Universal Health Services, Inc. Reports 2019 Second Quarter Financial Results And Increases To Stock Repurchase Program And Cash Dividend

07/25/2019
Microphone Webcast - Live
Q2 2019 Universal Health Services Earnings Conference Call
7/26/19 at 9:00 a.m. ET
 
Consolidated Results of Operations, As Reported and As Adjusted - Three-month periods ended June 30, 2019 and 2018:

KING OF PRUSSIA, Pa., July 25, 2019 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $238.3 million, or $2.66 per diluted share, during the second quarter of 2019 as compared to $226.1 million, or $2.39 per diluted share, during the comparable quarter of 2018.  Net revenues increased 6.5% to $2.855 billion during the second quarter of 2019 as compared to $2.681 billion during the second quarter of 2018.

For the three-month period ended June 30, 2019, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), was $247.2 million, or $2.76 per diluted share, as compared to $233.3 million, or $2.47 per diluted share, during the second quarter of 2018. 

Included in our reported and our adjusted net income attributable to UHS is a pre-tax unrealized gain of $6.9 million, or $.06 per diluted share, during the second quarter of 2019, and $8.0 million, or $.06 per diluted share, during the second quarter of 2018. These unrealized gains, which are included in "Other (income) expense, net" on the accompanying consolidated statements of income, resulted from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.  

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2019, is an aggregate net unfavorable after-tax impact of $8.9 million, or $.10 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from an $11.0 million pre-tax increase in the reserve ("DOJ Reserve") established in connection with the discussions with the Department of Justice ("DOJ"), which have recently resulted in an agreement in principle with the DOJ's Civil Division (which is subject to certain conditions as discussed below), and; (ii) an unfavorable after-tax impact of $509,000, or $.01 per diluted share, resulting from our adoption of ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09").

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2018, is a net aggregate unfavorable after-tax impact of $7.3 million, or $.08 per diluted share, substantially all of which related to the unfavorable after-tax impact of $7.2 million, or $.08 per diluted share, resulting from a $9.5 million pre-tax increase in the DOJ Reserve.  

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA net of NCI", NCI is net income attributable to noncontrolling interests), was $471.5 million during the second quarter of 2019 as compared to $444.7 million during the second quarter of 2018.  Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impacts of our adoption of ASU 2016-09, other (income) expense, net, as well as the unfavorable impacts of the above-mentioned increases in the DOJ Reserve, was $474.8 million during the second quarter of 2019 as compared to $438.8 million during the second quarter of 2018.

Consolidated Results of Operations, As Reported and As Adjusted  – Six-month periods ended June 30, 2019 and 2018:
Reported net income attributable to UHS was $472.5 million, or $5.23 per diluted share, during the six-month period ended June 30, 2019 as compared to $449.9 million, or $4.76 per diluted share, during the comparable six-month period of 2018.  Net revenues increased 5.4% to $5.660 billion during the first six months of 2019 as compared to $5.369 billion during the first six months of 2018.

For the six-month period ended June 30, 2019, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $470.5 million, or $5.21 per diluted share, as compared to $465.5 million, or $4.92 per diluted share, during the comparable six-month period of 2018. 

Included in our reported and our adjusted net income attributable to UHS is a pre-tax unrealized gain of $2.6 million, or $.02 per diluted share, during the first six months of 2019, and $8.0 million, or $.06 per diluted share, during the comparable six-month period of 2018. As discussed above, these unrealized gains resulted from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.  

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2019, is an aggregate net favorable after-tax impact of $2.0 million, or $.02 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from an $11.0 million pre-tax increase in the DOJ Reserve, offset by; (ii) a favorable after-tax impact of $10.4 million, or $.11 per diluted share, resulting from our adoption of ASU 2016-09.

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2018, is a net aggregate unfavorable after-tax impact of $15.6 million, or $.16 per diluted share, consisting of: (i) an unfavorable after-tax impact of $17.1 million, or $.18 per diluted share, resulting from a $22.5 million pre-tax increase in the DOJ Reserve, partially offset by; (ii) a favorable after-tax impact of $1.5 million, or $.02 per diluted share, resulting from our adoption of ASU 2016-09.

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA net of NCI", NCI is net income attributable to noncontrolling interests), was $924.3 million during the six-month period ended June 30, 2019 as compared to $886.8 million during the six-month period ended June 30, 2018.  Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impacts of our adoption of ASU 2016-09, other (income) expense, net, as well as the unfavorable impacts of the above-mentioned increases in the DOJ Reserve, was $932.0 million during the six-month period ended June 30, 2019 as compared to $893.9 million during the six-month period ended June 30, 2018.

