KING OF PRUSSIA, Pa., Feb. 28, 2011 /PRNewswire via COMTEX/ --

Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $37.2 million, or $.38 per diluted share, during the fourth quarter of 2010 as compared to $60.9 million, or $.62 per diluted share, during the comparable prior year quarter. Net revenues increased 21% to $1.56 billion during the fourth quarter of 2010 as compared to $1.29 billion during the fourth quarter of 2009. The increase in net revenues during the fourth quarter of 2010, as compared to the comparable quarter of the prior year, was due primarily to the revenues generated at the behavioral health care facilities acquired from Psychiatric Solutions, Inc. ("PSI") in November, 2010, as discussed below.

Consolidated Results of Operations, As Reported - Years ended December 31, 2010 and 2009:

Reported net income attributable to UHS was $230.2 million, or $2.34 per diluted share, during the year ended December 31, 2010 as compared to $260.4 million, or $2.64 per diluted share, during 2009. Net revenues increased 7% to $5.57 billion during 2010 as compared to $5.20 billion during 2009.

Consolidated Results of Operations, As Adjusted - Three-month periods ended December 31, 2010 and 2009:

After adjusting the reported results for the three-month periods ended December 31, 2010 and 2009 to neutralize the net impact of the items mentioned below, and as reflected on the attached Schedules of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedules"), our adjusted net income attributable to UHS was $57.5 million, or $.58 per diluted share, during the fourth quarter of 2010 as compared to $56.5 million, or $.57 per diluted share, during the fourth quarter of 2009. Included in the reported and adjusted net income attributable to UHS during the fourth quarter of 2009 was $3.4 million, or $.03 per diluted share, recorded in connection with the completion of a hospital construction management contract.

As indicated on the attached Supplemental Schedules, included in our net income attributable to UHS during the three-month period ended December 31, 2010, was a net charge of $20.4 million, or $.20 per diluted share, consisting of: (i) the unfavorable after-tax impact of $24.9 million, or $.25 per diluted share, resulting from the recording of transaction fees incurred in connection with our acquisition of PSI; (ii) the unfavorable after-tax impact of $9.2 million, or $.09 per diluted share, resulting from the charge incurred in connection with the previously disclosed split-dollar life insurance agreements; (iii) the unfavorable after-tax impact of $4.1 million, or $.04 per diluted share, resulting from the write-off of certain construction costs, partially offset by; (iv) the favorable after-tax impact of $17.9 million, or $.18 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.

As indicated on the attached Supplemental Schedule, included in our reported net income attributable to UHS during the three-month period ended December 31, 2009, was a favorable after-tax impact of $4.4 million, or $.05 per diluted share, resulting from a reduction to our workers' compensation self-insurance reserves relating primarily to years prior to 2009 based upon a reserve analysis.

Consolidated Results of Operations, As Adjusted - Years ended December 31, 2010 and 2009:

After adjusting the reported results for the years ended December 31, 2010 and 2009 to neutralize the impact of the items mentioned below, and as reflected on the attached Supplemental Schedule, our adjusted net income attributable to UHS was $249.8 million, or $2.54 per diluted share, during 2010 as compared to $246.2 million, or $2.49 per diluted share, during 2009.

As indicated on the attached Supplemental Schedules, included in our net income attributable to UHS during the year ended December 31, 2010, was a net charge of $19.6 million, or $.20 per diluted share, consisting of: (i) the unfavorable after-tax impact of $38.7 million, or $.39 per diluted share, resulting from the recording of transaction fees incurred in connection with our acquisition of PSI; (ii) the unfavorable after-tax impact of $9.2 million, or $.09 per diluted share, resulting from the charge incurred in connection with split-dollar life insurance agreements; (iii) the unfavorable after-tax impact of $4.1 million, or $.04 per diluted share, resulting from the write-off of certain construction costs, partially offset by; (iv) the favorable after-tax impact of $28.1 million, or $.28 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, and; (v) a favorable discrete tax item $4.3 million, or $.04 per diluted share, related to the estimated non-deductible portion of the South Texas Health System settlement with the government based upon the final agreement.

As indicated on the attached Supplemental Schedule, included in our reported net income attributable to UHS during the year ended December 31, 2009, was a combined net favorable impact of $14.2 million, or $.15 per diluted share, resulting from: (i) the favorable after-tax adjustment of $4.4 million, or $.05 per diluted share, resulting from a reduction to our workers' compensation self-insurance reserves relating primarily to years prior to 2009 based upon a reserve analysis; (ii) the favorable after-tax adjustment of $14.2 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; (iii) an unfavorable discrete tax item of $4.3 million, or $.04 per diluted share, related to the estimated non-deductible portion of the South Texas Health System settlement with the government.

