Universal Health Services Inc. (UHS)
Q1 2012 Results Earnings Call
April 27, 2012 9:00 AM ET
Steve Filton – Chief Financial Officer
Alan Miller – Chief Executive Officer
Bryan Sekino – Barclays
Tom Gallucci – Lazard Capital
Darren Lehrich – Deutsche Bank
Ralph Giacobbe – Credit Suisse
A.J. Rice - UBS
Gary Lieberman – Wells Fargo
Gary Taylor – Citigroup
Kevin Fishbeck – Bank of America
Todd Corsair – UBS
Whit Mayo – Robert Baird
Adam Feinstein – Barclays
Frank Morgan – RBC Capital Markets
Previous Statements by UHS
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Good morning. My name is Christine, and I’ll be your conference operator. At this time, I would like to welcome everyone to the UHS First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)
Thank you. I will now turn the conference over to Mr. Steve Filton, CFO.
Thank you and good morning. Alan Miller, our CEO is also joining us this morning. Welcome to this review of Universal Health Services’ results for the first quarter ended March 31, 2012.
During this conference call, Alan and I will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast, projections, and forward-looking statements.
For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, I recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2011.
We’d like to highlight just a couple of developments and business trends before opening the call up to questions.
As discussed in our press release last night, the company recorded net income attributable to UHS per diluted share of a $1.31 for the quarter, after adjusting for the prior year impact of several reimbursement items recorded during the quarter, our adjusted net income attributable to UHS per diluted share for the quarter ended March 31, 2012 was a $1.13.
On a same facility basis, revenues in our Behavioral Health division increased 5.3% during the first quarter of 2012. We note that the PSI facilities are included in our same-store data for the entire quarter.
Adjusted admissions and patient days to our behavioral health facilities owned for more than a year increased 9.2% and 2.8%, respectively during the first quarter. Revenue per adjusted patient day rose 2.4% during the first quarter of 2012 over the comparable prior year quarter.
Operating margins for our behavioral health hospitals owned for more than a year increased to 26.8% during the quarter ended March 31, 2012 as compared to 26.5% during the comparable prior year.
On a same facility basis in our acute care division revenues increased 0.8% during the first quarter of 2012. The increase resulted primarily from a 1.6% increase in adjusted admissions to our hospitals owned for more than a year.
The relatively muted revenue growth reflects a difficult comparisons to the prior year quarter when our net revenues were favorably impacted by positive changes in payor mix especially stabilization in uninsured volumes.
On a same facility basis operating margins for our acute hospitals decreased to 18.6% during the first quarter of 2012 from 20.5% during the first quarter of 2011. We also note that there are no EHR-related revenues included in our quarterly financial statements.
Our acute care hospitals provided charity care and uninsured discounts based on charges at established rates amounting to $315 million and $223 million during the three-month period ended March 31, 2012 and 2011.
As a percentage of acute care net revenues, bad debt, charity, care expense and the uninsured discount in this year’s first quarter were at levels higher than those experienced during the first quarter 2011.
However, due primarily to the increase in behavioral health revenues and the very low levels of bad debt and uninsured discounts in that business, our overall percentage of bad debt, charity care and uninsured discounts were lower than those experienced during the first quarter of 2011.
Our cash from operating activities was approximately $134 million during the first quarter of 2012, as compared to $183 million in the first quarter of 2011.
Our accounts receivable days outstanding increased to 56 days during the first quarter of 2012, primarily due to a lack of Medicaid payments from the State of Illinois and the lack of disproportionate share payments from Texas, as well as the Rural Floor settlement recorded as receivable during the quarter.
At March 31, 2012 our ratio of debt-to-total capitalization was 59.6%. We spent $93 million on capital expenditures during the first quarter, included in our capital expenditures were the construction cost related to the ongoing construction of a new acute care hospital in Temecula, California and a new bed tower at our Wellington facility in Florida. Active in the first quarter of 2012, we have completed all of the divestitures required by the FTC as part of the PSI acquisition.
Alan and I would be pleased to answer your questions at this time.
(Operator Instructions) Your first question comes from the line of Adam Feinstein of Barclays.
Bryan Sekino – Barclays
Hi. Good morning. This is Bryan Sekino on behalf of Adam this morning. Just wanted to know if you could provide us with some details in Vegas on some of the mix shift that you saw in acute care versus the strong Q1 of ‘11, if you could provide us with some details on how the mix shift, if that was really the bullish of the mix shift in the quarter?