Universal Health Services, Inc. Reports Increased Third Quarter Earnings
10/20/2003
KING OF PRUSSIA, Pa., Oct. 20 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its net income and earnings per share (diluted) were $47.4 million and $.76 for the three-month period ended September 30, 2003, and $151.1 million and $2.42 for the nine-month period ended September 30, 2003, respectively, after recording after tax, non- recurring gains on sales of $4.4 million or $.07 per share (diluted) and an after tax charge for the cumulative effect of a change in accounting principle of $1.7 million or $.03 per share (diluted). Excluding the non-recurring gains and the cumulative change in accounting principle, earnings per share (diluted) for the three-month period ended September 30, 2003 were $.72, an 11% increase from the earnings recorded in the third quarter of 2002. Revenues increased 10% to $896 million in the three-month period and by 11% to $2.69 billion in the nine-month period ended September 30, 2003. At September 30, 2003, the Company's balance sheet debt, net of cash, was $615 million and its shareholders' equity was $1.023 billion. The non-recurring gains in the third quarter of 2003 resulted from the sale of three radiation oncology centers in Kentucky and three medical office buildings located in Nevada. The cumulative effect of the change in accounting principle resulted from the adoption of Statement of Financial Accounting Standards No. 150 on July 1, 2003 for existing financial instruments entered into on or before May 31, 2003. As a result of a recent interpretation by the Financial Accounting Standards Board, it was determined that Statement No. 150 applied to minority partners' interest in certain consolidated entities.
On a same facility basis, patient admissions to the Company's acute care hospitals located in the U.S. and Puerto Rico decreased approximately 1% during the quarter ended September 30, 2003, as compared to the comparable prior-year quarter, while patient admissions to the Company's behavioral health care facilities owned in both periods increased approximately 1%. For the Company's acute care hospitals owned in both periods located in the U.S. and Puerto Rico, revenues increased 7.2% and revenue per adjusted patient day increased 5.6% during the 2003 third quarter as compared to the prior-year quarter. For the Company's behavioral health hospitals owned in both periods, revenues increased 4.5% and revenue per adjusted patient day increased 3.2%.
Operating margins for the Company's acute care hospitals located in the U.S. and Puerto Rico owned in both the three-month periods ended September 30, 2003 and September 30, 2002, increased to 17.0% from 16.7%. Operating margins for the Company's behavioral health hospitals owned in both periods increased to 22.3% during the third quarter of 2003 from 19.2% during the prior-year quarter. The Company's operating margin (as calculated on the attached schedules of Supplemental Consolidated Income Statement Information), increased to 15.4% in the three-month period ended September 30, 2003, as compared to 15.3% in the same period of the prior year.
During the quarter, the Company announced its agreement to acquire a ninety percent (90%) ownership interest in Pendleton Memorial Methodist Hospital in Louisiana. The Company hopes to complete this acquisition, as well as the previously announced acquisition of three acute care hospitals in California either during or shortly after the fourth quarter. The proposed acquisitions remain subject to regulatory review and approval. In early October, the Company also opened its new 176-bed Spring Valley Hospital in Las Vegas and a 90-bed addition to its Northwest Texas Hospital in Amarillo, Texas.
There will be a conference call for investors at 9:00 AM ET on Tuesday, October 21, 2003. The dial-in number is 1-877-648-7971.
Universal Health Services, Inc. is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals, ambulatory surgery and radiation 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).
Certain statements in this release may constitute forward-looking statements and are subject to various risks and uncertainties as discussed in the Company's filings with the Securities and Exchange Commission. The Company is not obligated to update these forward-looking statements even if the Company's assessment of these risks and uncertainties changes.
