[10-Q] Universal Health Services, Inc. Quarterly Earnings Report
Universal Health Services reported stronger operating results for the quarter and first half of 2025. Net revenues for the three months ended June 30, 2025 were $4.284 billion versus $3.908 billion a year earlier, and net income attributable to UHS was $353.2 million versus $289.2 million, producing basic EPS of $5.49 compared with $4.32 a year ago. For the six months, revenues were $8.384 billion and net income attributable to UHS was $669.9 million, with diluted EPS of $10.23 versus $8.08 in the prior year period.
The balance sheet shows total assets of $14.986 billion and total equity of $7.086 billion at June 30, 2025. Net cash provided by operating activities for the six months was $909.0 million; investing included $505.0 million of capital expenditures; financing used $319.1 million, including $378.5 million of share repurchases and $26.4 million of dividends. Self-insured reserves remain significant ($487 million professional/general liability; $147 million workers’ compensation), and the company disclosed ongoing legal matters including the Cumberland litigation and a confidential settlement that vacated a prior judgment for The Pavilion.
Universal Health Services ha comunicato risultati operativi più solidi per il trimestre e per la prima metà del 2025. I ricavi netti per i tre mesi terminati il 30 giugno 2025 sono stati $4.284 miliardi rispetto a $3.908 miliardi un anno prima, e l'utile netto attribuibile a UHS è stato $353.2 milioni rispetto a $289.2 milioni, con un utile base per azione (basic EPS) di $5.49 rispetto a $4.32 dell'anno precedente. Per i sei mesi, i ricavi sono stati $8.384 miliardi e l'utile netto attribuibile a UHS $669.9 milioni, con un diluted EPS di $10.23 rispetto a $8.08 nel periodo dell'anno precedente.
Lo stato patrimoniale mostra attività totali per $14.986 miliardi e un patrimonio netto complessivo di $7.086 miliardi al 30 giugno 2025. La liquidità netta generata dalle attività operative nei sei mesi è stata $909.0 milioni; gli investimenti hanno incluso $505.0 milioni di spese in conto capitale; le attività di finanziamento hanno assorbito $319.1 milioni, inclusi riacquisti di azioni per $378.5 milioni e dividendi per $26.4 milioni. Le riserve autoassicurative restano rilevanti ($487 milioni responsabilità professionale/generale; $147 milioni per infortuni sul lavoro), e la società ha reso note questioni legali in corso, tra cui la causa Cumberland e un accordo riservato che ha annullato una precedente sentenza relativa a The Pavilion.
Universal Health Services reportó resultados operativos más sólidos en el trimestre y en la primera mitad de 2025. Los ingresos netos para los tres meses terminados el 30 de junio de 2025 fueron $4.284 mil millones frente a $3.908 mil millones un año antes, y la utilidad neta atribuible a UHS fue de $353.2 millones frente a $289.2 millones, generando un BPA básico (basic EPS) de $5.49 frente a $4.32 un año atrás. En los seis meses, los ingresos fueron $8.384 mil millones y la utilidad neta atribuible a UHS $669.9 millones, con un EPS diluido (diluted EPS) de $10.23 frente a $8.08 en el mismo periodo del año anterior.
El balance muestra activos totales por $14.986 mil millones y patrimonio total de $7.086 mil millones al 30 de junio de 2025. El efectivo neto generado por actividades operativas en los seis meses fue $909.0 millones; las inversiones incluyeron $505.0 millones en gastos de capital; la financiación utilizó $319.1 millones, incluyendo recompras de acciones por $378.5 millones y dividendos por $26.4 millones. Las reservas de autoaseguro siguen siendo significativas ($487 millones responsabilidad profesional/general; $147 millones compensación laboral), y la compañía reveló asuntos legales en curso, incluida la demanda Cumberland y un acuerdo confidencial que dejó sin efecto una sentencia previa relacionada con The Pavilion.
Universal Health Services는 2025년 분기 및 상반기에 더 견조한 영업실적을 보고했습니다. 2025년 6월 30일로 종료된 3개월의 순매출은 $4.284 billion으로 전년의 $3.908 billion에 비해 증가했고, UHS에 귀속되는 순이익은 $353.2 million으로 전년의 $289.2 million보다 늘어 기본 주당순이익(basic EPS)은 $5.49로 전년의 $4.32에서 상승했습니다. 상반기 기준 매출은 $8.384 billion, UHS 귀속 순이익은 $669.9 million였으며, 희석 주당순이익(diluted EPS)은 $10.23으로 전년 동기 $8.08보다 높았습니다.
대차대조표상 총자산은 2025년 6월 30일 기준 $14.986 billion, 총자본(자기자본)은 $7.086 billion입니다. 6개월 동안 영업활동으로 인한 순현금흐름은 $909.0 million이었고; 투자활동에는 $505.0 million의 자본적 지출이 포함되었으며; 재무활동에서는 $319.1 million이 사용되었고 이에는 자사주 매입 $378.5 million 및 배당금 $26.4 million이 포함됩니다. 자기보험 준비금은 여전히 상당합니다(전문/일반 책임 $487 million; 산업재해 보상 $147 million), 또한 회사는 Cumberland 소송과 The Pavilion에 대한 이전 판결을 무효화한 기밀 합의 등 진행 중인 법적 사안을 공개했습니다.
Universal Health Services a annoncé des résultats opérationnels plus solides pour le trimestre et le premier semestre 2025. Les revenus nets pour les trois mois clos le 30 juin 2025 se sont élevés à $4.284 milliards contre $3.908 milliards un an plus tôt, et le résultat net attribuable à UHS était de $353.2 millions contre $289.2 millions, générant un bénéfice par action de base (basic EPS) de $5.49 contre $4.32 l'an dernier. Sur les six mois, les revenus ont atteint $8.384 milliards et le résultat net attribuable à UHS $669.9 millions, avec un BPA dilué (diluted EPS) de $10.23 contre $8.08 sur la même période de l'année précédente.
Le bilan fait apparaître un total d'actifs de $14.986 milliards et des capitaux propres totaux de $7.086 milliards au 30 juin 2025. Les flux de trésorerie nets dégagés par les activités opérationnelles sur les six mois se sont élevés à $909.0 millions ; les investissements comprenaient $505.0 millions de dépenses en immobilisations ; le financement a utilisé $319.1 millions, dont $378.5 millions de rachats d'actions et $26.4 millions de dividendes. Les réserves d'auto-assurance restent importantes ($487 millions responsabilité professionnelle/générale ; $147 millions indemnisation des accidents du travail), et la société a divulgué des litiges en cours, notamment le dossier Cumberland et un règlement confidentiel qui a annulé un jugement antérieur concernant The Pavilion.
