KING OF PRUSSIA, Pa., April 24, 2014 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $138.1 million, or $1.38 per diluted share, during the first quarter of 2014 as compared to $119.8 million, or $1.21 per diluted share, during the comparable quarter of 2013.  Net revenues increased 4.8% to $1.92 billion during the first quarter of 2014 as compared to $1.83 billion during the first quarter of 2013. 

Consolidated Results of Operations, As Adjusted – Three-month periods ended March 31, 2014 and 2013:

For the three-month period ended March 31, 2014, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule"), increased 13.8% to $136.7 million, or $1.36 per diluted share, as compared to $120.1 million, or $1.22 per diluted share, during the first quarter of 2013.     

As reflected on the Supplemental Schedule, included in our reported results during the first quarter of 2014 was an aggregate net favorable after-tax impact of approximately $1.4 million, or $.02 per diluted share, consisting of: (i) a favorable after-tax impact of $6.3 million, or $.07 per diluted share, resulting from a gain realized on the sale of a non-operating investment, and; (ii) a net unfavorable after-tax impact of approximately $4.9 million, or $.05 per diluted share, related to the incentive income and depreciation and amortization expense recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals.   

As reflected on the Supplemental Schedule, included in our reported results during the first quarter of 2013, was a net unfavorable after-tax impact of $327,000, or $.01 per diluted share, related to the incentive income and expenses recorded in connection with EHR applications at our acute care hospitals.  

Acute Care Services – Three-month periods ended March 31, 2014 and 2013:

During the first quarter of 2014, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased 0.5% and adjusted patient days increased 4.6%, as compared to the first quarter of 2013. Net revenues at these facilities increased 5.8% during the first quarter of 2014 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 6.3% while net revenue per adjusted patient day increased 1.1% during the first quarter of 2014 as compared to the comparable quarter of 2013. On a same facility basis, the operating margin at our acute care hospitals was 19.8% during the first quarter of 2014 as compared to 16.0% during the first quarter of 2013. We define operating margin as net revenues less salaries, wages and benefits, other operating expenses and supplies expense (excluding the EHR impact, as indicated on the Supplemental Schedule).

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 gross charges, amounting to approximately $320 million and $230 million during the three-month periods ended March 31, 2014 and 2013, respectively. The increase in charity care and uninsured discounts during the first quarter of 2014 was offset by a decrease in the provision for doubtful accounts which amounted to approximately $182 million during the first quarter of 2014 as compared to approximately $218 million during the first quarter of 2013.  As a percentage of gross charges for our acute care hospitals, charity care, uninsured discounts and provision for doubtful accounts decreased slightly during the first quarter of 2014 as compared to the first quarter of 2013. 

Behavioral Health Care Services – Three-month periods ended March 31, 2014 and 2013:

During the first quarter of 2014, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.3% while adjusted patient days remained relatively unchanged as compared to the first quarter of 2013. At these facilities, net revenue per adjusted admission remained relatively unchanged while net revenue per adjusted patient day increased 2.1% during the first quarter of 2014 over the comparable quarter in 2013. On a same facility basis, our behavioral health services' net revenues increased 3.7% during the first quarter of 2014, as compared to the comparable quarter in 2013, and the operating margins were 27.9% and 28.5% during the three-month periods ended March 31, 2014 and 2013, respectively.   

Behavioral Health Care Acquisition

We have completed the acquisition of the Psychiatric Institute of Washington ("PIW"), a 124-bed behavioral health care facility and outpatient treatment center located in the District of Columbia.  As part of this transaction, we also acquired the Arbor Group, L.L.C., which operates three management contracts covering 66 beds in the Washington, D.C. and Maryland market. "We are pleased to have been selected to continue PIW's forty-five year tradition of providing high quality behavioral health services to the region," said Alan B. Miller, Chief Executive Officer.  "The acquisition of PIW complements our 371-bed George Washington University Hospital and further strengthens our presence and commitment to this very important market."

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on April 25, 2014. 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 be available following the 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: 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, 2013), may cause the results to differ materially from those anticipated in the forward-looking statements.  The operating pressures that we continue to experience in many of our acute care markets has increased the volatility of our financial results making estimation of future results more challenging.  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.

Our acute care hospitals are eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, once they have demonstrated meaningful use of certified EHR technology for the applicable stage or have completed attestations to their adoption or implementation of certified EHR technology.  However, 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 material 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, 2013. 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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SOURCE Universal Health Services, Inc.

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