Acute Care Services – Three and six-month periods ended June 30, 2019 and 2018:
During the second quarter of 2019, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 5.0% and adjusted patient days increased 5.2%, as compared to the second quarter of 2018. At these facilities, net revenue per adjusted admission increased 3.5% while net revenue per adjusted patient day increased 3.3% during the second quarter of 2019 as compared to the second quarter of 2018. Net revenues from our acute care services on a same facility basis increased 9.0% during the second quarter of 2019 as compared to the second quarter of 2018.

During the six-month period ended June 30, 2019, at our acute care hospitals on a same facility basis, adjusted admissions increased 5.0% and adjusted patient days increased 4.8%, as compared to the first six months of 2018. At these facilities, net revenue per adjusted admission increased 1.5% while net revenue per adjusted patient day increased 1.6% during the six-month period ended June 30, 2019 as compared to the comparable six-month period of 2018. Net revenues from our acute care services on a same facility basis increased 6.8% during the first six months of 2019 as compared to the first six months of 2018.

Behavioral Health Care Services – Three and six-month periods ended June 30, 2019 and 2018:
During the second quarter of 2019, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 0.5% while adjusted patient days increased 0.3% as compared to the second quarter of 2018. At these facilities, net revenue per adjusted admission increased 2.2% while net revenue per adjusted patient day increased 2.4% during the second quarter of 2019 as compared to the comparable quarter in 2018. On a same facility basis, our behavioral health care services' net revenues increased 2.7% during the second quarter of 2019 as compared to the second quarter of 2018.   

During the six-month period ended June 30, 2019, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 1.7% while adjusted patient days increased 0.6% as compared to the comparable six-month period of 2018. At these facilities, net revenue per adjusted admission increased 1.3% while net revenue per adjusted patient day increased 2.4% during the first six months of 2019 as compared to the comparable six-month period in 2018. On a same facility basis, our behavioral health care services' net revenues increased 2.9% during the six-month period ended June 30, 2019 as compared to the comparable six-month period of 2018.   

Net Cash Provided by Operating Activities:
For the six months ended June 30, 2019, our net cash provided by operating activities increased to $624 million as compared to $607 million generated during the comparable six-month period of 2018. The $17 million net increase was due to: (i) a favorable change of $40 million resulting from an increase in net income plus/minus depreciation and amortization expense, stock-based compensation expense and net gains on sale of assets and businesses; (ii) an unfavorable change of $37 million in accounts receivable, and; (iii) $14 million of other combined net favorable changes.   

In conjunction with our January 1, 2019 adoption of ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities", we have included the net cash inflows or outflows, which were received or paid in connection with foreign exchange contracts that hedge our investment in the U.K., in investing cash flows on the consolidated statements of cash flows.  Prior to 2019, these net inflows/outflows were included in operating cash flows. Prior period amounts have been reclassified to conform with current year presentation on the consolidated statements of cash flows included herein.       

Increases to Stock Repurchase Program and Cash Dividend:
On July 25, 2019, our Board of Directors authorized a $1.0 billion increase to our stock repurchase program, which increased the aggregate authorization to $2.7 billion from the previous $1.7 billion authorization approved in various increments since 2014. Pursuant to this program, which currently has an aggregate available repurchase authorization of $1.017 billion, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. 

In conjunction with our previously approved stock repurchase programs, during the second quarter of 2019, we have repurchased approximately 2.72 million shares at an aggregate cost of $339.2 million (approximately $125 per share).  During the first six months of 2019, we have repurchased approximately 3.56 million shares at an aggregate cost of $445.6 million (approximately $125 per share). Since inception of the program in 2014 through June 30, 2019, we have repurchased approximately 14.23 million shares at an aggregate cost of approximately $1.68 billion (approximately $118 per share). 

Also on July 25, 2019, our Board of Directors authorized a $.10 per share increase in our cash dividend to $.20 per share. This cash dividend will be paid on September 16, 2019 to shareholders of record as of September 3, 2019.     

Agreement in Principle with DOJ's Civil Division and DOJ Reserve:
We have recently reached an agreement in principle with the DOJ's Civil Division, and on behalf of various states' attorneys general offices, to resolve the civil aspect of the government's investigation of our behavioral health care facilities for $127 million subject to requisite approvals and preparation and execution of definitive settlement and related agreements.  We have further been advised that the previously disclosed investigations being conducted by the DOJ's Criminal Frauds Section in connection with these matters have been closed.  We are awaiting the initial draft of a potential corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services ("OIG") which we expect will be part of the overall settlement of this matter.

In connection with the agreement in principle with the DOJ's Civil Division, during the three and six-month periods ended June 30, 2019, we recorded a pre-tax increase of approximately $11.0 million in the DOJ Reserve, which includes related fees and costs due to or on behalf of third-parties.  The aggregate pre-tax DOJ Reserve amounted to $134 million as of June 30, 2019 and $123 million as of December 31, 2018. Our financial statements assume that the amounts included in the aggregate pre-tax DOJ Reserve are fully deductible for federal and state income tax purposes.  

