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Universal Health Services, Inc. Reports Significant Increases In 2009 Fourth Quarter And Full Year Earnings Per Diluted Share

KING OF PRUSSIA, Pa., Feb. 25 /PRNewswire-FirstCall/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $60.9 million, or $.62 per diluted share, during the fourth quarter of 2009 as compared to $46.5 million, or $.46 per diluted share, during the comparable prior year quarter. Net revenues increased 4% to $1.29 billion during the fourth quarter of 2009 as compared to $1.24 billion during the fourth quarter of 2008.  

Consolidated Results of Operations, As Reported – Years ended December 31, 2009 and 2008:

Reported net income attributable to UHS was $260.4 million, or $2.64 per diluted share, during the year ended December 31, 2009 as compared to $199.4 million, or $1.96 per diluted share, during 2008.  Net revenues increased 4% to $5.20 billion during 2009 as compared to $5.02 billion during 2008.  

Consolidated Results of Operations, As Adjusted – Three-month periods ended December 31, 2009 and 2008:

After adjusting the reported results for the three-month periods ended December 31, 2009 and 2008 to neutralize the net favorable impact of the items mentioned below, and as reflected on the attached Schedules of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedules"), our adjusted net income attributable to UHS was $56.5 million, or an increase of 33% to $.57 per diluted share, during the fourth quarter of 2009 as compared to $43.7 million, or $.43 per diluted share, during the fourth quarter of 2008.  Included in the reported and adjusted net income attributable to UHS during the fourth quarter of 2009 was $3.4 million, or $.03 per diluted share, recorded in connection with the completion of a hospital construction management contract.

As indicated on the attached Supplemental Schedule, included in our reported net income attributable to UHS during the three-month period ended December 31, 2009, was a favorable impact of $4.4 million, or $.05 per diluted share, resulting from a reduction to our workers' compensation self-insurance reserves relating primarily to years prior to 2009 based upon a reserve analysis.

Included in our reported net income attributable to UHS during the three-month period ended December 31, 2008 was a combined net favorable impact of $2.8 million, or $.03 per diluted share, resulting from: (i) a charge recorded in connection with the government's investigation of our South Texas Health System affiliates (which was settled during the fourth quarter of 2009); (ii) a reduction to our professional and general liability self-insured claims expense due to partial liquidation proceeds received from a bankrupt commercial insurer, and; (iii) the after-tax income from discontinued operations consisting primarily of a gain recorded on divestiture of an acute care hospital sold during the fourth quarter of 2008.

Consolidated Results of Operations, As Adjusted – Years ended December 31, 2009 and 2008:

After adjusting the reported results for the years ended December 31, 2009 and 2008 to neutralize the net favorable impact of the items mentioned below, and as reflected on the attached Supplemental Schedule, our adjusted net income attributable to UHS was $246.2 million, or an increase of 28% to $2.49 per diluted share, during 2009 as compared to $197.3 million, or $1.94 per diluted share, during 2008.  

As indicated on the attached Supplemental Schedule, included in our reported net income attributable to UHS during the year ended December 31, 2009, was a combined net favorable impact of $14.2 million, or $.15 per diluted share, resulting from: (i) a favorable adjustment resulting from a reduction to our workers' compensation self-insurance reserves relating primarily to years prior to 2009 based upon a reserve analysis; (ii) a favorable adjustment resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2009 based upon a reserve analysis, partially offset by; (iii) an unfavorable discrete tax item recorded in connection with the settlement payment made to the government during the fourth quarter of 2009 in connection with their investigation of our South Texas Health System affiliates.  

Included in our reported net income attributable to UHS during the year ended December 31, 2008 was a combined net favorable impact of $2.0 million, or $.02 per diluted share, resulting from: (i) a charge recorded in connection with the government's investigation of our South Texas Health System affiliates; (ii) a reduction to our professional and general liability self-insured claims expense due to partial liquidation proceeds received from a bankrupt commercial insurer; (iii) gains recorded on divestiture of certain real property and other investment, and; (iv) the after-tax income from discontinued operations consisting primarily of a gain recorded on divestiture of an acute care hospital sold during the fourth quarter of 2008.

"Despite the very difficult operating environment in 2009, we are very proud of the manner in which our operators effectively managed the business and increased margins in both our business segments", said Alan B. Miller, Chief Executive Officer. "Although we're pleased with our 2009 accomplishments, we know that 2010 will present us with continued economic challenges and we remain committed to the same level of high quality performance and results."

Acute Care Services - Three-month periods ended December 31, 2009 and 2008:

At our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 3.1% while adjusted patient days increased 1.0% during the fourth quarter of 2009, as compared to the fourth quarter of 2008. Net revenues at these facilities increased 5.6% during the fourth quarter of 2009 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 2.5% while net revenue per adjusted patient day increased 4.6% during the fourth quarter of 2009 as compared to the comparable quarter of the prior year. On a same facility basis, the operating margin (net revenues less salaries, wages and benefits, other operating expenses, supplies expense and provision for doubtful accounts) at our acute care hospitals decreased to 13.4% during the fourth quarter of 2009 as compared to 14.0% during the fourth quarter of 2008, due to an increase in the provision for doubtful accounts. The provision for doubtful accounts at these hospitals amounted to 12.7% of net revenues during the fourth quarter of 2009 as compared to 12.2% during the fourth quarter of 2008.  

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