uhs-8k_20191024.htm
false UNIVERSAL HEALTH SERVICES INC 0000352915 0000352915 2019-10-24 2019-10-24

 

 

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 24, 2019

 

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))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class B Common Stock

UHS

New York Stock Exchange

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, 2019, 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 24, 2019.

104

  

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

Exhibit Index

 

Exhibit No.

  

Exhibit

 

 

99.1

  

Universal Health Services, Inc., press release, dated October 24, 2019.

 

104

  

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 


 

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, 2019

 

 

 

 

uhs-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 24, 2019

 

CONTACT:

Steve Filton

 

Chief Financial Officer

 

610-768-3300

 

 

UNIVERSAL HEALTH SERVICES, INC.

REPORTS 2019 THIRD QUARTER FINANCIAL RESULTS AND REVISES 2019 FULL YEAR EARNINGS GUIDANCE RANGE

 

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended September 30, 2019 and 2018:

KING OF PRUSSIA, PA – Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $97.2 million, or $1.10 per diluted share, during the third quarter of 2019 as compared to $171.7 million, or $1.84 per diluted share, during the comparable quarter of 2018.  Net revenues increased 6.6% to $2.822 billion during the third quarter of 2019 as compared to $2.649 billion during the third quarter of 2018.

 

For the three-month period ended September 30, 2019, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), was $176.3 million, or $1.99 per diluted share, as compared to $208.8 million, or $2.23 per diluted share, during the third quarter of 2018.  

 

Included in our reported and our adjusted net income attributable to UHS is a pre-tax unrealized loss of $15.2 million, or $.13 per diluted share after-tax, during the third quarter of 2019, as compared to a pre-tax unrealized gain of $10.5 million, or $.09 per diluted share after-tax, during the third quarter of 2018. These unrealized losses/gains, which are included in “Other (income) expense, net” on the accompanying consolidated statements of income, resulted from decreases/increases 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 2019, is an aggregate net unfavorable after-tax impact of $79.1 million, or $.89 per diluted share, resulting from: (i) an unfavorable after-tax impact of $74.6 million, or $.84 per diluted share, resulting from a $97.6 million provision for asset impairment, as discussed below; (ii) an unfavorable after-tax impact of $6.2 million, or $.07 per diluted share, resulting from the net estimated federal and state income taxes due on the portion of the aggregate pre-tax reserve (“DOJ Reserve”) established in connection with the previously disclosed agreement in principle with the Department Of Justice, Civil Division (“DOJ”), that is estimated to be non-deductible for income tax purposes, and; (iii) a favorable after-tax impact of $1.7 million, or $.02 per diluted share, resulting from our adoption of ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”).

 

As reflected on the Supplemental Schedule, included in our reported results during the 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 DOJ Reserve.  

 

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization (“EBITDA net of NCI”, NCI is net income attributable to noncontrolling interests), was $297.4 million during the third quarter of 2019 as compared to $377.7 million during the third quarter of 2018.  Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impacts of other (income) expense, net, as well as the unfavorable impact of the above-mentioned provision for asset impairment and increase in the DOJ Reserve, was $404.4 million during the third quarter of 2019 as compared to $414.3 million during the third quarter of 2018.

 

Consolidated Results of Operations, As Reported and As Adjusted  – Nine-month periods ended September 30, 2019 and 2018:

Reported net income attributable to UHS was $569.7 million, or $6.35 per diluted share, during the nine-month period ended September 30, 2019 as compared to $621.6 million, or $6.60 per diluted share, during the comparable nine-month period of 2018.  Net revenues increased 5.8% to $8.482 billion during the first nine months of 2019 as compared to $8.018 billion during the first nine months of 2018.

 

For the nine-month period ended September 30, 2019, our adjusted net income attributable to UHS, as calculated on the attached Supplemental Schedule, was $646.7 million, or $7.21 per diluted share, as compared to $674.3 million, or $7.16 per diluted share, during the comparable nine-month period of 2018.  

