KING OF
PRUSSIA, Pa., June 30,
2022 /PRNewswire/ -- Universal Health Services, Inc.
(NYSE: UHS) announced today that, due to a significant shortfall in
operating results experienced during April and May of 2022, as
compared to the comparable periods included in our previously
provided annual operating results forecast, we are revising our
forecast for the year ended December 31,
2022.
Based upon our consolidated results of operations for April and
May of 2022, we estimate that our adjusted net income attributable
to UHS will approximate $2.05 to
$2.15 per diluted share for the
three-month period ended June 30,
2022. The lower than expected earnings projected for the
second quarter of 2022 was due primarily to lower than expected
patient volumes, revenues and income generated at our acute care
hospitals. During April and May of 2022, our acute care hospitals
experienced a significant decline in COVID-related patients, as
compared to the first quarter of 2022. The decrease in
COVID-related patient volumes during the second quarter of 2022 was
not offset by an equivalent increase in non-COVID-related patients
resulting in significant shortfalls in revenues and earnings as
compared to our original forecasts for that period. Although the
decreased patient volumes at our acute care hospitals has relieved
some of the staffing shortages and related cost escalations
previously experienced at those facilities, recovery from the
effects of the labor pressures has been occurring at a somewhat
slower pace than expected. During April and May of 2022,
patient volumes, revenues and income generated at our behavioral
health care facilities were also below our expectations. However,
the shortfalls from internal expectations experienced within our
behavioral health segment were relatively consistent with those
experienced during the first quarter of
2022.
In the announcement of our financial results for the first
quarter of 2022 (as released on April 25,
2022), we indicated that, given the continued uncertainties
related to the COVID-19 pandemic, as well as the healthcare
staffing shortage and its unfavorable impact on our labor costs and
behavioral health patient volumes, we may make reductions to our
2022 full year operating results forecast at a future date if the
unfavorable operating trends experienced during the first quarter
of 2022 did not improve. Based upon the operating trends and
financial results experienced during April and May of 2022, as
discussed above, along with our financial results for the first
quarter of 2022, we are decreasing our guidance ranges for the year
ended December 31, 2022 for each of
the following: (i) net revenues; (ii) 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; (iii) adjusted net
income attributable to UHS per diluted share ("Adjusted
EPS-diluted").
The tables below include our revised 2022 operating results
forecasts for the year ended December 31,
2022, as well as our original 2022 operating results
forecast which was previously disclosed on February 24, 2022.
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Revised
Forecast
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Original
Forecast
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For the Year
Ended
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For the Year
Ended
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December 31,
2022
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December 31,
2022
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Low
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High
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Low
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High
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Net revenues
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$13.235
billion
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$13.371
billion
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$13.424
billion
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$13.694
billion
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Adjusted EBITDA, net of
NCI
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$1.635
billion
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$1.712
billion
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$1.830
billion
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$1.927
billion
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Adjusted EPS -
diluted
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$9.60 per
share
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$10.40 per
share
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$11.90 per
share
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$12.90 per
share
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- Our revised 2022 forecasted net revenues are estimated to be
approximately $13.235 billion to
$13.371 billion, representing
decreases of 1.4% to 2.4% as compared to our original 2022
forecasted net revenues.
- Our revised 2022 forecasted Adjusted EBITDA, net of NCI, is
estimated to be approximately $1.635
billion to $1.712 billion,
representing decreases of 10.7% to 11.2% as compared to our
original 2022 forecasted Adjusted EBITDA, net of NCI.
- Our revised 2022 forecasted Adjusted EPS-diluted is estimated
to be $9.60 per share to $10.40 per share, representing decreases of 19.3%
as compared to our original 2022 forecasted Adjusted
EPS-diluted.
Our revised operating results forecast for the balance of 2022
assumes that staffing vacancies and the corresponding premium pay
expenditures will continue to sequentially decline in the second
half of the year and that non-COVID patient volumes will
incrementally improve, although both at a slower pace than our
original forecast anticipated. We believe these assumptions will be
bolstered by our continuing recruitment and retention initiatives,
by changes to our historical patient care models, by other cost
cutting measures and by aggressive contractual negotiations and
renegotiations with our managed care payers. In addition,
during the second half of 2022, we also expect sequential
improvement in startup losses incurred during the first half of
2022 at newly constructed and recently opened acute care and
behavioral health hospitals. Included in our revised
operating results forecast for the year ended December 31, 2022, as compared to the original
forecast, is a $28 million increase
in depreciation and amortization expense which includes additional
depreciation expense expected to be incurred at one of our acute
care hospitals located in California on which a major renovation project
has commenced. The renovation plans for this facility, which
includes construction of a new seven-story tower, requires
demolition of a significant portion of the existing building over
the next few years.
Adjusted EPS-diluted and Adjusted EBITDA net of NCI, are
non-GAAP financial measures and should be examined in connection
with net income determined in accordance with GAAP as presented in
the consolidated financial statements and notes thereto included in
our filings with the Securities and Exchange Commission including
our Report on Form 10-Q for the quarter ended March 31, 2022 and our Report on Form 10-K for
the year ended December 31, 2021.
