KING OF PRUSSIA, Pa., Feb. 25, 2016 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $173.7 million, or $1.74 per diluted share, during the fourth quarter of 2015 as compared to $172.8 million, or $1.71 per diluted share, during the comparable quarter of 2014. Net revenues increased 6.4% to $2.32 billion during the fourth quarter of 2015 as compared to $2.18 billion during the fourth quarter of 2014.

For the three-month period ended December 31, 2015, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Consolidated Statements of Income Information ("Supplemental Schedule"), increased approximately 12% to $170.7 million, or $1.71 per diluted share, as compared to $152.0 million, or $1.51 per diluted share, during the fourth quarter of 2014.

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarters of 2015 and 2014, are net favorable after-tax impacts of approximately $3.1 million, or $.03 per diluted share, during the fourth quarter of 2015 and $8.6 million, or $.08 per diluted share, during the fourth quarter of 2014, related to the incentive income and depreciation and amortization expense recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals.

Also included in our reported results during the fourth quarter of 2014, as reflected on the Supplemental Schedule, was an aggregate favorable after-tax impact of approximately $12.2 million, or $.12 per diluted share, consisting of: (i) a favorable after-tax impact of $11.7 million, or $.12 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2014, based upon a reserve analysis, and; (ii) an after-tax impact of $493,000 relating to the charge incurred during 2014 in connection with the settlement of a legal matter.

Consolidated Results of Operations, As Reported and As Adjusted – Twelve-month periods ended December 31, 2015 and 2014:

Reported net income attributable to UHS was $680.5 million, or $6.76 per diluted share, during the year ended December 31, 2015 as compared to $545.3 million, or $5.42 per diluted share, during the 2014 full year. Net revenues increased 10.2% to $9.04 billion during the twelve-month period of 2015 as compared to $8.21 billion during the comparable twelve-month period of 2014.

For the year ended December 31, 2015, our adjusted net income attributable to UHS, as calculated on the Supplemental Schedule, increased approximately 19% to $692.0 million, or $6.87 per diluted share, as compared to $581.8 million, or $5.78 per diluted share, during the year ended December 31, 2014.

As reflected on the Supplemental Schedule, included in our reported results during the years ended December 31, 2015 and 2014, are net unfavorable after-tax impacts of approximately $11.5 million, or $.11 per diluted share, during 2015 and $4.7 million, or $.04 per diluted share, during 2014, related to the implementation of EHR applications at our acute care hospitals.

Also included in our reporting results during the year ended December 31, 2014, as reflected on the Supplemental Schedule, was a net unfavorable after-tax impact of approximately $31.7 million, or $.32 per diluted share, consisting of: (i) an after-tax charge of $27.1 million, or $.27 per diluted share, incurred in connection with the settlement of the Garden City Employees' Retirement System v. Psychiatric Solutions, Inc. legal matter; (ii) an aggregate after-tax charge of $22.7 million, or $.23 per diluted share, recorded in connection with the costs related to extinguishment of debt resulting from various financing transactions that occurred during the third quarter of 2014; (iii) a favorable after-tax impact of $11.7 million, or $.12 per diluted share, resulting from a reduction to our professional and general liability self-insurance reserves relating to years prior to 2014, based upon a reserve analysis, and; (iv) a favorable after-tax impact of $6.3 million, or $.06 per diluted share, resulting from a gain realized on the sale of a non-operating investment.

Acute Care Services – Three and twelve-month periods ended December 31, 2015 and 2014:During the fourth quarter of 2015, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 4.8% and adjusted patient days increased 3.9%, as compared to the fourth quarter of 2014. Net revenues at these facilities increased 7.3% during the fourth quarter of 2015 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission increased 3.3% while net revenue per adjusted patient day increased 4.2% during the fourth quarter of 2015 as compared to the comparable quarter of 2014. On a same facility basis, the operating margin at our acute care hospitals increased to 17.2% during the fourth quarter of 2015 as compared to 16.8% during the fourth quarter of 2014. We define operating margin as net revenues less salaries, wages and benefits, other operating expenses and supplies expense (excluding the impact of EHR and other items as indicated on the Supplemental Schedules).

