Earnings Per Share Data ("EPS") and Stock Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Earnings Per Share Data ("EPS") and Stock Based Compensation

(7) Earnings Per Share Data (“EPS”) and Stock Based Compensation

Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share for classes A, B, C and D common stockholders for the periods indicated (in thousands, except per share data):

	Three months ended September 30,						Nine months ended September 30,
	(amounts in thousands)
	2016			2015			2016			2015
Basic and Diluted:
Net income attributable to UHS	$	151,865		$	150,287		$	528,201		$	506,779
Less: Net income attributable to unvested restricted share    grants		(69	)		(82	)		(242	)		(221	)
Net income attributable to UHS – basic and diluted	$	151,796		$	150,205		$	527,959		$	506,558
Weighted average number of common shares - basic		97,118			98,858			97,278			98,924
Net effect of dilutive stock options and grants based on the    treasury stock method		1,203			2,301			1,257			1,987
Weighted average number of common shares and    equivalents - diluted		98,321			101,159			98,535			100,911
Earnings per basic share attributable to UHS:	$	1.56		$	1.52		$	5.43		$	5.12
Earnings per diluted share attributable to UHS:	$	1.54		$	1.48		$	5.36		$	5.02

The “Net effect of dilutive stock options and grants based on the treasury stock method”, for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. There were no significant anti-dilutive stock options during the three months ended September 30, 2016.  The excluded weighted-average stock options totaled 2.0 million for the nine months ended September 30, 2016.  There were no significant anti-dilutive stock options during the three months ended September 30, 2015.  The excluded weighted-average stock options totaled 987,000 for the nine months ended September 30, 2015.  All classes of our common stock have the same dividend rights.

Stock-Based Compensation: During the three-month periods ended September 30, 2016 and 2015, compensation cost of $11.1 million and $9.2 million, respectively, was recognized related to outstanding stock options. During the nine-month periods ended September 30, 2016 and 2015, compensation cost of $34.7 million and $28.7 million, respectively, was recognized related to outstanding stock options. In addition, during the three-month periods ended September 30, 2016 and 2015, compensation cost of approximately $390,000 and $304,000, respectively, was recognized related to restricted stock.  During the nine-month periods ended September 30, 2016 and 2015, compensation cost of approximately $1.0 million and $796,000, respectively, was recognized related to restricted stock.  As of September 30, 2016 there was $93.5 million of unrecognized compensation cost related to unvested options and restricted stock which is expected to be recognized over the remaining weighted average vesting period of 2.8 years. There were 2,867,050 stock options granted (net of cancellations) during the first nine months of 2016 with a weighted-average grant date fair value of $23.79 per share.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $36.4 million and $30.1 million during the nine-month periods ended September 30, 2016 and 2015, respectively. In accordance with ASC 718, excess income tax benefits related to stock based compensation are classified as cash inflows from financing activities on the Consolidated Statement of Cash Flows. During the first nine months of 2016 and 2015, we generated $36.4 million and $29.3 million, respectively, of excess income tax benefits related to stock based compensation which are reflected as cash inflows from financing activities in our Consolidated Statements of Cash Flows.