Universal Health Services, Inc. Reports 2020 Second Quarter Financial Results

KING OF PRUSSIA, Penn., July 27, 2020 /PRNewswire/ -- Universal Health Services, Inc. UHS announced today that its reported net income attributable to UHS was $251.9 million, or $2.95 per diluted share, during the second quarter of 2020, as compared to $238.3 million, or $2.66 per diluted share, during the comparable quarter of 2019.  Net revenues decreased 4.4% to $2.730 billion during the second quarter of 2020 as compared to $2.855 billion during the second quarter of 2019.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the second quarter of 2020 was $250.2 million, or $2.93 per diluted share, as compared to $247.2 million, or $2.76 per diluted share, during the second quarter of 2019. 

Included in our reported and adjusted net income attributable to UHS during the three-month period ended June 30, 2020 was approximately $161.9 million, or $1.90 per diluted share, resulting from the recognition of approximately $218 million of net revenues recorded in connection with various governmental stimulus programs, most notably the Public Health and Social Services Emergency Fund grants, as provided for by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Approximately $157 million of the governmental stimulus program net revenues were attributable to our acute care services and approximately $61 million were attributable to our behavioral health care services.  

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2020, 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 gain of $2.2 million, or $.03 per diluted share, ($2.9 million pre-tax which is included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale, and; (ii) a unfavorable after-tax impact of $0.5 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09").

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2019, is an aggregate net unfavorable after-tax impact of $8.9 million, or $.10 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from an $11.0 million pre-tax increase in the reserve ("DOJ Reserve") established in connection with the government's investigation of our behavioral health hospitals, (as previously disclosed, settlement agreements were finalized in early July, 2020 thereby resolving this matter), and; (ii) an unfavorable after-tax impact of $0.5 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09.

Included in our reported and our adjusted net income attributable to UHS during the second quarter of 2019 is a pre-tax unrealized gain of $6.9 million, or $.06 per diluted share (included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.  

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 $482.8 million during the second quarter of 2020, as compared to $471.5 million during the second quarter of 2019. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, and the increase in the DOJ Reserve recorded during the second quarter of 2019, was $479.7 million during the second quarter of 2020 as compared to $474.8 million during the second quarter of 2019.

COVID-19

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.  Patient volumes at both our acute care and behavioral health care facilities were most significantly reduced in April. Our acute care and behavioral health facilities began experiencing gradual and continued improvement in patient volumes in May and June as various states eased stay-at-home restrictions and acute care hospitals were permitted to resume elective surgeries and procedures.  However, many of our acute care and behavioral health facilities are located in states that began experiencing significant increases in COVID-19 infections in June and continuing into July. We believe that the adverse impact that COVID-19 will have on our future operations and financial results will depend upon many factors, most of which are beyond our capability to control or predict. 

Consolidated Results of Operations, As Reported and As Adjusted  – Six-month periods ended June 30, 2020 and 2019:

Reported net income attributable to UHS was $394.0 million, or $4.58 per diluted share, during the six-month period ended June 30, 2020, as compared to $472.5 million, or $5.23 per diluted share, during the first six months of 2019.  Net revenues decreased 1.8% to $5.559 billion during the first six months of 2020 as compared to $5.660 billion during the comparable period of 2019.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the six-month period ended June 30, 2020 was $400.4 million, or $4.65 per diluted share, as compared to $470.5 million, or $5.21 per diluted share, during the first six months of 2019. 

Our reported and adjusted net income attributable to UHS during the six-month period ended June 30, 2020 included approximately $161.9 million, or $1.89 per diluted share, resulting from the above-mentioned recognition of approximately $218 million of net revenues recorded in connection with governmental stimulus programs, most notably the CARES Act.    

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2020, was a net aggregate unfavorable after-tax impact of $6.4 million, or $.07 per diluted share, consisting of the following: (i) an after-tax unrealized loss of $5.1 million, or $.06 per diluted share, ($6.7 million pre-tax which is included in "Other (income) expense, net"), resulting from a decrease in the market value of shares of certain marketable securities held for investment and classified as available for sale, and; (ii) an unfavorable after-tax impact of $1.3 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09.

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2019, is an aggregate net favorable after-tax impact of $2.0 million, or $.02 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from the above-mentioned $11.0 million pre-tax increase in the DOJ Reserve, and; (ii) a favorable after-tax impact of $10.4 million, or $.11 per diluted share, resulting from our adoption of ASU 2016-09.

