UNIVERSAL HEALTH SERVICES, INC. REPORTS 2022 SECOND QUARTER FINANCIAL RESULTS

Jul 25th, 2022 20:16 EST

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended June 30, 2022 and 2021:

KING OF PRUSSIA, Pa., July 25, 2022 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $164.1 million, or $2.20 per diluted share, during the second quarter of 2022, as compared to $325.0 million, or $3.79 per diluted share, during the second quarter of 2021. Net revenues increased by 3.9% to $3.323 billion during the second quarter of 2022 as compared to $3.198 billion during the second quarter of 2021.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the second quarter of 2022 was $163.9 million, or $2.20 per diluted share, as compared to $322.3 million, or $3.76 per diluted share, during the second quarter of 2021. 

Included in our reported and adjusted net income attributable to UHS during the three and six-month periods ended June 30, 2021 was a net favorable after-tax impact of approximately $29.8 million, or $.35 per diluted share, from the following: (i) a favorable after-tax impact of $42.3 million, or $.49 per diluted share, resulting from approximately $55 million of revenues recorded during the second quarter of 2021 in connection with the Kentucky Medicaid managed care hospital rate increase program (covering the period of July 1, 2020 to June 30, 2021); (ii) an unfavorable after-tax impact of approximately $27.2 million, or $.32 per diluted share, resulting from a $36 million increase to our reserves for self-insured professional and general liability claims, and; (iii) an aggregate favorable after-tax impact of $14.6 million, or $.17 per diluted share, resulting from commercial insurance proceeds of approximately $19 million received during the second quarter of 2021 in connection with a previously incurred information technology incident and the COVID-19 pandemic.     

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 $384.5 million during the second quarter of 2022, as compared to $581.8 million during the second quarter of 2021. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, was $382.6 million during the second quarter of 2022, as compared to $572.7 million during the second quarter of 2021.

Consolidated Results of Operations, As Reported and As Adjusted  – Six-month periods ended June 30, 2022 and 2021:

Reported net income attributable to UHS was $318.0 million, or $4.22 per diluted share, during the first six months 2022, as compared to $534.1 million, or $6.22 per diluted share, during the first six months of 2021. Net revenues increased by 6.5% to $6.616 billion during the first six months of 2022 as compared to $6.211 billion during the comparable period of 2021.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the six-month period ended June 30, 2022 was $327.4 million, or $4.35 per diluted share, as compared to $532.4 million, or $6.20 per diluted share, during the six-month period ended June 30, 2021. 

As reflected on the Supplemental Schedule, included in our reported results during the first six months of 2022, was an unfavorable after-tax unrealized loss of $9.4 million, or $.13 per diluted share, ($12.3 million pre-tax which is included in "Other (income) expense, net"), resulting from a decrease in the market value of certain equity securities. 

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2021, was a net aggregate favorable after-tax impact of $1.7 million, or $.02 per diluted share, consisting of the following: (i) an after-tax unrealized loss of $0.5 million, or $.01 per diluted share, resulting from a decrease in the market value of certain marketable securities, and; (ii) a favorable after-tax impact of $2.2 million, or $.03 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 EBITDA net of NCI was $752.9 million during the first six months of 2022, as compared to $1.008 billion during the first six months of 2021. Our Adjusted EBITDA net of NCI was $762.1 million during the first six months of 2022, as compared to $999.8 million during the first six months of 2021.

Acute Care Services – Three and six-month periods ended June 30, 2022 and 2021:

During the second quarter of 2022, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased by 0.7% while adjusted patient days increased by 1.8%, as compared to the second quarter of 2021. At these facilities, during the second quarter of 2022, net revenue per adjusted admission increased by 2.5% while net revenue per adjusted patient day remained unchanged, as compared to the second quarter of 2021. Net revenues generated from our acute care services on a same facility basis increased by 3.3% during the second quarter of 2022, as compared to the second quarter of 2021. 

As previously disclosed in our update on operating results for the second quarter of 2022 and revision of 2022 full year guidance, as announced on June 30, 2022, our acute care hospitals experienced a significant decline in COVID-related patients during the second quarter of 2022, as compared to the first quarter of 2022. The decrease in COVID-related patient volumes during the second quarter of 2022 was not offset by an equivalent increase in non-COVID-related patients resulting in significant shortfalls in revenues and earnings as compared to our original forecasts the quarter. Although the decreased patient volumes at our acute care hospitals has relieved some of the staffing shortages and related cost escalations previously experienced at those facilities, recovery from the effects of the labor pressures has been occurring at a somewhat slower pace than expected. 