During the year ended December 31, 2015, at our acute care hospitals on a same facility basis, adjusted admissions increased 5.4% and adjusted patient days increased 5.5%, as compared to the 2014 full year. Net revenues at these facilities increased 8.7% during the 2015 full year as compared to the 2014 full year. At these facilities, net revenue per adjusted admission increased 3.9% while net revenue per adjusted patient day increased 3.7% during 2015 as compared to 2014. On a same facility basis, the operating margin at our acute care hospitals increased to 18.5% during the year ended December 31, 2015 as compared to 17.9% during the 2014 full year.

We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues or in accounts receivable, net. Our acute care hospitals provided charity care and uninsured discounts, based on gross charges, amounting to approximately $332 million and $284 million during the three-month periods ended December 31, 2015 and 2014, respectively, and $1.20 billion and $1.14 billion during the twelve-month periods ended December 31, 2015 and 2014, respectively. The provision for doubtful accounts at our acute care hospitals amounted to approximately $172 million and $130 million during the three-month periods ended December 31, 2015 and 2014, respectively, and $631 million and $590 million during the twelve-month periods ended December 31, 2015 and 2014, respectively. Our acute care hospitals experienced an increase in the aggregate of charity care, uninsured discounts and provision for doubtful accounts, as a percentage of gross charges, during the third and fourth quarters of 2015, as compared to the comparable quarters of 2014. During the year ended December 31, 2015, as compared to the 2014 full year, our acute care hospitals experienced a decrease in the aggregate of charity care, uninsured discounts and provision for doubtful accounts, as a percentage of gross charges.

Behavioral Health Care Services – Three and twelve-month periods ended December 31, 2015 and 2014:During the fourth quarter of 2015, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 0.2% while adjusted patient days increased 0.7% compared to the fourth quarter of 2014. At these facilities, net revenue per adjusted admission increased 3.1% while net revenue per adjusted patient day increased 2.5% during the fourth quarter of 2015 as compared to the comparable quarter in 2014. On a same facility basis, our behavioral health services' net revenues increased 3.6% during the fourth quarter of 2015, as compared to the comparable quarter in 2014, and the operating margins were 27.1% and 27.9% during the three-month periods ended December 31, 2015 and 2014, respectively.

During the twelve-month period ended December 31, 2015, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.9% while adjusted patient days increased 1.2% compared to the 2014 full year. At these facilities, net revenue per adjusted admission increased 1.8% during the year ended December 31, 2015 while net revenue per adjusted patient day increased 3.4% during the twelve-month period ended December 31, 2015 as compared to the 2014 full year. On a same facility basis, our behavioral health services' net revenues increased 5.0% during the full year of 2015, as compared to 2014, and the operating margins remained unchanged at 27.9% during each of the years ended December 31, 2015 and 2014.

Share Repurchase Program:In February of 2016, our Board of Directors authorized a $400 million increase to our stock repurchase program, which increased the aggregate authorization to $800 million from the previous $400 million authorization approved during the third quarter of 2014. Pursuant to this program, we may purchase shares of our Class B Common Stock, from time to time as conditions allow, on the open market or in negotiated private transactions.

In conjunction with this program, during the fourth quarter of 2015, we repurchased 478,118 shares at an aggregate cost of $57.8 million. Since inception of the program through December 31, 2015, we repurchased approximately 1.9 million shares at an aggregate cost of approximately $224.2 million. Subsequent to December 31, 2015, we repurchased an additional 886,782 shares at an aggregate cost of $99.0 million increasing our aggregate program inception to date stock repurchases to approximately 2.8 million shares at an aggregate cost of approximately $323.2 million.

2016 Full Year Guidance:Our estimated range of adjusted net income attributable to UHS for the year ended December 31, 2016, is $7.12 to $7.58 per diluted share. This guidance range represents an increase of approximately 4% to 10% over the adjusted net income attributable to UHS of $6.87 per diluted share for the year ended December 31, 2015, as calculated on the attached Supplemental Schedule. The range excludes the below-mentioned unfavorable EHR impact of $.17 per diluted share expected during 2016.

