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a-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10765

 

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

23-2077891

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

UNIVERSAL CORPORATE CENTER

367 SOUTH GULPH ROAD

KING OF PRUSSIA, Pennsylvania 19406

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (610) 768-3300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class B Common Stock, $0.01 par value

UHS

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common shares outstanding, as of July 31, 2024:

Class A

 

6,577,100

Class B

 

59,461,566

Class C

 

661,688

Class D

 

12,802

 

 


 

UNIVERSAL HEALTH SERVICES, INC.

INDEX

PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2024 and 2023

3

 

Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2024 and 2023

4

 

Condensed Consolidated Balance Sheets – June 30, 2024 and December 31, 2023

5

 

Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2024 and 2023

 

6

 

 

 

Condensed Consolidated Statements of Cash Flows - Three and Six Months Ended June 30, 2024 and 2023

8

 

Notes to Condensed Consolidated Financial Statements

9

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

60

 

Item 4. Controls and Procedures

61

 

PART II. Other Information

 

 

Item 1. Legal Proceedings

62

 

Item 1A. Risk Factors

62

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

63

 

 

 

Item 5. Other Information

63

 

 

 

Item 6. Exhibits

64

 

Signatures

65

This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2024. This Report modifies and supersedes documents filed prior to this Report. Information that we file with the Securities and Exchange Commission (the “SEC”) in the future will automatically update and supersede information contained in this Report.

In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries. UHS is a registered trademark of UHS of Delaware, Inc., the management company for, and a wholly-owned subsidiary of Universal Health Services, Inc. Universal Health Services, Inc. is a holding company and operates through its subsidiaries including its management company, UHS of Delaware, Inc. All healthcare and management operations are conducted by subsidiaries of Universal Health Services, Inc. To the extent any reference to “UHS” or “UHS facilities” in this report including letters, narratives or other forms contained herein relates to our healthcare or management operations it is referring to Universal Health Services, Inc.’s subsidiaries including UHS of Delaware, Inc. Further, the terms “we,” “us,” “our” or the “Company” in such context similarly refer to the operations of Universal Health Services Inc.’s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment with or employees of the subsidiaries of Universal Health Services, Inc. including UHS of Delaware, Inc.

2


 

PART I. FINANCIAL INFORMATION

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

(unaudited)

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net revenues

$

3,907,604

 

 

$

3,548,138

 

 

$

7,751,186

 

 

$

7,015,656

 

Operating charges:

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

1,856,372

 

 

 

1,770,271

 

 

 

3,698,996

 

 

 

3,523,606

 

Other operating expenses

 

1,043,116

 

 

 

938,314

 

 

 

2,075,286

 

 

 

1,817,265

 

Supplies expense

 

388,063

 

 

 

380,294

 

 

 

791,636

 

 

 

760,283

 

Depreciation and amortization

 

147,480

 

 

 

143,744

 

 

 

288,483

 

 

 

285,365

 

Lease and rental expense

 

36,175

 

 

 

35,387

 

 

 

71,625

 

 

 

70,309

 

 

 

3,471,206

 

 

 

3,268,010

 

 

 

6,926,026

 

 

 

6,456,828

 

Income from operations

 

436,398

 

 

 

280,128

 

 

 

825,160

 

 

 

558,828

 

Interest expense, net

 

48,899

 

 

 

48,831

 

 

 

101,725

 

 

 

99,707

 

Other (income) expense, net

 

5,493

 

 

 

6,602

 

 

 

5,343

 

 

 

20,325

 

Income before income taxes

 

382,006

 

 

 

224,695

 

 

 

718,092

 

 

 

438,796

 

Provision for income taxes

 

87,676

 

 

 

55,393

 

 

 

157,940

 

 

 

107,119

 

Net income

 

294,330

 

 

 

169,302

 

 

 

560,152

 

 

 

331,677

 

Less: Net income (loss) attributable to noncontrolling interests

 

5,178

 

 

 

(2,011

)

 

 

9,166

 

 

 

(2,751

)

Net income attributable to UHS

$

289,152

 

 

$

171,313

 

 

$

550,986

 

 

$

334,428

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to UHS

$

4.32

 

 

$

2.44

 

