Full Press Release Details
| CONTACT: | Steve Filton | |||
| Chief Financial Officer | July 26, 2010 | |||
| 610-768-3300 |
UNIVERSAL HEALTH SERVICES, INC. REPORTS
2010 SECOND QUARTER FINANCIAL RESULTS
Consolidated Results of Operations - Three-month periods ended June 30, 2010 and 2009:
KING OF PRUSSIA, PA Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS
was $65.6 million, or $.67 per diluted share, during the second quarter of 2010 as compared to $80.9 million, or $.82 per diluted share, during the comparable prior year quarter. Net revenues increased 3% to $1.34 billion during the second quarter
of 2010 as compared to $1.30 billion during the second quarter of 2009.
After adjusting the reported results for the second
quarters of 2010 and 2009 to neutralize the impact of the below-mentioned adjustments, our adjusted net income attributable to UHS was $66.7 million, or $.68 per diluted share, during the second quarter of 2010 as compared to $71.1 million, or $.72
per diluted share, during the second quarter of 2009.
As indicated on the attached Schedules of Non-GAAP Supplemental
Consolidated Statements of Income Information ( Supplemental Schedules ), included in our net income attributable to UHS during the three and six-month periods ended June 30, 2010, was a net loss of $1.1 million, or $.01 per diluted
share, consisting of: (i) a favorable after-tax adjustment of $10.2 million, or $.10 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2010 based upon a
reserve analysis, offset by; (ii) the unfavorable after-tax impact of $11.3 million, or $.11 per diluted share, resulting from the recording of transaction fees incurred in connection with our previously announced agreement to acquire
Psychiatric Solutions, Inc.
As indicated on the attached Supplemental Schedules, included in our net income attributable to
UHS during the three and six-month periods ended June 30, 2009, was net income of $9.8 million, or $.10 per diluted share, consisting of: (i) a favorable after-tax adjustment of $14.1 million, or $.14 per diluted share, resulting from a
reduction to our professional and general liability self-insurance reserves relating to years prior to 2009 based upon a reserve analysis, partially offset by; (ii) an unfavorable discrete tax item of $4.3 million, or $.04 per diluted share.
Consolidated Results of Operations - Six-month periods ended June 30, 2010 and 2009:
During the six-month period ended June 30, 2010, our reported net income attributable to UHS was $137.4 million, or $1.40
per diluted share, as compared to $148.4 million, or $1.50 per diluted share, during the comparable prior year period. Net revenues increased 3% to $2.69 billion during the first six months of 2010 as compared to $2.62 billion during the first six
After adjusting the reported results for six-month periods ended June 30, 2010 and 2009 to neutralize
the impact of the above-mentioned adjustments, our adjusted net income attributable to UHS was $138.5 million, or $1.41 per diluted share, during the first six months of 2010 as compared to $138.6 million, or $1.40 per diluted share, during the
first six months of 2009.
Acute Care Services - Three-month periods ended June 30, 2010 and 2009:
At our acute care hospitals owned during both periods ( same facility basis ), adjusted admissions (adjusted for outpatient
activity) increased 1.9% while adjusted patient days increased 0.3% during the second quarter of 2010, as compared to the second quarter of 2009. Net revenues at these facilities increased 2.2% during the second quarter of 2010 as compared to the
comparable quarter of the prior year. At these facilities, net revenue per adjusted admission during the second quarter of 2010 increased 0.3% while net revenue per adjusted patient day increased 1.9% as compared to the comparable quarter of the
prior year. On a same facility basis, excluding the items mentioned above and as included on the Supplemental Schedules, the operating margin at our acute care hospitals decreased to 14.2% during the second quarter of 2010 as compared to 16.9%
during the second quarter of 2009.
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 $190 million and $181 million during the three-month periods ended June 30, 2010 and 2009, respectively.
Acute Care Services - Six-month periods ended June 30, 2010 and 2009:
During the six-month period ended June 30, 2010, on a same facility basis, adjusted admissions increased 1.8% while adjusted patient
days increased 0.5% over the comparable prior year period. Net revenues at these facilities increased 2.6% during the second quarter of 2010 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted
admission increased 0.8% while net revenue per adjusted patient day increased 2.2% during the second quarter of 2010 as compared to the comparable quarter of the prior year. On a same facility basis, excluding the items mentioned above and as
included on the Supplemental Schedules, the operating margin at our acute care hospitals decreased to 15.2% during the second quarter of 2010 as compared to 17.2% during the second quarter of 2009.
Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $366 million
and $340 million during the six-month periods ended June 30, 2010 and 2009, respectively.