During the six-month period ended June 30, 2022, at our acute care hospitals on a same facility basis, adjusted admissions increased by 2.4% while adjusted patient days increased by 3.6%, as compared to the comparable six-month period of 2021. At these facilities, during the first six months of 2022, net revenue per adjusted admission increased by 2.9% while net revenue per adjusted patient day increased by 1.6%, as compared to the comparable six-month period of 2021. Net revenues generated from our acute care services on a same facility basis increased by 6.5% during the first six months of 2022, as compared to the comparable six-month period of 2021. 

Behavioral Health Care Services – Three and six-month periods ended June 30, 2022 and 2021:

During the second quarter of 2022, at behavioral health care facilities on a same facility basis, adjusted admissions decreased by 0.1% while adjusted patient days increased by 0.7%, as compared to the second quarter of 2021. At these facilities, during the second quarter of 2022, net revenue per adjusted admission increased by 2.6% and net revenue per adjusted patient day increased by 1.8%, as compared to the second quarter of 2021.  Net revenues generated from our behavioral health care services increased by 0.5% during the second quarter of 2022, as compared to the second quarter of 2021.

During the six-month period ended June 30, 2022, at behavioral health care facilities on a same facility basis, adjusted admissions decreased by 1.0% while adjusted patient days decreased by 0.3%, as compared to the comparable six-month period of 2021. At these facilities, during the first six months of 2022, net revenue per adjusted admission increased by 4.2% and net revenue per adjusted patient day increased by 3.4%, as compared to the comparable six-month period of 2021. Net revenues generated from our behavioral health care services increased by 2.1% during the first six months of 2022, as compared to the comparable period of 2021.

COVID-19 and Staffing Shortage

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 length and extent of the disruptions caused by the COVID‑19 pandemic are currently unknown; however, we expect such disruptions to continue during the remainder of 2022. 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 continue to materially affect our financial performance during the remainder of 2022. 

The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher‑cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. These factors, which had a material unfavorable impact on our results of operations during the first six months of 2022, are expected to have an unfavorable material impact on our results of operations during the remainder of 2022.  

However, as previously disclosed on June 30, 2022, our revised operating results forecast for the balance of 2022 assumes that staffing vacancies and the corresponding premium pay expenditures will continue to sequentially decline in the second half of the year and that non-COVID patient volumes will incrementally improve, although both at a slower pace than our original forecast anticipated. We believe these assumptions will be bolstered by our continuing recruitment and retention initiatives, by changes to our historical patient care models, by other cost cutting measures and by aggressive contractual negotiations and renegotiations with our managed care payers. 

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

During the six-month period ended June 30, 2022, our net cash provided by operating activities was $478 million as compared to $119 million during the comparable six-month period of 2021.  The $359 million net increase in our net cash provided by operating activities during the first six months of 2022, as compared to the first six months of 2021, was due to: (i) a favorable change of $695 million resulting from the early return of Medicare accelerated payments which were received during 2020 and repaid during the first quarter of 2021, partially offset by; (ii) an unfavorable change of $199 million resulting from a decrease in net income plus depreciation and amortization expense, stock-based compensation expense, gain/loss on sales of assets and businesses, and provision for asset impairment; (iii) an unfavorable change of $102 million from other working capital accounts due primarily to the timing of disbursements for accrued expenses, accounts payable and accrued compensation, and; (iv) $35 million of other combined net unfavorable changes.    

Liquidity:

As of June 30, 2022, we had $1.056 billion of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility, net of outstanding borrowings and letters of credit.  In June, 2022, we entered into an amendment to our credit agreement which, among other things, added a new incremental tranche A term loan facility in the aggregate principal amount of $700 million. The net proceeds generated from the incremental tranche A term loan facility were used to repay a portion of the borrowings that were previously outstanding under our $1.2 billion revolving credit facility.     

Stock Repurchase Program:

As of December 31, 2021, we had an aggregate remaining repurchase authorization of approximately $358 million pursuant to our stock repurchase program. In February of 2022, our Board of Directors authorized a $1.4 billion increase to the program. As of June 30, 2022, we had an aggregate available repurchase authorization of $1.21 billion. 

Pursuant to the terms of our stock repurchase 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 second quarter of 2022, we have repurchased approximately 1.61 million shares at an aggregate cost of approximately $195.6 million (approximately $122 per share) pursuant to the program.  During the first six months of 2022, we have repurchased approximately 4.25 million shares at an aggregate cost of approximately $545.8 million (approximately $128 per share) pursuant to the program.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 26, 2022.  A live webcast of the call will be available on our website at www.uhs.com. To participate via telephone, please register in advance by accessing this link.  Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the call will be available for one full year following the live call.

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; ranked #297 on the Fortune 500; and in 2021, ranked #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 28 acute care hospitals, 333 behavioral health facilities, 41 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. 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 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarter ended March 31, 2022 and 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 unfavorably 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; potential increases to expenses and other costs related to staffing, supply chain, construction and medical equipment costs and other expenditures resulting from inflation; 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. In addition, please see the disclosure above in COVID-19 and Staffing Shortage, in connection with the nationwide shortage of nurses and other clinical staff and support personnel which has had, and is expected to continue to have, a material unfavorable impact on our results of operations.   

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, 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 goodwill and 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-Q for the quarter ended March 31, 2022 and 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.

 

Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

Three months

Six months

ended June 30,

ended June 30,

2022

2021

2022

2021

Net revenues

$3,323,407

$3,197,880

$6,616,363

$6,210,867

Operating charges:

   Salaries, wages and benefits

1,691,472

1,487,935

3,383,742

2,985,708

   Other operating expenses

867,885

769,810

1,688,819

1,479,518

   Supplies expense

354,993

338,033

726,066

685,143

   Depreciation and amortization

143,850

133,985

287,634

265,388

   Lease and rental expense

31,773

29,149

63,811

60,473

3,089,973

2,758,912

6,150,072

5,476,230

Income from operations

233,434

438,968

466,291

734,637

Interest expense, net

25,676

21,299

47,349

43,256

Other (income) expense, net

(1,972)

(9,129)

9,229

(8,294)

Income before income taxes

209,730

426,798

409,713

699,675

Provision for income taxes

50,949

101,522

99,911

165,329

Net income

158,781

325,276

309,802

534,346

Less:  Net income (loss) attributable to

noncontrolling interests ("NCI")

(5,281)

252

(8,173)

231

Net income attributable to UHS

$164,062

$325,024

$317,975

$534,115

Basic earnings per share attributable to UHS (a)

$2.22

$3.85

$4.27

$6.31

Diluted earnings per share attributable to UHS (a)

$2.20

$3.79

$4.22

$6.22

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

Three months

Six months

(a) Earnings per share calculation:

ended June 30,

ended June 30,

2022

2021

2022

2021

Basic and diluted:

Net income attributable to UHS

$164,062

$325,024

$317,975

$534,115

Less: Net income attributable to unvested restricted share grants

(164)

(661)

(413)

(1,213)

Net income attributable to UHS - basic and diluted

$163,898

$324,363

$317,562

$532,902

Weighted average number of common shares - basic

73,682

84,224

74,356

84,503

Basic earnings per share attributable to UHS:

$2.22

$3.85

$4.27

$6.31

Weighted average number of common shares

73,682

84,224

74,356

84,503

Add: Other share equivalents

753

1,400

882

1,207

Weighted average number of common shares and equiv. - diluted

74,435

85,624

75,238

85,710

Diluted earnings per share attributable to UHS:

$2.20

$3.79

$4.22

$6.22

Universal Health Services, Inc.

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

For the Three Months ended June 30, 2022 and 2021

(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

June 30, 2022

revenues

June 30, 2021

revenues

Net income attributable to UHS

$164,062

$325,024

   Depreciation and amortization

143,850

133,985

   Interest expense, net

25,676

21,299

   Provision for income taxes

50,949

101,522

EBITDA net of NCI

$384,537

11.6 %

$581,830

18.2 %

Other (income) expense, net

(1,972)

(9,129)

Adjusted EBITDA net of NCI

$382,565

11.5 %

$572,701

17.9 %

Net revenues

$3,323,407

$3,197,880

Calculation of Adjusted Net Income Attributable to UHS

Three months ended

Three months ended

June 30, 2022

June 30, 2021

Per

Per

Amount

Diluted Share

Amount

Diluted Share

Net income attributable to UHS

$164,062

$2.20

$325,024

$3.79

Plus/minus after-tax adjustments:

Unrealized gain on equity securities

(153)

-

(1,607)

(0.02)

Impact of ASU 2016-09

-

-

(1,120)

(0.01)

Subtotal adjustments

(153)

-

(2,727)

(0.03)

Adjusted net income attributable to UHS

$163,909

$2.20

$322,297

$3.76

Universal Health Services, Inc.