Management of the Company believes that operating income and operating margin (as calculated on the attached schedules of Supplemental Consolidated Income Statement Information), which are non-GAAP financial measures, are helpful to investors as measures of the Company's operating performance. Since the source of financing for the purchase of property and equipment and other assets at each hospital varies, the Company believes that measuring operating performance before capital-related costs (such as depreciation and amortization, lease and rental and interest expense) provides a useful comparison of relative operating performance among its facilities. Operating income and operating margin are used by management as analytical indicators for purposes of assessing the relative operating performance of the Company's individual hospitals and operating segments, and the overall Company. In addition, the Company's use of operating income and operating margin enables investors to compare the performance of the Company with that of others in the industry. To obtain a complete understanding of the Company's financial performance, operating income and operating margin should be examined in connection with net income, determined in accordance with GAAP, as presented in these financial statements as well as information provided elsewhere such as the Company's Reports on Forms 10-Q and 10-K. Since the items excluded from operating income and operating margin are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be an alternative to net income as a measure of the Company's operating performance or profitability. Because operating income and operating margin are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, operating income and operating margin as presented may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating the Company's financial performance.
For additional information on the Company, visit our web site:
http://www.uhsinc.com.
Universal Health Services, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Unaudited
Three months Nine months
ended September 30, ended September 30,
2003 2002 2003 2002
Net revenues $896,332 $813,104 $2,694,094 $2,423,420
Operating charges:
Salaries, wages and
benefits 362,440 323,331 1,075,670 964,633
Other operating expenses 213,424 196,007 628,950 586,199
Supplies expense 119,897 106,382 362,190 313,747
Provision for doubtful
accounts 62,288 62,590 189,410 173,329
Depreciation and
amortization 35,799 30,136 105,849 90,444
Lease and rental expense 15,994 15,609 47,676 46,089
Interest expense, net 8,615 8,636 27,839 25,768
818,457 742,691 2,437,584 2,200,209
Income before gains on sales
of assets and businesses,
minority interests,
income taxes and
cumulative effect of
change in accounting
principle 77,875 70,413 256,510 223,211
Gains on sales of assets and
businesses (7,837) 0 (7,837) 0
Minority interests in earnings
of consolidated entities 7,476 4,924 21,036 15,485
Income before income taxes and
cumulative effect of
change in accounting
principle 78,236 65,489 243,311 207,726
Provision for income taxes 29,175 24,038 90,510 76,255
Income before cumulative
effect of change
in accounting principle 49,061 41,451 152,801 131,471
Cumulative effect of change in
accounting principle,
net of income taxes 1,699 0 1,699 0
Net income $47,362 $41,451 $151,102 $131,471
Earnings per common share -
basic $0.83 $0.69 $2.62 $2.20
Earnings per common share -
diluted $0.76 $0.65 $2.42 $2.05
EARNINGS PER SHARE CALCULATION
Net income $47,362 $41,451 $151,102 $131,471
Add: Debenture interest, net
of taxes 2,222 2,134 6,577 6,317
Adjusted net income $49,584 $43,585 $157,679 $137,788
Weighted average number of
common shares - basic 57,354 59,883 57,762 59,893
Add: Shares for conversion of
convertible debentures 6,577 6,577 6,577 6,577
Other share
equivalents 909 715 787 689
Weighted average number of
common shares and equiv. -
diluted 64,840 67,175 65,126 67,159
Earnings per common share -
diluted $0.76 $0.65 $2.42 $2.05
Universal Health Services, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
September 30, December 31,
2003 2002
Assets:
Cash and cash equivalents $28,261 $17,750
Accounts receivable, net 482,818 474,763
Other current assets 88,756 114,063
Total Current Assets 599,835 606,576
Property, plant and equipment, net 1,264,885 1,167,287
Other assets 553,754 549,366
Total Assets $2,418,474 $2,323,229
Liabilities and Stockholders'
Equity:
Current portion of long-term debt $11,225 $8,253
Other current liabilities 381,630 362,160
Total Current Liabilities 392,855 370,413
Other noncurrent liabilities 211,484 206,238
Minority interest 144,179 134,339
Long-term debt 632,526 680,514
Deferred income taxes 14,590 14,266
Total Liabilities 1,395,634 1,405,770
Stockholders' equity 1,022,840 917,459
Total Liabilities and
Stockholders' Equity $2,418,474 $2,323,229
Universal Health Services, Inc.
