UNIVERSAL HEALTH SERVICES, INC. ANNOUNCES 2022 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS AND 2023 FULL YEAR EARNINGS GUIDANCE

02/27/2023

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended December 31, 2022 and 2021:

KING OF PRUSSIA, Pa., Feb. 27, 2023 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $174.8 million, or $2.43 per diluted share, during the fourth quarter of 2022, as compared to $239.1 million, or $3.00 per diluted share, during the fourth quarter of 2021. Net revenues increased by 5.2% to $3.447 billion during the fourth quarter of 2022, as compared to $3.275 billion during the fourth quarter of 2021.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the fourth quarter of 2022, was $217.1 million, or $3.02 per diluted share, as compared to $235.1 million, or $2.95 per diluted share, during the fourth quarter of 2021. 

Included in our reported and adjusted net income attributable to UHS during the fourth quarter of 2022, was an aggregate favorable after-tax impact of approximately $19.6 million, or $.27 per diluted share, recorded in connection with $26.0 million of commercial insurance proceeds received during the quarter in connection with the following: (i) $15.7 million related to a business interruption and property damage claim at one of our behavioral health care facilities, and; (ii) $10.3 million related to a previously incurred information technology incident.     

Included in our reported and adjusted net income attributable to UHS during the fourth quarter of 2021, was a net favorable after-tax impact of approximately $26.2 million, or $.33 per diluted share, resulting from approximately $34 million of revenues recorded during the fourth quarter of 2021 in connection with the Kentucky Medicaid managed care hospital rate increase program (covering the period of July 1, 2021 to December 31, 2021).

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2022, was a net aggregate unfavorable after-tax impact of $42.3 million, or $.59 per diluted share, consisting of the following: (i) a $44.1 million, or $.61 per diluted share, provision for asset impairment ($57.6 million pre-tax which is included in other operating expenses) recorded to write-down the asset value of an acute care hospital located in Las Vegas, Nevada, as discussed below in Provision for Asset Impairment, and; (ii) a $1.8 million, or $.02 per diluted share, unrealized gain ($2.3 million pre-tax which is included in "Other (income) expense, net"), resulting from an increase in the market value of certain equity securities. 

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2021, was a net aggregate favorable after-tax impact of $4.0 million, or $.05 per diluted share, consisting primarily of an after-tax unrealized gain of $4.1 million, or $.05 per diluted share, ($5.4 million pre-tax which is included in "Other (income) expense, net"), resulting from an increase in the market value of certain equity securities. 

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA net of NCI", NCI is net income attributable to noncontrolling interests), was $419.0 million during the fourth quarter of 2022, as compared to $464.5 million during the fourth quarter of 2021. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of the provision for asset impairment and other (income) expense, net, was $471.7 million during the fourth quarter of 2022, as compared to $452.2 million during the fourth quarter of 2021.

Consolidated Results of Operations, As Reported and As Adjusted  – Twelve-month periods ended December 31, 2022 and 2021:

Reported net income attributable to UHS was $675.6 million, or $9.14 per diluted share, during the full year of 2022, as compared to $991.6 million, or $11.82 per diluted share, during the full year of 2021. Net revenues increased by 6.0% to $13.399 billion during 2022, as compared to $12.642 billion during 2021.

Our reported and adjusted net income attributable to UHS during the twelve-month period ended December 31, 2021, included the following: (i) a favorable after-tax impact of $74.0 million, or $.88 per diluted share, resulting from approximately $97 million of revenues recorded during 2021 in connection with the Kentucky Medicaid managed care hospital rate increase program (covering the period of July 1, 2020 to December 31, 2021); (ii) an unfavorable after-tax impact of approximately $39.2 million, or $.47 per diluted share, resulting from a $52 million increase to our reserves for self-insured professional and general liability claims recorded during 2021, and; (iii) an aggregate favorable after-tax impact of $28.4 million, or $.34 per diluted share, resulting from aggregate commercial insurance proceeds of approximately $38 million recorded during 2021 in connection with a previously incurred information technology incident and the COVID-19 pandemic.      

