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FORM 8-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 20, 2003

 

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UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE		1-10765		23-2077891
(State or other jurisdiction of		(Commission File Number)		(I.R.S. Employer
Incorporation or Organization)				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)

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Item 7.

Financial Statements and Exhibits.

 

(c) Exhibits. 99.1 Universal Health Services, Inc. Press Release dated October 20, 2003

 

Item 12.

Results of Operations and Financial Condition

 

On October 20, 2003, Universal Health Services, Inc. (the “Company”) issued its 2003 third quarter earnings release. A copy of the Company’s press release is furnished as an exhibit to this Form 8-K and is incorporated herein by reference.

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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: October 21, 2003

 

Exhibit Index

 

Exhibit No.		Exhibit
99.1		Press release, dated October 20, 2003

EXHIBIT 99.1

 

FOR IMMEDIATE RELEASE

 

CONTACT:		Steve Filton		October 20, 2003
		Chief Financial Officer
		610-768-3300

 

UNIVERSAL HEALTH SERVICES, INC. REPORTS

INCREASED THIRD QUARTER EARNINGS

 

KING OF PRUSSIA, PA – Universal Health Services, Inc. (NYSE: UHS) announced today that its net income and earnings per share (diluted) were $47.4 million and $.76 for the three-month period ended September 30, 2003, and $151.1 million and $2.42 for the nine-month period ended September 30, 2003, respectively, after recording after tax, non-recurring gains on sales of $4.4 million or $.07 per share (diluted) and an after tax charge for the cumulative effect of a change in accounting principle of $1.7 million or $.03 per share (diluted). Excluding the non-recurring gains and the cumulative change in accounting principle, earnings per share (diluted) for the three-month period ended September 30, 2003 were $.72, an 11% increase from the earnings recorded in the third quarter of 2002. Revenues increased 10% to $896 million in the three-month period and by 11% to $2.69 billion in the nine-month period ended September 30, 2003. At September 30, 2003, the Company’s balance sheet debt, net of cash, was $615 million and its shareholders’ equity was $1.023 billion. The non-recurring gains in the third quarter of 2003 resulted from the sale of three radiation oncology centers in Kentucky and three medical office buildings located in Nevada. The cumulative effect of the change in accounting principle resulted from the adoption of Statement of Financial Accounting Standards No. 150 on July 1, 2003 for existing financial instruments entered into on or before May 31, 2003. As a result of a recent interpretation by the Financial Accounting Standards Board, it was determined that Statement No. 150 applied to minority partners’ interest in certain consolidated entities.

 

On a same facility basis, patient admissions to the Company’s acute care hospitals located in the U.S. and Puerto Rico decreased approximately 1% during the quarter ended September 30, 2003, as compared to the comparable prior year quarter, while patient admissions to the Company’s behavioral health care facilities owned in both periods increased approximately 1%. For the Company’s acute care hospitals owned in both periods located in the U.S. and Puerto Rico, revenues increased 7.2% and revenue per adjusted patient day increased 5.6% during the 2003 third quarter as compared to the prior year quarter. For the Company’s behavioral health hospitals owned in both periods, revenues increased 4.5% and revenue per adjusted patient day increased 3.2%.

 

Operating margins for the Company’s acute care hospitals located in the U.S. and Puerto Rico owned in both the three-month periods ended September 30, 2003 and September 30, 2002, increased to 17.0% from 16.7%. Operating margins for the Company’s behavioral health hospitals owned in both periods increased to 22.3% during the third quarter of 2003 from 19.2% during the prior year quarter. The Company’s operating margin (as calculated on the attached schedules of Supplemental Consolidated Income Statement Information), increased to 15.4% in the three-month period ended September 30, 2003, as compared to 15.3% in the same period of the prior year.

