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Universal Health Services, Inc. Reports 2011 First Quarter Earnings and Increases 2011 Full Year Earnings Guidance
Consolidated Results of Operations - Three-month periods ended March 31, 2011 and 2010:

KING OF PRUSSIA, Pa., April 26, 2011 /PRNewswire via COMTEX/ --

Universal Health Services, Inc. (NYSE: UHS) announced today that net income attributable to UHS was $114.2 million, or $1.15 per diluted share, during the first quarter of 2011 as compared to $71.8 million, or $.73 per diluted share, during the comparable prior year quarter. Net revenues increased 42% to $1.91 billion during the first quarter of 2011 as compared to $1.35 billion during the first quarter of 2010. The increase in net revenues during the first quarter of 2011, as compared to the comparable quarter of the prior year, was due primarily to the revenues generated at the behavioral health care facilities acquired from Psychiatric Solutions, Inc. in November, 2010.

"For the last two years, the overall weakness in the economy has created a very challenging operating environment, most particularly for our acute care hospitals," said Alan B. Miller, Chief Executive Officer. "Although we remain cautious about the strength of the underlying economic recovery, we are extremely encouraged by the improvement in some of our payor mix trends in early 2011. Additionally, we remain excited with the fundamentals in the behavioral segment and the robust performance of, what is now, the premier behavioral health platform in the nation."

Acute Care Services - Three-month periods ended March 31, 2011 and 2010:

At our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 0.6% while adjusted patient days increased 2.2% during the first quarter of 2011, as compared to the first quarter of 2010. Net revenues at these facilities increased 6.6% during the first quarter of 2011 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 5.9% while net revenue per adjusted patient day increased 4.3% during the first quarter of 2011 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin (net revenues less salaries, wages and benefits, other operating expenses, supplies expense and provision for doubtful accounts) at our acute care hospitals increased to 18.0% during the first quarter of 2011 as compared to 16.1% during the first quarter of 2010. The increased operating margin for our acute care facilities during the first quarter of 2011, as compared to the comparable quarter of the prior year, was due primarily to improvements in the operating environments of several of the markets in which we operate, including Las Vegas, Nevada.

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 $223 million and $176 million during the three-month periods ended March 31, 2011 and 2010, respectively.

Behavioral Health Care Services - Three-month periods ended March 31, 2011 and 2010:

At our behavioral health care facilities, on a same facility basis, adjusted admissions increased 6.4% while adjusted patient days increased 1.8% during the first quarter of 2011 as compared to the first quarter of 2010. Net revenues at these facilities increased 6.5% during the first quarter of 2011 as compared to the comparable quarter in the prior year. At these facilities, net revenue per adjusted admission increased 0.1% while net revenue per adjusted patient day increased 4.6% during the first quarter of 2011 over the comparable prior year quarter. The operating margin at our behavioral health care facilities owned during both periods increased to 26.3% during the first quarter of 2011 as compared to 26.0% during the first quarter of 2010.

2011 Full Year Guidance Increased to $3.85 to $4.00 Per Diluted Share:

Based upon the operating trends and financial results experienced during the first three months of 2011, we are increasing our range of 2011 full year guidance for earnings per diluted share attributable to UHS to $3.85 to $4.00, representing a $.20 per diluted share increase over the previously provided range of $3.65 to $3.80 per diluted share. Our projected net revenues for 2011 remain unchanged at $7.6 billion to $7.7 billion

This guidance range is 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 April 27, 2011. The dial-in number is 1-877-648-7971. A digital recording of the conference call will be available two hours after the completion of the conference call on April 27, 2011 and will continue through midnight on May 11, 2011. The recording can be accessed by calling 1-800-642-1687 and entering the pass code 59918801. A live broadcast of the call will be available on our web site at www.uhsinc.com. The webcast will also be available through Thompson StreetEvents Network at www.earnings.comor www.streetevents.com, a password-protected event management site for institutional investors.

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, 2010), 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 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 items 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 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, 2010. 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


ended March 31,


2011


2010





Net revenues

$1,910,528


$1,347,153





Operating charges:




Salaries, wages and benefits

845,864


578,926

Other operating expenses

349,446


247,028

Supplies expense

207,170


183,816

Provision for doubtful accounts

153,116


125,390

Depreciation and amortization

71,351


53,511

Lease and rental expense

23,168


17,934


1,650,115


1,206,605





Income from operations

260,413


140,548





Interest expense, net

56,417


12,377





Income before income taxes

203,996


128,171





Provision for income taxes

74,009


45,409





Net income

129,987


82,762





Less: Income attributable to




noncontrolling interests

15,794


10,943





Net income attributable to UHS

$114,193


$71,819

























Basic earnings per share attributable to UHS (a)