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the twelve-month period ended December 31, 2022, was $730.2 million, or $9.88 per diluted share, as compared to $991.7 million, or $11.82 per diluted share, during the twelve-month period ended December 31, 2021

As reflected on the Supplemental Schedule, included in our reported results during the full year of 2022, was a net aggregate unfavorable after-tax impact of $54.6 million, or $.74 per diluted share, consisting of the following: (i) a $44.1 million, or $.60 per diluted share, provision for asset impairment ($57.6 million pre-tax which is included in other operating expenses), as discussed below in Provision for Asset Impairment, and; (ii) a $10.6 million, or $.14 per diluted share, unrealized loss ($13.8 million pre-tax which is included in "Other (income) expense, net"), resulting from a decrease in the market value of certain equity securities. 

As reflected on the Supplemental Schedule, included in our reported results during the full year of 2021, were the following which, on a net aggregate basis, amounted to a de minimis amount: (i) an after-tax charge of $12.9 million, or $.15 per diluted share, ($16.8 million pre-tax which is included in "Other (income) expense, net") recorded in connection with the costs related to extinguishment of debt resulting from various financing transactions completed during the third quarter of 2021; (ii) an after-tax unrealized gain of $10.4 million, or $.12 per diluted share, ($13.6 million pre-tax which is included in "Other (income) expense, net") resulting from an increase in the market value of shares of certain equity securities, and; (iii) a favorable after-tax impact of $2.4 million, or $.03 per diluted share, resulting from ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting".

As calculated on the attached Supplemental Schedule, our EBITDA net of NCI was $1.594 billion during the full year of 2022, as compared to $1.914 billion during the full year of 2021. Our Adjusted EBITDA net of NCI was $1.662 billion during the full year 2022, as compared to $1.900 billion during the 2021 full year.

Acute Care Services – Three and twelve-month periods ended December 31, 2022 and 2021:

During the fourth quarter of 2022, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased by 5.5% while adjusted patient days increased by 1.6%, as compared to the fourth quarter of 2021. At these facilities, during the fourth quarter of 2022, net revenue per adjusted admission decreased by 3.8% while net revenue per adjusted patient day decreased 0.2%, as compared to the fourth quarter of 2021. Net revenues generated from our acute care services on a same facility basis increased by 2.6% during the fourth quarter of 2022, as compared to the fourth quarter of 2021. 

During the twelve-month period ended December 31, 2022, at our acute care hospitals on a same facility basis, adjusted admissions increased by 3.1% while adjusted patient days increased by 0.9%, as compared to the comparable twelve-month period of 2021. At these facilities, during the full year of 2022, net revenue per adjusted admission decreased by 0.3% while net revenue per adjusted patient day increased by 1.9%, as compared to the comparable twelve-month period of 2021. Net revenues generated from our acute care services on a same facility basis increased by 4.1% during the full year of 2022, as compared to 2021. 

Behavioral Health Care Services – Three and twelve-month periods ended December 31, 2022 and 2021:

During the fourth quarter of 2022, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 0.7% while adjusted patient days increased by 2.0%, as compared to the fourth quarter of 2021. At these facilities, during the fourth quarter of 2022, net revenue per adjusted admission increased by 3.4% and net revenue per adjusted patient day increased by 2.2%, as compared to the fourth quarter of 2021. Net revenues generated from our behavioral health care services increased by 4.3% during the fourth quarter of 2022, as compared to the fourth quarter of 2021.

During the twelve-month period ended December 31, 2022, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 0.7% while adjusted patient days increased by 1.2%, as compared to the comparable twelve-month period of 2021. At these facilities, during the full year of 2022, net revenue per adjusted admission increased by 4.0% and net revenue per adjusted patient day increased by 3.5%, as compared to the comparable twelve-month period of 2021. Net revenues generated from our behavioral health care services increased by 4.2% during the full year of 2022, as compared to 2021.

