KING OF PRUSSIA, Pa., Oct. 29 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $51.1 million, or an increase of 41% to $1.03 per diluted share, during the third quarter of 2009 as compared to $37.0 million, or $.73 per diluted share, during the comparable quarter of the prior year.
Net revenues increased 4% to $1.30 billion during the third quarter of 2009 as compared to $1.24 billion during the third quarter of 2008.
"We are extremely pleased with these solid results in an extremely challenging environment," said Alan B. Miller, Chief Executive Officer. "The continued economic weakness continues to drive higher levels of uncompensated care and pressure certain markets in particular, but the overall balance in our acute portfolio and the very steady performance of our behavioral segment has contributed to another very satisfying performance this quarter."
Consolidated Results of Operations - Nine-month periods ended September 30, 2009 and 2008:
Reported net income attributable to UHS was $199.5 million, or $4.04 per diluted share, during the nine-month period ended September 30, 2009 as compared to $152.9 million, or $2.99 per diluted share, during the comparable nine-month period of the prior year.
As indicated on the attached Schedules of Non-GAAP Supplemental Consolidated Statements of Income Information, included in our net income attributable to UHS during the nine-month period ended September 30, 2009, was a combined $9.8 million, or $.20 per diluted share, consisting of: (i) a favorable after-tax adjustment of $14.1 million, or $.29 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2009 based upon a reserve analysis, partially offset by; (ii) an unfavorable discrete tax item of $4.3 million, or $.09 per diluted share, as discussed below.
After adjusting the reported results for the nine-month period ended September 30, 2009 to neutralize the net favorable impact of the above-mentioned adjustments (there were no adjustments applicable to the comparable nine-month prior year period), our adjusted net income attributable to UHS was $189.7 million, or an increase of 28% to $3.84 per diluted share, during the nine-month period ended September 30, 2009, as compared to $152.9 million, or $2.99 per diluted share during the comparable nine-month period of the prior year.
Net revenues increased 3% to $3.91 billion during the nine-month period ended September 30, 2009 as compared to $3.79 billion during the comparable nine-month period of the prior year.
Acute Care Services - Three-month periods ended September 30, 2009 and 2008:
At our acute care hospitals owned during both periods ("same facility basis"), inpatient admissions increased 0.5% while patient days decreased 2.2% during the third quarter of 2009, as compared to the third quarter of 2008. Net revenues at these facilities increased 5.3% during the third quarter of 2009 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 2.6% while net revenue per adjusted patient day increased 5.5% during the third quarter of 2009 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin (net revenues less salaries, wages and benefits, other operating expenses, supplies expense and provision for doubtful accounts) at our acute care hospitals increased to 13.0% during the third quarter of 2009 as compared to 11.6% during the third quarter of 2008.
We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues or in accounts receivable, net. Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $169 million and $154 million during the three-month periods ended September 30, 2009 and 2008, respectively.
Acute Care Services - Nine-month periods ended September 30, 2009 and 2008:
During the nine-month period ended September 30, 2009, on a same facility basis, inpatient admissions to our acute care facilities increased 0.3% while patient days decreased 1.7%, as compared to the comparable period of the prior year. Net revenues at our acute care facilities increased 3.0% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted admission increased 1.1% while net revenue per adjusted patient day increased 3.1% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. On a same facility basis, the operating margin at our acute care hospitals increased to 15.8% during the nine-month period ended September 30, 2009 as compared to 14.2% during the comparable period of the prior year.
Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $509 million and $450 million during the nine-month periods ended September 30, 2009 and 2008, respectively.
Behavioral Health Care Services - Three-month periods ended September 30, 2009 and 2008:
At our behavioral health care facilities, on a same facility basis, inpatient admissions increased 2.1% and patient days increased 1.4% during the third quarter of 2009 as compared to the third quarter of 2008. Net revenues at these facilities increased 3.6% during the third quarter of 2009 as compared to the comparable quarter in the prior year. Net revenue per adjusted patient day at these facilities increased 2.2% during the third quarter of 2009 over the comparable prior year quarter. The operating margin at our behavioral health care facilities owned during both periods was 25.2% during the third quarter of 2009 as compared to 23.5% during the third quarter of 2008.
Behavioral Health Care Services – Nine-month periods ended September 30, 2009 and 2008:
During the nine-month period ended September 30, 2009, on a same facility basis, inpatient admissions to our behavioral health care facilities increased 1.6% while patient days increased 0.4%, as compared to the comparable period of the prior year. Net revenues at our behavioral health care facilities increased 3.5% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted patient day increased 3.5% during the nine-month period ended September 30, 2009 as compared to the comparable prior year period. On a same facility basis, the operating margin at our behavioral health facilities increased to 25.5% during the nine-month period ended September 30, 2009 as compared to 24.1% during the comparable period of the prior year.
