PR Newswire | Jul 27, 2020 04:16PM EDT

07/27 15:16 CDT

Universal Health Services, Inc. Reports 2020 Second Quarter Financial ResultsConsolidated Results of Operations, As Reported and As Adjusted - Three-month periods ended June 30, 2020 and 2019: KING OF PRUSSIA, Penn., July 27, 2020

KING OF PRUSSIA, Penn., July 27, 2020 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $251.9 million, or $2.95 per diluted share, during the second quarter of 2020, as compared to $238.3 million, or $2.66 per diluted share, during the comparable quarter of 2019. Net revenues decreased 4.4% to $2.730 billion during the second quarter of 2020 as compared to $2.855 billion during the second quarter of 2019.

As reflected on the Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our adjusted net income attributable to UHS during the second quarter of 2020 was $250.2 million, or $2.93 per diluted share, as compared to $247.2 million, or $2.76 per diluted share, during the second quarter of 2019.

Included in our reported and adjusted net income attributable to UHS during the three-month period ended June 30, 2020 was approximately $161.9 million, or $1.90 per diluted share, resulting from the recognition of approximately $218 million of net revenues recorded in connection with various governmental stimulus programs, most notably the Public Health and Social Services Emergency Fund grants, as provided for by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Approximately $157 million of the governmental stimulus program net revenues were attributable to our acute care services and approximately $61 million were attributable to our behavioral health care services.

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2020, was a net aggregate favorable after-tax impact of $1.7 million, or $.02 per diluted share, consisting of the following: (i) an after-tax unrealized gain of $2.2 million, or $.03 per diluted share, ($2.9 million pre-tax which is included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale, and; (ii) a unfavorable after-tax impact of $0.5 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09").

As reflected on the Supplemental Schedule, included in our reported results during the second quarter of 2019, is an aggregate net unfavorable after-tax impact of $8.9 million, or $.10 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from an $11.0 million pre-tax increase in the reserve ("DOJ Reserve") established in connection with the government's investigation of our behavioral health hospitals, (as previously disclosed, settlement agreements were finalized in early July, 2020 thereby resolving this matter), and; (ii) an unfavorable after-tax impact of $0.5 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09.

Included in our reported and our adjusted net income attributable to UHS during the second quarter of 2019 is a pre-tax unrealized gain of $6.9 million, or $.06 per diluted share (included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.

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 $482.8 million during the second quarter of 2020, as compared to $471.5 million during the second quarter of 2019. Our adjusted earnings before interest, taxes, depreciation & amortization ("Adjusted EBITDA net of NCI"), which excludes the impact of other (income) expense, net, and the increase in the DOJ Reserve recorded during the second quarter of 2019, was $479.7 million during the second quarter of 2020 as compared to $474.8 million during the second quarter of 2019.

COVID-19

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 since that time. Patient volumes at both our acute care and behavioral health care facilities were most significantly reduced in April. Our acute care and behavioral health facilities began experiencing gradual and continued improvement in patient volumes in May and June as various states eased stay-at-home restrictions and acute care hospitals were permitted to resume elective surgeries and procedures. However, many of our acute care and behavioral health facilities are located in states that began experiencing significant increases in COVID-19 infections in June and continuing into July. We believe that the adverse impact that COVID-19 will have on our future operations and financial results will depend upon many factors, most of which are beyond our capability to control or predict.

Consolidated Results of Operations, As Reported and As Adjusted - Six-month periods ended June 30, 2020 and 2019:

Reported net income attributable to UHS was $394.0 million, or $4.58 per diluted share, during the six-month period ended June 30, 2020, as compared to $472.5 million, or $5.23 per diluted share, during the first six months of 2019. Net revenues decreased 1.8% to $5.559 billion during the first six months of 2020 as compared to $5.660 billion during the comparable period of 2019.

As reflected on the Supplemental Schedule, our adjusted net income attributable to UHS during the six-month period ended June 30, 2020 was $400.4 million, or $4.65 per diluted share, as compared to $470.5 million, or $5.21 per diluted share, during the first six months of 2019.

Our reported and adjusted net income attributable to UHS during the six-month period ended June 30, 2020 included approximately $161.9 million, or $1.89 per diluted share, resulting from the above-mentioned recognition of approximately $218 million of net revenues recorded in connection with governmental stimulus programs, most notably the CARES Act.

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2020, was a net aggregate unfavorable after-tax impact of $6.4 million, or $.07 per diluted share, consisting of the following: (i) an after-tax unrealized loss of $5.1 million, or $.06 per diluted share, ($6.7 million pre-tax which is included in "Other (income) expense, net"), resulting from a decrease in the market value of shares of certain marketable securities held for investment and classified as available for sale, and; (ii) an unfavorable after-tax impact of $1.3 million, or $.01 per diluted share, resulting from our adoption of ASU 2016-09.

