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): July 25, 2014 (July 24, 2014)

 

 

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 July 24, 2014, 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 July 24, 2014.

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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: July 25, 2014

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Exhibit Index

 

Exhibit No.		Exhibit
99.1		Universal Health Services, Inc., press release, dated July 24, 2014.

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

CONTACT:		Steve Filton
		Chief Financial Officer		July 24, 2014
		610-768-3300

UNIVERSAL HEALTH SERVICES, INC. REPORTS

2014 SECOND QUARTER FINANCIAL RESULTS, INCREASES 2014 FULL YEAR EARNINGS GUIDANCE AND ANNOUNCES SHARE REPURCHASE PROGRAM

Consolidated Results of Operations, As Reported – Three and six-month periods ended June 30, 2014 and 2013:

KING OF PRUSSIA, PA – Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $151.7 million, or $1.51 per diluted share, during the second quarter of 2014 as compared to $151.8 million, or $1.53 per diluted share, during the comparable quarter of 2013.

Net revenues increased 10.0% to $2.02 billion during the second quarter of 2014 as compared to $1.83 billion during the second quarter of 2013. Included in our net revenues during the second quarter of 2014 was approximately $15 million of additional net revenues recorded in connection with the Texas Medicaid Waiver (approximately $9 million applicable to the period of April 1, 2013 through June 30, 2014) and the Texas Delivery Service Reform Incentive Payment programs (approximately $6 million applicable to the period of October 1, 2013 through March 31, 2014).

Reported net income attributable to UHS was $289.7 million, or $2.89 per diluted share, during the first six months of 2014 as compared to $271.6 million, or $2.75 per diluted share, during the comparable period of 2013. Net revenues increased 7.5% to $3.94 billion during the first six months of 2014 as compared to $3.67 billion during the comparable period of 2013.

“We remain pleased with the underlying strength of our two businesses”, said Alan B. Miller, Chief Executive Officer. “The reduction in uncompensated care at our acute care hospitals resulting both from healthcare reform and improvements in the underlying economy partially reverses a trend that had been hindering our results for an extended period of time”.

Consolidated Results of Operations, As Adjusted – Three and six-month periods ended June 30, 2014 and 2013:

For the three-month period ended June 30, 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 approximately 30% to $155.6 million, or $1.55 per diluted share, as compared to $118.9 million, or $1.20 per diluted share, during the second quarter of 2013.

Included in our reported and adjusted net income attributable to UHS during the second quarter of 2014 is the after-tax impact of approximately $9 million, or $.09 per diluted share, resulting from

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above-mentioned $15 million of net revenues recorded in connection with the Texas Medicaid Waiver and the Texas Delivery Service Reform Incentive Payment programs. Approximately $6 million, or $.06 per diluted share, of this amount was attributable to periods prior to the second quarter of 2014. Also during the second quarter of 2014, we recorded an increase to the already established reserve in connection with the previously disclosed Garden City Employees’ Retirement System v. PSI matter. The increase in the reserve recorded during the second quarter of 2014 did not have a material impact on our financial statements. The trial in this matter is scheduled to begin in mid-September, 2014. Should we be deemed liable or enter into a settlement agreement related to this matter, we believe we would be entitled to commercial insurance recoveries for at least a portion of amounts paid by us, subject to certain limitations and deductibles. Although we cannot predict the outcome, it is possible the commercial insurance recoveries may not be sufficient to cover the ultimate disposition of this matter (including related legal fees) which would make us liable for a potentially material excess amount.

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2014 was an aggregate net unfavorable after-tax impact of approximately $3.9 million, or $.04 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 second quarter of 2013 was: (i) a net favorable after-tax impact of $37.8 million, or $.38 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2013, based upon a reserve analysis, and; (ii) an unfavorable after-tax impact of approximately $4.9 million, or $.05 per diluted share, related to the incentive income and expenses recorded in connection with the implementation of EHR applications.

For the six-month period ended June 30, 2014, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, increased approximately 22% to $292.3 million, or $2.92 per diluted share, as compared to $239.1 million, or $2.42 per diluted share, during the comparable period of 2013.