2009 Full Year Guidance Increased to $4.65 to $4.80 Per Diluted Share:
Based upon the operating trends and financial results experienced during the first nine months of 2009, and subject to certain assumptions, provisions and adjustments, including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures, we are increasing our estimated range of earnings per diluted share from continuing operations for the year ended December 31, 2009 to $4.65 to $4.80 from the previously provided range of $4.40 to $4.55. This revised guidance range excludes the net favorable impact of $.20 per diluted share resulting from the above-mentioned items that were included in our results for the nine-month periods ended September 30, 2009 (consisting of the favorable impact resulting from the reduction to our professional and general liability self-insurance reserves and the unfavorable impact resulting from the discrete tax item).
Settlement of South Texas Health System Affiliates Investigation:
As previously disclosed, since November, 2005, the government had been investigating our South Texas Health System affiliates. The investigation was focused on certain arrangements which, the government believed, may have violated Medicare and Medicaid rules and regulations pertaining to payments to physicians and the solicitation of patient referrals from physicians and other matters relating to payments to various individuals which may have constituted improper payments.
We have recently entered into a settlement agreement with the government in connection with this matter whereby we have agreed to pay $27.5 million and have entered into a corporate integrity agreement with respect to the South Texas Health System facilities. During 2008, we recorded a pre-tax charge of $25 million to establish a reserve in connection with this matter. Also, during the first six months of 2009 we: (i) reserved an additional $3 million in connection with this matter, and; (ii) recorded a $4.3 million unfavorable discrete tax item to reflect the estimated nondeductible portion of the amount reserved. We do not expect to incur any additional material charges in connection with this matter.
Conference Call Information:
We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on October 30, 2009. The dial-in number is 1-877-648-7971. A digital recording of the conference call will be available two hours after the completion of the conference call on October 30, 2009 and will continue through midnight on November 13, 2009. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 35911099. This call will also be available live over the internet at our web site at www.uhsinc.com. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents at www.streetevents.com.
General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
Universal Health Services, Inc. ("UHS") is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide and in Puerto Rico. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE: UHT). For additional information on the Company, visit our web site: http://www.uhsinc.com.
This press release contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2008 and in Item 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2009), may cause the results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
We believe that operating income, operating margin, adjusted income from continuing operations attributable to UHS, adjusted income from continuing operations attributable to UHS per diluted share, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and earnings before interest, taxes, depreciation and amortization ("EBITDA"), which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of items that are nonrecurring or non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2008 and Report on Form 10-Q for the quarter ended June 30, 2009. 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.
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SOURCE Universal Health Services, Inc.
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Net revenues increased 4% to $1.30 billion during the third quarter of 2009 as compared to $1.24 billion during the third quarter of 2008.
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"We are extremely pleased with these solid results in an extremely challenging environment," said Alan B. Miller, Chief Executive Officer. "The continued economic weakness continues to drive higher levels of uncompensated care and pressure certain markets in particular, but the overall balance in our acute portfolio and the very steady performance of our behavioral segment has contributed to another very satisfying performance this quarter."
Consolidated Results of Operations - Nine-month periods ended September 30, 2009 and 2008:
Reported net income attributable to UHS was $199.5 million, or $4.04 per diluted share, during the nine-month period ended September 30, 2009 as compared to $152.9 million, or $2.99 per diluted share, during the comparable nine-month period of the prior year.
As indicated on the attached Schedules of Non-GAAP Supplemental Consolidated Statements of Income Information, included in our net income attributable to UHS during the nine-month period ended September 30, 2009, was a combined $9.8 million, or $.20 per diluted share, consisting of: (i) a favorable after-tax adjustment of $14.1 million, or $.29 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2009 based upon a reserve analysis, partially offset by; (ii) an unfavorable discrete tax item of $4.3 million, or $.09 per diluted share, as discussed below.
After adjusting the reported results for the nine-month period ended September 30, 2009 to neutralize the net favorable impact of the above-mentioned adjustments (there were no adjustments applicable to the comparable nine-month prior year period), our adjusted net income attributable to UHS was $189.7 million, or an increase of 28% to $3.84 per diluted share, during the nine-month period ended September 30, 2009, as compared to $152.9 million, or $2.99 per diluted share during the comparable nine-month period of the prior year.
Net revenues increased 3% to $3.91 billion during the nine-month period ended September 30, 2009 as compared to $3.79 billion during the comparable nine-month period of the prior year.
Acute Care Services - Three-month periods ended September 30, 2009 and 2008:
At our acute care hospitals owned during both periods ("same facility basis"), inpatient admissions increased 0.5% while patient days decreased 2.2% during the third quarter of 2009, as compared to the third quarter of 2008. Net revenues at these facilities increased 5.3% during the third quarter of 2009 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 2.6% while net revenue per adjusted patient day increased 5.5% during the third quarter of 2009 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin (net revenues less salaries, wages and benefits, other operating expenses, supplies expense and provision for doubtful accounts) at our acute care hospitals increased to 13.0% during the third quarter of 2009 as compared to 11.6% during the third quarter of 2008.
