 

73.1%

72.5%

0.9%

 

Admissions

 

61,521

63,305

-2.8%

 

91,520

89,951

1.7%

 

Length of stay

 

4.4

4.4

0.7%

 

14.1

14.4

-1.8%

                   
 

Inpatient revenue

 

$3,013,482

$2,827,617

6.6%

 

$1,410,170

$1,368,405

3.1%

 

Outpatient revenue

 

1,517,261

1,384,084

9.6%

 

151,788

146,836

3.4%

 

Total patient revenue

 

4,530,743

4,211,701

7.6%

 

1,561,958

1,515,241

3.1%

 

Other revenue

 

25,006

19,884

25.8%

 

36,303

35,581

2.0%

 

Gross hospital revenue

 

4,555,749

4,231,585

7.7%

 

1,598,261

1,550,822

3.1%

                   
 

Total deductions

 

3,560,780

3,265,466

9.0%

 

734,266

707,287

3.8%

                   
 

Net hospital revenue before 

               
 

  provision for doubtful accounts

$994,969

$966,119

3.0%

 

$863,995

$843,535

2.4%

                   
 

Provision for doubtful accounts

$166,570

$134,344

24.0%

 

$22,326

$17,710

26.1%

                   
 

Net hospital revenue 

 

828,399

831,775

-0.4%

 

841,669

825,825

1.9%

                   
                   
 

SAME FACILITY:

               
                   
     

ACUTE  (1)

 

BEHAVIORAL HEALTH (2)(3)

     

09/30/12

09/30/11

%  change

 

09/30/12

09/30/11

%  change

                   
 

Hospitals owned and leased

 

24

24

0.0%

 

171

171

0.0%

 

Average licensed beds

 

5,545

5,580

-0.6%

 

19,010

18,960

0.3%

 

Patient days

 

265,043

270,314

-2.0%

 

1,278,478

1,266,518

0.9%

 

Average daily census

 

2,880.9

2,938.2

-2.0%

 

13,896.5

13,766.5

0.9%

 

Occupancy-licensed beds

 

52.0%

52.7%

-1.3%

 

73.1%

72.6%

0.7%

 

Admissions

 

59,643

61,229

-2.6%

 

90,415

87,895

2.9%

 

Length of stay

 

4.4

4.4

0.7%

 

14.1

14.4

-1.9%

                   
                   
                   

(1)

Auburn is excluded in both current and prior years. Hospital count previously reflected number of licenses

 

we have revised to reflect number of hospitals.

         
                   

(2)

King George School, Marion, Pennsylvania Clinical School, and San Juan Capestrano  

 
 

are excluded in both current and prior years.

         
                   

(3)

Brook Glen Behavioral Hospital, Jefferson Train, Manatee Palms Group Homes and the Peaks 

 
 

are excluded in both current and prior years 

         
                   
                   
                   
                   
                   
 

UNIVERSAL HEALTH SERVICES, INC.

 

SELECTED HOSPITAL STATISTICS

 

FOR THE NINE MONTHS ENDED

 

SEPTEMBER 30, 2012 AND 2011

                   
                   
 

AS REPORTED:

               
                   
                   
     

ACUTE (1)

 

BEHAVIORAL HEALTH

     

09/30/12

09/30/11

%  change

 

09/30/12

09/30/11

%  change

                   
 

Hospitals owned and leased

 

25

25

0.0%

 

175

178

 
 

Average licensed beds

 

5,703

5,713

-0.2%

 

19,152

19,390

-1.2%

 

Patient days

 

852,588

872,943

-2.3%

 

3,905,070

3,913,151

-0.2%

 

Average daily census

 

3,111.6

3,197.6

-2.7%

 

14,252.1

14,333.9

-0.6%

 

Occupancy-licensed beds

 

54.6%

56.0%

-2.5%

 

74.4%

73.9%

0.7%

 

Admissions

 

189,886

195,818

-3.0%

 

279,231

270,042

3.4%

 

Length of stay

 

4.5

4.5

0.7%

 

14.0

14.5

-3.5%

                   
 

Inpatient revenue

 

$9,326,344

$8,934,701

4.4%

 

$4,242,528

$4,154,117

2.1%

 

Outpatient revenue

 

4,606,680

4,068,566

13.2%

 

474,623

453,652

4.6%

 

Total patient revenue

 

13,933,024

13,003,267

7.2%

 

4,717,151

4,607,769

2.4%

 

Other revenue

 

68,827

55,620

23.7%

 

109,273

105,102

4.0%

 

Gross hospital revenue

 

14,001,851

13,058,887

7.2%

 

4,826,424

4,712,871

2.4%

                   
 

Total deductions

 

10,947,246

10,073,372

8.7%

 

2,188,024

2,162,038

1.2%

                   
 

Net hospital revenue before 

               
 

  provision for doubtful accounts

$3,054,605

$2,985,515

2.3%

 

$2,638,400

$2,550,833

3.4%

                   
 

Provision for doubtful accounts

$456,078

$398,445

14.5%

 

$66,144

$57,497

15.0%

                   
 

Net hospital revenue 

 

2,598,527

2,587,070

0.4%

 

2,572,256

2,493,336

3.2%

                   
                   
 

SAME FACILITY:

               
                   
                   
     

ACUTE (1)

 

BEHAVIORAL HEALTH (2)(3)

     

09/30/12

09/30/11

%  change

 

09/30/12

09/30/11

%  change

                   
 

Hospitals owned and leased

 

24

24

0.0%

 

171

171

0.0%

 

Average licensed beds

 

5,544

5,554

-0.2%

 

18,977

18,901

0.4%

 

Patient days

 

825,781

845,672

-2.4%

 

3,871,182

3,826,941

1.2%

 

Average daily census

 

3,013.8

3,097.7

-2.7%

 

14,128.4

14,018.1

0.8%

 

Occupancy-licensed beds

 

54.4%

55.8%

-2.5%

 

74.5%

74.2%

0.4%

 

Admissions

 

184,021

189,456

-2.9%

 

276,105

263,293

4.9%

 

Length of stay

 

4.5

4.5

0.5%

 

14.0

14.5

-3.5%

                   
                   
                   

(1)

Auburn is excluded in both current and prior years. Hospital count previously reflected number of licenses

 

we have revised to reflect number of hospitals.

         
                   

(2)

King George School, Marion, Pennsylvania Clinical School, and San Juan Capestrano  

 
 

are excluded in both current and prior years.

         
                   

(3)

Brook Glen Behavioral Hospital, Jefferson Train, Manatee Palms Group Homes and the Peaks 

 
 

are excluded in both current and prior years 

         

 

SOURCE Universal Health Services, Inc.

Steve Filton, Chief Financial Officer, +1-610-768-3300

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