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

During the twelve-month period ended December 31, 2022, our net cash provided by operating activities was $996 million as compared to $884 million during the twelve-month period of 2021. The $112 million net increase in our net cash provided by operating activities during 2022, as compared to 2021, was due to: (i) a favorable change of $695 million from the early return of Medicare accelerated payments which were received during 2020 and repaid during the first quarter of 2021; (ii) an unfavorable change of $249 million in accounts receivable due, in part, to increased receivables related to supplemental Medicaid programs in various states as well as amounts outstanding at December 31, 2022, related to facilities and businesses that were opened/acquired during the past year; (iii) an unfavorable change of $238 million resulting from a decrease in net income plus depreciation and amortization expense, stock-based compensation expense, gain/loss on sales of assets and businesses, costs related to extinguishment of debt and provision for asset impairments; (iv) an unfavorable change of $193 million from other working capital accounts due primarily to the timing of disbursements for accounts payable, accrued expenses and accrued compensation, as well as the payment during 2022, of a portion of the employer's share of the 2020 Social Security taxes which were deferred pursuant to the CARES Act; (v) an unfavorable change of $62 million in accrued insurance expense, net of commercial premiums paid; (vi) a favorable change of $59 million in other assets and deferred charges; (vii) a favorable change of $25 million in accrued and deferred income taxes, and; (viii) $75 million of other combined net favorable changes.    

Liquidity:

As of December 31, 2022, we had $886 million of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility, net of outstanding borrowings and letters of credit.       

Stock Repurchase Program:

As of December 31, 2021, we had an aggregate remaining repurchase authorization of approximately $358 million pursuant to our stock repurchase program. In February of 2022, our Board of Directors authorized a $1.4 billion increase to the program. As of December 31, 2022, we had an aggregate available repurchase authorization of approximately $947 million

Pursuant to the terms of our stock repurchase program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. During the fourth quarter of 2022, we have repurchased 812,141 shares at an aggregate cost of approximately $107.2 million (approximately $132 per share) pursuant to the program.  During the full year of 2022, we have repurchased approximately 6.67 million shares at an aggregate cost of approximately $810.9 million (approximately $122 per share) pursuant to the program.

Provision for Asset Impairment:

Our financial statements for the three and twelve-month periods ended December 31, 2022, include a pre-tax provision for asset impairment of $57.6 million, which is included in other operating expenses on the accompanying consolidated statements of income, to write-down the asset value of Desert Springs Hospital Medical Center, a 282-bed acute care hospital located in Las Vegas, Nevada. In early 2023, as a result of various competitive pressures and operational challenges experienced in the market, which had a significant unfavorable impact on the hospital's results of operations during the past year, as well as physical plant constraints and limitations resulting from the advanced age of the facility (which opened in 1971), we announced plans to discontinue all inpatient operations by March of 2023. During the next two years, we plan to continue providing emergency department services within a portion of the existing facility while we construct a new free-standing emergency department on the hospital's campus. The provision for asset impairment reduced the asset values of the facility's real estate and equipment to their estimated fair values.      

2023 Operating Results Forecast:

Reflected below is our 2023 guidance range for consolidated net revenues, earnings before interest, taxes, depreciation & amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests ("Adjusted EBITDA net of NCI"), adjusted net income attributable to UHS per diluted share ("Adjusted EPS-diluted") and capital expenditures. 

Adjusted EPS-diluted and Adjusted EBITDA net of NCI, are non-GAAP financial measures and should be examined in connection with net income determined in accordance with GAAP as presented in the consolidated financial statements and notes thereto in this report or in our filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2022. Please see the Supplemental Non-GAAP Disclosures - 2023 Operating Results Forecast schedule as included herein for additional information and a reconciliation to the financial forecasts as computed in accordance with GAAP. 


