UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2011

 

 

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

DELAWARE		1-10765		23-2077891
(State or other jurisdiction of Incorporation or Organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

UNIVERSAL CORPORATE CENTER

367 SOUTH GULPH ROAD

KING OF PRUSSIA, PENNSYLVANIA 19406

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code (610) 768-3300

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02 Results of Operations and Financial Condition

On February 28, 2011, Universal Health Services, Inc. issued the press release attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. 99.1    Universal Health Services, Inc., press release, dated February 28, 2011.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 28, 2011

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Exhibit Index

 

Exhibit No.		Exhibit
99.1		Universal Health Services, Inc., press release, dated February 28, 2011.

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

CONTACT:		Steve Filton
		Chief Financial Officer		February 28, 2011
		610-768-3300

UNIVERSAL HEALTH SERVICES, INC. REPORTS

2010 FOURTH QUARTER AND FULL YEAR EARNINGS PER DILUTED SHARE

AND 2011 EARNINGS GUIDANCE

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

KING OF PRUSSIA, PA – 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

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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

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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

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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.

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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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Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

		Three months ended December 31,								Twelve months ended December 31,
		2010				2009				2010				2009
Net revenues		$	1,559,453			$	1,291,211			$	5,568,185			$	5,202,379
Operating charges:
Salaries, wages and benefits			707,882				562,931				2,423,102				2,204,422
Other operating expenses			272,873				235,016				1,005,288				994,923
Supplies expense			189,327				177,219				733,093				699,249
Provision for doubtful accounts			144,288				127,869				546,909				508,603
Depreciation and amortization			60,849				51,279				223,915				204,703
Lease and rental expense			22,413				18,035				76,961				69,947
Transaction costs			31,105				0				53,220				0
			1,428,737				1,172,349				5,062,488				4,681,847
Income from operations			130,716				118,862				505,697				520,532
Interest expense, net			41,468				10,513				77,600				45,810
Income before income taxes			89,248				108,349				428,097				474,722
Provision for income taxes			38,432				39,167				152,302				170,475
Net income			50,816				69,182				275,795				304,247
Less: Income attributable to noncontrolling interests			13,634				8,317				45,612				43,874
Net income attributable to UHS		$	37,182			$	60,865			$	230,183			$	260,373
Basic earnings per share attributable to UHS (a)		$	0.38			$	0.62			$	2.37			$	2.65
Diluted earnings per share attributable to UHS (a)		$	0.38			$	0.62			$	2.34			$	2.64

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Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

		Three months ended December 31,								Twelve months ended December  31,
		2010				2009				2010				2009
(a) Earnings per share calculation:
Basic and diluted:
Net income attributable to UHS		$	37,182			$	60,865			$	230,183			$	260,373
Less: Net income attributable to unvested restricted share grants			(92	)			(234	)			(918	)			(1,146	)
Net income attributable to UHS - basic and diluted		$	37,090			$	60,631			$	229,265			$	259,227
Weighted average number of common shares - basic			97,125				97,290				96,786				97,794
Basic earnings per share attributable to UHS:		$	0.38			$	0.62			$	2.37			$	2.65
Weighted average number of common shares			97,125				97,290				96,786				97,794
Add: Other share equivalents			1,328				790				1,187				481
Weighted average number of common shares and equiv. - diluted			98,453				98,080				97,973				98,275
Diluted earnings per share attributable to UHS:		$	0.38			$	0.62			$	2.34			$	2.64

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Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information (“Supplemental Schedule”)

For the three months ended December 31, 2010 and 2009

(in thousands, except per share amounts)

(unaudited)

 

