Universal Health Services (UHS) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

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

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to the Third Quarter 2022 Universal Health Services Earnings Conference Call. And at this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded.

I would like to hand the conference over to your speakers today, Steve Filton, Executive Vice President and CFO; and Marc Miller, President and CEO. Please go ahead.

Steve Filton

Thank you, Michelle. Good morning. We welcome you to this review of Universal Health Services' results for the third quarter, ended September 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 June 30, 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 net income attributable to UHS per diluted share of $2.50 for the third quarter of 2022. After adjusting for the impact of the item reflected on the supplemental schedule, as included with the press release, our adjusted net income attributable to UHS per diluted share was $2.54 for the quarter-ended September 30, 2022.

Marc Miller

During the third quarter, we experienced a decrease in the number of patients with a COVID diagnosis treated in our hospitals as compared to the prior-year quarter. As a percentage of total admissions, COVID-diagnosed patients made up 16% of our admissions in the third quarter of 2021, but only 6% of our admissions in the third quarter of 2022. In our Acute segment, this declined in COVID patients resulted in reduced revenues due to the lower acuity and less of the incremental government reimbursement associated with COVID patients. While overall surgical volume tended to recover to pre-pandemic levels, there was a measurable shift from in-patient to outpatient, resulting in further overall revenue softness.

And while we were able to continue to reduce the amount of premium pay in the quarter, which declined from $117 million in the second quarter to $81 million in the third quarter, there was insufficient revenue growth to offset the accelerated rate of wage increases and other inflationary pressures. The $25 million we received in quality incentive fund payments, in Texas, helped to narrow the gap, leading to an Acute EBITDA result in the quarter only slightly below our internal forecasts.