For the Year Ended
December 31, 2023


       Low

       High

Net revenues

$14.044 billion

$14.314 billion

Adjusted EBITDA net of NCI

$1.662 billion

$1.753 billion 

Adjusted EPS-diluted

$9.50 per share

$10.50 per share

Capital expenditures

$725 million

$875 million

 

Our 2023 guidance contains a number of assumptions including, but not limited to, the following:

  • The 2023 forecasted amounts exclude the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as pre-tax unrealized gains/losses resulting from changes in the market value of shares of certain equity securities, and other potential material items including, but not limited to, reserves for various matters including settlements, legal judgments and lawsuits, potential impacts of non-ordinary course acquisitions, divestitures, joint ventures or other strategic transactions, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, impairment of long-lived and intangible assets, other amounts that may be reflected in the current financial statements that relate to prior periods, and the impact of share repurchases that differ from our forecasted assumptions. 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.
  • Our net revenues are estimated to be approximately $14.044 billion to $14.314 billion representing an increase of approximately 4.8% to 6.8% over our 2022 net revenues of approximately $13.399 billion.
  • Our Adjusted EBITDA net of NCI is estimated to be approximately $1.662 billion to $1.753 billion, as compared to our 2022 Adjusted EBITDA net of NCI of $1.662 billion.
  • Our projected interest expense during 2023 is estimated to increase by approximately $71 million, or 56%, over the interest expense incurred during 2022. The increase is due primarily to increases in our projected average cost of borrowings, and aggregate average borrowings outstanding, pursuant to our revolving credit and tranche A term loan facilities.
  • Our Adjusted EPS-diluted range is estimated to be $9.50 per diluted share to $10.50 per diluted share, as compared to our adjusted net income attributable to UHS of $9.88 per diluted share for the year ended December 31, 2022, as calculated on the attached Supplemental Schedule.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on February 28, 2023.  A live webcast of the call will be available on our website at www.uhs.com. To participate via telephone, please register in advance by accessing this link

Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the call will be available for one full year following the live call.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:

One of the nation's largest and most respected providers of hospital and healthcare services, Universal Health Services, Inc. has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues during 2022 were approximately $13.4 billion. UHS ranked #297 on the Fortune 500; and #391 on Forbes' list of America's Largest Public Companies. UHS was again recognized as one of the World's Most Admired Companies by Fortune.  

Our operating philosophy is as effective today as it was upon the Company's founding in 1979, enabling us to provide compassionate care to our patients and their loved ones.  Our strategy includes building or acquiring high quality hospitals in rapidly growing markets, investing in the people and equipment needed to allow each facility to thrive, and becoming the leading healthcare provider in each community we serve.

Headquartered in King of Prussia, PA, UHS has approximately 93,800 employees and, through its subsidiaries, operates 28 inpatient acute care hospitals, 331 inpatient behavioral health facilities, 39 outpatient facilities and ambulatory care access points, an insurance offering, a physician network and various related services located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information visit www.uhs.com.

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to the anticipated impact of COVID-19 on our operations and financial results, 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, 2022), may cause the results to differ materially from those anticipated in the forward-looking statements.  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. 

Many of the factors that could affect our future results are beyond our control or ability to predict, including the impact of the COVID-19 pandemic. The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The length and extent of the disruptions caused by the COVID–19 pandemic are currently unknown; however, we expect such disruptions to continue into the future. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results.  However, future developments related to the COVID-19 pandemic could continue to materially affect our financial performance.   

The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher–cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. These factors, which had a material unfavorable impact on our results of operations during 2022, could continue to have an unfavorable material impact on our results of operations for the foreseeable future.    

In addition, the increase in interest rates has substantially increased our borrowings costs and reduced our ability to access the capital markets on favorable terms.  Additional increases in interest rates could have a significant unfavorable impact on our future results of operations and the resulting effect on the capital markets could adversely affect our ability to carry out our strategy.       