 

Included in our reported and our adjusted net income attributable to UHS is a pre-tax unrealized loss of $12.5 million, or $.11 per diluted share after-tax, during the first nine months of 2019, as compared to a pre-tax unrealized gain of $18.5 million, or $.15 per diluted share after-tax, during the comparable nine-month period of 2018. As discussed above, these unrealized losses/gains resulted from a decreases/increases 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, 2019, is an aggregate net unfavorable after-tax impact of $77.0 million, or $.86 per diluted share, resulting from: (i) an unfavorable after-tax impact of $74.6 million, or $.84 per diluted share, resulting from a $97.6 million provision for asset impairment, as discussed below; (ii) an unfavorable after-tax impact of $14.6 million, or $.16 per diluted share, resulting from an increase in the DOJ Reserve and the net estimated federal and state income taxes due on the portion of the DOJ Reserve that is estimated to be non-deductible for income tax purposes, and; (iii) a favorable after-tax impact of $12.1 million, or $.14 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, 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, 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 calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization (EBITDA net of NCI”), was $1.222 billion during the nine-month period ended September 30, 2019 as compared to $1.264 billion during the nine-month period ended September 30, 2018.  Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impacts of other (income) expense, net, as well as the unfavorable impact of the above-mentioned provision for asset impairment and increase in the DOJ Reserve, was $1.336 billion during the nine-month period ended September 30, 2019 as compared to $1.308 billion during the nine-month period ended September 30, 2018.

 

Acute Care Services – Three and nine-month periods ended September 30, 2019 and 2018:

During the third quarter of 2019, at our acute care hospitals owned during both periods (“same facility basis”), adjusted admissions (adjusted for outpatient activity) increased 7.4% and adjusted patient days increased 7.0%, as compared to the third quarter of 2018. At these facilities, net revenue per adjusted admission increased 1.6% while net revenue per adjusted patient day increased 2.0% during the third quarter of 2019 as compared to the third quarter of 2018. Net revenues from our acute care services on a same facility basis increased 9.3% during the third quarter of 2019 as compared to the third quarter of 2018.

 

During the nine-month period ended September 30, 2019, at our acute care hospitals on a same facility basis, adjusted admissions increased 5.8% and adjusted patient days increased 5.5%, as compared to the first nine months of 2018. At these facilities, net revenue per adjusted admission increased 1.5% while net revenue per adjusted patient day increased 1.7% during the nine-month period ended September 30, 2019 as compared to the comparable nine-month period of 2018. Net revenues from our acute care services on a same facility basis increased 7.6% during the first nine months of 2019 as compared to the comparable period of 2018.

 

Behavioral Health Care Services – Three and nine-month periods ended September 30, 2019 and 2018:

During the third quarter of 2019, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 0.5% while adjusted patient days increased 0.4% as compared to the third quarter of 2018. At these facilities, net revenue per adjusted admission increased 2.0% while net revenue per adjusted patient day increased 2.2% during the third quarter of 2019 as compared to the comparable quarter in 2018. On a same facility basis, our behavioral health care services’ net revenues increased 2.1% during the third quarter of 2019 as compared to the third quarter of 2018.    

 

During the nine-month period ended September 30, 2019, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 1.3% while adjusted patient days increased 0.5% as compared to the comparable nine-month period of 2018. At these facilities, net revenue per adjusted admission increased 1.5% while net revenue per adjusted patient day increased 2.3% during the first nine months of 2019 as compared to the comparable nine-month period in 2018. On a same facility basis, our behavioral health care services’ net revenues increased 2.6% during the nine-month period ended September 30, 2019 as compared to the comparable nine-month period of 2018.    

 

Net Cash Provided by Operating Activities and Share Repurchase Program:

For the nine months ended September 30, 2019, our net cash provided by operating activities increased to $1.049 billion as compared to $949 million generated during the comparable nine-month period of 2018. The $100 million net increase was due to: (i) a favorable change of $69 million resulting from an increase in net income plus/minus depreciation and amortization expense, stock-based compensation expense, provision for asset impairment and net gains on sale of assets and businesses; (ii)


a favorable change of $37 million in accounts receivable, and; (iii) $6 million of other combined net unfavorable changes.  