Supplemental Consolidated Income Statement Information
(in thousands)
unaudited
Three months ended Three months ended
September 30, 2003 September 30, 2002
Net revenues $896,332 100.0% $813,104 100.0%
Operating charges:
Salaries, wages and benefits 362,440 40.4% 323,331 39.8%
Other operating expenses 213,424 23.8% 196,007 24.1%
Supplies expense 119,897 13.4% 106,382 13.1%
Provision for doubtful accounts 62,288 6.9% 62,590 7.7%
758,049 84.6% 688,310 84.7%
Operating income/margin 138,283 15.4% 124,794 15.3%
Depreciation and amortization 35,799 30,136
Lease and rental expense 15,994 15,609
Interest expense, net 8,615 8,636
Gains on sales of assets and
businesses (7,837) 0
Minority interests in earnings of
consolidated entities 7,476 4,924
Income before income taxes and
cumulative effect of change
in accounting principle 78,236 65,489
Provision for income taxes 29,175 24,038
Income before cumulative effect of
change
in accounting principle 49,061 41,451
Cumulative effect of change in
accounting principle,
net of income taxes 1,699 0
Net income $47,362 $41,451
Per
Amount Diluted Share
Net income $47,362 $0.76
Less: After-tax gain on sales of
assets and businesses (4,396) ($0.07)
Plus: Cumulative effect of change in
accounting principle,
net of income taxes 1,699 $0.03
Adjusted net income $44,665 $0.72
Universal Health Services, Inc.
Supplemental Consolidated Income Statement Information
(in thousands)
unaudited
Nine months ended Nine months ended
September 30, 2003 September 30, 2002
Net revenues $2,694,094 100.0% $2,423,420 100.0%
Operating charges:
Salaries, wages and benefits 1,075,670 39.9% 964,633 39.8%
Other operating expenses 628,950 23.3% 586,199 24.2%
Supplies expense 362,190 13.4% 313,747 12.9%
Provision for doubtful accounts 189,410 7.0% 173,329 7.2%
2,256,220 83.7% 2,037,908 84.1%
Operating income/margin 437,874 16.3% 385,512 15.9%
Depreciation and amortization 105,849 90,444
Lease and rental expense 47,676 46,089
Interest expense, net 27,839 25,768
Gains on sales of assets and
businesses (7,837) 0
Minority interests in earnings
of consolidated entities 21,036 15,485
Income before income taxes and
cumulative effect of change
in accounting principle 243,311 207,726
Provision for income taxes 90,510 76,255
Income before cumulative effect of
change
in accounting principle 152,801 131,471
Cumulative effect of change in
accounting principle,
net of income taxes 1,699 0
Net income $151,102 $131,471
Per
Amount Diluted Share
Net income $151,102 $2.42
Less: After-tax gain on sales of
assets and businesses (4,396) ($0.07)
Plus: Cumulative effect of change in
accounting principle,
net of income taxes 1,699 $0.03
Adjusted net income $148,405 $2.38
Universal Health Services, Inc.