Since the agreement in principle with the DOJ's Civil Division is subject to certain required approvals and negotiation and execution of definitive settlement agreements, as well as negotiation and execution of a potential corporate integrity agreement with the OIG, we can provide no assurance that definitive agreements will ultimately be finalized. We therefore can provide no assurance that final amounts paid in settlement or otherwise, or associated costs, or the income tax deductibility of such payments, will not differ materially from our established reserve and assumptions related to income tax deductibility. Please see Item 1-Legal Proceedings in our Form 10-Q for the quarterly period ended March 31, 2019 for additional disclosure in connection with this matter.

Conference call information:
We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 26, 2019. 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.  Also, a replay of the call will be available following the conclusion of the live call and will be available for one full year.

Adoption of ASU 2016-02, "Leases (Topic 842): Amendments to the FASB Accounting Standards Codification":
Effective January 1, 2019, we adopted ASU 2016-02 which requires companies to, among other things, recognize lease assets and lease liabilities on the balance sheet. As a result of our adoption of ASU 2016-02, our consolidated balance sheet as of June 30, 2019 includes right of use assets-operating leases ($332.1 million) and operating lease liabilities ($56.4 million current and $275.7 million noncurrent).  Prior period financial statements were not adjusted for the effects of this new standard.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
One of the nation's largest and most respected hospital companies, Universal Health Services, Inc. ("UHS") has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues were $10.77 billion during 2018. In 2019, UHS was again recognized as one of the World's Most Admired Companies by Fortune; ranked #293 on the Fortune 500; and in 2017, listed #275 in Forbes inaugural ranking of America's Top 500 Public Companies.

Our operating philosophy is as effective today as it was 40 years ago, enabling us to provide compassionate care to our patients and their loved ones.  Our mission includes building or acquiring high quality hospitals in rapidly growing markets, investing in the people and equipment needed to allow each facility to thrive, and becoming the leading healthcare provider in each community we serve.

Headquartered in King of Prussia, PA, UHS has more than 87,000 employees and through its subsidiaries operates 353 inpatient acute care hospitals and behavioral health facilities and 38 outpatient and other facilities located in 37 states, Washington, D.C., Puerto Rico and the United Kingdom. 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, 2018 and in Item 2-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended March 31, 2019), 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 net of NCI and adjusted EBITDA net of NCI, 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 impacting our net income attributable to UHS, such as, changes in the reserve established in connection with our discussions with the Department of Justice, our adoption of ASU 2016-09 and other potential material items that are nonrecurring or non-operational in nature including, but not limited to, impairments of long-lived and intangible assets, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, and other 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 attributable to UHS, as determined in accordance with GAAP, and 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 Reports on Form 10-K for the year ended December 31, 2018 and Form 10-Q for the quarterly period ended March 31, 2019. 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

 

Six months

 

ended June 30,

 

ended June 30,

 

2019

 

2018

 

2019

 

2018

               

Net revenues

$2,855,168

 

$2,681,353

 

$5,659,559

 

$5,368,869

               

Operating charges:

             

   Salaries, wages and benefits

1,383,481

 

1,305,974

 

2,749,027

 

2,606,122

   Other operating expenses

672,564

 

624,484

 

1,317,344

 

1,245,303

   Supplies expense

305,857

 

289,733

 

613,320

 

582,662

   Depreciation and amortization

121,168

 

109,581

 

241,208

 

222,684

   Lease and rental expense

26,535

 

27,119

 

52,660

 

53,822

 

2,509,605

 

2,356,891

 

4,973,559

 

4,710,593

               

Income from operations

345,563

 

324,462

 

686,000

 

658,276

               

Interest expense, net

42,487

 

38,000

 

82,127

 

75,576

Other (income) expense, net

(7,732)

 

(15,308)

 

(3,231)

 

(15,308)

               

Income before income taxes

310,808

 

301,770

 

607,104

 

598,008

               

Provision for income taxes

69,543

 

71,059

 

128,441

 

138,628

               

Net income

241,265

 

230,711

 

478,663

 

459,380

               

Less:  Net income attributable to

             

noncontrolling interests ("NCI")

2,945

 

4,659

 

6,175

 

9,496

               

Net income attributable to UHS

$238,320

 

$226,052

 

$472,488

 

$449,884

               
               
               
               
               
               

Basic earnings per share attributable to UHS (a)

$2.67

 

$2.40

 

$5.24

 

$4.78

               

Diluted earnings per share attributable to UHS (a)

$2.66

 

$2.39

 

$5.23

 

$4.76

               

 

 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

               
 

Three months

 

Six months

(a) Earnings per share calculation:

ended June 30,

 

ended June 30,

 

2019

 

2018

 

2019

 

