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Universal Health Services, Inc. Reports 34% First Quarter Diluted EPS Growth

KING OF PRUSSIA, Pa., April 27, 2005 /PRNewswire-FirstCall via COMTEX/ -- Universal Health Services, Inc. (NYSE: UHS) announced today its results for the three-month period ended March 31, 2005. Reported net income was $61.4 million during the first quarter of 2005, as compared to $46.2 million during the prior year quarter. Reported earnings per diluted share were $.99 during quarter ended March 31, 2005, a 34% increase over the $.74 per diluted share reported during the prior year quarter. Reported income from continuing operations was $56.4 million or $.91 per diluted share during the first quarter of 2005 as compared to $45.6 million or $.73 per diluted share during the first quarter of 2004.

Net revenues during the 2005 quarter were $1.09 billion, an increase of 11% over the same quarter in the prior year. At March 31, 2005, our balance sheet debt, net of cash, was approximately $646 million and our shareholders' equity was approximately $1.27 billion.

On a same facility basis, patient admissions to our acute care hospitals located in the U.S. increased 2.4% during the first quarter of 2005 as compared to the comparable prior year quarter. At our acute care hospitals owned in both periods located in the U.S., revenues increased 8.7% and revenue per adjusted patient day increased 7.2% during the 2005 first quarter as compared to the prior year quarter. At our behavioral health hospitals owned in both periods, admissions were relatively unchanged, revenues increased 5.4% and revenue per adjusted patient day increased 2.8%.

Included in the reported results for the quarter ended March 31, 2005 were the following items (as listed on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information): (i) a $3.8 million after-tax gain ($6.0 million pre-tax) on the sale of two acute care hospitals located in Puerto Rico; (ii) a $2.0 million after-tax gain ($3.1 million pre-tax) on the sale of a home health business in Bradenton, Florida, and; (iii) a $2.0 million after-tax asset impairment charge ($3.1 million pre-tax) related to a women's hospital located in Edmond, Oklahoma. Included in the reported results for the quarter ended March 31, 2004 was Medicaid disproportionate share hospital revenue ("DSH") related to a prior period which favorably impacted net income during the first quarter of 2004 by $1.7 million after-tax ($2.8 million pre-tax).

Excluding the items listed above for the three-month periods ended March 31, 2005 and 2004, our adjusted net income increased 30% to $57.6 million during the first quarter of 2005, as compared to $44.4 million during the 2004 first quarter. Our adjusted earnings per diluted share increased 29% to $.93 during the quarter ended March 31, 2005, as compared to $.72 during the comparable prior year quarter. Our adjusted income from continuing operations increased 33% to $58.4 million during the first quarter of 2005, as compared to $43.8 million during the 2004 first quarter. Our adjusted income from continuing operations per diluted share increased 32% to $.94 during the quarter ended March 31, 2005, as compared to $.71 during the comparable prior year quarter.

Our adjusted operating margin increased to 16.0% during the three-month period ended March 31, 2005 as compared to 14.3% during the same period of the prior year. The operating margin at our acute care hospitals located in the U.S. owned in both the three-month periods ended March 31, 2005 and March 31, 2004, increased to 17.2% from 14.6%. The operating margin at our behavioral health hospitals owned in both periods increased to 24.8% during the first quarter of 2005 from 24.0% during the prior year quarter.

As previously announced, we sold our two remaining acute care hospitals located in Puerto Rico during the first quarter of 2005 and subsequent to quarter-end, we signed a definitive agreement to sell our 81.5% interest in Medi-Partenaires, an operating company that owns and operates 14 hospitals located in France. We expect to complete the sale of Medi-Partenaires, which is subject to customary regulatory approvals, in mid-to-late May 2005.

We will hold a conference call for investors and analysts at 9:00 a.m. Eastern Time on April 28, 2005. 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 28, 2005 and will continue through midnight on May 5, 2005. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 5013358.

This call will also be available live over the Internet at our web site at http://www.uhsinc.com. It will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at http://www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (http://www.streetevents.com).