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2014 was: (i) an aggregate net unfavorable after-tax impact of approximately $8.9 million, or $.09 per diluted share, related to the incentive income and depreciation and amortization expense recorded in connection with the implementation of EHR applications, and; (ii) a favorable after-tax impact of $6.3 million, or $.06 per diluted share, resulting from a gain realized on the sale of a non-operating investment during the first quarter of 2014.

Included in our reported results during the six-month period ended June 30, 2013 was the above-mentioned net favorable after-tax impact of $37.8 million, or $.38 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating years prior to 2013, and an unfavorable after-tax impact of approximately $5.3 million, or $.05 per diluted share, related to the incentive income and expenses recorded in connection with the implementation of EHR applications.

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Acute Care Services – Three and six-month periods ended June 30, 2014 and 2013:

During the second quarter of 2014, at our acute care hospitals owned during both periods (“same facility basis”), adjusted admissions (adjusted for outpatient activity) increased 3.6% and adjusted patient days increased 7.9%, as compared to the second quarter of 2013. Net revenues at these facilities increased 11.5% during the second quarter of 2014 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 7.7% while net revenue per adjusted patient day increased 3.3% during the second quarter of 2014 as compared to the comparable quarter of 2013. On a same facility basis, the operating margin at our acute care hospitals increased to 19.2% during the second quarter of 2014 as compared to 14.8% during the second 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).

During the first six months of 2014, at our acute care hospitals on a same facility basis, adjusted admissions increased 1.5% and adjusted patient days increased 6.2%, as compared to the comparable period of 2013. Net revenues at these facilities increased 8.6% during the first six months of 2014 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted admission increased 7.0% while net revenue per adjusted patient day increased 2.2% during the first six months of 2014 as compared to the comparable period of 2013. On a same facility basis, the operating margin at our acute care hospitals increased to 19.5% during the first six months of 2014 as compared to 15.4% during the comparable period of 2013.

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 $267 million and $258 million during the three-month periods ended June 30, 2014 and 2013, respectively, and $586 million and $489 million during the six-month periods ended June 30, 2014 and 2013, respectively. The increase in charity care and uninsured discounts during the three and six-month periods ended June 30, 2014 was offset by a decrease in the provision for doubtful accounts which amounted to approximately $149 million and $216 million during the three-month periods ended June 30, 2014 and 2013, respectively, and $331 million and $434 million during the six-month periods ended June 30, 2014 and 2013, respectively. During the three and six-month periods ended June 30, 2014, as compared to the comparable periods of 2013, our acute care hospitals experienced a decrease in the aggregate of charity care, uninsured discounts and provision for doubtful accounts as a percentage of gross charges.

Behavioral Health Care Services – Three and six-month periods ended June 30, 2014 and 2013:

During the second quarter of 2014, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 4.4% while adjusted patient days increased 1.8% compared to the second quarter of 2013. At these facilities, net revenue per adjusted admission remained unchanged while net revenue per adjusted patient day increased 2.6% during the second quarter of 2014 over the comparable quarter in 2013. On a same facility basis, our behavioral health services’ net revenues increased 5.9% during the second quarter of 2014, as compared to the comparable quarter in 2013, and the operating margins were 28.6% and 28.7% during the three-month periods ended June 30, 2014 and 2013, respectively.

During the six-month period ended June 30, 2014, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 3.4% while adjusted patient days increased 1.0%

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compared to the comparable period of 2013. At these facilities, net revenue per adjusted admission remained unchanged while net revenue per adjusted patient day increased 2.3% during the first six months of 2014 over the comparable period of 2013. On a same facility basis, our behavioral health services’ net revenues increased 4.8% during the first six months of 2014, as compared to the comparable period of 2013, and the operating margins were 28.2% and 28.6% during the six-month periods ended June 30, 2014 and 2013, respectively.

2014 Full Year Earnings Guidance Increase:

Based upon the operating trends and financial results experienced during the first six months of 2014, we are increasing our estimated range of adjusted net income attributable to UHS, for the year ended December 31, 2014, to $5.55 to $5.85 per diluted share. This revised guidance, which excludes the expected EHR impact for the year, as well as the impact of the other item reflected on the Supplemental Schedule for the six months ended June 30, 2014, represents an increase of approximately 15% to 16% from the previously provided range of $4.80 to $5.10 per diluted share.

