Universal Health Services, Inc. Reports 2017 Third Quarter Financial Results and Revises 2017 Full Year Earnings Guidance

10/25/2017
Consolidated Results of Operations, As Reported and As Adjusted - Three-month periods ended September 30, 2017 and 2016:

KING OF PRUSSIA, Pa., Oct. 25, 2017 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $141.2 million, or $1.47 per diluted share, during the third quarter of 2017 as compared to $151.9 million, or $1.54 per diluted share, during the comparable quarter of 2016.  Net revenues increased 5.5% to $2.54 billion during the third quarter of 2017 as compared to $2.41 billion during the third quarter of 2016.

Our financial results for three and nine-month periods ended September 30, 2017 were unfavorably impacted by an after-tax aggregate of approximately $14 million to $15 million ($22 million to $24 million pre-tax), or $.14 to $.15 per diluted share, resulting from the following: (i) an unfavorable after-tax impact of approximately $8 million to $9 million, or $.09 to $.10 per diluted share, related to the hurricane expenses and estimated business interruption impact incurred by 28 of our behavioral health care facilities located in Texas, Florida, South Carolina, Georgia, Puerto Rico and the U.S. Virgin Islands and our 3 acute care hospitals located in Florida, and; (ii) an after-tax charge of approximately $5 million, or $.05 per diluted share, recorded in connection with a court order in Texas related to certain litigation.

Generally, our facilities impacted by Hurricanes Harvey, Irma and Maria did not sustain extensive property damage and the vast majority have resumed normal operations. However, a portion of the beds at our 124-bed behavioral health facility located in Houston, Texas remain closed and, although our 3 behavioral health facilities located in Puerto Rico are operational (240 beds in the aggregate), they continue to operate on auxiliary power in areas that suffered extensive damage to surrounding infrastructure and properties. It is difficult to predict the impact that the hurricanes may have on the future operating results of these four facilities.               

For the three-month period ended September 30, 2017, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), was $143.4 million, or $1.49 per diluted share, as compared to $157.2 million, or $1.60 per diluted share, during the third quarter of 2016.  As reflected on the Supplemental Schedule, included in our reported results during the third quarter of 2017, is a net aggregate unfavorable after-tax impact of $2.1 million, or $.02 per diluted share, consisting of: (i) an unfavorable after-tax impact of $2.6 million, or $.03 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals, partially offset by; (ii) a favorable after-tax impact of $487,000, or $.01 per diluted share, resulting from our January 1, 2017 adoption of ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), as discussed below. Included in our reported results during the three-month period ended September 30, 2016 is an unfavorable after-tax impact of $5.3 million, or $.06 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of EHR applications at our acute care hospitals.

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA"), which was unfavorably impacted by the approximately $22 million to $24 million above-mentioned hurricanes and litigation matter, decreased 3.3% to $363.4 million during the third quarter of 2017 as compared to $375.9 million during the third quarter of 2016.

Consolidated Results of Operations, As Reported and As Adjusted  – Nine-month periods ended September 30, 2017 and 2016:

Reported net income attributable to UHS was $532.7 million, or $5.50 per diluted share, during the first nine months of 2017 as compared to $528.2 million, or $5.36 per diluted share, during the comparable period of 2016. 

Net revenues increased 6.5% to $7.77 billion during the first nine months of 2017 as compared to $7.29 billion during the first nine months of 2016. As calculated on the attached Supplemental Schedule, our EBITDA increased 2.1% to $1.26 billion during the nine-month period ended September 30, 2017 as compared to $1.24 billion during the comparable nine-month period of 2016.

For the nine-month period ended September 30, 2017, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $535.8 million, or $5.53 per diluted share, as compared to $544.3 million, or $5.52 per diluted share, during the first nine months of 2016.  As reflected on the Supplemental Schedule, included in our reported results during the nine-month period ended September 30, 2017, is a net aggregate unfavorable after-tax impact of $3.1 million, or $.03 per diluted share, consisting of: (i) an unfavorable after-tax impact of $11.7 million, or $.12 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of EHR applications at our acute care hospitals, partially offset by; (ii) a favorable after-tax impact of $8.6 million, or $.09 per diluted share, resulting from our January 1, 2017 adoption of ASU 2016-09.  Included in our reported results during the nine-month period ended September 30, 2016 is an unfavorable after tax impact of $16.1 million, or $.16 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of EHR applications at our acute care hospitals.