2018

Basic and diluted:

             

Net income attributable to UHS

$238,320

 

$226,052

 

$472,488

 

$449,884

Less: Net income attributable to unvested restricted share grants

(656)

 

(392)

 

(1,171)

 

(496)

Net income attributable to UHS - basic and diluted

$237,664

 

$225,660

 

$471,317

 

$449,388

               

Weighted average number of common shares - basic

89,136

 

93,842

 

89,956

 

94,034

               

Basic earnings per share attributable to UHS:

$2.67

 

$2.40

 

$5.24

 

$4.78

               

Weighted average number of common shares

89,136

 

93,842

 

89,956

 

94,034

Add: Other share equivalents

99

 

439

 

145

 

448

Weighted average number of common shares and equiv. - diluted

89,235

 

94,281

 

90,101

 

94,482

               

Diluted earnings per share attributable to UHS:

$2.66

 

$2.39

 

$5.23

 

$4.76

 

 

Universal Health Services, Inc.

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

For the Three Months ended June 30, 2019 and 2018

(in thousands, except per share amounts)

(unaudited)

               
               
               

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

EBITDA net of NCI")

               
 

Three months ended

 

% Net

 

Three months ended

 

% Net

 

June 30, 2019

 

revenues

 

June 30, 2018

 

revenues

               

Net income attributable to UHS

$238,320

     

$226,052

   

   Depreciation and amortization

121,168

     

109,581

   

   Interest expense, net

42,487

     

38,000

   

   Provision for income taxes

69,543

     

71,059

   

EBITDA net of NCI

$471,518

 

16.5%

 

$444,692

 

16.6%

               

Other (income) expense, net

(7,732)

     

(15,308)

   

Increase in DOJ Reserve

10,978

     

9,451

   

Adjusted EBITDA net of NCI

$474,764

 

16.6%

 

$438,835

 

16.4%

               

Net revenues

$2,855,168

     

$2,681,353

   
               
               
               
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Three months ended

 

Three months ended

 

June 30, 2019

 

June 30, 2018

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

               

Net income attributable to UHS

$238,320

 

$2.66

 

$226,052

 

$2.39

Plus/minus after-tax adjustments:

             

Increase in DOJ Reserve, after-tax

8,369

 

0.09

 

7,205

 

0.08

Impact of ASU 2016-09

509

 

0.01

 

61

 

-

Subtotal adjustments

8,878

 

0.10

 

7,266

 

0.08

Adjusted net income attributable to UHS

$247,198

 

$2.76

 

$233,318

 

$2.47

               

 

 

Universal Health Services, Inc.

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

For the Six Months ended June 30, 2019 and 2018

(in thousands, except per share amounts)

(unaudited)

               
               
               

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

EBITDA net of NCI")

               
 

Six months ended

 

% Net

 

Six months ended

 

% Net

 

June 30, 2019

 

revenues

 

June 30, 2018

 

revenues

               

Net income attributable to UHS

$472,488

     

$449,884

   

   Depreciation and amortization

241,208

     

222,684

   

   Interest expense, net

82,127

     

75,576

   

   Provision for income taxes

128,441

     

138,628

   

EBITDA net of NCI

$924,264

 

16.3%

 

$886,772

 

16.5%

               

Other (income) expense, net

(3,231)

     

(15,308)

   

Increase in DOJ Reserve

10,978

     

22,451

   

Adjusted EBITDA net of NCI

$932,011

 

16.5%

 

$893,915

 

16.6%

               

Net revenues

$5,659,559

     

$5,368,869

   
               
               
               
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Six months ended

 

Six months ended

 

June 30, 2019

 

June 30, 2018

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

               

Net income attributable to UHS

$472,488

 

$5.23

 

$449,884

 

$4.76

Plus/minus after-tax adjustments:

             

Increase in DOJ Reserve, after-tax

8,369

 

0.09

 

17,116

 

0.18

Impact of ASU 2016-09

(10,398)

 

(0.11)

 

(1,537)

 

(0.02)

Subtotal adjustments

(2,029)

 

(0.02)

 

15,579

 

0.16

Adjusted net income attributable to UHS

$470,459

 

$5.21

 

$465,463

 

$4.92

 

 

 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

               
 

Three months

 

Six months

 

ended June 30,

 

ended June 30,

 

2019

 

2018

 

2019

 

2018

               

Net income

$241,265

 

$230,711

 

$478,663

 

$459,380

Other comprehensive income (loss):

             

   Unrealized derivative gains (losses) on cash flow hedges

(1,008)

 

(545)

 

(3,925)

 

1,579

   Foreign currency translation adjustment

5,159

 

1,184

 

(9,103)

 

(3,157)

   Other

0

 

(2,367)

 

0

 

0

Other comprehensive income (loss) before tax

4,151

 

(1,728)