During 2016, our net revenues are estimated to be approximately $9.75 billion to $9.85 billion representing an increase of approximately 8% to 9% over our 2015 net revenues of approximately $9.04 billion.

During 2016, we expect to record approximately $5 million of EHR incentive income and approximately $36 million of EHR-related depreciation and amortization expense resulting in a net unfavorable after-tax (and after income attributable to noncontrolling interest) impact of approximately $17 million, or $.17 per diluted share.

This guidance range also excludes the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, costs related to extinguishment of debt, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, impact of share repurchases and other material amounts that may be reflected in our financial statements that relate to prior periods. It is also subject to certain conditions including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures.

Conference call information:We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on February 26, 2016. The dial-in number is 1-877-648-7971.

A live broadcast of the conference call will be available on our website at www.uhsinc.com. A replay of the call will be available following the conclusion of the live call and will be available for one full year.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:Universal Health Services, Inc. ("UHS") is one of the nation's largest hospital companies operating through its subsidiaries acute care hospitals, behavioral health facilities and ambulatory centers located throughout the United States, the United Kingdom, Puerto Rico and the U.S. Virgin Islands. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE: UHT). For additional information on the Company, visit our web site: http://www.uhsinc.com.

This press release contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2015), may cause the results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

We believe that operating income, operating margin, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and earnings before interest, taxes, depreciation and amortization ("EBITDA"), which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of material items that are nonrecurring or non-operational in nature including items such as, but not limited to, costs related to extinguishment of debt, gains on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2015. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

We incur health-care related taxes ("Provider Taxes") imposed by states in the form of a licensing fee, assessment or other mandatory payment which are related to: (i) healthcare items or services; (ii) the provision of, or the authority to provide, the health care items or services, or; (iii) the payment for the health care items or services. Such Provider Taxes are subject to various federal regulations that limit the scope and amount of the taxes that can be levied by states in order to secure federal matching funds as part of their respective state Medicaid programs. We derive a related Medicaid reimbursement benefit from assessed Provider Taxes in the form of Medicaid claims based payment increases and/or lump sum Medicaid supplemental payments. Under these programs, including the impact of uncompensated care and upper payment limit programs, and the Texas Delivery System Reform Incentive program, we earned revenues (before Provider Tax assessments) of approximately $86 million and $117 million during the three-month periods ended December 31, 2015 and 2014, respectively, and $307 million and $295 million during the twelve-month periods ended December 31, 2015 and 2014, respectively. These revenues were offset by assessments of $40 million and $69 million during the fourth quarters of 2015 and 2014, respectively, and $137 million and $140 million during the twelve-month periods ended December 31, 2015 and 2014, respectively, which are recorded in other operating expenses on the attached Consolidated Statement of Income. Prior to 2015, these assessments were recorded as a reduction to our net revenues. Accordingly, to conform with current year presentation, these assessments were reclassified on our Consolidated Statement of Income for the three and twelve-month periods ended December 31, 2014.

Our acute care hospitals are eligible for Medicare and Medicaid EHR incentive payments upon implementation of the EHR application, once they have demonstrated meaningful use of certified EHR technology for the applicable stage or have completed attestations to their adoption or implementation of certified EHR technology. However, there may be timing differences in the recognition of the incentive income and expenses recorded in connection with the implementation of the EHR application which may cause material period-to-period changes in our future results of operations. Pursuant to regulations, hospitals that did not qualify as a meaningful user of EHR by 2015 are subject to a reduced market basket update to the inpatient prospective payment system standardized amount in 2015 and each subsequent fiscal year. We believe that all of our acute care hospitals have met the applicable meaningful use criteria and therefore are not subject to a reduced market basked update to the inpatient prospective payment standardized amount. Under the HITECH Act, hospitals must continue to meet the applicable meaningful use criteria in each fiscal year or they will be subject to a market basket update reduction in a subsequent fiscal year.

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SOURCE Universal Health Services, Inc.