This guidance range also excludes the impact of future 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, costs related to extinguishment of debt, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, impact of share repurchases and other material amounts that may be reflected in our 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.

Share Repurchase Program and Declaration of Increased Quarterly Dividend:

Our Board of Directors has authorized a stock repurchase program whereby, from time to time as conditions allow, we may spend up to $400 million to purchase shares of our Class B Common Stock on the open market or in negotiated private transactions. In conjunction with this program, remaining authorizations under previously announced stock repurchase programs are cancelled.

Our Board of Directors also authorized a $.05 per share increase to our quarterly cash dividend to $.10 per share. The dividend is payable on September 16, 2014 to shareholders of record as of September 2, 2014.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 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.

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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, 2013 and in Item 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended March 31, 2014), 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.

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, impairments of long-lived assets 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 and our Report on Form 10-Q for the quarterly period ended March 31, 2014. 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

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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 June 30,								Six months ended June 30,
		2014				2013				2014				2013
Net revenues before provision for doubtful accounts		$	2,195,776			$	2,081,662			$	4,324,126			$	4,160,010
Less: Provision for doubtful accounts			175,955				246,687				384,139				493,403
Net revenues			2,019,821				1,834,975				3,939,987				3,666,607
Operating charges:
Salaries, wages and benefits			961,920				897,334				1,897,285				1,799,630
Other operating expenses			428,720				325,562				810,480				706,569
Supplies expense			223,774				202,344				439,572				406,986
Depreciation and amortization			90,691				81,682				184,050				161,494
Lease and rental expense			23,458				24,082				46,796				48,747
Electronic health records incentive income			(2,174	)			(83	)			(2,604	)			(4,795	)
			1,726,389				1,530,921				3,375,579				3,118,631
Income from operations			293,432				304,054				564,408				547,976
Interest expense, net			35,087				38,236				70,280				78,174
Income before income taxes			258,345				265,818				494,128				469,802
Provision for income taxes			91,731				98,015				175,662				172,064
Net income			166,614				167,803				318,466				297,738
Less: Income attributable to noncontrolling interests			14,943				15,962				28,717				26,113
Net income attributable to UHS		$	151,671			$	151,841			$	289,749			$	271,625
Basic earnings per share attributable to UHS (a)		$	1.53			$	1.55			$	2.93			$	2.77
Diluted earnings per share attributable to UHS (a)		$	1.51			$	1.53			$	2.89			$	2.75

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Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
(a) Earnings per share calculation:
Basic and diluted:
Net income attributable to UHS		$	151,671			$	151,841			$	289,749			$	271,625
Less: Net income attributable to unvested restricted share grants			(77	)			(88	)			(147	)			(157	)
Net income attributable to UHS - basic and diluted		$	151,594			$	151,753			$	289,602			$	271,468
Weighted average number of common shares - basic			98,872				98,033				98,722				97,872
Basic earnings per share attributable to UHS:		$	1.53			$	1.55			$	2.93			$	2.77
Weighted average number of common shares			98,872				98,033				98,722				97,872
Add: Other share equivalents			1,363				1,178				1,474				1,019
Weighted average number of common shares and equiv. - diluted			100,235				99,211				100,196				98,891
Diluted earnings per share attributable to UHS:		$	1.51			$	1.53			$	2.89			$	2.75

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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 June 30, 2014 and 2013

(in thousands, except per share amounts)

(unaudited)

Calculation of “EBITDA”

 

		Three months ended June 30, 2014								Three months ended June 30, 2013
Net revenues before provision for doubtful accounts		$	2,195,776							$	2,081,662
Less: Provision for doubtful accounts			175,955								246,687
Net revenues			2,019,821				100.0	%			1,834,975				100.0	%
Operating charges:
Salaries, wages and benefits			961,920				47.6	%			897,334				48.9	%
Other operating expenses			428,720				21.2	%			325,562				17.7	%
Supplies expense			223,774				11.1	%			202,344				11.0	%
EHR incentive income			(2,174	)			–0.1	%			(83	)			0.0	%
			1,612,240				79.8	%			1,425,157				77.7	%
Operating income/margin (“EBITDAR”)			407,581				20.2	%			409,818				22.3	%
Lease and rental expense			23,458								24,082
Income attributable to noncontrolling interests			14,943								15,962
Earnings before, depreciation and amortization, interest expense, and income taxes (“EBITDA”)			369,180				18.3	%			369,774				20.2	%
Depreciation and amortization			90,691								81,682
Interest expense, net			35,087								38,236
Income before income taxes			243,402								249,856
Provision for income taxes			91,731								98,015
Net income attributable to UHS		$	151,671							$	151,841