 

(13,028)

 

(1,578)

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

1,616

 

(702)

 

(850)

 

375

Total other comprehensive income (loss), net of tax

2,535

 

(1,026)

 

(12,178)

 

(1,953)

               

Comprehensive income

243,800

 

229,685

 

466,485

 

457,427

Less: Comprehensive income attributable to noncontrolling interests

2,945

 

4,659

 

6,175

 

9,496

Comprehensive income attributable to UHS

$240,855

 

$225,026

 

$460,310

 

$447,931

 

 

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

             
     

June 30,

   

December 31,

     

2019

   

2018

Assets

           

Current assets:

           

    Cash and cash equivalents

 

$

61,297

 

$

105,220

    Accounts receivable, net

   

1,601,352

   

1,509,909

    Supplies

   

153,574

   

148,206

    Other current assets

   

148,809

   

174,467

          Total current assets

   

1,965,032

   

1,937,802

             

Property and equipment

   

8,859,104

   

8,563,455

Less: accumulated depreciation

   

(3,914,406)

   

(3,715,515)

     

4,944,698

   

4,847,940

             

Other assets:

           

    Goodwill

   

3,843,429

   

3,844,628

    Deferred income taxes

   

15,747

   

5,280

    Right of use assets-operating leases

   

332,135

   

0

    Deferred charges

   

7,533

   

8,772

    Other

   

644,076

   

621,058

Total Assets

 

$

11,752,650

 

$

11,265,480

             

Liabilities and Stockholders' Equity

           

Current liabilities:

           

    Current maturities of long-term debt

 

$

91,833

 

$

63,446

    Accounts payable and accrued liabilities

   

1,253,760

   

1,253,714

    Legal reserves

   

141,750

   

129,150

    Operating lease liabilities

   

56,447

   

0

    Federal and state taxes

   

479

   

2,428

          Total current liabilities

   

1,544,269

   

1,448,738

             

Other noncurrent liabilities

   

369,229

   

361,809

Operating lease liabilities noncurrent

   

275,688

   

0

Long-term debt

   

4,057,121

   

3,935,187

Deferred income taxes

   

37,906

   

49,661

             

Redeemable noncontrolling interest

   

3,986

   

4,292

             

UHS common stockholders' equity

   

5,393,089

   

5,389,262

Noncontrolling interest

   

71,362

   

76,531

          Total equity

   

5,464,451

   

5,465,793

             

Total Liabilities and Stockholders' Equity

 

$

11,752,650

 

$

11,265,480

 

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Six months

 

ended June 30,

 

2019

 

2018

       

Cash Flows from Operating Activities:

     

  Net income

$478,663

 

$459,380

  Adjustments to reconcile net income to net 

     

cash provided by operating activities:

     

Depreciation & amortization

241,208

 

222,716

Stock-based compensation expense

34,676

 

34,716

Gain on sale of assets and businesses

0

 

(2,513)

  Changes in assets & liabilities, net of effects from

     

acquisitions and dispositions:

     

   Accounts receivable

(101,329)

 

(64,055)

   Accrued interest

948

 

199

   Accrued and deferred income taxes 

(16,846)

 

(42,540)

   Other working capital accounts 

30,082

 

8,977

   Other assets and deferred charges

(1,333)

 

(14,144)

   Other 

(49,687)

 

(3,422)

   Accrued insurance expense, net of commercial premiums paid

51,819

 

46,255

   Payments made in settlement of self-insurance claims

(44,115)

 

(38,606)

          Net cash provided by operating activities

624,086

 

606,963

       

Cash Flows from Investing Activities:

     

   Property and equipment additions, net of disposals

(323,920)

 

(370,252)

   Acquisition of property and businesses

0

 

(20,931)

   Inflows (outflows) from foreign exchange contracts that hedge our net U.K. investment

53,363

 

22,298

   Proceeds received from sales of assets and businesses

0

 

13,502

   Costs incurred for purchase and implementation of information technology applications

(13,893)

 

(24,087)

   Decrease in capital reserves of commercial insurance subsidiary

0

 

100

   Investment in, and advances to,  joint ventures and other

(11,949)

 

(14,059)

          Net cash used in investing activities

(296,399)

 

(393,429)

       

Cash Flows from Financing Activities:

     

   Reduction of long-term debt

(28,617)

 

(82,470)

   Additional borrowings

177,200

 

30,500

   Financing costs

0

 

(754)

   Repurchase of common shares

(494,649)

 

(134,784)

   Dividends paid

(17,953)

 

(18,804)

   Issuance of common stock

5,271

 

4,959

   Profit distributions to noncontrolling interests

(11,650)

 

(7,914)

          Net cash used in financing activities

(370,398)

 

(209,267)

       

   Effect of exchange rate changes on cash, cash equivalents and restricted cash

(273)