Supplemental Statistical Information
(unaudited)
% Change % Change
Quarter Ended 9 mos. ended
Same Facility: 09/30/2003 09/30/2003
Acute Care Hospitals
Revenues 7.2% 8.5%
Adjusted Admissions 0.0% 0.9%
Adjusted Patient Days 1.6% 1.0%
Revenue Per Adjusted Admission 7.2% 7.5%
Revenue Per Adjusted Patient Day 5.6% 7.4%
Behavioral Health Hospitals
Revenues 4.5% 5.0%
Adjusted Admissions 0.6% 1.4%
Adjusted Patient Days 1.2% 2.1%
Revenue Per Adjusted Admission 3.8% 3.5%
Revenue Per Adjusted Patient Day 3.2% 2.9%
UHS Consolidated Third Quarter Ended Nine months Ended
09/30/2003 09/30/2002 09/30/2003 09/30/2002
Revenues $896,332 $813,104 $2,694,094 $2,423,420
EBITDA (1) $114,813 $104,261 $369,162 $323,938
EBITDA Margin (1) 12.8% 12.8% 13.7% 13.4%
Cash Flow From Operations $103,224 $111,115 $313,402 $245,181
Days Sales Outstanding 50 53 49 53
Capital Expenditures $57,346 $59,532 $155,765 $156,684
Debt (net of cash) - - $615,490 $645,766
Shareholders Equity - - $1,022,840 $946,921
Debt / Total Capitalization - - 37.6% 40.5%
Debt / EBITDA (2) - - 1.28 1.56
Debt / Cash From Operations
(2) - - 1.54 2.23
Acute Care EBITDAR Margin (3) 17.0% 16.7% 18.0% 17.3%
Behavioral Health EBITDAR
Margin (3) 22.4% 19.2% 22.8% 20.3%
(1) Net of Minority Interest
(2) Latest 4 quarters
(3) Before Corporate overhead allocation and minority interest
UNIVERSAL HEALTH SERVICES, INC.
SELECTED HOSPITAL STATISTICS
SEPTEMBER 30, 2003
AS REPORTED:
FOR THE THREE MONTHS ENDED
ACUTE (1)
9/30/03 9/30/02 %
Hospitals owned and leased 25 25 0.0%
Average licensed beds 5,735 5,846 -1.9%
Patient days 306,182 304,497 0.6%
Average daily census 3,328.1 3,309.8 0.6%
Occupancy-licensed beds 58.0% 56.6% 2.5%
Admissions 65,628 66,401 -1.2%
Length of stay 4.7 4.6 1.7%
Inpatient revenue $1,453,560 $1,270,856 14.4%
Outpatient revenue 542,588 458,549 18.3%
Total patient revenue 1,996,148 1,729,405 15.4%
Other revenue 12,526 13,341 -6.1%
Gross hospital revenue 2,008,674 1,742,746 15.3%
Total deductions 1,332,357 1,111,934 19.8%
Net hospital revenue $676,317 $630,812 7.2%
AS REPORTED:
FOR THE THREE MONTHS ENDED
BEHAVIORAL HEALTH
9/30/03 9/30/02 %
Hospitals owned and leased 39 37 5.4%
Average licensed beds 3,902 3,749 4.1%
Patient days 263,926 253,190 4.2%
Average daily census 2,868.8 2,752.1 4.2%
Occupancy-licensed beds 73.5% 73.4% 0.2%
Admissions 21,949 21,542 1.9%
Length of stay 12.0 11.8 2.3%
Inpatient revenue $269,972 $247,693 9.0%
Outpatient revenue 35,764 34,420 3.9%
Total patient revenue 305,736 282,113 8.4%
Other revenue 8,338 8,861 -5.9%
Gross hospital revenue 314,074 290,974 7.9%
Total deductions 164,054 150,576 9.0%
Net hospital revenue $150,020 $140,398 6.9%
SAME STORE:
FOR THE THREE MONTHS ENDED
ACUTE (1) BEHAVIORAL HEALTH (2)
9/30/03 9/30/02 % 9/30/03 9/30/02 %
Hospitals owned and
leased 25 25 0.0% 37 37 0.0%
Average licensed beds 5,735 5,846 -1.9% 3,785 3,754 0.8%
Patient days 306,176 304,492 0.6% 256,662 253,193 1.4%
Average daily census 3,328.0 3,309.7 0.6% 2,789.8 2,752.1 1.4%
Occupancy-licensed beds 58.0% 56.6% 2.5% 73.7% 73.3% 0.5%
Admissions 65,628 66,401 -1.2% 21,745 21,542 0.9%
Length of stay 4.7 4.6 1.7% 11.8 11.8 0.4%
(1) Does not include hospitals located in France.
