SEC Filing - Universal Health Services Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

uhs-10q_20210630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10765

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware

23-2077891

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

UNIVERSAL CORPORATE CENTER

367 SOUTH GULPH ROAD

KING OF PRUSSIA, Pennsylvania 19406

(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, $0.01 par value	UHS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer		☐

Non-accelerated filer	☐	Smaller reporting company		☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common shares outstanding, as of July 31, 2021:

Class A		6,577,100
Class B		75,874,282
Class C		661,688
Class D		17,956

UNIVERSAL HEALTH SERVICES, INC.

INDEX

		PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2021 and 2020		3

Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2021 and 2020		4

Condensed Consolidated Balance Sheets – June 30, 2021 and December 31, 2020		5

Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2021 and 2020		6

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2021 and 2020		8

Notes to Condensed Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

Item 3. Quantitative and Qualitative Disclosures About Market Risk		59

Item 4. Controls and Procedures		59

PART II. Other Information

Item 1. Legal Proceedings		60

Item 1A. Risk Factors		60

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		60

Item 6. Exhibits		61

Signatures		62

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2021. This Report modifies and supersedes documents filed prior to this Report. Information that we file with the Securities and Exchange Commission (the “SEC”) in the future will automatically update and supersede information contained in this Report.

In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries. UHS is a registered trademark of UHS of Delaware, Inc., the management company for, and a wholly-owned subsidiary of Universal Health Services, Inc. Universal Health Services, Inc. is a holding company and operates through its subsidiaries including its management company, UHS of Delaware, Inc. All healthcare and management operations are conducted by subsidiaries of Universal Health Services, Inc. To the extent any reference to “UHS” or “UHS facilities” in this report including letters, narratives or other forms contained herein relates to our healthcare or management operations it is referring to Universal Health Services, Inc.’s subsidiaries including UHS of Delaware, Inc. Further, the terms “we,” “us,” “our” or the “Company” in such context similarly refer to the operations of Universal Health Services Inc.’s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment with or employees of the subsidiaries of Universal Health Services, Inc. including UHS of Delaware, Inc.

PART I. FINANCIAL INFORMATION

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Net revenues	$	3,197,880		$	2,729,754		$	6,210,867		$	5,559,421
Operating charges:
Salaries, wages and benefits		1,487,935			1,308,010			2,985,708			2,740,679
Other operating expenses		769,810			625,747			1,479,518			1,315,537
Supplies expense		338,033			283,572			685,143			601,399
Depreciation and amortization		133,985			126,208			265,388			250,602
Lease and rental expense		29,149			28,186			60,473			56,479
		2,758,912			2,371,723			5,476,230			4,964,696
Income from operations		438,968			358,031			734,637			594,725
Interest expense, net		21,299			25,473			43,256			61,824
Other (income) expense, net		(9,129	)		(3,100	)		(8,294	)		6,460
Income before income taxes		426,798			335,658			699,675			526,441
Provision for income taxes		101,522			79,154			165,329			125,477
Net income		325,276			256,504			534,346			400,964
Less: Net income attributable to noncontrolling interests		252			4,575			231			6,998
Net income attributable to UHS	$	325,024		$	251,929		$	534,115		$	393,966

Basic earnings per share attributable to UHS	$	3.85		$	2.97		$	6.31		$	4.60
Diluted earnings per share attributable to UHS	$	3.79		$	2.95		$	6.22		$	4.58

Weighted average number of common shares - basic		84,224			84,632			84,503			85,422
Add: Other share equivalents		1,400			427			1,207			335
Weighted average number of common shares and equivalents - diluted		85,624			85,059			85,710			85,757

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, unaudited)

	Three months ended June 30,					Six months ended June 30,
	2021			2020		2021			2020
Net income	$	325,276		$	256,504	$	534,346		$	400,964
Other comprehensive income (loss):
Foreign currency translation adjustment		(3,717	)		6,676		(14,063	)		(32,525	)
Other comprehensive income (loss) before tax		(3,717	)		6,676		(14,063	)		(32,525	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(601	)		898		(2,067	)		(1,210	)
Total other comprehensive income (loss), net of tax		(3,116	)		5,778		(11,996	)		(31,315	)
Comprehensive income		322,160			262,282		522,350			369,649
Less: Comprehensive income attributable to noncontrolling interests		252			4,575		231			6,998
Comprehensive income attributable to UHS	$	321,908		$	257,707	$	522,119		$	362,651

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, unaudited)

	June 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	199,017		$	1,224,490
Accounts receivable, net		1,787,931			1,728,928
Supplies		195,141			190,417
Other current assets		183,216			138,034
Total current assets		2,365,305			3,281,869

Property and equipment		10,361,669			9,885,888
Less: accumulated depreciation		(4,731,772	)		(4,512,764	)
		5,629,897			5,373,124
Other assets:
Goodwill		3,903,266			3,882,715
Deferred income taxes		34,945			22,689
Right of use assets-operating leases		317,231			336,513
Deferred charges		4,865			4,985
Other		557,126			574,984
Total Assets	$	12,812,635		$	13,476,879

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	107,370		$	331,998
Accounts payable and other liabilities		1,765,773			1,668,671
Medicare accelerated payments and deferred CARES Act and other grants		1,757			376,151
Operating lease liabilities		60,595			59,796
Federal and state taxes		33,315			44,423
Total current liabilities		1,968,810			2,481,039

Other noncurrent liabilities		522,007			458,549
Operating lease liabilities noncurrent		258,823			278,303
Medicare accelerated payments noncurrent		0			322,617
Long-term debt		3,486,222			3,524,253
Deferred income taxes		0			5,582
Redeemable noncontrolling interests		4,693			4,569

Equity:
UHS common stockholders’ equity		6,480,100			6,317,146
Noncontrolling interest		91,980			84,821
Total equity		6,572,080			6,401,967
Total Liabilities and Stockholders’ Equity	$	12,812,635		$	13,476,879

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Six Months ended June 30, 2021

(amounts in thousands, unaudited)

																			Accumulated		UHS
	Redeemable																		Other		Common
	Noncontrolling			Class A		Class B			Class C		Class D		Cumulative			Retained			Comprehensive		Stockholders'			Noncontrolling
	Interest			Common		Common			Common		Common		Dividends			Earnings			Income (Loss)		Equity			Interest			Total
Balance, January 1, 2021	$	4,569		$	66	$	778		$	7	$	0	$	(479,503	)	$	6,747,678		$	48,120	$	6,317,146		$	84,821		$	6,401,967
Common Stock
Issued/(converted)		—			—		5			—		—		—			6,439			—		6,444			—			6,444
Repurchased		—			—		(23	)		—		—		—			(368,057	)		—		(368,080	)		—			(368,080	)
Restricted share-based compensation expense		—			—		—			—		—		—			6,102			—		6,102			—			6,102
Dividends paid		—			—		—			—		—		(33,874	)		—			—		(33,874	)		—			(33,874	)
Stock option expense		—			—		—			—		—		—			30,243			—		30,243			—			30,243
Distributions to noncontrolling interests		(203	)		—		—			—		—		—			—			—		—			(5,414	)		(5,414	)
Purchase of ownership interests by minority members		—			—		—			—		—		—			—			—		—			12,669			12,669
Comprehensive income: