uhs-8k_20220224.htm
false 0000352915 0000352915 2022-02-24 2022-02-24

 

 

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): February 24, 2022

 

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 February 24, 2022, 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 February 24, 2022.

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 February 24, 2022.

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: February 24, 2022

 

 

 

 

uhs-ex991_8.htm

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

February 24, 2022

 

CONTACT:

Steve Filton

 

Chief Financial Officer

 

610-768-3300

 

 

UNIVERSAL HEALTH SERVICES, INC.

ANNOUNCES 2021 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS,

2022 FULL YEAR EARNINGS GUIDANCE AND $1.4 BILLION INCREASE TO STOCK REPURCHASE PROGRAM

 

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended December 31, 2021 and 2020:

KING OF PRUSSIA, PA – Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $239.1 million, or $3.00 per diluted share, during the fourth quarter of 2021, as compared to $308.7 million, or $3.60 per diluted share, during the fourth quarter of 2020. Net revenues increased by 6.1% to $3.275 billion during the fourth quarter of 2021 as compared to $3.087 billion during the fourth quarter of 2020.

As reflected on the Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), our adjusted net income attributable to UHS during the fourth quarter of 2021 was $235.1 million, or $2.95 per diluted share, as compared to $307.9 million, or $3.59 per diluted share, during the fourth quarter of 2020.  

Included in our reported and adjusted net income attributable to UHS during the fourth quarter of 2021 was a net favorable after-tax impact of approximately $26.2 million, or $.33 per diluted share, resulting from approximately $34 million of revenues recorded during the fourth quarter in connection with the Kentucky Medicaid Managed Care Hospital Rate Increase Program, covering the period of July 1, 2021 to December 31, 2021, as discussed below in Kentucky Hospital Rate Increase Program;

Included in our reported and adjusted net income attributable to UHS during the fourth quarter of 2020 were the following: (i) a favorable impact of approximately $151.4 million, or $1.76 per diluted share, resulting from the recording of approximately $200 million of grant revenues from various governmental stimulus programs, most notably the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and; (ii) an unfavorable estimated impact of $42.1 million ($55 million pre-tax), or $.49 per diluted share, resulting from the information technology incident that occurred in September, 2020.  

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2021, was a net aggregate favorable after-tax impact of $4.0 million, or $.05 per diluted share, consisting primarily of an after-tax unrealized gain of $4.1 million, or $.05 per diluted share, ($5.4 million pre-tax which is included in “Other (income) expense, net”), resulting from an increase in the market value of certain equity securities.  

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2020, was a net aggregate favorable after-tax impact of $849,000, or $.01 per diluted share, consisting of the following: (i) an after-tax unrealized gain of $3.9 million, or $.05 per diluted share, resulting from an increase in the market value certain equity securities, and; (ii) a unfavorable after-tax impact of $3.0 million, or $.04 per diluted share, resulting from ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”).

 


 

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization (“EBITDA net of NCI”, NCI is net income attributable to noncontrolling interests), was $464.5 million during the fourth quarter of 2021, as compared to $557.2 million during the fourth quarter of 2020. Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impact of other (income) expense, net, was $452.2 million during the fourth quarter of 2021 as compared to $548.9 million during the fourth quarter of 2020.

Consolidated Results of Operations, As Reported and As Adjusted  – Twelve-month periods ended December 31, 2021 and 2020:

Reported net income attributable to UHS was $991.6 million, or $11.82 per diluted share, during the full year of 2021, as compared to $944.0 million, or $10.99 per diluted share, during the 2020 full year. Net revenues increased by 9.4% to $12.642 billion during 2021 as compared to $11.559 billion during 2020.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the twelve-month period ended December 31, 2021 was $991.7 million, or $11.82 per diluted share, as compared to $954.7 million, or $11.12 per diluted share, during the full year of 2020.  

