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Universal Health Services, Inc. Reports 2013 Fourth Quarter And Full Year Earnings And 2014 Earnings Guidance
Webcast Image Webcast - Live
Universal Health Services, Inc. 2013 Fourth Quarter and Full Year Earnings Conference Call
Friday, February 28, 2014 9:00 a.m. ET

Consolidated Results of Operations, As Reported - Three and twelve-month periods ended December 31, 2013 and 2012:

KING OF PRUSSIA, Pa., Feb. 27, 2014 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $124.5 million, or $1.24 per diluted share, during the fourth quarter of 2013 as compared to $135.5 million, or $1.39 per diluted share, during the comparable quarter of 2012.  Net revenues increased 2.0% to $1.80 billion during the fourth quarter of 2013 as compared to $1.76 billion during the fourth quarter of 2012. 

Reported net income attributable to UHS was $510.7 million, or $5.14 per diluted share, during the year ended December 31, 2013 as compared to $443.4 million, or $4.53 per diluted share, during the 2012 full year period.  Net revenues increased 4.6% to $7.28 billion during the twelve-month period of 2013 as compared to $6.96 billion during the comparable 2012 twelve-month period. 

Consolidated Results of Operations, As Adjusted – Three-month periods ended December 31, 2013 and 2012:

For the three-month period ended December 31, 2013, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule"), was $103.6 million, or $1.03 per diluted share, as compared to $98.0 million, or $1.00 per diluted share, during the fourth quarter of 2012.     

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2013 was an aggregate net favorable after-tax impact of approximately $20.9 million, or $.21 per diluted share, consisting of: (i) a favorable after-tax impact of $9.2 million, or $.09 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2013, based upon a reserve analysis, and; (ii) a net favorable after-tax impact of approximately $11.8 million, or $.12 per diluted share, related to the incentive income ($33.1 million) and expenses ($14.2 million excluding income taxes) recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals (as discussed below in Accounting for HITECH Act incentive income and EHR expenses). 

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2012, was an aggregate net favorable after-tax impact of $37.4 million, or $.39 per diluted share, consisting of: (i) a favorable after-tax impact of approximately $15.5 million, or $.16 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2012, based upon a reserve analysis; (ii) a favorable after-tax impact of approximately $16.4 million, or $.17 per diluted share, resulting from the gain realized on the sale of Auburn Regional Medical Center which was divested in October, 2012, and; (iii) a net favorable after-tax impact of approximately $5.5 million, or $.06 per diluted share, related to the incentive income ($17.5 million) and expenses ($8.7 million excluding income taxes) recorded in connection with the implementation of EHR applications at our acute care hospitals.

Consolidated Results of Operations, As Adjusted – Twelve-month periods ended December 31, 2013 and 2012:

For the twelve-month period ended December 31, 2013, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $452.1 million, or $4.55 per diluted share, as compared to $406.4 million, or $4.15 per diluted share, during the twelve-month period of 2012.

As reflected on the Supplemental Schedule, included in our reported results during the full year of 2013 was an aggregate net favorable after-tax impact of approximately $58.6 million, or $.59 per diluted share, consisting of: (i) a favorable after-tax impact of $47.0 million, or $.47 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2013, based upon reserve analyses, and; (ii) a net favorable after-tax impact of approximately $11.6 million, or $.12 per diluted share, related to the incentive income ($61.0 million) and expenses ($42.4 million excluding income taxes) recorded in connection with the implementation of EHR applications at our acute care hospitals.

