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Universal Health Services, Inc. Reports 30% Increase in 2008 First Quarter Earnings Per Diluted Share
Date:4/24/2008

Consolidated Results of Operations:

KING OF PRUSSIA, Pa., April 24 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income was $61.7 million, or $1.20 per diluted share, during the first quarter of 2008 as compared to $49.5 million, or $.92 per diluted share, during the comparable prior year quarter. After adjusting our first quarter of 2007 results for hurricane related expenses and the gain realized on the sale of vacant land (as indicated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information), our net income for the three months ended March 31, 2007 was $47.9 million, or $.89 per diluted share. There were no such adjustments applicable to our results during the first quarter of 2008.

Net revenues increased 8% to $1.30 billion during the first quarter of 2008 as compared to $1.20 billion during the first quarter of 2007. Our consolidated operating margin, as calculated on the attached Supplemental Schedule (without adjusting the 2007 first quarter results for the items mentioned above), was 14.8% and 13.9% during the three-month periods ended March 31, 2008 and 2007, respectively.

Acute Care Services:

At our acute care hospitals owned during both periods ("same facility basis"), inpatient admissions increased 0.8% and patient days increased 2.0% during the first quarter of 2008 as compared to the first quarter of 2007. On a same facility basis, net revenues at our acute care facilities increased 6.9% during the first quarter of 2008 as compared to the comparable prior year quarter. Net revenue per adjusted admission at these facilities increased 5.3% during the first quarter of 2008 over the comferred income taxes 31,301 27,373

Other working capital accounts 27,777 13,565

Other assets and deferred charges 456 (2,811)

Other (1,714) (4,041)

Minority interest in earnings of consolidated

entities, net of distributions 12,906 10,972

Accrued insurance expense, net of commercial

premiums paid 19,376 23,071

Payments made in settlement of self-insurance

claims (13,766) (12,170)

Net cash provided by operating activities 131,676 98,976

Cash Flows from Investing Activities:

Property and equipment additions, net of

disposals (81,751) (99,349)

Proceeds received from sale of assets 2,235 5,268

Acquisition of assets and businesses - (73,378)

Purchase of minority ownership interest

in majority owned business - (14,762)

Net cash used in investing activities (79,516) (182,221)

Cash Flows from Financing Activities:

Additional borrowings 33,180 84,664

Repurchase of common shares (89,799) (3,288)

Dividends paid (4,072) (4,310)

Issuance of common stock 1,093 115

Capital contributions from minority member - 2,340

Net cash (used in) provided by financing

activities (59,598) 79,521

Decrease in cash and cash equivalents (7,438) (3,724)

Cash and cash equivalents, beginning of period 16,354 14,939

Cash and cash equivalents, end of period $8,916 $11,215

Supplemental Disclosures of Cash Flow Information:

Interest paid $6,407 $5,182

Income taxes paid, net of refunds $7,642 $3,700

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

% Change

Quarter Ended

Same Facility: 03/31/2008

Acute Care Hospitals

Revenues 6.9%

Adjusted Admissions 1.5%

Adjusted Patient Days 2.8%

Revenue Per Adjusted Admission 5.3%

Revenue Per Adjusted Patient Day 4.0%

Behavioral Health Hospitals

Revenues 9.2%

Adjusted Admissions 6.4%

Adjusted Patient Days 4.7%

Revenue Per Adjusted Admission 2.6%

Revenue Per Adjusted Patient Day 4.3%

UHS Consolidated First Quarter Ended

03/31/2008 03/31/2007

Revenues $1,297,715 $1,197,601

EBITDA (1) $161,122 $136,437

EBITDA Margin (1) 12.4% 11.4%

Cash Flow From Operations $131,676 $98,976

Days Sales Outstanding 48 50

Capital Expenditures $81,751 $99,349

Debt 1,045,082 913,275

Shareholders Equity 1,487,212 1,461,195

Debt / Total Capitalization 41.3% 38.5%

Debt / EBITDA (2) 1.95 1.97

Debt / Cash From Operations (2) 2.74 5.78

Acute Care EBITDAR Margin (3) 16.2% 15.1%

Behavioral Health EBITDAR Margin (3) 23.1% 22.4%

(1) Net of Minority Interest

(2) Latest 4 quarters

(3) Before Corporate overhead allocation and minority interest

UNIVERSAL HEALTH SERVICES, INC.