Our reported and adjusted net income attributable to UHS during the twelve-month period ended December 31, 2021, included the following:  

 

a favorable after-tax impact of $74.0 million, or $.88 per diluted share, resulting from approximately $97 million of revenues recorded during 2021 in connection with the Kentucky Medicaid Managed Care Hospital Rate Increase Program, covering the period of July 1, 2020 to December 31, 2021, as discussed below in Kentucky Hospital Rate Increase Program;

 

an unfavorable after-tax impact of approximately $39.2 million, or $.47 per diluted share, resulting from a $52 million increase to our reserves for self-insured professional and general liability claims recorded during 2021 resulting from unfavorable trends experienced in connection with the number of asserted claims and reported incidents and estimates of losses for those claims, and;

 

an aggregate favorable after-tax impact of $28.4 million, or $.34 per diluted share, resulting from approximately $38 million of aggregate commercial insurance proceeds received during 2021 in connection with: (i) the unfavorable economic impact resulting from the previously disclosed information technology incident that occurred during 2020 ($29 million aggregate proceeds received thus far representing partial recovery of the loss sustained), and; (ii) the COVID-19 pandemic (approximately $9 million of insurance proceeds received representing recovery of the policy maximum).  

Our reported and adjusted net income attributable to UHS during the twelve-month period ended December 31, 2020, included the following: (i) a favorable impact of $308.6 million, or $3.61 per diluted share, resulting from the recording of grant revenues of approximately $413 million from various governmental stimulus programs, most notably the CARES Act; (ii) an unfavorable estimated impact of $51.3 million ($67 million pre-tax), or $.60 per diluted share, resulting from the information technology incident that occurred in September, 2020, and; (iii) a favorable impact of $21.4 million, or $0.25 per diluted share, resulting from $28 million of net revenues recorded in connection with the California Medicaid supplemental payment program related to our acute care hospitals.   

As reflected on the Supplemental Schedule, included in our reported results during the twelve-month period ended December 31, 2021, were the following which, on a net aggregate basis, amounted to a de minimis amount: (i) an after-tax charge of $12.9 million, or $.15 per diluted share, ($16.8 million pre-tax which is included in “Other (income) expense, net”) recorded in connection with the costs related to extinguishment of debt resulting from various financing transactions completed during the third quarter of 2021; (ii) an after-tax unrealized gain of $10.4 million, or $.12 per diluted share, ($13.6 million pre-tax which is included in “Other

 


 

(income) expense, net”) resulting from an increase in the market value of shares of certain equity securities, and; (iii) a favorable after-tax impact of $2.4 million, or $.03 per diluted share, resulting from ASU 2016-09.

As reflected on the Supplemental Schedule, included in our reported results during the twelve-month period ended December 31, 2020, was a net aggregate unfavorable after-tax impact of $10.8 million, or $.13 per diluted share, consisting of the following: (i) an after-tax unrealized loss of $3.3 million, or $.04 per diluted share, resulting from a decrease in the market value of shares of certain equity securities, and; (ii) an unfavorable after-tax impact of $7.4 million, or $.09 per diluted share, resulting from ASU 2016-09.

As calculated on the attached Supplemental Schedule, our EBITDA net of NCI, was $1.914 billion during the twelve-month period ended December 31, 2021, as compared to $1.860 billion during the full year of 2020. Our Adjusted EBITDA net of NCI, which excludes the impact of other (income) expense, net, was $1.900 billion during the twelve-month period ended December 31, 2021, as compared to $1.860 billion during the full year of 2020.

Acute Care Services – Three and twelve-month periods ended December 31, 2021 and 2020:

During the fourth quarter of 2021, at our acute care hospitals owned during both periods (“same facility basis”), adjusted admissions (adjusted for outpatient activity) increased by 8.9% and adjusted patient days increased by 5.0%, as compared to the fourth quarter of 2020.

At these facilities, excluding the CARES Act and other governmental stimulus revenues of approximately $155 million recorded during the fourth quarter of 2020, net revenue per adjusted admission increased by 3.7% while net revenue per adjusted patient day increased by 7.5% during the fourth quarter of 2021, as compared to the fourth quarter of 2020.  During the fourth quarter of 2021, as compared to the fourth quarter of 2020, net revenues generated from our acute care services on a same facility basis increased by 4.4% including the CARES Act and other governmental stimulus revenues recorded during the fourth quarter of 2020, and increased by 14.8% excluding the CARES Act and other governmental stimulus revenues recorded during the fourth quarter of 2020.  