As reflected on the Supplemental Schedule, included in our reported results during the six-month period ended June 30, 2019, is an aggregate net favorable after-tax impact of $2.0 million, or $.02 per diluted share, resulting from: (i) an unfavorable after-tax impact of $8.4 million, or $.09 per diluted share, resulting from the above-mentioned $11.0 million pre-tax increase in the DOJ Reserve, and; (ii) a favorable after-tax impact of $10.4 million, or $.11 per diluted share, resulting from our adoption of ASU 2016-09.

Included in our reported and our adjusted net income attributable to UHS during the six-month period ended June 30, 2019 is a pre-tax unrealized gain of $2.6 million, or $.02 per diluted share (included in "Other (income) expense, net"), resulting from an increase in the market value of shares of certain marketable securities held for investment and classified as available for sale.

As calculated on the attached Supplemental Schedule, our EBITDA net of NCI was $831.9 million during the first six months of 2020, as compared to $924.3 million during the first six months of 2019. Our Adjusted EBITDA net of NCI, which excludes the impact of other (income) expense, net, and the increase in the DOJ Reserve recorded during the first six months of 2019, was $838.3 million during the six-month period ended June 30, 2020 and $932.0 million during the comparable period of 2019.

Acute Care Services - Three and six-month periods ended June 30, 2020 and 2019:

During the second quarter of 2020, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) decreased 24.8% and adjusted patient days decreased 18.1%, as compared to the second quarter of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $157 million recorded during the second quarter of 2020, net revenue per adjusted admission increased 12.7% while net revenue per adjusted patient day increased 3.5% during the second quarter of 2020 as compared to the second quarter of 2019. During the second quarter of 2020, as compared to the second quarter of 2019, net revenues generated from our acute care services on a same facility basis decreased 3.5% including the governmental stimulus revenues, and decreased 14.0% excluding the governmental stimulus revenues.

During the six-month period ended June 30, 2020, at our acute care hospitals on a same facility basis, adjusted admissions decreased 14.4% and adjusted patient days decreased 9.1%, as compared to the first six months of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $157 million recorded during the first six months of 2020, net revenue per adjusted admission increased 7.7% while net revenue per adjusted patient day increased 1.3% during the six-month period ended June 30, 2020 as compared to the comparable six-month period of 2019. During the first six months of 2020, as compared to the first six months of 2019, net revenues generated from our acute care services on a same facility basis decreased 1.6% including the governmental stimulus revenues, and decreased 6.8% excluding the governmental stimulus revenues.

Behavioral Health Care Services - Three and six-month periods ended June 30, 2020 and 2019:

During the second quarter of 2020, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased 15.4% while adjusted patient days decreased 10.4% as compared to the second quarter of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $61 million recorded during the second quarter of 2020, net revenue per adjusted admission increased 8.1% while net revenue per adjusted patient day increased 2.0% during the second quarter of 2020 as compared to the comparable quarter in 2019. During the second quarter of 2020, as compared to the second quarter of 2019, net revenues generated from our behavioral health care services on a same facility basis decreased 3.8% including the governmental stimulus revenues, and decreased 8.5% excluding the governmental stimulus revenues.

During the six-month period ended June 30, 2020, at our behavioral health care facilities on a same facility basis, adjusted admissions decreased 8.6% and adjusted patient days decreased 5.9%, as compared to the first six months of 2019. At these facilities, excluding the governmental stimulus revenues of approximately $61 million recorded during the first six months of 2020, net revenue per adjusted admission increased 5.9% while net revenue per adjusted patient day increased 2.8% during the first six months of 2020 as compared to the comparable period of 2019. During the first six months of 2020, as compared to the first six months of 2019, net revenues generated from our behavioral health care services on a same facility basis decreased 0.8% including the governmental stimulus revenues, and decreased 3.2% excluding the governmental stimulus revenues.

Net Cash Provided by Operating Activities and Liquidity:

Net Cash Provided by Operating Activities:

For the six months ended June 30, 2020, our net cash provided by operating activities increased to $1.451 billion as compared to $673 million generated during the first six months of 2019.

The $779 million net increase was due to: (i) a favorable change of $477 million resulting from the Medicare accelerated payments and deferred governmental stimulus grants; (ii) a favorable change of $233 million in accounts receivable; (iii) a favorable change of $134 million in accrued and deferred income taxes; (iv) an unfavorable change of $67 million resulting from a decrease in net income plus/minus depreciation and amortization expense, stock-based compensation expense and loss on sales of assets and businesses, and; (v) $2 million of other combined net favorable changes.

Liquidity:

As of June 30, 2020, there were no borrowings outstanding pursuant to our $1 billion revolving credit facility or our $450 million accounts receivable securitization program. As of that date, we had $1.375 billion of aggregate available borrowing capacity pursuant to the terms of these debt facilities, net of outstanding letters of credit.

In addition, as of June 30, 2020, we had approximately $574 million of short-term cash investments.

