Universal Health Services, Inc. Reports 34% First Quarter Diluted EPS Growth
04/27/2005
KING OF PRUSSIA, Pa., April 27, 2005 /PRNewswire-FirstCall via COMTEX/ -- Universal Health Services, Inc. (NYSE: UHS) announced today its results for the three-month period ended March 31, 2005. Reported net income was $61.4 million during the first quarter of 2005, as compared to $46.2 million during the prior year quarter. Reported earnings per diluted share were $.99 during quarter ended March 31, 2005, a 34% increase over the $.74 per diluted share reported during the prior year quarter. Reported income from continuing operations was $56.4 million or $.91 per diluted share during the first quarter of 2005 as compared to $45.6 million or $.73 per diluted share during the first quarter of 2004.
Net revenues during the 2005 quarter were $1.09 billion, an increase of 11% over the same quarter in the prior year. At March 31, 2005, our balance sheet debt, net of cash, was approximately $646 million and our shareholders' equity was approximately $1.27 billion.
On a same facility basis, patient admissions to our acute care hospitals located in the U.S. increased 2.4% during the first quarter of 2005 as compared to the comparable prior year quarter. At our acute care hospitals owned in both periods located in the U.S., revenues increased 8.7% and revenue per adjusted patient day increased 7.2% during the 2005 first quarter as compared to the prior year quarter. At our behavioral health hospitals owned in both periods, admissions were relatively unchanged, revenues increased 5.4% and revenue per adjusted patient day increased 2.8%.
Included in the reported results for the quarter ended March 31, 2005 were the following items (as listed on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information): (i) a $3.8 million after-tax gain ($6.0 million pre-tax) on the sale of two acute care hospitals located in Puerto Rico; (ii) a $2.0 million after-tax gain ($3.1 million pre-tax) on the sale of a home health business in Bradenton, Florida, and; (iii) a $2.0 million after-tax asset impairment charge ($3.1 million pre-tax) related to a women's hospital located in Edmond, Oklahoma. Included in the reported results for the quarter ended March 31, 2004 was Medicaid disproportionate share hospital revenue ("DSH") related to a prior period which favorably impacted net income during the first quarter of 2004 by $1.7 million after-tax ($2.8 million pre-tax).
Excluding the items listed above for the three-month periods ended March 31, 2005 and 2004, our adjusted net income increased 30% to $57.6 million during the first quarter of 2005, as compared to $44.4 million during the 2004 first quarter. Our adjusted earnings per diluted share increased 29% to $.93 during the quarter ended March 31, 2005, as compared to $.72 during the comparable prior year quarter. Our adjusted income from continuing operations increased 33% to $58.4 million during the first quarter of 2005, as compared to $43.8 million during the 2004 first quarter. Our adjusted income from continuing operations per diluted share increased 32% to $.94 during the quarter ended March 31, 2005, as compared to $.71 during the comparable prior year quarter.
Our adjusted operating margin increased to 16.0% during the three-month period ended March 31, 2005 as compared to 14.3% during the same period of the prior year. The operating margin at our acute care hospitals located in the U.S. owned in both the three-month periods ended March 31, 2005 and March 31, 2004, increased to 17.2% from 14.6%. The operating margin at our behavioral health hospitals owned in both periods increased to 24.8% during the first quarter of 2005 from 24.0% during the prior year quarter.
As previously announced, we sold our two remaining acute care hospitals located in Puerto Rico during the first quarter of 2005 and subsequent to quarter-end, we signed a definitive agreement to sell our 81.5% interest in Medi-Partenaires, an operating company that owns and operates 14 hospitals located in France. We expect to complete the sale of Medi-Partenaires, which is subject to customary regulatory approvals, in mid-to-late May 2005.
We will hold a conference call for investors and analysts at 9:00 a.m. Eastern Time on April 28, 2005. 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 April 28, 2005 and will continue through midnight on May 5, 2005. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 5013358.
This call will also be available live over the Internet at our web site at http://www.uhsinc.com. It will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at http://www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (http://www.streetevents.com).
Universal Health Services, Inc. is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide, in Puerto Rico and in France. 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 related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in "Forward-Looking Statements and Risk Factors" on pages 25 and 26 of our Form 10-K for the year ended December 31, 2004), may cause 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 income from continuing operations, adjusted income from continuing operations per diluted share, adjusted net income, adjusted net income per diluted share, adjusted operating income and adjusted operating margin, 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 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 such as property write-downs, gains on sales of assets and businesses or other amounts 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, 2004. 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. Below are schedules of Non-GAAP Supplemental Consolidated Income Statement Information which reconcile these measures to net income for the periods presented.