During the twelve-month period ended December 31, 2021, at our acute care hospitals on a same facility basis, adjusted admissions increased by 7.7% and adjusted patient days increased by 8.6%, as compared to the full year of 2020.  At these facilities, excluding the CARES Act and other governmental stimulus revenues of approximately $316 million recorded during the full year of 2020, net revenue per adjusted admission increased by 8.6% while net revenue per adjusted patient day increased by 7.7% during the full year of 2021, as compared to 2020. During the full year of 2021, as compared to 2020, net revenues generated from our acute care services on a same facility basis increased by 11.6% including the CARES Act and other governmental stimulus revenues recorded during the full year of 2020 and increased by 17.6% excluding the CARES Act and other governmental stimulus revenues recorded during 2020.    

Behavioral Health Care Services – Three and twelve-month periods ended December 31, 2021 and 2020:

During the fourth quarter of 2021, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 1.5% and adjusted patient days increased 0.5%, as compared to the fourth quarter of 2020.

At these facilities, excluding the CARES Act and other governmental stimulus revenues of approximately $45 million recorded during the fourth quarter of 2020, net revenue per adjusted admission increased by 7.8% while net revenue per adjusted patient day increased by 8.9% during the fourth quarter of 2021, as compared to the fourth quarter of 2020.  During the fourth quarter of 2021, as compared to the fourth quarter of 2020, net revenues generated from our behavioral health care services on a same facility basis increased by 5.4% including the CARES Act and other governmental stimulus revenues recorded during the fourth quarter of 2020, and increased by 9.2% excluding the CARES Act and other governmental stimulus revenues recorded during the fourth quarter of 2020.    

 


 

During the twelve-month period ended December 31, 2021, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 1.6% and adjusted patient days increased by 0.4%, as compared to the full year of 2020. At these facilities, excluding the CARES Act and other governmental stimulus revenues of approximately $97 million recorded during the full year of 2020, net revenue per adjusted admission increased by 5.4% while net revenue per adjusted patient day increased by 6.7% during the full year of 2021, as compared to the full year of 2020.  During the year ended December 31, 2021, as compared to the full year of 2020, net revenues generated from our behavioral health care services on a same facility basis increased by 5.4% including the CARES Act and other governmental stimulus revenues recorded during the full year of 2020, and increased by 7.5% excluding the CARES Act and other governmental stimulus revenues recorded during the year ended December 31, 2020.    

COVID-19

The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The COVID-19 vaccination process commenced during the first quarter of 2021. Since that time through the second quarter of 2021, we had generally experienced a decline in COVID-19 patients as well as a corresponding recovery in non-COVID patient activity.  However, during the third and fourth quarters of 2021, and continuing into the first quarter of 2022, our facilities have generally experienced an increase in COVID-19 patients resulting from the Delta and, more recently, the highly transmissible Omicron variants. Although booster doses for COVID-19 vaccinations began during the third quarter of 2021, and while we expect the administration of vaccines booster doses will assist in easing the number of COVID-19 patients, the pace at which this is likely to occur is very difficult to predict. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results.  However, developments related to the COVID-19 pandemic could materially affect our financial performance during 2022.  

Net Cash Provided by Operating Activities and Liquidity and Financing Transactions:

Net Cash Provided by Operating Activities:

For the twelve months ended December 31, 2021, our net cash provided by operating activities was $884 million as compared to $2.360 billion during the full year of 2020.  The $1.476 billion net decrease in our cash provided by operating activities during the year ended December 31, 2021, as compared to full year of 2020, was due to: (i) an unfavorable change of $1.398 billion resulting primarily from the early return of the $695 million of Medicare accelerated payments which were repaid during the first quarter of 2021, as compared to a favorable change of $699 million experienced during 2020 resulting primarily from receipt of the Medicare accelerated payments; (ii) an unfavorable change of approximately $262 million due to the following, as provided for by the CARES Act: (1) a $178 million favorable impact experienced during 2020 resulting from the payment deferral of the employer’s share of Social Security taxes, and; (2) an $84 million unfavorable impact experienced during 2021 resulting from the payment of the first of two installments to remit the deferred amount (the $94 million remaining payment deferral will be remitted during 2022); (iii) a favorable change of $137 million in accounts receivable due, in part, to the unfavorable impact experienced during 2020, and corresponding favorable impact experienced during 2021, resulting from the coding, billing and collection delays experienced during the fourth quarter of 2020 resulting from the information technology incident that occurred in September, 2020; (iv) a favorable change of $88 million resulting from an increase in net income plus depreciation and amortization expense, stock-based compensation expense, gain/loss on sales of assets and businesses, costs related to extinguishment of debt and provision for asset impairment; (v) an unfavorable change of $64 million in accrued and deferred income taxes; (vi) a favorable change of $49 million in accrued insurance expense, net of commercial premiums paid, and; (vii) $26 million of other combined net unfavorable changes.    

 


 

Liquidity and Financing Transactions:

As of December 31, 2021, we had $854 million of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility, net of outstanding letters of credit.  

In connection with the various financing transactions completed during the third quarter of 2021, our results of operations for the twelve-month periods ended December 31, 2021, include a $16.8 million pre-tax charge incurred for costs related to the extinguishment of debt. This pre-tax charge consisted of the following: (i) $6.8 million incurred to write-off unamortized deferred charges on the extinguished debt, and; (ii) a $10 million make-whole premium paid on the early redemption of the $400 million, 5.00% senior secured notes.

Stock Repurchase Program and Increased Authorization:

On February 24, 2022, our Board of Directors authorized a $1.4 billion increase to our stock repurchase program. Pursuant to this program, 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. 

During the fourth quarter of 2021, pursuant to previous share repurchase authorizations, including a $1.0 billion increase to the program approved by our Board of Directors in July, 2021, we have repurchased approximately 3.43 million shares at an aggregate cost of approximately $432.3 million (approximately $126 per share).  For the year ended December 31, 2021, we have repurchased approximately 8.41 million shares at an aggregate cost of approximately $1.201 billion (approximately $143 per share).      

As of December 31, 2021, prior to the above-mentioned increased authorization approved in February, 2022, we had an aggregate available repurchase authorization of $358.2 million.  In January and February of 2022, we have repurchased an additional 2.30 million shares at an aggregate cost of approximately $299.1 million (approximately $130 per share).  As of February 24, 2022, including the above-mentioned $1.4 billion increased authorization, we have an aggregate available repurchase authorization of approximately $1.46 billion.  

2022 Operating Results Forecast:

Reflected below is our 2022 guidance range for consolidated net revenues, earnings before interest, taxes, depreciation & amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests (“Adjusted EBITDA net of NCI”), adjusted net income attributable to UHS per diluted share (“Adjusted EPS-diluted”) and capital expenditures.  

Adjusted EPS-diluted and Adjusted EBITDA net of NCI, are non-GAAP financial measures and should be examined in connection with net income determined in accordance with GAAP as presented in the consolidated financial statements and notes thereto in this report or in our filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2021. Please see the Supplemental Non-GAAP Disclosures - 2022 Operating Results Forecast schedule as included herein for additional information and a reconciliation to the financial forecasts as computed in accordance with GAAP.  

 

                     For the Year Ended

                                             December 31, 2022

 

       Low

       High

Net revenues

$13.424 billion

$13.694 billion

Adjusted EBITDA net of NCI

$1.830 billion

$1.927 billion  

Adjusted EPS-diluted

$11.90 per share

$12.90 per share

Capital expenditures

$950 million

$1.100 billion

Our 2022 guidance contains a number of assumptions including, but not limited to, the following:

 

The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material unfavorable effect on our operations and financial results since that time. The

 


 

 

extent to which the COVID-19 pandemic and measures taken in response thereto impact our business, results of operations and financial condition will depend on numerous factors and future developments, most of which are beyond our control or ability to predict. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We are not able to fully quantify the impact that these factors will have on our future financial results, but expect developments related to the COVID-19 pandemic to materially affect our financial performance in 2022 and may cause our 2022 actual operating results to differ materially from our 2022 operating results forecast. Please see additional disclosure above in COVID-19.