 

In conjunction with our January 1, 2019 adoption of ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities”, we have included the net cash inflows/outflows, which were received/paid in connection with foreign exchange contracts that hedge our investment in the U.K., in investing cash flows on the consolidated statements of cash flows. For the nine-month periods ended September 30, 2019 and 2018, we have received $90.3 million and $26.1 million, respectively, of net cash inflows in connection with foreign exchange contracts that hedge our investment in the U.K. Prior to 2019, these net inflows/outflows were included in operating cash flows. Prior period amounts have been reclassified to conform with current year presentation on the consolidated statements of cash flows included herein.

 

In July, 2019, our Board of Directors authorized a $1.0 billion increase to our stock repurchase program, which increased the aggregate authorization to $2.7 billion from the previous $1.7 billion authorization approved in various increments since 2014. Pursuant to this program, which had an aggregate available repurchase authorization of $937.3 million as of September 30, 2019, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. 

 

In conjunction with our stock repurchase program, during the third quarter of 2019, we have repurchased 550,564 shares at an aggregate cost of $79.5 million (approximately $144 per share).  During the first nine months of 2019, we have repurchased approximately 4.11 million shares at an aggregate cost of $525.0 million (approximately $128 per share). Since inception of the program in 2014 through September 30, 2019, we have repurchased approximately 14.78 million shares at an aggregate cost of approximately $1.76 billion (approximately $119 per share). 

 

Update on Agreement in Principle with DOJ’s Civil Division and DOJ Reserve:

As previously disclosed on July 25, 2019, we have reached an agreement in principle with the DOJ’s Civil Division, and on behalf of various states’ attorneys general offices, to resolve the civil aspect of the government’s investigation of our behavioral health care facilities for $127 million subject to requisite approvals and preparation and execution of definitive settlement and related agreements.  At that time, we also disclosed that we were further advised that the previously disclosed investigations being conducted by the DOJ’s Criminal Frauds Section in connection with these matters had been closed.  

In connection with the agreement in principle with the DOJ’s Civil Division, during the nine-month period ended September 30, 2019, we recorded a pre-tax increase of approximately $11.0 million in the DOJ Reserve, which includes related fees and costs due to or on behalf of third-parties. The aggregate pre-tax DOJ Reserve amounted to approximately $134 million as of September 30, 2019 and approximately $123 million as of December 31, 2018.

In late August, 2019, we received the initial draft of the settlement agreement from the DOJ’s Civil Division.  Negotiations regarding the terms and conditions of the settlement agreement continue. Based upon the terms and provisions included in the draft settlement agreement, and related subsequent discussions, our financial statements for each of the three and nine-month periods ended September 30, 2019 include an unfavorable provision for income taxes of $6.2 million resulting from the net estimated federal and state income taxes due on the portion of the aggregate pre-tax DOJ Reserve that is estimated to be non-deductible for income tax purposes.


Since the agreement in principle with the DOJ’s Civil Division is subject to certain required approvals and negotiation and execution of definitive settlement agreements, as well as finalization and execution of a corporate integrity agreement with the Office of Inspector General for the United States Department of Health and Human Services, we can provide no assurance that definitive agreements will ultimately be finalized. We therefore can provide no assurance that final amounts paid in settlement or otherwise, or associated costs, or the income tax deductibility of such payments, will not differ materially from our established reserve and assumptions related to income tax deductibility. Please see Item 1-Legal Proceedings in our Form 10-Q for the quarterly period ended June 30, 2019 for additional disclosure in connection with this matter.

 

Provision for Asset Impairment – Foundations Recovery Network   

Our financial results for the three and nine-month periods ended September 30, 2019, include an aggregate pre-tax provision for asset impairment of $97.6 million recorded in connection with Foundations Recovery Network, L.L.C. (“Foundations”), which was acquired by us in 2015. This pre-tax provision for asset impairment includes: (i) a $74.9 million impairment provision to write-off the carrying value of the Foundations’ tradename intangible asset, and; (ii) a $22.7 million impairment provision to reduce the carrying value of real property assets of certain Foundations’ facilities.

