uhs-8k_20181025.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2018

 

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

DELAWARE

 

1-10765

 

23-2077891

(State or other jurisdiction of

 

(Commission

 

(I.R.S. Employer

Incorporation or Organization)

 

File Number)

 

Identification No.)

UNIVERSAL CORPORATE CENTER

367 SOUTH GULPH ROAD

KING OF PRUSSIA, PENNSYLVANIA 19406

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code (610) 768-3300

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02 Results of Operations and Financial Condition

On October 25, 2018, Universal Health Services, Inc. issued the press release attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

 

 

 

99.1

  

Universal Health Services, Inc., press release, dated October 25, 2018.

 

 

 

Exhibit Index

 

Exhibit No.

  

Exhibit

 

 

99.1

  

Universal Health Services, Inc., press release, dated October 25, 2018.

 

 


 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Universal Health Services, Inc.

 

By:

 

/s/ Steve Filton

Name: Steve Filton

Title: Executive Vice President and

            Chief Financial Officer

Date: October 25, 2018

 

 

 

 

uhs-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 25, 2018

 

CONTACT:

Steve Filton

 

Chief Financial Officer

 

610-768-3300

 

 

UNIVERSAL HEALTH SERVICES, INC.

REPORTS 2018 THIRD QUARTER FINANCIAL RESULTS AND NARROWS 2018 FULL YEAR EARNINGS GUIDANCE RANGE

 

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended September 30, 2018 and 2017:

KING OF PRUSSIA, PA – Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $171.7 million, or $1.84 per diluted share, during the third quarter of 2018 as compared to $141.2 million, or $1.47 per diluted share, during the comparable quarter of 2017.  Net revenues increased 4.2% to $2.65 billion during the third quarter of 2018 as compared to $2.54 billion during the third quarter of 2017.

 

For the three-month period ended September 30, 2018, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), was $208.8 million, or $2.23 per diluted share, as compared to $143.4 million, or $1.49 per diluted share, during the third quarter of 2017.  

 

Included in our reported and our adjusted net income attributable to UHS during the third quarter of 2018, is a pre-tax unrealized gain of $10.5 million, or $.09 per diluted share (included in “Other (income) expense, net”), resulting 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 third quarter of 2018, is a net aggregate unfavorable after-tax impact of $37.1 million, or $.39 per diluted share, substantially all of which resulted from an unfavorable after-tax impact of $36.6 million, or $.39 per diluted share, resulting from a $48.0 million pre-tax increase in the reserve established in connection with the discussions with the Department of Justice (“DOJ Reserve”), as discussed below.  

 

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 calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization (“EBITDA net of NCI”), was $377.7 million during the third quarter of


2018 as compared to $363.4 million during the third quarter of 2017.  Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impact of the above-mentioned $48.0 million pre-tax increase in the DOJ Reserve and $11.4 million of other income, net, was $414.3 million during the third quarter of 2018 as compared to $363.4 million during the third quarter of 2017.

 

Consolidated Results of Operations, As Reported and As Adjusted  – Nine-month periods ended September 30, 2018 and 2017:

Reported net income attributable to UHS was $621.6 million, or $6.60 per diluted share, during the nine-month period ended September 30, 2018 as compared to $532.7 million, or $5.50 per diluted share, during the comparable period of 2017.  Net revenues increased 3.2% to $8.02 billion during the first nine months of 2018 as compared to $7.77 billion during the first nine months of 2017.

 

For the nine-month period ended September 30, 2018, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $674.3 million, or $7.16 per diluted share, as compared to $535.8 million, or $5.53 per diluted share, during the comparable nine-month period of 2017.  

 

Included in our reported and our adjusted net income attributable to UHS during the first nine months of 2018, is a pre-tax unrealized gain of $18.5 million, or $.15 per diluted share (included in “Other (income) expense, net”), resulting 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 nine-month period ended September 30, 2018, is a net aggregate unfavorable after-tax impact of $52.6 million, or $.56 per diluted share, consisting of: (i) an unfavorable after-tax impact of $53.7 million, or $.57 per diluted share, resulting from a $70.4 million pre-tax increase in the DOJ Reserve, as discussed below, partially offset by; (ii) a favorable after-tax impact of $1.1 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09.  