 

The 2022 forecasted amounts exclude the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters including settlements, legal judgments and lawsuits, potential impacts of non-ordinary course acquisitions, divestitures, joint ventures or other strategic transactions, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, impairment of long-lived and intangible assets, other amounts that may be reflected in the current financial statements that relate to prior periods, and the impact of share repurchases that differ from our forecasted assumptions. 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.

 

Our net revenues are estimated to be approximately $13.424 billion to $13.694 billion representing an increase of approximately 6.2% to 8.3% over our 2021 net revenues of approximately $12.642 billion.  

 

Our Adjusted EBITDA net of NCI is estimated to be approximately $1.830 billion to $1.927 billion as compared to our 2021 Adjusted EBITDA net of NCI of $1.900 billion.

 

Our Adjusted EPS-diluted range is estimated to be $11.90 per diluted share to $12.90 per diluted share as compared to our adjusted net income attributable to UHS of $11.82 per diluted share for the year ended December 31, 2021, as calculated on the attached Supplemental Schedule.

Kentucky Hospital Rate Increase Program:

In early 2021, CMS approved the Kentucky Medicaid Managed Care Hospital Rate Increase Program (“HRIP”) for SFY 2021, which covered the period of July 1, 2020 through June 30, 2021. In December 2021, CMS approved the HRIP program period for the period July 1, 2021 to December 31, 2021.

Included in our financial results for the three-month period ended December 31, 2021 is approximately $34 million of HRIP reimbursement covering the six-month period of July 1, 2021 through December 31, 2021.  Included in our financial results for the full year of 2021 was approximately $97 million of HRIP reimbursement covering the eighteen-month period of July 1, 2020 through December 31, 2021.  

Programs such as HRIP require an annual state submission and approval by CMS. In December, 2021, CMS approved the program for the period of January 1, 2022 through December 31, 2022 at rates similar to the prior year. We estimate that our reimbursements pursuant to HRIP will approximate $58 million during the year ended December 31, 2022.  

Conference call information:        

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on February 25, 2022. The dial-in number is 1-877-648-7971.  

A live broadcast of the conference call will be available on our website at www.uhs.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.

 


 

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 during 2021 were approximately $12.6 billion. In 2022, UHS was again recognized as one of the World’s Most Admired Companies by Fortune; and in 2021 the Company ranked #270 on the Fortune 500 and #307 on Forbes’ list of America’s Largest Public Companies.

Our operating philosophy is as effective today as it was upon the Company’s founding in 1979, 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 over 89,000 employees and through its subsidiaries operates 27 acute care hospitals, 335 behavioral health facilities, 40 outpatient facilities and ambulatory care access points, an insurance offering, a physician network and various related services located in 39 U.S. states, Washington, D.C., Puerto Rico and the United Kingdom. In addition, UHS also has under construction, a new 170-bed acute care hospital located in Reno, Nevada, that is scheduled to be completed and opened during the first quarter of 2022. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information visit www.uhs.com.

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to the anticipated impact of COVID-19 on our operations and financial results, 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, 2021), may cause the results to differ materially from those anticipated in the forward-looking statements.  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.  Many of the factors that could affect our future results are beyond our control or ability to predict, including the impact of the COVID-19 pandemic. Our future operations and financial results will likely be materially impacted by developments related to COVID-19 including, but not limited to, the potential impact on future COVID-19 patient volumes resulting from new variants of the virus, the length of time and severity of the spread of the pandemic; the volume of cancelled or rescheduled elective procedures and the volume of COVID-19 patients treated at our hospitals and other healthcare facilities; measures we are taking to respond to the COVID-19 pandemic; the impact of government and administrative regulation and stimulus on the hospital industry and potential retrospective adjustment in future periods of CARES Act and other grant income revenues recorded as revenues in prior periods; declining patient volumes and unfavorable changes in payer mix caused by deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients as the result of business closings and layoffs); potential disruptions to our clinical staffing and shortages and disruptions related to supplies required for our employees and patients; and potential increases to expenses related to staffing, supply chain or other expenditures; the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, as well as risks associated with disruptions in the financial markets and the business of financial institutions as the result of the COVID-19 pandemic which could impact us from a financing perspective; and changes in general economic conditions nationally and regionally in our markets resulting from the COVID-19 pandemic. We are not able to fully quantify the impact that these factors will have on our future financial results, but developments related to the COVID-19 pandemic could materially affect our financial performance during 2022.