Included in our reported and our adjusted net income attributable to UHS during the six-month period ended June 30, 2019 is a pre-tax unrealized gain of $2.6 million, or $.02 per diluted share (included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.  

As calculated on the attached Supplemental Schedule, our EBITDA net of NCI was $831.9 million during the first six months of 2020, as compared to $924.3 million during the first six months of 2019. Our Adjusted EBITDA net of NCI, which excludes the impact of other (income) expense, net, and the increase in the DOJ Reserve recorded during the first six months of 2019, was $838.3 million during the six-month period ended June 30, 2020 and $932.0 million during the comparable period of 2019.

Acute Care Services – Three and six-month periods ended June 30, 2020 and 2019:

During the second quarter of 2020, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased 24.8% and adjusted patient days decreased 18.1%, as compared to the second quarter of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $157 million recorded during the second quarter of 2020, net revenue per adjusted admission increased 12.7% while net revenue per adjusted patient day increased 3.5% during the second quarter of 2020 as compared to the second quarter of 2019. During the second quarter of 2020, as compared to the second quarter of 2019, net revenues generated from our acute care services on a same facility basis decreased 3.5% including the governmental stimulus revenues, and decreased 14.0% excluding the governmental stimulus revenues.

During the six-month period ended June 30, 2020, at our acute care hospitals on a same facility basis, adjusted admissions decreased 14.4% and adjusted patient days decreased 9.1%, as compared to the first six months of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $157 million recorded during the first six months of 2020, net revenue per adjusted admission increased 7.7% while net revenue per adjusted patient day increased 1.3% during the six-month period ended June 30, 2020 as compared to the comparable six-month period of 2019. During the first six months of 2020, as compared to the first six months of 2019, net revenues generated from our acute care services on a same facility basis decreased 1.6% including the governmental stimulus revenues, and decreased 6.8% excluding the governmental stimulus revenues.

Behavioral Health Care Services – Three and six-month periods ended June 30, 2020 and 2019:

During the second quarter of 2020, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased 15.4% while adjusted patient days decreased 10.4% as compared to the second quarter of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $61 million recorded during the second quarter of 2020, net revenue per adjusted admission increased 8.1% while net revenue per adjusted patient day increased 2.0% during the second quarter of 2020 as compared to the comparable quarter in 2019. During the second quarter of 2020, as compared to the second quarter of 2019, net revenues generated from our behavioral health care services on a same facility basis decreased 3.8% including the governmental stimulus revenues, and decreased 8.5% excluding the governmental stimulus revenues.     

During the six-month period ended June 30, 2020, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased 8.6% and adjusted patient days decreased 5.9%, as compared to the first six months of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $61 million recorded during the first six months of 2020, net revenue per adjusted admission increased 5.9% while net revenue per adjusted patient day increased 2.8% during the first six months of 2020 as compared to the comparable period of 2019. During the first six months of 2020, as compared to the first six months of 2019, net revenues generated from our behavioral health care services on a same facility basis decreased 0.8% including the governmental stimulus revenues, and decreased 3.2% excluding the governmental stimulus revenues.

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

For the six months ended June 30, 2020, our net cash provided by operating activities increased to $1.451 billion as compared to $673 million generated during the first six months of 2019.

The $779 million net increase was due to: (i) a favorable change of $477 million resulting from the Medicare accelerated payments and deferred governmental stimulus grants; (ii) a favorable change of $233 million in accounts receivable; (iii) a favorable change of $134 million in accrued and deferred income taxes; (iv) an unfavorable change of $67 million resulting from a decrease in net income plus/minus depreciation and amortization expense, stock-based compensation expense and loss on sales of assets and businesses, and; (v) $2 million of other combined net favorable changes.

Liquidity:

As of June 30, 2020, there were no borrowings outstanding pursuant to our $1 billion revolving credit facility or our $450 million accounts receivable securitization program.  As of that date, we had $1.375 billion of aggregate available borrowing capacity pursuant to the terms of these debt facilities, net of outstanding letters of credit.    

In addition, as of June 30, 2020, we had approximately $574 million of short-term cash investments.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 28, 2020. The dial-in number is 1-877-648-7971. 

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

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

One of the nation's largest and most respected providers of hospital and healthcare services, Universal Health Services, Inc. has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues were approximately $11.4 billion during 2019. In 2020, UHS was again recognized as one of the World's Most Admired Companies by Fortune; in 2019 ranked #293 on the Fortune 500; and listed #330 in Forbes ranking of U.S.' Largest Public Companies.