		Three months ended December 31, 2010								Three months ended December 31, 2009
Net revenues		$	1,559,453				100.0	%		$	1,291,211				100.0	%
Operating charges:
Salaries, wages and benefits			707,882				45.4	%			562,931				43.6	%
Other operating expenses			272,873				17.5	%			235,016				18.2	%
Supplies expense			189,327				12.1	%			177,219				13.7	%
Provision for doubtful accounts			144,288				9.3	%			127,869				9.9	%
			1,314,370				84.3	%			1,103,035				85.4	%
Operating income/margin			245,083				15.7	%			188,176				14.6	%
Lease and rental expense			22,413								18,035
Income attributable to noncontrolling interests			13,634								8,317
Earnings before, depreciation and amortization, interest expense, and income taxes			209,036								161,824
Depreciation and amortization			60,849								51,279
Interest expense, net			41,468								10,513
Transaction costs			31,105								0
Income before income taxes			75,614								100,032
Provision for income taxes			38,432								39,167
Net income attributable to UHS		$	37,182							$	60,865
		Three months ended December 31, 2010								Three months ended December 31, 2009
		Amount				Per Diluted Share				Amount				Per Diluted Share
Calculation of Adjusted Net Income Attributable to UHS
Net income attributable to UHS		$	37,182			$	0.38			$	60,865			$	0.62
Plus/minus adjustments:
Acquisition transaction costs, net of income taxes			24,933				0.25				—				—
Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes			(17,915	)			(0.18	)			—				—
Write-off certain construction costs, net of income taxes			4,133				0.04				—				—
Charge recorded in connection with split-dollar life insurance agreements			9,207				0.09				—				—
Reduction of reserves relating to prior years for workers’ compensation self-insured claims, net of income taxes			—				—				(4,350	)			(0.05	)
Subtotal after-tax adjustments to net income attributable to UHS			20,358				0.20				(4,350	)			(0.05	)
Adjusted net income attributable to UHS		$	57,540			$	0.58			$	56,515			$	0.57

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Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information (“Supplemental Schedule”)

For the twelve months ended December 31, 2010 and 2009

(in thousands, except per share amounts)

(unaudited)

 

		Twelve months ended December 31, 2010								Twelve months ended December 31, 2009
Net revenues		$	5,568,185				100.0	%		$	5,202,379				100.0	%
Operating charges:
Salaries, wages and benefits			2,423,102				43.5	%			2,204,422				42.4	%
Other operating expenses			1,005,288				18.1	%			994,923				19.1	%
Supplies expense			733,093				13.2	%			699,249				13.4	%
Provision for doubtful accounts			546,909				9.8	%			508,603				9.8	%
			4,708,392				84.6	%			4,407,197				84.7	%
Operating income/margin			859,793				15.4	%			795,182				15.3	%
Lease and rental expense			76,961								69,947
Income attributable to noncontrolling interests			45,612								43,874
Earnings before, depreciation and amortization, interest expense, and income taxes			737,220								681,361
Depreciation and amortization			223,915								204,703
Interest expense, net			77,600								45,810
Transaction costs			53,220								0
Income before income taxes			382,485								430,848
Provision for income taxes			152,302								170,475
Net income attributable to UHS		$	230,183							$	260,373
		Twelve months ended December 31, 2010								Twelve months ended December 31, 2009
		Amount				Per Diluted Share				Amount				Per Diluted Share
Calculation of Adjusted Net Income Attributable to UHS
Net income attributable to UHS		$	230,183			$	2.34			$	260,373			$	2.64
Plus/minus adjustments:
Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes			(28,113	)			(0.28	)			(14,168	)			(0.14	)
Reduction of reserves relating to prior years for workers’ compensation self-insured claims, net of income taxes											(4,350	)			(0.05	)
Acquisition transaction costs, net of income taxes			38,675				0.39				—				—
Write-off certain construction costs, net of income taxes			4,133				0.04				—				—
Charge recorded in connection with split-dollar life insurance agreements			9,207				0.09				—				—
(Favorable) Unfavorable discrete tax item			(4,331	)			(0.04	)			4,331				0.04
Subtotal after-tax adjustments to net income attributable to UHS			19,571				0.20				(14,187	)			(0.15	)
Adjusted net income attributable to UHS		$	249,754			$	2.54			$	246,186			$	2.49

