KING OF PRUSSIA, Pa., Feb. 24 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. announced today its results for the fourth quarter and full year ended December 31, 2004. Reported net income was $37.2 million or $.61 per diluted share during the fourth quarter of 2004, as compared to $46.5 million or $.75 per diluted share during the fourth quarter of 2003. For the full year of 2004, reported net income was $169.5 million or $2.75 per diluted share as compared to $199.3 million or $3.20 per diluted share during 2003. Net revenues were $995 million and $887 million during the three-month periods ended December 31, 2004 and 2003, respectively, and $3.94 billion and $3.39 billion during the twelve-month periods ended December 31, 2004 and 2003, respectively.
Reported income from continuing operations was $38.1 million or $.62 per diluted share during the fourth quarter of 2004 as compared to $45.2 million or $.73 per diluted share during the fourth quarter of 2003. Income from continuing operations was $170.0 million or $2.76 per diluted share during the year ended December 31, 2004 as compared to $192.1 million or $3.09 per diluted share during the prior year.
Excluding the impact of a cumulative reduction to current and prior year’s compensation expense resulting from the reversal of expense related to restricted shares granted to our Chief Executive Officer that were contingent on an earnings threshold which was not achieved, our adjusted income from continuing operations was $30.7 million or $.51 per diluted share during the three-month period ended December 31, 2004. Adjusted income from continuing operations was $162.3 million or $2.65 per diluted share during the year ended December 31, 2004 (as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Income Statement Information).
At our acute care hospitals owned during both periods located in the U.S., net revenues increased 2.6% during the fourth quarter of 2004, as compared to the comparable prior year quarter, due primarily to a 3.3% increase in revenue per adjusted patient day. Admissions to these facilities decreased .5% and patient days decreased 1.8% during the fourth quarter of 2004, as compared to the prior year quarter. At our behavioral health hospitals owned in both periods, admissions increased 2.0%, patient days increased 7.4%, net revenues increased 5.1% and revenue per adjusted patient day increased .5% during the fourth quarter of 2004, as compared to the prior year quarter.
Our adjusted operating margin (as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Income Statement Information), decreased to 12.3% during the three-month period ended December 31, 2004 as compared to 15.2% during the same period of the prior year. The operating margin at our acute care hospitals located in the U.S. owned during both periods (“same facility basis”) decreased to 13.9% during the three months ended December 31, 2004 as compared to 14.8% during the three months ended December 31, 2003. Also contributing to the decrease in our consolidated operating margin during the fourth quarter of 2004, as compared to the comparable prior year quarter, was a much lower operating margin experienced at an acute care facility purchased during the first quarter of 2004 and a newly constructed acute care facility which opened during the third quarter of 2004. On a same facility basis, the operating margin at our behavioral health hospitals decreased to 19.3% during the fourth quarter of 2004 from 25.4% during the comparable quarter of the prior year. Favorably impacting the operating margin at our behavioral health hospitals during the fourth quarter of 2003 was the reversal of $4 million of previously established bad debt reserves which were reversed as a result of a certain payor’s emergence from Chapter 11 bankruptcy protection.
The provision for doubtful accounts was 7.0% of net revenues during the fourth quarter of 2004 as compared to 8.0% during the prior year’s fourth quarter. The decrease resulted primarily from an increase in balances classified as charity care as a result of implementation of an indigent discount policy.
We will hold a conference call for investors and analysts at 9:00 a.m. Eastern Time on February 25, 2005. 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 February 25, 2005 and will continue through midnight on March 4, 2005. The recording can be accessed by calling 1-800-642-1687 and entering the conference ID number 3720717.
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/).
Universal Health Services, Inc. is one of the nation’s largest hospital companies, operating acute care and behavioral health hospitals and ambulatory centers nationwide, in Puerto Rico and in France. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust . 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 related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in “Forward-Looking Statements and Risk Factors” on pages 17 and 18 of our Form 10-Q for the quarterly period ended September 30, 2004), 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 operating income and adjusted operating margin, which are non-GAAP financial measures (“GAAP” is Generally Accepted Accounting Principles), are helpful to our investors as measures of our operating performance. In addition, we believe that comparing and discussing our financial results based on adjusted income from continuing operations, 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 such as reversal of previously recorded stock grant amortization, property write- downs, gains on sales of assets and businesses or other amounts reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance, operating income, operating margin and adjusted income from continuing operations should be examined in connection with net income, determined in accordance with accounting principles generally accepted in the United States of America, 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, 2003. Since the items included or excluded from operating income, operating margin and adjusted income from continuing operations are significant components in understanding and assessing financial performance under accounting principles generally accepted in the United States of America, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since operating income, operating margin and adjusted income from continuing operations are not measurements determined in accordance with accounting principles generally accepted in the United States of America and are thus susceptible to varying calculations, these measures as presented may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance. Below are schedules of Non-GAAP Supplemental Consolidated Income Statement Information which reconcile operating income and adjusted income from continuing operations to net income for the periods presented.