 

(1,138)

(Decrease) Increase in cash, cash equivalents and restricted cash

(42,984)

 

3,129

Cash, cash equivalents and restricted cash, beginning of period

199,685

 

167,297

Cash, cash equivalents and restricted cash, end of period

$156,701

 

$170,426

       

Supplemental Disclosures of Cash Flow Information:

     

  Interest paid

$78,623

 

$70,890

       

  Income taxes paid, net of refunds

$145,404

 

$182,130

       

  Noncash purchases of property and equipment

$71,923

 

$91,742

       

  Right-of-use assets obtained in exchange for lease obligations

$359,329

 

$0

 

 

 

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

                   
                   
                   
         

 % Change 

 

 % Change 

   
         

Quarter ended

 

6 months ended

   

Same Facility:

       

6/30/2019

 

6/30/2019

   
                   

Acute Care Hospitals

                 

Revenues

       

9.0%

 

6.8%

   

Adjusted Admissions

       

5.0%

 

5.0%

   

Adjusted Patient Days

       

5.2%

 

4.8%

   

Revenue Per Adjusted Admission

     

3.5%

 

1.5%

   

Revenue Per Adjusted Patient Day

     

3.3%

 

1.6%

   
                   
                   
                   

Behavioral Health Hospitals

                 

Revenues

       

2.7%

 

2.9%

   

Adjusted Admissions

       

0.5%

 

1.7%

   

Adjusted Patient Days

       

0.3%

 

0.6%

   

Revenue Per Adjusted Admission

     

2.2%

 

1.3%

   

Revenue Per Adjusted Patient Day

     

2.4%

 

2.4%

   
                   
                   
                   
                   

UHS Consolidated

   

second quarter ended

 

six months ended

     

6/30/2019

 

6/30/2018

 

6/30/2019

 

6/30/2018

                   

Revenues

   

$2,855,168

 

$2,681,353

 

$5,659,559

 

$5,368,869

EBITDA net of NCI

   

$471,518

 

$444,692

 

$924,264

 

$886,772

EBITDA Margin net of NCI

   

16.5%

 

16.6%

 

16.3%

 

16.5%

Adjusted EBITDA net of NCI

   

$474,764

 

$438,835

 

$932,011

 

$893,915

Adjusted EBITDA Margin net of NCI

 

16.6%

 

16.4%

 

16.5%

 

16.6%

                   
                   

Cash Flow From Operations

   

$233,185

 

$197,059

 

$624,086

 

$606,963

Days Sales Outstanding

   

51

 

53

 

51

 

53

Capital Expenditures  

   

$154,072

 

$181,211

 

$323,920

 

$370,252

                   

Debt 

           

$4,148,954

 

$3,990,464

UHS' Shareholders Equity

           

$5,393,089

 

$5,317,583

Debt / Total Capitalization

           

43.5%

 

42.9%

Debt / EBITDA net of NCI (1)

           

2.50

 

2.35

Debt / Adjusted EBITDA net of NCI (1)

       

2.31

 

2.34

Debt / Cash From Operations (1)

           

3.21

 

3.12

                   

(1)  Latest 4 quarters

                 

 

 

Universal Health Services, Inc.

Acute Care Hospital Services

For the three and six months ended

June 30, 2019 and 2018

(in thousands)

                                 
                                 

Same Facility Basis - Acute Care Hospital Services

                               
                                 
   

Three months ended

 

Three months ended

 

Six months ended

 

Six months ended

   

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

   

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

Net revenues

 

$1,498,493

 

100.0%

 

$1,374,725

 

100.0%

 

$2,989,355

 

100.0%

 

$2,798,502

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

623,218

 

41.6%

 

584,126

 

42.5%

 

1,241,909

 

41.5%

 

1,165,894

 

41.7%

Other operating expenses

 

339,507

 

22.7%

 

308,660

 

22.5%

 

671,392

 

22.5%

 

616,841

 

22.0%

Supplies expense

 

255,322

 

17.0%

 

240,118

 

17.5%

 

513,033

 

17.2%

 

483,271

 

17.3%

Depreciation and amortization

 

75,368

 

5.0%

 

67,165

 

4.9%

 

149,596

 

5.0%

 

139,315

 

5.0%

Lease and rental expense

 

14,654

 

1.0%

 

14,708

 

1.1%

 

28,910

 

1.0%

 

28,991

 

1.0%

Subtotal-operating expenses

 

1,308,069

 

87.3%

 

1,214,777

 

88.4%

 

2,604,840

 

87.1%

 

2,434,312

 

87.0%

Income from operations

 

190,424

 

12.7%

 

159,948

 

11.6%

 

384,515

 

12.9%

 

364,190

 

13.0%

Interest expense, net

 

244

 

0.0%

 

431

 

0.0%

 

523

 

