uhs-10q_20220930.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 September 30, 2022


☐	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 October 31, 2022:

Class A		6,577,100
Class B		64,157,474
Class C		661,688
Class D		14,170

UNIVERSAL HEALTH SERVICES, INC.

INDEX

		PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Statements of Income – Three and Nine Months Ended September 30, 2022 and 2021		3

Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2022 and 2021		4

Condensed Consolidated Balance Sheets – September 30, 2022 and December 31, 2021		5

Condensed Consolidated Statements of Changes in Equity – Three and Nine Months Ended September 30, 2022 and 2021		6

Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and 2021		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		62

Item 4. Controls and Procedures		62

PART II. Other Information

Item 1. Legal Proceedings		63

Item 1A. Risk Factors		63

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		63

Item 6. Exhibits		64

Signatures		65

This Quarterly Report on Form 10-Q is for the quarter ended September 30, 2022. 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 September 30,					Nine months ended September 30,
	2022			2021		2022			2021
Net revenues	$	3,336,027		$	3,155,999	$	9,952,390		$	9,366,866
Operating charges:
Salaries, wages and benefits		1,677,431			1,556,448		5,061,173			4,542,156
Other operating expenses		837,241			754,072		2,526,060			2,233,590
Supplies expense		366,337			367,834		1,092,403			1,052,977
Depreciation and amortization		145,874			134,462		433,508			399,850
Lease and rental expense		33,264			28,375		97,075			88,848
		3,060,147			2,841,191		9,210,219			8,317,421
Income from operations		275,880			314,808		742,171			1,049,445
Interest expense, net		35,653			21,199		83,002			64,455
Other (income) expense, net		6,015			6,719		15,244			(1,575	)
Income before income taxes		234,212			286,890		643,925			986,565
Provision for income taxes		57,401			67,515		157,312			232,844
Net income		176,811			219,375		486,613			753,721
Less: Net income (loss) attributable to noncontrolling interests		(6,003	)		1,024		(14,176	)		1,255
Net income attributable to UHS	$	182,814		$	218,351	$	500,789		$	752,466

Basic earnings per share attributable to UHS	$	2.52		$	2.65	$	6.78		$	8.96
Diluted earnings per share attributable to UHS	$	2.50		$	2.60	$	6.71		$	8.83

Weighted average number of common shares - basic		72,595			82,262		73,769			83,756
Add: Other share equivalents		465			1,411		743			1,275
Weighted average number of common shares and equivalents - diluted		73,060			83,673		74,512			85,031

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 September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Net income	$	176,811		$	219,375		$	486,613		$	753,721
Other comprehensive income (loss):
Foreign currency translation adjustment		24,242			(9,121	)		(22,460	)		(23,184	)
Other comprehensive income (loss) before tax		24,242			(9,121	)		(22,460	)		(23,184	)
Income tax expense (benefit) related to items of other comprehensive income (loss)		6,685			109			5,809			(1,958	)
Total other comprehensive income (loss), net of tax		17,557			(9,230	)		(28,269	)		(21,226	)
Comprehensive income		194,368			210,145			458,344			732,495
Less: Comprehensive income (loss) attributable to noncontrolling interests		(6,003	)		1,024			(14,176	)		1,255
Comprehensive income attributable to UHS	$	200,371		$	209,121		$	472,520		$	731,240

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)

	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	74,571		$	115,301
Accounts receivable, net		1,902,472			1,746,635
Supplies		217,818			206,839
Other current assets		261,698			194,781
Total current assets		2,456,559			2,263,556

Property and equipment		11,103,596			10,770,702
Less: accumulated depreciation		(5,167,198	)		(4,896,427	)
		5,936,398			5,874,275
Other assets:
Goodwill		3,874,021			3,962,624
Deferred income taxes		55,789			45,707
Right of use assets-operating leases		457,209			367,477
Deferred charges		6,336			6,525
Other		592,588			573,379
Total Assets	$	13,378,900		$	13,093,543

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	66,307		$	48,409
Accounts payable and other liabilities		1,795,004			1,860,496
Operating lease liabilities		70,146			64,484
Federal and state taxes		7,743			10,720
Total current liabilities		1,939,200			1,984,109

Other noncurrent liabilities		500,119			464,759
Operating lease liabilities noncurrent		392,582			304,624
Long-term debt		4,638,356			4,141,879

Redeemable noncontrolling interests		4,563			5,119

Equity:
UHS common stockholders’ equity		5,855,353			6,089,664
Noncontrolling interest		48,727			103,389
Total equity		5,904,080			6,193,053
Total Liabilities and Stockholders’ Equity	$	13,378,900		$	13,093,543

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 and Nine Months ended September 30, 2022

(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, July 1, 2022	$	4,449	$	66	$	660		$	7	$	0	$	(575,198	)	$	6,404,660		$	(15,535	)	$	5,814,660		$	89,256		$	5,903,916
Common Stock
Issued/(converted)		—		—		1			—		—		—			3,738			—			3,739			—			3,739
Repurchased		—		—		(16	)		—		—		—			(158,186	)		—			(158,202	)		—			(158,202	)
Restricted share-based compensation expense		—		—		—			—		—		—			4,869			—			4,869			—			4,869
Dividends paid and accrued		—		—		—			—		—		(14,607	)		—			—			(14,607	)		—			(14,607	)
Stock option expense		—		—		—			—		—		—			15,797			—			15,797			—			15,797
Acquisition of noncontrolling interest in majority owned business		—		—		—			—		—		—			(11,274	)		—			(11,274	)		(37,608	)		(48,882	)
Distributions to noncontrolling interests		—		—		—			—		—		—			—			—			—			(103	)		(103	)
Purchase (sale) of ownership interests by (from) minority members		—		—		—			—