Universal Health Services Inc Class B UHS
Q3 2013 Earnings Call Transcript

Transcript Call Date 03/01/2013

Operator: Good morning. My name is Ginger, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Universal Health Services' Q4 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.

Thank you. Mr. Steve Filton, you may begin your conference.

Steve G. Filton - SVP and CFO: Thank you. Good morning, I am Steve Filton. Alan Miller our CEO is also joining us this morning. Welcome to this review of Universal Health Services results for the full-year and fourth quarter ended December 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, 2012.

We would 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 $4.53 for the year, and $1.39 for the quarter. After adjusting for a reduction in malpractice reserves relating primarily to prior years, the gain on the sale of our Auburn facility and the incentive income and expenses associated with the implementation of electronic health record applications at our acute care hospitals. Our adjusted net income attributable to UHS per diluted share for the quarter ended December 31, 2012 was $1. Included in the quarter is an increase to our effective tax rate due to non-deductible transaction costs related to the Ascend acquisition.

On a same facility basis revenues in our Behavioral Health division increased 4.5% during the fourth quarter of 2012. Adjusted admissions and patient days to our Behavioral Health facilities owned for more than a year increased 5% and 0.5%, respectively, during the fourth quarter. Revenue per adjusted patient day rose 4% during the fourth quarter of 2012 over the comparable prior year quarter.

We defined operating margins as operating income or net revenue less salaries, wages and benefits other operating expenses, supplies expense and doubtful accounts divided by net revenue.

Operating margins for our Behavioral Health hospitals owned for more than a year increased to 27.6% during the quarter ended December 31, 2012, as compared to 25.3% during the comparable prior year period.

As discussed in the Form 10-K we filed last night the OIG has served a subpoena requesting various documents concerning UHS and several of its behavioral facilities.

At the present time we are uncertain as to the focus, scope or extent of the investigation, viability of the facilities and/or potential financial exposure if any in connection with this matter. On a same facility basis in our acute division revenues increased 3.1% during the fourth quarter of 2012. The increase resulted primarily from 1.7% increase in adjusted admissions and 1.4% increase in revenues per adjusted admission.

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