0.0%

 

962

 

0.0%

Other (income) expense, net

 

(45)

 

(0.0)%

 

(2,498)

 

(0.2)%

 

(45)

 

(0.0)%

 

(2,498)

 

(0.1)%

Income before income taxes

 

190,225

 

12.7%

 

$162,015

 

11.8%

 

384,037

 

12.8%

 

$365,726

 

13.1%

                                 
                                 
                                 

All Acute Care Hospital Services

                               
                                 
   

Three months ended

 

Three months ended

 

Six months ended

 

Six months ended

   

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

   

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

Net revenues

 

$1,531,709

 

100.0%

 

$1,403,991

 

100.0%

 

$3,046,553

 

100.0%

 

$2,849,623

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

624,035

 

40.7%

 

584,126

 

41.6%

 

1,243,352

 

40.8%

 

1,165,894

 

40.9%

Other operating expenses

 

373,069

 

24.4%

 

337,926

 

24.1%

 

729,300

 

23.9%

 

667,962

 

23.4%

Supplies expense

 

255,703

 

16.7%

 

240,118

 

17.1%

 

513,847

 

16.9%

 

483,271

 

17.0%

Depreciation and amortization

 

75,810

 

4.9%

 

67,165

 

4.8%

 

150,171

 

4.9%

 

139,315

 

4.9%

Lease and rental expense

 

14,736

 

1.0%

 

14,708

 

1.0%

 

29,035

 

1.0%

 

28,991

 

1.0%

Subtotal-operating expenses

 

1,343,353

 

87.7%

 

1,244,043

 

88.6%

 

2,665,705

 

87.5%

 

2,485,433

 

87.2%

Income from operations

 

188,356

 

12.3%

 

159,948

 

11.4%

 

380,848

 

12.5%

 

364,190

 

12.8%

Interest expense, net

 

244

 

0.0%

 

431

 

0.0%

 

523

 

0.0%

 

962

 

0.0%

Other (income) expense, net

 

(45)

 

(0.0)%

 

(2,498)

 

(0.2)%

 

(45)

 

(0.0)%

 

(2,498)

 

(0.1)%

Income before income taxes

 

188,157

 

12.3%

 

$162,015

 

11.5%

 

380,370

 

12.5%

 

$365,726

 

12.8%

                                 
                                 

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 material

items that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters, settlements, legal judgments and lawsuits, cost related to

extinguishment of debt, gains/losses on sales of assets and businesses, impairments of long-lived and intangible assets 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 herein and the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2018 and Form 10-Q for the

quarter ended March 31, 2019.

                                 

The All Acute Care Hospital Servicestable summarizes the results of operations for all our acute care operations during the periods presented. These amounts include: (i) our acute care

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.

Behavioral Health Care Services

For the three and six months ended

June 30, 2019 and 2018

(in thousands)

                                 
                                 

Same Facility - Behavioral Health Care Services

                               
                                 
   

Three months ended

 

Three months ended

 

Six months ended

 

Six months ended

   

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

   

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

Net revenues

 

$1,272,249

 

100.0%

 

$1,238,263

 

100.0%

 

$2,513,474

 

100.0%

 

$2,443,311

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

664,547

 

52.2%

 

642,368

 

51.9%

 

1,320,133

 

52.5%

 

1,273,199

 

52.1%

Other operating expenses

 

234,563

 

18.4%

 

233,585

 

18.9%

 

468,987

 

18.7%

 

464,171

 

19.0%

Supplies expense

 

49,499

 

3.9%

 

48,808

 

3.9%

 

98,117

 

3.9%

 

97,551

 

4.0%

Depreciation and amortization

 

39,095

 

3.1%

 

37,734

 

3.0%

 

78,967

 

3.1%

 

74,472

 

3.0%

Lease and rental expense

 

11,006

 

0.9%

 

11,528

 

0.9%

 

21,923

 

0.9%

 

23,224

 

1.0%

Subtotal-operating expenses

 

998,710

 

78.5%

 

974,023

 

78.7%

 

1,988,127

 

79.1%

 

1,932,617

 

79.1%

Income from operations

 

273,539

 

21.5%

 

264,240

 

21.3%

 

525,347

 

20.9%

 

510,694

 

20.9%

Interest expense, net

 

369

 

0.0%

 

410

 

0.0%

 

744

 

0.0%

 

837

 

0.0%

Other (income) expense, net

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Income before income taxes

 

$273,170

 

21.5%

 

$263,830

 

21.3%

 

$524,603

 

20.9%

 

$509,857

 

20.9%

                                 
                                 
                                 

All Behavioral Health Care Services

                               
                                 
   

Three months ended

 

Three months ended

 

Six months ended

 

Six months ended

   

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

   

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

Net revenues

 

$1,320,241

 

100.0%

 