Behavioral Health Care Services - Three-month periods ended June 30, 2010 and 2009:
At our behavioral health care facilities, on a same facility basis, adjusted admissions increased 4.7% and adjusted patient
days increased 2.4% during the second quarter of 2010 as compared to the second quarter of 2009. Net revenues at these facilities increased 5.5% during the second quarter of 2010 as compared to the comparable quarter in the prior year. At these
facilities, net revenue per adjusted admission during the second quarter of 2010 increased 0.1% while net revenue per adjusted patient day increased 2.3% as compared to the comparable prior year quarter. On a same facility basis, excluding the items
mentioned above and as included on the Supplemental Schedules, the operating margin at our behavioral health care facilities increased to 27.9% during the second quarter of 2010 as compared to 25.9% during the second quarter of 2009.
Behavioral Health Care Services - Six-month periods ended June 30, 2010 and 2009:
During the six-month period ended June 30, 2010, on a same facility basis, adjusted admissions increased 4.2% and adjusted patient
days increased 3.1% during the first six months of 2010 as compared to the comparable period of 2009. Net revenues at these facilities increased 6.1% during the first six months of 2010 as compared to the comparable prior year period. At these
facilities, net revenue per adjusted admission increased 1.4% while net revenue per adjusted patient day increased 2.5% during the first six months of 2010 over the comparable prior year period. On a same facility basis, excluding the items
mentioned above and as included on the Supplemental Schedules, the operating margin at our behavioral health care facilities increased to 27.0% during the first six months of 2010 as compared to 25.2% during the comparable period of 2009.
On July 21, 2010, our Board of Directors approved a cash dividend of $0.05 per share payable on September 15, 2010 to
shareholders of record as of September 1, 2010.
Conference Call Information:
We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 27, 2010. The dial-in number is
1-877-648-7971. A digital recording of the conference call will be available two hours after the completion of the conference call on July 27, 2010 and will continue through midnight on August 10, 2010. The recording can be accessed by
calling 1-800-642-1687 and entering the conference ID number 88336222. A live broadcast of the call will be available on our web site at www.uhsinc.com. The webcast will be available through Thompson StreetEvents Network at
www.earnings.com or www.streetevents.com, a password-protected event management site for institutional investors.
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, through its subsidiaries, acute care hospitals, behavioral healthcare facilities and ambulatory centers located throughout the United States and Puerto Rico.
UHS 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: http://www.uhsinc.com.
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, 2009 and in Item 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended
March 31, 2010), 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.
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, 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,
2009 and Report on Form 10-Q for the quarterly period ended March 31, 2010. 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.
Universal Health Services, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
| Net revenues | $ | 1,338,315 | $ | 1,303,640 | $ | 2,685,468 | $ | 2,616,059 | ||||
| Operating charges: | ||||||||||||
| Salaries, wages and benefits | 563,552 | 541,950 | 1,142,478 | 1,083,247 | ||||||||
| Other operating expenses | 249,114 | 232,894 | 496,142 | 506,115 | ||||||||
| Supplies expense | 179,926 | 176,411 | 363,742 | 350,378 | ||||||||
| Provision for doubtful accounts | 143,764 | 120,670 | 269,154 | 239,648 | ||||||||
| Depreciation and amortization | 54,025 | 51,085 | 107,536 | 102,219 | ||||||||
| Lease and rental expense | 18,185 | 17,587 | 36,119 | 34,659 | ||||||||
| 1,208,566 | 1,140,597 | 2,415,171 | 2,316,266 | |||||||||
| Income from operations | 129,749 | 163,043 | 270,297 | 299,793 | ||||||||
| Interest expense, net | 12,277 | 11,879 | 24,654 | 24,517 | ||||||||
| Income before income taxes | 117,472 | 151,164 | 245,643 | 275,276 | ||||||||
| Provision for income taxes | 41,057 | 57,187 | 86,466 | 99,265 | ||||||||
| Net income | 76,415 | 93,977 | 159,177 | 176,011 | ||||||||
| Less: Income attributable tononcontrolling interests | 10,843 | 13,084 | 21,786 | 27,577 | ||||||||
| Net income attributable to UHS | $ | 65,572 | $ | 80,893 | $ | 137,391 | $ | 148,434 | ||||
| Basic earnings per share attributable to UHS (a) | $ | 0.68 | $ | 0.82 | $ | 1.42 | $ | 1.51 | ||||
| Diluted earnings per share attributable to UHS (a) | $ | 0.67 | $ | 0.82 | $ | 1.40 | $ | 1.50 |
Universal Health Services, Inc.
