Universal Health Realty Income Trust UHT

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended September 30, 2023 and 2022:

KING OF PRUSSIA, Pa., Oct. 25, 2023 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $167.0 million, or $2.40 per diluted share, during the third quarter of 2023, as compared to $182.8 million, or $2.50 per diluted share, during the third quarter of 2022. Net revenues increased by 6.8% to $3.563 billion during the third quarter of 2023, as compared to $3.336 billion during the third quarter of 2022.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the third quarter of 2023 was $177.5 million, or $2.55 per diluted share, as compared to $185.8 million, or $2.54 per diluted share, during the third quarter of 2022.  As reflected on the Supplemental Schedule, included in our reported results were unrealized after-tax losses of $10.5 million, or $.15 per diluted share ($13.8 million pre-tax), during the third quarter of 2023, and $3.0 million, or $.04 per diluted share ($3.9 million pre-tax) during the third quarter of 2022. These unrealized losses, which are included in "Other (income) expense, net", resulted from decreases in the market value of certain equity securities. 

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 $410.1 million during the third quarter of 2023, as compared to $421.7 million during the third quarter of 2022. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, was $421.5 million during the third quarter of 2023, as compared to $427.8 million during the third quarter of 2022.

Consolidated Results of Operations, As Reported and As Adjusted  – Nine-month periods ended September 30, 2023 and 2022:

Reported net income attributable to UHS was $501.4 million, or $7.09 per diluted share, during the first nine months of 2023, as compared to $500.8 million, or $6.71 per diluted share, during the first nine months 2022. Net revenues increased by 6.3% to $10.578 billion during the first nine months of 2023, as compared to $9.952 billion during the comparable period of 2022.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the first nine months of 2023, was $524.5 million, or $7.42 per diluted share, as compared to $513.1 million, or $6.88 per diluted share, during the nine-month period ended September 30, 2022. 

As reflected on the Supplemental Schedule, included in our reported results were unrealized after-tax losses of $23.0 million, or $.33 per diluted share, ($30.1 million pre-tax) during the first nine months of 2023 and $12.4 million, or $.17 per diluted share, ($16.1 million pre-tax) during the first nine months of 2022. These unrealized losses, which are included in "Other (income) expense, net", resulted from decreases in the market value of certain equity securities. 

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA net of NCI"), was $1.237 billion during the first nine months of 2023, as compared to $1.175 billion during the first nine months of 2022. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, was $1.268 billion during the first nine months of 2023, as compared to $1.190 billion during the comparable period of 2022.

Acute Care Services – Three and nine-month periods ended September 30, 2023 and 2022:

During the third quarter of 2023, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased by 6.8% while adjusted patient days increased by 3.8%, as compared to the third quarter of 2022. At these facilities, during the third quarter of 2023, net revenue per adjusted admission increased by 0.4% while net revenue per adjusted patient day increased by 3.3%, as compared to the third quarter of 2022. Net revenues generated from our acute care services, on a same facility basis, increased by 7.5% during the third quarter of 2023, as compared to the third quarter of 2022.

 During the nine-month period ended September 30, 2023, at our acute care hospitals on a same facility basis, adjusted admissions increased by 8.3% while adjusted patient days increased by 4.8%, as compared to the first nine months of 2022. At these facilities, during the first nine months of 2023, net revenue per adjusted admission decreased by 2.0% while net revenue per adjusted patient day increased by 1.3%, as compared to the first nine months of 2022. Net revenues generated from our acute care services, on a same facility basis, increased by 6.9% during the first nine months of 2023, as compared to the comparable period of 2022.

Behavioral Health Care Services – Three and nine-month periods ended September 30, 2023 and 2022:

During the third quarter of 2023, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 0.8% while adjusted patient days increased by 1.1%, as compared to the third quarter of 2022. At these facilities, during the third quarter of 2023, net revenue per adjusted admission increased by 6.8% and net revenue per adjusted patient day increased by 6.5%, as compared to the third quarter of 2022. Net revenues generated from our behavioral health care services, on a same facility basis, increased by 7.6% during the third quarter of 2023, as compared to the third quarter of 2022.