Universal Health Services meldete für das Quartal und das erste Halbjahr 2025 stärkere operative Ergebnisse. Die Nettoumsatzerlöse für die drei Monate zum 30. Juni 2025 betrugen $4.284 Milliarden gegenüber $3.908 Milliarden im Vorjahr, und der auf UHS entfallende Nettogewinn lag bei $353.2 Millionen gegenüber $289.2 Millionen, was ein einfaches Ergebnis je Aktie (basic EPS) von $5.49 gegenüber $4.32 im Vorjahr ergab. Für die sechs Monate beliefen sich die Umsätze auf $8.384 Milliarden und der auf UHS entfallende Nettogewinn auf $669.9 Millionen, mit einem verwässerten Ergebnis je Aktie (diluted EPS) von $10.23 gegenüber $8.08 im Vorjahreszeitraum.
Die Bilanz weist zum 30. Juni 2025 Gesamtvermögen von $14.986 Milliarden und ein Gesamteigenkapital von $7.086 Milliarden aus. Der operative Cashflow für die sechs Monate betrug $909.0 Millionen; die Investitionstätigkeit umfasste $505.0 Millionen an Investitionsausgaben; die Finanzierung erforderte $319.1 Millionen, darunter Aktienrückkäufe in Höhe von $378.5 Millionen und Dividenden in Höhe von $26.4 Millionen. Die Rückstellungen für Selbstversicherung bleiben erheblich ($487 Millionen Beruf-/Allgemeine Haftpflicht; $147 Millionen Arbeitsunfallversicherung), und das Unternehmen nannte laufende Rechtsangelegenheiten, darunter den Cumberland-Prozess und eine vertrauliche Einigung, die ein früheres Urteil zu The Pavilion aufgehoben hat.
- Net revenue growth: Q2 net revenues increased to $4,283,816 thousand from $3,907,604 thousand year-over-year
- Higher profitability: Net income attributable to UHS rose to $353,218 thousand in Q2 from $289,152 thousand a year ago, and six-month net income rose to $669,898 thousand
- Improved EPS: Basic EPS increased to $5.49 (Q2) and diluted six-month EPS reached $10.23, up materially from prior year
- Strong operating cash flow: Net cash provided by operating activities was $909,026 thousand for the six months
- Available liquidity: Revolving credit facility showed approximately $1.08 billion available borrowing capacity (net of borrowings) as of June 30, 2025
- Declining operating cash vs prior year: Six-month net cash provided by operations fell to $909,026 thousand from $1,075,687 thousand
- Significant self-insured reserves: Professional/general liability accruals of $487 million and workers’ compensation accruals of $147 million represent material contingent exposure
- Ongoing litigation: Cumberland multi-plaintiff litigation remains unresolved with potential material outcomes and approximately $147 million remaining commercial coverage for 2020 matters
- Large share repurchases: $378,542 thousand of repurchases in the six months represents a significant cash deployment
- Foreign currency hedge losses in AOCI: Net unrealized losses on net investment hedges were $(67,514) thousand for the six months
Insights
TL;DR: Revenue and earnings rose materially year-over-year; EPS improved sharply while capital spending and share repurchases used cash.
The quarter delivered meaningful top-line growth with net revenue up to $4.284 billion and net income attributable to UHS rising to $353.2 million, driving basic EPS to $5.49. Six-month operating cash flow of $909.0 million remains substantial but is down versus prior year, partly offset by disciplined access to liquidity via a revolving facility with approximately $1.08 billion available capacity and a $1.18 billion Tranche A term loan outstanding. Debt carrying value was about $4.6 billion with scheduled maturities disclosed by bucket. These operating and financing items are material for assessing near-term capital allocation and leverage metrics.
TL;DR: Strong earnings are tempered by sizable self-insured reserves, ongoing litigation exposure and concentrated insurance limits.
The company maintains significant self-insurance accruals ($487 million professional/general liability; $147 million workers’ compensation) and disclosed ongoing multi-plaintiff litigation (Cumberland) with uncertain ultimate exposure and approximately $147 million of remaining commercial coverage for the 2020 policy year. Foreign currency hedge losses recorded in AOCI were material for the period. These items represent tangible downside risk to cash flow and insurance capacity if adverse developments occur.
Universal Health Services ha comunicato risultati operativi più solidi per il trimestre e per la prima metà del 2025. I ricavi netti per i tre mesi terminati il 30 giugno 2025 sono stati $4.284 miliardi rispetto a $3.908 miliardi un anno prima, e l'utile netto attribuibile a UHS è stato $353.2 milioni rispetto a $289.2 milioni, con un utile base per azione (basic EPS) di $5.49 rispetto a $4.32 dell'anno precedente. Per i sei mesi, i ricavi sono stati $8.384 miliardi e l'utile netto attribuibile a UHS $669.9 milioni, con un diluted EPS di $10.23 rispetto a $8.08 nel periodo dell'anno precedente.
Lo stato patrimoniale mostra attività totali per $14.986 miliardi e un patrimonio netto complessivo di $7.086 miliardi al 30 giugno 2025. La liquidità netta generata dalle attività operative nei sei mesi è stata $909.0 milioni; gli investimenti hanno incluso $505.0 milioni di spese in conto capitale; le attività di finanziamento hanno assorbito $319.1 milioni, inclusi riacquisti di azioni per $378.5 milioni e dividendi per $26.4 milioni. Le riserve autoassicurative restano rilevanti ($487 milioni responsabilità professionale/generale; $147 milioni per infortuni sul lavoro), e la società ha reso note questioni legali in corso, tra cui la causa Cumberland e un accordo riservato che ha annullato una precedente sentenza relativa a The Pavilion.
Universal Health Services reportó resultados operativos más sólidos en el trimestre y en la primera mitad de 2025. Los ingresos netos para los tres meses terminados el 30 de junio de 2025 fueron $4.284 mil millones frente a $3.908 mil millones un año antes, y la utilidad neta atribuible a UHS fue de $353.2 millones frente a $289.2 millones, generando un BPA básico (basic EPS) de $5.49 frente a $4.32 un año atrás. En los seis meses, los ingresos fueron $8.384 mil millones y la utilidad neta atribuible a UHS $669.9 millones, con un EPS diluido (diluted EPS) de $10.23 frente a $8.08 en el mismo periodo del año anterior.
El balance muestra activos totales por $14.986 mil millones y patrimonio total de $7.086 mil millones al 30 de junio de 2025. El efectivo neto generado por actividades operativas en los seis meses fue $909.0 millones; las inversiones incluyeron $505.0 millones en gastos de capital; la financiación utilizó $319.1 millones, incluyendo recompras de acciones por $378.5 millones y dividendos por $26.4 millones. Las reservas de autoaseguro siguen siendo significativas ($487 millones responsabilidad profesional/general; $147 millones compensación laboral), y la compañía reveló asuntos legales en curso, incluida la demanda Cumberland y un acuerdo confidencial que dejó sin efecto una sentencia previa relacionada con The Pavilion.
Universal Health Services는 2025년 분기 및 상반기에 더 견조한 영업실적을 보고했습니다. 2025년 6월 30일로 종료된 3개월의 순매출은 $4.284 billion으로 전년의 $3.908 billion에 비해 증가했고, UHS에 귀속되는 순이익은 $353.2 million으로 전년의 $289.2 million보다 늘어 기본 주당순이익(basic EPS)은 $5.49로 전년의 $4.32에서 상승했습니다. 상반기 기준 매출은 $8.384 billion, UHS 귀속 순이익은 $669.9 million였으며, 희석 주당순이익(diluted EPS)은 $10.23으로 전년 동기 $8.08보다 높았습니다.
대차대조표상 총자산은 2025년 6월 30일 기준 $14.986 billion, 총자본(자기자본)은 $7.086 billion입니다. 6개월 동안 영업활동으로 인한 순현금흐름은 $909.0 million이었고; 투자활동에는 $505.0 million의 자본적 지출이 포함되었으며; 재무활동에서는 $319.1 million이 사용되었고 이에는 자사주 매입 $378.5 million 및 배당금 $26.4 million이 포함됩니다. 자기보험 준비금은 여전히 상당합니다(전문/일반 책임 $487 million; 산업재해 보상 $147 million), 또한 회사는 Cumberland 소송과 The Pavilion에 대한 이전 판결을 무효화한 기밀 합의 등 진행 중인 법적 사안을 공개했습니다.
Universal Health Services a annoncé des résultats opérationnels plus solides pour le trimestre et le premier semestre 2025. Les revenus nets pour les trois mois clos le 30 juin 2025 se sont élevés à $4.284 milliards contre $3.908 milliards un an plus tôt, et le résultat net attribuable à UHS était de $353.2 millions contre $289.2 millions, générant un bénéfice par action de base (basic EPS) de $5.49 contre $4.32 l'an dernier. Sur les six mois, les revenus ont atteint $8.384 milliards et le résultat net attribuable à UHS $669.9 millions, avec un BPA dilué (diluted EPS) de $10.23 contre $8.08 sur la même période de l'année précédente.
Le bilan fait apparaître un total d'actifs de $14.986 milliards et des capitaux propres totaux de $7.086 milliards au 30 juin 2025. Les flux de trésorerie nets dégagés par les activités opérationnelles sur les six mois se sont élevés à $909.0 millions ; les investissements comprenaient $505.0 millions de dépenses en immobilisations ; le financement a utilisé $319.1 millions, dont $378.5 millions de rachats d'actions et $26.4 millions de dividendes. Les réserves d'auto-assurance restent importantes ($487 millions responsabilité professionnelle/générale ; $147 millions indemnisation des accidents du travail), et la société a divulgué des litiges en cours, notamment le dossier Cumberland et un règlement confidentiel qui a annulé un jugement antérieur concernant The Pavilion.
Universal Health Services meldete für das Quartal und das erste Halbjahr 2025 stärkere operative Ergebnisse. Die Nettoumsatzerlöse für die drei Monate zum 30. Juni 2025 betrugen $4.284 Milliarden gegenüber $3.908 Milliarden im Vorjahr, und der auf UHS entfallende Nettogewinn lag bei $353.2 Millionen gegenüber $289.2 Millionen, was ein einfaches Ergebnis je Aktie (basic EPS) von $5.49 gegenüber $4.32 im Vorjahr ergab. Für die sechs Monate beliefen sich die Umsätze auf $8.384 Milliarden und der auf UHS entfallende Nettogewinn auf $669.9 Millionen, mit einem verwässerten Ergebnis je Aktie (diluted EPS) von $10.23 gegenüber $8.08 im Vorjahreszeitraum.
Die Bilanz weist zum 30. Juni 2025 Gesamtvermögen von $14.986 Milliarden und ein Gesamteigenkapital von $7.086 Milliarden aus. Der operative Cashflow für die sechs Monate betrug $909.0 Millionen; die Investitionstätigkeit umfasste $505.0 Millionen an Investitionsausgaben; die Finanzierung erforderte $319.1 Millionen, darunter Aktienrückkäufe in Höhe von $378.5 Millionen und Dividenden in Höhe von $26.4 Millionen. Die Rückstellungen für Selbstversicherung bleiben erheblich ($487 Millionen Beruf-/Allgemeine Haftpflicht; $147 Millionen Arbeitsunfallversicherung), und das Unternehmen nannte laufende Rechtsangelegenheiten, darunter den Cumberland-Prozess und eine vertrauliche Einigung, die ein früheres Urteil zu The Pavilion aufgehoben hat.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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UNIVERSAL HEALTH SERVICES, INC.
INDEX
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements (unaudited) |
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Condensed Consolidated Statements of Income – Three and Six Months Ended June 30, 2025 and 2024 |
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Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2025 and 2024 |
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Condensed Consolidated Balance Sheets – June 30, 2025 and December 31, 2024 |
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Condensed Consolidated Statements of Changes in Equity – Three and Six Months Ended June 30, 2025 and 2024 |
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Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2025 and 2024 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. Controls and Procedures |
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PART II. Other Information |
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Item 1. Legal Proceedings |
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Item 1A. Risk Factors |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 5. Other Information |
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Item 6. Exhibits |
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68 |
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Signatures |
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This Quarterly Report on Form 10-Q is for the quarter ended June 30, 2025. This Report modifies and supersedes documents filed prior to this Report. Information that we file with the Securities and Exchange Commission (the “SEC”) in the future will automatically update and supersede information contained in this Report.