 

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 adoption of ASU 2016-09.  

 

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization (“EBITDA net of NCI”), was $1.264 billion during the first nine months of 2018 as compared to $1.262 billion during the first nine months of 2017. Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impact of the $70.4 million pre-tax increase in the DOJ Reserve and $26.7 million of other income, net, was $1.308 billion during the nine-month period ended September 30, 2018 as compared to $1.262 billion during the first nine months of 2017.

 

Acute Care Services – Three and nine-month periods ended September 30, 2018 and 2017:

During the third quarter of 2018, at our acute care hospitals owned during both periods (“same facility basis”), adjusted admissions (adjusted for outpatient activity) increased 1.5% and adjusted


patient days increased 4.1%, as compared to the third quarter of 2017. At these facilities, net revenue per adjusted admission increased 6.6% while net revenue per adjusted patient day increased 3.9% during the third quarter of 2018 as compared to the comparable quarter of 2017. Net revenues from our acute care services on a same facility basis increased 6.7% during the third quarter of 2018 as compared to the comparable quarter of the prior year.

 

During the nine-month period ended September 30, 2018, at our acute care hospitals on a same facility basis, adjusted admissions increased 2.0% and adjusted patient days increased 4.8%, as compared to the comparable period  of 2017. At these facilities, net revenue per adjusted admission increased 4.2% while net revenue per adjusted patient day increased 1.5% during the first nine months of 2018 as compared to the comparable period of 2017. Net revenues from our acute care services on a same facility basis increased 4.5% during the first nine months of 2018 as compared to the comparable period of the prior year.

 

Behavioral Health Care Services – Three and nine-month periods ended September 30, 2018 and 2017:

During the third quarter of 2018, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 4.7% while adjusted patient days increased 0.6% as compared to the third quarter of 2017. At these facilities, net revenue per adjusted admission decreased 1.9% while net revenue per adjusted patient day increased 2.1% during the third quarter of 2018 as compared to the comparable quarter in 2017. On a same facility basis, our behavioral health care services’ net revenues increased 2.5% during the third quarter of 2018 as compared to the third quarter of 2017.    

 

During the nine-month period ended September 30, 2018, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.5% while adjusted patient days increased 0.2% as compared to the comparable period of 2017. At these facilities, net revenue per adjusted admission increased 0.7% while net revenue per adjusted patient day increased 3.0% during the first nine months of 2018 as compared to the comparable period in 2017. On a same facility basis, our behavioral health care services’ net revenues increased 2.8% during the first nine months of 2018 as compared to the comparable period of 2017.    

 

Net Cash Provided by Operating Activities and Share Repurchase Program:

For the nine months ended September 30, 2018, our net cash provided by operating activities was $975 million as compared to $879 million generated during the first nine months of 2017. The $97 million increase was due to: (i) a $98 million favorable change in cash flows from foreign currency forward exchange contracts related to our investments in the U.K; (ii) an $84 million unfavorable change in accounts receivable; (iii) a $65 million favorable change in other working capital accounts resulting primarily from changes in accrued expenses and accounts payable due to timing of disbursements, and; (iv) $18 million of other combined net favorable changes.

 

In November of 2017, our Board of Directors authorized a $400 million increase to our stock repurchase program, which increased the aggregate authorization to $1.2 billion from the previous $800 million authorization approved during 2016 and 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 our stock repurchase program, during the third quarter of 2018, we have repurchased 940,059 shares at an aggregate cost of approximately $117.9 million (approximately $125 per share).  During the first nine months of 2018, we have repurchased approximately 2.10 million


shares at an aggregate cost of $252.0 million (approximately $120 per share). Since inception of the program in 2014 through September 30, 2018, we have repurchased approximately 9.45 million shares at an aggregate cost of $1.09 billion (approximately $115 per share).  