Included in our reported results during the year ended December 31, 2012 was a net favorable after-tax impact of approximately $1.9 million, or $.02 per diluted share, recorded in connection with the implementation of EHR applications, as well as a net aggregate favorable after-tax impact of $35.2 million, or $.36 per diluted share, consisting of the following: (i) a favorable after-tax impact of approximately $15.5 million resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2012, based upon a reserve analysis; (ii)  a favorable after-tax impact of approximately $16.4 million resulting from the gain realized on the sale of Auburn Regional Medical Center which was divested in October, 2012; (iii) an after-tax charge of $18.1 million resulting from the write-off of deferred financing costs related to the portion of our Term Loan B credit facility that was extinguished during the third quarter of 2012; (iv) a favorable after-tax impact of $18.8 million resulting from an industry-wide settlement with the United States Department of Health and Human Services, the Secretary of Health and Human Services, and the Centers for Medicare and Medicaid Services, related to underpayments of Medicare inpatient prospective payments during a number of years prior to 2012; (v) a favorable after-tax impact of $4.3 million representing the 2011 portion of the net Medicaid supplemental reimbursements recorded pursuant to the Oklahoma Supplemental Hospital Offset Payment Program; (vi) an aggregate unfavorable after-tax impact of $5.1 million resulting from the revised Supplemental Security Income ratios utilized for calculating Medicare disproportionate share hospital reimbursements for federal fiscal years 2006 through 2009 ($2.4 million unfavorable after-tax impact), and the write-off of receivables related to revenues recorded during 2011 at two of our acute care hospitals located in Florida resulting from reductions in certain county reimbursements due to reductions in federal matching Inter-Governmental Transfer funds ($2.7 million unfavorable after-tax impact), and; (vii) a net favorable after-tax impact of $3.4 million consisting primarily of the 2011 portion of net Medicaid supplemental revenues recorded during the second quarter of 2012. 

Acute Care Services – Three and twelve-month periods ended December 31, 2013 and 2012:

During the fourth quarter of 2013, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) were unchanged and adjusted patient days increased 3.6%, as compared to the fourth quarter of 2012. Net revenues at these facilities increased 1.1% during the fourth quarter of 2013 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 2.1% while net revenue per adjusted patient day decreased 1.5% during the fourth quarter of 2013 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin at our acute care hospitals was 14.1% during the fourth quarter of 2013 as compared to 14.4% during the fourth quarter of 2012. We define operating margin as net revenues less salaries, wages and benefits, other operating expenses and supplies expense (excluding the impact of the items mentioned above and excluding the EHR impact, as indicated on the Supplemental Schedule).

During the year ended December 31, 2013, at our acute care hospitals on a same facility basis, adjusted admissions increased 1.0% and adjusted patient days increased 2.2%, as compared to the year ended December 31, 2012. Net revenues at these facilities increased 3.8% during the full year of 2013 as compared to 2012.  At these facilities, net revenue per adjusted admission increased 2.7% while net revenue per adjusted patient day increased 1.5% during the full year of 2013, as compared to 2012. The operating margin at our acute care hospitals owned during both years decreased to 14.8% during 2013, as compared to 15.8% during 2012.

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 charges at established rates, amounting to approximately $234 million and $206 million during the three-month periods ended December 31, 2013 and 2012, respectively, and approximately $999 million and $1.05 billion during the years ended December 31, 2013 and 2012, respectively. In addition, the provision for doubtful accounts at our acute care hospitals increased to approximately $291 million during the fourth quarter of 2013 as compared to approximately $179 million during the fourth quarter of 2012 and increased to approximately $1.02 billion during the full year of 2013 as compared to approximately $635 million during the year ended December 31, 2012. 

Behavioral Health Care Services – Three and twelve-month periods ended December 31, 2013 and 2012:

During the fourth quarter of 2013, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.4% while adjusted patient days increased 0.8%, as compared to the fourth quarter of 2012. Net revenues at these facilities increased 4.0% during the fourth quarter of 2013, as compared to the comparable quarter in 2012. At these facilities, net revenue per adjusted admission increased 1.5% while net revenue per adjusted patient day increased 3.2% during the fourth quarter of 2013 over the comparable quarter in 2012. The operating margin at our behavioral health care facilities owned during both periods was 27.9% during the fourth quarter of 2013, as compared to 27.8% during the fourth quarter of 2012. 

During the year ended December 31, 2013, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 3.5% while adjusted patient days increased 1.0%, as compared to the full year of 2012. Net revenues at these facilities increased 3.2% during the twelve-months of 2013, as compared to the comparable twelve-month period of 2012. At these facilities, net revenue per adjusted admission decreased 0.3% while net revenue per adjusted patient day increased 2.2% during the full year of 2013 over 2012. The operating margin at our behavioral health care facilities owned during both years increased to 28.1% during 2013 as compared to 27.8% during 2012. 

Accounting for HITECH Act incentive income and EHR expenses:

The health information technology provisions of the American Recovery and Reinvestment Act (referred to as the "HITECH Act") established criteria related to the "meaningful use" of electronic health records ("EHR") for acute care hospitals and established requirements for the Medicare and Medicaid EHR payment incentive programs.   