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Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

		December 31, 2010				December 31, 2009 (a)
Assets
Current assets:
Cash and cash equivalents		$	29,474			$	9,180
Accounts receivable, net			837,820				602,559
Supplies			94,330				84,272
Other current assets			130,060				27,270
Deferred income taxes			120,834				51,336
Assets of facilities held for sale			118,598				21,580
Total current assets			1,331,116				796,197
Property and equipment			4,853,972				3,738,818
Less: accumulated depreciation			(1,601,005	)			(1,423,580	)
			3,252,967				2,315,238
Other assets:
Goodwill			2,589,914				732,685
Deferred charges			108,660				8,643
Other			245,279				111,700
		$	7,527,936			$	3,964,463
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt		$	3,449			$	2,573
Accounts payable and accrued liabilities			819,334				578,617
Liabilities of facilities held for sale			3,516				0
Federal and state taxes			0				1,627
Total current liabilities			826,299				582,817
Other noncurrent liabilities			380,649				375,580
Long-term debt			3,912,102				956,429
Deferred income taxes			173,354				60,091
Redeemable noncontrolling interest			211,761				197,152
UHS common stockholders’ equity			1,978,772				1,751,071
Noncontrolling interest			44,999				41,323
Total equity			2,023,771				1,792,394
		$	7,527,936			$	3,964,463

 

(a)

Revised to reclassify $197.2 million of noncontrolling interests, which are redeemable outside of our control, from total equity to mezzanine equity. This revision did not affect UHS’s common stockholders’ equity. We do not believe this revision is material to the Condensed Consolidated Balance Sheet at December 31, 2009.

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Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

 

		Twelve months ended December 31,
		2010				2009
Cash Flows from Operating Activities:
Net income		$	275,795			$	304,247
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization			223,997				204,703
Net gain on sale of assets and businesses			(1,993	)			(1,346	)
Stock-based compensation expense			16,799				13,096
Changes in assets & liabilities, net of effects from acquisitions and dispositions:
Accounts receivable			22,726				(1,402	)
Construction management and other receivable			0				29,519
Accrued interest			8,408				357
Accrued and deferred income taxes			132				14,930
Other working capital accounts			(26,437	)			(18,828	)
Other assets and deferred charges			11,539				6,699
Other			812				755
Accrued insurance expense, net of commercial premiums paid			19,739				44,314
Payments made in settlement of self-insurance claims			(50,173	)			(55,782	)
Net cash provided by operating activities			501,344				541,262
Cash Flows from Investing Activities:
Property and equipment additions, net of disposals			(239,274	)			(379,748	)
Acquisition of property and businesses			(1,958,298	)			(12,499	)
Proceeds received from sale of assets and businesses			21,460				9,770
Costs incurred for purchase and implementation of electronic health records applications			(17,971	)			(7,957	)
Net cash used in investing activities			(2,194,083	)			(390,434	)
Cash Flows from Financing Activities:
Reduction of long-term debt			(1,392,086	)			(66,499	)
Additional borrowings			3,266,146				26,069
Financing costs			(101,815	)			0
Repurchase of common shares			(11,528	)			(63,288	)
Dividends paid			(19,422	)			(16,706	)
Issuance of common stock			3,594				3,290
Profit distributions to noncontrolling interests			(32,456	)			(29,866	)
Proceeds from sale of noncontrolling interest in majority owned business			600				0
Capital contributions from noncontrolling interests			0				121
Purchase of noncontrolling interest in majority owned business			0				(229	)
Net cash provided by (used in) financing activities			1,713,033				(147,108	)
Increase in cash and cash equivalents			20,294				3,720
Cash and cash equivalents, beginning of period			9,180				5,460
Cash and cash equivalents, end of period		$	29,474			$	9,180
Supplemental Disclosures of Cash Flow Information:
Interest paid		$	76,900			$	57,018
Income taxes paid, net of refunds		$	152,088			$	155,368