Conference call information:

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on July 28, 2020. 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. Also, a replay of the call will be available following the conclusion of the live call and will be available for one full year.

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 were approximately $11.4 billion during 2019. In 2020, UHS was again recognized as one of the World's Most Admired Companies by Fortune; in 2019 ranked #293 on the Fortune 500; and listed #330 in Forbes ranking of U.S.' Largest Public Companies.

Our operating philosophy is as effective today as it was 40 years ago, 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 more than 90,000 employees and through its subsidiaries operates 26 acute care hospitals, 330 behavioral health facilities, 41 outpatient facilities and ambulatory care access points, an insurance offering, a physician network and various related services located in 37 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 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 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 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-Q for the quarterly period ended March 31, 2020), 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 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 governmental stimulus grants 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; and potential increases to expenses related to staffing, supply chain or other expenditures; 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 expect developments related to the COVID-19 pandemic to materially affect our financial performance in 2020.

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, our adoption of ASU 2016-09, unrealized gains/losses resulting from changes in the market value of shares of certain marketable securities held for investment and classified as available for sale, and other potential material items that are nonrecurring or non-operational in nature including, but not limited to, impairments of long-lived and intangible assets, changes in the reserve established in connection with our discussions with the Department of Justice, 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 Reports on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarterly period ended March 31, 2020. 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.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

Three months Six months

ended June 30, ended June 30,

2020 2019 2020 2019

Net revenues $2,729,754 $2,855,168 $5,559,421 $5,659,559

Operating charges:

Salaries, wages and benefits 1,308,010 1,383,481 2,740,679 2,749,027

Other operating expenses 625,747 672,564 1,315,537 1,317,344

Supplies expense 283,572 305,857 601,399 613,320

Depreciation and amortization 126,208 121,168 250,602 241,208

Lease and rental expense 28,186 26,535 56,479 52,660

2,371,723 2,509,605 4,964,696 4,973,559

Income from operations 358,031 345,563 594,725 686,000

Interest expense, net 25,473 42,487 61,824 82,127

Other (income) expense, net (3,100) (7,732) 6,460 (3,231)

Income before income taxes 335,658 310,808 526,441 607,104

Provision for income taxes 79,154 69,543 125,477 128,441

Net income 256,504 241,265 400,964 478,663

Less: Net income attributableto

noncontrolling interests ("NCI") 4,575 2,945 6,998 6,175

Net income attributable to UHS $251,929 $238,320 $393,966 $472,488

Basic earnings per share $2.97 $2.67 $4.60 $5.24attributable to UHS (a)

Diluted earnings per share $2.95 $2.66 $4.58 $5.23attributable to UHS (a)

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

Three months Six months

(a) Earnings per share calculation: ended June 30, ended June 30,

2020 2019 2020 2019

Basic and diluted:

Net income attributable to UHS $251,929 $238,320 $393,966 $472,488

Less: Net income attributable to (824) (656) (1,197) (1,171)unvested restricted share grants

Net income attributable to UHS - basic $251,105 $237,664 $392,769 $471,317and diluted

Weighted average number of common shares 84,632 89,136 85,422 89,956- basic

Basic earnings per share attributable to $2.97 $2.67 $4.60 $5.24UHS:

Weighted average number of common shares 84,632 89,136 85,422 89,956

Add: Other share equivalents 427 99 335 145

Weighted average number of common shares 85,059 89,235 85,757 90,101and equiv. - diluted

Diluted earnings per share attributable $2.95 $2.66 $4.58 $5.23to UHS:

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Three Months ended June 30, 2020 and 2019

(in thousands, except per share amounts)

(unaudited)

Calculation of Earnings/Adjusted Earnings Before Interest, Taxes, Depreciationand Amortization ("EBITDA/Adjusted EBITDA net of NCI")

Three Three months % Net months % Net ended ended

June 30, revenues June 30, revenues 2020 2019

Net income attributable to UHS $251,929 $238,320

Depreciation and amortization 126,208 121,168

Interest expense, net 25,473 42,487

Provision for income taxes 79,154 69,543

EBITDA net of NCI $482,764 17.7% $471,518 16.5%

Other (income) expense, net (3,100) (7,732)

Increase in DOJ Reserve - 10,978

Adjusted EBITDA net of NCI $479,664 17.6% $474,764 16.6%

Net revenues $2,729,754 $2,855,168

Calculation of Adjusted Net Income Attributable to UHS

Three months ended Three months ended

June 30, 2020 June 30, 2019

Per Per

Amount Diluted Amount Diluted Share Share

Net income attributable to UHS $251,929 $2.95 $238,320 $2.66

Plus/minus after-tax adjustments:

Unrealized gain on marketable (2,223) (0.03) - -securities held for sale

Increase in DOJ Reserve - - 8,369 0.09

Impact of ASU 2016-09 505 0.01 509 0.01

Subtotal adjustments (1,718) (0.02) 8,878 0.10

Adjusted net income attributable $250,211 $2.93 $247,198 $2.76to UHS

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Six Months ended June 30, 2020 and 2019