 


 

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 of material items impacting our net income attributable to UHS, such as, the impact of ASU 2016-09, unrealized gains/losses resulting from changes in the market value of shares of certain equity securities, 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 Report on Form 10-K for the year ended December 31, 2021. 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

 

 

Twelve months

 

 

 

ended December 31,

 

 

ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

$

3,275,251

 

 

 

3,086,935

 

 

$

12,642,117

 

 

 

11,558,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating charges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

1,621,788

 

 

 

1,466,070

 

 

 

6,163,944

 

 

 

5,613,097

 

Other operating expenses

 

 

802,279

 

 

 

690,560

 

 

 

3,035,869

 

 

 

2,672,762

 

Supplies expense

 

 

374,157

 

 

 

351,324

 

 

 

1,427,134

 

 

 

1,288,132

 

Depreciation and amortization

 

 

133,363

 

 

 

133,930

 

 

 

533,213

 

 

 

510,493

 

Lease and rental expense

 

 

30,015

 

 

 

31,092

 

 

 

118,863

 

 

 

116,059

 

 

 

 

2,961,602

 

 

 

2,672,976

 

 

 

11,279,023

 

 

 

10,200,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

313,649

 

 

 

413,959

 

 

 

1,363,094

 

 

 

1,358,354

 

Interest expense, net

 

 

19,217

 

 

 

19,886

 

 

 

83,672

 

 

 

106,285

 

Other (income) expense, net

 

 

(12,316

)

 

 

(8,305

)

 

 

(13,891

)

 

 

(14

)

Income before income taxes

 

 

306,748

 

 

 

402,378

 

 

 

1,293,313

 

 

 

1,252,083

 

Provision for income taxes

 

 

72,837

 

 

 

94,644

 

 

 

305,681

 

 

 

299,293

 

Net income

 

 

233,911

 

 

 

307,734

 

 

 

987,632

 

 

 

952,790

 

Less:  Net income (loss) attributable to noncontrolling interests ("NCI")

 

 

(5,213

)

 

 

(974

)

 

 

(3,958

)

 

 

8,837

 

Net income attributable to UHS

 

$

239,124

 

 

$

308,708

 

 

$

991,590

 

 

$

943,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS (a)

 

$

3.03

 

 

$

3.63

 

 

$

11.99

 

 

$

11.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS (a)

 

$

3.00

 

 

$

3.60

 

 

$

11.82

 

 

$

10.99

 

 


 


 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(a) Earnings per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to UHS

 

$

239,124

 

 

$

308,708

 

 

$

991,590

 

 

$

943,953

 

Less: Net income attributable to unvested restricted share grants

 

 

(450

)

 

 

(994

)

 

 

(2,059

)

 

 

(2,981

)

Net income attributable to UHS - basic and diluted

 

$

238,674

 

 

$

307,714

 

 

$

989,531

 

 

$

940,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

 

78,808

 

 

 

84,728

 

 

 

82,519

 

 

 

85,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS:

 

$

3.03

 

 

$

3.63

 

 

$

11.99

 

 

$

11.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

78,808

 

 

 

84,728

 

 

 

82,519

 

 

 

85,061

 

Add: Other share equivalents

 

 

867

 

 

 

859

 

 

 

1,173

 

 

 

526

 

Weighted average number of common shares and equiv. - diluted

 

 

79,675

 

 

 

85,587

 

 

 

83,692

 

 

 

85,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to UHS:

 

$

3.00

 

 

$

3.60

 

 

$

11.82

 

 

$

10.99

 

 

 


 

 

Universal Health Services, Inc.