---

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

Same Facility:

 

		% Change Quarter Ended 12/31/2010				% Change 12 months ended 12/31/2010
Acute Care Hospitals
Revenues			2.3	%			2.4	%
Adjusted Admissions			-0.1	%			1.3	%
Adjusted Patient Days			0.3	%			0.7	%
Revenue Per Adjusted Admission			2.4	%			1.0	%
Revenue Per Adjusted Patient Day			2.0	%			1.7	%
Behavioral Health Hospitals
Revenues			5.9	%			6.0	%
Adjusted Admissions			5.1	%			4.2	%
Adjusted Patient Days			-0.4	%			1.7	%
Revenue Per Adjusted Admission			0.4	%			1.4	%
Revenue Per Adjusted Patient Day			5.9	%			3.9	%

UHS Consolidated

 

		Fourth Quarter Ended								Twelve months Ended
		12/31/2010				12/31/2009				12/31/2010				12/31/2009
Revenues		$	1,559,453			$	1,291,211			$	5,568,185			$	5,202,379
EBITDA (1)			209,036				161,824				737,220				681,361
EBITDA Margin (1)			13.4	%			12.5	%			13.2	%			13.1	%
Cash Flow From Operations			101,745				56,987				501,344				541,262
Days Sales Outstanding			43				43				43				42
Capital Expenditures			59,045				100,923				239,274				379,748
Total Debt											3,915,551				959,002
UHS Shareholders Equity											1,978,772				1,751,071
Total Debt / Total Capitalization											66.4	%			35.4	%
Total Debt / EBITDA (2)											5.31				1.41
Debt / Cash From Operations (2)											7.81				1.77
Acute Care EBITDAR Margin (3)			14.4	%			13.5	%			14.5	%			15.3	%
Behavioral Health EBITDAR Margin (3)			21.7	%			24.5	%			24.6	%			24.8	%

 

(1)	Net of Minority Interest and before the items indicated on the supplemental schedules booked in 2010 and 2009

(2)	Latest 4 quarters

(3)	Before Corporate overhead allocation, minority interest and prior year self insurance reserve adjustment booked in 2009

---

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE THREE MONTHS ENDED

DECEMBER 31, 2010

AS REPORTED:

 

		ACUTE												BEHAVIORAL HEALTH
		12/31/10				12/31/09				% change				12/31/10				12/31/09				% change
Hospitals owned and leased			21				21				0.0	%			179				84				113.1	%
Average licensed beds			5,689				5,540				2.7	%			13,750				8,054				70.7	%
Patient days			284,534				289,469				-1.7	%			885,807				530,927				66.8	%
Average daily census			3,092.8				3,146.4				-1.7	%			9,628.3				5,770.9				66.8	%
Occupancy-licensed beds			54.4	%			56.8	%			-4.3	%			70.0	%			71.7	%			-2.3	%
Admissions			64,655				66,018				-2.1	%			56,940				33,614				69.4	%
Length of stay			4.4				4.4				0.4	%			15.6				15.8				-1.5	%
Inpatient revenue		$	2,794,619			$	2,471,016				13.1	%		$	916,831			$	522,505				75.5	%
Outpatient revenue			1,235,850				1,018,861				21.3	%			111,874				73,255				52.7	%
Total patient revenue			4,030,469				3,489,877				15.5	%			1,028,705				595,760				72.7	%
Other revenue			19,136				17,254				10.9	%			24,131				8,120				197.2	%
Gross hospital revenue			4,049,605				3,507,131				15.5	%			1,052,836				603,880				74.3	%
Total deductions			3,076,918				2,556,636				20.4	%			474,299				272,925				73.8	%
Net hospital revenue		$	972,687			$	950,495				2.3	%		$	578,537			$	330,955				74.8	%

SAME FACILITY:

 