During 2011, we began implementing EHR applications at certain of our acute care hospitals and continued to do so, on a hospital-by-hospital basis, until completion which occurred at the end of June, 2013. Our acute care hospitals are eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, once they have demonstrated meaningful use of certified EHR technology for the applicable stage or have completed attestations to their adoption or implementation of certified EHR technology.  With the exception of the newly constructed and recently opened Temecula Valley Hospital (as discussed below), we believe that all of our acute care hospitals have met the stage 1, year one meaningful use criteria.   

As reflected on the Supplemental Schedule, in connection with the implementation of EHR applications, our consolidated results of operations include the net favorable after-tax impact of $11.8 million ($18.9 million pre-tax), or $.12 per diluted share, during the fourth quarter of 2013 and $5.5 million ($8.9 million pre-tax), or $.06 per diluted share, during the fourth quarter of 2012. 

In connection with the implementation of EHR applications, our consolidated results of operations include the net favorable after-tax impact of $11.6 million ($18.7 million pre-tax), or $.12 per diluted share, during the year ended December 31, 2013 and $1.9 million ($3.0 million pre-tax), or $.02 per diluted share, during the prior year.   

During 2014, based upon our anticipated "meaningful use" qualifications, we expect to record approximately $27 million of EHR incentive income and approximately $37 million of EHR-related depreciation and amortization expense resulting in a net unfavorable after-tax (and after income attributable to noncontrolling interest) impact of approximately $5 million, or $.05 per diluted share.       

2014 Full Year Guidance:

Our estimated range of net income attributable to UHS for the year ended December 31, 2014, is $4.80 to $5.10 per diluted share.  This guidance range represents an increase of approximately 6% to 12% over the adjusted net income attributable to UHS of $4.55 per diluted share for the year ended December 31, 2013, as calculated on the attached supplemental schedule.  This range includes an estimated increase of approximately 3% to 7% (or approximately $0.15 to $0.30 per diluted share) related to the Patient Protection and Affordable Care Act. The range excludes the above-mentioned unfavorable EHR impact of $.05 per diluted share.  

During 2014, our net revenues are estimated to be approximately $7.89 billion to $7.94 billion representing an increase of approximately 8% to 9% over our 2013 net revenues.    

This guidance range excludes the impact of items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits 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.

Opening of the newly constructed Temecula Valley Hospital:

In October, 2013, we opened the newly constructed Temecula Valley Hospital, an acute care facility located in Temecula, California.  With 140 private patient rooms, Temecula Valley Hospital offers emergency care, advanced cardiac and stroke care, orthopedics and general medical care, along with surgical specialties.  The new hospital is our fourth located in Riverside County, which is one of the fastest-growing counties in the United States. 

Conference call information:          

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on February 28, 2014. 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 follow shortly after 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 acute care and behavioral health hospitals and ambulatory centers nationwide and in 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, 2013, may cause the results to differ materially from those anticipated in the forward-looking statements.  The operating pressures that we continue to experience in many of our acute care markets has increased the volatility of our financial results making estimation of future results more challenging.  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.

As mentioned above, our acute care hospitals are eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, once they have demonstrated meaningful use of certified EHR technology for the applicable stage or have completed attestations to their adoption or implementation of certified EHR technology.  However, there may be timing differences in the recognition of the incentive income and expenses recorded in connection with the implementation of the EHR application which may cause material period-to-period changes in our future results of operations. Hospitals that do not qualify as a meaningful user of EHR by 2015 are subject to a reduced market basket update to the inpatient prospective payment system standardized amount in 2015 and each subsequent fiscal year. Although we believe that our acute care hospitals will be in compliance with the EHR standards by 2015, there can be no assurance that all of our facilities will be in compliance and therefore not subject to the penalty provision of the HITECH Act.

We believe that operating income, operating margin, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and earnings before interest, taxes, depreciation and amortization ("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 items such as, but not limited to, costs related to extinguishment of debt, gains on sales of assets and businesses, reserves for 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.  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, 2013. 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


Twelve months


ended December 31,


ended December 31,


2013


2012


2013


2012









Net revenues before provision for doubtful accounts

$2,116,288


$1,969,395


$8,411,038


$7,688,071

  Less: Provision for doubtful accounts

315,442


204,468


1,127,216


726,671

Net revenues

1,800,846


1,764,927


7,283,822


6,961,400









Operating charges:








   Salaries, wages and benefits

901,778


875,865


3,604,620


3,440,917

   Other operating expenses

368,626


322,790


1,468,744


1,381,838

   Supplies expense

207,108


204,697


821,089


799,621

   Depreciation and amortization

88,707


80,619


337,172


302,426

   Lease and rental expense

25,107


23,979


97,758


94,885

   Electronic health records incentive income

(33,081)


(17,532)


(61,024)


(30,038)

   Costs related to extinguishment of debt

0


0


0


29,170


1,558,245


1,490,418


6,268,359


6,018,819









Income from operations

242,601


274,509


1,015,463


942,581









Interest expense, net

35,643


41,113


146,131


178,918









Income before income taxes

206,958


233,396


869,332


763,663









Provision for income taxes

73,772


85,736


315,309


274,616









Net income

133,186


147,660


554,023


489,047









Less:  Income attributable to








noncontrolling interests

8,665


12,199


43,290


45,601









Net income attributable to UHS

$124,521


$135,461


$510,733


$443,446

















































Basic earnings per share attributable to UHS (a)

$1.27


$1.39


$5.21


$4.57









Diluted earnings per share attributable to UHS (a)

$1.24


$1.39


$5.14


$4.53









 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)










Three months


Twelve months


ended December 31,


ended December 31,


2013


2012


2013


2012









(a) Earnings per share calculation:
















Basic and diluted:








Net income attributable to UHS

$124,521


$135,461


$510,733


$443,446

Less: Net income attributable to unvested restricted share grants

(94)


(118)


(294)


(497)

Net income attributable to UHS - basic and diluted

$124,427


$135,343


$510,439


$442,949









Weighted average number of common shares - basic

98,237


97,181


98,033


96,821









Basic earnings per share attributable to UHS:

$1.27


$1.39


$5.21


$4.57









Weighted average number of common shares

98,237


97,181


98,033


96,821

Add: Other share equivalents

1,838


530


1,328


890

Weighted average number of common shares and equiv. - diluted

100,075


97,711


99,361


97,711









Diluted earnings per share attributable to UHS:

$1.24


$1.39


$5.14


$4.53









 

Universal Health Services, Inc.


Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule")


For the three months ended December 31, 2013 and 2012


(in thousands, except per share amounts)


(unaudited)





























Calculation of "EBITDA"












Three months ended


Three months ended



December 31, 2013


December 31, 2012




















Net revenues before provision for doubtful accounts

$2,116,288




$1,969,395




  Less: Provision for doubtful accounts

315,442




204,468




Net revenues

1,800,846


100.0%


1,764,927


100.0%











Operating charges:









   Salaries, wages and benefits

901,778


50.1%


875,865


49.6%


   Other operating expenses

368,626


20.5%


322,790


18.3%


   Supplies expense

207,108


11.5%


204,697


11.6%


   EHR incentive income

(33,081)


-1.8%


(17,532)


-1.0%



1,444,431


80.2%


1,385,820


78.5%











Operating income/margin ("EBITDAR")

356,415


19.8%


379,107


21.5%











   Lease and rental expense

25,107




23,979




   Income attributable to noncontrolling interests

8,665




12,199













Earnings before, depreciation and amortization, interest expense, and income taxes ("EBITDA")

322,643


17.9%


342,929


19.4%











   Depreciation and amortization

88,707




80,619




   Costs related to extinguishment of debt

0




0




   Interest expense, net

35,643




41,113













Income before income taxes 

198,293




221,197













Provision for income taxes

73,772




85,736




Net income attributable to UHS

$124,521




$135,461






















Calculation of Adjusted Net Income Attributable to UHS












Three months ended


Three months ended



December 31, 2013


December 31, 2012





Per




Per



Amount


Diluted Share


Amount


Diluted Share


Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:









Net income attributable to UHS

$124,521


$1.24


$135,461


$1.39


Plus/minus adjustments:









  Reduction of reserves relating to prior years for professional and general liability









      self-insured claims, net of income taxes

(9,155)


(0.09)


(15,516)


(0.16)


  Gain on sale of assets and business, net of income taxes

-


-


(16,417)


(0.17)


Subtotal after-tax adjustments to net income attributable to UHS

(9,155)


(0.09)


(31,933)


(0.33)


Adjusted net income attributable to UHS - including Electronic Health Records ("EHR") impact

$115,366


$1.15


$103,528


$1.06











Plus/minus impact of EHR implementation: 









EHR-related incentive income, pre-tax

(33,081)




(17,532)




EHR-related salaries, wages and benefits, pre-tax

1,579




3,594




EHR-related other operating costs, pre-tax

2,238




(173)




EHR-related depreciation & amortization, pre-tax

9,877




5,191




EHR-related minority interest in earnings of consolidated entities, pre-tax

533




53




Income tax provision on EHR-related items 

7,078




3,357




After-tax impact of EHR-related items

(11,776)


(0.12)


(5,510)


(0.06)


Adjusted net income attributable to UHS

$103,590


$1.03


$98,018


1.00















































 

Universal Health Services, Inc.


Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule")


For the twelve months ended December 31, 2013 and 2012


(in thousands, except per share amounts)


(unaudited)





























Calculation of "EBITDA"












Twelve months ended


Twelve months ended



December 31, 2013


December 31, 2012




















Net revenues before provision for doubtful accounts

$8,411,038




$7,688,071




  Less: Provision for doubtful accounts

1,127,216




726,671




Net revenues

7,283,822


100.0%


6,961,400


100.0%











Operating charges:









   Salaries, wages and benefits

3,604,620


49.5%


3,440,917


49.4%


   Other operating expenses

1,468,744


20.2%


1,381,838


19.9%


   Supplies expense

821,089


11.3%


799,621


11.5%


   EHR incentive income

(61,024)


-0.8%


(30,038)


-0.4%



5,833,429


80.1%


5,592,338


80.3%











Operating income/margin ("EBITDAR")

1,450,393


19.9%


1,369,062


19.7%











   Lease and rental expense

97,758




94,885




   Income attributable to noncontrolling interests

43,290




45,601













Earnings before, depreciation and amortization, interest expense, and income taxes ("EBITDA")

1,309,345


18.0%


1,228,576


17.6%











   Depreciation and amortization

337,172




302,426




   Costs related to extinguishment of debt

0




29,170




   Interest expense, net

146,131




178,918













Income before income taxes 

826,042




718,062













Provision for income taxes

315,309




274,616




Net income attributable to UHS

$510,733




$443,446






















Calculation of Adjusted Net Income Attributable to UHS












Twelve months ended


Twelve months ended



December 31, 2013


December 31, 2012





Per




Per



Amount


Diluted Share


Amount


Diluted Share


Calculation of Adjusted Net Income Attributable to UHS - including and excluding EHR impact:









Net income attributable to UHS

$510,733


$5.14


$443,446


$4.53


Plus/minus adjustments:









  Reduction of reserves relating to prior years for professional and general liability









      self-insured claims, net of income taxes

(46,981)




(15,516)




  Medicare Rural Floor settlement, net of income taxes

-




(18,753)




  Oklahoma SHOPP Medicaid reimbursements related to prior years, net of income taxes

-




(4,329)




  Impact of revised SSI ratios and write-off Florida county receivables, net of income taxes

-




5,149




  Net Medicaid reimbursements related to prior years, net of income taxes

-




(3,417)




  Costs related to extinguishment of debt, net of income taxes

-


-


18,126




  Gain on sale of assets and business, net of income taxes





(16,417)




Subtotal after-tax adjustments to net income attributable to UHS

(46,981)


(0.47)


(35,157)


(0.36)


Adjusted net income attributable to UHS - including Electronic Health Records ("EHR") impact

$463,752


$4.67


$408,289


$4.17











Plus/minus impact of EHR implementation: 









EHR-related incentive income, pre-tax

(61,024)




(30,038)




EHR-related salaries, wages and benefits, pre-tax

6,570




14,316




EHR-related other operating costs, pre-tax

3,363




141




EHR-related depreciation & amortization, pre-tax

33,286




13,293




EHR-related minority interest in earnings of consolidated entities, pre-tax

(846)




(722)




Income tax provision on EHR-related items 

7,002




1,140




After-tax impact of EHR-related items

(11,649)


(0.12)


(1,870)


(0.02)


Adjusted net income attributable to UHS

$452,103


$4.55


$406,419


$4.15











 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)










Three months


Twelve months


ended December 31,


ended December 31,


2013


2012


2013


2012









Net income

$133,186


$147,660


$554,023


$489,047

Other comprehensive income (loss):








   Unrealized derivative gains (loss) on cash flow hedges

4,092


4,895


16,963


6,677

   Amortization of terminated hedge

(84)


(84)


(336)


(336)