This provision for asset impairment, which is included in other operating expenses in our consolidated statements of income for the three and nine-month periods ended September 30, 2019, was recorded after evaluation of the estimated fair value of the Foundations’ tradename as well as certain related real property assets. The provision for asset impairment was impacted by the following: (i) recent decisions made by management to cancel the opening of future planned de novo facilities; (ii) reductions in projected future patient volumes, revenues and cash flows based upon the operating trends and financial results experienced by existing facilities, and; (iii) competitive pressures experienced in certain markets.  

 

Revision of 2019 Full Year Earnings Guidance Range:

Based upon the operating trends and financial results experienced during the first nine months of 2019, we are revising our estimated range of adjusted net income attributable to UHS for the year ended December 31, 2019 to $9.60 to $9.90 per diluted share as compared to the previously provided range of $9.70 to $10.40 per diluted share. This revised estimated guidance range decreases the lower end of the previously provided range 1.0% and decreases the upper end of the previously provided range by 4.8%.  

 

Contributing to, and included in, the revised estimated earnings guidance range for the year ended December 31, 2019 is the above-mentioned unrealized loss of $.11 per diluted share ($12.5 million pre-tax), recorded during the first nine months of 2019 resulting from a decrease in the market value of shares of certain marketable securities held for investment and classified as available for sale.  For comparative purposes, included in our reported and our adjusted net income attributable to UHS during the first nine months of 2018, was an unrealized gain of $.15 per diluted share ($18.5 million pre-tax), resulting from an increase in the market value of these marketable securities.  The revised estimated earnings guidance range for the full year of 2019 assumes no change in the market value of these marketable securities during the fourth quarter of 2019.    

 

This revised estimated earnings guidance range excludes: (i) the unfavorable after-tax impact of $14.6 million, or $.16 per diluted share, representing the current year changes in the DOJ Reserve, and related provision for income taxes, established in connection with the civil aspects of the government’s


investigation of our certain of our behavioral health care facilities, as discussed above; (ii) the unfavorable after-tax impact of $74.6 million, or $.84 per diluted share, resulting from a $97.6 million provision for asset impairment, as discussed below, partially offset by; (iii) the favorable impact of $12.1 million, or $.14 per diluted share, on our provision for income taxes and net income attributable to UHS resulting from of our adoption of ASU 2016-09.  

 

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 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 25, 2019. The dial-in number is 1-877-648-7971.  

A live broadcast of the conference call will be available on our website at www.uhsinc.com.  Also, a replay of the call will be available following the conclusion of the live call and will be available for one full year.

Adoption of ASU 2016-02, “Leases (Topic 842): Amendments to the FASB Accounting Standards Codification”:

Effective January 1, 2019, we adopted ASU 2016-02 which requires companies to, among other things, recognize lease assets and lease liabilities on the balance sheet. As a result of our adoption of ASU 2016-02, our consolidated balance sheet as of September 30, 2019 includes right of use assets-operating leases ($329.3 million) and operating lease liabilities ($55.1 million current and $274.2 million noncurrent).  Prior period financial statements were not adjusted for the effects of this new standard.    

 

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:

One of the nation’s largest and most respected providers of hospital and healthcare services, Universal Health Services, Inc. has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues were $10.77 billion during 2018. In 2019, UHS was again recognized as one of the World’s Most Admired Companies by Fortune; ranked #293 on the Fortune 500; and in 2017, listed #275 in Forbes inaugural ranking of America’s Top 500 Public Companies.

 

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

 

Headquartered in King of Prussia, PA, UHS has more than 87,000 employees and through its subsidiaries operates 26 acute care hospitals, 327 behavioral health facilities, 40 outpatient facilities and


ambulatory care access points, an insurance offering, a physician network and various related services located in 37 U.S. states, Washington, D.C., Puerto Rico and the United Kingdom. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information on the Company, visit our web site: http://www.uhsinc.com.