We believe that adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share, EBITDA net of NCI and Adjusted EBITDA net of NCI, 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 of material items impacting our net income attributable to UHS, such as, changes in the market value of shares of certain equity securities and other potential material items that are nonrecurring or non-operational in nature including, but not limited to, impairments of goodwill and long-lived and intangible assets, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, 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 attributable to UHS, as determined in accordance with GAAP, and 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, 2022. 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)

(unaudited)










Three months


Twelve months


ended December 31,


ended December 31,


2022


2021


2022


2021









Net revenues

$3,446,980


$3,275,251


$13,399,370


$12,642,117









Operating charges:








   Salaries, wages and benefits

1,701,083


1,621,788


6,762,256


6,163,944

   Other operating expenses

919,673


802,279


3,445,733


3,035,869

   Supplies expense

381,936


374,157


1,474,339


1,427,134

   Depreciation and amortization

148,353


133,363


581,861


533,213

   Lease and rental expense

34,551


30,015


131,626


118,863


3,185,596


2,961,602


12,395,815


11,279,023









Income from operations

261,384


313,649


1,003,555


1,363,094









Interest expense, net

43,887


19,217


126,889


83,672

Other (income) expense, net

(4,838)


(12,316)


10,406


(13,891)









Income before income taxes

222,335


306,748


866,260


1,293,313









Provision for income taxes

51,966


72,837


209,278


305,681









Net income

170,369


233,911


656,982


987,632









Less:  Net income (loss) attributable to








noncontrolling interests ("NCI")

(4,451)


(5,213)


(18,627)


(3,958)









Net income attributable to UHS

$174,820


$239,124


$675,609


$991,590

















































Basic earnings per share attributable to UHS (a)

$2.45


$3.03


$9.23


$11.99









Diluted earnings per share attributable to UHS (a)

$2.43


$3.00


$9.14


$11.82

 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)










Three months


Twelve months

(a) Earnings per share calculation:

ended December 31,


ended December 31,


2022


2021


2022


2021

Basic and diluted:








Net income attributable to UHS

$174,820


$239,124


$675,609


$991,590

Less: Net income attributable to unvested restricted share grants

(156)


(450)


(748)


(2,059)

Net income attributable to UHS - basic and diluted

$174,664


$238,674


$674,861


$989,531









Weighted average number of common shares - basic

71,165


78,808


73,118


82,519









Basic earnings per share attributable to UHS:

$2.45


$3.03


$9.23


$11.99









Weighted average number of common shares

71,165


78,808


73,118


82,519

Add: Other share equivalents

627


867


714


1,173

Weighted average number of common shares and equiv. - diluted

71,792


79,675


73,832


83,692









Diluted earnings per share attributable to UHS:

$2.43


$3.00


$9.14


$11.82

 

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Three Months ended December 31, 2022 and 2021

(in thousands, except per share amounts)

(unaudited)

























Calculation of Earnings/Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA/Adjusted EBITDA net of NCI")










Three months ended


% Net


Three months ended


% Net


December 31, 2022


revenues


December 31, 2021


revenues









Net income attributable to UHS

$174,820




$239,124



   Depreciation and amortization

148,353




133,363



   Interest expense, net

43,887




19,217



   Provision for income taxes

51,966




72,837



EBITDA net of NCI

$419,026


12.2 %


$464,541


14.2 %









Other (income) expense, net

(4,838)




(12,316)



Provision for asset impairment

57,550




-



Adjusted EBITDA net of NCI

$471,738


13.7 %


$452,225


13.8 %









Net revenues

$3,446,980




$3,275,251



 

Calculation of Adjusted Net Income Attributable to UHS










Three months ended


Three months ended


December 31, 2022


December 31, 2021




Per




Per


Amount


Diluted Share


Amount


Diluted Share









Net income attributable to UHS

$174,820


$2.43


$239,124


$3.00

Plus/minus after-tax adjustments:








Unrealized (gain) loss on equity securities

(1,778)


(0.02)


(4,119)


(0.05)

Provision for asset impairment

44,055


0.61


-


-

Impact of ASU 2016-09

-


-


99


-

Subtotal adjustments

42,277


0.59


(4,020)


(0.05)

Adjusted net income attributable to UHS

$217,097


$3.02


$235,104


$2.95

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Twelve Months ended December 31, 2022 and 2021

(in thousands, except per share amounts)

(unaudited)

























Calculation of Earnings/Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA/Adjusted EBITDA net of NCI")