Calculation of Adjusted Net Income Attributable to UHS

 

		Three months ended June 30, 2014								Three months ended June 30, 2013
		Amount				Per Diluted Share				Amount				Per Diluted Share
Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:
Net income attributable to UHS		$	151,671			$	1.51			$	151,841			$	1.53
Plus/minus adjustments:
Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes			—				—				(37,826	)			(0.38	)
Adjusted net income attributable to UHS - including Electronic Health Records (“EHR”) impact		$	151,671			$	1.51			$	114,015			$	1.15
Plus/minus impact of EHR implementation:
EHR-related incentive income, pre-tax			(2,174	)							(83	)
EHR-related salaries, wages and benefits, pre-tax			—								(88	)
EHR-related other operating costs, pre-tax			—								2,053
EHR-related depreciation & amortization, pre-tax			9,310								7,006
EHR-related minority interest in earnings of consolidated entities, pre-tax			(871	)							(984	)
Income tax provision on EHR-related items			(2,350	)							(2,977	)
After-tax impact of EHR-related items			3,915				0.04				4,927				0.05
Adjusted net income attributable to UHS		$	155,586			$	1.55			$	118,942			$	1.20

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Universal Health Services, Inc.

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

For the six months ended June 30, 2014 and 2013

(in thousands, except per share amounts)

(unaudited)

Calculation of “EBITDA”

 

		Six months ended June 30, 2014								Six months ended June 30, 2013
Net revenues before provision for doubtful accounts		$	4,324,126							$	4,160,010
Less: Provision for doubtful accounts			384,139								493,403
Net revenues			3,939,987				100.0	%			3,666,607				100.0	%
Operating charges:
Salaries, wages and benefits			1,897,285				48.2	%			1,799,630				49.1	%
Other operating expenses			810,480				20.6	%			706,569				19.3	%
Supplies expense			439,572				11.2	%			406,986				11.1	%
EHR incentive income			(2,604	)			–0.1	%			(4,795	)			–0.1	%
			3,144,733				79.8	%			2,908,390				79.3	%
Operating income/margin (“EBITDAR”)			795,254				20.2	%			758,217				20.7	%
Lease and rental expense			46,796								48,747
Income attributable to noncontrolling interests			28,717								26,113
Earnings before, depreciation and amortization, interest expense, and income taxes (“EBITDA”)			719,741				18.3	%			683,357				18.6	%
Depreciation and amortization			184,050								161,494
Interest expense, net			70,280								78,174
Income before income taxes			465,411								443,689
Provision for income taxes			175,662								172,064
Net income attributable to UHS		$	289,749							$	271,625

Calculation of Adjusted Net Income Attributable to UHS

 

		Six months ended June 30, 2014								Six months ended June 30, 2013
		Amount				Per Diluted Share				Amount				Per Diluted Share
Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:
Net income attributable to UHS		$	289,749			$	2.89			$	271,625			$	2.75
Plus/minus adjustments:
Gain on sale of investment, net of income taxes			(6,330	)			(0.06	)
Reduction of reserves relating to prior years for professional and general liability self-insured claims, net of income taxes			—				—				(37,826	)			(0.38	)
Adjusted net income attributable to UHS - including Electronic Health Records (“EHR”) impact		$	283,419			$	2.83			$	233,799			$	2.37
Plus/minus impact of EHR implementation:
EHR-related incentive income, pre-tax			(2,604	)							(4,795	)
EHR-related salaries, wages and benefits, pre-tax			0								238
EHR-related other operating costs, pre-tax			0								2,018
EHR-related depreciation & amortization, pre-tax			18,600								12,492
EHR-related minority interest in earnings of consolidated entities, pre-tax			(1,837	)							(1,525	)
Income tax provision on EHR-related items			(5,298	)							(3,174	)
After-tax impact of EHR-related items			8,861				0.09				5,254				0.05
Adjusted net income attributable to UHS		$	292,280			$	2.92			$	239,053			$	2.42