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

For the Six months ended June 30, 2022 and 2021

(in thousands, except per share amounts)

(unaudited)

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

Six months ended

% Net

Six months ended

% Net

June 30, 2022

revenues

June 30, 2021

revenues

Net income attributable to UHS

$317,975

$534,115

   Depreciation and amortization

287,634

265,388

   Interest expense, net

47,349

43,256

   Provision for income taxes

99,911

165,329

EBITDA net of NCI

$752,869

11.4 %

$1,008,088

16.2 %

Other (income) expense, net

9,229

(8,294)

Adjusted EBITDA net of NCI

$762,098

11.5 %

$999,794

16.1 %

Net revenues

$6,616,363

$6,210,867

Calculation of Adjusted Net Income Attributable to UHS

Six months ended

Six months ended

June 30, 2022

June 30, 2021

Per

Per

Amount

Diluted Share

Amount

Diluted Share

Net income attributable to UHS

$317,975

$4.22

$534,115

$6.22

Plus/minus after-tax adjustments:

Unrealized loss on equity securities

9,384

0.13

530

0.01

Impact of ASU 2016-09

-

-

(2,199)

(0.03)

Subtotal adjustments

9,384

0.13

(1,669)

(0.02)

Adjusted net income attributable to UHS

$327,359

$4.35

$532,446

$6.20

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

Three months

Six months

ended June 30,

ended June 30,

2022

2021

2022

2021

Net income

$158,781

$325,276

$309,802

$534,346

Other comprehensive income (loss):

   Foreign currency translation adjustment

(28,232)

(3,717)

(46,702)

(14,063)

Other comprehensive income (loss) before tax

(28,232)

(3,717)

(46,702)

(14,063)

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

1,820

(601)

876

(2,067)

Total other comprehensive income (loss), net of tax

(30,052)

(3,116)

(47,578)

(11,996)

Comprehensive income

128,729

322,160

262,224

522,350

Less: Comprehensive income (loss) attributable to noncontrolling interests

(5,281)

252

(8,173)

231

Comprehensive income attributable to UHS

$134,010

$321,908

$270,397

$522,119

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

June 30,

December 31,

2022

2021

Assets

Current assets:

    Cash and cash equivalents

$

132,658

$

115,301

    Accounts receivable, net

1,835,238

1,746,635

    Supplies

209,569

206,839

    Other current assets

258,760

194,781

          Total current assets

2,436,225

2,263,556

Property and equipment

11,057,885

10,770,702

Less: accumulated depreciation

(5,087,166)

(4,896,427)

5,970,719

5,874,275

Other assets:

    Goodwill

3,912,382

3,962,624

    Deferred income taxes

51,548

45,707

    Right of use assets-operating leases

360,791

367,477

    Deferred charges

6,188

6,525

    Other

558,250

573,379

Total Assets

$

13,296,103

$

13,093,543

Liabilities and Stockholders' Equity

Current liabilities:

    Current maturities of long-term debt

$

66,205

$

48,409

    Accounts payable and other liabilities

1,861,467

1,860,496

    Operating lease liabilities

63,630

64,484

    Federal and state taxes

396

10,720

          Total current liabilities

1,991,698

1,984,109

Other noncurrent liabilities

496,639

464,759

Operating lease liabilities noncurrent

300,197

304,624

Long-term debt

4,599,204

4,141,879

Redeemable noncontrolling interest

4,449

5,119

UHS common stockholders' equity

5,814,660

6,089,664

Noncontrolling interest

89,256

103,389

          Total equity

5,903,916

6,193,053

Total Liabilities and Stockholders' Equity

$

13,296,103

$

13,093,543

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six months

ended June 30,

2022

2021

Cash Flows from Operating Activities:

  Net income

$309,802

$534,346

  Adjustments to reconcile net income to net

cash provided by operating activities:

Depreciation & amortization

287,634

265,388

(Gain) loss on sale of assets and businesses

1,084

(4,803)

Stock-based compensation expense

41,640

37,031

Provision for asset impairment

0

7,195

  Changes in assets & liabilities, net of effects from

acquisitions and dispositions:

   Accounts receivable

(89,729)

(35,903)

   Accrued interest

1,329

(1,459)

   Accrued and deferred income taxes

(34,260)

(26,769)

   Other working capital accounts

(98,811)

3,560

   Medicare accelerated payments and deferred CARES Act and other grants

5,339

(697,011)

   Other assets and deferred charges

30,278

(28,763)

   Other

(15,763)

5,052

   Accrued insurance expense, net of commercial premiums paid

97,570

104,079

   Payments made in settlement of self-insurance claims

(58,066)

(42,495)

          Net cash provided by operating activities

478,047

119,448

Cash Flows from Investing Activities:

   Property and equipment additions

(407,962)

(482,211)

   Proceeds received from sales of assets and businesses

10,232

21,143

   Acquisition of businesses and property

(12,485)

0

   Inflows (outflows) from foreign exchange contracts that hedge our net U.K. investment

84,535

(21,487)

   Decrease in capital reserves of commercial insurance subsidiary

100

100

   Costs incurred for purchase of information technology applications, net of refunds

0

(1,246)

          Net cash used in investing activities

(325,580)

(483,701)

Cash Flows from Financing Activities:

   Repayments of long-term debt

(226,854)

(278,785)

   Additional borrowings

700,000

6,578

   Financing costs

(2,387)

0

   Repurchase of common shares

(565,182)

(368,080)

   Dividends paid

(29,641)

(33,844)

   Issuance of common stock

6,661

6,442

   Profit distributions to noncontrolling interests

(5,323)

(5,617)

   Purchase (sale) of ownership interests by (from) minority members

(1,307)

11,433

          Net cash used in financing activities

(124,033)

(661,873)

   Effect of exchange rate changes on cash, cash equivalents and restricted cash

(5,457)

660

Increase (decrease) in cash, cash equivalents and restricted cash

22,977

(1,025,466)

Cash, cash equivalents and restricted cash, beginning of period

178,934

1,279,154

Cash, cash equivalents and restricted cash, end of period

$201,911

$253,688

Supplemental Disclosures of Cash Flow Information:

  Interest paid

$43,796

$43,641

  Income taxes paid, net of refunds

$145,448

$189,979

  Noncash purchases of property and equipment

$112,420

$95,979

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

 % Change

 % Change

3 Months ended

6 Months ended

Same Facility:

6/30/2022

6/30/2022

Acute Care Hospitals

Revenues

3.3 %

6.5 %

Adjusted Admissions

-0.7 %

2.4 %

Adjusted Patient Days

1.8 %

3.6 %

Revenue Per Adjusted Admission

2.5 %

2.9 %

Revenue Per Adjusted Patient Day

0.0 %

1.6 %

Behavioral Health Hospitals

Revenues

0.5 %

2.1 %

Adjusted Admissions

-0.1 %

-1.0 %

Adjusted Patient Days

0.7 %

-0.3 %

Revenue Per Adjusted Admission

2.6 %

4.2 %

Revenue Per Adjusted Patient Day

1.8 %

3.4 %

UHS Consolidated

Second Quarter Ended

Six Months Ended

6/30/2022

6/30/2021

6/30/2022

6/30/2021

Revenues

$3,323,407

$3,197,880

$6,616,363

$6,210,867

EBITDA net of NCI

$384,537

$581,830

$752,869

$1,008,088

EBITDA Margin net of NCI

11.6 %

18.2 %

11.4 %

16.2 %

Adjusted EBITDA net of NCI

$382,565

$572,701

$762,098

$999,794

Adjusted EBITDA Margin net of NCI

11.5 %

17.9 %

11.5 %

16.1 %

Cash Flow From Operations

$32,614

$47,653

$478,047

$119,448

Days Sales Outstanding

50

51

50

52

Capital Expenditures 

$207,960

$234,752

$407,962

$482,211

Debt

$4,665,409

$3,593,592

UHS' Shareholders Equity

$5,814,660

$6,480,100

Debt / Total Capitalization

44.5 %

35.7 %

Debt / EBITDA net of NCI (1)

2.81

1.76

Debt / Adjusted EBITDA net of NCI (1)

2.81

1.78

Debt / Cash From Operations (1)

3.76

3.49

(1) Latest 4 quarters.

Universal Health Services, Inc.