Twelve months ended


% Net


Twelve months ended


% Net


December 31, 2022


revenues


December 31, 2021


revenues









Net income attributable to UHS

$675,609




$991,590



   Depreciation and amortization

581,861




533,213



   Interest expense, net

126,889




83,672



   Provision for income taxes

209,278




305,681



EBITDA net of NCI

$1,593,637


11.9 %


$1,914,156


15.1 %









Other (income) expense, net

10,406




(13,891)



Provision for asset impairment

57,550




-



Adjusted EBITDA net of NCI

$1,661,593


12.4 %


$1,900,265


15.0 %









Net revenues

$13,399,370




$12,642,117



 

Calculation of Adjusted Net Income Attributable to UHS










Twelve months ended


Twelve months ended


December 31, 2022


December 31, 2021




Per




Per


Amount


Diluted Share


Amount


Diluted Share









Net income attributable to UHS

$675,609


$9.14


$991,590


$11.82

Plus/minus after-tax adjustments:








Unrealized (gain) loss on equity securities

10,580


0.14


(10,374)


(0.12)

Provision for asset impairment

44,055


0.60


-


-

Debt extinguishment costs

-


-


12,884


0.15

Impact of ASU 2016-09

-


-


(2,423)


(0.03)

Subtotal adjustments

54,635


0.74


87


-

Adjusted net income attributable to UHS

$730,244


$9.88


$991,677


$11.82

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)











December 31,



December 31,




2022



2021

Assets







Current assets:







    Cash and cash equivalents


$

102,818


$

115,301

    Accounts receivable, net



2,017,722



1,746,635

    Supplies



218,517



206,839

    Other current assets



198,283



194,781

          Total current assets



2,537,340



2,263,556








Property and equipment



11,085,852



10,770,702

Less: accumulated depreciation



(5,167,394)



(4,896,427)




5,918,458



5,874,275








Other assets:







    Goodwill



3,909,456



3,962,624

    Deferred income taxes



68,397



45,707

    Right of use assets-operating leases



454,650



367,477

    Deferred charges



6,264



6,525

    Other



599,623



573,379

Total Assets


$

13,494,188


$

13,093,543








Liabilities and Stockholders' Equity







Current liabilities:







    Current maturities of long-term debt


$

81,447


$

48,409

    Accounts payable and other liabilities



1,760,588



1,860,496

    Operating lease liabilities



67,776



64,484

    Federal and state taxes



4,608



10,720

          Total current liabilities



1,914,419



1,984,109








Other noncurrent liabilities



487,669



464,759

Operating lease liabilities noncurrent



395,522



304,624

Long-term debt



4,726,533



4,141,879








Redeemable noncontrolling interest



4,695



5,119








UHS common stockholders' equity



5,920,582



6,089,664

Noncontrolling interest



44,768



103,389

          Total equity



5,965,350



6,193,053








Total Liabilities and Stockholders' Equity


$

13,494,188


$

13,093,543

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


Twelve months


ended December 31,


2022


2021





Cash Flows from Operating Activities:




  Net income

$656,982


$987,632

  Adjustments to reconcile net income to net 




cash provided by operating activities:




Depreciation & amortization

581,861


533,213

Loss (gain) on sale of assets and businesses

584


(5,170)

Costs related to extinguishment of debt

0


16,831

Stock-based compensation expense

85,378


73,686

Provision for asset impairment

57,550


14,391

  Changes in assets & liabilities, net of effects from




acquisitions and dispositions:




   Accounts receivable

(258,338)


(8,873)

   Accrued interest

1,835


4,950

   Accrued and deferred income taxes 

(29,510)


(54,030)

   Other working capital accounts 

(146,692)


46,526

   Medicare accelerated payments and deferred CARES Act and other grants

2,391


(698,762)

   Other assets and deferred charges

19,918


(39,337)

   Other 

(8,676)


(82,075)

   Accrued insurance expense, net of commercial premiums paid

174,723


186,215

   Payments made in settlement of self-insurance claims

(141,983)


(91,502)

          Net cash provided by operating activities

996,023


883,695





Cash Flows from Investing Activities:




   Property and equipment additions

(734,001)


(855,659)