Acute Care Services – Three and nine-month periods ended September 30, 2017 and 2016:

During the third quarter of 2017, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 3.5% and adjusted patient days increased 1.5%, as compared to the third quarter of 2016. Net revenues from our acute care services increased 2.2% during the third quarter of 2017 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission decreased 0.6% while net revenue per adjusted patient day increased 1.3% during the third quarter of 2017 as compared to the comparable quarter of 2016.

During the nine-month period ended September 30, 2017, at our acute care hospitals on a same facility basis, adjusted admissions increased 4.9% and adjusted patient days increased 2.0%, as compared to the first nine months of 2016. Net revenues from our acute care services increased 4.0% during the first nine months of 2017 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted admission decreased 0.3% while net revenue per adjusted patient day increased 2.5% during the first nine months of 2017 as compared to the comparable nine-month period of 2016.

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 $447 million and $370 million during the three-month periods ended September 30, 2017 and 2016, respectively, and $1.36 billion and $1.06 billion during the nine-month periods ended September 30, 2017 and 2016, respectively. The provision for doubtful accounts at our acute care hospitals amounted to approximately $205 million and $173 million during the three-month periods ended September 30, 2017 and 2016, respectively, and $573 million and $492 million during the nine-month periods ended September 30, 2017 and 2016, respectively.          

Behavioral Health Care Services – Three and nine-month periods ended September 30, 2017 and 2016:

During the third quarter of 2017, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 1.1% while adjusted patient days decreased 0.2% as compared to the third quarter of 2016. At these facilities, net revenue per adjusted admission increased 1.3% while net revenue per adjusted patient day increased 2.6% during the third quarter of 2017 as compared to the comparable quarter in 2016. On a same facility basis, our behavioral health care services' net revenues increased 1.8% during the third quarter of 2017 as compared to the third quarter of 2016.    

During the nine-month period ended September 30, 2017, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.4% while adjusted patient days increased 0.5% as compared to the first nine months of 2016. At these facilities, net revenue per adjusted admission decreased 0.4% while net revenue per adjusted patient day increased 1.5% during the first nine months of 2017 as compared to the comparable nine-month period of 2016. On a same facility basis, our behavioral health care services' net revenues increased 1.8% during the first nine months of 2017 as compared to the comparable period of 2016.   

Net Cash Provided by Operating Activities and Share Repurchase Program:

For the nine months ended September 30, 2017, our net cash provided by operating activities decreased to $878 million from $1.14 billion generated during the comparable nine-month period of 2016.  The $258 million decrease was caused primarily by a $128 million unfavorable change in cash flows from foreign currency forward exchange contracts related to our investments in the U.K and a $101 million unfavorable change in other working capital accounts resulting primarily from changes in accounts payable and accrued expenses due to timing of disbursements.

In February of 2016, our Board of Directors authorized a $400 million increase to our stock repurchase program, which increased the aggregate authorization to $800 million from the previous $400 million authorization approved during the third quarter of 2014.  Pursuant to this program, we may purchase shares of our Class B Common Stock, from time to time as conditions allow, on the open market or in negotiated private transactions. 

In conjunction with this program, during the third quarter of 2017, we have repurchased 870,000 shares at an aggregate cost of $94.3 million.  During the first nine months of 2017, we have repurchased approximately 1.96 million shares at an aggregate cost of $221.4 million. Since inception of the program through September 30, 2017, we have repurchased approximately 6.34 million shares at an aggregate cost of $735.6 million

Revision of 2017 Full Year Earnings Guidance Range:

Based upon the operating trends and financial results experienced during the first nine months of 2017, we are revising our estimated range of adjusted net income attributable to UHS for the year ended December 31, 2017 to $7.25 to $7.50 per diluted share from the previously provided range of $7.50 to $8.00 per diluted share.  This revised guidance range decreases the lower end of the previously provided range by approximately 3.3% and decreases the upper end of the previously provided range by approximately 6.3%. 

