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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, 2023

OR

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, 2023:

Class A

 

6,577,100

Class B

 

62,140,309

Class C

 

661,688

Class D

 

14,045

 

 


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, 2023 and 2022

3

 

Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2023 and 2022

4

 

Condensed Consolidated Balance Sheets – June 30, 2023 and December 31, 2022

5

 

Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2023 and 2022

 

6

 

 

 

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2023 and 2022

8

 

Notes to Condensed Consolidated Financial Statements

9

 

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

25

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

58

 

Item 4. Controls and Procedures

58

 

PART II. Other Information

 

 

Item 1. Legal Proceedings

59

 

Item 1A. Risk Factors

59

 

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

59

 

 

 

Item 5. Other Information

59

 

 

 

Item 6. Exhibits

60

 

Signatures

61

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2023. 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.

2


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,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net revenues

$

3,548,138

 

 

$

3,323,407

 

 

$

7,015,656

 

 

$

6,616,363

 

Operating charges:

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

1,770,271

 

 

 

1,691,472

 

 

 

3,523,606

 

 

 

3,383,742

 

Other operating expenses

 

938,314

 

 

 

867,885

 

 

 

1,817,265

 

 

 

1,688,819

 

Supplies expense

 

380,294

 

 

 

354,993

 

 

 

760,283

 

 

 

726,066

 

Depreciation and amortization

 

143,744

 

 

 

143,850

 

 

 

285,365

 

 

 

287,634

 

Lease and rental expense

 

35,387

 

 

 

31,773

 

 

 

70,309

 

 

 

63,811

 

 

 

3,268,010

 

 

 

3,089,973

 

 

 

6,456,828

 

 

 

6,150,072

 

Income from operations

 

280,128

 

 

 

233,434

 

 

 

558,828

 

 

 

466,291

 

Interest expense, net

 

48,831

 

 

 

25,676

 

 

 

99,707

 

 

 

47,349

 

Other (income) expense, net

 

6,602

 

 

 

(1,972

)

 

 

20,325

 

 

 

9,229

 

Income before income taxes

 

224,695

 

 

 

209,730

 

 

 

438,796

 

 

 

409,713

 

Provision for income taxes

 

55,393

 

 

 

50,949

 

 

 

107,119

 

 

 

99,911

 

Net income

 

169,302

 

 

 

158,781

 

 

 

331,677

 

 

 

309,802

 

Less: Net income (loss) attributable to noncontrolling interests

 

(2,011

)

 

 

(5,281

)

 

 

(2,751

)

 

 

(8,173

)

Net income attributable to UHS

$

171,313

 

 

$

164,062

 

 

$

334,428

 

 

$

317,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS

$

2.44

 

 

$

2.22

 

 

$

4.75

 

 

$

4.27

 

Diluted earnings per share attributable to UHS

$

2.42

 

 

$

2.20

 

 

$

4.70

 

 

$

4.22

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

70,073

 

 

 

73,682

 

 

 

70,304

 

 

 

74,356

 

Add: Other share equivalents

 

766

 

 

 

753

 

 

 

859

 

 

 

882

 

Weighted average number of common shares and
   equivalents - diluted

 

70,839

 

 

 

74,435

 

 

 

71,163

 

 

 

75,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3


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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

169,302

 

 

$

158,781

 

 

$

331,677

 

 

$

309,802

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

19,730

 

 

 

(28,232

)

 

 

23,928

 

 

 

(46,702

)

Other comprehensive income (loss) before tax

 

 

19,730

 

 

 

(28,232

)

 

 

23,928

 

 

 

(46,702

)

Income tax expense (benefit) related to items of other
   comprehensive income (loss)

 

 

1,255

 

 

 

68

 

 

 

831

 

 

 

(876

)

Total other comprehensive income (loss), net of tax

 

 

18,475

 

 

 

(28,300

)

 

 

23,097

 

 

 

(45,826

)

Comprehensive income

 

 

187,777

 

 

 

130,481

 

 

 

354,774

 

 

 

263,976

 

Less: Comprehensive income (loss) attributable to noncontrolling
   interests

 

 

(2,011

)

 

 

(5,281

)

 

 

(2,751

)

 

 

(8,173

)

Comprehensive income attributable to UHS

 

$

189,788

 

 

$

135,762

 

 

$

357,525

 

 

$

272,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4


UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, unaudited)

 

June 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

79,451

 

 

$

102,818

 

Accounts receivable, net

 

2,103,478

 

 

 

2,017,722

 

Supplies

 

215,380

 

 

 

218,517

 

Other current assets

 

226,405

 

 

 

198,283

 

Total current assets

 

2,624,714

 

 

 

2,537,340

 

 

 

 

 

 

 

Property and equipment

 

11,441,608

 

 

 

11,085,852

 

Less: accumulated depreciation

 

(5,413,892

)

 

 

(5,167,394

)

 

 

6,027,716

 

 

 

5,918,458

 

Other assets:

 

 

 

 

 

Goodwill

 

3,929,722

 

 

 

3,909,456

 

Deferred income taxes

 

109,773

 

 

 

68,397

 

Right of use assets-operating leases

 

446,618

 

 

 

454,650

 

Deferred charges

 

5,858

 

 

 

6,264

 

Other

 

587,908

 

 

 

599,623

 

Total Assets

$

13,732,309

 

 

$

13,494,188

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

$

111,357

 

 

$

81,447

 

Accounts payable and other liabilities

 

1,843,379

 

 

 

1,760,588

 

Operating lease liabilities

 

73,649

 

 

 

67,776

 

Federal and state taxes

 

6,962

 

 

 

4,608

 

Total current liabilities

 

2,035,347

 

 

 

1,914,419

 

 

 

 

 

 

 

Other noncurrent liabilities

 

571,206

 

 

 

487,669

 

Operating lease liabilities noncurrent

 

387,709

 

 

 

395,522

 

Long-term debt

 

4,605,075

 

 

 

4,726,533

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

4,213

 

 

 

4,695

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

UHS common stockholders’ equity

 

6,087,182

 

 

 

5,920,582

 

Noncontrolling interest

 

41,577

 

 

 

44,768

 

Total equity

 

6,128,759

 

 

 

5,965,350

 

Total Liabilities and Stockholders’ Equity

$

13,732,309

 

 

$

13,494,188

 

 

 

 

 

 

 

 

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

 

5


UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Six Months ended June 30, 2023

(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, April 1, 2023

 

$

4,269

 

 

$

66

 

 

$

633

 

 

$

7

 

 

$

0

 

 

$

(618,326

)

 

$

6,634,774

 

 

$

(5,046

)

 

$

6,012,108

 

 

$

40,309

 

 

$

6,052,417

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued/(converted)

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3,608

 

 

 

 

 

 

3,611

 

 

 

 

 

 

3,611

 

Repurchased, including excise tax

 

 

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

(125,843

)

 

 

 

 

 

(125,851

)

 

 

 

 

 

(125,851

)

Restricted share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,769

 

 

 

 

 

 

5,769

 

 

 

 

 

 

5,769

 

Dividends paid and accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,147

)

 

 

 

 

 

 

 

 

(14,147

)

 

 

 

 

 

(14,147

)

Stock option expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,904

 

 

 

 

 

 

15,904

 

 

 

 

 

 

15,904

 

Distributions to noncontrolling interests

 

 

(300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(290

)

 

 

(290

)

Purchase (sale) of ownership interests by (from) minority members

 

 

 

 

 

 

 

 

 

 

 

&#