 

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2018 and in Item 2-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2019), may cause the results to differ materially from those anticipated in the forward-looking statements.  Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially.  Readers should not place undue reliance on such forward-looking statements which reflect management’s view only as of the date hereof.  We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

 

We believe that adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share, EBITDA net of NCI and adjusted EBITDA net of NCI, which are non-GAAP financial measures (“GAAP” is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of material items impacting our net income attributable to UHS, such as, changes in the reserve established in connection with our discussions with the Department of Justice, our adoption of ASU 2016-09 and other potential material items that are nonrecurring or non-operational in nature including, but not limited to, impairments of long-lived and intangible assets, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income attributable to UHS, as determined in accordance with GAAP, and as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Reports on Form 10-K for the year ended December 31, 2018 and Form 10-Q for the quarterly period ended June 30, 2019. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

 

(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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenues

 

$

2,822,453

 

 

 

2,648,913

 

 

$

8,482,012

 

 

 

8,017,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

1,408,226

 

 

 

1,316,710

 

 

 

4,157,253

 

 

 

3,922,832

 

Other operating expenses

 

 

762,174

 

 

 

651,442

 

 

 

2,079,518

 

 

 

1,896,745

 

Supplies expense

 

 

313,936

 

 

 

285,201

 

 

 

927,256

 

 

 

867,863

 

Depreciation and amortization

 

 

121,528

 

 

 

112,286

 

 

 

362,736

 

 

 

334,970

 

Lease and rental expense

 

 

27,660

 

 

 

26,110

 

 

 

80,320

 

 

 

79,932

 

 

 

 

2,633,524

 

 

 

2,391,749

 

 

 

7,607,083

 

 

 

7,102,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

188,929

 

 

 

257,164

 

 

 

874,929

 

 

 

915,440

 

Interest expense, net

 

 

41,447

 

 

 

39,506

 

 

 

123,574

 

 

 

115,082

 

Other (income) expense, net

 

 

9,407

 

 

 

(11,409

)

 

 

6,176

 

 

 

(26,717

)

Income before income taxes

 

 

138,075

 

 

 

229,067

 

 

 

745,179

 

 

 

827,075

 

Provision for income taxes

 

 

37,205

 

 

 

54,186

 

 

 

165,646

 

 

 

192,814

 

Net income

 

 

100,870

 

 

 

174,881

 

 

 

579,533

 

 

 

634,261

 

Less:  Net income attributable to noncontrolling interests

 

 

3,680

 

 

 

3,135

 

 

 

9,855

 

 

 

12,631

 

Net income attributable to UHS

 

$

97,190

 

 

$

171,746

 

 

$

569,678

 

 

$

621,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS (a)

 

$

1.10

 

 

$

1.85

 

 

$

6.36

 

 

$

6.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS (a)

 

$

1.10

 

 

$

1.84

 

 

$

6.35

 

 

$

6.60

 

 



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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

(a) Earnings per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to UHS

 

$

97,190

 

 

$

171,746

 

 

$

569,678

 

 

$

621,630

 

Less: Net income attributable to unvested restricted share grants

 

 

(243

)

 

 

(317

)

 

 

(1,414

)

 

 

(813

)

Net income attributable to UHS - basic and diluted

 

$

96,947

 

 

$

171,429

 

 

$

568,264

 

 

$

620,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

 

87,952

 

 

 

92,849

 

 

 

89,288

 

 

 

93,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS:

 

$

1.10

 

 

$

1.85

 

 

$

6.36

 

 

$

6.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

87,952

 

 

 

92,849

 

 

 

89,288

 

 

 

93,639

 

Add: Other share equivalents

 

 

403

 

 

 

481

 

 

 

231

 

 

 

459

 

Weighted average number of common shares and equiv. - diluted

 

 

88,355

 

 

 

93,330

 

 

 

89,519

 

 

 

94,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS:

 

$

1.10

 

 

$

1.84

 

 

$

6.35

 

 

$

6.60

 

 


Universal Health Services, Inc.