This revised guidance excludes the expected EHR unfavorable impact of $.15 per diluted share for the year, as well as the impact on our provision for income taxes and net income attributable to UHS resulting from of our January 1, 2017 adoption of ASU 2016-09, which as discussed below, we are unable to estimate at this time. 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/losses 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.

Adoption of ASU 2016-09:

Effective January 1, 2017, we adopted ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", which amends the accounting for employee share-based payment transactions to require recognition of the tax effects resulting from the settlement of stock-based awards as income tax expense or benefit in the income statement in the reporting period in which they occur.  In connection with the adoption of ASU 2016-09, during the three and nine-month periods ended September 30, 2017, we recorded reductions to our provision for income taxes of $487,000 and $8.6 million, respectively, which resulted in a corresponding increases in our net income attributable to UHS of $487,000, or $.01 per diluted share, during the third quarter of 2017 and $8.6 million, or $.09 per diluted share, during the first nine months of 2017.

Since the impact of ASU 2016-09 on our future financial statements is dependent upon the timing of stock option exercises, and the market price of our stock at the time of exercise, we are unable to estimate the impact this adoption will have on our future provision for income taxes and net income attributable to UHS.  This reporting change is applied prospectively, effective as of January 1, 2017, with the exception of the change in the presentation of the excess income tax benefits related to stock-based compensation in the Statement of Cash Flows, which was applied retrospectively.    

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on Thursday, October 26, 2017. 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 through its subsidiaries acute care hospitals, behavioral health facilities and ambulatory centers located throughout the United States, the United Kingdom, 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.

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, 2016 and in Item 2-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2017), 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.

We believe that adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share, EBITDA and adjusted 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, but not limited to, costs/benefits related to the impact on our provision for income taxes and net income attributable to UHS resulting from our January 1, 2017 adoption of ASU 2016-09, the implementation of EHR applications at our acute care hospitals, extinguishment of debt, gains/losses on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, and other items and other material 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, 2016 and our Report on Form 10-Q for the quarterly period ended June 30, 2017. 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.

Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)










Three months


Nine months


ended September 30,


ended September 30,


2017


2016


2017


2016









Net revenues before provision for doubtful accounts

$2,775,790


$2,610,911


$8,428,971


$7,869,352

  Less: Provision for doubtful accounts

233,926


201,039


661,893


578,827

Net revenues

2,541,864


2,409,872


7,767,078


7,290,525









Operating charges:








   Salaries, wages and benefits

1,251,528


1,149,729


3,725,786


3,428,801

   Other operating expenses

628,523


597,270


1,868,076


1,744,849

   Supplies expense

268,089


257,793


820,242


767,465

   Depreciation and amortization

110,217


103,712


334,127


309,172

   Lease and rental expense

26,197


23,799


77,413


73,057


2,284,554


2,132,303


6,825,644


6,323,344









Income from operations

257,310


277,569


941,434


967,181









Interest expense, net

36,956


32,129


108,383


92,171









Income before income taxes

220,354


245,440


833,051


875,010









Provision for income taxes

74,992


88,175


286,774


306,577









Net income

145,362


157,265


546,277


568,433









Less:  Net income attributable to








noncontrolling interests

4,117


5,400


13,583


40,232









Net income attributable to UHS

$141,245


$151,865


$532,694


$528,201









































Basic earnings per share attributable to UHS (a)

$1.48


$1.56


$5.54


$5.43









Diluted earnings per share attributable to UHS (a)

$1.47


$1.54


$5.50


$5.36

 

 

 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)










Three months


Nine months

(a) Earnings per share calculation:

ended September 30,


ended September 30,


2017


2016


2017


2016

Basic and diluted:








Net income attributable to UHS

$141,245


$151,865


$532,694


$528,201

Less: Net income attributable to unvested restricted share grants

(81)


