Universal Health Services, Inc. Reports 2021 Third Quarter Financial Results

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KING OF PRUSSIA, Pa., Oct. 25, 2021 /PRNewswire/ — Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $218.4 million, or $2.60 per diluted share, during the third quarter of 2021, as compared to $241.3 million, or $2.82 per diluted share, during the third quarter of 2020. Net revenues increased 8.4% to $3.156 billion during the third quarter of 2021 as compared to $2.913 billion during the third quarter of 2020.

As reflected on the Schedule of Non-GAAP Supplemental Information (“Supplemental Schedule”), our adjusted net income attributable to UHS during the third quarter of 2021 was $224.1 million, or $2.67 per diluted share, as compared to $246.5 million, or $2.88 per diluted share, during the third quarter of 2020.

Included in our reported and adjusted net income attributable to UHS during the third quarter of last year were the following: (i) a favorable impact of approximately $21.4 million, or $0.25 per diluted share, resulting from $28 million of net revenues recorded in connection with the California Medicaid supplemental payment program related to our acute care hospitals (approximately $11 million of these supplemental revenues were attributable to the first nine months of 2020 and $17 million were attributable to prior years), and; (ii) an unfavorable impact of approximately $4.7 million, or $0.06 per diluted share, resulting from a reversal of approximately $5 million of previously recognized grant income revenues recorded in connection with various governmental stimulus programs, most notably the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

As reflected on the Supplemental Schedule, included in our reported results during the third quarter of 2021, was a net aggregate unfavorable after-tax impact of $5.8 million, or $.07 per diluted share, consisting primarily of the following: (i) an after-tax charge of $12.9 million, or $.15 per diluted share, ($16.8 million pre-tax which is included in “Other (income) expense, net”) recorded in connection with costs related to extinguishment of debt, as discussed below in Liquidity and Financing Transactions, partially offset by; (ii) an after-tax unrealized gain of $6.8 million, or $.08 per diluted share, ($8.9 million pre-tax which is included in “Other (income) expense, net”), resulting from an increase in the market value of shares of certain equity securities.

As reflected on the Supplemental Schedule, included in our reported results during the third quarter of 2020, was a net aggregate unfavorable after-tax impact of $5.2 million, or $.06 per diluted share, consisting of the following: (i) an after-tax unrealized loss of $2.1 million, or $.02 per diluted share, ($2.7 million pre-tax which is included in “Other (income) expense, net”), resulting from a decrease in the market value of shares of certain equity securities, and; (ii) an unfavorable after-tax impact of $3.1 million, or $.04 per diluted share, resulting from ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”).

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 $441.5 million during the third quarter of 2021, as compared to $471.0 million during the third quarter of 2020. Our adjusted earnings before interest, taxes, depreciation & amortization (“Adjusted EBITDA net of NCI”), which excludes the impact of other (income) expense, net, was $448.2 million during the third quarter of 2021 as compared to $472.8 million during the third quarter of 2020.

Consolidated Results of Operations, As Reported and As Adjusted  – Nine-month periods ended September 30, 2021 and 2020:
Reported net income attributable to UHS was $752.5 million, or $8.83 per diluted share, during the nine-month period ended September 30, 2021, as compared to $635.2 million, or $7.40 per diluted share, during the first nine months of 2020. Net revenues increased 10.6% to $9.367 billion during the first nine months of 2021 as compared to $8.472 billion during the comparable period of 2020.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the nine-month period ended September 30, 2021 was $756.6 million, or $8.88 per diluted share, as compared to $646.9 million, or $7.53 per diluted share, during the first nine months of 2020.

Included in our reported and adjusted net income attributable to UHS during the nine-month period ended September 30, 2021, the substantial majority of which was previously disclosed and recorded during the second quarter of 2021, was a net favorable after-tax impact of approximately $31.2 million, or $.37 per diluted share, consisting of:

  • a favorable after-tax impact of $47.7 million, or $.56 per diluted share, resulting from approximately $62 million of revenues recorded during the second and third quarters of 2021 ($55 million and $7 million, respectively), in connection with the Kentucky Medicaid Managed Care Hospital Rate Increase Program, covering the period of July 1, 2020 to June 30, 2021, as discussed below in Kentucky Hospital Rate Increase Program;
  • an unfavorable after-tax impact of approximately $31.0 million, or $.36 per diluted share, resulting from a $41 million increase to our reserves for self-insured professional and general liability claims recorded during the second and third quarters of 2021 ($36 million and $5 million, respectively), resulting from unfavorable trends experienced in connection with the number of asserted claims and reported incidents and estimates of losses for those claims;
  • an aggregate favorable after-tax impact of $22.1 million, or $.26 per diluted share, resulting from aggregate commercial insurance proceeds received of approximately $29 million, approximately $19 million and $10 million of which were recorded during the second and third quarters of 2021, respectively, in connection with: (i) the unfavorable economic impact resulting from the previously disclosed information technology incident that occurred during 2020 ($20 million aggregate proceeds received thus far representing partial recovery of the loss sustained), and; (ii) the COVID-19 pandemic (approximately $9 million of insurance proceeds received during the second quarter of 2021 representing recovery of the policy maximum), and;
  • an estimated unfavorable impact of approximately $7.6 million (approximately $10 million pre-tax), or $.09 per diluted share, resulting from damage sustained from Hurricane Ida during the third quarter of 2021 at three of our behavioral health care facilities located in Louisiana and Pennsylvania (see below in Behavioral Health Care Services for additional disclosure).

Our reported and adjusted net income attributable to UHS during the nine-month period ended September 30, 2020 included the following: (i) a favorable impact of $157.2 million, or $1.84 per diluted share, resulting from the recording of approximately $213 million of grant income revenues recorded in connection with various governmental stimulus programs, most notably the CARES Act, and; (ii) a favorable impact of $21.4 million, or $0.25 per diluted share, resulting from the above-mentioned $28 million of net revenues recorded during the third quarter of 2020 in connection with the California Medicaid supplemental payment program.

As reflected on the Supplemental Schedule, included in our reported results during the nine-month period ended September 30, 2021, was a net aggregate unfavorable after-tax impact of $4.1 million, or $.05 per diluted share, consisting of the following: (i) an after-tax charge of $12.9 million, or $.15 per diluted share, ($16.8 million pre-tax which is included in “Other (income) expense, net”) recorded in connection with costs related to extinguishment of debt, as discussed below in Liquidity and Financing Transactions; (ii) an after-tax unrealized gain of $6.3 million, or $.07 per diluted share, ($8.2 million pre-tax which is included in “Other (income) expense, net”) resulting from an increase in the market value of shares of certain equity securities, and; (iii) a favorable after-tax impact of $2.5 million, or $.03 per diluted share, resulting from ASU 2016-09.

As reflected on the Supplemental Schedule, included in our reported results during the nine-month period ended <span…

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