Universal Health Services (UHS) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 26, 2022 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and thank you for standing by. Welcome to the Universal Health Services, Inc. Second Quarter 2022 Earnings Conference Call. I would now like to hand the conference over to our speaker today, Steve Filton, Chief Financial Officer. Please go ahead, Mr. Filton.

Steve Filton

Thank you, and good morning, everyone. Marc Miller is also joining us this morning. We welcome you to this review of Universal Health Services results for the second quarter ended June 30, 2022. During the conference call, we will be using words such as believes, expects, anticipates, estimates and similar words that represent forecasts, projections and forward-looking statements.

For anyone not familiar with the risks and uncertainties inherent in those 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, 2021, and our Form 10-Q for the quarter ended March 31, 2022.

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 reported an adjusted net income attributable to UHS per diluted share of $2.20 for the second quarter of 2022. As previously disclosed in our preannouncement on June 30, 2022, our acute hospitals experienced a significant decline in COVID-related patients during the second quarter of 2022.

As a percentage of total admissions, COVID diagnosed patients made up 13% of total admissions in the first quarter of 2022, but only 3% in the second quarter of 2022. The decrease in COVID-related patient volumes during the second quarter was not offset by an equivalent increase in non-COVID-related patients resulting in significant shortfalls in revenues and earnings compared to our original forecast for the quarter.

And even though we did make progress in reducing premium pay in the acute segment, which went from $153 million in the first quarter to $117 million in the second quarter, overall costs did not decline sufficiently to offset the weaker revenues. Specifically, a surge in patients with the Omicron variant of the virus, which began in December of 2021, tended to peak in most of our geographies in January of 2022.

In our acute segment, we would note that in general, the Omicron patients were less acutely ill than the COVID-related patients treated in previous surges and thus displayed somewhat lower acuity. Meanwhile, the amount of contract nursing hours used and even more importantly, the rate we had to pay for those hours increased significantly in the first quarter, both on a sequential basis as well as on a year-over-year comparison. In our behavioral segment, we also made progress in filling our vacant positions, but patient day volumes still does not recover as quickly as we originally expected.