(69)


(257)


(242)

Net income attributable to UHS - basic and diluted

$141,164


$151,796


$532,437


$527,959









Weighted average number of common shares - basic

95,246


97,118


96,026


97,278









Basic earnings per share attributable to UHS:

$1.48


$1.56


$5.54


$5.43









Weighted average number of common shares

95,246


97,118


96,026


97,278

Add: Other share equivalents

731


1,203


771


1,257

Weighted average number of common shares and equiv. - diluted

95,977


98,321


96,797


98,535









Diluted earnings per share attributable to UHS:

$1.47


$1.54


$5.50


$5.36

 

 

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the three months ended September 30, 2017 and 2016

(in thousands, except per share amounts)

(unaudited)

























Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")










Three months ended


% Net


Three months ended


% Net


September 30, 2017


revenues


September 30, 2016


revenues









Net income attributable to UHS

$141,245




$151,865



   Depreciation and amortization

110,217




103,712



   Interest expense, net

36,956




32,129



   Provision for income taxes

74,992




88,175



EBITDA

$363,410


14.3%


$375,881


15.6%

EHR-related net income attributable to noncontrolling interests, pre-tax

(27)




(201)



Adjusted EBITDA

$363,383


14.3%


$375,680


15.6%









Net revenues

$2,541,864




$2,409,872











































Calculation of Adjusted Net Income Attributable to UHS










Three months ended


Three months ended


September 30, 2017


September 30, 2016




Per




Per


Amount


Diluted Share


Amount


Diluted Share









Net income attributable to UHS

$141,245


$1.47


$151,865


$1.54

Plus/minus after-tax adjustments:








Impact of ASU 2016-09

(487)


(0.01)


-


-

After-tax impact of EHR-related items

2,636


0.03


5,349


0.06

Subtotal

2,149


0.02


5,349


0.06

Adjusted net income attributable to UHS

$143,394


$1.49


$157,214


$1.60

 

 

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the nine months ended September 30, 2017 and 2016

(in thousands, except per share amounts)

(unaudited)

























Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")










Nine months ended


% Net


Nine months ended


% Net


September 30, 2017


revenues


September 30, 2016


revenues









Net income attributable to UHS

$532,694




$528,201



   Depreciation and amortization

334,127




309,172



   Interest expense, net

108,383




92,171



   Provision for income taxes

286,774




306,577



EBITDA

$1,261,978


16.2%


$1,236,121


17.0%

EHR-related net income attributable to noncontrolling interests, pre-tax

(200)




(1,618)



Adjusted EBITDA

$1,261,778


16.2%


$1,234,503


16.9%









Net revenues

$7,767,078




$7,290,525











































Calculation of Adjusted Net Income Attributable to UHS










Nine months ended


Nine months ended


September 30, 2017


September 30, 2016




Per




Per


Amount


Diluted Share


Amount


Diluted Share









Net income attributable to UHS

$532,694


$5.50


$528,201


$5.36

Plus/minus after-tax adjustments:








Impact of ASU 2016-09

(8,619)


(0.09)


-


-

After-tax impact of EHR-related items

11,747


0.12


16,060


0.16

Subtotal

3,128


0.03


16,060


0.16

Adjusted net income attributable to UHS

$535,822


$5.53


$544,261


$5.52

 

 

 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)










Three months


Nine months


ended September 30,


ended September 30,


2017


2016


2017


2016









Net income

$145,362


$157,265


$546,277


$568,433

Other comprehensive income (loss):








   Unrealized derivative gains (losses) on cash flow hedges

610


6,424


3,547


(11,644)

   Amortization of terminated hedge

0


0


0


(167)

   Unrealized gain (loss) on marketable security

(2,515)


(134)


1,645


(755)

   Foreign currency translation adjustment

983


(10,973)


9,932


(9,150)

Other comprehensive income (loss) before tax

(922)


(4,683)


15,124


(21,716)

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

(711)


2,346


1,935


(4,681)

Total other comprehensive income (loss), net of tax

(211)


