Universal Health Services, Inc. Revises Upward the Gain on Sale of French Assets, No Effect on Income From Continuing Operations
08/01/2005
KING OF PRUSSIA, Pa., Aug. 1 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its previously released Consolidated Statements of Income for the three and six months ended June 30, 2005 included an after-tax gain on the sale of our 81.5% ownership interest in Medi-Partenaires which was understated by $12.4 million or $.19 per diluted share. The actual after-tax gain on the sale amounts to $120.7 million or $1.89 per diluted share which is included in income from discontinued operations, net of income tax expense. This revision has no effect on the previously released balance sheet. It reflects the cumulative translation adjustment, previously included in stockholders' equity on the balance sheet, reclassified through the income statement upon the sale of the French assets.
As a result of this revision, reported net income increases to $158.8 million or $2.53 per diluted share for the three months ended June 30, 2005 and $220.3 million or $3.51 per diluted share for the six months ended June 30, 2005. This revision had no impact in either period on our income from continuing operations and income from continuing operations per diluted share or our adjusted net income and adjusted net income per diluted share (as calculated on the attached Schedules of Non-GAAP Supplemental Consolidated Statements of Income Information).
Income from continuing operations and income from continuing operations per diluted share remain unchanged as previously reported at $36.6 million or $.61 per diluted share during the three months ended June 30, 2005 and $91.3 million or $1.50 per diluted share during the six months ended June 30, 2005. Adjusted net income and adjusted net income per diluted share also remain unchanged as previously reported at $38.2 million or $.64 per diluted share during the three months ended June 30, 2005 and $95.8 million or $1.57 per diluted share during the six months ended June 30, 2005.
Universal Health Services, Inc. is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide and in Puerto Rico. 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 website: http://www.uhsinc.com.
This press release contains forward-looking statements based on current management expectations. Numerous factors, including those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in "Forward-Looking Statements and Risk Factors" on pages 17 and 18 of our Form 10-Q for the quarterly period ended March 31, 2005), may cause 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 income from continuing operations, adjusted income from continuing operations per diluted share, adjusted net income, adjusted net income per diluted share, adjusted operating income and adjusted operating margin, 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 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 such as property write-downs, gains on sales of assets and businesses or other amounts 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, 2004. 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. Below are Schedules of Non-GAAP Supplemental Consolidated Income Statement Information which reconcile these measures to net income for the periods presented.
Universal Health Services, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
Three months Six months
ended June 30, ended June 30,
2005 2004 2005 2004
Net revenues $990,888 $905,494 $1,997,533 $1,812,620
Operating charges:
Salaries, wages and
benefits 407,897 369,335 814,237 740,793
Other operating expenses 234,707 213,274 465,872 421,229
Supplies expense 126,124 113,521 252,660 229,105
Provision for doubtful
accounts 95,478 74,244 177,886 157,801
Depreciation and
amortization 37,988 35,033 77,684 68,342
Lease and rental expense 15,288 15,255 30,755 30,148
917,482 820,662 1,819,094 1,647,418
Income before interest
expense, minority interests
and income taxes 73,406 84,832 178,439 165,202
Interest expense, net 7,450 9,359 18,126 18,926
Minority interests in earnings
of consolidated entities 7,926 5,183 15,845 8,710
Income before income taxes 58,030 70,290 144,468 137,566
Provision for income taxes 21,398 25,908 53,146 50,671
Income from continuing
operations 36,632 44,382 91,322 86,895
Income from discontinued
operations, net of income tax
expense (a) 122,211 3,907 128,930 7,578
Net income $158,843 $48,289 $220,252 $94,473
Basic earnings per share: (b)
From continuing
operations $0.65 $0.77 $1.60 $1.51
From discontinued
operations 2.16 0.07 2.26 0.13
Total basic earnings
per share $2.81 $0.84 $3.86 $1.64
Diluted earnings per share: (b)
From continuing
operations $0.61 $0.72 $1.50 $1.40
From discontinued
operations 1.92 0.06 2.01 0.12
Total diluted
earnings per share $2.53 $0.78 $3.51 $1.52
Universal Health Services, Inc.
Footnotes to Consolidated Statements of Income
Three months Six months
ended June 30, ended June 30,
2005 2004 2005 2004
(a) Calculation of income from
discontinued operations, net of
income tax:
Income from operations $2,602 $4,039 $4,433 $10,114
Gains on divestitures 177,125 2,338 186,220 2,338
Income from discontinued operations,
pre-tax 179,727 6,377 190,653 12,452
Income tax provision (57,516) (2,470) (61,723) (4,874)
Income from discontinued operations,
net of income tax expense $122,211 $3,907 $128,930 $7,578
(b) Earnings per share calculation:
Basic:
Income from continuing operations $36,632 $44,382 $91,322 $86,895
Less: Dividends on unvested
restricted stock, net of taxes (28) (28) (55) (56)
Income from continuing operations -
basic $36,604 $44,354 $91,267 $86,839
Income from discontinued operations 122,211 3,907 128,930 7,578
Net income - basic $158,815 $48,261 $220,197 $94,417
Weighted average number of common
shares - basic 56,425 57,622 56,974 57,593
Basic earnings per share:
From continuing operations $0.65 $0.77 $1.60 $1.51
From discontinued operations 2.16 0.07 2.26 0.13
Total basic earnings per
share $2.81 $0.84 $3.86 $1.64
Diluted:
Income from continuing operations $36,632 $44,382 $91,322 $86,895
Less: Dividends on unvested
restricted stock, net of taxes (28) (28) (55) (56)
Add: Debenture interest, net of
taxes 2,382 2,305 4,764 4,573
Income from continuing operations -
diluted $38,986 $46,659 $96,031 $91,412
Income from discontinued operations 122,211 3,907 128,930 7,578
Net income - diluted $161,197 $50,566 $224,961 $98,990
Weighted average number of common
shares 56,425 57,622 56,974 57,593
Add: Shares for conversion of
convertible debentures 6,577 6,577 6,577 6,577
Other share equivalents 646 774 481 860
Weighted average number of common
shares and equiv. - diluted 63,648 64,973 64,032 65,030
Diluted earnings per share:
From continuing operations $0.61 $0.72 $1.50 $1.40
From discontinued operations 1.92 0.06 2.01 0.12
Total diluted earnings per
share $2.53 $0.78 $3.51 $1.52
Universal Health Services, Inc.