$1.17


$0.74





Diluted earnings per share attributable to UHS (a)

$1.15


$0.73

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)


Three months

ended March 31,






2011


2010





(a) Earnings per share calculation:








Basic and diluted:




Net income attributable to UHS

$114,193


$71,819

Less: Net income attributable to unvested restricted share grants

(149)


(315)

Net income attributable to UHS - basic and diluted

$114,044


$71,504





Weighted average number of common shares - basic

97,381


96,539





Basic earnings per share attributable to UHS:

$1.17


$0.74





Weighted average number of common shares

97,381


96,539

Add: Other share equivalents

1,487


911

Weighted average number of common shares and equiv. - diluted

98,868


97,450





Diluted earnings per share attributable to UHS:

$1.15


$0.73

Universal Health Services, Inc.

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

For the three months ended March 31, 2011 and 2010

(in thousands, except per share amounts)

(unaudited)




Calculation of "EBITDA"



Three months ended


Three months ended


March 31, 2011


March 31, 2010

















Net revenues

$1,910,528


100.0%


$1,347,153


100.0%









Operating charges:








Salaries, wages and benefits

845,864


44.3%


578,926


43.0%

Other operating expenses

349,446


18.3%


247,028


18.3%

Supplies expense

207,170


10.8%


183,816


13.6%

Provision for doubtful accounts

153,116


8.0%


125,390


9.3%


1,555,596


81.4%


1,135,160


84.3%









Operating income/margin ("EBITDAR")

354,932


18.6%


211,993


15.7%









Lease and rental expense

23,168




17,934



Income attributable to noncontrolling interests

15,794




10,943











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

315,970




183,116











Depreciation and amortization

71,351




53,511



Interest expense, net

56,417




12,377











Income before income taxes

188,202




117,228











Provision for income taxes

74,009




45,409



Net income attributable to UHS

$114,193




$71,819



Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)







March 31,



December 31,



2011



2010

Assets






Current assets:






Cash and cash equivalents

$

52,076


$

29,474

Accounts receivable, net


940,803



837,820

Supplies


95,129



94,330

Other current assets


81,079



130,060

Deferred income taxes


118,671



120,834

Assets of facilities held for sale


113,426



118,598

Total current assets


1,401,184



1,331,116







Property and equipment


4,880,795



4,853,972

Less: accumulated depreciation


(1,640,993)



(1,601,005)



3,239,802



3,252,967







Other assets:






Goodwill


2,596,292



2,589,914

Deferred charges


125,644



108,660

Other


250,152



245,279


$

7,613,074


$

7,527,936







Liabilities and Stockholders' Equity






Current liabilities:






Current maturities of long-term debt

$

3,033


$

3,449

Accounts payable and accrued liabilities


821,413



819,334

Liabilities of facilities held for sale


3,581



3,516

Federal and state taxes


9,155



0

Total current liabilities


837,182



826,299







Other noncurrent liabilities


376,844



380,649

Long-term debt


3,850,859



3,912,102

Deferred income taxes


185,267



173,354







Redeemable noncontrolling interest


223,819



211,761







UHS common stockholders' equity


2,094,393



1,978,772

Noncontrolling interest


44,710



44,999

Total equity


2,139,103



2,023,771








$

7,613,074


$

7,527,936

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


Three months


ended March 31,


2011


2010



Cash Flows from Operating Activities:




Net income

$129,987


$82,762

Adjustments to reconcile net income to net




cash provided by operating activities:




Depreciation & amortization

71,526


53,511

Gain on sale of assets and businesses

0


(1,848)

Stock-based compensation expense

3,954


4,065

Changes in assets & liabilities, net of effects from




acquisitions and dispositions:




Accounts receivable

(103,919)


(46,499)

Accrued interest

12,875


8,357

Accrued and deferred income taxes

68,994


37,380

Other working capital accounts

(27,056)


(2,389)

Other assets and deferred charges

6,777


(489)

Other

11,208


(4,164)

Accrued insurance expense, net of commercial premiums paid

23,744


18,960

Payments made in settlement of self-insurance claims

(14,913)


(10,187)

Net cash provided by operating activities

183,177


139,459





Cash Flows from Investing Activities:




Property and equipment additions, net of disposals

(56,558)


(62,576)

Proceeds received from sale of assets and businesses

991


2,894

Costs incurred for purchase and implementation of electronic health records application

(8,145)


(3,742)

Net cash used in investing activities

(63,712)


(63,424)





Cash Flows from Financing Activities:




Reduction of long-term debt

(136,403)


(68,363)

Additional borrowings

73,500


0

Financing costs

(23,140)


0

Repurchase of common shares

(3,170)


(2,157)

Dividends paid

(4,876)


(4,834)

Issuance of common stock

1,251


1,627

Profit distributions to noncontrolling interests

(4,025)


(4,623)

Net cash used in financing activities

(96,863)


(78,350)





Increase (decrease) in cash and cash equivalents

22,602


(2,315)

Cash and cash equivalents, beginning of period

29,474


9,180

Cash and cash equivalents, end of period

$52,076


$6,865





Supplemental Disclosures of Cash Flow Information:




Interest paid

$37,130


$5,482





Income taxes paid, net of refunds

$4,527


$6,732

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)












% Change




Quarter Ended

Same Facility:




3/31/2011





Acute Care Hospitals




Revenues



6.6%

Adjusted Admissions



0.6%

Adjusted Patient Days



2.2%

Revenue Per Adjusted Admission



5.9%

Revenue Per Adjusted Patient Day



4.3%









Behavioral Health Hospitals








Revenues



6.5%

Adjusted Admissions



6.4%

Adjusted Patient Days



1.8%

Revenue Per Adjusted Admission



0.1%

Revenue Per Adjusted Patient Day



4.6%

















UHS Consolidated


First Quarter Ended


3/31/2011


3/31/2010





Revenues

$1,910,528


$1,347,153

EBITDA (1)

$315,970


$183,116

EBITDA Margin (1)

16.5%


13.6%





Cash Flow From Operations

$183,177


$139,459

Days Sales Outstanding

44


43

Capital Expenditures

$56,558


$62,576





Debt

3,853,892


893,141

UHS Shareholders Equity

2,094,393


1,821,755

Debt / Total Capitalization

64.8%


32.9%

Debt / EBITDA (2)

4.43


1.29

Debt / Cash From Operations (2)

7.07


1.72









Acute Care EBITDAR Margin (3)

18.0%


16.1%

Behavioral Health EBITDAR Margin (3)

25.4%


25.5%









(1) Net of Minority Interest

(2) Latest 4 quarters

(3) Before Corporate overhead allocation and minority interest

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

MARCH 31, 2011

















AS REPORTED:

For the three months ended










Acute



Behavioral Health



03/31/11

03/31/10

%


03/31/11

03/31/10

%









Hospitals owned and leased

21

21

0.0%


188

82

129.3%

Average licensed beds

5,695

5,689

0.1%


19,396

7,971

143.3%

Patient days

307,370

305,676

0.6%


1,299,272

538,750

141.2%

Average daily census

3,415.2

3,396.4

0.6%


14,436.4

5,986.1

141.2%

Occupancy-licensed beds

60.0%

59.7%

0.4%


74.4%

75.1%

-0.9%

Admissions

67,938

68,638

-1.0%


89,563

36,357

146.3%

Length of stay

4.5

4.5

1.6%


14.5

14.8

-2.1%









Inpatient revenue

$3,222,247

$2,783,431

15.8%


$1,391,201

$544,781

155.4%

Outpatient revenue

1,370,118

1,116,925

22.7%


149,595

77,977

91.8%

Total patient revenue

4,592,365

3,900,356

17.7%


1,540,796

622,758

147.4%

Other revenue

17,354

15,803

9.8%


34,208

8,408

306.9%

Gross hospital revenue

4,609,719

3,916,159

17.7%


1,575,004

631,166

149.5%









Total deductions

3,555,426

2,926,848

21.5%


724,701

281,984

157.0%









Net hospital revenue

$1,054,293

$989,311

6.6%


$850,303

$349,182

143.5%

















SAME FACILITY:

















Acute



Behavioral Health (1)



03/31/11

03/31/10

%


03/31/11

03/31/10

%









Hospitals owned and leased

21

21

0.0%


81

81

0.0%

Average licensed beds

5,695

5,689

0.1%


7,999

7,857

1.8%

Patient days

307,386

305,676

0.6%


541,782

530,325

2.2%

Average daily census

3,415.4

3,396.4

0.6%


6,019.8

5,892.5

2.2%

Occupancy-licensed beds

60.0%

59.7%

0.5%


75.3%

75.0%

0.3%

Admissions

67,938

68,638

-1.0%


38,816

36,344

6.8%

Length of stay

4.5

4.5

1.6%


14.0

14.6

-4.3%

























(1) Pennsylvania Clinical School is excluded in both current and prior years. Facilities acquired in acquisition of Psychiatric Solutions are excluded in current and prior years.

SOURCE Universal Health Services, Inc.

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