(7,029)


13,189


(17,035)









Comprehensive income

145,151


150,236


559,466


551,398

Less: Comprehensive income attributable to noncontrolling interests

4,117


5,400


13,583


40,232

Comprehensive income attributable to UHS

$141,034


$144,836


$545,883


$511,166

 

 

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)











September 30,



December 31,




2017



2016

Assets







Current assets:







    Cash and cash equivalents


$

65,424


$

33,747

    Accounts receivable, net



1,452,018



1,439,553

    Supplies



135,849



125,365

    Other current assets



101,896



82,706

          Total current assets



1,755,187



1,681,371








Property and equipment



7,769,073



7,314,437

Less: accumulated depreciation



(3,252,934)



(2,983,481)




4,516,139



4,330,956








Other assets:







    Goodwill



3,821,610



3,784,106

    Deferred charges



10,385



13,520

    Deferred income taxes



1,340



1,234

    Other



534,699



506,615

Total Assets


$

10,639,360


$

10,317,802








Liabilities and Stockholders' Equity







Current liabilities:







    Current maturities of long-term debt


$

112,757


$

105,895

    Accounts payable and accrued liabilities



1,284,740



1,209,329

    Federal and state taxes



0



2,149

          Total current liabilities



1,397,497



1,317,373








Other noncurrent liabilities



298,252



275,167

Long-term debt



3,927,396



4,030,230

Deferred income taxes



78,968



88,119








Redeemable noncontrolling interest



7,037



9,319








UHS common stockholders' equity



4,865,212



4,533,220

Noncontrolling interest



64,998



64,374

          Total equity



4,930,210



4,597,594








Total Liabilities and Stockholders' Equity


$

10,639,360


$

10,317,802

 

 

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


Nine months


ended September 30,


2017


2016





Cash Flows from Operating Activities:




  Net income

$546,277


$568,433

  Adjustments to reconcile net income to net 




cash provided by operating activities:




Depreciation & amortization

334,127


309,172

Stock-based compensation expense

42,838


36,358

  Changes in assets & liabilities, net of effects from




acquisitions and dispositions:




   Accounts receivable

10,090


(6,836)

   Accrued interest

(5,747)


3,303

   Accrued and deferred income taxes 

(20,177)


12,187

   Other working capital accounts 

23,729


124,987

   Other assets and deferred charges

(21,798)


(11,451)

   Other 

(54,664)


58,040

   Excess income tax benefits related to stock-based compensation

0


36,407

   Accrued insurance expense, net of commercial premiums paid

80,814


66,049

   Payments made in settlement of self-insurance claims

(57,224)


(60,137)

          Net cash provided by operating activities

878,265


1,136,512





Cash Flows from Investing Activities:




   Property and equipment additions, net of disposals

(418,693)


(396,163)

   Acquisition of property and businesses

(19,610)


(136,221)

   Increase in capital reserves of commercial insurance subsidiary

(3,000)


0

   Costs incurred for purchase and implementation of information technology application

(26,401)


0

          Net cash used in investing activities

(467,704)


(532,384)





Cash Flows from Financing Activities:




   Reduction of long-term debt

(143,526)


(814,971)

   Additional borrowings

43,124


1,026,000

   Acquisition of noncontrolling interests in majority owned businesses

0


(418,000)

   Financing costs

(34)


(12,330)

   Repurchase of common shares

(242,870)


(297,177)

   Dividends paid

(28,776)


(29,197)

   Issuance of common stock

7,637


6,379

   Profit distributions to noncontrolling interests

(15,924)


(61,053)

          Net cash used in financing activities

(380,369)


(600,349)





   Effect of exchange rate changes on cash and cash equivalents

1,485


(3,263)

Increase in cash and cash equivalents

31,677


516

Cash and cash equivalents, beginning of period

33,747


61,228

Cash and cash equivalents, end of period

$65,424


$61,744





Supplemental Disclosures of Cash Flow Information:




  Interest paid

$107,442


$82,883





  Income taxes paid, net of refunds

$305,885


$259,174





  Noncash purchases of property and equipment

$64,958


$45,319

 