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

Headquartered in King of Prussia, PA, UHS has more than 90,000 employees and through its subsidiaries operates 26 acute care hospitals, 330 behavioral health facilities, 41 outpatient facilities and ambulatory care access points, an insurance offering, a physician network and various related services located in 37 U.S. states, Washington, D.C., Puerto Rico and the United Kingdom. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust 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 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-Q for the quarterly period ended March 31, 2020), 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 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 governmental stimulus grants 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 expect developments related to the COVID-19 pandemic to materially affect our financial performance in 2020.

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, our adoption of ASU 2016-09, unrealized gains/losses resulting from changes in the market value of shares of certain marketable securities held for investment and classified as available for sale, 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, changes in the reserve established in connection with our discussions with the Department of Justice, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income attributable to UHS, as determined in accordance with GAAP, and as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Reports on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarterly period ended March 31, 2020. 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,



2020



2019



2020



2019

















Net revenues

$2,729,754



$2,855,168



$5,559,421



$5,659,559

















Operating charges:















   Salaries, wages and benefits

1,308,010



1,383,481



2,740,679



2,749,027

   Other operating expenses

625,747



672,564



1,315,537



1,317,344

   Supplies expense

283,572



305,857



601,399



613,320

   Depreciation and amortization

126,208



121,168



250,602



241,208

   Lease and rental expense

28,186



26,535



56,479



52,660



2,371,723



2,509,605



4,964,696



4,973,559

















Income from operations

358,031



345,563



594,725



686,000

















Interest expense, net

25,473



42,487



61,824



82,127

Other (income) expense, net

(3,100)



(7,732)



6,460



(3,231)

















Income before income taxes

335,658



310,808



526,441



607,104

















Provision for income taxes

79,154



69,543



125,477



128,441

















Net income

256,504



241,265



400,964



478,663

















Less:  Net income attributable to















noncontrolling interests ("NCI")

4,575



2,945



6,998



6,175

















Net income attributable to UHS

$251,929



$238,320



$393,966



$472,488

































































































Basic earnings per share attributable to UHS (a)

$2.97



$2.67



$4.60



$5.24

















Diluted earnings per share attributable to UHS (a)

$2.95



$2.66



$4.58



$5.23

 

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,



2020



2019



2020



2019

Basic and diluted:















Net income attributable to UHS

$251,929



$238,320



$393,966



$472,488

Less: Net income attributable to unvested restricted share grants

(824)



(656)



(1,197)



(1,171)

Net income attributable to UHS - basic and diluted

$251,105



$237,664



$392,769



$471,317

















Weighted average number of common shares - basic

84,632



89,136



85,422



89,956

















Basic earnings per share attributable to UHS:

$2.97



$2.67



$4.60



$5.24

















Weighted average number of common shares

84,632



89,136



85,422



89,956

Add: Other share equivalents

427



99



335



145

Weighted average number of common shares and equiv. - diluted

85,059



89,235



85,757



90,101

















Diluted earnings per share attributable to UHS:

$2.95



$2.66



$4.58



$5.23

 

Universal Health Services, Inc.

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

For the Three Months ended June 30, 2020 and 2019

(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, 2020



revenues



June 30, 2019



revenues

















Net income attributable to UHS

$251,929







$238,320





   Depreciation and amortization

126,208







121,168





   Interest expense, net

25,473







42,487





   Provision for income taxes

79,154







69,543





EBITDA net of NCI

$482,764



17.7%



$471,518



16.5%

















Other (income) expense, net

(3,100)







(7,732)





Increase in DOJ Reserve

-







10,978





Adjusted EBITDA net of NCI

$479,664



17.6%



$474,764



16.6%

















Net revenues

$2,729,754







$2,855,168





















































































Calculation of Adjusted Net Income Attributable to UHS



















Three months ended



Three months ended



June 30, 2020



June 30, 2019







Per







Per



Amount



Diluted Share



Amount



Diluted Share

















Net income attributable to UHS

$251,929



$2.95



$238,320



$2.66

Plus/minus after-tax adjustments:















Unrealized gain on marketable securities held for sale

(2,223)



(0.03)



-



-

Increase in DOJ Reserve

-



-



8,369



0.09

Impact of ASU 2016-09

505



0.01



509



0.01

Subtotal adjustments

(1,718)



(0.02)



8,878



0.10

Adjusted net income attributable to UHS

$250,211



$2.93



$247,198



$2.76

 

Universal Health Services, Inc.