Schedule of Non-GAAP Supplemental Consolidated Statements of Income
Information
For the Three Months Ended June 30, 2005 and 2004
(in thousands)
(unaudited)
Three months ended Three months ended
June 30, 2005 June 30, 2004
Net revenues $990,888 100.0% $905,494 100.0%
Operating charges:
Salaries, wages and benefits 407,897 41.2% 369,335 40.8%
Other operating expenses 234,707 23.7% 213,274 23.6%
Supplies expense 126,124 12.7% 113,521 12.5%
Provision for doubtful accounts 95,478 9.6% 74,244 8.2%
864,206 87.2% 770,374 85.1%
Operating income/margin 126,682 12.8% 135,120 14.9%
Lease and rental expense 15,288 15,255
Minority interests in earnings of
consolidated entities 7,926 5,183
Earnings before depreciation and
amortization, interest expense, and
income taxes ("EBITDA") 103,468 114,682
Depreciation and amortization 37,988 35,033
Interest expense, net 7,450 9,359
Income before income taxes 58,030 70,290
Provision for income taxes 21,398 25,908
Income from continuing operations 36,632 44,382
Income from discontinued operations,
net of income taxes 122,211 3,907
Net income $158,843 $48,289
Three months ended Three months ended
June 30, 2005 June 30, 2004
Per Per
Diluted Diluted
Amount Share Amount Share
Calculation of Adjusted Net Income
Net income $158,843 $2.53 $48,289 $0.78
Less: After-tax gain on sale of
facilities (120,680) (1.89) (1,486) (0.02)
Adjusted net income $38,163 $0.64 $46,803 $0.76
Universal Health Services, Inc.
Schedule of Non-GAAP Supplemental Consolidated Statements of Income
Information
For the Six Months Ended June 30, 2005 and 2004
(in thousands)
(unaudited)
Six months ended Six months ended
June 30, 2005 June 30, 2004
Net revenues $1,997,533 100.0% $1,812,620 100.0%
Operating charges:
Salaries, wages and benefits 814,237 40.8% 740,793 40.9%
Other operating expenses 465,872 23.3% 421,229 23.2%
Supplies expense 252,660 12.6% 229,105 12.6%
Provision for doubtful accounts 177,886 8.9% 157,801 8.7%
1,710,655 85.6% 1,548,928 85.5%
Operating income/margin 286,878 14.4% 263,692 14.5%
Lease and rental expense 30,755 30,148
Minority interests in earnings
of consolidated entities 15,845 8,710
Earnings before depreciation and
amortization, interest expense,
and income taxes ("EBITDA") 240,278 224,834
Depreciation and amortization 77,684 68,342
Interest expense, net 18,126 18,926
Income before income taxes 144,468 137,566
Provision for income taxes 53,146 50,671
Income from continuing operations 91,322 86,895
Income from discontinued
operations, net of income taxes 128,930 7,578
Net income $220,252 $94,473
Six months ended Six months ended
June 30, 2005 June 30, 2004
Per Per
Diluted Diluted
Amount Share Amount Share
Calculation of Adjusted Income from
Continuing Operations
Income from continuing operations $91,322 $1.50 $86,895 $1.40
Less: After-tax DSH revenue
attributable to prior year - - (1,748) (0.02)
Adjusted income from continuing
operations $91,322 $1.50 $85,147 $1.38
Calculation of Adjusted Net Income
Net income $220,252 $3.51 $94,473 $1.52
Add: After-tax asset impairment
charge 1,974 0.03 - -
Less: After-tax gain on sale of
facilities (126,462) (1.97) (1,486) (0.02)
Less: After-tax DSH revenue
attributable to prior year - - (1,748) (0.02)
Adjusted net income $95,764 $1.57 $91,239 $1.48
Amount Margin Amount Margin
Calculation of Adjusted Operating
Income/Margin
Operating income/margin $286,878 14.4% $263,692 14.5%
Less: After-tax DSH revenue
attributable to prior year - - (1,748) -
Adjusted operating income/margin $286,878 14.4% $261,944 14.5%
SOURCE: Universal Health Services, Inc.
CONTACT: Steve Filton, Chief Financial Officer, Universal Health Services, +1-610-768-3300