Universal Health Services, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three months
ended March 31,
2005 2004
Net revenues $1,090,981 $982,576
Operating charges:
Salaries, wages and benefits 438,232 399,914
Other operating expenses 248,816 221,111
Supplies expense 149,327 135,858
Provision for doubtful accounts 82,455 83,596
Depreciation and amortization 43,609 36,454
Lease and rental expense 17,503 17,405
979,942 894,338
Income before interest expense,
minority interests and income taxes 111,039 88,238
Interest expense, net 11,995 10,902
Minority interests in earnings
of consolidated entities 9,556 4,941
Income before income taxes 89,488 72,395
Provision for income taxes 33,086 26,813
Income from continuing operations 56,402 45,582
Income from discontinued operations,
net of income tax expense (a) 5,007 601
Net income $61,409 $46,183
Basic earnings per share: (b)
From continuing operations $0.98 $0.79
From discontinued operations 0.09 0.01
Total basic earnings per share $1.07 $0.80
Diluted earnings per share: (b)
From continuing operations $0.91 $0.73
From discontinued operations 0.08 0.01
Total diluted earnings per share $0.99 $0.74
Universal Health Services, Inc.
Footnotes to Consolidated Statements of Income
Three months
ended March 31,
2005 2004
(a) Calculation of income (loss) from
discontinued operations, net of
income tax:
(Loss) income from operations ($1,219) $951
Gains on divestitures 9,096 -
Income from discontinued operations, pre-tax 7,877 951
Income tax provision (2,870) (350)
Income from discontinued operations,
net of income tax expense $5,007 $601
(b) Earnings per share calculation:
Basic:
Income from continuing operations $56,402 $45,582
Less: Dividends on unvested
restricted stock, net of taxes (27) (28)
Income from continuing operations - basic $56,375 $45,554
Income from discontinued operations 5,007 601
Net income - basic $61,382 $46,155
Weighted average number of common
shares - basic 57,523 57,564
Basic earnings per share:
From continuing operations $0.98 $0.79
From discontinued operations 0.09 0.01
Total basic earnings per share $1.07 $0.80
Diluted:
Income from continuing operations $56,402 $45,582
Less: Dividends on unvested
restricted stock, net of taxes (27) (28)
Add: Debenture interest, net of taxes 2,382 2,268
Income from continuing operations - diluted $58,757 $47,822
Income from discontinued operations 5,007 601
Net income - diluted $63,764 $48,423
Weighted average number of common shares 57,523 57,564
Add: Shares for conversion of
convertible debentures 6,577 6,577
Other share equivalents 316 946
Weighted average number of common
shares and equiv. - diluted 64,416 65,087
Diluted earnings per share:
From continuing operations $0.91 $0.73
From discontinued operations 0.08 0.01
Total diluted earnings per share $0.99 $0.74
Universal Health Services, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
2005 2004
Assets:
Cash and cash equivalents $54,188 $33,125
Accounts receivable, net 624,181 552,538
Other current assets 97,542 90,392
Property, plant and equipment, net 1,456,699 1,448,066
Other assets 750,099 765,852
Assets held for sale 1,058 132,870
Total Assets $2,983,767 $3,022,843
Liabilities and Stockholders' Equity:
Current portion of long-term debt $16,113 $16,968
Liabilities held for sale 222 11,116
Other current liabilities 514,990 441,572
Other noncurrent liabilities 251,352 243,617
Long-term debt 684,397 852,229
Deferred income taxes 50,935 50,212
Minority interest 190,863 186,543
Stockholders' equity 1,274,895 1,220,586
Total Liabilities and Stockholders' Equity $2,983,767 $3,022,843
Universal Health Services, Inc.
Schedule of Non-GAAP Supplemental Consolidated Statements of Income
Information
For the Three Months Ended March 31, 2005 and 2004
(in thousands)
(unaudited)
Three months ended Three months ended
March 31, 2005 March 31, 2004
Net revenues $1,090,981 100.0% $982,576 100.0%
Operating charges:
Salaries, wages and benefits 438,232 40.2% 399,914 40.7%
Other operating expenses 248,816 22.8% 221,111 22.5%
Supplies expense 149,327 13.7% 135,858 13.8%
Provision for doubtful accounts 82,455 7.6% 83,596 8.5%
918,830 84.2% 840,479 85.5%
Operating income/margin 172,151 15.8% 142,097 14.5%
Lease and rental expense 17,503 17,405
Minority interests in earnings of
consolidated entities 9,556 4,941
Earnings before depreciation and
amortization, interest expense, and
income taxes ("EBITDA") 145,092 119,751
Depreciation and amortization 43,609 36,454
Interest expense, net 11,995 10,902
Income before income taxes 89,488 72,395
Provision for income taxes 33,086 26,813
Income from continuing operations 56,402 45,582
Income from discontinued operations,
net of income taxes 5,007 601
Net income $61,409 $46,183
Three months Three months
ended ended
March 31, 2005 March 31, 2004
Per Per
Calculation of Adjusted Income from Diluted Diluted
Continuing Operations Amount Share Amount Share
Income from continuing operations $56,402 $0.91 $45,582 $0.73
Add: After-tax asset impairment
charge 1,974 0.03 - -
Less: After-tax DSH revenue
attributable to prior year - - (1,748) (0.02)
Adjusted income from continuing
operations $58,376 $0.94 $43,834 $0.71
Net income $61,409 $0.99 $46,183 $0.74
Add: After-tax asset impairment
charge 1,974 0.03 - -
Less: After-tax DSH revenue
attributable to prior year - - (1,748) (0.02)
Less: After-tax gain on sale of home
health business (1,970) (0.03) - -
Less: After-tax gain on sale of
Puerto Rico hospitals (3,812) (0.06) - -
Adjusted net income $57,601 $0.93 $44,435 $0.72
Calculation of Adjusted Operating
Income/Margin Amount Margin Amount Margin
Operating income/margin $172,151 15.8% $142,097 14.5%
Add: After-tax asset impairment
charge 1,974 0.2% - -
Less: After-tax DSH revenue
attributable to prior year - - (1,748) (0.2%)
Adjusted operating income/margin $174,125 16.0% $140,349 14.3%
Universal Health Services, Inc.