In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries. UHS is a registered trademark of UHS of Delaware, Inc., the management company for, and a wholly-owned subsidiary of Universal Health Services, Inc. Universal Health Services, Inc. is a holding company and operates through its subsidiaries including its management company, UHS of Delaware, Inc. All healthcare and management operations are conducted by subsidiaries of Universal Health Services, Inc. To the extent any reference to “UHS” or “UHS facilities” in this report including letters, narratives or other forms contained herein relates to our healthcare or management operations it is referring to Universal Health Services, Inc.’s subsidiaries including UHS of Delaware, Inc. Further, the terms “we,” “us,” “our” or the “Company” in such context similarly refer to the operations of Universal Health Services Inc.’s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment with or employees of the subsidiaries of Universal Health Services, Inc. including UHS of Delaware, Inc.
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PART I. FINANCIAL INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
(unaudited)
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||||
Other (income) expense, net |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Net income (loss) attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to UHS |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share attributable to UHS |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share attributable to UHS |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares - basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Add: Other share equivalents |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares and |
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(amounts in thousands, unaudited)
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Other comprehensive income (loss) before tax |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income tax expense (benefit) related to items of other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total other comprehensive (loss) income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Comprehensive income (loss) attributable to noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income attributable to UHS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, unaudited)
|
June 30, |
|
|
December 31, |
|
||
Assets |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
|
|
$ |
|
||
Accounts receivable, net |
|
|
|
|
|
||
Supplies |
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
||
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
||
Less: accumulated depreciation |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other assets: |
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
||
Right of use assets-operating leases |
|
|
|
|
|
||
Deferred charges |
|
|
|
|
|
||
Other |
|
|
|
|
|
||
Total Assets |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Current maturities of long-term debt |
$ |
|
|
$ |
|
||
Accounts payable and other liabilities |
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
||
Federal and state taxes |
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
||
|
|
|
|
|
|
||
Other noncurrent liabilities |
|
|
|
|
|
||
Operating lease liabilities noncurrent |
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
||
|
|
|
|
|
|
||
Redeemable noncontrolling interests |
|
|
|
|
|
||
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
||
UHS common stockholders’ equity |
|
|
|
|
|
||
Noncontrolling interest |
|
|
|
|
|
||
Total equity |
|
|
|
|
|
||
Total Liabilities and Stockholders’ Equity |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three and Six Months ended June 30, 2025
(amounts in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
UHS |
|
|
|
|
|
|
|
|||||||||||
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Common |
|
|
|
|
|
|
|
|||||||||||
|
|
Noncontrolling |
|
|
Class A |
|
|
Class B |
|
|
Class C |
|
|
Class D |
|
|
Cumulative |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
Noncontrolling |
|
|
|
|
|||||||||||
|
|
Interest |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Dividends |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Equity |
|
|
Interest |
|
|
Total |
|
|||||||||||
Balance, April 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Issued/(converted) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Repurchased, including excise tax |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Dividends paid and accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock option expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Reclass of noncontrolling interests to redeemable noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Change in redemption amount of redeemable noncontrolling interest |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Distributions to noncontrolling interests |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Purchase (sale) of ownership interests by (from) minority members |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) to UHS / noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments, net of income tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Subtotal - comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
UHS |
|
|
|
|
|
|
|
|||||||||||
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Common |
|
|
|
|
|
|
|
|||||||||||
|
|
Noncontrolling |
|
|
Class A |
|
|
Class B |
|
|
Class C |
|
|
Class D |
|
|
Cumulative |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
Noncontrolling |
|
|
|
|
|||||||||||
|
|
Interest |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Common |
|
|
Dividends |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Equity |
|
|
Interest |
|
|
Total |
|
|||||||||||
Balance, January 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Issued/(converted) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Repurchased, including excise tax |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Dividends paid and accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock option expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Reclass of noncontrolling interests to redeemable noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Change in redemption amount of redeemable noncontrolling interest |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Distributions to noncontrolling interests |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Purchase (sale) of ownership interests by (from) minority members |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) to UHS / noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments, net of income tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Subtotal - comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three and Six Months ended June 30, 2024
(amounts in thousands, unaudited)
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Accumulated |
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UHS |
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Redeemable |
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Other |
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Common |
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Noncontrolling |
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Class A |
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Class B |
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Class C |
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Class D |
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Cumulative |
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Retained |
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Comprehensive |
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Stockholders' |
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Noncontrolling |
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Interest |
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Common |
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Common |
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Common |
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Common |
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Dividends |
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Earnings |
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Income (Loss) |
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Equity |
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Interest |
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Total |
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Balance, April 1, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common Stock |
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Issued/(converted) |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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|||
Repurchased, including excise tax |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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— |
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( |
) |
Restricted share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|||
Dividends paid and accrued |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock option expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|||
Distributions to noncontrolling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
— |
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|
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( |
) |
|
|
( |
) |
Purchase (sale) of ownership interests by (from) minority members |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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||
Comprehensive income: |
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|||||||||||
Net income (loss) to UHS / noncontrolling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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Other |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
— |
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|
— |
|
Foreign currency translation adjustments, net of income tax |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
— |
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|||
Subtotal - comprehensive income |
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— |
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— |
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— |
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— |
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— |
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Balance, June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
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$ |
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|||||||||||
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Accumulated |
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UHS |
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|||||||||||
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Redeemable |
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Other |
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Common |
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|||||||||||
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Noncontrolling |
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Class A |
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Class B |
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Class C |
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Class D |
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Cumulative |
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Retained |
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Comprehensive |
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Stockholders' |
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Noncontrolling |
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|||||||||||