 

Narrowing of 2018 Full Year Earnings Guidance Range:

Based upon the operating trends and financial results experienced during the first nine months of 2018, we are narrowing our estimated range of adjusted net income attributable to UHS for the year ended December 31, 2018 to $9.25 to $9.60 per diluted share as compared to the previously provided range of $9.25 to $9.90 per diluted share.  This revised estimated guidance range decreases the upper end of the previously provided range by 3.0% while the lower end of the range remains unchanged.  

 

This revised estimated earnings guidance range excludes the unfavorable impact of the reserve established in connection with the civil aspects of the government’s investigation of our certain of our behavioral health care facilities (“DOJ Reserve”), as discussed below, and excludes the impact on our provision for income taxes and net income attributable to UHS resulting from of our adoption of ASU 2016-09.  

 

Included in the revised estimated earnings guidance range for the year ended December 31, 2018 is the above-mentioned pre-tax unrealized gain of $18.5 million, or $.15 per diluted share, recorded during the first nine months of 2018 resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.  The revised estimated earnings guidance range for the full year of 2018 assumes no change in the market value of these marketable securities during the fourth quarter of 2018.    

 

In addition, this revised estimated earnings guidance range excludes the impact of future items, if applicable and material, 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 and intangible assets, impact of share repurchases and other 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.

 

Conference call information:        

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on October 26, 2018. 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.

DOJ Reserve:

During the three and nine-month periods ended September 30, 2018, we recorded pre-tax increases of approximately $48.0 million and $70.4 million, respectively, to the reserve established in connection with the civil aspects of the government’s investigation of certain of our behavioral health care facilities, increasing the aggregate pre-tax reserve to approximately $90 million as of September 30, 2018.  Changes in the reserve may be required in future periods as discussions with the Department of


Justice continue and additional information becomes available.  We cannot predict the ultimate resolution of this matter and therefore can provide no assurance that final amounts paid in settlement or otherwise, if any, or associated costs, will not differ materially from our established reserve.  Please see Item 1-Legal Proceedings in our Form 10-Q for the quarterly period ended June 30, 2018 for additional disclosure in connection with this matter.

 

Credit Facilities:

Earlier this week we entered into a sixth amendment to our credit agreement originally dated as of November 15, 2010 to, among other things: (i) increase the aggregate amount of the revolving credit facility by $200 million to $1 billion; (ii) increase the aggregate amount of the tranche A term loan by approximately $290 million to $2 billion, and; (iii) extend the maturity date of the credit agreement from August 7, 2019 to October 23, 2023. We also anticipate adding an additional seven-year tranche B term loan facility in the aggregate principal amount of up to $500 million in the very near future.

 

Adoption of New Revenue Recognition Standard:

On January 1, 2018, we adopted, using the modified retrospective approach, ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, respectively, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The most significant change from the adoption of the new standard relates to our estimation for the allowance for doubtful accounts. Under the previous standards, our estimate for amounts not expected to be collected based upon our historical experience, were reflected as provision for doubtful accounts, included within net revenue. Under the new standard, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue, however, not reflected separately as provision for doubtful accounts. Under the new standard, subsequent changes in estimate of collectability due to a change in the financial status of a payor, for example a bankruptcy, will be recognized as bad debt expense in operating charges. The adoption of this ASU in 2018, and amounts recognized as bad debt expense and included in other operating expenses, did not have a material impact on our consolidated financial statements.      

 

Tax Cuts and Jobs Act of 2017:

Effective January 1, 2018, our provision for income taxes, net income attributable to UHS, and net income attributable to UHS per diluted share, were favorably impacted by the Tax Cuts and Jobs Act of 2017 which made broad and complex changes to the U.S. tax code including, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%.

 

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 its inception into an esteemed Fortune 500 corporation, UHS today has annual revenue exceeding $10 billion. In 2018, UHS was recognized as one of the World’s Most Admired Companies by Fortune; ranked #268 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: Build or acquire high quality hospitals in rapidly growing markets, invest in the people and equipment needed to allow each facility to thrive, and become the leading healthcare provider in each community we serve.