Supplemental Statistical Information
(unaudited)
% Change
Quarter Ended
Same Facility: 3/31/2005
Acute Care Hospitals
Revenues 8.7%
Adjusted Admissions 2.3%
Adjusted Patient Days 1.4%
Revenue Per Adjusted Admission 6.2%
Revenue Per Adjusted Patient Day 7.2%
Behavioral Health Hospitals
Revenues 5.4%
Adjusted Admissions 0.1%
Adjusted Patient Days 2.5%
Revenue Per Adjusted Admission 5.2%
Revenue Per Adjusted Patient Day 2.8%
UHS Consolidated First Quarter Ended
3/31/2005 3/31/2004
Revenues $1,090,981 $982,576
EBITDA (1) $145,092 $119,753
EBITDA Margin (1) 13.3% 12.2%
Cash Flow From Operations $134,612 $95,126
Days Sales Outstanding 51 53
Capital Expenditures $57,920 $70,436
Debt (net of cash) 646,322 870,029
Shareholders Equity 1,274,895 1,133,329
Debt / Total Capitalization 33.6% 43.4%
Debt / EBITDA (2) 1.30 1.79
Debt / Cash From Operations (2) 1.49 2.24
Acute Care EBITDAR Margin (3) 17.0% 14.9%
Behavioral Health EBITDAR Margin (3) 24.6% 24.0%
(1) Net of Minority Interest
(2) Latest 4 quarters
(3) Before Corporate overhead allocation and minority interest
UNIVERSAL HEALTH SERVICES, INC.
SELECTED HOSPITAL STATISTICS
MARCH 31, 2005
AS REPORTED:
For the three months ended
Acute (1)
03/31/05 03/31/04 %
Hospitals owned and leased 24 23 4.3%
Average licensed beds 5,529 5,652 -2.2%
Patient days 311,598 303,610 2.6%
Average daily census 3,462.2 3,336.4 3.8%
Occupancy-licensed beds 62.6% 59.0% 6.1%
Admissions 67,015 64,550 3.8%
Length of stay 4.6 4.7 -1.1%
Inpatient revenue $1,946,868 $1,751,418 11.2%
Outpatient revenue 690,580 616,434 12.0%
Total patient revenue 2,637,448 2,367,852 11.4%
Other revenue 13,116 9,011 45.6%
Gross hospital revenue 2,650,564 2,376,863 11.5%
Total deductions 1,843,940 1,644,412 12.1%
Net hospital revenue $806,624 $732,451 10.1%
For the three months ended
Behavioral Health
03/31/05 03/31/04 %
Hospitals owned and leased 44 39 12.8%
Average licensed beds 4,414 3,904 13.1%
Patient days 325,874 283,898 14.8%
Average daily census 3,620.8 3,119.8 16.1%
Occupancy-licensed beds 82.0% 79.9% 2.7%
Admissions 25,045 24,139 3.8%
Length of stay 13.0 11.8 10.6%
Inpatient revenue $325,897 $293,729 11.0%
Outpatient revenue 48,515 42,976 12.9%
Total patient revenue 374,412 336,705 11.2%
Other revenue 7,960 8,341 -4.6%
Gross hospital revenue 382,372 345,046 10.8%
Total deductions 192,812 179,143 7.6%
Net hospital revenue $189,560 $165,903 14.3%
SAME FACILITY:
Acute (1)(2) Behavioral Health(3)
03/31/05 03/31/04 % 03/31/05 03/31/04 %
Hospitals owned and
leased 23 23 0.0% 39 39 0.0%
Average licensed
beds 5,409 5,652 -4.3% 4,008 3,904 2.7%
Patient days 308,379 303,610 1.6% 291,951 283,898 2.8%
Average daily census 3,426.4 3,336.4 2.7% 3,243.9 3,119.8 4.0%
Occupancy-licensed
beds 63.3% 59.0% 7.3% 80.9% 79.9% 1.3%
Admissions 66,120 64,550 2.4% 24,221 24,139 0.3%
Length of stay 4.7 4.7 -0.8% 12.1 11.8 2.5%
(1) Does not include hospitals located in France or discontinued
operations.
(2) Lakewood Ranch is excluded in both current and prior years.
(3) Stonington and the four facilities purchased from Keystone are
excluded in both current and prior years.
SOURCE: Universal Health Services, Inc.
Steve Filton, Chief Financial Officer, Universal Health Services, +1-610-768-3300