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Interest |
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Common |
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Common |
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Common |
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Common |
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Dividends |
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Earnings |
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Income (Loss) |
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Equity |
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Interest |
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Total |
|
|||||||||||
Balance, January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Common Stock |
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|
|||||||||||
Issued/(converted) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
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|
— |
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|
— |
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|
||||
Repurchased, including excise tax |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
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|
— |
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|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Dividends paid and accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Stock option expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
— |
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|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Distributions to noncontrolling interests |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Purchase (sale) of ownership interests by (from) minority members |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) to UHS / noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
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|
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|
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|
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|
|||||
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Foreign currency translation adjustments, net of income tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Subtotal - comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Balance, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands, unaudited)
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Six months |
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|||||
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2025 |
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2024 |
|
||
Cash Flows from Operating Activities: |
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|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
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|
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|
|
||
Depreciation & amortization |
|
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|
||
Loss (gain) on sales of assets and businesses |
|
|
|
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|
( |
) |
|
Stock-based compensation expense |
|
|
|
|
|
|
||
Changes in assets & liabilities, net of effects from acquisitions and dispositions: |
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|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
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|
|
Accrued interest |
|
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( |
) |
|
|
|
|
Accrued and deferred income taxes |
|
|
( |
) |
|
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|
Other working capital accounts |
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|
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|
||
Other assets and deferred charges |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
|
|
|
|
||
Accrued insurance expense, net of commercial premiums paid |
|
|
|
|
|
|
||
Payments made in settlement of self-insurance claims, net of commercial insurance reimbursements |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
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||
|
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|
|
|
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||
Cash Flows from Investing Activities: |
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|
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|
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|
||
Property and equipment additions |
|
|
( |
) |
|
|
( |
) |
Proceeds received from sales of assets and businesses |
|
|
|
|
|
|
||
Acquisition of businesses and property |
|
|
( |
) |
|
|
- |
|
(Outflows) inflows from foreign exchange contracts that hedge our net U.K. investment |
|
|
( |
) |
|
|
|
|
(Increase) decrease in capital reserves of commercial insurance subsidiary |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash Flows from Financing Activities: |
|
|
|
|
|
|
||
Repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
Additional borrowings |
|
|
|
|
|
|
||
Repurchase of common shares |
|
|
( |
) |
|
|
( |
) |
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Issuance of common stock |
|
|
|
|
|
|
||
Profit distributions to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Purchase (sale) of ownership interests by (from) minority member |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid, net of refunds |
|
$ |
|
|
$ |
|
||
Noncash purchases of property and equipment |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) General
This Quarterly Report on Form 10-Q is for the quarterly period ended June 30, 2025. In this Quarterly Report, “we,” “us,” “our” “UHS” and the “Company” refer to Universal Health Services, Inc. and its subsidiaries.
The condensed consolidated interim financial statements include the accounts of our majority-owned subsidiaries and partnerships and limited liability companies controlled by us, or our subsidiaries, as managing general partner or managing member. The condensed consolidated interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments (consisting only of normal recurring adjustments) which, in our opinion, are necessary to fairly state results for the interim periods. Certain information and footnote disclosures normally included in audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although we believe that the accompanying disclosures are adequate to make the information presented not misleading. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements, significant accounting policies and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 26, 2025.
(2) Relationship with Universal Health Realty Income Trust and Other Related Party Transactions
Relationship with Universal Health Realty Income Trust:
At June 30, 2025, we held approximately
In addition, certain of our officers and directors are also officers and/or directors of the Trust. Management believes that it has the ability to exercise significant influence over the Trust, therefore we account for our investment in the Trust using the equity method of accounting.
Our pre-tax share of income from the Trust was approximately $
The Trust commenced operations in 1986 by purchasing certain hospital properties from us and immediately leasing the properties back to our respective subsidiaries. The base rents are paid monthly and the bonus rents, which effective as of January 1, 2022 are applicable only to McAllen Medical Center, are computed and paid on a quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The leases with those subsidiaries are unconditionally guaranteed by us and are cross-defaulted with one another.
The aggregate rent payable to the Trust in connection with the leases on McAllen Medical Center, Wellington Regional Medical Center, Aiken Regional Medical Center and Canyon Creek Behavioral Health was approximately $
In connection with an asset purchase and sale agreement, and related lease agreements, completed with the Trust in 2021, related to Aiken Regional Medical Center ("Aiken") and Canyon Creek Behavioral Health ("Canyon Creek"), our consolidated balance sheets at June 30, 2025 and December 31, 2024 reflect financial liabilities, which are included in debt, of approximately $
9
GAAP and we have accounted for the transaction as a financing arrangement. Our lease payments payable to the Trust in connection with Aiken and Canyon Creek are recorded to interest expense and as a reduction of the outstanding financial liability. Since we did not derecognize the real property related to Aiken and Canyon Creek as a result of the asset purchase and sale agreement, we will continue to depreciate the assets.
Pursuant to the Master Leases by certain subsidiaries of ours and the Trust as described in the table below, dated 1986 and 2021 (“the Master Leases”) which govern the leases of McAllen Medical Center and Wellington Regional Medical Center (each of which is governed by the Master Lease dated 1986), and Aiken Regional Medical Center and Canyon Creek Behavioral Health (each of which is governed by the Master Lease dated 2021), we have the option to renew the leases at the lease terms described above and below by providing notice to the Trust at least
In addition, we are the managing, majority member in a joint venture with an unrelated third-party that operates Clive Behavioral Health, a
The table below provides certain details for each of the hospitals leased from the Trust as of June 30, 2025:
Hospital Name |
|
Annual |
|
|
End of Lease Term |
|
Renewal |
|
|
||
McAllen Medical Center |
|
$ |
|
|
|
|
|
(a) |
|||
Wellington Regional Medical Center |
|
$ |
|
|
|
|
|
(b) |
|||
Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services |
|
$ |
|
|
|
|
|
(c) |
|||
Canyon Creek Behavioral Health |
|
$ |
|
|
|
|
|
(c) |
|||
Clive Behavioral Health Hospital |
|
$ |
|
|
|
|
|
(d) |
|||
In addition, certain of our subsidiaries are tenants in several medical office buildings (“MOBs”) and
10
rates at the then fair market value. These leases are cross-defaulted with one another and our subsidiaries have the option to purchase the leased properties upon the expiration of each five-year extended term at the fair market value at that time.
During the third quarter of 2023, the Trust acquired the McAllen Doctor's Center, a
During the first quarter of 2023, the Trust substantially completed construction on a new
Other Related Party Transactions:
In December, 2010, our Board of Directors approved the Company’s entering into supplemental life insurance plans and agreements on the lives of Alan B. Miller (our Executive Chairman of the Board) and his wife. As a result of these agreements, as amended in October, 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $
In August, 2015, Marc D. Miller, our President and Chief Executive Officer and member of our Board of Directors, was appointed to the Board of Directors of Premier, Inc. (“Premier”), a healthcare performance improvement alliance. During 2013, we entered into a new group purchasing organization agreement (“GPO”) with Premier. In conjunction with the GPO agreement, we acquired a minority interest in Premier for a nominal amount. During the fourth quarter of 2013, in connection with the completion of an initial public offering of the stock of Premier, we received cash proceeds for the sale of a portion of our ownership interest in the GPO. Also in connection with this GPO agreement, we received shares of restricted stock of Premier which vested ratably over a
A member of our Board of Directors and member of the Executive Committee and Finance Committee is Of Counsel for Norton Rose Fulbright US LLP, a law firm engaged by us for a variety of legal services. The Board member and his law firm also provide personal legal services to our Executive Chairman and he acts as trustee of certain trusts for the benefit of our Executive Chairman and his family.