   Proceeds received from sales of assets and businesses

12,001


25,425

   Acquisition of businesses and property

(20,309)


(105,415)

   Inflows from foreign exchange contracts that hedge our net U.K. investment

94,913


1,357

   Decrease in capital reserves of commercial insurance subsidiary 

100


100

   Costs incurred for purchase of information technology applications, net of refunds

0


19,726

          Net cash used in investing activities

(647,296)


(914,466)





Cash Flows from Financing Activities:




   Repayments of long-term debt

(89,367)


(3,037,868)

   Additional borrowings

705,321


3,254,974

   Financing costs

(3,164)


(18,770)

   Repurchase of common shares

(832,918)


(1,220,875)

   Dividends paid

(58,449)


(65,896)

   Issuance of common stock

14,068


13,372

   Profit distributions to noncontrolling interests

(5,391)


(7,080)

   Purchase (sale) of ownership interests by (from) minority members

(48,500)


13,193

          Net cash used in financing activities

(318,400)


(1,068,950)





   Effect of exchange rate changes on cash, cash equivalents and restricted cash

(8,424)


(499)

Increase (decrease) in cash, cash equivalents and restricted cash

21,903


(1,100,220)

Cash, cash equivalents and restricted cash, beginning of period

178,934


1,279,154

Cash, cash equivalents and restricted cash, end of period

$200,837


$178,934





Supplemental Disclosures of Cash Flow Information:




  Interest paid

$120,136


$75,607





  Income taxes paid, net of refunds

$250,759


$362,978





  Noncash purchases of property and equipment

$72,064


$167,234

 

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)




























 % Change 


 % Change 








3 Months ended


12 Months ended

Same Facility:







12/31/2022


12/31/2022











Acute Care Hospitals










Revenues







2.6 %


4.1 %

Adjusted Admissions







5.5 %


3.1 %

Adjusted Patient Days







1.6 %


0.9 %

Revenue Per Adjusted Admission







-3.8 %


-0.3 %

Revenue Per Adjusted Patient Day







-0.2 %


1.9 %











Behavioral Health Hospitals










Revenues







4.3 %


4.2 %

Adjusted Admissions







0.7 %


0.7 %

Adjusted Patient Days







2.0 %


1.2 %

Revenue Per Adjusted Admission







3.4 %


4.0 %

Revenue Per Adjusted Patient Day







2.2 %


3.5 %











UHS Consolidated



Fourth Quarter Ended


Twelve Months Ended




12/31/2022


12/31/2021


12/31/2022


12/31/2021











Revenues



$3,446,980


$3,275,251


$13,399,370


$12,642,117

EBITDA net of NCI



$419,026


$464,541


$1,593,637


$1,914,156

EBITDA Margin net of NCI



12.2 %


14.2 %


11.9 %


15.1 %

Adjusted EBITDA net of NCI



$471,738


$452,225


$1,661,593


$1,900,265

Adjusted EBITDA Margin net of NCI



13.7 %


13.8 %


12.4 %


15.0 %











Cash Flow From Operations



$297,304


$322,020


$996,023


$883,695

Days Sales Outstanding



54


49


55


50

Capital Expenditures  



$164,446


$189,634


$734,001


$855,659











Debt 







$4,807,980


$4,190,288

UHS' Shareholders Equity







$5,920,582


$6,089,664

Debt / Total Capitalization







44.8 %


40.8 %

Debt / EBITDA net of NCI (1)







3.02


2.19

Debt / Adjusted EBITDA net of NCI (1)






2.89


2.21

Debt / Cash From Operations (1)







4.83


4.74











(1) Latest 4 quarters.










 

Universal Health Services, Inc.

