uhs-10q_20210331.htm

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 March 31, 2021


☐	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 April 30, 2021:

Class A		6,577,100
Class B		77,972,436
Class C		661,688
Class D		18,191

UNIVERSAL HEALTH SERVICES, INC.

INDEX

		PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Statements of Income – Three Months Ended March 31, 2021 and 2020		3

Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2021 and 2020		4

Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020		5

Condensed Consolidated Statements of Changes in Equity – Three Months Ended March 31, 2021 and 2020		6

Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2021 and 2020		8

Notes to Condensed Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		53

Item 4. Controls and Procedures		53

PART II. Other Information

Item 1. Legal Proceedings		54

Item 1A. Risk Factors		54

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		54

Item 6. Exhibits		55

Signatures		56

This Quarterly Report on Form 10-Q is for the quarter ended March 31, 2021. 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.

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 March 31,
	2021			2020
Net revenues	$	3,012,987		$	2,829,667
Operating charges:
Salaries, wages and benefits		1,497,773			1,432,669
Other operating expenses		709,708			689,790
Supplies expense		347,110			317,827
Depreciation and amortization		131,403			124,394
Lease and rental expense		31,324			28,293
		2,717,318			2,592,973
Income from operations		295,669			236,694
Interest expense, net		21,957			36,351
Other (income) expense, net		835			9,560
Income before income taxes		272,877			190,783
Provision for income taxes		63,807			46,323
Net income		209,070			144,460
Less: Net income (loss) attributable to noncontrolling interests		(21	)		2,423
Net income attributable to UHS	$	209,091		$	142,037

Basic earnings per share attributable to UHS	$	2.46		$	1.64
Diluted earnings per share attributable to UHS	$	2.43		$	1.64

Weighted average number of common shares - basic		84,782			86,212
Add: Other share equivalents		1,014			243
Weighted average number of common shares and equivalents - diluted		85,796			86,455

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

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, unaudited)

	Three months ended March 31,
	2021			2020
Net income	$	209,070		$	144,460
Other comprehensive income (loss):
Foreign currency translation adjustment		(10,346	)		(39,201	)
Other comprehensive income (loss) before tax		(10,346	)		(39,201	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(1,466	)		(2,108	)
Total other comprehensive income (loss), net of tax		(8,880	)		(37,093	)
Comprehensive income		200,190			107,367
Less: Comprehensive income (loss) attributable to noncontrolling interests		(21	)		2,423
Comprehensive income attributable to UHS	$	200,211		$	104,944

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

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, unaudited)

	March 31, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	764,502		$	1,224,490
Accounts receivable, net		1,668,650			1,728,928
Supplies		193,961			190,417
Other current assets		157,052			138,034
Total current assets		2,784,165			3,281,869

Property and equipment		10,119,037			9,885,888
Less: accumulated depreciation		(4,623,435	)		(4,512,764	)
		5,495,602			5,373,124
Other assets:
Goodwill		3,886,973			3,882,715
Deferred income taxes		23,514			22,689
Right of use assets-operating leases		326,703			336,513
Deferred charges		4,782			4,985
Other		574,590			574,984
Total Assets	$	13,096,329		$	13,476,879

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	107,281		$	331,998
Accounts payable and other liabilities		1,779,700			1,668,671
Medicare accelerated payments and deferred CARES Act and other grants		189,320			376,151
Operating lease liabilities		60,812			59,796
Federal and state taxes		102,266			44,423
Total current liabilities		2,239,379			2,481,039

Other noncurrent liabilities		476,377			458,549
Operating lease liabilities noncurrent		267,707			278,303
Medicare accelerated payments noncurrent		0			322,617
Long-term debt		3,505,822			3,524,253
Deferred income taxes		735			5,582
Redeemable noncontrolling interests		4,470			4,569

Equity:
UHS common stockholders’ equity		6,513,862			6,317,146
Noncontrolling interest		87,977			84,821
Total equity		6,601,839			6,401,967
Total Liabilities and Stockholders’ Equity	$	13,096,329		$	13,476,879

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

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months ended March 31, 2021

(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, January 1, 2021	$	4,569		$	66	$	778		$	7	$	0	$	(479,503	)	$	6,747,678		$	48,120		$	6,317,146		$	84,821		$	6,401,967
Common Stock
Issued/(converted)		—			—		4			—		—		—			3,356			—			3,360			—			3,360
Repurchased		—			—		(1	)		—		—		—			(7,463	)		—			(7,464	)		—			(7,464	)
Restricted share-based compensation expense		—			—		—			—		—		—			2,862			—			2,862			—			2,862
Dividends paid		—			—		—			—		—		(17,018	)		—			—			(17,018	)		—			(17,018	)
Stock option expense		—			—		—			—		—		—			14,765			—			14,765			—			14,765
Distributions to noncontrolling interests		—			—		—			—		—		—			—			—			—			(4,525	)		(4,525	)
Purchase of ownership interests by minority members		—			—		—			—		—		—			—			—			—			7,603			7,603
Comprehensive income:
Net income to UHS / noncontrolling interests		(99	)		—		—			—		—		—			209,091			—			209,091			78			209,169
Foreign currency translation adjustments, net of income tax		—			—		—			—		—		—			—			(8,880	)		(8,880	)		—			(8,880	)
Subtotal - comprehensive income		(99	)		—		—			—		—		—			209,091			(8,880	)		200,211			78			200,289
Balance, March 31, 2021	$	4,470		$	66	$	781		$	7	$	0	$	(496,521	)	$	6,970,289		$	39,240		$	6,513,862		$	87,977		$	6,601,839

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

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months ended March 31, 2020

(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, January 1, 2020	$	4,333	$	66	$	794	$	7	$	0	$	(462,159	)	$	5,933,504	$	31,893	$	5,504,105	$	74,766	$	5,578,871
Common Stock
Issued/(converted)		—		—		2		—		—		—			3,110		—		3,112		—		3,112
Repurchased		—		—