 

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During the quarter, the Company announced its agreement to acquire a ninety percent (90%) ownership interest in Pendleton Memorial Methodist Hospital in Louisiana. The Company hopes to complete this acquisition, as well as the previously announced acquisition of three acute care hospitals in California either during or shortly after the fourth quarter. The proposed acquisitions remain subject to regulatory review and approval. In early October, the Company also opened its new 176-bed Spring Valley Hospital in Las Vegas and a 90-bed addition to its Northwest Texas Hospital in Amarillo, Texas.

 

There will be a conference call for investors at 9:00AM ET on Tuesday, October 21, 2003. The dial-in number is 1-877-648-7971.

 

Universal Health Services, Inc. is one of the nation’s largest hospital companies, operating acute care and behavioral health hospitals, ambulatory surgery and radiation centers nationwide, in Puerto Rico, and in France. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE: UHT).

 

Certain statements in this release may constitute forward-looking statements and are subject to various risks and uncertainties as discussed in the Company’s filings with the Securities and Exchange Commission. The Company is not obligated to update these forward-looking statements even if the Company’s assessment of these risks and uncertainties changes.

 

Management of the Company believes that operating income and operating margin (as calculated on the attached schedules of Supplemental Consolidated Income Statement Information), which are non-GAAP financial measures, are helpful to investors as measures of the Company’s operating performance. Since the source of financing for the purchase of property and equipment and other assets at each hospital varies, the Company believes that measuring operating performance before capital-related costs (such as depreciation and amortization, lease and rental and interest expense) provides a useful comparison of relative operating performance among its facilities. Operating income and operating margin are used by management as analytical indicators for purposes of assessing the relative operating performance of the Company’s individual hospitals and operating segments, and the overall Company. In addition, the Company’s use of operating income and operating margin enables investors to compare the performance of the Company with that of others in the industry. To obtain a complete understanding of the Company’s financial performance, operating income and operating margin should be examined in connection with net income, determined in accordance with GAAP, as presented in these financial statements as well as information provided elsewhere such as the Company’s Reports on Forms 10-Q and 10-K. Since the items excluded from operating income and operating margin are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be an alternative to net income as a measure of the Company’s operating performance or profitability. Because operating income and operating margin are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, operating income and operating

 

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margin as presented may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating the Company’s financial performance.

 

For additional information on the Company, visit our web site: http://www.uhsinc.com.

 

(more)

 

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Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

Unaudited

 

		Three months ended September 30,							Nine months ended September 30,
		2003				2002			2003				2002
Net revenues		$	896,332			$	813,104		$	2,694,094			$	2,423,420
Operating charges:
Salaries, wages and benefits			362,440				323,331			1,075,670				964,633
Other operating expenses			213,424				196,007			628,950				586,199
Supplies expense			119,897				106,382			362,190				313,747
Provision for doubtful accounts			62,288				62,590			189,410				173,329
Depreciation and amortization			35,799				30,136			105,849				90,444
Lease and rental expense			15,994				15,609			47,676				46,089
Interest expense, net			8,615				8,636			27,839				25,768
			818,457				742,691			2,437,584				2,200,209
Income before gains on sales of assets and businesses, minority interests, income taxes and cumulative effect of change in accounting principle			77,875				70,413			256,510				223,211
Gains on sales of assets and businesses			(7,837	)			0			(7,837	)			0
Minority interests in earnings of consolidated entities			7,476				4,924			21,036				15,485
Income before income taxes and cumulative effect of change in accounting principle			78,236				65,489			243,311				207,726
Provision for income taxes			29,175				24,038			90,510				76,255
Income before cumulative effect of change in accounting principle			49,061				41,451			152,801				131,471
Cumulative effect of change in accounting principle, net of income taxes			1,699				0			1,699				0
Net income		$	47,362			$	41,451		$	151,102			$	131,471
Earnings per common share—basic		$	0.83			$	0.69		$	2.62			$	2.20
Earnings per common share—diluted		$	0.76			$	0.65		$	2.42			$	2.05
EARNINGS PER SHARE CALCULATION
Net income		$	47,362			$	41,451		$	151,102			$	131,471
Add: Debenture interest, net of taxes			2,222				2,134			6,577				6,317
Adjusted net income		$	49,584			$	43,585		$	157,679			$	137,788
Weighted average number of common shares—basic			57,354				59,883			57,762				59,893
Add: Shares for conversion of convertible debentures			6,577				6,577			6,577				6,577
Other share equivalents			909				715			787				689
Weighted average number of common shares and equiv.—diluted			64,840				67,175			65,126				67,159
Earnings per common share—diluted		$	0.76			$	0.65		$	2.42			$	2.05

 

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Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

Unaudited

 

		September 30, 2003			December 31, 2002
Assets:
Cash and cash equivalents		$	28,261		$	17,750
Accounts receivable, net			482,818			474,763
Other current assets			88,756			114,063
Total Current Assets			599,835			606,576
Property, plant and equipment, net			1,264,885			1,167,287
Other assets			553,754			549,366
Total Assets		$	2,418,474		$	2,323,229
Liabilities and Stockholders’ Equity:
Current portion of long-term debt		$	11,225		$	8,253
Other current liabilities			381,630			362,160
Total Current Liabilities			392,855			370,413
Other noncurrent liabilities			211,484			206,238
Minority interest			144,179			134,339
Long-term debt			632,526			680,514
Deferred income taxes			14,590			14,266
Total Liabilities			1,395,634			1,405,770
Stockholders’ equity			1,022,840			917,459
Total Liabilities and Stockholders’ Equity		$	2,418,474		$	2,323,229

 

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Universal Health Services, Inc.

Supplemental Consolidated Income Statement Information

(in thousands)

unaudited

 

		Three months ended September 30, 2003								Three months ended September 30, 2002
Net revenues		$	896,332				100.0	%		$	813,104		100.0	%
Operating charges:
Salaries, wages and benefits			362,440				40.4	%			323,331		39.8	%
Other operating expenses			213,424				23.8	%			196,007		24.1	%
Supplies expense			119,897				13.4	%			106,382		13.1	%
Provision for doubtful accounts			62,288				6.9	%			62,590		7.7	%
			758,049				84.6	%			688,310		84.7	%
Operating income/margin			138,283				15.4	%			124,794		15.3	%
Depreciation and amortization			35,799								30,136
Lease and rental expense			15,994								15,609
Interest expense, net			8,615								8,636
Gains on sales of assets and businesses			(7,837	)							0
Minority interests in earnings of consolidated entities			7,476								4,924
Income before income taxes and cumulative effect of change in accounting principle			78,236								65,489
Provision for income taxes			29,175								24,038
Income before cumulative effect of change in accounting principle			49,061								41,451
Cumulative effect of change in accounting principle, net of income taxes			1,699								0
Net income		$	47,362							$	41,451
		Amount				Per Diluted Share
Net income		$	47,362			$	0.76
Less: After-tax gain on sales of assets and businesses			(4,396	)		$	(0.07	)
Plus: Cumulative effect of change in accounting principle,
net of income taxes			1,699			$	0.03
Adjusted net income		$	44,665			$	0.72

 

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Universal Health Services, Inc.

Supplemental Consolidated Income Statement Information

(in thousands)

unaudited

 

		Nine months ended September 30, 2003								Nine months ended September 30, 2002
Net revenues		$	2,694,094				100.0	%		$	2,423,420		100.0	%
Operating charges:
Salaries, wages and benefits			1,075,670				39.9	%			964,633		39.8	%
Other operating expenses			628,950				23.3	%			586,199		24.2	%
Supplies expense			362,190				13.4	%			313,747		12.9	%
Provision for doubtful accounts			189,410				7.0	%			173,329		7.2	%
			2,256,220				83.7	%			2,037,908		84.1	%
Operating income/margin			437,874				16.3	%			385,512		15.9	%
Depreciation and amortization			105,849								90,444
Lease and rental expense			47,676								46,089
Interest expense, net			27,839								25,768
Gains on sales of assets and businesses			(7,837	)							0
Minority interests in earnings of consolidated entities			21,036								15,485
Income before income taxes and cumulative effect of change in accounting principle			243,311								207,726
Provision for income taxes			90,510								76,255
Income before cumulative effect of change in accounting principle			152,801								131,471
Cumulative effect of change in accounting principle, net of income taxes			1,699								0
Net income		$	151,102							$	131,471
		Amount				Per Diluted Share
Net income		$	151,102			$	2.42
Less: After-tax gain on sales of assets and businesses			(4,396	)		$	(0.07	)
Plus: Cumulative effect of change in accounting principle, net of income taxes			1,699			$	0.03
Adjusted net income		$	148,405			$	2.38				.