Universal Health Services, Inc. is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide, in Puerto Rico and in France. 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 related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in "Forward-Looking Statements and Risk Factors" on pages 25 and 26 of our Form 10-K for the year ended December 31, 2004), may cause 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 income from continuing operations, adjusted income from continuing operations per diluted share, adjusted net income, adjusted net income per diluted share, adjusted operating income and adjusted operating margin, 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 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 such as property write-downs, gains on sales of assets and businesses or other amounts 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, 2004. 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. Below are schedules of Non-GAAP Supplemental Consolidated Income Statement Information which reconcile these measures to net income for the periods presented.

Universal Health Services, Inc.
                        Consolidated Statements of Income
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                         Three months
                                                        ended March 31,
                                                    2005              2004

    Net revenues                                 $1,090,981         $982,576

    Operating charges:
       Salaries, wages and benefits                 438,232          399,914
       Other operating expenses                     248,816          221,111
       Supplies expense                             149,327          135,858
       Provision for doubtful accounts               82,455           83,596
       Depreciation and amortization                 43,609           36,454
       Lease and rental expense                      17,503           17,405
                                                    979,942          894,338

    Income before interest expense,
     minority interests and income taxes            111,039           88,238


    Interest expense, net                            11,995           10,902
    Minority interests in earnings
     of consolidated entities                         9,556            4,941

    Income before income taxes                       89,488           72,395

    Provision for income taxes                       33,086           26,813

    Income from continuing operations                56,402           45,582

    Income from discontinued operations,
     net of income tax expense (a)                    5,007              601


    Net income                                      $61,409          $46,183


    Basic earnings per share: (b)
         From continuing operations                   $0.98            $0.79
         From discontinued operations                  0.09             0.01
              Total basic earnings per share          $1.07            $0.80

    Diluted earnings per share: (b)
         From continuing operations                   $0.91            $0.73
         From discontinued operations                  0.08             0.01
              Total diluted earnings per share        $0.99            $0.74


                         Universal Health Services, Inc.
                 Footnotes to Consolidated Statements of Income

                                                          Three months
                                                         ended March 31,
                                                     2005              2004

    (a) Calculation of income (loss) from
        discontinued operations, net of
        income tax:

    (Loss) income from operations                  ($1,219)             $951
    Gains on divestitures                            9,096               -
    Income from discontinued operations, pre-tax     7,877               951
    Income tax provision                            (2,870)             (350)
    Income from discontinued operations,
     net of income tax expense                      $5,007              $601


    (b) Earnings per share calculation:

    Basic:
    Income from continuing operations              $56,402           $45,582
    Less: Dividends on unvested
     restricted stock, net of taxes                    (27)              (28)
    Income from continuing operations - basic      $56,375           $45,554
    Income from discontinued operations              5,007               601
    Net income - basic                             $61,382           $46,155

    Weighted average number of common
     shares - basic                                 57,523            57,564

    Basic earnings per share:
         From continuing operations                  $0.98             $0.79
         From discontinued operations                 0.09              0.01
              Total basic earnings per share         $1.07             $0.80

    Diluted:
    Income from continuing operations              $56,402           $45,582
    Less: Dividends on unvested
     restricted stock, net of taxes                    (27)              (28)
    Add: Debenture interest, net of taxes            2,382             2,268
    Income from continuing operations - diluted    $58,757           $47,822
    Income from discontinued operations              5,007               601
    Net income - diluted                           $63,764           $48,423

    Weighted average number of common shares        57,523            57,564
    Add: Shares for conversion of
          convertible debentures                     6,577             6,577
         Other share equivalents                       316               946
    Weighted average number of common
     shares and equiv. - diluted                    64,416            65,087

    Diluted earnings per share:
         From continuing operations                  $0.91             $0.73
         From discontinued operations                 0.08              0.01
              Total diluted earnings per share       $0.99             $0.74


                         Universal Health Services, Inc.
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (unaudited)

                                                 March 31,        December 31,
                                                   2005              2004

    Assets:
    Cash and cash equivalents                      $54,188           $33,125
    Accounts receivable, net                       624,181           552,538
    Other current assets                            97,542            90,392
    Property, plant and equipment, net           1,456,699         1,448,066
    Other assets                                   750,099           765,852
    Assets held for sale                             1,058           132,870
    Total Assets                                $2,983,767        $3,022,843