"For the last two years, the overall weakness in the economy has created a very challenging operating environment," said Alan B. Miller, Chief Executive Officer. "We look to 2011 and beyond with renewed enthusiasm, however, as we begin to see signs of gradual recovery in a number of our markets. Additionally, we continue to be excited at the prospect of overseeing the premier behavioral health platform in the industry and look forward to the opportunities this will allow us to create over the course of the next several years."

The PSI Acquisition:

In November, 2010, we completed the acquisition of Psychiatric Solutions Inc. ("PSI") for a total purchase price of $3.04 billion consisting of $1.96 billion in cash plus the assumption of approximately $1.08 billion of PSI's debt, the majority of which has since been refinanced. PSI was formerly the largest operator of freestanding inpatient behavioral health care facilities operating a total of 105 inpatient and outpatient facilities in 32 states, Puerto Rico, and the U.S. Virgin Islands.

Acute Care Services - Three-month periods ended December 31, 2010 and 2009:

At our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) were relatively unchanged while adjusted patient days increased 0.3% during the fourth quarter of 2010, as compared to the fourth quarter of 2009. Net revenues at these facilities increased 2.3% during the fourth quarter of 2010 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 2.4% while net revenue per adjusted patient day increased 2.0% during the fourth quarter of 2010 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin (net revenues less salaries, wages and benefits, other operating expenses, supplies expense and provision for doubtful accounts, excluding the items indicated on the Supplemental Schedules) at our acute care hospitals increased to 14.4% during the fourth quarter of 2010 as compared to 13.5% during the fourth quarter of 2009. The increased operating margin for our acute care facilities during the fourth quarter of 2010, as compared to the comparable quarter of the prior year, was due primarily to improvements in the operating environments of several of our local markets, including Las Vegas, Nevada.

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 $208 million and $162 million during the three-month periods ended December 31, 2010 and 2009, respectively.

Acute Care Services - Years ended December 31, 2010 and 2009:

During the year ended December 31, 2010, on a same facility basis, adjusted admissions to our acute care facilities increased 1.3% while adjusted patient days increased 0.7%, as compared to 2009. Net revenues at our acute care facilities increased 2.4% during 2010 as compared to 2009. At these facilities, net revenue per adjusted admission increased 1.0% while net revenue per adjusted patient day increased 1.7% during 2010 as compared to 2009. On a same facility basis, the operating margin at our acute care hospitals decreased to 14.5% during 2010 as compared to 15.3% during 2009.

Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $807 million and $671 million during 2010 and 2009, respectively.

Behavioral Health Care Services - Three-month periods ended December 31, 2010 and 2009:

At our behavioral health care facilities, on a same facility basis, adjusted admissions increased 5.1% while adjusted patient days decreased 0.4% during the fourth quarter of 2010 as compared to the fourth quarter of 2009. Net revenues at these facilities increased 5.9% during the fourth quarter of 2010 as compared to the comparable quarter in the prior year. At these facilities, net revenue per adjusted admission increased 0.4% while net revenue per adjusted patient day increased 5.9% during the fourth quarter of 2010 over the comparable prior year quarter. The operating margin at our behavioral health care facilities owned during both periods decreased to 24.0% during the fourth quarter of 2010 as compared to 24.6% during the fourth quarter of 2009.

Behavioral Health Care Services - Years ended December 31, 2010 and 2009:

During the year ended December 31, 2010, on a same facility basis, adjusted admissions to our behavioral health care facilities increased 4.2% while adjusted patient days increased 1.7%, as compared to 2009. Net revenues at our behavioral health care facilities increased 6.0% during 2010 as compared to 2009. At these facilities, net revenue per adjusted admission increased 1.4% while net revenue per adjusted patient day increased 3.9% during 2010 as compared to 2009. On a same facility basis, the operating margin at our behavioral health facilities increased to 26.0% during 2010 as compared to 24.9% during 2009.

2011 Full Year Guidance:

Our estimated range of earnings per diluted share attributable to UHS for the year ended December 31, 2011 is $3.50 to $3.65 on projected net revenues of $7.6 billion to $7.7 billion.

This guidance range is based upon the operating trends and financial results experienced during 2010 and include the projected results for the facilities acquired by us from PSI in November, 2010. This guidance range excludes the impact of 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 amounts that may be reflected in our 2011 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.

Conference Call Information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on March 1, 2011. 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 March 1, 2011 and will continue through midnight on March 15, 2011. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 39875831. This call will also be available live over the internet at our web site at www.uhsinc.com. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents at www.streetevents.com.

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: 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, 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, 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.

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