 

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Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

 

Same Facility:		% Change Quarter Ended 09/30/2003			% Change 9 mos. ended 09/30/2003
Acute Care Hospitals
Revenues		7.2	%		8.5	%
Adjusted Admissions		0.0	%		0.9	%
Adjusted Patient Days		1.6	%		1.0	%
Revenue Per Adjusted Admission		7.2	%		7.5	%
Revenue Per Adjusted Patient Day		5.6	%		7.4	%
Behavioral Health Hospitals
Revenues		4.5	%		5.0	%
Adjusted Admissions		0.6	%		1.4	%
Adjusted Patient Days		1.2	%		2.1	%
Revenue Per Adjusted Admission		3.8	%		3.5	%
Revenue Per Adjusted Patient Day		3.2	%		2.9	%

 

UHS Consolidated		Third Quarter Ended								Nine months Ended
		09/30/2003				09/30/2002				09/30/2003				09/30/2002
Revenues		$	896,332			$	813,104			$	2,694,094			$	2,423,420
EBITDA (1)		$	114,813			$	104,261			$	369,162			$	323,938
EBITDA Margin (1)			12.8	%			12.8	%			13.7	%			13.4	%
Cash Flow From Operations		$	103,224			$	111,115			$	313,402			$	245,181
Days Sales Outstanding			50				53				49				53
Capital Expenditures		$	57,346			$	59,532			$	155,765			$	156,684
Debt (net of cash)			—				—			$	615,490			$	645,766
Shareholders Equity			—				—			$	1,022,840			$	946,921
Debt / Total Capitalization			—				—				37.6	%			40.5	%
Debt / EBITDA (2)			—				—				1.28				1.56
Debt / Cash From Operations (2)			—				—				1.54				2.23
Acute Care EBITDAR Margin (3)			17.0	%			16.7	%			18.0	%			17.3	%
Behavioral Health EBITDAR Margin (3)			22.4	%			19.2	%			22.8	%			20.3	%

 

(1)	Net of Minority Interest

(2)	Latest 4 quarters

(3)	Before Corporate overhead allocation and minority interest

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UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

SEPTEMBER 30, 2003

 

AS REPORTED:

 