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Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

 

		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
Net income		$	166,614			$	167,803			$	318,466			$	297,738
Other comprehensive income (loss):
Unrealized derivative gains (loss) on cash flow hedges			4,465				5,282				8,210				9,817
Amortization of terminated hedge			(84	)			(84	)			(168	)			(168	)
Other comprehensive income before tax			4,381				5,198				8,042				9,649
Income tax expense related to items of other comprehensive income			1,620				1,960				2,974				3,638
Total other comprehensive income, net of tax			2,761				3,238				5,068				6,011
Comprehensive income			169,375				171,041				323,534				303,749
Less: Comprehensive income attributable to noncontrolling interests			14,943				15,962				28,717				26,113
Comprehensive income attributable to UHS		$	154,432			$	155,079			$	294,817			$	277,636

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Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

		June 30, 2014				December 31, 2013
Assets
Current assets:
Cash and cash equivalents		$	14,732			$	17,238
Accounts receivable, net			1,186,012				1,116,961
Supplies			104,280				101,781
Deferred income taxes			107,359				119,903
Other current assets			117,498				76,446
Total current assets			1,529,881				1,432,329
Property and equipment			5,901,163				5,691,902
Less: accumulated depreciation			(2,386,484	)			(2,249,733	)
			3,514,679				3,442,169
Other assets:
Goodwill			3,089,172				3,049,016
Deferred charges			48,976				57,881
Other			365,364				330,328
		$	8,548,072			$	8,311,723
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt		$	77,686			$	99,312
Accounts payable and accrued liabilities			1,038,187				953,449
Federal and state taxes			0				7,127
Total current liabilities			1,115,873				1,059,888
Other noncurrent liabilities			276,462				284,589
Long-term debt			3,070,311				3,209,762
Deferred income taxes			254,573				239,148
Redeemable noncontrolling interest			231,545				218,107
UHS common stockholders’ equity			3,546,134				3,249,979
Noncontrolling interest			53,174				50,250
Total equity			3,599,308				3,300,229
		$	8,548,072			$	8,311,723

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Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

		Six months ended June 30,
		2014				2013
Cash Flows from Operating Activities:
Net income		$	318,466			$	297,738
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation & amortization			184,050				161,677
Gains on sales of assets and businesses, net of losses			(10,134	)			(2,277	)
Stock-based compensation expense			14,945				13,579
Changes in assets & liabilities, net of effects from acquisitions and dispositions:
Accounts receivable			(61,865	)			(82,224	)
Accrued interest			(271	)			13,199
Accrued and deferred income taxes			(9,435	)			3,280
Other working capital accounts			17,739				32,421
Other assets and deferred charges			10,415				9,069
Other			(4,092	)			4,083
Accrued insurance expense, net of commercial premiums paid			38,520				(22,590	)
Payments made in settlement of self-insurance claims			(39,922	)			(37,038	)
Net cash provided by operating activities			458,416				390,917
Cash Flows from Investing Activities:
Property and equipment additions, net of disposals			(186,786	)			(175,944	)
Proceeds received from sale of assets and businesses			11,450				34,008
Cash paid/reserved related to acquisition of property and businesses			(71,000	)			(1,320	)
Costs incurred for purchase and implementation of electronic health records application			(8,399	)			(33,396	)
Net cash used in investing activities			(254,735	)			(176,652	)
Cash Flows from Financing Activities:
Reduction of long-term debt			(179,126	)			(196,096	)
Additional borrowings			0				11,000
Repurchase of common shares			(35,773	)			(21,373	)
Dividends paid			(9,884	)			(9,795	)
Issuance of common stock			3,287				2,735
Excess income tax benefits related to stock-based compensation			28,493				15,085
Profit distributions to noncontrolling interests			(13,184	)			(26,734	)
Net cash used in financing activities			(206,187	)			(225,178	)
Decrease in cash and cash equivalents			(2,506	)			(10,913	)
Cash and cash equivalents, beginning of period			17,238				23,471
Cash and cash equivalents, end of period		$	14,732			$	12,558
Supplemental Disclosures of Cash Flow Information:
Interest paid		$	60,078			$	54,067
Income taxes paid, net of refunds		$	156,434			$	152,553

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Universal Health Services, Inc.