		ACUTE												BEHAVIORAL HEALTH (1)
		12/31/10				12/31/09				% change				12/31/10				12/31/09				% change
Hospitals owned and leased			21				21				0.0	%			81				81				0.0	%
Average licensed beds			5,689				5,540				2.7	%			8,011				7,902				1.4	%
Patient days			284,538				289,469				-1.7	%			527,850				528,430				-0.1	%
Average daily census			3,092.8				3,146.4				-1.7	%			5,737.5				5,743.8				-0.1	%
Occupancy-licensed beds			54.4	%			56.8	%			-4.3	%			71.6	%			72.7	%			-1.5	%
Admissions			64,655				66,018				-2.1	%			35,431				33,607				5.4	%
Length of stay			4.4				4.4				0.4	%			14.9				15.7				-5.3	%

 

(1)

Ascent, Crescent Pines and the Hope program are excluded in both current and prior years. Coastal Behavorial is included in March 1st thru year to date. Centennial Peaks is included in July 1st thru year to date. Springwoods Behavorial is included in September 1st thru year to date. Facilities acquired in acquisition of Psychiatric Solutions are excluded in current and prior years.

---

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE TWELVE MONTHS ENDED

DECEMBER 31, 2010

AS REPORTED:

 

		ACUTE												BEHAVIORAL HEALTH
		12/31/10				12/31/09				% change				12/31/10				12/31/09				% change
Hospitals owned and leased			21				21				0.0	%			179				84				113.1	%
Average licensed beds			5,689				5,484				3.7	%			9,427				7,921				19.0	%
Patient days			1,155,987				1,166,704				-0.9	%			2,507,046				2,105,625				19.1	%
Average daily census			3,167.1				3,196.4				-0.9	%			6,868.6				5,768.8				19.1	%
Occupancy-licensed beds			55.7	%			58.3	%			-4.5	%			72.9	%			72.8	%			0.0	%
Admissions			264,470				265,244				-0.3	%			166,434				136,639				21.8	%
Length of stay			4.4				4.4				-0.6	%			15.1				15.4				-2.3	%
Inpatient revenue		$	10,890,171			$	9,901,032				10.0	%		$	2,566,366			$	2,075,141				23.7	%
Outpatient revenue			4,771,070				4,100,427				16.4	%			350,192				282,473				24.0	%
Total patient revenue			15,661,241				14,001,459				11.9	%			2,916,558				2,357,614				23.7	%
Other revenue			71,004				70,879				0.2	%			46,638				31,728				47.0	%
Gross hospital revenue			15,732,245				14,072,338				11.8	%			2,963,196				2,389,342				24.0	%
Total deductions			11,830,430				10,261,510				15.3	%			1,327,741				1,074,313				23.6	%
Net hospital revenue		$	3,901,815			$	3,810,828				2.4	%		$	1,635,455			$	1,315,029				24.4	%

SAME FACILITY:

 

		ACUTE												BEHAVIORAL HEALTH (1)
		12/31/10				12/31/09				% change				12/31/10				12/31/09				% change
Hospitals owned and leased			21				21				0.0	%			81				81				0.0	%
Average licensed beds			5,689				5,484				3.7	%			7,851				7,768				1.1	%
Patient days			1,155,987				1,166,704				-0.9	%			2,130,870				2,094,115				1.8	%
Average daily census			3,167.1				3,196.4				-0.9	%			5,838.0				5,737.3				1.8	%
Occupancy-licensed beds			55.7	%			58.3	%			-4.5	%			74.4	%			73.9	%			0.7	%
Admissions			264,470				265,244				-0.3	%			142,384				136,579				4.3	%
Length of stay			4.4				4.4				-0.6	%			15.0				15.3				-2.4	%

 

(1)

Ascent, Crescent Pines and the Hope program are excluded in both current and prior years. Coastal Behavorial is included in March 1st thru year to date. Centennial Peaks is included in Jul 1st thru year to date. Springwoods Behavorial is included in September 1st thru year to date. Facilities acquired in acquisition of Psychiatric Solutions are excluded in current and prior years.