Acute Care Hospital Services

For the Three and Six Months ended

June 30, 2022 and 2021

(in thousands)

Same Facility Basis - Acute Care Hospital Services

Three months ended

Three months ended

Six months ended

Six months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Net revenues

$1,770,546

100.0 %

$1,713,896

100.0 %

$3,605,325

100.0 %

$3,385,732

100.0 %

Operating charges:

Salaries, wages and benefits

792,922

44.8 %

691,019

40.3 %

1,613,132

44.7 %

1,397,830

41.3 %

Other operating expenses

469,108

26.5 %

412,111

24.0 %

906,585

25.1 %

805,318

23.8 %

Supplies expense

290,067

16.4 %

289,111

16.9 %

603,204

16.7 %

585,589

17.3 %

Depreciation and amortization

87,636

4.9 %

82,959

4.8 %

180,575

5.0 %

164,143

4.8 %

Lease and rental expense

17,351

1.0 %

18,046

1.1 %

35,066

1.0 %

38,158

1.1 %

Subtotal-operating expenses

1,657,084

93.6 %

1,493,246

87.1 %

3,338,562

92.6 %

2,991,038

88.3 %

Income from operations

113,462

6.4 %

220,650

12.9 %

266,763

7.4 %

394,694

11.7 %

Interest expense, net

478

0.0 %

248

0.0 %

1,116

0.0 %

494

0.0 %

Other (income) expense, net

221

0.0 %

-

-

422

0.0 %

-

-

Income before income taxes

$112,763

6.4 %

$220,402

12.9 %

$265,225

7.4 %

$394,200

11.6 %

All Acute Care Hospital Services

Three months ended

Three months ended

Six months ended

Six months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Net revenues

$1,875,516

100.0 %

$1,754,431

100.0 %

$3,787,832

100.0 %

$3,448,973

100.0 %

Operating charges:

Salaries, wages and benefits

829,040

44.2 %

691,880

39.4 %

1,672,946

44.2 %

1,399,098

40.6 %

Other operating expenses

532,504

28.4 %

453,063

25.8 %

1,014,582

26.8 %

869,070

25.2 %

Supplies expense

302,728

16.1 %

289,225

16.5 %

624,155

16.5 %

585,704

17.0 %

Depreciation and amortization

95,004

5.1 %

83,306

4.7 %

189,538

5.0 %

164,668

4.8 %

Lease and rental expense

20,482

1.1 %

18,046

1.0 %

41,334

1.1 %

38,158

1.1 %

Subtotal-operating expenses

1,779,758

94.9 %

1,535,520

87.5 %

3,542,555

93.5 %

3,056,698

88.6 %

Income from operations

95,758

5.1 %

218,911

12.5 %

245,277

6.5 %

392,275

11.4 %

Interest expense, net

478

0.0 %

248

0.0 %

1,116

0.0 %

494

0.0 %

Other (income) expense, net

221

0.0 %

-

-

422

0.0 %

-

-

Income before income taxes

$95,059

5.1 %

$218,663

12.5 %

$243,739

6.4 %

$391,781

11.4 %

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable), the effect of material items that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters, settlements, legal judgments and lawsuits, cost related to extinguishment of debt, gains/losses on sales of assets and businesses, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented herein and the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2021 and Form 10-Q for the quarter ended March 31, 2022.

The All Acute Care Hospital Services table summarizes the results of operations for all our acute care operations during the periods presented. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the last twelve months.

Universal Health Services, Inc.

Behavioral Health Care Services

For the Three and Six Months ended

June 30, 2022 and 2021

(in thousands)

Same Facility - Behavioral Health Care Services

Three months ended

Three months ended

Six months ended

Six months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Net revenues

$1,410,799

100.0 %

$1,404,142

100.0 %

$2,745,331

100.0 %

$2,690,119

100.0 %

Operating charges:

Salaries, wages and benefits

768,174

54.4 %

709,170

50.5 %

1,513,980

55.1 %

1,407,398

52.3 %

Other operating expenses

274,237

19.4 %

263,135

18.7 %

539,928

19.7 %

507,500

18.9 %

Supplies expense

52,343

3.7 %

49,278

3.5 %

101,939

3.7 %

99,791

3.7 %

Depreciation and amortization

45,154

3.2 %

46,323

3.3 %

89,885

3.3 %

91,413

3.4 %

Lease and rental expense

10,685

0.8 %

9,736

0.7 %

21,409

0.8 %

20,987

0.8 %

Subtotal-operating expenses

1,150,593

81.6 %

1,077,642

76.7 %

2,267,141

82.6 %

2,127,089

79.1 %

Income from operations

260,206

18.4 %

326,500

23.3 %

478,190

17.4 %

563,030

20.9 %

Interest expense, net

1,141

0.1 %

989

0.1 %

1,606

0.1 %

1,327

0.0 %

Other (income) expense, net

(643)