Footnotes to Consolidated Statements of Income
(in thousands, except per share amounts)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (a) Earnings per share calculation: | ||||||||||||||||
| Basic and diluted: | ||||||||||||||||
| Net income attributable to UHS | $ | 65,572 | $ | 80,893 | $ | 137,391 | $ | 148,434 | ||||||||
| Less: Net income attributable to unvested restricted share grants | (278 | ) | (381 | ) | (593 | ) | (695 | ) | ||||||||
| Net income attributable to UHS - basic and diluted | $ | 65,294 | $ | 80,512 | $ | 136,798 | $ | 147,739 | ||||||||
| Weighted average number of common shares - basic | 96,703 | 97,700 | 96,621 | 98,056 | ||||||||||||
| Basic earnings per share attributable to UHS: | $ | 0.68 | $ | 0.82 | $ | 1.42 | $ | 1.51 | ||||||||
| Weighted average number of common shares | 96,703 | 97,700 | 96,621 | 98,056 | ||||||||||||
| Add: Other share equivalents | 1,351 | 404 | 1,131 | 202 | ||||||||||||
| Weighted average number of common shares and equiv. - diluted | 98,054 | 98,104 | 97,752 | 98,258 | ||||||||||||
| Diluted earnings per share attributable to UHS: | $ | 0.67 | $ | 0.82 | $ | 1.40 | $ | 1.50 |
Universal Health Services, Inc.
Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ( Supplemental Schedule )
For the three months ended June 30, 2010 and 2009
(in thousands, except per share amounts)
| Three months ended | Three months ended | |||||||||||||||
| June 30, 2010 | June 30, 2009 | |||||||||||||||
| Net revenues | $ | 1,338,315 | 100.0 | % | $ | 1,303,640 | 100.0 | % | ||||||||
| Operating charges: | ||||||||||||||||
| Salaries, wages and benefits | 563,552 | 42.1 | % | 541,950 | 41.6 | % | ||||||||||
| Other operating expenses | 249,114 | 18.6 | % | 232,894 | 17.9 | % | ||||||||||
| Supplies expense | 179,926 | 13.4 | % | 176,411 | 13.5 | % | ||||||||||
| Provision for doubtful accounts | 143,764 | 10.7 | % | 120,670 | 9.3 | % | ||||||||||
| 1,136,356 | 84.9 | % | 1,071,925 | 82.2 | % | |||||||||||
| Operating income/margin | 201,959 | 15.1 | % | 231,715 | 17.8 | % | ||||||||||
| Lease and rental expense | 18,185 | 17,587 | ||||||||||||||
| Income attributable to noncontrolling interests | 10,843 | 13,084 | ||||||||||||||
| Earnings before, depreciation and amortization, interest expense, and income taxes | 172,931 | 201,044 | ||||||||||||||
| Depreciation and amortization | 54,025 | 51,085 | ||||||||||||||
| Interest expense, net | 12,277 | 11,879 | ||||||||||||||
| Income before income taxes | 106,629 | 138,080 | ||||||||||||||
| Provision for income taxes | 41,057 | 57,187 | ||||||||||||||
| Net income attributable to UHS | $ | 65,572 | $ | 80,893 | ||||||||||||
| Three months ended | Three months ended | |||||||||||||||
| June 30, 2010 | June 30, 2009 | |||||||||||||||
| Amount | Per Diluted Share | Amount | Per Diluted Share | |||||||||||||
| Calculation of Adjusted Net Income Attributable to UHS | ||||||||||||||||
| Net income attributable to UHS | $ | 65,572 | $ | 0.67 | $ | 80,893 | $ | 0.82 | ||||||||
| Plus/minus adjustments: | ||||||||||||||||
| Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes | (10,198 | ) | (0.10 | ) | (14,168 | ) | (0.14 | ) | ||||||||
| Acquistion transaction costs, net of income taxes | 11,288 | 0.11 | ||||||||||||||
| Unfavorable discrete tax item | 4,331 | 0.04 | ||||||||||||||
| Subtotal after-tax adjustments to net income attributable to UHS | 1,090 | 0.01 | (9,837 | ) | (0.10 | ) | ||||||||||
| Adjusted net income attributable to UHS | $ | 66,662 | $ | 0.68 | $ | 71,056 | $ | 0.72 |
Universal Health Services, Inc.
Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ( Supplemental Schedule )
For the six months ended June 30, 2010 and 2009
(in thousands, except per share amounts)
| Six months ended June 30, 2010 | Six months ended June 30, 2009 | |||||||||||||||
| Net revenues | $ | 2,685,468 | 100.0 | % | $ | 2,616,059 | 100.0 | % | ||||||||
| Operating charges: | ||||||||||||||||
| Salaries, wages and benefits | 1,142,478 | 42.5 | % | 1,083,247 | 41.4 | % | ||||||||||
| Other operating expenses | 496,142 | 18.5 | % | 506,115 | 19.3 | % | ||||||||||
| Supplies expense | 363,742 | 13.5 | % | 350,378 | 13.4 | % | ||||||||||
| Provision for doubtful accounts | 269,154 | 10.0 | % | 239,648 | 9.2 | % | ||||||||||
| 2,271,516 | 84.6 | % | 2,179,388 | 83.3 | % | |||||||||||
| Operating income/margin | 413,952 | 15.4 | % | 436,671 | 16.7 | % | ||||||||||
| Lease and rental expense | 36,119 | 34,659 | ||||||||||||||
| Income attributable to noncontrolling interests | 21,786 | 27,577 | ||||||||||||||
| Earnings before, depreciation and amortization, interest expense, and income taxes | 356,047 | 374,435 | ||||||||||||||
| Depreciation and amortization | 107,536 | 102,219 | ||||||||||||||
| Interest expense, net | 24,654 | 24,517 | ||||||||||||||
| Income before income taxes | 223,857 | 247,699 | ||||||||||||||
| Provision for income taxes | 86,466 | 99,265 | ||||||||||||||
| Net income attributable to UHS | $ | 137,391 | $ | 148,434 | ||||||||||||
| Six months ended June 30, 2010 | Six months ended June 30, 2009 | |||||||||||||||
| Amount | Per Diluted Share | Amount | Per Diluted Share | |||||||||||||
| Calculation of Adjusted Net Income Attributable to UHS | ||||||||||||||||
| Net income attributable to UHS | $ | 137,391 | $ | 1.40 | $ | 148,434 | $ | 1.50 | ||||||||
| Plus/minus adjustments: | ||||||||||||||||
| Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes | (10,198 | ) | (0.10 | ) | (14,168 | ) | (0.14 | ) | ||||||||
| Acquistion transaction costs, net of income taxes | 11,288 | 0.11 | ||||||||||||||
| Unfavorable discrete tax item | 4,331 | 0.04 | ||||||||||||||
| Subtotal after-tax adjustments to net income attributable to UHS | 1,090 | 0.01 | (9,837 | ) | (0.10 | ) | ||||||||||
| Adjusted net income attributable to UHS | $ | 138,481 | $ | 1.41 | $ | 138,597 | $ | 1.40 |
Universal Health Services, Inc.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
| June 30, 2010 | As revised (a) December 31, 2009 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,337 | $ | 9,180 | ||||
| Accounts receivable, net | 618,855 | 602,559 | ||||||
| Supplies | 84,683 | 84,272 | ||||||
| Other current assets | 38,985 | 27,270 | ||||||
| Deferred income taxes | 51,109 | 51,336 | ||||||
| Current assets held for sale | 16,250 | 21,580 | ||||||
| Total current assets | 822,219 | 796,197 | ||||||
| Property and equipment | 3,818,209 | 3,738,818 | ||||||
| Less: accumulated depreciation | (1,510,592 | ) | (1,423,580 | ) | ||||
| 2,307,617 | 2,315,238 | |||||||
| Other assets: | ||||||||
| Goodwill | 732,754 | 732,685 | ||||||
| Deferred charges | 8,864 | 8,643 | ||||||
| Other | 118,303 | 111,700 | ||||||
| $ | 3,989,757 | $ | 3,964,463 | |||||
| Liabilities and Stockholders Equity | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt | $ | 2,032 | $ | 2,573 | ||||
| Accounts payable and accrued liabilities | 552,794 | 578,617 | ||||||
| Federal and state taxes | 3,298 | 1,627 | ||||||
| Total current liabilities | 558,124 | 582,817 | ||||||
| Other noncurrent liabilities | 346,310 | 375,580 | ||||||
| Long-term debt | 881,344 | 956,429 | ||||||
| Deferred income taxes | 68,386 | 60,091 | ||||||
| Redeemable noncontrolling interest | 205,463 | 197,152 | ||||||
| UHS common stockholders equity | 1,887,365 | 1,751,071 | ||||||
| Noncontrolling interest | 42,765 | 41,323 | ||||||
| Total equity | 1,930,130 | 1,792,394 | ||||||
| $ | 3,989,757 | $ | 3,964,463 |
Universal Health Services, Inc.
Consolidated Statements of Cash Flows