		FOR THE THREE MONTHS ENDED
		ACUTE (1)											BEHAVIORAL HEALTH
		9/30/03				9/30/02				%			9/30/03				9/30/02				%
Hospitals owned and leased			25				25			0.0	%			39				37			5.4	%
Average licensed beds			5,735				5,846			-1.9	%			3,902				3,749			4.1	%
Patient days			306,182				304,497			0.6	%			263,926				253,190			4.2	%
Average daily census			3,328.1				3,309.8			0.6	%			2,868.8				2,752.1			4.2	%
Occupancy-licensed beds			58.0	%			56.6	%		2.5	%			73.5	%			73.4	%		0.2	%
Admissions			65,628				66,401			-1.2	%			21,949				21,542			1.9	%
Length of stay			4.7				4.6			1.7	%			12.0				11.8			2.3	%
Inpatient revenue		$	1,453,560			$	1,270,856			14.4	%		$	269,972			$	247,693			9.0	%
Outpatient revenue			542,588				458,549			18.3	%			35,764				34,420			3.9	%
Total patient revenue			1,996,148				1,729,405			15.4	%			305,736				282,113			8.4	%
Other revenue			12,526				13,341			-6.1	%			8,338				8,861			-5.9	%
Gross hospital revenue			2,008,674				1,742,746			15.3	%			314,074				290,974			7.9	%
Total deductions			1,332,357				1,111,934			19.8	%			164,054				150,576			9.0	%
Net hospital revenue		$	676,317			$	630,812			7.2	%		$	150,020			$	140,398			6.9	%
SAME STORE:
		FOR THE THREE MONTHS ENDED
		ACUTE (1)											BEHAVIORAL HEALTH (2)
		9/30/03				9/30/02				%			9/30/03				9/30/02				%
Hospitals owned and leased			25				25			0.0	%			37				37			0.0	%
Average licensed beds			5,735				5,846			-1.9	%			3,785				3,754			0.8	%
Patient days			306,176				304,492			0.6	%			256,662				253,193			1.4	%
Average daily census			3,328.0				3,309.7			0.6	%			2,789.8				2,752.1			1.4	%
Occupancy-licensed beds			58.0	%			56.6	%		2.5	%			73.7	%			73.3	%		0.5	%
Admissions			65,628				66,401			-1.2	%			21,745				21,542			0.9	%
Length of stay			4.7				4.6			1.7	%			11.8				11.8			0.4	%

 

(1)	Does not include hospitals located in France.

(2)	North Star Hospital and Residential Center are excluded in both current and prior years.

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UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

SEPTEMBER 30, 2003

 

AS REPORTED:

		FOR THE NINE MONTHS ENDED
		ACUTE (1)											BEHAVIORAL HEALTH
		9/30/03				9/30/02				%			9/30/03				9/30/02				%
Hospitals owned and leased			25				25			0.0	%			39				37			5.4	%
Average licensed beds			5,735				5,846			-1.9	%			3,892				3,749			3.8	%
Patient days			932,743				928,562			0.5	%			801,467				757,174			5.8	%
Average daily census			3,416.6				3,401.3			0.5	%			2,935.8				2,773.5			5.8	%
Occupancy-licensed beds			59.6	%			58.2	%		2.4	%			75.4	%			74.0	%		2.0	%
Admissions			199,217				198,866			0.2	%			65,932				63,969			3.1	%
Length of stay			4.7				4.7			0.3	%			12.2				11.8			2.7	%
Inpatient revenue		$	4,421,657			$	3,799,360			16.4	%		$	817,616			$	738,327			10.7	%
Outpatient revenue			1,589,073				1,339,967			18.6	%			115,515				112,170			3.0	%
Total patient revenue			6,010,730				5,139,327			17.0	%			933,131				850,497			9.7	%
Other revenue			39,945				44,744			-10.7	%			25,913				28,098			-7.8	%
Gross hospital revenue			6,050,675				5,184,071			16.7	%			959,044				878,595			9.2	%
Total deductions			4,017,034				3,308,943			21.4	%			501,440				452,653			10.8	%
Net hospital revenue		$	2,033,641			$	1,875,128			8.5	%		$	457,604			$	425,942			7.4	%

 

SAME STORE:

 

		FOR THE NINE MONTHS ENDED
		ACUTE (1)									BEHAVIORAL HEALTH (2)
		9/30/03			9/30/02			%			9/30/03			9/30/02			%
Hospitals owned and leased		25			25			0.0	%		37			37			0.0	%
Average licensed beds		5,735			5,846			-1.9	%		3,775			3,751			0.6	%
Patient days		932,677			928,555			0.4	%		776,685			757,220			2.6	%
Average daily census		3,416.4			3,401.3			0.4	%		2,845.0			2,773.7			2.6	%
Occupancy-licensed beds		59.6	%		58.2	%		2.4	%		75.4	%		73.9	%		1.9	%
Admissions		199,217			198,866			0.2	%		65,278			63,969			2.0	%
Length of stay		4.7			4.7			0.3	%		11.9			11.8			0.5	%

 

(1)	Does not include hospitals located in France.

(2)	North Star Hospital and Residential Center are excluded in both current and prior years.