(in thousands, except per share amounts)

(unaudited)

Calculation of Earnings/Adjusted Earnings Before Interest, Taxes, Depreciationand Amortization ("EBITDA/Adjusted EBITDA net of NCI")

Six months % Net Six months % Net ended ended

June 30, revenues June 30, revenues 2020 2019

Net income attributable to UHS $393,966 $472,488

Depreciation and amortization 250,602 241,208

Interest expense, net 61,824 82,127

Provision for income taxes 125,477 128,441

EBITDA net of NCI $831,869 15.0% $924,264 16.3%

Other (income) expense, net 6,460 (3,231)

Increase in DOJ Reserve - 10,978

Adjusted EBITDA net of NCI $838,329 15.1% $932,011 16.5%

Net revenues $5,559,421 $5,659,559

Calculation of Adjusted Net Income Attributable to UHS

Six months ended Six months ended

June 30, 2020 June 30, 2019

Per Per

Amount Diluted Amount Diluted Share Share

Net income attributable to UHS $393,966 $4.58 $472,488 $5.23

Plus/minus after-tax adjustments:

Unrealized loss on marketable 5,127 0.06 - -securities held for sale

Increase in DOJ Reserve - - 8,369 0.09

Impact of ASU 2016-09 1,275 0.01 (10,398) (0.11)

Subtotal adjustments 6,402 0.07 (2,029) (0.02)

Adjusted net income attributable to $400,368 $4.65 $470,459 $5.21UHS

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

Three months Six months

ended June 30, ended June 30,

2020 2019 2020 2019

Net income $256,504 $241,265 $400,964 $478,663

Other comprehensive income (loss):

Unrealized derivative gains (losses) 0 (1,008) 0 (3,925)on cash flow hedges

Foreign currency translation 6,676 5,159 (32,525) (9,103)adjustment

Other comprehensive income (loss) before 6,676 4,151 (32,525) (13,028)tax

Income tax expense (benefit) related toitems of other comprehensive income 898 1,616 (1,210) (850)(loss)

Total other comprehensive income (loss), 5,778 2,535 (31,315) (12,178)net of tax

Comprehensive income 262,282 243,800 369,649 466,485

Less: Comprehensive income attributable 4,575 2,945 6,998 6,175to noncontrolling interests

Comprehensive income attributable to UHS $257,707 $240,855 $362,651 $460,310

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

June 30, December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 539,622 $ 61,268

Accounts receivable, net 1,438,697 1,560,847

Supplies 167,626 159,889

Other current assets 150,842 133,930

Total current assets 2,296,787 1,915,934

Property and equipment 9,398,890 9,106,377

Less: accumulated depreciation (4,294,341) (4,089,679)

5,104,549 5,016,698

Other assets:

Goodwill 3,836,020 3,869,760

Deferred income taxes 20,241 16,189

Right of use assets-operating leases 335,388 326,518

Deferred charges 6,390 6,373

Other 549,124 516,778

Total Assets $ 12,148,499 $ 11,668,250

Liabilities and Stockholders' Equity

Current liabilities:

Current maturities of long-term debt $ 82,085 $ 87,550

Accounts payable and other liabilities 1,371,698 1,272,374

Medicare accelerated payments and deferred 477,099 0governmental stimulus grants

Legal reserves 145,227 144,509

Operating lease liabilities 56,629 56,442

Federal and state taxes 126,431 2,515

Total current liabilities 2,259,169 1,563,390

Other noncurrent liabilities 374,616 329,932

Operating lease liabilities noncurrent 279,747 270,076

Long-term debt 3,449,940 3,896,577

Deferred income taxes 19,168 25,071

Redeemable noncontrolling interest 4,287 4,333

UHS common stockholders' equity 5,688,647 5,504,105

Noncontrolling interest 72,925 74,766

Total equity 5,761,572 5,578,871

Total Liabilities and Stockholders' Equity $ 12,148,499 $ 11,668,250

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six months

ended June 30,

2020

Cash Flows from Operating Activities:

Net income $400,964 $478,663

Adjustments to reconcile net income to net

cash provided by operating activities:

Depreciation & amortization 250,602 241,208

Loss on sale of assets and businesses 2,161 0

Stock-based compensation expense 33,954 34,676

Changes in assets & liabilities, net of effects from

acquisitions and dispositions:

Accounts receivable 131,294 (101,329)

Accrued interest (2,191) 948

Accrued and deferred income taxes 116,707 (16,846)

Other working capital accounts 26,361 30,082

Medicare accelerated payments and deferred governmental 477,099 0stimulus grants

Other assets and deferred charges 5,095 (1,333)

Other (7,659) (1,209)

Accrued insurance expense, net of commercial premiums 81,016 51,819paid

Payments made in settlement of self-insurance claims (64,034) (44,115)