 

$

8.22

 

 

$

4.75

 

Diluted earnings per share attributable to UHS

$

4.26

 

 

$

2.42

 

 

$

8.08

 

 

$

4.70

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

66,878

 

 

 

70,073

 

 

 

67,041

 

 

 

70,304

 

Add: Other share equivalents

 

1,042

 

 

 

766

 

 

 

1,160

 

 

 

859

 

Weighted average number of common shares and
   equivalents - diluted

 

67,920

 

 

 

70,839

 

 

 

68,201

 

 

 

71,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, unaudited)

 

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

 

$

294,330

 

 

$

169,302

 

 

$

560,152

 

 

$

331,677

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

907

 

 

 

19,730

 

 

 

(66

)

 

 

23,928

 

Other

 

 

-

 

 

 

-

 

 

 

17

 

 

 

-

 

Other comprehensive income (loss) before tax

 

 

907

 

 

 

19,730

 

 

 

(49

)

 

 

23,928

 

Income tax expense (benefit) related to items of other
   comprehensive income (loss)

 

 

8

 

 

 

1,255

 

 

 

428

 

 

 

831

 

Total other comprehensive (loss) income, net of tax

 

 

899

 

 

 

18,475

 

 

 

(477

)

 

 

23,097

 

Comprehensive income

 

 

295,229

 

 

 

187,777

 

 

 

559,675

 

 

 

354,774

 

Less: Comprehensive income (loss) attributable to noncontrolling
   interests

 

 

5,178

 

 

 

(2,011

)

 

 

9,166

 

 

 

(2,751

)

Comprehensive income attributable to UHS

 

$

290,051

 

 

$

189,788

 

 

$

550,509

 

 

$

357,525

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, unaudited)

 

June 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

128,786

 

 

$

119,439

 

Accounts receivable, net

 

2,156,811

 

 

 

2,238,265

 

Supplies

 

218,780

 

 

 

216,988

 

Other current assets

 

236,317

 

 

 

236,658

 

Total current assets

 

2,740,694

 

 

 

2,811,350

 

 

 

 

 

 

 

Property and equipment

 

12,239,814

 

 

 

11,777,047

 

Less: accumulated depreciation

 

(5,905,061

)

 

 

(5,652,518

)

 

 

6,334,753

 

 

 

6,124,529

 

Other assets:

 

 

 

 

 

Goodwill

 

3,942,372

 

 

 

3,932,407

 

Deferred income taxes

 

107,963

 

 

 

85,626

 

Right of use assets-operating leases

 

425,407

 

 

 

433,962

 

Deferred charges

 

6,858

 

 

 

6,974

 

Other

 

513,381

 

 

 

572,754

 

Total Assets

$

14,071,428

 

 

$

13,967,602

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

$

127,508

 

 

$

126,686

 

Accounts payable and other liabilities

 

1,926,295

 

 

 

1,813,015

 

Operating lease liabilities

 

71,982

 

 

 

71,600

 

Federal and state taxes

 

23,422

 

 

 

2,046

 

Total current liabilities

 

2,149,207

 

 

 

2,013,347

 

 

 

 

 

 

 

Other noncurrent liabilities

 

569,687

 

 

 

584,007

 

Operating lease liabilities noncurrent

 

379,580

 

 

 

382,559

 

Long-term debt

 

4,416,731

 

 

 

4,785,783

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

5,418

 

 

 

5,191

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

UHS common stockholders’ equity

 

6,485,372

 

 

 

6,149,001

 

Noncontrolling interest

 

65,433

 

 

 

47,714

 

Total equity

 

6,550,805

 

 

 

6,196,715

 

Total Liabilities and Stockholders’ Equity

$

14,071,428

 

 

$

13,967,602

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Six Months ended June 30, 2024

(amounts in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

UHS

 

 

 

 

 

 

 

 

 

Redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Common

 

 

 

 

 

 

 

 

 

Noncontrolling

 

 

Class A

 

 

Class B

 

 

Class C

 

 

Class D

 

 

Cumulative

 

 

Retained

 

 

Comprehensive

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

 

 

 

Interest

 

 

Common

 

 

Common

 

 

Common

 

 

Common

 

 