Universal Health Services, Inc. Consolidated Statements of Income (in thousands, except per share amounts) (unaudited) Three months Twelve months ended December 31, ended December 31, 2004 2003 2004 2003 Net revenues $994,836 $887,286 $3,938,320 $3,391,506 Operating charges: Salaries, wages and benefits 404,865 356,524 1,607,103 1,355,047 Other operating expenses 239,068 202,532 916,542 778,656 Supplies expense 147,589 122,547 546,801 449,225 Provision for doubtful accounts 69,169 70,945 307,163 252,644 Depreciation and amortization 40,085 34,956 155,514 130,039 Lease and rental expense 17,962 15,195 70,433 59,479 918,738 802,699 3,603,556 3,025,090 Income before interest expense, minority interests and income taxes 76,098 84,587 334,764 366,416 Interest expense, net 10,930 9,915 43,405 37,855 Minority interests in earnings of consolidated entities 3,316 2,221 20,216 22,265 Income before income taxes 61,852 72,451 271,143 306,296 Provision for income taxes 23,733 27,204 101,137 114,217 Income from continuing operations 38,119 45,247 170,006 192,079 Income (loss) from discontinued operations, net of income tax expense (a) (945) 1,221 (514) 7,190 Net income $37,174 $46,468 $169,492 $199,269 Basic earnings (loss) per share: (b) From continuing operations $0.66 $0.79 $2.95 $3.33 From discontinued operations ($0.02) $0.02 ($0.01) $0.12 Total basic earnings per share $0.64 $0.81 $2.94 $3.45 Diluted earnings (loss) per share: (b) From continuing operations $0.62 $0.73 $2.76 $3.09 From discontinued operations ($0.01) $0.02 ($0.01) $0.11 Total diluted earnings per share $0.61 $0.75 $2.75 $3.20 Universal Health Services, Inc. Footnotes to Consolidated Statements of Income Three months Twelve months ended December 31, ended December 31, 2004 2003 2004 2003 (a) Calculation of income (loss) from discontinued operations, net of income tax: Income (loss) from operations ($1,458) $26 ($6,191) $1,655 Gains (losses), net (29) 6,786 5,382 14,623 Provision for asset impairment - (13,742) - (13,742) Recovery of provision for judgment/closure costs - 8,867 - 8,867 Income (loss) from discontinued operations, pre-tax (1,487) 1,937 (809) 11,403 Income tax (provision)/benefit 542 (716) 295 (4,213) Income (loss) from discontinued operations, net of income tax expense ($945) $1,221 ($514) $7,190 (b) Earnings per share calculation: Basic: Income from continuing operations $38,119 $45,247 $170,006 $192,079 Less: Dividends on unvested restricted stock, net of taxes (27) (28) (111) (28) Income from continuing operations - basic $38,092 $45,219 $169,895 $192,051 Income (loss) from discontinued operations (945) 1,221 (514) 7,190 Net income - basic $37,147 $46,440 $169,381 $199,241 Weighted average number of common shares - basic 57,635 57,466 57,653 57,688 Basic earnings (loss) per share: From continuing operations $0.66 $0.79 $2.95 $3.33 From discontinued operations ($0.02) $0.02 ($0.01) $0.12 Total basic earnings per share $0.64 $0.81 $2.94 $3.45 Diluted: Income from continuing operations $38,119 $45,247 $170,006 $192,079 Less: Dividends on unvested restricted stock, net of taxes (27) (28) (111) (28) Add: Debenture interest, net of taxes 2,334 2,222 9,240 8,799 Income from continuing operations - diluted $40,426 $47,441 $179,135 $200,850 Income (loss) from discontinued operations (945) 1,221 (514) 7,190 Net income - diluted $39,481 $48,662 $178,621 $208,040 Weighted average number of common shares 57,635 57,466 57,653 57,688 Add: Shares for conversion of convertible debentures 6,577 6,577 6,577 6,577 Other share equivalents 280 935 635 824 Weighted average number of common shares and equiv. - diluted 64,492 64,978 64,865 65,089 Diluted earnings (loss) per share: From continuing operations $0.62 $0.73 $2.76 $3.09 From discontinued operations ($0.01) $0.02 ($0.01) $0.11 Total diluted earnings per share $0.61 $0.75 $2.75 $3.20 Universal Health Services, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) December 31, December 31, 2004 2003 Assets: Cash and cash equivalents $33,125 $34,863 Accounts receivable, net 552,538 503,929 Other current assets 90,392 106,999 Property, plant and equipment, net 1,448,066 1,304,341 Other assets 765,852 822,598 Assets held for sale 132,870 - Total Assets $3,022,843 $2,772,730 Liabilities and Stockholders’ Equity: Current portion of long-term debt $16,968 $10,871 Liabilities held for sale 14,720 - Other current liabilities 437,968 384,882 Other noncurrent liabilities 243,617 216,094 Long-term debt 852,229 868,566 Deferred income taxes 50,212 41,841 Minority interest 186,543 159,554 Stockholders’ equity 1,220,586 1,090,922 Total Liabilities and Stockholders’ Equity $3,022,843 $2,772,730 Universal Health Services, Inc. Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information For the Three Months Ended December 31, 2004 and 2003 (in thousands) (unaudited) Three months ended Three months ended December 31, 2004 December 31, 2003 Net revenues $994,836 100.0% $887,286 100.0% Operating charges: Salaries, wages and benefits 404,865 40.7% 356,524 40.2% Other operating expenses 239,068 24.0% 202,532 22.8% Supplies expense 147,589 14.8% 122,547 13.8% Provision for doubtful accounts 69,169 7.0% 70,945 8.0% 860,691 86.5% 752,548 84.8% Operating income/margin 134,145 13.5% 134,738 15.2% Lease and rental expense 17,962 15,195 Minority interests in earnings of consolidated entities 3,316 2,221 Earnings before depreciation and amortization, interest expense, and income taxes (“EBITDA”) 112,867 117,322 Depreciation and amortization 40,085 34,956 Interest expense, net 10,930 9,915 Income before income taxes 61,852 72,451 Provision for income taxes 23,733 27,204 Income from continuing operations 38,119 45,247 Income (loss) from discontinued operations, net of income taxes (945) 1,221 Net income $37,174 $46,468 Three months ended Three months ended December 31, 2004 December 31, 2003 Per Per Calculation of Adjusted Income from Diluted Diluted Continuing Operations Amount Share Amount Share Income from continuing operations $38,119 $0.62 $45,247 $0.73 Less: After-tax reversal of previously recorded stock grant amortization expense (7,394) ($0.11) - - Adjusted income from continuing operations $30,725 $0.51 $45,247 $0.73 Calculation of Adjusted Operating Income/Margin Amount Margin Amount Margin Operating income/margin $134,145 13.5% $134,738 15.2% Less: Pre-tax reversal of previously recorded stock grant amortization expense (11,632) (1.2%) - - Adjusted operating income/margin $122,513 12.3% $134,738 15.2% Universal Health Services, Inc. Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information For the Twelve Months Ended December 31, 2004 and 2003 (in thousands) (unaudited) Twelve months ended Twelve months ended December 31, 2004 December 31, 2003 Net revenues $3,938,320 100.0% $3,391,506 100.0% Operating charges: Salaries, wages and benefits 1,607,103 40.8% 1,355,047 40.0% Other operating expenses 916,542 23.3% 778,656 23.0% Supplies expense 546,801 13.9% 449,225 13.2% Provision for doubtful accounts 307,163 7.8% 252,644 7.4% 3,377,609 85.8% 2,835,572 83.6% Operating income/margin 560,711 14.2% 555,934 16.4% Lease and rental expense 70,433 59,479 Minority interests in earnings of consolidated entities 20,216 22,265 Earnings before depreciation and amortization, interest expense, and income taxes (“EBITDA”) 470,062 474,190 Depreciation and amortization 155,514 130,039 Interest