SELECTED HOSPITAL STATISTICS

MARCH 31, 2008

AS REPORTED:

For the three months ended

Acute (1) Behavioral Health

03/31/08 03/31/07 % 03/31/08 03/31/07 %

Hospitals owned and

leased 23 22 4.5% 83 81 2.5%

Average licensed beds 5,578 5,417 3.0% 7,596 7,060 7.6%

Patient days 320,595 309,174 3.7% 529,955 481,353 10.1%

Average daily census 3,523.0 3,435.3 2.6% 5,823.7 5,348.4 8.9%

Occupancy-licensed

beds 63.2% 63.4% -0.4% 76.7% 75.8% 1.2%

Admissions 70,511 68,766 2.5% 32,882 29,405 11.8%

Length of stay 4.5 4.5 1.1% 16.1 16.4 -1.5%

Inpatient revenue $2,505,320 $2,271,139 10.3% $488,733 $433,912 12.6%

Outpatient revenue 955,155 868,131 10.0% 66,588 59,645 11.6%

Total patient revenue 3,460,475 3,139,270 10.2% 555,321 493,557 12.5%

Other revenue 19,132 14,451 32.4% 8,158 7,830 4.2%

Gross hospital

revenue 3,479,607 3,153,721 10.3% 563,479 501,387 12.4%

Total deductions 2,508,600 2,260,856 11.0% 250,621 225,675 11.1%

Net hospital revenue $971,007 $892,865 8.8% $312,858 $275,712 13.5%

SAME FACILITY:

Acute (2) Behavioral Health (3)

03/31/08 03/31/07 % 03/31/08 03/31/07 %

Hospitals owned and

leased 22 22 0.0% 80 80 0.0%

Average licensed beds 5,413 5,417 -0.1% 7,307 7,054 3.6%

Patient days 315,433 309,174 2.0% 511,056 480,987 6.3%

Average daily census 3,466.3 3,435.3 0.9% 5,616.0 5,344.3 5.1%

Occupancy-licensed

beds 64.0% 63.4% 1.0% 76.9% 75.8% 1.4%

Admissions 69,330 68,766 0.8% 31,745 29,394 8.0%

Length of stay 4.5 4.5 1.2% 16.1 16.4 -1.6%

(1) Licensed beds from our Acute care hospitals located in New Orleans are

excluded.

(2) Our three acute care hospitals located in New Orleans and Centennial

Hills are excluded in current and prior years.

(3) Casa de Lago, Cottonwood Treatment Center, Dover Behavioral,

Foundations Behavioral and Shenandoah Valley are excluded in the

current and prior years. Highlands Behavioral is included in both

current and prior years from March 1 through year to date.

parable prior year quarter. The operating margin at our acute care hospitals owned during both quarters increased to 17.1% during the first quarter of 2008 as compared to 15.1% during the first quarter of 2007.

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 $151 million and $127 million during the three-month periods ended March 31, 2008 and 2007, respectively.

Behavioral Health Care Services:

At our behavioral health facilities, on a same facility basis, inpatient admissions increased 8.0% and patient days increased 6.3% during the first quarter of 2008 as compared to the first quarter of 2007. On a same facility basis, net revenues at our behavioral health facilities increased 9.2% during the first quarter of 2008 as compared to the comparable prior year quarter. Net revenue per adjusted admission at these facilities increased 2.6% during the first quarter of 2008 over the comparable prior year quarter. The operating margin at our behavioral health facilities owned during both periods increased to 23.7% during the first quarter of 2008 as compared to 22.7% during the first quarter of 2007.

2008 Revised Guidance:

Based upon the operating trends and financial results experienced during the first quarter of 2008, and subject to certain provisions and adjustments, including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures, we estimate that we will achieve earnings per diluted share from continuing operations of approximately $3.70 to $3.80 during the year ended December 31, 2008.

Conference Call Information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on April 25, 2008. 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 April 25, 2008 and will continue through midnight on May 9, 2008. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 41016419. This call will also be available live over the internet at our web site at http://www.uhsinc.com. It will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at http://www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (http://www.streetevents.com).