(3) Other Noncurrent liabilities and Redeemable/Noncontrolling Interests
Other noncurrent liabilities include the long-term portion of our professional and general liability, workers’ compensation reserves, pension and deferred compensation liabilities, and liabilities incurred in connection with split-dollar life insurance agreements on the lives of our chief executive officer and his wife.
As of June 30, 2025, outside owners held noncontrolling, minority ownership interests of: (i) approximately
11
In connection with certain of the behavioral health care facilities mentioned above, the outside owners have “put options” to potentially put their entire ownership interest to us either in the future upon the occurrence of certain triggering events (as specified in the agreements), or at the present time. If exercised, the put option requires us to purchase the minority member’s interest at fair market value. Amounts recorded as redeemable noncontrolling interests on our condensed consolidated balance sheet as of June 30, 2025 reflect the estimated fair market value of the minority ownership interests that contain such put options.
Generally accepted accounting principles require that noncontrolling interests be classified as equity and we have presented noncontrolling interests in total equity. However, since certain of our noncontrolling interests have redemption rights outside of our control, those noncontrolling interests are classified outside of permanent equity. Accordingly, noncontrolling interests with an estimated redemption amount of approximately $39 million as of March 31, 2025 have been reclassified from noncontrolling interest to redeemable noncontrolling interests as of June 30, 2025. We do not believe these revisions are material to the condensed consolidated financial statements as of March 31, 2025 or to any prior years’ consolidated financial statements.
The minority owners of a
(4) Treasury
In September 2024, we entered into a tenth amendment ("Tenth Amendment") to our credit agreement ("Credit Agreement"), dated as of November 15, 2010, as amended and restated at various times from March, 2011 to June, 2022, among UHS, as borrower, the several banks and other financial institutions or entities from time to time parties thereto, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent. The Tenth Amendment provided for: (i) an extension of the maturity date to September 26, 2029; (ii) a new revolving credit facility of up to $
Pursuant to the terms of the Tenth Amendment, the Tranche A Term Loan provides for installment payments of $
Revolving credit and Tranche A Term Loan borrowings under the Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender’s prime rate, (b) the greater of the federal funds effective rate and the overnight bank funding rate, plus
The Credit Agreement includes a material adverse change clause that must be represented at each draw. The Credit Agreement also contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens, indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We were in compliance with all required covenants as of June 30, 2025 and December 31, 2024.
As of June 30, 2025, we had combined aggregate principal of $
12
The 2026, 2029, 2030, 2032 and 2034 Notes (collectively "All the Notes") are guaranteed (the “Guarantees”) on a senior secured basis by all of our existing and future direct and indirect subsidiaries that guarantee our Credit Agreement, other first lien obligations, or any junior lien obligations (the "Subsidiary Guarantors"). All the Notes and the Guarantees are secured by first-priority liens, subject to permitted liens, on certain of the Company’s and the Subsidiary Guarantors’ assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to a Company-related receivables facility (as defined in the Indenture pursuant to which All the Notes were issued (the “Indentures”), and certain other excluded assets). The Company’s obligations with respect to All the Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company’s and the Subsidiary Guarantors’ other obligations under the Indentures, are secured equally and ratably with the Company’s and the Subsidiary Guarantors’ obligations under the Credit Agreement. However, the liens on the collateral securing All the Notes and the Guarantees will be released if: (i) All the Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and All the Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no longer required to be pledged. The liens on any collateral securing All the Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.
The average outstanding borrowings and the average effective interest rate, which includes amortization of deferred financing costs and original issue discount, under our revolving credit, Tranche A Term Loan and All the Notes, were approximately $
In connection with an asset purchase and sale agreement, and related lease agreements, completed with Universal Health Realty Income Trust ("Trust") in December 2021, our consolidated balance sheets at June 30, 2025 and December 31, 2024 reflect financial liabilities, which are included in debt, of approximately $
At June 30, 2025, the carrying value and fair value of our debt were approximately $
The aggregate scheduled maturities of our $
Foreign Currency Forward Exchange Contracts:
We use forward exchange contracts to hedge our net investment in foreign operations against movements in exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within accumulated other comprehensive income and remains there until either the sale or liquidation of the subsidiary. In connection with these forward exchange contracts, we recorded net cash outflows of $
Derivatives Hedging Relationships:
The following table presents the effects of our foreign currency forward exchange contracts on our results of operations for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):
|
Gain/(Loss) recognized in AOCI |
|
|||||||||||||
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net Investment Hedge relationships |
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
13
No other gains or losses were recognized in income related to derivatives in Subtopic 815-20.
Cash, Cash Equivalents and Restricted Cash:
Cash, cash equivalents, and restricted cash as reported in the condensed consolidated statements of cash flows are presented separately on our condensed consolidated balance sheets as follows (in thousands):
|
June 30, |
|
|
June 30, |
|
|
December 31, |
|
|||
|
2025 |
|
|
2024 |
|
|
2024 |
|
|||
Cash and cash equivalents |
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash (a) |
|
|
|
|
|
|
|
|
|||
Total cash, cash equivalents and restricted cash |
$ |
|
|
$ |
|
|
$ |
|
|||
(a) Restricted cash is included in other assets on the accompanying condensed consolidated balance sheets and consists of statutorily required capital reserves related to our commercial insurance subsidiary.
The fair value of our restricted cash was computed based upon quotes received from financial institutions. We consider these to be “level 1” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with financial securities.