 

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

 

For the Three Months ended September 30, 2019 and 2018

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

% Net

 

 

Three months ended

 

 

% Net

 

 

September 30, 2019

 

 

revenues

 

 

September 30, 2018

 

 

revenues

 

Net income attributable to UHS

$

97,190

 

 

 

 

 

 

$

171,746

 

 

 

 

 

   Depreciation and amortization

 

121,528

 

 

 

 

 

 

 

112,286

 

 

 

 

 

   Interest expense, net

 

41,447

 

 

 

 

 

 

 

39,506

 

 

 

 

 

   Provision for income taxes

 

37,205

 

 

 

 

 

 

 

54,186

 

 

 

 

 

EBITDA net of NCI

$

297,370

 

 

 

10.5

%

 

$

377,724

 

 

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

9,407

 

 

 

 

 

 

 

(11,409

)

 

 

 

 

Increase in DOJ Reserve

 

-

 

 

 

 

 

 

 

47,981

 

 

 

 

 

Provision for asset impairment

 

97,631

 

 

 

 

 

 

 

-

 

 

 

 

 

Adjusted EBITDA net of NCI

$

404,408

 

 

 

14.3

%

 

$

414,296

 

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

2,822,453

 

 

 

 

 

 

$

2,648,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Three months ended

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

97,190

 

 

$

1.10

 

 

$

171,746

 

 

$

1.84

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in DOJ Reserve and related income taxes

 

6,214

 

 

 

0.07

 

 

 

36,578

 

 

 

0.39

 

Impact of ASU 2016-09

 

(1,724

)

 

 

(0.02

)

 

 

481

 

 

 

-

 

Provision for asset impairment, after-tax

 

74,583

 

 

 

0.84

 

 

 

-

 

 

 

-

 

Subtotal adjustments

 

79,073

 

 

 

0.89

 

 

 

37,059

 

 

 

0.39

 

Adjusted net income attributable to UHS

$

176,263

 

 

$

1.99

 

 

$

208,805

 

 

$

2.23

 

 


Universal Health Services, Inc.

 

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

 

For the Nine Months ended September 30, 2019 and 2018

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

% Net

 

 

Nine months ended

 

 

% Net

 

 

September 30, 2019

 

 

revenues

 

 

September 30, 2018

 

 

revenues

 

Net income attributable to UHS

$

569,678

 

 

 

 

 

 

$

621,630

 

 

 

 

 

   Depreciation and amortization

 

362,736

 

 

 

 

 

 

 

334,970

 

 

 

 

 

   Interest expense, net

 

123,574

 

 

 

 

 

 

 

115,082

 

 

 

 

 

   Provision for income taxes

 

165,646

 

 

 

 

 

 

 

192,814

 

 

 

 

 

EBITDA net of NCI

$

1,221,634

 

 

 

14.4

%

 

$

1,264,496

 

 

 

15.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

6,176

 

 

 

 

 

 

 

(26,717

)

 

 

 

 

Increase in DOJ Reserve

 

10,978

 

 

 

 

 

 

 

70,432

 

 

 

 

 

Provision for asset impairment

 

97,631

 

 

 

 

 

 

 

-

 

 

 

 

 

Adjusted EBITDA net of NCI

$

1,336,419

 

 

 

15.8

%

 

$

1,308,211

 

 

 

16.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

8,482,012

 

 

 

 

 

 

$

8,017,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

Nine months ended

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

569,678

 

 

$

6.35

 

 

$

621,630

 

 

$

6.60

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in DOJ Reserve, after-tax

 

14,583

 

 

 

0.16

 

 

 

53,694

 

 

 

0.57

 

Impact of ASU 2016-09

 

(12,122

)

 

 

(0.14

)

 

 

(1,056

)

 

 

(0.01

)

Provision for asset impairment, after-tax

 

74,583

 

 

 

0.84

 

 

 

-

 

 

 

-

 

Subtotal adjustments

 

77,044

 

 

 

0.86

 

 

 

52,638

 

 

 

0.56

 

Adjusted net income attributable to UHS

$

646,722

 

 

$

7.21

 

 

$

674,268

 

 

$

7.16

 

 

 

 


Universal Health Services, Inc.