 

 

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)




































 % Change 


 % Change 








Quarter ended


9 months ended



Same Facility:





9/30/2017


9/30/2017













Acute Care Hospitals










Revenues





2.2%


4.0%



Adjusted Admissions





3.5%


4.9%



Adjusted Patient Days





1.5%


2.0%



Revenue Per Adjusted Admission




-0.6%


-0.3%



Revenue Per Adjusted Patient Day




1.3%


2.5%

































Behavioral Health Hospitals










Revenues





1.8%


1.8%



Adjusted Admissions





1.1%


2.4%



Adjusted Patient Days





-0.2%


0.5%



Revenue Per Adjusted Admission




1.3%


-0.4%



Revenue Per Adjusted Patient Day




2.6%


1.5%











































UHS Consolidated



Third quarter ended


Nine months ended




9/30/2017


9/30/2016


9/30/2017


9/30/2016











Revenues



$2,541,864


$2,409,872


$7,767,078


$7,290,525

EBITDA (1)



$363,410


$375,881


$1,261,978


$1,236,121

EBITDA Margin (1)



14.3%


15.6%


16.2%


17.0%





















Cash Flow From Operations



$344,673


$300,083


$878,265


$1,136,512

Days Sales Outstanding



53


50


51


49

Capital Expenditures  



$156,241


$148,448


$418,693


$396,163











Debt 







$4,040,153


$3,634,169

UHS' Shareholders Equity







$4,865,212


$4,394,703

Debt / Total Capitalization







45.4%


45.3%

Debt / EBITDA  (2)







2.41


2.21

Debt / Cash From Operations  (2)






3.76


2.64











(1)  Net of Minority Interest 







(2)  Latest 4 quarters










 

 

Universal Health Services, Inc.

Acute Care Hospital Services

For the three and nine months ended

September 30, 2017 and 2016

(in thousands)



































Same Facility Basis - Acute Care Hospital Services




































Three months ended


Three months ended


Nine months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 

Net revenues before provision for doubtful accounts


$1,452,997




$1,402,732




$4,431,714




$4,224,695



Less: Provision for doubtful accounts


196,542




172,883




548,387




491,556



Net revenues


1,256,455


100.0%


1,229,849


100.0%


3,883,327


100.0%


3,733,139


100.0%

Operating charges:

















Salaries, wages and benefits


551,144


43.9%


528,249


43.0%


1,623,774


41.8%


1,547,580


41.5%

Other operating expenses


307,909


24.5%


309,702


25.2%


925,122


23.8%


896,589


24.0%

Supplies expense


212,350


16.9%


210,973


17.2%


654,218


16.8%


621,258


16.6%

Depreciation and amortization


62,446


5.0%


59,252


4.8%


185,151


4.8%


174,855


4.7%

Lease and rental expense


14,390


1.1%


12,572


1.0%


41,864


1.1%


39,489


1.1%

Subtotal-operating expenses


1,148,239


91.4%


1,120,748


91.1%


3,430,129


88.3%


3,279,771


87.9%

Income from operations


108,216


8.6%


109,101


8.9%


453,198


11.7%


453,368


12.1%

Interest expense, net


639


0.1%


817


0.1%


2,073


0.1%


2,460


0.1%

Income before income taxes


$107,577


8.6%


$108,284


8.8%


$451,125


11.6%


$450,908


12.1%




















































All Acute Care Hospital Services




































Three months ended


Three months ended


Nine months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



Amount


% of Net
Revenues


Amount


% of Net
Revenues 


Amount


% of Net
Revenues


Amount


% of Net
Revenues 

Net revenues before provision for doubtful accounts


$1,521,727




$1,426,749




$4,646,083




$4,285,897



Less: Provision for doubtful accounts


204,979




172,883




573,331




491,556



Net revenues


1,316,748


100.0%


1,253,866


100.0%


4,072,752


100.0%


3,794,341


100.0%

Operating charges:

















Salaries, wages and benefits


566,214


43.0%


529,544


42.2%


1,672,909


41.1%


1,549,311


40.8%

Other operating expenses


342,486


26.0%


334,387


26.7%


1,018,454


25.0%


958,844


25.3%

Supplies expense


217,035


16.5%


211,017


16.8%


670,444


16.5%


621,305


16.4%

Depreciation and amortization


69,062


5.2%


67,982


5.4%


213,417


5.2%


202,079


5.3%

Lease and rental expense


14,605


1.1%


12,577


1.0%


43,066


1.1%


39,510


1.0%

Subtotal-operating expenses


1,209,402


91.8%


1,155,507


92.2%


3,618,290


88.8%


3,371,049


88.8%

Income from operations


107,346


8.2%


98,359


7.8%


454,462


11.2%


423,292


11.2%

Interest expense, net


639


0.0%


817


0.1%


2,074


0.1%


2,460


0.1%

Income before income taxes


$106,707


8.1%


$97,542


7.8%


$452,388


11.1%


$420,832


11.1%



































We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the impact of the EHR applications, the effect of items that are non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period.However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2016 and our Form 10-Q for the quarterly period ended June 30, 2017. 


















The All Acute Care Hospital Services table summarizes the results of operations for all our acute care operations during the three and nine-month periods ended September 30, 2017 and 2016. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of the implementation of EHR applications at our acute care hospitals; (iii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iv) certain other amounts including the results of facilities acquired or opened during the last twelve months.

 

Universal Health Services, Inc.

Behavioral Health Services

For the three and nine months ended

September 30, 2017 and 2016

(in thousands)



































Same Facility - Behavioral Health Care Services




































Three months ended


Three months ended


Nine months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 


Amount


% of Net
Revenues 

Net revenues before provision for doubtful accounts


$1,175,860




$1,159,594




$3,566,216




$3,509,217



Less: Provision for doubtful accounts


24,311




28,109




82,973




87,004



Net revenues


1,151,549


100.0%


1,131,485


100.0%


3,483,243


100.0%


3,422,213


100.0%

Operating charges:

















Salaries, wages and benefits


595,571


51.7%


567,889


50.2%


1,770,122


50.8%


1,692,898


49.5%

Other operating expenses


234,945


20.4%


223,940


19.8%


693,200


19.9%


660,559


19.3%

Supplies expense


49,629


4.3%


49,001


4.3%


146,286


4.2%


145,626


4.3%

Depreciation and amortization


34,206


3.0%


32,757


2.9%


100,838


2.9%


98,506


2.9%

Lease and rental expense


11,491


1.0%


11,061


1.0%


32,988


0.9%


32,878


1.0%

Subtotal-operating expenses


925,842


80.4%


884,648


78.2%


2,743,434


78.8%


2,630,467


76.9%

Income from operations


225,707


19.6%


246,837


21.8%


739,809


21.2%


791,746


23.1%

Interest expense, net


428


0.0%


420


0.0%


1,590


0.0%


1,302


0.0%

Income before income taxes


$225,279


19.6%


$246,417


21.8%


$738,219


21.2%


$790,444


23.1%




















































All Behavioral Health Care Services




































Three months ended


Three months ended


Nine months ended


Nine months ended



September 30, 2017


September 30, 2016


September 30, 2017


September 30, 2016



Amount


% of Net
Revenues


Amount


% of Net
Revenues 


Amount


% of Net
Revenues


Amount


% of Net
Revenues 

Net revenues before provision for doubtful accounts


$1,249,585




$1,182,041




$3,769,879




$3,576,957



Less: Provision for doubtful accounts


25,037




28,161




84,649




87,276



Net revenues


1,224,548


100.0%


1,153,880


100.0%


3,685,230


100.0%


3,489,681


100.0%

Operating charges:

















