Universal Health Services net revenues increase 2% to $1.83 billion in first quarter 2013

Published on April 26, 2013 at 3:42 AM · No Comments

Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $119.8 million, or $1.21 per diluted share, during the first quarter of 2013 as compared to $128.6 million, or $1.31 per diluted share, during the comparable quarter of 2012.  Net revenues increased 2% to $1.83 billion during the first quarter of 2013 as compared to $1.79 billion during the first quarter of 2012. 

Consolidated Results of Operations, As Adjusted – Three-month periods ended March 31, 2013 and 2012:
For the three-month period ended March 31, 2013, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule"), was $120.1 million, or $1.22 per diluted share, as compared to $110.7 million, or $1.13 per diluted share, during the first quarter of 2012.     

Included in our net income attributable to UHS during the first quarter of 2013 was an aggregate net unfavorable after-tax impact of $327,000 related to the incentive income and expenses recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals (as discussed below in Accounting for HITECH Act incentive income and EHR expenses). 

Included in our net income attributable to UHS during the three-month period ended March 31, 2012, was an aggregate net favorable after-tax impact of $17.9 million, or $.18 per diluted share, consisting of the following: (i) a favorable after-tax impact of $18.8 million, or $.19 per diluted share, resulting from an industry-wide settlement with the United States Department of Health and Human Services, the Secretary of Health and Human Services, and the Centers for Medicare and Medicaid Services, related to underpayments of Medicare inpatient prospective payments during a number of prior years;  (ii) a favorable after-tax impact of $4.3 million, or $.04 per diluted share, representing the 2011 portion of the net Medicaid supplemental reimbursements recorded pursuant to the Oklahoma Supplemental Hospital Offset Payment Program, and; (iii) an aggregate unfavorable after-tax impact of $5.1 million, or $.05 per diluted share, resulting from the revised Supplemental Security Income ratios utilized for calculating Medicare disproportionate share hospital reimbursements for federal fiscal years 2006 through 2009 ($2.4 million unfavorable after-tax impact), and the write-off of receivables related to revenues recorded during 2011 at two of our acute care hospitals located in Florida resulting from reductions in certain county reimbursements due to reductions in federal matching Inter-Governmental Transfer funds ($2.7 million unfavorable after-tax impact). 

Acute Care Services – Three-month periods ended March 31, 2013 and 2012:
During the first quarter of 2013, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased 1.5% and adjusted patient days increased 0.1%, as compared to the first quarter of 2012. Net revenues at these facilities increased 0.7% during the first quarter of 2013 as compared to the comparable quarter of 2012. At these facilities, net revenue per adjusted admission increased 2.2% while net revenue per adjusted patient day increased 0.6% during the first quarter of 2013 as compared to the first quarter of 2012. On a same facility basis, the operating margin at our acute care hospitals decreased to 16.0% during the first quarter of 2013 as compared to 19.0% during the first quarter of 2012. We define operating margin as net revenues less salaries, wages and benefits, other operating expenses and supplies expense (excluding the impact of the items mentioned above and excluding the EHR impact, as indicated on the Supplemental Schedule).

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 $230 million and $312 million during the three-month periods ended March 31, 2013 and 2012, respectively.  The decrease in charity care and uninsured discounts recorded at our acute care hospitals during the first quarter of 2013, as compared to the first quarter of 2012, was offset by an increase in the provision for doubtful accounts which amounted to $218 million during the first quarter of 2013 as compared to $125 million during the first quarter of 2012. 

Behavioral Health Care Services – Three-month periods ended March 31, 2013 and 2012:
During the first quarter of 2013, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 0.6% while adjusted patient days decreased 0.2%, as compared to the first quarter of 2012. Net revenues at these facilities increased 2.4% during the first quarter of 2013, as compared to the comparable quarter in 2012. At these facilities, net revenue per adjusted admission increased 1.8% while net revenue per adjusted patient day increased 2.6% during the first quarter of 2013 over the comparable quarter in 2012. The operating margin at our behavioral health care facilities owned during both periods increased to 28.4% during the first quarter of 2013, as compared to 26.8% during the first quarter of 2012. 

Accounting for HITECH Act incentive income and EHR expenses:
The health information technology provisions of the American Recovery and Reinvestment Act (referred to as the "HITECH Act") established criteria related to the "meaningful use" of electronic health records ("EHR") for acute care hospitals and established requirements for the Medicare and Medicaid EHR payment incentive programs.    

During 2011, we began implementing EHR applications at certain of our acute care hospitals and will continue to do so, on a hospital-by-hospital basis, until completion which is scheduled to occur by the end of June, 2013. As of March 31, 2013, EHR applications have been implemented at eighteen of our acute care hospitals. Our acute care hospitals are eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, assuming they meet the "meaningful use" criteria.  As of March 31, 2013, thirteen hospitals met the "meaningful use" criteria.

As reflected on the Supplemental Schedule, our consolidated results of operations for the three-month period ended March 31, 2013 includes the net unfavorable after-tax impact of $327,000 ($524,000 pre-tax) recorded in connection with the implementation of EHR applications. Included in the pre-tax charge incurred during the first quarter of 2013 was $4.7 million of EHR incentive income offset by $5.2 million of net expenses, which as indicated on the Supplemental Schedule, consisted primarily of depreciation and amortization expense.

Conference call information:
We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on April 26, 2013. 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.  A replay of the call will follow shortly after conclusion of the live call and will be available for one full year.

Source:

Universal Health Services, Inc.

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