$1,274,083

 

100.0%

 

$2,606,624

 

100.0%

 

$2,512,079

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

683,948

 

51.8%

 

651,852

 

51.2%

 

1,359,647

 

52.2%

 

1,293,980

 

51.5%

Other operating expenses

 

265,785

 

20.1%

 

259,959

 

20.4%

 

527,922

 

20.3%

 

516,361

 

20.6%

Supplies expense

 

49,986

 

3.8%

 

49,470

 

3.9%

 

99,117

 

3.8%

 

99,006

 

3.9%

Depreciation and amortization

 

42,339

 

3.2%

 

39,777

 

3.1%

 

84,891

 

3.3%

 

78,231

 

3.1%

Lease and rental expense

 

11,719

 

0.9%

 

12,256

 

1.0%

 

23,363

 

0.9%

 

24,557

 

1.0%

Subtotal-operating expenses

 

1,053,777

 

79.8%

 

1,013,314

 

79.5%

 

2,094,940

 

80.4%

 

2,012,135

 

80.1%

Income from operations

 

266,464

 

20.2%

 

260,769

 

20.5%

 

511,684

 

19.6%

 

499,944

 

19.9%

Interest expense, net

 

369

 

0.0%

 

410

 

0.0%

 

744

 

0.0%

 

837

 

0.0%

Other (income) expense, net

 

109

 

0.0%

 

(1,085)

 

(0.1)%

 

786

 

0.0%

 

(1,085)

 

(0.0)%

Income before income taxes

 

265,986

 

20.1%

 

261,444

 

20.5%

 

510,154

 

19.6%

 

500,192

 

19.9%

                                 
                                 

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 material

items that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters, settlements, legal judgments and lawsuits, cost related to

extinguishment of debt, gains/losses on sales of assets and businesses, impairments of long-lived and intangible assets 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 herein and in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2018 and Form 10-Q for the

quarter ended March 31, 2019.

                                 

The All Behavioral Health Care Services table summarizes the results of operations for all our behavioral health care facilities during the periods presented. 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 as well as the results of

certain facilities that were closed or restructured during the past year.

 

Universal Health Services, Inc.

Selected Hospital Statistics

For the three months ended

June 30, 2019 and 2018

                         
                         

AS REPORTED:

                       
                         
                         
   

ACUTE

 

BEHAVIORAL HEALTH

   

6/30/19

 

6/30/18

 

%  change

 

6/30/19

 

6/30/18

 

%  change

                         

Hospitals owned and leased

 

26

 

26

 

0.0%

 

327

 

301

 

8.6%

Average licensed beds

 

6,371

 

6,213

 

2.5%

 

23,798

 

23,262

 

2.3%

Average available beds

 

6,195

 

6,037

 

2.6%

 

23,698

 

23,178

 

2.2%

Patient days

 

357,894

 

339,697

 

5.4%

 

1,632,531

 

1,605,977

 

1.7%

Average daily census

 

3,932.9

 

3,733.1

 

5.4%

 

17,939.9

 

17,648.1

 

1.7%

Occupancy-licensed beds

 

61.7%

 

60.1%

 

2.7%

 

75.4%

 

75.9%

 

-0.6%

Occupancy-available beds

 

63.5%

 

61.8%

 

2.7%

 

75.7%

 

76.1%

 

-0.6%

Admissions

 

78,879

 

74,997

 

5.2%

 

121,687

 

120,469

 

1.0%

Length of stay

 

4.5

 

4.5

 

0.2%

 

13.4

 

13.3

 

0.6%

                         

Inpatient revenue

 

$7,051,925

 

$6,164,010

 

14.4%

 

$2,547,626

 

$2,448,894

 

4.0%

Outpatient revenue

 

4,402,308

 

3,760,326

 

17.1%

 

268,693

 

267,537

 

0.4%

Total patient revenue

 

11,454,233

 

9,924,336

 

15.4%

 

2,816,319

 

2,716,431

 

3.7%

Other revenue

 

114,017

 

100,171

 

13.8%

 

62,140

 

51,145

 

21.5%

Gross hospital revenue

 

11,568,250

 

10,024,507

 

15.4%

 

2,878,459

 

2,767,576

 

4.0%

Total deductions

 

10,036,541

 

8,620,516

 

16.4%

 

1,558,218

 

1,493,493

 

4.3%

Net hospital revenue 

 

$1,531,709

 

$1,403,991

 

9.1%

 

$1,320,241

 

$1,274,083

 

3.6%

                         
                         

SAME FACILITY:

                       
                         
   

ACUTE

 

BEHAVIORAL HEALTH

   

6/30/19

 

6/30/18

 

%  change

 

6/30/19

 

6/30/18

 

%  change

                         

Hospitals owned and leased

 

26

 

26

 

0.0%

 

288

 

288