expense, net 43,405 37,855 Income before income taxes 271,143 306,296 Provision for income taxes 101,137 114,217 Income from continuing operations 170,006 192,079 Income (loss) from discontinued operations, net of income taxes (514) 7,190 Net income $169,492 $199,269 Twelve months Twelve months ended ended December 31, 2004 December 31, 2003 Per Per Calculation of Adjusted Income from Diluted Diluted Continuing Operations Amount Share Amount Share Income from continuing operations $170,006 $2.76 $192,079 $3.09 Less: After-tax DSH revenue attributable to prior year (1,748) ($0.02) - - Add: After-tax hurricane property damage 1,474 $0.02 - - Less: After-tax reversal of previously recorded stock grant amortization expense (7,394) ($0.11) - - Adjusted income from continuing operations $162,338 $2.65 $192,079 $3.09 Calculation of Adjusted Operating Income/Margin Amount Margin Amount Margin Operating income/margin $560,711 14.2% $555,934 16.4% Less: Pre-tax reversal of previously recorded stock grant amortization expense (11,632) (0.3%) - - Adjusted operating income/margin $549,079 13.9% $555,934 16.4% Universal Health Services, Inc. Supplemental Statistical Information (un-audited) % Change % Change Quarter Ended 12 mos. ended Same Facility: 12/31/2004 12/31/2004 Acute Care Hospitals Revenues 2.6% 3.1% Adjusted Admissions 0.9% 0.3% Adjusted Patient Days -0.7% -0.4% Revenue Per Adjusted Admission 1.7% 2.8% Revenue Per Adjusted Patient Day 3.3% 3.4% Behavioral Health Hospitals Revenues 7.3% 7.9% Adjusted Admissions 1.5% 5.4% Adjusted Patient Days 6.8% 6.3% Revenue Per Adjusted Admission 5.7% 2.4% Revenue Per Adjusted Patient Day 0.5% 1.5% UHS Consolidated Fourth Quarter Ended Twelve months Ended 12/31/2004 12/31/2003 12/31/2004 12/31/2003 Revenues $994,836 $887,286 $3,938,320 $3,391,506 EBITDA (1) 112,867 117,322 470,062 474,190 EBITDA Margin (1) 11.3% 13.2% 11.9% 14.0% Cash Flow From Operations 81,015 63,373 394,529 376,775 Days Sales Outstanding 51 52 51 54 Capital Expenditures 54,658 57,140 231,987 224,370 Debt (net of cash) - - 836,072 $844,574 Shareholders Equity - - 1,220,586 $1,090,922 Debt / Total Capitalization - - 40.7% 43.6% Debt / EBITDA - - 1.78 1.78 Debt / Cash From Operations - - 2.12 2.24 Acute Care EBITDAR Margin (2) 12.5% 15.3% 14.7% 18.1% Behavioral Health EBITDAR Margin (2) 19.0% 25.4% 22.3% 23.5% (1) Net of Minority Interest (2) Before Corporate overhead allocation and minority interest UNIVERSAL HEALTH SERVICES, INC. SELECTED HOSPITAL STATISTICS DECEMBER 31, 2004 AS REPORTED: FOR THE THREE MONTHS ENDED ACUTE (1) (2) 12/31/04 12/31/03 % Hospitals owned and leased 25 25 0.0% Average licensed beds 5,602 4,998 12.1% Patient days 284,920 260,778 9.3% Average daily census 3,097.0 2,834.5 9.3% Occupancy-licensed beds 55.3% 56.7% -2.5% Admissions 63,218 57,795 9.4% Length of stay 4.5 4.5 -0.1% Inpatient revenue $1,692,754 $1,453,424 16.5% Outpatient revenue 648,448 512,535 26.5% Total patient revenue 2,341,202 1,965,959 19.1% Other revenue 8,274 8,261 0.2% Gross hospital revenue 2,349,476 1,974,220 19.0% Total deductions 1,629,805 1,339,457 21.7% Net hospital revenue $719,671 $634,763 13.4% BEHAVIORAL HEALTH 12/31/04 12/31/03 % Hospitals owned and leased 44 39 12.8% Average licensed beds 4,386 3,902 12.4% Patient days 320,753 265,733 20.7% Average daily census 3,486.4 2,888.4 20.7% Occupancy-licensed beds 79.5% 74.0% 7.4% Admissions 22,896 21,756 5.2% Length of stay 14.0 12.2 14.7% Inpatient revenue $318,264 $274,269 16.0% Outpatient revenue 45,538 40,600 12.2% Total patient revenue 363,802 314,869 15.5% Other revenue 7,482 7,432 0.7% Gross hospital revenue 371,284 322,301 15.2% Total deductions 192,938 167,501 15.2% Net hospital revenue $178,346 $154,800 15.2% SAME FACILITY: FOR THE THREE MONTHS ENDED ACUTE (1) (3) BEHAVIORAL HEALTH (4) 12/31/04 12/31/03 % 12/31/04 12/31/03 % Hospitals owned and leased 25 25 0.0% 39 39 0.0% Average licensed beds 4,894 4,998 -2.1% 3,980 3,902 2.0% Patient days 255,990 260,778 -1.8% 285,494 265,733 7.4% Average daily census 2,782.5 2,834.5 -1.8% 3,103.2 2,888.2 7.4% Occupancy-licensed beds 56.9% 56.7% 0.3% 78.0% 74.0% 5.3% Admissions 57,488 57,795 -0.5% 22,195 21,756 2.0% Length of stay 4.5 4.5 -1.3% 12.9 12.2 5.3% (1) Does not include hospitals located in France (2) Does not include discontinued operations (3) Does not include discontinued operations, Corona, Methodist/Lakeland or Lakewood Ranch in current or prior years. Spring Valley is included in the current and prior year from October 1st through year end. (4) Stonington is excluded in both current and prior years from April 1 through year end and the four facilities purchased from Keystone are excluded in both years from May 1 through year end. UNIVERSAL HEALTH SERVICES, INC. SELECTED HOSPITAL STATISTICS DECEMBER 31, 2004 AS REPORTED: FOR THE TWELVE MONTHS ENDED ACUTE (1) (2) 12/31/04 12/31/03 % Hospitals owned and leased 25 25 0.0% Average licensed beds 5,645 4,792 17.8% Patient days 1,150,882 1,032,348 11.5% Average daily census 3,144.5 2,828.4 11.2% Occupancy-licensed beds 55.7% 59.0% -5.6% Admissions 251,655 227,932 10.4% Length of stay 4.6 4.5 1.0% Inpatient revenue $6,732,660 $5,658,490 19.0% Outpatient revenue 2,544,891 1,985,040 28.2% Total patient revenue 9,277,551 7,643,530 21.4% Other revenue 35,604 37,757 -5.7% Gross hospital revenue 9,313,155 7,681,287 21.2% Total deductions 6,415,436 5,181,737 23.8% Net hospital revenue $2,897,719 $2,499,550 15.9% BEHAVIORAL HEALTH 12/31/04 12/31/03 % Hospitals owned and leased 44 39 12.8% Average licensed beds 4,225 3,894 8.5% Patient days 1,234,152 1,067,200 15.6% Average daily census 3,372.0 2,923.8 15.3% Occupancy-licensed beds 79.8% 75.1% 6.3% Admissions 94,743 87,688 8.0% Length of stay 13.0 12.2 7.0% Inpatient revenue $1,238,131 $1,091,885 13.4% Outpatient revenue 177,360 156,115 13.6% Total patient revenue 1,415,491 1,248,000 13.4% Other revenue 32,849 33,345 -1.5% Gross hospital revenue 1,448,340 1,281,345 13.0% Total deductions 749,568 668,941 12.1% Net hospital revenue $698,772 $612,404 14.1% SAME FACILITY: FOR THE TWELVE MONTHS ENDED ACUTE (1) (3) 12/31/04 12/31/03 % Hospitals owned and leased 25 25 0.0% Average licensed beds 4,837 4,792 0.9% Patient days 1,018,249 1,032,348 -1.4% Average daily census 2,782.1 2,828.6 -1.6% Occupancy-licensed beds 57.5% 59.0% -2.6% Admissions 225,803 227,932 -0.9% Length of stay 4.5 4.5 -0.4% BEHAVIORAL HEALTH (4) 12/31/04 12/31/03 % Hospitals owned and leased 39 39 0.0% Average licensed beds 3,947 3,894 1.4% Patient days 1,138,297 1,067,200 6.7% Average daily census 3,110.1 2,923.8 6.4% Occupancy-licensed beds 78.8% 75.1% 4.9% Admissions 92,850 87,688 5.9% Length of stay 12.3 12.2 0.7% (1) Does not include hospitals located in France (2) Does not include discontinued operations (3) Does not include discontinued operations, Corona, Methodist/Lakeland or Lakewood Ranch in current or prior years. Spring Valley is included in the current and prior year from October 1st through year end. (4) Stonington is excluded in both current and prior years from April 1 through year end and the four facilities purchased from Keystone are excluded in both years from May 1 through year end.
Universal Health Services, Inc.
CONTACT: Steve Filton, Chief Financial Officer of Universal HealthServices, +1-610-768-3300
Web site: http://www.uhsinc.com/
Company News On-Call: http://www.prnewswire.com/comp/916225.html