    Liabilities and Stockholders' Equity:
    Current portion of long-term debt              $16,113           $16,968
    Liabilities held for sale                          222            11,116
    Other current liabilities                      514,990           441,572
    Other noncurrent liabilities                   251,352           243,617
    Long-term debt                                 684,397           852,229
    Deferred income taxes                           50,935            50,212
    Minority interest                              190,863           186,543
    Stockholders' equity                         1,274,895         1,220,586
    Total Liabilities and Stockholders' Equity  $2,983,767        $3,022,843


                         Universal Health Services, Inc.
       Schedule of Non-GAAP Supplemental Consolidated Statements of Income
                                   Information
                For the Three Months Ended March 31, 2005 and 2004
                                  (in thousands)
                                   (unaudited)

                                         Three months ended Three months ended
                                           March 31, 2005     March 31, 2004


    Net revenues                         $1,090,981  100.0%  $982,576  100.0%

    Operating charges:
       Salaries, wages and benefits         438,232   40.2%   399,914   40.7%
       Other operating expenses             248,816   22.8%   221,111   22.5%
       Supplies expense                     149,327   13.7%   135,858   13.8%
       Provision for doubtful accounts       82,455    7.6%    83,596    8.5%
                                            918,830   84.2%   840,479   85.5%

    Operating income/margin                 172,151   15.8%   142,097   14.5%

       Lease and rental expense              17,503            17,405
       Minority interests in earnings of
        consolidated entities                 9,556             4,941

    Earnings before depreciation and
     amortization, interest expense, and
     income taxes ("EBITDA")                145,092           119,751

       Depreciation and amortization         43,609            36,454
       Interest expense, net                 11,995            10,902

    Income before income taxes               89,488            72,395

    Provision for income taxes               33,086            26,813

    Income from continuing operations        56,402            45,582

    Income from discontinued operations,
     net of income taxes                      5,007               601

    Net income                              $61,409           $46,183



                                           Three months     Three months
                                               ended            ended
                                          March 31, 2005   March 31, 2004

                                                     Per              Per
    Calculation of Adjusted Income from            Diluted          Diluted
    Continuing Operations                  Amount   Share   Amount   Share

    Income from continuing operations      $56,402  $0.91   $45,582  $0.73
    Add:  After-tax asset impairment
     charge                                  1,974   0.03       -      -
    Less:  After-tax DSH revenue
     attributable to prior year                -      -      (1,748) (0.02)
    Adjusted income from continuing
     operations                            $58,376  $0.94   $43,834  $0.71

    Net income                             $61,409  $0.99   $46,183  $0.74
    Add:  After-tax asset impairment
     charge                                  1,974   0.03       -      -
    Less:  After-tax DSH revenue
     attributable to prior year                -      -      (1,748) (0.02)
    Less:  After-tax gain on sale of home
     health business                        (1,970) (0.03)      -      -
    Less:  After-tax gain on sale of
     Puerto Rico hospitals                  (3,812) (0.06)      -      -
    Adjusted net income                    $57,601  $0.93   $44,435  $0.72


    Calculation of Adjusted Operating
     Income/Margin                         Amount  Margin   Amount  Margin

    Operating income/margin               $172,151  15.8%  $142,097  14.5%
    Add:  After-tax asset impairment
     charge                                  1,974   0.2%       -      -
    Less:  After-tax DSH revenue
     attributable to prior year                -      -      (1,748) (0.2%)
    Adjusted operating income/margin      $174,125  16.0%  $140,349  14.3%



                       Universal Health Services, Inc.
                     Supplemental Statistical Information
                                 (unaudited)


                                                                   % Change
                                                                 Quarter Ended
    Same Facility:                                                  3/31/2005

    Acute Care Hospitals
    Revenues                                                             8.7%
    Adjusted Admissions                                                  2.3%
    Adjusted Patient Days                                                1.4%
    Revenue Per Adjusted Admission                                       6.2%
    Revenue Per Adjusted Patient Day                                     7.2%