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

For the Six Months ended June 30, 2020 and 2019

(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, 2020



revenues



June 30, 2019



revenues

















Net income attributable to UHS

$393,966







$472,488





   Depreciation and amortization

250,602







241,208





   Interest expense, net

61,824







82,127





   Provision for income taxes

125,477







128,441





EBITDA net of NCI

$831,869



15.0%



$924,264



16.3%

















Other (income) expense, net

6,460







(3,231)





Increase in DOJ Reserve

-







10,978





Adjusted EBITDA net of NCI

$838,329



15.1%



$932,011



16.5%

















Net revenues

$5,559,421







$5,659,559





















































































Calculation of Adjusted Net Income Attributable to UHS



















Six months ended



Six months ended



June 30, 2020



June 30, 2019







Per







Per



Amount



Diluted Share



Amount



Diluted Share

















Net income attributable to UHS

$393,966



$4.58



$472,488



$5.23

Plus/minus after-tax adjustments:















Unrealized loss on marketable securities held for sale

5,127



0.06



-



-

Increase in DOJ Reserve

-



-



8,369



0.09

Impact of ASU 2016-09

1,275



0.01



(10,398)



(0.11)

Subtotal adjustments

6,402



0.07



(2,029)



(0.02)

Adjusted net income attributable to UHS

$400,368



$4.65



$470,459



$5.21

 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



















Three months



Six months



ended June 30,



ended June 30,



2020



2019



2020



2019

















Net income

$256,504



$241,265



$400,964



$478,663

Other comprehensive income (loss):















   Unrealized derivative gains (losses) on cash flow hedges

0



(1,008)



0



(3,925)

   Foreign currency translation adjustment

6,676



5,159



(32,525)



(9,103)

Other comprehensive income (loss) before tax

6,676



4,151



(32,525)



(13,028)

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

898



1,616



(1,210)



(850)

Total other comprehensive income (loss), net of tax

5,778



2,535



(31,315)



(12,178)

















Comprehensive income

262,282



243,800



369,649



466,485

Less: Comprehensive income attributable to noncontrolling interests

4,575



2,945



6,998



6,175

Comprehensive income attributable to UHS

$257,707



$240,855



$362,651



$460,310

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)















June 30,



December 31,



2020



2019

Assets











Current assets:











    Cash and cash equivalents

$

539,622



$

61,268

    Accounts receivable, net



1,438,697





1,560,847

    Supplies



167,626





159,889

    Other current assets



150,842





133,930

          Total current assets



2,296,787





1,915,934













Property and equipment



9,398,890





9,106,377

Less: accumulated depreciation



(4,294,341)





(4,089,679)





5,104,549





5,016,698













Other assets:











    Goodwill



3,836,020





3,869,760

    Deferred income taxes



20,241





16,189

    Right of use assets-operating leases



335,388





326,518

    Deferred charges



6,390





6,373

    Other



549,124





516,778

Total Assets

$

12,148,499



$

11,668,250













Liabilities and Stockholders' Equity











Current liabilities:











    Current maturities of long-term debt

$

82,085



$

87,550

    Accounts payable and other liabilities



1,371,698





1,272,374

    Medicare accelerated payments and deferred governmental stimulus grants



477,099





0

    Legal reserves



145,227





144,509

    Operating lease liabilities



56,629





56,442

    Federal and state taxes



126,431





2,515

          Total current liabilities



2,259,169





1,563,390













Other noncurrent liabilities



374,616





329,932

Operating lease liabilities noncurrent



279,747





270,076

Long-term debt



3,449,940





3,896,577

Deferred income taxes



19,168





25,071













Redeemable noncontrolling interest



4,287





4,333













UHS common stockholders' equity



5,688,647





5,504,105

Noncontrolling interest



72,925





74,766

          Total equity



5,761,572





5,578,871













Total Liabilities and Stockholders' Equity

$

12,148,499



$

11,668,250

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



Six months



ended June 30,



2020









Cash Flows from Operating Activities:







  Net income

$400,964



$478,663

  Adjustments to reconcile net income to net 







cash provided by operating activities:







Depreciation & amortization

250,602



241,208

Loss on sale of assets and businesses

2,161



0

Stock-based compensation expense

33,954



34,676

  Changes in assets & liabilities, net of effects from







acquisitions and dispositions:







   Accounts receivable

131,294



(101,329)

   Accrued interest

(2,191)



948

   Accrued and deferred income taxes 

116,707



(16,846)

   Other working capital accounts 

26,361



30,082

   Medicare accelerated payments and deferred governmental stimulus grants

477,099



0

   Other assets and deferred charges

5,095



(1,333)

   Other 

(7,659)



(1,209)

   Accrued insurance expense, net of commercial premiums paid

81,016



51,819

   Payments made in settlement of self-insurance claims

(64,034)



(44,115)

          Net cash provided by operating activities

1,451,369



672,564









Cash Flows from Investing Activities:







   Property and equipment additions, net of disposals

(354,610)



(323,920)

   Proceeds received from sales of assets and businesses

6,440



0

   Acquisition of businesses and property

(968)



0

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

57,029



4,885

   Costs incurred for purchase and implementation of information technology applications

(4,421)



(13,893)

   Investment in, and advances to,  joint ventures and other

(285)



(11,949)

          Net cash used in investing activities

(296,815)



(344,877)









Cash Flows from Financing Activities:







   Reduction of long-term debt

(459,332)



(28,617)

   Additional borrowings

5,453



177,200

   Repurchase of common shares

(200,054)



(494,649)

   Dividends paid

(17,344)



(17,953)

   Issuance of common stock

5,852



5,271

   Profit distributions to noncontrolling interests

(8,885)



(11,650)

          Net cash used in financing activities

(674,310)



(370,398)









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

(1,639)



(273)

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

478,605



(42,984)

Cash, cash equivalents and restricted cash, beginning of period

105,667



199,685

Cash, cash equivalents and restricted cash, end of period

$584,272



$156,701









Supplemental Disclosures of Cash Flow Information:







  Interest paid

$61,802



$78,623









  Income taxes paid, net of refunds

$14,394



$145,404









  Noncash purchases of property and equipment

$80,031



$71,923









  Right-of-use assets obtained in exchange for lease obligations

$37,780



$359,329

 

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

































 % Change 



 % Change 











Quarter ended



6 months ended

Same Facility:









6/30/2020



6/30/2020

















Acute Care Hospitals















Revenues (a)









-3.5%



-1.6%

Revenues-excludes governmental stimulus revenues









-14.0%



-6.8%

Adjusted Admissions









-24.8%



-14.4%

Adjusted Patient Days









-18.1%



-9.1%

Revenue Per Adjusted Admission-excludes governmental stimulus revenues









12.7%



7.7%

Revenue Per Adjusted Patient Day-excludes governmental stimulus revenues









3.5%



1.3%

















Behavioral Health Hospitals















Revenues (b)









-3.8%



-0.8%

Revenues-excludes governmental stimulus revenues









-8.5%



-3.2%

Adjusted Admissions









-15.4%



-8.6%

Adjusted Patient Days









-10.4%



-5.9%

Revenue Per Adjusted Admission-excludes governmental stimulus revenues









8.1%



5.9%

Revenue Per Adjusted Patient Day-excludes governmental stimulus revenues









2.0%



2.8%

















(a) Includes governmental stimulus program revenues of $157 million.















(b) Includes governmental stimulus program revenues of $61 million.















































UHS Consolidated

second quarter ended



six months ended



6/30/2020



6/30/2019



6/30/2020



6/30/2019

















Revenues

$2,729,754



$2,855,168



$5,559,421



$5,659,559

EBITDA net of NCI

$482,764



$471,518



$831,869



$924,264

EBITDA Margin net of NCI

17.7%



16.5%



15.0%



16.3%

Adjusted EBITDA net of NCI

$479,664



$474,764



$838,329



$932,011

Adjusted EBITDA Margin net of NCI

17.6%



16.6%



15.1%



16.5%

















Cash Flow From Operations









$1,451,369



$672,564

Days Sales Outstanding









47



51

Capital Expenditures  









$354,610



$323,920

















Debt 









$3,532,025



$4,148,954

UHS' Shareholders Equity









$5,688,647



$5,393,089

Debt / Total Capitalization









38.3%



43.5%

Debt / EBITDA net of NCI (1)









2.19



2.50

Debt / Adjusted EBITDA net of NCI (1)









2.07



2.31

Debt / Cash From Operations (1)









1.59



3.10

Net Debt / EBITDA net of NCI (1) (2)









1.83





Net Debt / Adjusted EBITDA net of NCI (1) (2)









1.73





Net Debt / Cash From Operations (1) (2)









1.33





















(1) Latest 4 quarters

(2) Debt, net of $574 million of short-term cash investments held as of June 30, 2020

 

Universal Health Services, Inc.

Acute Care Hospital Services

For the three and six months ended

June 30, 2020 and 2019

(in thousands)





















































Same Facility Basis - Acute Care Hospital Services







































































Three months ended



Three months ended



Six months ended



Six months ended





June 30, 2020



June 30, 2019



June 30, 2020



June 30, 2019





Amount



% of Net

Revenues 



Amount



% of Net

Revenues 



Amount



% of Net

Revenues 



Amount



% of Net

Revenues 

Net revenues (a)



$1,446,099



100.0%



$1,499,054



100.0%



$2,943,222



100.0%



$2,990,405



100.0%

Operating charges:

































Salaries, wages and benefits



589,677



40.8%



624,035



41.6%



1,248,606



42.4%



1,243,352



41.6%

Other operating expenses



344,384



23.8%



340,414



22.7%



719,915



24.5%



673,152



22.5%

Supplies expense



233,419



16.1%



255,703



17.1%



497,949



16.9%



513,847



17.2%

Depreciation and amortization



78,440



5.4%



75,810



5.1%



156,368



5.3%



150,171



5.0%

Lease and rental expense



16,563



1.1%



14,736



1.0%



32,583



1.1%



29,035



1.0%

Subtotal-operating expenses



1,262,483



87.3%



1,310,698



87.4%



2,655,421



90.2%



2,609,557



87.3%

Income from operations



183,616



12.7%



188,356



12.6%



287,801



9.8%



380,848



12.7%

Interest expense, net



516



0.0%



244



0.0%



1,134



0.0%



523



0.0%

Other (income) expense, net



-



-



(45)



(0.0)%



-



-



(45)



(0.0)%

Income before income taxes



$183,100



12.7%



$188,157



12.6%



$286,667



9.7%



$380,370



12.7%







































































































All Acute Care Hospital Services







































































Three months ended



Three months ended



Six months ended



Six months ended





June 30, 2020



June 30, 2019



June 30, 2020



June 30, 2019





Amount



% of Net

Revenues



Amount



% of Net

Revenues 



Amount



% of Net

Revenues



Amount



% of Net

Revenues 

Net revenues (a)



$1,467,506



100.0%



$1,531,709



100.0%



$2,988,555



100.0%



$3,046,553



100.0%

Operating charges:

































Salaries, wages and benefits



589,762



40.2%



624,035



40.7%



1,248,721



41.8%



1,243,352



40.8%

Other operating expenses



365,810



24.9%



373,069



24.4%



765,267



25.6%



729,300



23.9%

Supplies expense



233,419



15.9%



255,703



16.7%



497,949



16.7%



513,847



16.9%

Depreciation and amortization



78,440



5.3%



75,810



4.9%



156,368



5.2%



150,171



4.9%

Lease and rental expense



16,563



1.1%



14,736



1.0%



32,583



1.1%



29,035



1.0%

Subtotal-operating expenses



1,283,994



87.5%



1,343,353



87.7%



2,700,888



90.4%



2,665,705



87.5%

Income from operations



183,512



12.5%



188,356



12.3%



287,667



9.6%



380,848



12.5%

Interest expense, net



516



0.0%



244



0.0%



1,134



0.0%



523



0.0%

Other (income) expense, net



-



-



(45)



(0.0)%



-



-



(45)



(0.0)%

Income before income taxes



$182,996



12.5%



$188,157



12.3%



$286,533



9.6%



$380,370



12.5%



































(a) Includes $157 million of governmental stimulus program revenues in each of the three and six-months periods ended June 30, 2020.



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, 2019 and Form 10-Q for the quarter ended March 31, 2020.