Supplemental Statistical Information

(un-audited)

Same Facility:

 

		% Change Quarter Ended 6/30/2014				% Change 6 months ended 6/30/2014
Acute Care Hospitals
Revenues			11.5	%			8.6	%
Adjusted Admissions			3.6	%			1.5	%
Adjusted Patient Days			7.9	%			6.2	%
Revenue Per Adjusted Admission			7.7	%			7.0	%
Revenue Per Adjusted Patient Day			3.3	%			2.2	%
Behavioral Health Hospitals
Revenues			5.9	%			4.8	%
Adjusted Admissions			4.4	%			3.4	%
Adjusted Patient Days			1.8	%			1.0	%
Revenue Per Adjusted Admission			0.0	%			0.0	%
Revenue Per Adjusted Patient Day			2.6	%			2.3	%

 

 

UHS Consolidated

 

		Second Quarter Ended								Six months Ended
		6/30/2014				6/30/2013				6/30/2014				6/30/2013
Revenues		$	2,019,821			$	1,834,975			$	3,939,987			$	3,666,607
EBITDA (1)			369,180				369,774				719,741				683,357
EBITDA Margin (1)			18.3	%			20.2	%			18.3	%			18.6	%
Cash Flow From Operations			263,777				212,420				458,416				390,917
Days Sales Outstanding			53				57				54				57
Capital Expenditures			94,399				80,025				186,786				175,944
Debt											3,147,997				3,546,685
UHS Shareholders Equity											3,546,134				2,991,457
Debt / Total Capitalization											47.0	%			54.2	%
Debt / EBITDA (2)											2.34				2.75
Debt / Cash From Operations (2)											3.31				4.34
Acute Care EBITDAR Margin (3)			19.2	%			14.8	%			19.5	%			15.4	%
Behavioral Health EBITDAR Margin (3)			28.6	%			28.7	%			28.2	%			28.6	%

 

(1)	Net of Minority Interest

(2)	Latest 4 quarters

(3)	Same facility basis before Corporate overhead allocation and minority interest. Before adjustments shown on the Supplemental Schedule

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UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE THREE MONTHS ENDED

JUNE 30, 2014 AND 2013

AS REPORTED:

 

		ACUTE												BEHAVIORAL HEALTH
		06/30/14				06/30/13				% change				06/30/14				06/30/13				% change
Hospitals owned and leased			24				23				4.3	%			182				184				–1.1	%
Average licensed beds			5,802				5,617				3.3	%			19,951				19,982				–0.2	%
Patient days			289,982				272,745				6.3	%			1,387,757				1,368,883				1.4	%
Average daily census			3,186.6				2,997.2				6.3	%			15,250.1				15,042.7				1.4	%
Occupancy-licensed beds			54.9	%			53.4	%			2.9	%			76.4	%			75.3	%			1.5	%
Admissions			62,138				60,697				2.4	%			107,436				101,726				5.6	%
Length of stay			4.7				4.5				3.9	%			12.9				13.5				–4.0	%
Inpatient revenue		$	3,724,309			$	3,321,384				12.1	%		$	1,686,512			$	1,598,383				5.5	%
Outpatient revenue			2,068,076				1,708,200				21.1	%			204,480				193,703				5.6	%
Total patient revenue			5,792,385				5,029,584				15.2	%			1,890,992				1,792,086				5.5	%
Other revenue			54,139				30,740				76.1	%			45,795				30,887				48.3	%
Gross hospital revenue			5,846,524				5,060,324				15.5	%			1,936,787				1,822,973				6.2	%
Total deductions			4,673,457				3,949,632				18.3	%			917,059				862,919				6.3	%
Net hospital revenue before provision for doubtful accounts			1,173,067				1,110,692				5.6	%			1,019,728				960,054				6.2	%
Provision for doubtful accounts			149,056				216,053				–31.0	%			27,380				30,584				–10.5	%
Net hospital revenue		$	1,024,011			$	894,639				14.5	%		$	992,348			$	929,470				6.8	%

SAME FACILITY:

 

		ACUTE (1)												BEHAVIORAL HEALTH (2)
		06/30/14				06/30/13				% change				06/30/14				06/30/13				% change
Hospitals owned and leased			23				23				0.0	%			179				179				0.0	%
Average licensed beds			5,662				5,617				0.8	%			19,562				19,408				0.8	%
Patient days			286,677				272,745				5.1	%			1,360,923				1,338,410				1.7	%
Average daily census			3,150.3				2,997.2				5.1	%			14,955.2				14,707.8				1.7	%
Occupancy-licensed beds			55.6	%			53.4	%			4.3	%			76.5	%			75.8	%			0.9	%
Admissions			61,226				60,697				0.9	%			105,743				101,391				4.3	%
Length of stay			4.7				4.5				4.2	%			12.9				13.2				–2.5	%

 

(1)	Temecula is excluded in both current and prior years

(2)	Bristol Youth Academy, Community BH, Gulph Coast Treatment Center, John Costigan Ctr, Okaloosa Youth Academy, Palo Verde, The Peaks, and Psychiatric Institute of Washington are excluded in both current and prior years. Austin Oaks in included in both current and prior years June only.

---

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE SIX MONTHS ENDED

JUNE 30, 2014 AND 2013

AS REPORTED:

 

		ACUTE												BEHAVIORAL HEALTH
		06/30/14				06/30/13				% change				06/30/14				06/30/13				% change
Hospitals owned and leased			24				23				4.3	%			182				184				–1.1	%
Average licensed beds			5,780				5,617				2.9	%			19,856				20,003				–0.7	%
Patient days			589,856				563,471				4.7	%			2,722,534				2,723,937				–0.1	%
Average daily census			3,258.9				3,113.1				4.7	%			15,041.6				15,049.4				–0.1	%
Occupancy-licensed beds			56.4	%			55.4	%			1.7	%			75.8	%			75.2	%			0.7	%
Admissions			124,838				124,436				0.3	%			211,331				203,122				4.0	%
Length of stay			4.7				4.5				4.3	%			12.9				13.4				–3.9	%
Inpatient revenue		$	7,600,673			$	6,828,424				11.3	%		$	3,295,411			$	3,174,531				3.8	%
Outpatient revenue			4,025,567				3,359,775				19.8	%			388,595				379,505				2.4	%
Total patient revenue			11,626,240				10,188,199				14.1	%			3,684,006				3,554,036				3.7	%
Other revenue			88,686				61,865				43.4	%			89,417				61,987				44.3	%
Gross hospital revenue			11,714,926				10,250,064				14.3	%			3,773,423				3,616,023				4.4	%
Total deductions			9,388,120				8,012,595				17.2	%			1,782,373				1,717,818				3.8	%
Net hospital revenue before provision for doubtful accounts			2,326,806				2,237,469				4.0	%			1,991,050				1,898,205				4.9	%
Provision for doubtful accounts			331,406				434,096				–23.7	%			53,245				59,191				–10.0	%
Net hospital revenue		$	1,995,400			$	1,803,373				10.6	%		$	1,937,805			$	1,839,014				5.4	%

SAME FACILITY:

 

		ACUTE (1)												BEHAVIORAL HEALTH (2)
		06/30/14				06/30/13				% change				06/30/14				06/30/13				% change
Hospitals owned and leased			23				23				0.0	%			179				179				0.0	%
Average licensed beds			5,640				5,617				0.4	%			19,516				19,373				0.7	%
Patient days			584,178				563,471				3.7	%			2,681,207				2,652,935				1.1	%
Average daily census			3,227.5				3,113.1				3.7	%			14,813.3				14,657.1				1.1	%
Occupancy-licensed beds			57.2	%			55.4	%			3.3	%			75.9	%			75.7	%			0.3	%
Admissions			123,240				124,436				–1.0	%			209,043				202,054				3.5	%
Length of stay			4.7				4.5				4.7	%			12.8				13.1				–2.3	%

 

(1)	Temecula is excluded in both current and prior years

(2)

Bristol Youth Academy, Community BH, Gulph Coast Treatment Center, John Costigan Ctr, Okaloosa Youth Academy, Palo Verde, The Peaks, and Psychiatric Institute of Washington are excluded in both current and prior years. Garfield Park is excluded in both current and prior years in January only. Austin Oaks is excluded in both current and and prior years January thru May.