Net cash provided by operating activities 1,451,369 672,564

Cash Flows from Investing Activities:

Property and equipment additions, net of disposals (354,610) (323,920)

Proceeds received from sales of assets and businesses 6,440 0

Acquisition of businesses and property (968) 0

Inflows from foreign exchange contracts that hedge our 57,029 4,885net U.K. investment

Costs incurred for purchase and implementation of (4,421) (13,893)information technology applications

Investment in, and advances to, joint ventures and (285) (11,949)other

Net cash used in investing activities (296,815) (344,877)

Cash Flows from Financing Activities:

Reduction of long-term debt (459,332) (28,617)

Additional borrowings 5,453 177,200

Repurchase of common shares (200,054) (494,649)

Dividends paid (17,344) (17,953)

Issuance of common stock 5,852 5,271

Profit distributions to noncontrolling interests (8,885) (11,650)

Net cash used in financing activities (674,310) (370,398)

Effect of exchange rate changes on cash, cash (1,639) (273)equivalents and restricted cash

Increase (decrease) in cash, cash equivalents and 478,605 (42,984)restricted cash

Cash, cash equivalents and restricted cash, beginning of 105,667 199,685period

Cash, cash equivalents and restricted cash, end of period $584,272 $156,701

Supplemental Disclosures of Cash Flow Information:

Interest paid $61,802 $78,623

Income taxes paid, net of refunds $14,394 $145,404

Noncash purchases of property and equipment $80,031 $71,923

Right-of-use assets obtained in exchange for lease $37,780 $359,329obligations

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

% Change % Change

Quarter 6 months ended ended

Same Facility: 6/30/2020 6/30/2020

Acute Care Hospitals

Revenues (a) -3.5% -1.6%

Revenues-excludes governmental -14.0% -6.8%stimulus revenues

Adjusted Admissions -24.8% -14.4%

Adjusted Patient Days -18.1% -9.1%

Revenue Per AdjustedAdmission-excludes governmental 12.7% 7.7%stimulus revenues

Revenue Per Adjusted PatientDay-excludes governmental 3.5% 1.3%stimulus revenues

Behavioral Health Hospitals

Revenues (b) -3.8% -0.8%

Revenues-excludes governmental -8.5% -3.2%stimulus revenues

Adjusted Admissions -15.4% -8.6%

Adjusted Patient Days -10.4% -5.9%

Revenue Per AdjustedAdmission-excludes governmental 8.1% 5.9%stimulus revenues

Revenue Per Adjusted PatientDay-excludes governmental 2.0% 2.8%stimulus revenues

(a) Includes governmentalstimulus program revenues of$157 million.

(b) Includes governmentalstimulus program revenues of $61million.

UHS Consolidated second quarter ended six months ended

6/30/2020 6/30/2019 6/30/2020 6/30/2019

Revenues $2,729,754 $2,855,168 $5,559,421 $5,659,559

EBITDA net of NCI $482,764 $471,518 $831,869 $924,264

EBITDA Margin net of NCI 17.7% 16.5% 15.0% 16.3%

Adjusted EBITDA net of NCI $479,664 $474,764 $838,329 $932,011

Adjusted EBITDA Margin net of 17.6% 16.6% 15.1% 16.5%NCI

Cash Flow From Operations $1,451,369 $672,564

Days Sales Outstanding 47 51

Capital Expenditures $354,610 $323,920

Debt $3,532,025 $4,148,954

UHS' Shareholders Equity $5,688,647 $5,393,089

Debt / Total Capitalization 38.3% 43.5%

Debt / EBITDA net of NCI (1) 2.19 2.50

Debt / Adjusted EBITDA net of 2.07 2.31NCI (1)

Debt / Cash From Operations (1) 1.59 3.10

Net Debt / EBITDA net of NCI (1) 1.83(2)

Net Debt / Adjusted EBITDA net 1.73of NCI (1) (2)

Net Debt / Cash From Operations 1.33(1) (2)

(1) Latest 4 quarters

(2) Debt, net of $574 million of short-term cash investments held as of June30, 2020

Universal Health Services, Inc.

Acute Care Hospital Services

For the three and six months ended

June 30, 2020 and 2019

(in thousands)

Same Facility Basis- Acute CareHospital Services

Three months ended Three months ended Six months ended Six months ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Amount % of Net Amount % of Net Amount % of Net Amount % of Net Revenues Revenues Revenues Revenues

Net revenues (a) $1,446,099 100.0% $1,499,054 100.0% $2,943,222 100.0% $2,990,405 100.0%

Operating charges:

Salaries, wages and 589,677 40.8% 624,035 41.6% 1,248,606 42.4% 1,243,352 41.6%benefits