The All Acute Care Hospital Servicestable 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, 2020 and 2019

(in thousands)





















































Same Facility - Behavioral Health Care Services

































































Three months ended



Three months ended



Six months ended



Six months ended



June 30, 2020



June 30, 2019



June 30, 2020



June 30, 2019



Amount



% of Net

Revenues 



Amount



% of Net

Revenues 



Amount



% of Net

Revenues 



Amount



% of Net

Revenues 

Net revenues (a)

$1,240,631



100.0%



$1,289,115



100.0%



$2,524,631



100.0%



$2,546,024



100.0%

Operating charges:































Salaries, wages and benefits

648,385



52.3%



676,003



52.4%



1,340,862



53.1%



1,343,926



52.8%

Other operating expenses

221,709



17.9%



237,490



18.4%



464,918



18.4%



474,762



18.6%

Supplies expense

50,386



4.1%



49,608



3.8%



102,015



4.0%



98,324



3.9%

Depreciation and amortization

43,342



3.5%



40,565



3.1%



86,273



3.4%



81,494



3.2%

Lease and rental expense

10,576



0.9%



10,718



0.8%



21,787



0.9%



21,338



0.8%

Subtotal-operating expenses

974,398



78.5%



1,014,384



78.7%



2,015,855



79.8%



2,019,844



79.3%

Income from operations

266,233



21.5%



274,731



21.3%



508,776



20.2%



526,180



20.7%

Interest expense, net

361



0.0%



369



0.0%



725



0.0%



744



0.0%

Other (income) expense, net

922



0.1%



109



0.0%



1,811



0.1%



784



0.0%

Income before income taxes

$264,950



21.4%



$274,253



21.3%



$506,240



20.1%



$524,652



20.6%

































































































All Behavioral Health Care Services

































































Three months ended



Three months ended



Six months ended



Six months ended



June 30, 2020



June 30, 2019



June 30, 2020



June 30, 2019



Amount



% of Net

Revenues



Amount



% of Net

Revenues 



Amount



% of Net

Revenues



Amount



% of Net

Revenues 

Net revenues (a)

$1,259,123



100.0%



$1,320,241



100.0%



$2,565,232



100.0%



$2,606,624



100.0%

Operating charges:































Salaries, wages and benefits

649,376



51.6%



683,948



51.8%



1,342,648



52.3%



1,359,647



52.2%

Other operating expenses

245,045



19.5%



265,785



20.1%



511,227



19.9%



527,922



20.3%

Supplies expense

50,363



4.0%



49,986



3.8%



102,002



4.0%



99,117



3.8%

Depreciation and amortization

45,038



3.6%



42,339



3.2%



88,927



3.5%



84,891



3.3%

Lease and rental expense

11,259



0.9%



11,719



0.9%



23,417



0.9%



23,363



0.9%

Subtotal-operating expenses

1,001,081



79.5%



1,053,777



79.8%



2,068,221



80.6%



2,094,940



80.4%

Income from operations

258,042



20.5%



266,464



20.2%



497,011



19.4%



511,684



19.6%

Interest expense, net

354



0.0%



369



0.0%



751



0.0%



744



0.0%

Other (income) expense, net

922



0.1%



109



0.0%



1,811



0.1%



786



0.0%

Income before income taxes

$256,766



20.4%



$265,986



20.1%



$494,449



19.3%



$510,154



19.6%

































(a) Includes $61 million of governmental stimulus program revenues in each of the three and six-months periods ended June 30, 2020.



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, 2019 and Form 10-Q for the quarter ended March 31, 2020.



The All Behavioral Health Care Servicestable 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, 2020 and 2019











































AS REPORTED:



































































ACUTE



BEHAVIORAL HEALTH



06/30/20



06/30/19



%  change



06/30/20



06/30/19



%  change

























Hospitals owned and leased

26



26



0.0%



330



327



0.9%

Average licensed beds

6,451



6,371



1.3%



23,573



23,798



-0.9%

Average available beds

6,279



6,195



1.4%



23,470



23,698



-1.0%

Patient days

317,359



357,894



-11.3%



1,464,601



1,632,531



-10.3%

Average daily census

3,487.4



3,932.9



-11.3%



16,094.5



17,939.9



-10.3%

Occupancy-licensed beds

54.1%



61.7%



-12.4%



68.3%



75.4%



-9.4%

Occupancy-available beds

55.5%



63.5%



-12.5%



68.6%



75.7%



-9.4%

Admissions

64,208



78,879



-18.6%



102,770



121,687



-15.5%

Length of stay

4.9



4.5



8.9%



14.3



13.4



6.2%

























Inpatient revenue

$6,736,777



$7,051,925



-4.5%



$2,285,359



$2,547,626



-10.3%

Outpatient revenue

3,394,680



4,402,308



-22.9%



216,174



268,693



-19.5%

Total patient revenue

10,131,457



11,454,233



-11.5%



2,501,533



2,816,319



-11.2%

Other revenue

269,749



114,017



136.6%



113,717



62,140



83.0%

Gross hospital revenue

10,401,206



11,568,250



-10.1%



2,615,250



2,878,459



-9.1%

Total deductions

8,933,700



10,036,541



-11.0%



1,356,127



1,558,218



-13.0%

Net hospital revenue 

$1,467,506



$1,531,709



-4.2%



$1,259,123



$1,320,241



-4.6%

















































SAME FACILITY:

















