 

Headquartered in King of Prussia, PA, UHS has more than 83,000 employees and through its subsidiaries operates 350 inpatient acute care hospitals and behavioral health facilities and 32 outpatient and other facilities located in 37 states, Washington, D.C., the United Kingdom and Puerto Rico. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information on the Company, visit our 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, 2017 and in Item 2-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2018), 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 operating income, operating margin, 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, reserves for various matters including settlements, legal judgments and lawsuits, costs 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. 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, 2017 and Form 10-Q for the quarterly period ended June 30, 2018. 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.


 

 

(more)



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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net revenues before provision for doubtful accounts

 

 

 

 

 

$

2,775,790

 

 

 

 

 

 

$

8,428,971

 

Less: Provision for doubtful accounts

 

 

 

 

 

 

233,926

 

 

 

 

 

 

 

661,893

 

Net revenues

 

$

2,648,913

 

 

 

2,541,864

 

 

$

8,017,782

 

 

 

7,767,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

1,316,710

 

 

 

1,251,528

 

 

 

3,922,832

 

 

 

3,725,786

 

Other operating expenses

 

 

651,442

 

 

 

628,523

 

 

 

1,896,745

 

 

 

1,868,076

 

Supplies expense

 

 

285,201

 

 

 

268,089

 

 

 

867,863

 

 

 

820,242

 

Depreciation and amortization

 

 

112,286

 

 

 

110,217

 

 

 

334,970

 

 

 

334,127

 

Lease and rental expense

 

 

26,110

 

 

 

26,197

 

 

 

79,932

 

 

 

77,413

 

 

 

 

2,391,749

 

 

 

2,284,554

 

 

 

7,102,342

 

 

 

6,825,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

257,164

 

 

 

257,310

 

 

 

915,440

 

 

 

941,434

 

Interest expense, net

 

 

39,506

 

 

 

36,956

 

 

 

115,082

 

 

 

108,383

 

Other (income) expense, net

 

 

(11,409

)

 

 

-

 

 

 

(26,717

)

 

 

-

 

Income before income taxes

 

 

229,067

 

 

 

220,354

 

 

 

827,075

 

 

 

833,051

 

Provision for income taxes

 

 

54,186

 

 

 

74,992

 

 

 

192,814

 

 

 

286,774

 

Net income

 

 

174,881

 

 

 

145,362

 

 

 

634,261

 

 

 

546,277

 

Less:  Net income attributable to noncontrolling interests

 

 

3,135

 

 

 

4,117

 

 

 

12,631

 

 

 

13,583

 

Net income attributable to UHS

 

$

171,746

 

 

$

141,245

 

 

$

621,630

 

 

$

532,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS (a)

 

$

1.85

 

 

$

1.48

 

 

$

6.63

 

 

$

5.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS (a)

 

$

1.84

 

 

$

1.47

 

 

$

6.60

 

 

$

5.50

 

 



Universal Health Services, Inc.

 

Footnotes to Consolidated Statements of Income

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

 

Nine months

 

 

 

ended September 30,

 

 

ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

(a) Earnings per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to UHS

 

$

171,746

 

 

$

141,245

 

 

$

621,630

 

 

$

532,694

 

Less: Net income attributable to unvested restricted share grants

 

 

(317

)

 

 

(81

)

 

 

(813

)

 

 

(257

)

Net income attributable to UHS - basic and diluted

 

$

171,429

 

 

$

141,164

 

 

$

620,817

 

 

$

532,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

 

92,849

 

 

 

95,246

 

 

 

93,639

 

 

 

96,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS:

 

$

1.85

 

 

$

1.48

 

 

$

6.63

 

 

$

5.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

92,849

 

 

 

95,246

 

 

 

93,639

 

 

 

96,026

 

Add: Other share equivalents

 

 

481

 

 

 

731

 

 

 

459

 

 

 

771

 

Weighted average number of common shares and equiv. - diluted

 

 

93,330

 

 

 

95,977

 

 

 

94,098

 

 

 

96,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS:

 

$

1.84

 

 

$

1.47

 

 

$

6.60

 

 

$

5.50

 

 


Universal Health Services, Inc.