 

Consolidated Statements of Comprehensive Income

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

 

Nine months

 

 

 

ended September 30,

 

 

ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

100,870

 

 

$

174,881

 

 

$

579,533

 

 

$

634,261

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized derivative gains (losses) on cash flow hedges

 

 

0

 

 

 

(1,924

)

 

 

(3,925

)

 

 

(345

)

Foreign currency translation adjustment

 

 

(10,089

)

 

 

(12,323

)

 

 

(19,192

)

 

 

(15,480

)

Other comprehensive income (loss)  before tax

 

 

(10,089

)

 

 

(14,247

)

 

 

(23,117

)

 

 

(15,825

)

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

 

 

174

 

 

 

(457

)

 

 

(676

)

 

 

(82

)

Total other comprehensive income (loss), net of tax

 

 

(10,263

)

 

 

(13,790

)

 

 

(22,441

)

 

 

(15,743

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

90,607

 

 

 

161,091

 

 

 

557,092

 

 

 

618,518

 

Less: Comprehensive income attributable to noncontrolling interests

 

 

3,680

 

 

 

3,135

 

 

 

9,855

 

 

 

12,631

 

Comprehensive income attributable to UHS

 

$

86,927

 

 

$

157,956

 

 

$

547,237

 

 

$

605,887

 

 


Universal Health Services, Inc.

 

Condensed Consolidated Balance Sheets

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,905

 

 

$

105,220

 

Accounts receivable, net

 

 

1,544,077

 

 

 

1,509,909

 

Supplies

 

 

156,285

 

 

 

148,206

 

Other current assets

 

 

171,360

 

 

 

174,467

 

Total current assets

 

 

1,930,627

 

 

 

1,937,802

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

8,967,340

 

 

 

8,563,455

 

Less: accumulated depreciation

 

 

(4,008,931

)

 

 

(3,715,515

)

 

 

 

4,958,409

 

 

 

4,847,940

 

Other assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

3,827,867

 

 

 

3,844,628

 

Deferred income taxes

 

 

19,199

 

 

 

5,280

 

Right of use assets-operating leases

 

 

329,328

 

 

 

0

 

Deferred charges

 

 

6,926

 

 

 

8,772

 

Other

 

 

522,045

 

 

 

621,058

 

Total Assets

 

$

11,594,401

 

 

$

11,265,480

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

78,077

 

 

$

63,446

 

Accounts payable and accrued liabilities

 

 

1,343,922

 

 

 

1,253,714

 

Legal reserves

 

 

144,120

 

 

 

129,150

 

Operating lease liabilities

 

 

55,080

 

 

 

0

 

Federal and state taxes

 

 

570

 

 

 

2,428

 

Total current liabilities

 

 

1,621,769

 

 

 

1,448,738

 

 

 

 

 

 

 

 

 

 

Other noncurrent liabilities

 

 

338,871

 

 

 

361,809

 

Operating lease liabilities noncurrent

 

 

274,248

 

 

 

0

 

Long-term debt

 

 

3,870,294

 

 

 

3,935,187

 

Deferred income taxes

 

 

21,213

 

 

 

49,661

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

4,061

 

 

 

4,292

 

 

 

 

 

 

 

 

 

 

UHS common stockholders' equity

 

 

5,389,215

 

 

 

5,389,262

 

Noncontrolling interest

 

 

74,730

 

 

 

76,531

 

Total equity

 

 

5,463,945

 

 

 

5,465,793

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

11,594,401

 

 

$

11,265,480

 

 


Universal Health Services, Inc.

 

Consolidated Statements of Cash Flows

 

(in thousands)

 

(unaudited)

 

 

Nine months

 

 

ended September 30,

 

 

2019

 

 

2018

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net income

$

579,533

 

 

$

634,261

 

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