We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues or in accounts receivable, net. Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $169 million and $154 million during the three-month periods ended September 30, 2009 and 2008, respectively.
Acute Care Services - Nine-month periods ended September 30, 2009 and 2008:
During the nine-month period ended September 30, 2009, on a same facility basis, inpatient admissions to our acute care facilities increased 0.3% while patient days decreased 1.7%, as compared to the comparable period of the prior year. Net revenues at our acute care facilities increased 3.0% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted admission increased 1.1% while net revenue per adjusted patient day increased 3.1% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. On a same facility basis, the operating margin at our acute care hospitals increased to 15.8% during the nine-month period ended September 30, 2009 as compared to 14.2% during the comparable period of the prior year.
Our acute care hospitals provided charity care and uninsured discounts, based on charges at established rates, amounting to $509 million and $450 million during the nine-month periods ended September 30, 2009 and 2008, respectively.
Behavioral Health Care Services - Three-month periods ended September 30, 2009 and 2008:
At our behavioral health care facilities, on a same facility basis, inpatient admissions increased 2.1% and patient days increased 1.4% during the third quarter of 2009 as compared to the third quarter of 2008. Net revenues at these facilities increased 3.6% during the third quarter of 2009 as compared to the comparable quarter in the prior year. Net revenue per adjusted patient day at these facilities increased 2.2% during the third quarter of 2009 over the comparable prior year quarter. The operating margin at our behavioral health care facilities owned during both periods was 25.2% during the third quarter of 2009 as compared to 23.5% during the third quarter of 2008.
Behavioral Health Care Services – Nine-month periods ended September 30, 2009 and 2008:
During the nine-month period ended September 30, 2009, on a same facility basis, inpatient admissions to our behavioral health care facilities increased 1.6% while patient days increased 0.4%, as compared to the comparable period of the prior year. Net revenues at our behavioral health care facilities increased 3.5% during the nine-month period ended September 30, 2009 as compared to the comparable period of the prior year. At these facilities, net revenue per adjusted patient day increased 3.5% during the nine-month period ended September 30, 2009 as compared to the comparable prior year period. On a same facility basis, the operating margin at our behavioral health facilities increased to 25.5% during the nine-month period ended September 30, 2009 as compared to 24.1% during the comparable period of the prior year.
2009 Full Year Guidance Increased to $4.65 to $4.80 Per Diluted Share:
Based upon the operating trends and financial results experienced during the first nine months of 2009, and subject to certain assumptions, provisions and adjustments, including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures, we are increasing our estimated range of earnings per diluted share from continuing operations for the year ended December 31, 2009 to $4.65 to $4.80 from the previously provided range of $4.40 to $4.55. This revised guidance range excludes the net favorable impact of $.20 per diluted share resulting from the above-mentioned items that were included in our results for the nine-month periods ended September 30, 2009 (consisting of the favorable impact resulting from the reduction to our professional and general liability self-insurance reserves and the unfavorable impact resulting from the discrete tax item).
Settlement of South Texas Health System Affiliates Investigation:
As previously disclosed, since November, 2005, the government had been investigating our South Texas Health System affiliates. The investigation was focused on certain arrangements which, the government believed, may have violated Medicare and Medicaid rules and regulations pertaining to payments to physicians and the solicitation of patient referrals from physicians and other matters relating to payments to various individuals which may have constituted improper payments.
We have recently entered into a settlement agreement with the government in connection with this matter whereby we have agreed to pay $27.5 million and have entered into a corporate integrity agreement with respect to the South Texas Health System facilities. During 2008, we recorded a pre-tax charge of $25 million to establish a reserve in connection with this matter. Also, during the first six months of 2009 we: (i) reserved an additional $3 million in connection with this matter, and; (ii) recorded a $4.3 million unfavorable discrete tax item to reflect the estimated nondeductible portion of the amount reserved. We do not expect to incur any additional material charges in connection with this matter.
Conference Call Information:
We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on October 30, 2009. The dial-in number is 1-877-648-7971. A digital recording of the conference call will be available two hours after the completion of the conference call on October 30, 2009 and will continue through midnight on November 13, 2009. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 35911099. This call will also be available live over the internet at our web site at www.uhsinc.com. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents at www.streetevents.com.
General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:
Universal Health Services, Inc. ("UHS") is one of the nation's largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide and in Puerto Rico. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE: UHT). For additional information on the Company, visit our web site: http://www.uhsinc.com.
This press release contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2008 and in Item 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended June 30, 2009), may cause the results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
We believe that operating income, operating margin, adjusted income from continuing operations attributable to UHS, adjusted income from continuing operations attributable to UHS per diluted share, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and earnings before interest, taxes, depreciation and amortization ("EBITDA"), which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of items that are nonrecurring or non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2008 and Report on Form 10-Q for the quarter ended June 30, 2009. 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.
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SOURCE Universal Health Services, Inc.