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

Universal Health Services, Inc. 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, 2007), may cause 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, adjusted income from continuing operations per diluted share, adjusted net income, adjusted net income 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 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, hurricane-related expenses and insurance recoveries, reserves for legal judgments, lawsuits and other settlements 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, 2007. 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

ended March 31,

2008 2007

Net revenues $1,297,715 $1,197,601

Operating charges:

Salaries, wages and benefits 550,460 510,993

Other operating expenses 252,495 245,352

Supplies expense 181,817 175,358

Provision for doubtful accounts 120,875 99,093

Depreciation and amortization 47,370 43,463

Lease and rental expense 17,667 16,176

Hurricane related expenses, net - (433)

1,170,684 1,090,002

Income before interest expense, hurricane

insurance recoveries in excess of

expenses, minority interests and income

taxes 127,031 107,599

Interest expense, net 13,479 12,722

Minority interests in earnings of

consolidated entities 13,279 14,192

Income before income taxes 100,273 80,685

Provision for income taxes 38,610 31,113

Income from continuing operations 61,663 49,572

Loss from discontinued operations,

net of income taxes - (64)

Net income $61,663 $49,508

Basic earnings per share:

From continuing operations $1.20 $0.93

From discontinued operations - -

Total basic earnings per share $1.20 $0.93

Diluted earnings per share:

From continuing operations $1.20 $0.92

From discontinued operations - -

Total diluted earnings per share $1.20 $0.92

Weighted average number of common shares 51,263 53,493

Other share equivalents 73 193

Weighted average number of common shares

and equiv. - diluted 51,336 53,686

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Consolidated Statements of Income

Information ("Supplemental Schedule")

For the three months ended March 31, 2008 and 2007

(in thousands, except per share amounts)

(unaudited)

Three months ended Three months ended

March 31, 2008 March 31, 2007

Net revenues $1,297,715 100.0% $1,197,601 100.0%

Operating charges:

Salaries, wages and benefits 550,460 42.4% 510,993 42.7%

Other operating expenses 252,495 19.5% 245,352 20.5%

Supplies expense 181,817 14.0% 175,358 14.6%

Provision for doubtful accounts 120,875 9.3% 99,093 8.3%

1,105,647 85.2% 1,030,796 86.1%

Operating income/margin 192,068 14.8% 166,805 13.9%

Lease and rental expense 17,667 16,176

Minority interests in earnings

of consolidated entities 13,279 14,192

Earnings before hurricane related

expenses, hurricane insurance

recoveries, depreciation and

amortization, interest expense,

and income taxes ("EBITDA") 161,122 136,437

Hurricane related expenses, net

of recoveries - (433)

Depreciation and amortization 47,370 43,463

Interest expense, net 13,479 12,722

Income before income taxes 100,273 80,685

Provision for income taxes 38,610 31,113

Income from continuing operations 61,663 49,572

Loss from discontinued operations,

net of income taxes - (64)

Net income $61,663 $49,508

Three months ended Three months ended

March 31, 2008 March 31, 2007

Per Per

Diluted Diluted

Amount Share Amount Share

Calculation of Adjusted Income from

Continuing Operations

Income from continuing operations $61,663 $1.20 $49,572 $0.92

Plus/minus adjustments:

Hurricane related recoveries, net

of expenses and income taxes - - (269) -

Gain on sale of real property, net

of income taxes - - (1,369) (0.03)

Subtotal after-tax adjustments to

income from continuing operations - - (1,638) (0.03)

Adjusted income from continuing

operations $61,663 $1.20 $47,934 $0.89

Calculation of Adjusted Net Income

Net income $61,663 $1.20 $49,508 $0.92

After-tax adjustments to income from

continuing operations, as indicated

above - - (1,638) (0.03)

Adjusted net income $61,663 $1.20 $47,870 $0.89

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

March 31, December 31,

2008 2007

Assets:

Cash and cash equivalents $8,916 $16,354

Accounts receivable, net 689,878 627,186

Other current assets 127,576 131,307

Property, plant and equipment, net 1,959,265 1,933,916

Other assets 900,647 899,894

Total Assets $3,686,282 $3,608,657

Liabilities and Stockholders' Equity:

Current portion of long-term debt $3,774 $3,116

Other current liabilities 543,555 484,595

Other noncurrent liabilities 349,369 344,755

Long-term debt 1,041,308 1,008,786

Deferred income taxes 37,974 40,022

Minority interests 223,090 210,184

Stockholders' equity 1,487,212 1,517,199

Total Liabilities and Stockholders' Equity $3,686,282 $3,608,657

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three months

ended March 31,

2008 2007

Cash Flows from Operating Activities:

Net income $61,663 $49,508

Adjustments to reconcile net income to net

cash provided by operating activities:

Depreciation & amortization 47,370 43,482

Gain on sale of assets - (2,200)

Changes in assets & liabilities, net of

effects from acquisitions and dispositions:

Accounts receivable (62,692) (57,307)

Accrued interest 8,999 9,534

Accrued and de
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SOURCE Universal Health Services, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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