Salaries, wages and benefits


632,492


51.7%


571,070


49.5%


1,869,170


50.7%


1,703,222


48.8%

Other operating expenses


261,959


21.4%


242,949


21.1%


784,678


21.3%


720,678


20.7%

Supplies expense


50,947


4.2%


49,244


4.3%


149,967


4.1%


146,244


4.2%

Depreciation and amortization


38,574


3.2%


33,584


2.9%


113,083


3.1%


101,003


2.9%

Lease and rental expense


11,475


0.9%


11,098


1.0%


33,993


0.9%


33,216


1.0%

Subtotal-operating expenses


995,447


81.3%


907,945


78.7%


2,950,891


80.1%


2,704,363


77.5%

Income from operations


229,101


18.7%


245,935


21.3%


734,339


19.9%


785,318


22.5%

Interest expense, net


428


0.0%


420


0.0%


1,590


0.0%


1,302


0.0%

Income before income taxes


$228,673


18.7%


$245,515


21.3%


$732,749


19.9%


$784,016


22.5%



































We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable), the effect of items that are non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period.However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2016 and our Form 10-Q for the quarterly period ended June 30, 2017. 


















The All Behavioral Health Care Services table summarizes the results of operations for all our behavioral health care facilities during the three and nine-month periods ended September 30, 2017 and 2016. These amounts include: (i) our behavioral health results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the last twelve months.

 

 

Universal Health Services, Inc.

Selected Hospital Statistics

For the three months ended

September 30, 2017 and 2016



















AS REPORTED:





























ACUTE


BEHAVIORAL HEALTH



9/30/17

9/30/16

%  change


9/30/17

9/30/16

%  change










Hospitals owned and leased


26

25

4.0%


298

213

39.9%

Average licensed beds


6,147

5,926

3.7%


23,173

21,840

6.1%

Patient days


324,697

309,505

4.9%


1,594,487

1,503,472

6.1%

Average daily census


3,529.3

3,364.2

4.9%


17,331.4

16,342.1

6.1%

Occupancy-licensed beds


57.4%

56.8%

1.1%


74.8%

74.8%

0.0%

Admissions


73,692

68,165

8.1%


116,301

114,678

1.4%

Length of stay


4.4

4.5

-3.0%


13.7

13.1

4.6%










Inpatient revenue


$5,344,625

$4,647,578

15.0%


$2,257,231

$2,031,868

11.1%

Outpatient revenue


3,199,066

2,854,851

12.1%


236,559

217,571

8.7%

Total patient revenue


8,543,691

7,502,429

13.9%


2,493,790

2,249,439

10.9%

Other revenue


113,346

114,344

-0.9%


50,143

53,570

-6.4%

Gross hospital revenue


8,657,037

7,616,773

13.7%


2,543,933

2,303,009

10.5%










Total deductions


7,135,310

6,190,024

15.3%


1,294,348

1,120,968

15.5%










Net hospital revenue before 









  provision for doubtful accounts


1,521,727

1,426,749

6.7%


1,249,585

1,182,041

5.7%










Provision for doubtful accounts


204,979

172,883

18.6%


25,037

28,161

-11.1%










Net hospital revenue 


$1,316,748

$1,253,866

5.0%


$1,224,548

$1,153,880

6.1%



















SAME FACILITY:




















ACUTE (1)


BEHAVIORAL HEALTH (2)



9/30/17

9/30/16

%  change


9/30/17

9/30/16

%  change










Hospitals owned and leased


25

25

0.0%


211

211

0.0%

Average licensed beds


6,009

5,926

1.4%


21,814

21,607

1.0%

Patient days


319,102

309,505

3.1%


1,485,837

1,485,616

0.0%

Average daily census


3,468.5

3,364.2

3.1%


16,150.4

16,148.0

0.0%

Occupancy-licensed beds


57.7%

56.8%

1.6%


74.0%

74.7%

-0.9%

Admissions


71,621

68,165

5.1%


115,826

114,356

1.3%

Length of stay


4.5

4.5

-1.9%


12.8

13.0

-1.3%










(1) Henderson Hospital is excluded in current year.




(2) CAMBIAN facilities are excluded in current year.





 

 

 

Universal Health Services, Inc.

Selected Hospital Statistics

For the nine months ended

September 30, 2017 and 2016



















AS REPORTED: