UNIVERSAL HEALTH SERVICES, INC. ANNOUNCES 2024 SECOND QUARTER FINANCIAL RESULTS, INCREASES 2024 FULL YEAR OPERATING RESULTS FORECAST AND ANNOUNCES $1 BILLION INCREASE TO STOCK REPURCHASE PROGRAM AUTHORIZATION

Consolidated Results of Operations, As Reported and As Adjusted  – Three-month periods ended June 30, 2024 and 2023:

KING OF PRUSSIA, Pa., July 24, 2024 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $289.2 million, or $4.26 per diluted share, during the second quarter of 2024, as compared to $171.3 million, or $2.42 per diluted share, during the second quarter of 2023. Net revenues increased by 10.1% to $3.908 billion during the second quarter of 2024, as compared to $3.548 billion during the second quarter of 2023.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the second quarter of 2024 was $292.6 million, or $4.31 per diluted share, as compared to $179.4 million, or $2.53 per diluted share, during the second quarter of 2023. 

Included in our reported and adjusted net income attributable to UHS during the second quarter of 2024, were net incremental reimbursements (net of related provider taxes) aggregating to approximately $34.5 million, or $.38 per diluted share, recorded in connection with the following: (i) $18.8 million, or $.21 per diluted share, applicable to the period of January 1, 2024 through June 30, 2024, resulting from a recently expanded state directed payment program in Washington, and; (ii) $15.7 million, or $.17 per diluted share, applicable to the period of July 1, 2023 through June 30, 2024, resulting from additional net reimbursements from an existing supplemental Medicaid program in Idaho.

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2024 were: (i) an unrealized after-tax loss of $5.9 million, or $.09 per diluted share ($7.7 million pre-tax), resulting from a decrease in the market value of certain equity securities (included in "Other (income) expense, net"), and; (ii) a favorable after-tax impact of $2.5 million, or $.04 per diluted share, resulting from the tax benefit recorded in connection with employee share-based payments (pursuant to "ASU 2016-09", Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting).  Our reported results during the second quarter of 2023 included an unrealized after-tax loss of $8.1 million, or $.11 per diluted share, ($10.5 million pre-tax) resulting from a decrease 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 $573.2 million, or 14.7% of net revenues, during the second quarter of 2024, as compared to $419.3 million, or 11.8% of net revenues, during the second quarter of 2023. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, was $578.7 million, or 14.8% of net revenues, during the second quarter of 2024, as compared to $425.9 million, or 12.0% of net revenues, during the second quarter of 2023.

Consolidated Results of Operations, As Reported and As Adjusted  – Six-month periods ended June 30, 2024 and 2023:

Reported net income attributable to UHS was $551.0 million, or $8.08 per diluted share, during the first six months of 2024, as compared to $334.4 million, or $4.70 per diluted share, during the first six months 2023. Net revenues increased by 10.5% to $7.751 billion during the first six months of 2024, as compared to $7.016 billion during the comparable period of 2023.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the first six months of 2024 was $545.7 million, or $8.00 per diluted share, as compared to $346.9 million, or $4.87 per diluted share, during the comparable period of 2023. 

As reflected on the Supplemental Schedule, included in our reported results during the first six months of 2024 were: (i) an unrealized after-tax loss of $6.3 million, or $.09 per diluted share ($8.2 million pre-tax), resulting from a decrease in the market value of certain equity securities (included in "Other (income) expense, net"), and; (ii) a favorable after-tax impact of $11.6 million, or $.17 per diluted share, resulting from the tax benefit recorded in connection with ASU 2016-09.  Our reported results during the first six months of 2023 included an unrealized after-tax loss of $12.5 million, or $.17 per diluted share, ($16.3 million pre-tax) resulting from a decrease in the market value of certain equity securities.   

As calculated on the attached Supplemental Schedule, our EBITDA net of NCI, was $1.099 billion, or 14.2% of net revenues, during the first six months of 2024, as compared to $826.6 million, or 11.8% of net revenues, during the first six months of 2023. Our Adjusted EBITDA net of NCI, which excludes the impact of other (income) expense, net, was $1.104 billion, or 14.2% of net revenues, during the first six months of 2024, as compared to $846.9 million, or 12.1% of net revenues, during the comparable period of 2023.

Acute Care Services – Three and six-month periods ended June 30, 2024 and 2023:

During the second quarter of 2024, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased by 3.4% while adjusted patient days increased by 1.6%, as compared to the second quarter of 2023. At these facilities, during the second quarter of 2024, net revenue per adjusted admission increased by 3.5% while net revenue per adjusted patient day increased by 5.3%, as compared to the second quarter of 2023. Net revenues generated from our acute care services, on a same facility basis, increased by 6.6% during the second quarter of 2024, as compared to the second quarter of 2023.

 During the six-month period ended June 30, 2024, at our acute care hospitals on a same facility basis, adjusted admissions increased by 3.9% while adjusted patient days increased by 2.5%, as compared to the first six months of 2023. At these facilities, during the first six months of 2024, net revenue per adjusted admission increased by 4.0% while net revenue per adjusted patient day increased by 5.5%, as compared to the first six months of 2023. Net revenues generated from our acute care services, on a same facility basis, increased by 8.1% during the first six months of 2024, as compared to the comparable period of 2023.

Behavioral Health Care Services – Three and six-month periods ended June 30, 2024 and 2023:

During the second quarter of 2024, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased by 0.4% while adjusted patient days increased by 1.4%, as compared to the second quarter of 2023. At these facilities, during the second quarter of 2024, net revenue per adjusted admission increased by 11.2% and net revenue per adjusted patient day increased by 9.3%, as compared to the second quarter of 2023. Net revenues generated from our behavioral health care services, on a same facility basis, increased by 11.0% during the second quarter of 2024, as compared to the second quarter of 2023.