Other operating 344,384 23.8% 340,414 22.7% 719,915 24.5% 673,152 22.5%expenses

Supplies expense 233,419 16.1% 255,703 17.1% 497,949 16.9% 513,847 17.2%

Depreciation and 78,440 5.4% 75,810 5.1% 156,368 5.3% 150,171 5.0%amortization

Lease and rental 16,563 1.1% 14,736 1.0% 32,583 1.1% 29,035 1.0%expense

Subtotal-operating 1,262,483 87.3% 1,310,698 87.4% 2,655,421 90.2% 2,609,557 87.3%expenses

Income from 183,616 12.7% 188,356 12.6% 287,801 9.8% 380,848 12.7%operations

Interest expense, 516 0.0% 244 0.0% 1,134 0.0% 523 0.0%net

Other (income) - - (45) (0.0)% - - (45) (0.0)%expense, net

Income before $183,100 12.7% $188,157 12.6% $286,667 9.7% $380,370 12.7%income taxes

All Acute CareHospital Services

Three months ended Three months ended Six months ended Six months ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Amount % of Net Amount % of Net Amount % of Net Amount % of Net Revenues Revenues Revenues Revenues

Net revenues (a) $1,467,506 100.0% $1,531,709 100.0% $2,988,555 100.0% $3,046,553 100.0%

Operating charges:

Salaries, wages and 589,762 40.2% 624,035 40.7% 1,248,721 41.8% 1,243,352 40.8%benefits

Other operating 365,810 24.9% 373,069 24.4% 765,267 25.6% 729,300 23.9%expenses

Supplies expense 233,419 15.9% 255,703 16.7% 497,949 16.7% 513,847 16.9%

Depreciation and 78,440 5.3% 75,810 4.9% 156,368 5.2% 150,171 4.9%amortization

Lease and rental 16,563 1.1% 14,736 1.0% 32,583 1.1% 29,035 1.0%expense

Subtotal-operating 1,283,994 87.5% 1,343,353 87.7% 2,700,888 90.4% 2,665,705 87.5%expenses

Income from 183,512 12.5% 188,356 12.3% 287,667 9.6% 380,848 12.5%operations

Interest expense, 516 0.0% 244 0.0% 1,134 0.0% 523 0.0%net

Other (income) - - (45) (0.0)% - - (45) (0.0)%expense, net

Income before $182,996 12.5% $188,157 12.3% $286,533 9.6% $380,370 12.5%income taxes

(a) Includes $157 million of governmental stimulus program revenues in each ofthe three and six-months periods ended June 30, 2020.

We believe that providing our results on a "Same Facility" basis (which is anon-GAAP measure), which includes the operating results for facilities andbusinesses operated in both the current year and prior year periods, is helpfulto our investors as a measure of our operating performance. Our Same Facilityresults also neutralize (if applicable), the effect of material items that arenonrecurring or non-operational in nature including items such as, but notlimited to, reserves for various matters, settlements, legal judgments andlawsuits, cost related to extinguishment of debt, gains/losses on sales ofassets and businesses, impairments of long-lived and intangible assets andother amounts that may be reflected in the current or prior year financialstatements that relate to prior periods. Our Same Facility basis resultsexclude from net revenues and other operating expenses, provider taxassessments incurred in each period. However, these provider tax assessmentsare included in net revenues and other operating expenses as reflected in thetable under All Acute Care Hospital Services. The provider tax assessments hadno impact on the income before income taxes as reflected on the above tablessince the amounts offset between net revenues and other operating expenses. Toobtain a complete understanding of our financial performance, the Same Facilityresults should be examined in connection with our net income as determined inaccordance with GAAP and as presented herein and the condensed consolidatedfinancial statements and notes thereto as contained in our Form 10-K for theyear ended December 31, 2019 and Form 10-Q for the quarter ended March 31,2020.

The All Acute Care Hospital Servicestable summarizes the results of operationsfor all our acute care operations during the periods presented. These amountsinclude: (i) our acute care results on a same facility basis, as indicatedabove; (ii) the impact of provider tax assessments which increased net revenuesand other operating expenses but had no impact on income before income taxes,and; (iii) certain other amounts including the results of facilities acquiredor opened during the last twelve months.

Universal Health Services, Inc.

Behavioral Health Care Services

For the three and six months ended

June 30, 2020 and 2019

(in thousands)

Same Facility -Behavioral HealthCare Services

Three months ended Three months ended Six months ended Six months ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Amount % of Net Amount % of Net Amount % of Net Amount % of Net Revenues Revenues Revenues Revenues

Net revenues (a) $1,240,631 100.0% $1,289,115 100.0% $2,524,631 100.0% $2,546,024 100.0%

Operating charges:

Salaries, wages 648,385 52.3% 676,003 52.4% 1,340,862 53.1% 1,343,926 52.8%and benefits

Other operating 221,709 17.9% 237,490 18.4% 464,918 18.4% 474,762 18.6%expenses

Supplies expense 50,386 4.1% 49,608 3.8% 102,015 4.0% 98,324 3.9%

Depreciation and 43,342 3.5% 40,565 3.1% 86,273 3.4% 81,494 3.2%amortization

Lease and rental 10,576 0.9% 10,718 0.8% 21,787 0.9% 21,338 0.8%expense

Subtotal-operating 974,398 78.5% 1,014,384 78.7% 2,015,855 79.8% 2,019,844 79.3%expenses

Income from 266,233 21.5% 274,731 21.3% 508,776 20.2% 526,180 20.7%operations

Interest expense, 361 0.0% 369 0.0% 725 0.0% 744 0.0%net

Other (income) 922 0.1% 109 0.0% 1,811 0.1% 784 0.0%expense, net

Income before $264,950 21.4% $274,253 21.3% $506,240 20.1% $524,652 20.6%income taxes

All BehavioralHealth CareServices

Three months ended Three months ended Six months ended Six months ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Amount % of Net Amount % of Net Amount % of Net Amount % of Net Revenues Revenues Revenues Revenues

Net revenues (a) $1,259,123 100.0% $1,320,241 100.0% $2,565,232 100.0% $2,606,624 100.0%

Operating charges:

Salaries, wages 649,376 51.6% 683,948 51.8% 1,342,648 52.3% 1,359,647 52.2%and benefits

Other operating 245,045 19.5% 265,785 20.1% 511,227 19.9% 527,922 20.3%expenses

Supplies expense 50,363 4.0% 49,986 3.8% 102,002 4.0% 99,117 3.8%

Depreciation and 45,038 3.6% 42,339 3.2% 88,927 3.5% 84,891 3.3%amortization

Lease and rental 11,259 0.9% 11,719 0.9% 23,417 0.9% 23,363 0.9%expense

Subtotal-operating 1,001,081 79.5% 1,053,777 79.8% 2,068,221 80.6% 2,094,940 80.4%expenses

Income from 258,042 20.5% 266,464 20.2% 497,011 19.4% 511,684 19.6%operations

Interest expense, 354 0.0% 369 0.0% 751 0.0% 744 0.0%net

Other (income) 922 0.1% 109 0.0% 1,811 0.1% 786 0.0%expense, net

Income before $256,766 20.4% $265,986 20.1% $494,449 19.3% $510,154 19.6%income taxes

(a) Includes $61 million of governmental stimulus program revenues in each ofthe three and six-months periods ended June 30, 2020.

We believe that providing our results on a "Same Facility" basis (which is anon-GAAP measure), which includes the operating results for facilities andbusinesses operated in both the current year and prior year periods, is helpfulto our investors as a measure of our operating performance. Our Same Facilityresults also neutralize (if applicable), the effect of material items that arenonrecurring or non-operational in nature including items such as, but notlimited to, reserves for various matters, settlements, legal judgments,lawsuits and reserves established in connection with the government'sinvestigation of our behavioral health care facilities, cost related toextinguishment of debt, gains/losses on sales of assets and businesses,impairments of long-lived and intangible assets and other amounts that may bereflected in the current or prior year financial statements that relate toprior periods. Our Same Facility basis results exclude from net revenues andother operating expenses, provider tax assessments incurred in each period.However, these provider tax assessments are included in net revenues and otheroperating expenses as reflected in the table under All Behavioral Health CareServices. The provider tax assessments had no impact on the income beforeincome taxes as reflected on the above tables since the amounts offset betweennet revenues and other operating expenses. To obtain a complete understandingof our financial performance, the Same Facility results should be examined inconnection with our net income as determined in accordance with GAAP and aspresented herein and in the condensed consolidated financial statements andnotes thereto as contained in our Form 10-K for the year ended December 31,2019 and Form 10-Q for the quarter ended March 31, 2020.

The All Behavioral Health Care Servicestable summarizes the results ofoperations for all our behavioral health care facilities during the periodspresented. These amounts include: (i) our behavioral health results on a samefacility basis, as indicated above; (ii) the impact of provider tax assessmentswhich increased net revenues and other operating expenses but had no impact onincome before income taxes, and; (iii) certain other amounts including theresults of facilities acquired or opened during the last twelve months as wellas the results of certain facilities that were closed or restructured duringthe past year.

Universal Health Services, Inc.