14
(5) Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:
The following tables present the assets and liabilities recorded at fair value on a recurring basis:
|
Balance at |
|
Balance Sheet |
Basis of Fair Value Measurement |
|
||||||||
(in thousands) |
June 30, 2025 |
|
Location |
Level 1 |
|
Level 2 |
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
||||
Money market mutual funds |
$ |
|
Other noncurrent assets |
$ |
|
|
|
|
|
||||
Certificates of deposit |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
Equity securities |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
Deferred compensation assets |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
$ |
|
|
- |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts |
$ |
|
Accounts payable and other liabilities |
|
|
$ |
|
|
|
||||
Deferred compensation liability |
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
$ |
|
|
- |
|
|||
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at |
|
Balance Sheet |
Basis of Fair Value Measurement |
|
||||||||
(in thousands) |
December 31, 2024 |
|
Location |
Level 1 |
|
Level 2 |
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
||||
Money market mutual funds |
$ |
|
Other noncurrent assets |
$ |
|
|
|
|
|
||||
Certificates of deposit |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
Equity securities |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
Deferred compensation assets |
|
|
Other noncurrent assets |
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts |
|
|
Other current assets |
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
$ |
|
|
- |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liability |
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
$ |
- |
|
|
- |
|
||
The fair value of our money market mutual funds, certificates of deposit and equity securities with a readily determinable fair value are computed based upon quoted market prices in an active market. The fair value of deferred compensation assets and the offsetting liability are computed based on market prices in an active market held in a rabbi trust. The fair value of our foreign currency exchange contracts is determined using quoted forward exchange rates and spot rates at the reporting date.
15
(6) Commitments and Contingencies
Professional and General Liability, Workers’ Compensation Liability
The vast majority of our subsidiaries are self-insured for professional and general liability exposure up to: (i) $
These subsidiaries are provided with several excess policies through commercial insurance carriers which provide for coverage in excess of the applicable per occurrence and aggregate self-insured retention or underlying policy limits up to approximately $
In addition, from time to time based upon marketplace conditions, we may elect to purchase additional commercial coverage for certain of our facilities or businesses. Our behavioral health care facilities located in the U.K. have policies through a commercial insurance carrier located in the U.K. that provides for £
As of June 30, 2025, the total net accrual for our self-insured professional and general liability claims was $
There were no adjustments recorded to our reserves for self-insured professional and general liability claims during the first six months of 2025. As a result of unfavorable trends experienced during the past several years, our results of operations included pre-tax increases to our reserves for self-insured professional and general liability claims including $
As of June 30, 2025, the total accrual for our workers’ compensation liability claims was $
Although we are unable to predict whether or not our future financial statements will require updates to estimates for our prior year reserves for self-insured general and professional and workers’ compensation claims, given the relatively unpredictable nature of these potential liabilities and the factors impacting these reserves, as discussed above, it is reasonably likely that our future financial results may include material adjustments to prior period reserves.
As disclosed below in Legal Proceedings:
16
We can make no assurances regarding the ultimate financial exposure, timing, substance or outcome of the Cumberland matter (which related to occurrences in the 2020 policy year), or the amount of damages that may be ultimately held recoverable after post-judgment proceedings and appeals. As of June 30, 2025, without reduction for any potential amounts related to the Cumberland matter, the Company and its subsidiaries have aggregate insurance coverage of approximately $
We have received lawsuits in various jurisdictions on behalf of numerous former patients spanning decades claiming to be the victims of sexual assaults while patients at our facilities. Many of these lawsuits have been brought in conjunction with various states extending their statute of limitations to allow alleged victims of sexual assaults or abuse to file claims many years after the alleged incidents occurred. We are uncertain as to potential liability in connection with these matters.
Property Insurance
We have commercial property insurance policies for our properties, covering the period of June 1, 2025 to June 1, 2026, providing property and business interruption coverage for losses in excess of $
These commercial property policies are subject to a deductible of: (i) $
17
event the $
Commitment to Develop, Lease and Operate an Acute Care Hospital in Washington, D.C.
During 2020, we entered into various agreements with the District of Columbia (the “District”) related to the development, leasing and operation of an acute care hospital and certain other facilities/structures on land owned by the District (“District Facilities”). The agreements contemplate that we will serve as manager for development and construction of the District Facilities on behalf of the District, with a projected aggregate cost of approximately $
We will lease the District Facilities for a nominal rental amount for a period of
Additionally, we have committed to expend no less than $
Legal Proceedings
We operate in a highly regulated and litigious industry which subjects us to various claims and lawsuits in the ordinary course of business as well as regulatory proceedings and government investigations. These claims or suits include claims for damages for personal injuries, medical malpractice, commercial/contractual disputes, wrongful restriction of, or interference with, physicians’ staff privileges, and employment related claims. In addition, health care companies are subject to investigations and/or actions by various state and federal governmental agencies or those bringing claims on their behalf. Government action has increased with respect to investigations and/or allegations against healthcare providers concerning possible violations of fraud and abuse and false claims statutes as well as compliance with clinical and operational regulations. Currently, and from time to time, we and some of our facilities are subjected to inquiries in the form of subpoenas, Civil Investigative Demands, audits and other document requests from various federal and state agencies. These inquiries can lead to notices and/or actions including repayment obligations from state and federal government agencies associated with potential non-compliance with laws and regulations. Further, the federal False Claims Act allows private individuals to bring lawsuits (qui tam actions) against healthcare providers that submit claims for payments to the government. Various states have also adopted similar statutes. When such a claim is filed, the government will investigate the matter and decide if they are going to intervene in the pending case. These qui tam lawsuits are placed under seal by the court to comply with the False Claims Act’s requirements. If the government chooses not to intervene, the private individual(s) can proceed independently on behalf of the government. Health care providers that are found to violate the False Claims Act may be subject to substantial monetary fines/penalties as well as face potential exclusion from participating in government health care programs or be required to comply with Corporate Integrity Agreements as a condition of a settlement of a False Claims Act matter. In September 2014, the Criminal Division of the Department of Justice (“DOJ”) announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The DOJ has also announced an intention to pursue civil and criminal actions against individuals within a company as well as the corporate entity or entities. In addition, health care facilities are subject to monitoring by state and federal surveyors to ensure compliance with program Conditions of Participation. In the event a facility is found to be out of compliance with a Condition of Participation and unable to remedy the alleged deficiency(s), the facility faces termination from the Medicare and Medicaid programs or compliance with a System Improvement Agreement to remedy deficiencies and ensure compliance.