 

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

 

For the Three Months ended September 30, 2018 and 2017

 

(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

 

 

September 30, 2018

 

 

revenues

 

 

September 30, 2017

 

 

revenues

 

Net income attributable to UHS

$

171,746

 

 

 

 

 

 

$

141,245

 

 

 

 

 

   Depreciation and amortization

 

112,286

 

 

 

 

 

 

 

110,217

 

 

 

 

 

   Interest expense, net

 

39,506

 

 

 

 

 

 

 

36,956

 

 

 

 

 

   Provision for income taxes

 

54,186

 

 

 

 

 

 

 

74,992

 

 

 

 

 

EBITDA net of NCI

$

377,724

 

 

 

14.3

%

 

$

363,410

 

 

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

(11,409

)

 

 

 

 

 

 

-

 

 

 

 

 

Increase in DOJ Reserve

 

47,981

 

 

 

 

 

 

 

-

 

 

 

 

 

Adjusted EBITDA net of NCI

$

414,296

 

 

 

15.6

%

 

$

363,410

 

 

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

2,648,913

 

 

 

 

 

 

$

2,541,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Three months ended

 

 

September 30, 2018

 

 

September 30, 2017

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

171,746

 

 

$

1.84

 

 

$

141,245

 

 

$

1.47

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in DOJ Reserve, after-tax

 

36,578

 

 

 

0.39

 

 

 

-

 

 

 

-

 

Impact of ASU 2016-09

 

481

 

 

 

-

 

 

 

(487

)

 

 

(0.01

)

EHR depreciation & amortization, after-tax

 

-

 

 

 

-

 

 

 

2,636

 

 

 

0.03

 

Subtotal adjustments

$

37,059

 

 

$

0.39

 

 

$

2,149

 

 

$

0.02

 

Adjusted net income attributable to UHS

$

208,805

 

 

$

2.23

 

 

$

143,394

 

 

$

1.49

 

 

 

 

 


Universal Health Services, Inc.

 

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

 

For the Nine Months ended September 30, 2018 and 2017

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

% Net

 

 

Nine months ended

 

 

% Net

 

 

September 30, 2018

 

 

revenues

 

 

September 30, 2017

 

 

revenues

 

Net income attributable to UHS

$

621,630

 

 

 

 

 

 

$

532,694

 

 

 

 

 

   Depreciation and amortization

 

334,970

 

 

 

 

 

 

 

334,127

 

 

 

 

 

   Interest expense, net

 

115,082

 

 

 

 

 

 

 

108,383

 

 

 

 

 

   Provision for income taxes

 

192,814

 

 

 

 

 

 

 

286,774

 

 

 

 

 

EBITDA net of NCI

$

1,264,496

 

 

 

15.8

%

 

$

1,261,978

 

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

(26,717

)

 

 

 

 

 

 

-

 

 

 

 

 

Increase in DOJ Reserve

 

70,432

 

 

 

 

 

 

 

-

 

 

 

 

 

Adjusted EBITDA net of NCI

$

1,308,211

 

 

 

16.3

%

 

$

1,261,978

 

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

8,017,782

 

 

 

 

 

 

$

7,767,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

Nine months ended

 

 

September 30, 2018

 

 

September 30, 2017

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

621,630

 

 

$

6.60

 

 

$

532,694

 

 

$

5.50

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in DOJ Reserve, after-tax

 

53,694

 

 

 

0.57

 

 

 

-

 

 

 

-

 

Impact of ASU 2016-09

 

(1,056

)

 

 

(0.01

)

 

 

(8,619

)

 

 

(0.09

)

EHR depreciation & amortization, after-tax

 

-

 

 

 

-

 

 

 

11,747

 

 

 

0.12

 

Subtotal adjustments

$

52,638

 

 

$

0.56

 

 

$

3,128

 

 

$

0.03

 

Adjusted net income attributable to UHS

$

674,268

 

 

$

7.16

 

 

$

535,822

 

 

$

5.53

 

 


Universal Health Services, Inc.