 

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

 

For the Three Months ended December 31, 2021 and 2020

 

(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

 

 

December 31, 2021

 

 

revenues

 

 

December 31, 2020

 

 

revenues

 

Net income attributable to UHS

$

239,124

 

 

 

 

 

 

$

308,708

 

 

 

 

 

   Depreciation and amortization

 

133,363

 

 

 

 

 

 

 

133,930

 

 

 

 

 

   Interest expense, net

 

19,217

 

 

 

 

 

 

 

19,886

 

 

 

 

 

   Provision for income taxes

 

72,837

 

 

 

 

 

 

 

94,644

 

 

 

 

 

EBITDA net of NCI

$

464,541

 

 

 

14.2

%

 

$

557,168

 

 

 

18.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

(12,316

)

 

 

 

 

 

 

(8,305

)

 

 

 

 

Adjusted EBITDA net of NCI

$

452,225

 

 

 

13.8

%

 

$

548,863

 

 

 

17.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

3,275,251

 

 

 

 

 

 

$

3,086,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Three months ended

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

239,124

 

 

$

3.00

 

 

$

308,708

 

 

$

3.60

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on equity securities

 

(4,119

)

 

 

(0.05

)

 

 

(3,880

)

 

 

(0.05

)

Impact of ASU 2016-09

 

99

 

 

 

-

 

 

 

3,031

 

 

 

0.04

 

Subtotal adjustments

 

(4,020

)

 

 

(0.05

)

 

 

(849

)

 

 

(0.01

)

Adjusted net income attributable to UHS

$

235,104

 

 

$

2.95

 

 

$

307,859

 

 

$

3.59

 

 

 

 

 


 

 

Universal Health Services, Inc.

 

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

 

For the Twelve Months ended December 31, 2021 and 2020

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve months ended

 

 

% Net

 

 

Twelve months ended

 

 

% Net

 

 

December 31, 2021

 

 

revenues

 

 

December 31, 2020

 

 

revenues

 

Net income attributable to UHS

$

991,590

 

 

 

 

 

 

$

943,953

 

 

 

 

 

   Depreciation and amortization

 

533,213

 

 

 

 

 

 

 

510,493

 

 

 

 

 

   Interest expense, net

 

83,672

 

 

 

 

 

 

 

106,285

 

 

 

 

 

   Provision for income taxes

 

305,681

 

 

 

 

 

 

 

299,293

 

 

 

 

 

EBITDA net of NCI

$

1,914,156

 

 

 

15.1

%

 

$

1,860,024

 

 

 

16.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

(13,891

)

 

 

 

 

 

 

(14

)

 

 

 

 

Adjusted EBITDA net of NCI

$

1,900,265

 

 

 

15.0

%

 

$

1,860,010

 

 

 

16.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

12,642,117

 

 

 

 

 

 

$

11,558,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Net Income Attributable to UHS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve months ended

 

 

Twelve months ended

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

 

 

 

Per

 

 

 

 

 

 

Per

 

 

Amount

 

 

Diluted Share

 

 

Amount

 

 

Diluted Share

 

Net income attributable to UHS

$

991,590

 

 

$

11.82

 

 

$

943,953

 

 

$

10.99

 

Plus/minus after-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss on equity securities

 

(10,374

)

 

 

(0.12

)

 

 

3,313

 

 

 

0.04

 

Debt extinguishment costs

 

12,884

 

 

 

0.15

 

 

 

-

 

 

 

-

 

Impact of ASU 2016-09

 

(2,423

)

 

 

(0.03

)

 

 

7,443

 

 

 

0.09

 

Subtotal adjustments

 

87

 

 

 

-

 

 

 

10,756

 

 

 

0.13

 

Adjusted net income attributable to UHS

$

991,677

 

 

$

11.82

 

 

$

954,709

 

 

$

11.12

 

 

 

 

 

 


 

 

Universal Health Services, Inc.