During the nine-month period ended September 30, 2023, at our behavioral health care facilities on a same facility basis, adjusted admissions increased by 3.8% while adjusted patient days increased by 2.4%, as compared to the first nine months of 2022. At these facilities, during the first nine months of 2023, net revenue per adjusted admission increased by 4.4% and net revenue per adjusted patient day increased by 5.9%, as compared to the first nine months of 2022. Net revenues generated from our behavioral health care services, on a same facility basis, increased by 8.3% during the first nine months of 2023, as compared to the comparable period of 2022.

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

During the nine-month period ended September 30, 2023, our net cash provided by operating activities was $815 million as compared to $699 million during the first nine months of 2022. Included in the $117 million net increase in our net cash provided by operating activities was a favorable change of $109 million in other working capital accounts due primarily to the timing of disbursements for accrued compensation and accounts payable.

Liquidity:

As of September 30, 2023, we had $721 million of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility, net of outstanding borrowings and letters of credit.       

Stock Repurchase Program:

As of December 31, 2022, we had an aggregate remaining repurchase authorization of approximately $947 million pursuant to our stock repurchase program. Pursuant to the terms of our stock repurchase program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. 

During the third quarter of 2023, we have repurchased 1.32 million shares at an aggregate cost of approximately $175.1 million (approximately $133 per share) pursuant to the program. During the first nine months of 2023, we have repurchased approximately 2.73 million shares at an aggregate cost of approximately $367.2 million (approximately $135 per share) pursuant to the program.

As of September 30, 2023, we had an aggregate available repurchase authorization of approximately $580 million. 

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on October 26, 2023.  A live webcast of the call will be available on our website at www.uhs.com. To participate via telephone, please register in advance at this link. 

Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the call will be available for one full year following the live call.

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

One of the nation's largest and most respected providers of hospital and healthcare services, Universal Health Services, Inc. has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues during 2022 were approximately $13.4 billion. UHS ranked #311 on the Fortune 500; and #434 on Forbes' list of America's Largest Public Companies. UHS was again recognized as one of the World's Most Admired Companies by Fortune.  

Our operating philosophy is as effective today as it was upon the Company's founding in 1979, enabling us to provide compassionate care to our patients and their loved ones.  Our strategy includes building or acquiring high quality hospitals in rapidly growing markets, investing in the people and equipment needed to allow each facility to thrive, and becoming the leading healthcare provider in each community we serve.

Headquartered in King of Prussia, PA, UHS has approximately 93,800 employees and, through its subsidiaries, operates 27 inpatient acute care hospitals, 331 inpatient behavioral health facilities, 43 outpatient facilities and ambulatory care access points, an insurance offering, a physician network and various related services located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information visit www.uhs.com.

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to the potential impact of COVID-19 on our operations and financial results, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 2-Forward Looking Statements and Risk Factors in our Form 10-Q for the quarter ended June 30, 2023 and in Item 1A-Risk Factors, and Item 7-Forward-Looking Statements and Risk Factors, in our Form 10-K for the year ended December 31, 2022), 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, but not limited to:

• The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher‑cost temporary labor and pay premiums above standard compensation for essential workers. These factors, which had a material unfavorable impact on our results of operations during 2022, could continue to have an unfavorable material impact on our results of operations for the foreseeable future.
• The impact of the COVID-19 pandemic, which began in March, 2020, has had a material effect on our operations and financial results, at various times, since that time. We cannot predict if there will be future disruptions caused by the COVID‑19 pandemic.
• A significant portion of our revenues are derived from federal and state government programs including the Medicare and Medicaid programs. Payments from these programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review, and federal and state funding restrictions. Changes to these programs, if adopted, could materially affect program payments which could materially impact our results of operations.
• The increase in interest rates has substantially increased our borrowings costs and reduced our ability to access the capital markets on favorable terms. Additional increases in interest rates could have a significant unfavorable impact on our future results of operations and the resulting effect on the capital markets could adversely affect our ability to carry out our strategy.

We believe that adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share, EBITDA net of NCI and Adjusted EBITDA net of NCI, which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect of material items impacting our net income attributable to UHS, such as, changes in the market value of shares of certain equity securities and other potential material items that are nonrecurring or non-operational in nature including, but not limited to, impairments of goodwill, long-lived and intangible assets, reserves for various matters including settlements, legal judgments and lawsuits, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, potential impacts of non-ordinary acquisitions, divestitures, joint ventures or other strategic transactions, and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income attributable to UHS, as determined in accordance with GAAP, and as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-Q for the quarter ended June 30, 2023 and our Report on Form 10-K for the year ended December 31, 2022. 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.