    Behavioral Health Hospitals

    Revenues                                                             5.4%
    Adjusted Admissions                                                  0.1%
    Adjusted Patient Days                                                2.5%
    Revenue Per Adjusted Admission                                       5.2%
    Revenue Per Adjusted Patient Day                                     2.8%



    UHS Consolidated                                First Quarter Ended
                                                3/31/2005          3/31/2004

    Revenues                                    $1,090,981          $982,576
    EBITDA   (1)                                  $145,092          $119,753
    EBITDA Margin (1)                                13.3%             12.2%

    Cash Flow From Operations                     $134,612           $95,126
    Days Sales Outstanding                              51                53
    Capital Expenditures                           $57,920           $70,436

    Debt (net of cash)                             646,322           870,029
    Shareholders Equity                          1,274,895         1,133,329
    Debt / Total Capitalization                      33.6%             43.4%
    Debt / EBITDA (2)                                 1.30              1.79
    Debt / Cash From Operations (2)                   1.49              2.24


    Acute Care EBITDAR Margin (3)                    17.0%             14.9%
    Behavioral Health EBITDAR Margin (3)             24.6%             24.0%


    (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, 2005



        AS REPORTED:
                                                For the three months ended

                                                       Acute (1)
                                              03/31/05      03/31/04       %

            Hospitals owned and leased              24            23     4.3%
            Average licensed beds                5,529         5,652    -2.2%
            Patient days                       311,598       303,610     2.6%
            Average daily census               3,462.2       3,336.4     3.8%
            Occupancy-licensed beds              62.6%         59.0%     6.1%
            Admissions                          67,015        64,550     3.8%
            Length of stay                         4.6           4.7    -1.1%

            Inpatient revenue               $1,946,868    $1,751,418    11.2%
            Outpatient revenue                 690,580       616,434    12.0%
            Total patient revenue            2,637,448     2,367,852    11.4%
            Other revenue                       13,116         9,011    45.6%
            Gross hospital revenue           2,650,564     2,376,863    11.5%

            Total deductions                 1,843,940     1,644,412    12.1%

            Net hospital revenue              $806,624      $732,451    10.1%


                                                For the three months ended

                                                Behavioral Health
                                              03/31/05     03/31/04       %

             Hospitals owned and leased            44           39     12.8%
             Average licensed beds              4,414        3,904     13.1%
             Patient days                     325,874      283,898     14.8%
             Average daily census             3,620.8      3,119.8     16.1%
             Occupancy-licensed beds            82.0%        79.9%      2.7%
             Admissions                        25,045       24,139      3.8%
             Length of stay                      13.0         11.8     10.6%

             Inpatient revenue               $325,897     $293,729     11.0%
             Outpatient revenue                48,515       42,976     12.9%
             Total patient revenue            374,412      336,705     11.2%
             Other revenue                      7,960        8,341     -4.6%
             Gross hospital revenue           382,372      345,046     10.8%

             Total deductions                 192,812      179,143      7.6%

             Net hospital revenue            $189,560     $165,903     14.3%



         SAME FACILITY:



                                   Acute (1)(2)      Behavioral Health(3)
                             03/31/05 03/31/04    %   03/31/05 03/31/04   %

         Hospitals owned and
          leased                   23       23   0.0%       39       39  0.0%
         Average licensed
          beds                  5,409    5,652  -4.3%    4,008    3,904  2.7%
         Patient days         308,379  303,610   1.6%  291,951  283,898  2.8%
         Average daily census 3,426.4  3,336.4   2.7%  3,243.9  3,119.8  4.0%
         Occupancy-licensed
          beds                  63.3%    59.0%   7.3%    80.9%    79.9%  1.3%
         Admissions            66,120   64,550   2.4%   24,221   24,139  0.3%
         Length of stay           4.7      4.7  -0.8%     12.1     11.8  2.5%

         (1) Does not include hospitals located in France or discontinued
             operations.
         (2) Lakewood Ranch is excluded in both current and prior years.
         (3) Stonington and the four facilities purchased from Keystone are
             excluded in both current and prior years.

SOURCE: Universal Health Services, Inc.

Steve Filton, Chief Financial Officer, Universal Health Services, +1-610-768-3300

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