During the six-month period ended June 30, 2024, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased by 0.6% while adjusted patient days increased by 1.7%, as compared to the first six months of 2023. At these facilities, during the first six months of 2024, net revenue per adjusted admission increased by 11.2% and net revenue per adjusted patient day increased by 8.7%, as compared to the first six months of 2023. Net revenues generated from our behavioral health care services, on a same facility basis, increased by 10.7% during the first six months of 2024, as compared to the comparable period of 2023.

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

During the six-month period ended June 30, 2024, our net cash provided by operating activities was $1.076 billion as compared to $654 million during the first six months of 2023. The $422 million net increase in our net cash provided by operating activities consisted of: (i) a favorable change of $237 million resulting from an increase in net income plus/minus depreciation and amortization expense, stock-based compensation expense and gains on sales of assets and businesses; (ii) a favorable change of $148 million in accounts receivable; (iii) a favorable change of $60 million in accrued and deferred income taxes; (iv) an unfavorable change of $36 million in other assets and deferred charges, and; (v) $13 million of other combined net favorable changes.     

Liquidity:

As of June 30, 2024, we had $1.02 billion of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility, net of outstanding borrowings and letters of credit.       

Increased Authorization to Stock Repurchase Program:

On July 24, 2024, our Board of Directors authorized a $1.0 billion increase to our stock repurchase program. Pursuant to this program, which including today's increased authorization has a current aggregate available repurchase authorization of $1.228 billion, 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 second quarter of 2024, we have repurchased 373,000 shares at an aggregate cost of approximately $70.0 million (approximately $187 per share) pursuant to the program. During the first six months of 2024, we have repurchased 1.073 million shares at an aggregate cost of approximately $195.1 million (approximately $182 per share) pursuant to the program.

Revised 2024 Operating Results Forecasts:

Based upon the operating trends and financial results experienced during the first six months of 2024, as indicated on the Revised Forecast table below, we are increasing our operating results forecast range for consolidated net revenues; adjusted earnings before interest, taxes, depreciation & amortization, and the impacts of other income/expense and net income attributable to noncontrolling interests ("Adjusted EBITDA, net of NCI"), and adjusted net income attributable to UHS per diluted share ("Adjusted EPS-diluted") for the year ended December 31, 2024.

The tables below include our revised full year 2024 operating results forecasts as well as our original 2024 operating results forecast, which was previously disclosed on February 27, 2024.

• Our revised 2024 forecasted net revenues are estimated to be approximately $15.565 billion to $15.753 billion, representing increases of 1.0% to 0.3% over our original 2024 forecasted net revenues. 
• Our revised 2024 forecasted Adjusted EBITDA, net of NCI, is estimated to be approximately $2.154 billion to $2.226 billion, representing increases of 11.5% to 10.3% over our original 2024 forecasted Adjusted EBITDA, net of NCI.
• Our revised 2024 forecasted Adjusted EPS-diluted is estimated to be $15.40 per share to $16.20 per share, representing increases of 18.5% to 15.7% over our original 2024 forecasted Adjusted EPS-diluted. 

Our 2024 forecasted range of net income attributable to UHS, and EPS-diluted, exclude certain items as described below because we do not believe we can forecast those items with sufficient accuracy. Adjusted EBITDA net of NCI, is a non-GAAP financial measure and should not be considered a measure of financial performance under GAAP. We believe Adjusted EBITDA net of NCI is helpful to our investors as a measure of our operating performance. Please see the Supplemental Non-GAAP Disclosures - 2024 Revised Operating Results Forecast schedule as included herein for additional information and a reconciliation of our 2024 revised forecasted range of net income attributable to UHS to our 2024 revised forecasted range of Adjusted EBITDA net of NCI. 

The revised 2024 forecasted amounts exclude the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as pre-tax unrealized gains/losses resulting from changes in the market value of shares of certain equity securities, and other potential material items including, but not limited to, reserves for various matters including settlements, legal judgments and lawsuits, potential impacts of non-ordinary course acquisitions, divestitures, joint ventures or other strategic transactions, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, impairments of goodwill, long-lived and intangible assets, other amounts that may be reflected in the current financial statements that relate to prior periods, and the impact of share repurchases that differ from our forecasted assumptions. It is also subject to certain conditions including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 25, 2024.  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. (the "Company") has built an impressive record of achievement and performance. Growing steadily since our inception into an esteemed Fortune 500 corporation, our annual revenues during 2023 were $14.282 billion. UHS ranked #299 on the Fortune 500; and #399 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 96,700 employees and, through its subsidiaries, operates 27 inpatient acute care hospitals, 332 inpatient behavioral health facilities, 48 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 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 March 31, 2024 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, 2023), 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:  

• 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.
• The outcome of known and unknown litigation, liabilities and other claims asserted against us and/or our subsidiaries, including, but not limited to, the March 28, 2024, jury award (of compensatory damages of $60 million and punitive damages of $475 million) against The Pavilion Behavioral Health System (the "Pavilion), an indirect subsidiary of the Company, as previously disclosed on Form 8-K, as filed with the Securities and Exchange Commission on April 1, 2024. While the Pavilion has professional liability insurance to cover a portion of these amounts, the resolution of this matter may have a material adverse effect on the Company.

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, the impact of ASU 2016-09 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 March 31, 2024 and our Report on Form 10-K for the year ended December 31, 2023. 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.