ACUTE



BEHAVIORAL HEALTH



06/30/20



06/30/19



%  change



06/30/20



06/30/19



%  change

























Hospitals owned and leased

26



26



0.0%



312



312



0.0%

Average licensed beds

6,451



6,371



1.3%



23,399



23,299



0.4%

Average available beds

6,279



6,195



1.4%



23,296



23,199



0.4%

Patient days

317,359



357,894



-11.3%



1,456,945



1,614,274



-9.7%

Average daily census

3,487.4



3,932.9



-11.3%



16,010.4



17,739.3



-9.7%

Occupancy-licensed beds

54.1%



61.7%



-12.4%



68.4%



76.1%



-10.1%

Occupancy-available beds

55.5%



63.5%



-12.5%



68.7%



76.5%



-10.1%

Admissions

64,208



78,879



-18.6%



102,248



119,975



-14.8%

Length of stay

4.9



4.5



8.9%



14.2



13.5



5.9%

 

Universal Health Services, Inc.

Selected Hospital Statistics

For the six months ended

June 30, 2020 and 2019











































AS REPORTED:



































































ACUTE



BEHAVIORAL HEALTH



06/30/20



06/30/19



%  change



06/30/20



06/30/19



%  change

























Hospitals owned and leased

26



26



0.0%



330



327



0.9%

Average licensed beds

6,451



6,371



1.3%



23,604



23,871



-1.1%

Average available beds

6,279



6,195



1.4%



23,501



23,771



-1.1%

Patient days

687,872



727,620



-5.5%



3,057,212



3,251,336



-6.0%

Average daily census

3,779.5



4,020.2



-6.0%



16,797.9



17,963.2



-6.5%

Occupancy-licensed beds

58.6%



63.1%



-7.2%



71.2%



75.3%



-5.4%

Occupancy-available beds

60.2%



64.9%



-7.2%



71.5%



75.6%



-5.4%

Admissions

141,976



159,542



-11.0%



223,787



245,394



-8.8%

Length of stay

4.8



4.6



6.2%



13.7



13.2



3.1%

























Inpatient revenue

$14,558,249



$14,215,639



2.4%



$4,810,898



$5,031,625



-4.4%

Outpatient revenue

8,076,421



8,659,922



-6.7%



475,913



535,239



-11.1%

Total patient revenue

22,634,670



22,875,561



-1.1%



5,286,811



5,566,864



-5.0%

Other revenue

386,027



223,343



72.8%



170,107



110,739



53.6%

Gross hospital revenue

23,020,697



23,098,904



-0.3%



5,456,918



5,677,603



-3.9%

Total deductions

20,032,142



20,052,351



-0.1%



2,891,686



3,070,979



-5.8%

Net hospital revenue 

$2,988,555



$3,046,553



-1.9%



$2,565,232



$2,606,624



-1.6%

















































SAME FACILITY:

















































ACUTE



BEHAVIORAL HEALTH



06/30/20



06/30/19



%  change



06/30/20



06/30/19



%  change

























Hospitals owned and leased

26



26



0.0%



312



312



0.0%

Average licensed beds

6,451



6,371



1.3%



23,442



23,325



0.5%

Average available beds

6,279



6,195



1.4%



23,339



23,225



0.5%

Patient days

687,872



727,620



-5.5%



3,042,689



3,214,280



-5.3%

Average daily census

3,779.5



4,020.2



-6.0%



16,718.1



17,758.5



-5.9%

Occupancy-licensed beds

58.6%



63.1%



-7.2%



71.3%



76.1%



-6.3%

Occupancy-available beds

60.2%



64.9%



-7.2%



71.6%



76.5%



-6.3%

Admissions

141,976



159,542



-11.0%



222,664



242,263



-8.1%

Length of stay

4.8



4.6



6.2%



13.7



13.3



3.0%

 

Cision View original content:http://www.prnewswire.com/news-releases/universal-health-services-inc-reports-2020-second-quarter-financial-results-301100510.html

SOURCE Universal Health Services, Inc.

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