(0.0) %

(5)

(0.0) %

(758)

(0.0) %

408

0.0 %

Income before income taxes

259,708

18.4 %

$325,516

23.2 %

$477,342

17.4 %

$561,295

20.9 %

All Behavioral Health Care Services

Three months ended

Three months ended

Six months ended

Six months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Amount

% of NetRevenues

Net revenues

$1,433,920

100.0 %

$1,431,497

100.0 %

$2,800,387

100.0 %

$2,746,834

100.0 %

Operating charges:

Salaries, wages and benefits

773,966

54.0 %

713,623

49.9 %

1,527,852

54.6 %

1,417,598

51.6 %

Other operating expenses

299,782

20.9 %

285,689

20.0 %

598,249

21.4 %

554,986

20.2 %

Supplies expense

52,655

3.7 %

49,552

3.5 %

102,832

3.7 %

100,561

3.7 %

Depreciation and amortization

45,863

3.2 %

47,183

3.3 %

91,942

3.3 %

93,665

3.4 %

Lease and rental expense

10,973

0.8 %

9,685

0.7 %

21,793

0.8 %

21,368

0.8 %

Subtotal-operating expenses

1,183,239

82.5 %

1,105,732

77.2 %

2,342,668

83.7 %

2,188,178

79.7 %

Income from operations

250,681

17.5 %

325,765

22.8 %

457,719

16.3 %

558,656

20.3 %

Interest expense, net

1,366

0.1 %

1,193

0.1 %

2,731

0.1 %

2,346

0.1 %

Other (income) expense, net

(643)

(0.0) %

(5)

(0.0) %

(758)

(0.0) %

408

0.0 %

Income before income taxes

249,958

17.4 %

$324,577

22.7 %

$455,746

16.3 %

$555,902

20.2 %

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable), the effect of material items that are nonrecurring or non-operational in nature including items such as, but not limited to, reserves for various matters, settlements, legal judgments, lawsuits and reserves established in connection with the government's investigation of our behavioral health care facilities, cost related to extinguishment of debt, gains/losses on sales of assets and businesses, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented herein and in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2021 and Form 10-Q for the quarter ended March 31, 2022.

The All Behavioral Health Care Services table summarizes the results of operations for all our behavioral health care facilities during the periods presented. These amounts include: (i) our behavioral health results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the last twelve months as well as the results of certain facilities that were closed or restructured during the past year.

Universal Health Services, Inc.

Selected Hospital Statistics

For the Three Months ended

June 30, 2022 and 2021

AS REPORTED:

ACUTE

BEHAVIORAL HEALTH

6/30/22

6/30/21

%  change

6/30/22

6/30/21

%  change

Hospitals owned and leased

28

26

7.7 %

333

334

-0.3 %

Average licensed beds

6,971

6,511

7.1 %

24,340

24,161

0.7 %

Average available beds

6,799

6,339

7.3 %

24,240

24,056

0.8 %

Patient days

375,955

362,325

3.8 %

1,574,715

1,564,902

0.6 %

Average daily census

4,131.4

3,981.6

3.8 %

17,304.6

17,009.8

1.7 %

Occupancy-licensed beds

59.3 %

61.2 %

-3.2 %

71.1 %

70.4 %

1.0 %

Occupancy-available beds

60.8 %

62.8 %

-3.2 %

71.4 %

70.7 %

1.0 %

Admissions

76,713

76,221

0.6 %

116,627

117,018

-0.3 %

Length of stay

4.9

4.8

2.1 %

13.4

13.4

0.0 %

Inpatient revenue

$9,706,731

$8,662,335

12.1 %

$2,561,553

$2,527,776

1.3 %

Outpatient revenue

6,206,039

5,357,888

15.8 %

268,489

266,328

0.8 %

Total patient revenue

15,912,770

14,020,223

13.5 %

2,830,042

2,794,104

1.3 %

Other revenue

202,975

167,899

20.9 %

75,359

70,929

6.2 %

Gross hospital revenue

16,115,745

14,188,122

13.6 %

2,905,401

2,865,033

1.4 %

Total deductions

14,240,229

12,433,691

14.5 %

1,471,481

1,433,536

2.6 %

Net hospital revenue

$1,875,516

$1,754,431

6.9 %

$1,433,920

$1,431,497

0.2 %

SAME FACILITY:

ACUTE

BEHAVIORAL HEALTH

6/30/22

6/30/21

%  change

6/30/22

6/30/21

%  change

Hospitals owned and leased

26

26

0.0 %

328

328

0.0 %

Average licensed beds

6,747

6,511

3.6 %

23,782

23,661

0.5 %

Average available beds

6,575

6,339

3.7 %

23,682

23,561

0.5 %

Patient days

368,341

362,325

1.7 %

1,512,830

1,512,397

0.0 %

Average daily census

4,047.7

3,981.6

1.7 %

16,443.8

16,439.1

0.0 %

Occupancy-licensed beds

60.0 %

61.2 %

-1.9 %

69.1 %

69.5 %

-0.5 %

Occupancy-available beds

61.6 %

62.8 %

-2.0 %

69.4 %

69.8 %

-0.5 %

Admissions

77,046

76,221

1.1 %

109,681

108,527

1.1 %

Length of stay

4.8

4.8

0.6 %

13.8

13.9

-1.0 %

Universal Health Services, Inc.

Selected Hospital Statistics

For the Six Months ended

June 30, 2022 and 2021

AS REPORTED:

ACUTE

BEHAVIORAL HEALTH

6/30/22

6/30/21

%  change

6/30/22

6/30/21

%  change

Hospitals owned and leased

28

26

7.7 %

333

334

-0.3 %

Average licensed beds

6,860

6,513

5.3 %

24,291

24,089

0.8 %

Average available beds

6,688

6,341

5.5 %

24,191

23,987

0.9 %

Patient days

781,907

754,719

3.6 %

3,081,066

3,099,064

-0.6 %

Average daily census

4,319.9

4,169.7

3.6 %

17,022.5

17,121.9

-0.6 %

Occupancy-licensed beds

63.0 %

64.0 %

-1.6 %

70.1 %

71.1 %

-1.4 %

Occupancy-available beds

64.6 %

65.8 %

-1.8 %

70.4 %

71.4 %

-1.4 %

Admissions

152,002

149,145

1.9 %

229,060

232,426

-1.4 %

Length of stay

5.1

5.1

0.9 %

13.5

13.3

1.1 %

Inpatient revenue

$19,945,962

$17,781,519

12.2 %

$4,998,027

$5,001,341

-0.1 %

Outpatient revenue

11,981,578

9,938,608

20.6 %

525,602

513,092

2.4 %

Total patient revenue

31,927,540

27,720,127

15.2 %

5,523,629

5,514,433

0.2 %

Other revenue

387,456

311,164

24.5 %

142,056

133,137

6.7 %

Gross hospital revenue

32,314,996

28,031,291

15.3 %

5,665,685

5,647,570

0.3 %

Total deductions

28,527,164

24,582,318

16.0 %

2,865,298

2,900,736

-1.2 %

Net hospital revenue

$3,787,832

$3,448,973

9.8 %

$2,800,387

$2,746,834

1.9 %

SAME FACILITY:

ACUTE

BEHAVIORAL HEALTH

6/30/22

6/30/21

%  change

6/30/22

6/30/21

%  change

Hospitals owned and leased

26

26

0.0 %

328

328

0.0 %

Average licensed beds

6,715

6,513

3.1 %

23,900

23,796

0.4 %

Average available beds

6,543

6,341

3.2 %

23,800

23,694

0.4 %

Patient days

770,553

754,719

2.1 %

3,054,248

3,068,258

-0.5 %

Average daily census

4,257.2

4,169.7

2.1 %

16,874.3

16,951.7

-0.5 %

Occupancy-licensed beds

63.4 %

64.0 %

-1.0 %

70.6 %

71.2 %

-0.9 %

Occupancy-available beds

65.1 %

65.8 %

-1.1 %

70.9 %

71.5 %

-0.9 %

Admissions

150,482

149,145

0.9 %

226,235

228,931

-1.2 %

Length of stay

5.1

5.1

1.2 %

13.5

13.4

0.7 %

SOURCE Universal Health Services, Inc.

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