 

Consolidated Statements of Comprehensive Income

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

 

Twelve months

 

 

 

ended December 31,

 

 

ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

233,911

 

 

$

307,734

 

 

$

987,632

 

 

$

952,790

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum pension liability

 

 

1,427

 

 

 

4,428

 

 

 

1,427

 

 

 

4,428

 

Foreign currency translation adjustment

 

 

2,441

 

 

 

31,899

 

 

 

(20,743

)

 

 

13,619

 

Other comprehensive income (loss)  before tax

 

 

3,868

 

 

 

36,327

 

 

 

(19,316

)

 

 

18,047

 

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

 

 

471

 

 

 

2,728

 

 

 

(1,487

)

 

 

1,820

 

Total other comprehensive income (loss), net of tax

 

 

3,397

 

 

 

33,599

 

 

 

(17,829

)

 

 

16,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

237,308

 

 

 

341,333

 

 

 

969,803

 

 

 

969,017

 

Less: Comprehensive income attributable to noncontrolling interests

 

 

(5,213

)

 

 

(974

)

 

 

(3,958

)

 

 

8,837

 

Comprehensive income attributable to UHS

 

$

242,521

 

 

$

342,307

 

 

$

973,761

 

 

$

960,180

 

 

 


 

 

Universal Health Services, Inc.

 

Condensed Consolidated Balance Sheets

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

115,301

 

 

$

1,224,490

 

Accounts receivable, net

 

 

1,746,635

 

 

 

1,728,928

 

Supplies

 

 

206,839

 

 

 

190,417

 

Other current assets

 

 

194,781

 

 

 

138,034

 

Total current assets

 

 

2,263,556

 

 

 

3,281,869

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

10,770,702

 

 

 

9,885,888

 

Less: accumulated depreciation

 

 

(4,896,427

)

 

 

(4,512,764

)

 

 

 

5,874,275

 

 

 

5,373,124

 

Other assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

3,962,624

 

 

 

3,882,715

 

Deferred income taxes

 

 

45,707

 

 

 

22,689

 

Right of use assets-operating leases

 

 

367,477

 

 

 

336,513

 

Deferred charges

 

 

6,525

 

 

 

4,985

 

Other

 

 

573,379

 

 

 

574,984

 

Total Assets

 

$

13,093,543

 

 

$

13,476,879

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

48,409

 

 

$

331,998

 

Accounts payable and other liabilities

 

 

1,860,490

 

 

 

1,668,671

 

Medicare accelerated payments and deferred CARES Act and other grants

 

 

6

 

 

 

376,151

 

Operating lease liabilities

 

 

64,484

 

 

 

59,796

 

Federal and state taxes

 

 

10,720

 

 

 

44,423

 

Total current liabilities

 

 

1,984,109

 

 

 

2,481,039

 

 

 

 

 

 

 

 

 

 

Other noncurrent liabilities

 

 

464,759

 

 

 

458,549

 

Operating lease liabilities noncurrent

 

 

304,624

 

 

 

278,303

 

Medicare accelerated payments noncurrent

 

 

0

 

 

 

322,617

 

Long-term debt

 

 

4,141,879

 

 

 

3,524,253

 

Deferred income taxes

 

 

0

 

 

 

5,582

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

5,119

 

 

 

4,569

 

 

 

 

 

 

 

 

 

 

UHS common stockholders' equity

 

 

6,089,664

 

 

 

6,317,146

 

Noncontrolling interest

 

 

103,389

 

 

 

84,821

 

Total equity

 

 

6,193,053

 

 

 

6,401,967

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

13,093,543

 

 

$

13,476,879

 

 

 


 

 

Universal Health Services, Inc.

 

Consolidated Statements of Cash Flows

 

(in thousands)

 

(unaudited)

 

 

Twelve months

 

 

ended December 31,

 

 

2021

 

 

2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net income

$

987,632

 

 

$

952,790

 

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

 

 

 

 

 

 

 

Depreciation & amortization

 

533,213

 

 

 

510,493

 

(Gain) loss on sale of assets and businesses

 

(5,170

)

 

 

1,957

 

Costs related to extinguishment of debt

 

16,831

 

 

 

1,365

 

Stock-based compensation expense

 

73,686