Acute Care Hospital Services

For the Three and Twelve Months ended

December 31, 2022 and 2021

(in thousands)



































Same Facility Basis - Acute Care Hospital Services




































Three months ended


Three months ended


Twelve months ended


Twelve months ended



December 31, 2022


December 31, 2021


December 31, 2022


December 31, 2021



Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 

Net revenues


$1,862,515


100.0 %


$1,815,364


100.0 %


$7,281,739


100.0 %


$6,998,257


100.0 %

Operating charges:

















Salaries, wages and benefits


816,516


43.8 %


810,580


44.7 %


3,221,550


44.2 %


2,964,934


42.4 %

Other operating expenses


480,121


25.8 %


444,753


24.5 %


1,860,791


25.6 %


1,661,418


23.7 %

Supplies expense


320,978


17.2 %


322,020


17.7 %


1,224,070


16.8 %


1,224,499


17.5 %

Depreciation and amortization


91,848


4.9 %


82,801


4.6 %


361,354


5.0 %


329,755


4.7 %

Lease and rental expense


22,845


1.2 %


19,725


1.1 %


76,649


1.1 %


75,391


1.1 %

Subtotal-operating expenses


1,732,308


93.0 %


1,679,879


92.5 %


6,744,414


92.6 %


6,255,997


89.4 %

Income from operations


130,207


7.0 %


135,485


7.5 %


537,325


7.4 %


742,260


10.6 %

Interest expense, net


(241)


(0.0) %


257


0.0 %


1,109


0.0 %


1,006


0.0 %

Other (income) expense, net


687


0.0 %


131


0.0 %


1,493


0.0 %


567


0.0 %

Income before income taxes


$129,761


7.0 %


$135,097


7.4 %


$534,723


7.3 %


$740,687


10.6 %




















































All Acute Care Hospital Services




































Three months ended


Three months ended


Twelve months ended


Twelve months ended



December 31, 2022


December 31, 2021


December 31, 2022


December 31, 2021



Amount


% of Net
Revenues


Amount


% of Net
Revenues 


Amount


% of Net
Revenues


Amount


% of Net
Revenues 

Net revenues


$1,939,239


100.0 %


$1,837,254


100.0 %


$7,646,749


100.0 %


$7,108,254


100.0 %

Operating charges:

















Salaries, wages and benefits


834,647


43.0 %


811,080


44.1 %


3,332,535


43.6 %


2,968,140


41.8 %

Other operating expenses


596,152


30.7 %


466,768


25.4 %


2,146,196


28.1 %


1,772,312


24.9 %

Supplies expense


329,129


17.0 %


322,010


17.5 %


1,264,688


16.5 %


1,224,664


17.2 %

Depreciation and amortization


97,557


5.0 %


83,046


4.5 %


383,115


5.0 %


331,508


4.7 %

Lease and rental expense


23,330


1.2 %


19,715


1.1 %


86,654


1.1 %


75,391


1.1 %

Subtotal-operating expenses


1,880,815


97.0 %


1,702,619


92.7 %


7,213,188


94.3 %


6,372,015


89.6 %

Income from operations


58,424


3.0 %


134,635


7.3 %


433,561


5.7 %


736,239


10.4 %

Interest expense, net


(241)


(0.0) %


257


0.0 %


1,109


0.0 %


1,006


0.0 %

Other (income) expense, net


1,982


0.1 %


131


0.0 %


2,788


0.0 %


567


0.0 %

Income before income taxes


$56,683


2.9 %


$134,247


7.3 %


$429,664


5.6 %


$734,666


10.3 %


We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable), the effect of material items that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters, settlements, legal judgments and lawsuits, cost related to extinguishment of debt, gains/losses on sales of assets and businesses, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented herein and the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2022.


















The All Acute Care Hospital Services table summarizes the results of operations for all our acute care operations during the periods presented. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the last twelve months.

 

Universal Health Services, Inc.

Behavioral Health Care Services

For the Three and Twelve Months ended

December 31, 2022 and 2021

(in thousands)



































Same Facility - Behavioral Health Care Services




































Three months ended


Three months ended


Twelve months ended


Twelve months ended



December 31, 2022


December 31, 2021


December 31, 2022


December 31, 2021



Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 

Net revenues


$1,446,835


100.0 %


$1,387,252


100.0 %


$5,595,179


100.0 %


$5,371,512


100.0 %

Operating charges:

















Salaries, wages and benefits


787,332


54.4 %


738,503


53.2 %


3,075,718


55.0 %