Selected Hospital Statistics

For the three months ended

June 30, 2020 and 2019

AS REPORTED:

ACUTE BEHAVIORAL HEALTH

06/30/20 06/30/19 % 06/30/20 06/30/19 % change change

Hospitals owned and 26 26 0.0% 330 327 0.9%leased

Average licensed 6,451 6,371 1.3% 23,573 23,798 -0.9%beds

Average available 6,279 6,195 1.4% 23,470 23,698 -1.0%beds

Patient days 317,359 357,894 -11.3% 1,464,601 1,632,531 -10.3%

Average daily 3,487.4 3,932.9 -11.3% 16,094.5 17,939.9 -10.3%census

Occupancy-licensed 54.1% 61.7% -12.4% 68.3% 75.4% -9.4%beds

Occupancy-available 55.5% 63.5% -12.5% 68.6% 75.7% -9.4%beds

Admissions 64,208 78,879 -18.6% 102,770 121,687 -15.5%

Length of stay 4.9 4.5 8.9% 14.3 13.4 6.2%

Inpatient revenue $6,736,777 $7,051,925 -4.5% $2,285,359 $2,547,626 -10.3%

Outpatient revenue 3,394,680 4,402,308 -22.9% 216,174 268,693 -19.5%

Total patient 10,131,457 11,454,233 -11.5% 2,501,533 2,816,319 -11.2%revenue

Other revenue 269,749 114,017 136.6% 113,717 62,140 83.0%

Gross hospital 10,401,206 11,568,250 -10.1% 2,615,250 2,878,459 -9.1%revenue

Total deductions 8,933,700 10,036,541 -11.0% 1,356,127 1,558,218 -13.0%

Net hospital $1,467,506 $1,531,709 -4.2% $1,259,123 $1,320,241 -4.6%revenue

SAME FACILITY:

ACUTE BEHAVIORAL HEALTH

06/30/20 06/30/19 % 06/30/20 06/30/19 % change change

Hospitals owned and 26 26 0.0% 312 312 0.0%leased

Average licensed 6,451 6,371 1.3% 23,399 23,299 0.4%beds

Average available 6,279 6,195 1.4% 23,296 23,199 0.4%beds

Patient days 317,359 357,894 -11.3% 1,456,945 1,614,274 -9.7%

Average daily 3,487.4 3,932.9 -11.3% 16,010.4 17,739.3 -9.7%census

Occupancy-licensed 54.1% 61.7% -12.4% 68.4% 76.1% -10.1%beds

Occupancy-available 55.5% 63.5% -12.5% 68.7% 76.5% -10.1%beds

Admissions 64,208 78,879 -18.6% 102,248 119,975 -14.8%

Length of stay 4.9 4.5 8.9% 14.2 13.5 5.9%

Universal Health Services, Inc.

Selected Hospital Statistics

For the six months ended

June 30, 2020 and 2019

AS REPORTED:

ACUTE BEHAVIORAL HEALTH

06/30/20 06/30/19 % 06/30/20 06/30/19 % change change

Hospitals owned and 26 26 0.0% 330 327 0.9%leased

Average licensed 6,451 6,371 1.3% 23,604 23,871 -1.1%beds

Average available 6,279 6,195 1.4% 23,501 23,771 -1.1%beds

Patient days 687,872 727,620 -5.5% 3,057,212 3,251,336 -6.0%

Average daily 3,779.5 4,020.2 -6.0% 16,797.9 17,963.2 -6.5%census

Occupancy-licensed 58.6% 63.1% -7.2% 71.2% 75.3% -5.4%beds

Occupancy-available 60.2% 64.9% -7.2% 71.5% 75.6% -5.4%beds

Admissions 141,976 159,542 -11.0% 223,787 245,394 -8.8%

Length of stay 4.8 4.6 6.2% 13.7 13.2 3.1%

Inpatient revenue $14,558,249 $14,215,639 2.4% $4,810,898 $5,031,625 -4.4%

Outpatient revenue 8,076,421 8,659,922 -6.7% 475,913 535,239 -11.1%

Total patient 22,634,670 22,875,561 -1.1% 5,286,811 5,566,864 -5.0%revenue

Other revenue 386,027 223,343 72.8% 170,107 110,739 53.6%

Gross hospital 23,020,697 23,098,904 -0.3% 5,456,918 5,677,603 -3.9%revenue

Total deductions 20,032,142 20,052,351 -0.1% 2,891,686 3,070,979 -5.8%

Net hospital $2,988,555 $3,046,553 -1.9% $2,565,232 $2,606,624 -1.6%revenue

SAME FACILITY:

ACUTE BEHAVIORAL HEALTH

06/30/20 06/30/19 % 06/30/20 06/30/19 % change change

Hospitals owned and 26 26 0.0% 312 312 0.0%leased

Average licensed 6,451 6,371 1.3% 23,442 23,325 0.5%beds

Average available 6,279 6,195 1.4% 23,339 23,225 0.5%beds

Patient days 687,872 727,620 -5.5% 3,042,689 3,214,280 -5.3%

Average daily 3,779.5 4,020.2 -6.0% 16,718.1 17,758.5 -5.9%census

Occupancy-licensed 58.6% 63.1% -7.2% 71.3% 76.1% -6.3%beds

Occupancy-available 60.2% 64.9% -7.2% 71.6% 76.5% -6.3%beds

Admissions 141,976 159,542 -11.0% 222,664 242,263 -8.1%

Length of stay 4.8 4.6 6.2% 13.7 13.3 3.0%

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SOURCE Universal Health Services, Inc.