   Minimum pension liability

14,657


4,986


14,657


4,986

Other comprehensive income before tax

18,665


9,797


31,284


11,327

Income tax expense related to items of other comprehensive income

7,182


3,721


11,940


4,306

Total other comprehensive income, net of tax

11,483


6,076


19,344


7,021









Comprehensive income

144,669


153,736


573,367


496,068

Less: Comprehensive income attributable to noncontrolling interests

8,665


12,199


43,290


45,601

Comprehensive income attributable to UHS

$136,004


$141,537


$530,077


$450,467









Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)











December 31,



December 31,




2013



2012

Assets







Current assets:







    Cash and cash equivalents


$

17,238


$

23,471

    Accounts receivable, net



1,116,961



1,067,197

    Supplies



101,781



99,000

    Deferred income taxes



119,903



104,461

    Other current assets



76,446



87,936

    Assets of facilities held for sale



0



25,431

          Total current assets



1,432,329



1,407,496








Property and equipment



5,691,902



5,368,345

Less: accumulated depreciation



(2,249,733)



(1,986,110)




3,442,169



3,382,235








Other assets:







    Goodwill



3,049,016



3,036,765

    Deferred charges



57,881



75,888

    Other



330,328



298,459



$

8,311,723


$

8,200,843








Liabilities and Stockholders' Equity







Current liabilities:







    Current maturities of long-term debt


$

99,312


$

2,589

    Accounts payable and accrued liabilities



953,449



889,557

    Federal and state taxes



7,127



1,062

    Liabilities of facilities held for sale



0



850

          Total current liabilities



1,059,888



894,058








Other noncurrent liabilities



284,589



395,355

Long-term debt



3,209,762



3,727,431

Deferred income taxes



239,148



183,747








Redeemable noncontrolling interest



218,107



234,303








UHS common stockholders' equity



3,249,979



2,713,345

Noncontrolling interest



50,250



52,604

          Total equity



3,300,229



2,765,949










$

8,311,723


$

8,200,843








Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


Twelve months


ended December 31,


2013


2012





Cash Flows from Operating Activities:




  Net income

$554,023


$489,047

  Adjustments to reconcile net income to net 




cash provided by operating activities:




Depreciation & amortization

337,356


308,690

Stock-based compensation expense

27,783


22,518

Gains on sales of assets and business, net of losses

(3,114)


(27,085)

Costs related to extinguishment of debt

0


29,170

  Changes in assets & liabilities, net of effects from




acquisitions and dispositions:




   Accounts receivable

(49,708)


(71,068)

   Accrued interest

(1,197)


152

   Accrued and deferred income taxes 

34,861


(5,666)

   Other working capital accounts 

26,234


28,554

   Other assets and deferred charges

8,984


30,976

   Other 

23,485


6,367

   Accrued insurance expense, net of commercial premiums paid

(3,821)


62,660

   Payments made in settlement of self-insurance claims

(70,645)


(75,084)

          Net cash provided by operating activities

884,241


799,231





Cash Flows from Investing Activities:




   Property and equipment additions, net of disposals

(358,493)


(363,192)

   Proceeds received from sale of assets and businesses

37,482


149,311

   Acquisition of property and businesses

(12,636)


(527,847)

   Costs incurred for purchase and implementation of electronic health records application

(49,811)


(54,362)

   Return of deposit on terminated purchase agreement

0


6,500

          Net cash used in investing activities

(383,458)


(789,590)





Cash Flows from Financing Activities:




   Reduction of long-term debt

(440,224)


(849,647)

   Additional borrowings

15,761


913,500

   Financing costs

(231)


(8,283)

   Repurchase of common shares

(27,201)


(19,154)

   Dividends paid

(19,621)


(58,395)

   Issuance of common stock

5,708


5,435

   Excess income tax benefits related to stock-based compensation

20,121


16,040

   Profit distributions to noncontrolling interests

(61,329)


(26,895)

          Net cash used in financing activities

(507,016)


(27,399)





Decrease in cash and cash equivalents

(6,233)


(17,758)

Cash and cash equivalents, beginning of period

23,471


41,229

Cash and cash equivalents, end of period

$17,238


$23,471





Supplemental Disclosures of Cash Flow Information:




  Interest paid

$131,259


$157,415





  Income taxes paid, net of refunds

$259,896


$264,824





 



       Universal Health Services, Inc.





  Supplemental Statistical Information






                   (un-audited)






























 % Change 


 % Change 








Quarter Ended


12 months ended



Same Facility:





12/31/2013


12/31/2013













Acute Care Hospitals










Revenues





1.1%


3.8%



Adjusted Admissions





0.0%


1.0%



Adjusted Patient Days





3.6%


2.2%



Revenue Per Adjusted Admission





2.1%


2.7%



Revenue Per Adjusted Patient Day





-1.5%


1.5%























Behavioral Health Hospitals




















Revenues





4.0%


3.2%



Adjusted Admissions





2.4%


3.5%



Adjusted Patient Days





0.8%


1.0%



Revenue Per Adjusted Admission





1.5%


-0.3%



Revenue Per Adjusted Patient Day





3.2%


2.2%











































UHS Consolidated



Fourth Quarter Ended


Twelve months Ended




12/31/2013


12/31/2012


12/31/2013


12/31/2012











Revenues



$1,800,846


$1,764,927


$7,283,822


$6,961,400

EBITDA   (1)



322,643


342,929


1,309,345


1,228,576

EBITDA Margin (1)



17.9%


19.4%


18.0%


17.6%











Cash Flow From Operations



292,509


264,225


884,241


799,231

Days Sales Outstanding



57


56


56


56

Capital Expenditures  



78,742


81,001


358,493


363,192











Debt 







3,309,074


3,730,020

Shareholders Equity







3,249,979


2,713,345

Debt / Total Capitalization







50.5%


57.9%

Debt / EBITDA  







2.53


3.04

Debt / Cash From Operations  







3.74


4.67





















Acute Care EBITDAR Margin  (2) 



14.1%


14.4%


14.8%


15.8%

Behavioral Health EBITDAR Margin  (2) 


27.9%


27.8%


28.1%


27.8%





















(1)  Net of Minority Interest 









(2)  Same facility basis, before corporate overhead allocation and minority interest and Minority Interest 












 

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE THREE MONTHS ENDED

DECEMBER 31, 2013 AND 2012



















AS REPORTED:





























                       ACUTE



               BEHAVIORAL HEALTH



12/31/13

12/31/12

%  change


12/31/13

12/31/12

%  change










Hospitals owned and leased


25

24

4.2%


183

176

4.0%

Average licensed beds


5,757

5,620

2.4%


19,961

19,172

4.1%

Patient days


276,186

269,974

2.3%


1,310,563

1,283,176

2.1%

Average daily census


3,002.0

2,934.5

2.3%


14,245.3

13,947.6

2.1%

Occupancy-licensed beds


52.1%

52.2%

-0.1%


71.4%

72.7%

-1.9%

Admissions


60,569

61,213

-1.1%


97,783

91,253

7.2%

Length of stay


4.6

4.4

3.4%


13.4

14.1

-4.7%










Inpatient revenue


$3,344,361

$3,080,223

8.6%


$1,552,079

$1,521,842

2.0%

Outpatient revenue


1,756,242

1,527,935

14.9%


185,222

171,554

8.0%

Total patient revenue


5,100,603

4,608,158

10.7%


1,737,301

1,693,396

2.6%

Other revenue


32,678

30,406

7.5%


40,546

33,788

20.0%

Gross hospital revenue


5,133,281

4,638,564

10.7%


1,777,847

1,727,184

2.9%










Total deductions


3,969,063

3,596,470

10.4%


832,169

814,073

2.2%










Net hospital revenue before 









  provision for doubtful accounts

$1,164,218

$1,042,094

11.7%


$945,678

$913,111

3.6%










Provision for doubtful accounts

$290,762

$179,205

62.3%


$24,660

$25,226

-2.2%










Net hospital revenue 


873,456

862,889

1.2%


921,018

887,885

3.7%



















SAME FACILITY:




















                      ACUTE  (1)



             BEHAVIORAL HEALTH (2)



12/31/13

12/31/12

%  change


12/31/13

12/31/12

%  change










Hospitals owned and leased


24

24

0.0%


174

174

0.0%

Average licensed beds


5,617

5,620

-0.1%


19,064

18,964

0.5%

Patient days


274,684

269,974

1.7%


1,275,460

1,271,403

0.3%

Average daily census


2,985.7

2,934.5

1.7%


13,863.7

13,819.6

0.3%

Occupancy-licensed beds


53.2%

52.2%

1.8%


72.7%

72.9%

-0.2%

Admissions


60,123

61,213

-1.8%


95,511

93,681

2.0%

Length of stay


4.6

4.4

3.6%


13.4

13.6

-1.6%




























(1) Auburn and Temecula is excluded in both current and prior years. Hospital count previously reflected 


     number of licenses we have revised to reflect number of hospitals.