Please see the schedule of Supplemental Non-GAAP Disclosures -
2022 Revised Operating Results Forecast, as included herein for
additional information and a reconciliation to the financial
forecasts as computed in accordance with GAAP.
In addition, the 2022 revised 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 marketable 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, potential impairments of goodwill and 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 included 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, including the
likelihood that our future operations and financial results may
continue to be materially impacted by developments related to
COVID-19 and labor pressures caused by the nationwide shortage of
nurses and other clinical staff and support personnel, as discussed
herein.
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 2021 were approximately
$12.6 billion. In 2022, UHS was again
recognized as one of the World's Most Admired Companies by
Fortune; ranked #297 on the Fortune 500; and in 2021, ranked
#307 on Forbes' list of America's Largest Public
Companies.
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 over 89,000 employees and through its
subsidiaries operates 28 acute care hospitals, 336 behavioral
health facilities, 41 outpatient facilities and ambulatory care
access points, an insurance offering, a physician network and
various related services located in 39 U.S. states, Washington, D.C., Puerto Rico and the United Kingdom. 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 anticipated 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 March 31, 2022
and 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,
2021), 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 the
impact of the COVID-19 pandemic. Our future operations and
financial results will likely be materially impacted by
developments related to COVID-19 including, but not limited to, the
potential impact on future COVID-19 patient volumes resulting from
new variants of the virus, the length of time and severity of the
spread of the pandemic; the volume of cancelled or rescheduled
elective procedures and the volume of COVID-19 patients treated at
our hospitals and other healthcare facilities; measures we are
taking to respond to the COVID-19 pandemic; the impact of
government and administrative regulation and stimulus on the
hospital industry and potential retrospective adjustment in future
periods of CARES Act and other grant income revenues recorded as
revenues in prior periods; declining patient volumes and
unfavorable changes in payer mix caused by deteriorating
macroeconomic conditions (including increases in uninsured and
underinsured patients as the result of business closings and
layoffs); potential disruptions to our clinical staffing and
shortages and disruptions related to supplies required for our
employees and patients; potential increases to expenses and other
costs related to staffing, supply chain, construction and medical
equipment costs and other expenditures resulting from inflation;
the impact of our substantial indebtedness and the ability to
refinance such indebtedness on acceptable terms, as well as risks
associated with disruptions in the financial markets and the
business of financial institutions as the result of the COVID-19
pandemic which could impact us from a financing perspective; and
changes in general economic conditions nationally and regionally in
our markets resulting from the COVID-19 pandemic. We are not able
to fully quantify the impact that these factors will have on our
future financial results, but developments related to the COVID-19
pandemic could continue to materially affect our financial
performance during 2022.
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 and 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, 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,
2022 and our Report on Form 10-K for the year ended
December 31, 2021. 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.
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Supplemental Non-GAAP Disclosures
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2022 Revised Operating Results
Forecast
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(in thousands, except
per share amounts)
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Forecast for the Year Ending December 31,
2022
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% Net
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% Net
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Low
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revenues
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High
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revenues
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Net revenues
(a)
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$13,235,000
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$13,371,000
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Adjusted net income
attributable to UHS (a) (b)
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$701,705
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$760,204
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Depreciation and
amortization
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590,483
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590,483
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Interest
expense
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129,472
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129,472
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Other (income)
expense, net
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(5,210)
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(5,210)
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Provision for
income taxes
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218,261
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236,593
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Adjusted EBITDA net of
NCI (a) (c)
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$1,634,711
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12.4 %
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$1,711,542
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12.8 %
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Adjusted net income
attributable to UHS, per diluted share (a) (b)
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$9.60
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$10.40
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Shares used in
computing diluted earnings per share
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72,972
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72,972
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(a) The impact of the
COVID-19 pandemic, which began during the second half of March,
2020, has had a material unfavorable effect on our operations and
financial results. The extent to which the COVID-19 pandemic and
measures taken in response thereto impact our business, results of
operations and financial condition will depend on numerous factors
and future developments, most of which are beyond our control or
ability to predict. The nationwide shortage of nurses and other
clinical staff and support personnel has also been a significant
operating issue facing us and other healthcare providers. The
ultimate impact of the COVID-19 pandemic and the healthcare
staffing shortage is highly uncertain and subject to change. We are
not able to fully quantify the impact that these factors will have
on our future financial results, but expect developments related to
the COVID-19 pandemic and the staffing shortage to materially
affect our financial performance in 2022 and may cause our 2022
actual operating results to differ materially from our 2022
operating results forecast.
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(b) Adjusted net income
attributable to UHS/per diluted share are non-GAAP financial
measures. The 2022 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, potential impairment of goodwill and 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 in General Information, Forward-Looking
Statements and Risk Factors and Non-GAAP Financial
Measures.
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(c) Adjusted EBITDA net
of NCI is a non-GAAP financial measure. To obtain a complete
understanding of our financial performance, Adjusted EBITDA net of
NCI should be examined in connection with net income determined in
accordance with GAAP as presented in the consolidated financial
statements and notes thereto in our filings with the Securities and
Exchange Commission including our Report on Form 10-Q for the
quarter ended March 31, 2022 and our Report on Form 10-K for the
year ended December 31, 2021.
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SOURCE Universal Health Services, Inc.