Dividends

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

 

Interest

 

 

Total

 

Balance, April 1, 2024

 

$

4,987

 

 

$

66

 

 

$

600

 

 

$

7

 

 

$

0

 

 

$

(673,436

)

 

$

6,921,547

 

 

$

7,913

 

 

$

6,256,697

 

 

$

49,147

 

 

$

6,305,844

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued/(converted)

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

3,985

 

 

 

 

 

 

3,983

 

 

 

 

 

 

3,983

 

Repurchased, including excise tax

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

(77,843

)

 

 

 

 

 

(77,847

)

 

 

 

 

 

(77,847

)

Restricted share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,779

 

 

 

 

 

 

12,779

 

 

 

 

 

 

12,779

 

Dividends paid and accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,579

)

 

 

 

 

 

 

 

 

(13,579

)

 

 

 

 

 

(13,579

)

Stock option expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,288

 

 

 

 

 

 

13,288

 

 

 

 

 

 

13,288

 

Distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(609

)

 

 

(609

)

Sale of ownership interests to minority members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,148

 

 

 

12,148

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) to UHS / noncontrolling interests

 

 

431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

289,152

 

 

 

 

 

 

289,152

 

 

 

4,747

 

 

 

293,899

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

899

 

 

 

899

 

 

 

 

 

 

899

 

Subtotal - comprehensive income

 

 

431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

289,152

 

 

 

899

 

 

 

290,051

 

 

 

4,747

 

 

 

294,798

 

Balance, June 30, 2024

 

$

5,418

 

 

$

66

 

 

$

594

 

 

$

7

 

 

$

 

 

$

(687,015

)

 

$

7,162,908

 

 

$

8,812

 

 

$

6,485,372

 

 

$

65,433

 

 

$

6,550,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

UHS

 

 

 

 

 

 

 

 

 

Redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Common

 

 

 

 

 

 

 

 

 

Noncontrolling

 

 

Class A

 

 

Class B

 

 

Class C

 

 

Class D

 

 

Cumulative

 

 

Retained

 

 

Comprehensive

 

 

Stockholders'

 

 

Noncontrolling

 

 

 

 

 

 

Interest

 

 

Common

 

 

Common

 

 

Common

 

 

Common

 

 

Dividends

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

 

Interest

 

 

Total

 

Balance, January 1, 2024

 

$

5,191

 

 

$

66

 

 

$

599

 

 

$

7

 

 

$

0

 

 

$

(659,890

)

 

$

6,798,930

 

 

$

9,289

 

 

$

6,149,001

 

 

$

47,714

 

 

$

6,196,715

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued/(converted)

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

7,386

 

 

 

 

 

 

7,394

 

 

 

 

 

 

7,394

 

Repurchased, including excise tax

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

(239,925

)

 

 

 

 

 

(239,938

)

 

 

 

 

 

(239,938

)

Restricted share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,879

 

 

 

 

 

 

17,879

 

 

 

 

 

 

17,879

 

Dividends paid and accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,125

)

 

 

 

 

 

 

 

 

(27,125

)

 

 

 

 

 

(27,125

)

Stock option expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,669

 

 

 

 

 

 

27,669

 

 

 

 

 

 

27,669

 

Distributions to noncontrolling interests

 

 

(649

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,440

)

 

 

(4,440

)

Sale of ownership interests to minority members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,869

 

 

 

13,869

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) to UHS / noncontrolling interests

 

 

876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

550,986

 

 

 

 

 

 

550,986

 

 

 

8,290

 

 

 

559,276

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

17

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(494

)

 

 

(494

)

 

 

 

 

 

(494

)

Subtotal - comprehensive income

 

 

876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

550,969

 

 

 

(477

)

 

 

550,492

 

 

 

8,290

 

 

 

558,782

 

Balance, June 30, 2024

 

$

5,418

 

 

$

66

 

 

$

594

 

 

$

7

 

 

$

0

 

 

$

(687,015

)

 

$

7,162,908

 

 

$

8,812

 

 

$

6,485,372

 

 

$

65,433

 

 

$

6,550,805

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


 

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three and Six Months ended June 30, 2023

(amounts in thousands, unaudited)