(2) San Juan Capestrano, Keys of Carolina, Garfield Park and Auston Oaks are excluded in both current and 


     prior years. Community BH ois excluded in both current and prior years from June 1st through December 31st.


     Bristol Youth Academy is excluded in both current and prior years from July 1st through December 31st.


     Jefferson Trail, Manatee Palms Group Homes and The Peaks are excluded in both current and prior years. 


     Brooke Glen is included in both current and prior years from March 1st through December 31st. John 


     Costigan Ctr. Is excluded in both current and prior years from June 1st through current date. Gulf Coast


     Treatment and Okaloosa Youth Academy is excluded in both current and prior years from July 1st through


     December 31st.



























UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

FOR THE TWELVE MONTHS ENDED

DECEMBER 31, 2013 AND 2012



















AS REPORTED:





























                       ACUTE



               BEHAVIORAL HEALTH



12/31/13

12/31/12

%  change


12/31/13

12/31/12

%  change










Hospitals owned and leased


25

24

4.2%


183

176


Average licensed beds


5,652

5,563

1.6%


19,975

19,159

4.3%

Patient days


1,112,541

1,095,804

1.5%


5,365,734

5,188,246

3.4%

Average daily census


3,048.1

2,994.0

1.8%


14,700.6

14,175.5

3.7%

Occupancy-licensed beds


53.9%

53.8%

0.2%


73.6%

74.0%

-0.5%

Admissions


246,160

245,234

0.4%


402,088

370,484

8.5%

Length of stay


4.5

4.5

1.1%


13.3

14.0

-4.7%










Inpatient revenue


$13,469,269

$12,406,567

8.6%


$6,294,046

$5,764,370

9.2%

Outpatient revenue


6,828,307

6,134,615

11.3%


744,510

646,177

15.2%

Total patient revenue


20,297,576

18,541,182

9.5%


7,038,556

6,410,547

9.8%

Other revenue


128,462

99,233

29.5%


136,454

143,061

-4.6%

Gross hospital revenue


20,426,038

18,640,415

9.6%


7,175,010

6,553,608

9.5%










Total deductions


15,833,936

14,543,716

8.9%


3,395,773

3,002,097

13.1%










Net hospital revenue before 









  provision for doubtful accounts

$4,592,102

$4,096,699

12.1%


$3,779,237

$3,551,511

6.4%










Provision for doubtful accounts

$1,015,733

$635,283

59.9%


$111,270

$91,370

21.8%










Net hospital revenue 


3,576,369

3,461,416

3.3%


3,667,967

3,460,141

6.0%



















SAME FACILITY:




















                       ACUTE   (1)



             BEHAVIORAL HEALTH (2)



12/31/13

12/31/12

%  change


12/31/13

12/31/12

%  change










Hospitals owned and leased


24

24

0.0%


174

174

0.0%

Average licensed beds


5,617

5,563

1.0%


18,881

18,759

0.7%

Patient days


1,111,097

1,095,804

1.4%


5,122,082

5,088,608

0.7%

Average daily census


3,044.1

2,994.0

1.7%


14,033.1

13,903.3

0.9%

Occupancy-licensed beds


54.2%

53.8%

0.7%


74.3%

74.1%

0.3%

Admissions


245,714

245,234

0.2%


382,484

370,619

3.2%

Length of stay


4.5

4.5

1.2%


13.4

13.7

-2.5%




























(1) Auburn and Temecula is excluded in both current and prior years. Hospital count previously reflected 


     number of licenses we have revised to reflect number of hospitals.














(2) San Juan Capestrano, Keys of Carolina, Garfield Park and Auston Oaks are excluded in both current and 


     prior years. Community BH ois excluded in both current and prior years from June 1st through December 31st.


     Bristol Youth Academy is excluded in both current and prior years from July 1st through December 31st.


     Jefferson Trail, Manatee Palms Group Homes and The Peaks are excluded in both current and prior years. 


     Brooke Glen is included in both current and prior years from March 1st through December 31st. John 


     Costigan Ctr. Is excluded in both current and prior years from June 1st through current date. Gulf Coast


     Treatment and Okaloosa Youth Academy is excluded in both current and prior years from July 1st through


     December 31st.









 

SOURCE Universal Health Services, Inc.

Steve Filton, Chief Financial Officer, 610-768-3300