 

Consolidated Statements of Comprehensive Income

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

 

Nine months

 

 

 

ended September 30,

 

 

ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

174,881

 

 

$

145,362

 

 

$

634,261

 

 

$

546,277

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized derivative gains (losses) on cash flow hedges

 

 

(1,924

)

 

 

610

 

 

 

(345

)

 

 

3,547

 

Foreign currency translation adjustment

 

 

(12,323

)

 

 

983

 

 

 

(15,480

)

 

 

9,932

 

Other

 

 

0

 

 

 

(2,515

)

 

 

0

 

 

 

1,645

 

Other comprehensive income (loss)  before tax

 

 

(14,247

)

 

 

(922

)

 

 

(15,825

)

 

 

15,124

 

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

 

 

293

 

 

 

(711

)

 

 

(82

)

 

 

1,935

 

Total other comprehensive income (loss), net of tax

 

 

(14,540

)

 

 

(211

)

 

 

(15,743

)

 

 

13,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

160,341

 

 

 

145,151

 

 

 

618,518

 

 

 

559,466

 

Less: Comprehensive income attributable to noncontrolling interests

 

 

3,135

 

 

 

4,117

 

 

 

12,631

 

 

 

13,583

 

Comprehensive income attributable to UHS

 

$

157,206

 

 

$

141,034

 

 

$

605,887

 

 

$

545,883

 

 


Universal Health Services, Inc.

 

Condensed Consolidated Balance Sheets

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

83,721

 

 

$

74,423

 

Accounts receivable, net

 

 

1,543,348

 

 

 

1,500,898

 

Supplies

 

 

144,471

 

 

 

136,177

 

Other current assets

 

 

169,713

 

 

 

86,504

 

Total current assets

 

 

1,941,253

 

 

 

1,798,002

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

8,459,668

 

 

 

7,921,126

 

Less: accumulated depreciation

 

 

(3,623,049

)

 

 

(3,349,289

)

 

 

 

4,836,619

 

 

 

4,571,837

 

Other assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

3,852,851

 

 

 

3,825,157

 

Deferred charges

 

 

6,933

 

 

 

9,787

 

Deferred income taxes

 

 

2,944

 

 

 

3,007

 

Other

 

 

632,985

 

 

 

554,038

 

Total Assets

 

$

11,273,585

 

 

$

10,761,828

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

342,425

 

 

$

545,619

 

Accounts payable and accrued liabilities

 

 

1,435,592

 

 

 

1,284,081

 

Federal and state taxes

 

 

252

 

 

 

18,334

 

Total current liabilities

 

 

1,778,269

 

 

 

1,848,034

 

 

 

 

 

 

 

 

 

 

Other noncurrent liabilities

 

 

319,113

 

 

 

306,304

 

Long-term debt

 

 

3,683,919

 

 

 

3,494,390

 

Deferred income taxes

 

 

46,765

 

 

 

54,962

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

6,389

 

 

 

6,702

 

 

 

 

 

 

 

 

 

 

UHS common stockholders' equity

 

 

5,363,745

 

 

 

4,989,514

 

Noncontrolling interest

 

 

75,385

 

 

 

61,922

 

Total equity

 

 

5,439,130

 

 

 

5,051,436

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

11,273,585

 

 

$

10,761,828

 

 


Universal Health Services, Inc.

 

Consolidated Statements of Cash Flows

 

(in thousands)

 

(unaudited)

 

 

Nine months

 

 

ended September 30,

 

 

2018

 

 

2017

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net income

$

634,261

 

 

$

546,277

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation & amortization

 

335,002

 

 

 

334,127

 

Stock-based compensation expense

 

50,645

 

 

 

42,838

 

Gain on sale of assets and businesses

 

(2,513

)

 

 

0

 

Changes in assets & liabilities, net of effects from acquisitions and dispositions:

 

 

 

 

 

 

 

Accounts receivable

 

(74,129

)

 

 

10,090

 

Accrued interest

 

(5,808

)

 

 

(5,747

)

Accrued and deferred income taxes

 

(53,165

)