(2) North Star Hospital and Residential Center are excluded in both
current and prior years.
UNIVERSAL HEALTH SERVICES, INC.
SELECTED HOSPITAL STATISTICS
SEPTEMBER 30, 2003
AS REPORTED:
FOR THE NINE MONTHS ENDED
ACUTE (1)
9/30/03 9/30/02 %
Hospitals owned and leased 25 25 0.0%
Average licensed beds 5,735 5,846 -1.9%
Patient days 932,743 928,562 0.5%
Average daily census 3,416.6 3,401.3 0.5%
Occupancy-licensed beds 59.6% 58.2% 2.4%
Admissions 199,217 198,866 0.2%
Length of stay 4.7 4.7 0.3%
Inpatient revenue $4,421,657 $3,799,360 16.4%
Outpatient revenue 1,589,073 1,339,967 18.6%
Total patient revenue 6,010,730 5,139,327 17.0%
Other revenue 39,945 44,744 -10.7%
Gross hospital revenue 6,050,675 5,184,071 16.7%
Total deductions 4,017,034 3,308,943 21.4%
Net hospital revenue $2,033,641 $1,875,128 8.5%
AS REPORTED:
FOR THE NINE MONTHS ENDED
BEHAVIORAL HEALTH
9/30/03 9/30/02 %
Hospitals owned and leased 39 37 5.4%
Average licensed beds 3,892 3,749 3.8%
Patient days 801,467 757,174 5.8%
Average daily census 2,935.8 2,773.5 5.8%
Occupancy-licensed beds 75.4% 74.0% 2.0%
Admissions 65,932 63,969 3.1%
Length of stay 12.2 11.8 2.7%
Inpatient revenue $817,616 $738,327 10.7%
Outpatient revenue 115,515 112,170 3.0%
Total patient revenue 933,131 850,497 9.7%
Other revenue 25,913 28,098 -7.8%
Gross hospital revenue 959,044 878,595 9.2%
Total deductions 501,440 452,653 10.8%
Net hospital revenue $457,604 $425,942 7.4%
SAME STORE:
FOR THE NINE MONTHS ENDED
ACUTE (1) BEHAVIORAL HEALTH (2)
9/30/03 9/30/02 % 9/30/03 9/30/02 %
Hospitals owned and
leased 25 25 0.0% 37 37 0.0%
Average licensed beds 5,735 5,846 -1.9% 3,775 3,751 0.6%
Patient days 932,677 928,555 0.4% 776,685 757,220 2.6%
Average daily census 3,416.4 3,401.3 0.4% 2,845.0 2,773.7 2.6%
Occupancy-licensed beds 59.6% 58.2% 2.4% 75.4% 73.9% 1.9%
Admissions 199,217 198,866 0.2% 65,278 63,969 2.0%
Length of stay 4.7 4.7 0.3% 11.9 11.8 0.5%
(1) Does not include hospitals located in France.
(2) North Star Hospital and Residential Center are excluded in both
current and prior years.
SOURCE Universal Health Services, Inc.
-0- 10/20/2003
/CONTACT: Steve Filton, Chief Financial Officer, Universal Health
Services, +1-610-768-3300/
/Company News On-Call: http://www.prnewswire.com/comp/916225.html/
/Web site: http://www.uhsinc.com /
(UHS UHT)
CO: Universal Health Services, Inc.; Universal Health Realty Income Trust
ST: Pennsylvania
IN: HEA FIN RLT
SU: ERN MAV CCA
FB
-- PHM042 --
2562 10/20/2003 17:34 EDT http://www.prnewswire.com