The Office of Inspector General of the Department of Health and Human Services (the “OIG”) had recently proposed extending the Corporate Integrity Agreement ("CIA"), that we entered into with them in July 2020 in connection with the settlement of certain claims brought against the Company, for an additional year beyond its expiration date in July 2025. The OIG indicated that they believed the additional twelve-month period would provide the Company with the opportunity to further develop and intensify its quality-improvement activities and enhance its ability to achieve consistent, sustained quality improvement across its behavioral health care segment. After responding to the OIG’s request, and providing assurances of certain future compliance efforts by the Company, the OIG accepted the conclusion of the CIA at its originally established date of July 5, 2025.
The laws and regulations governing the healthcare industry are complex covering, among other things, government healthcare participation requirements, licensure, certification and accreditation, privacy of patient information, reimbursement for patient services
18
as well as fraud and abuse compliance. These laws and regulations are constantly evolving and expanding. Further, the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act, has added additional obligations on healthcare providers to report and refund overpayments by government healthcare programs and authorizes the suspension of Medicare and Medicaid payments “pending an investigation of a credible allegation of fraud.” We monitor our business and have developed an ethics and compliance program with respect to these complex laws, rules and regulations. Although we believe our policies, procedures and practices comply with government regulations, there is no assurance that we will not be faced with the sanctions referenced above which include fines, penalties and/or substantial damages, repayment obligations, payment suspensions, licensure revocation, and expulsion from government healthcare programs. Even if we were to ultimately prevail in any action brought against us or our facilities or in responding to any inquiry, such action or inquiry could have a material adverse effect on us.
Certain legal matters are described below:
Rachel Capriglione, as natural mother and Next Friend of A.T., a minor, Plaintiff, v. The Pavilion Foundation d/b/a The Pavilion Behavioral Health System
The Pavilion Behavioral Health System (the “Pavilion”), an indirect subsidiary of the Company, was the sole defendant in a lawsuit filed in Champaign County, Illinois, relating to the sexual assault of one minor patient by another minor patient in 2020. Plaintiff asserted claims of negligence and misrepresentation. The Pavilion denied any liability.
The case went to trial in March of 2024. On March 28, 2024, a jury rejected the misrepresentation claim, but returned a verdict for ordinary negligence, and awarded compensatory damages of $
In an order dated October 10, 2024, the trial court ordered a remittitur of punitive damages from $
We reached a settlement agreement, that was approved by the Court during the second quarter of 2025, and the judgment has been vacated. Pursuant to the agreement, the terms of the settlement are confidential. The settlement amount was covered by our commercial excess insurance and our existing reserves for the matter.
K.E.E., et al., Plaintiffs v. Cumberland Hospital, LLC d/b/a Cumberland Hospital for Children and Adolescents, et al. (and related lawsuits)
Cumberland Hospital for Children and Adolescents (“Cumberland”), an indirect subsidiary of the Company, is a defendant in multi-plaintiff lawsuits filed in the Circuit Court for Richmond, Virginia (the “Cumberland Litigation”), relating to allegations of inappropriate sexual contact during medical examinations by Dr. Daniel Davidow, an independent contractor and the former medical director for Cumberland. The Company and UHS of Delaware, Inc., our administrative services subsidiary (“UHS Delaware”), were also named as co-defendants in the Cumberland Litigation. Plaintiffs have asserted claims of negligence, assault and battery (against Dr. Davidow), false imprisonment, violations of the Virginia Consumer Protection Act (“VCPA”), and vicarious liability for Dr. Davidow’s conduct against Cumberland, the Company, and UHS Delaware. All defendants have denied liability.
The claims asserted by three of the plaintiffs in the Cumberland Litigation were consolidated for trial in September of 2024. The Company and UHS Delaware were dismissed from the action during trial. On September 27, 2024, a jury entered a verdict finding Dr. Davidow and Cumberland liable and awarded these
There are approximately
Although we can make no assurances regarding the ultimate outcomes of the various claims made in connection with the Cumberland Litigation, or what damages will ultimately be awarded, the final resolution of these matters could have a material adverse effect on the Company.
Other Matters
Various other suits, claims and investigations, including government subpoenas, arising against, or issued to, us are pending and additional such matters may arise in the future. Management will consider additional disclosure from time to time to the extent it believes such matters may be or become material. The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines
19
or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters described above or that are otherwise pending because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including, but not limited to: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the matter is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties, or; (vii) there is a wide range of potential outcomes. It is possible that the outcome of these matters could have a material adverse impact on our future results of operations, financial position, cash flows and, potentially, our reputation.
(7) Segment Reporting
We operate in
Note: prior year amounts related to certain facilities previously included in our Behavioral Health Care Services’ results have been reclassified into our Acute Care Hospital Services' results as of May 1, 2024 to conform with current year presentation.
20
Three months ended June 30, 2025 |
|
Acute Care |
|
|
Behavioral |
|
|
Total |
|
|||
|
|
(amounts in thousands) |
|
|||||||||
Net revenue from reportable segments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of Net Revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Total Net Revenue |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
|
|
|
|||
Other segment item operating expenses (a) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|||
Interest (income) expense, net |
|
|
( |
) |
|
|
|
|
|
|
||
Other (income) expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Reportable segment income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of non-segment revenue/expenses to consolidated income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment operating expenses (b) |
|
|
|
|
|
|
|
|
|
|||
Non-segment interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Non-segment other (income) expense, net |
|
|
|
|
|
|
|
|
( |
) |
||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Six months ended June 30, 2025 |
|
Acute Care |
|
|
Behavioral |
|
|
Total |
|
|||
|
|
(amounts in thousands) |
|
|||||||||
Net revenue from reportable segments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of Net Revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Total Net Revenue |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
|
|
|
|||
Other segment item operating expenses (a) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|||
Interest (income) expense, net |
|
|
|
|
|
|
|
|
|
|||
Other (income) expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Reportable segment income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of non-segment revenue/expenses to consolidated income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment operating expenses (b) |
|
|
|
|
|
|
|
|
|
|||
Non-segment interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Non-segment other (income) expense, net |
|
|
|
|
|
|
|
|
( |
) |
||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
21
Three months ended June 30, 2024 |
|
Acute Care |
|
|
Behavioral |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net revenue from reportable segments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of Net Revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Total Net Revenue |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
|
|
|
|||
Other segment item operating expenses (a) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Other expense (income), net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Reportable segment income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of non-segment revenue/expenses to consolidated income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment operating expenses (b) |
|
|
|
|
|
|
|
|
|
|||
Non-segment interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Non-segment other (income) expense, net |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Six months ended June 30, 2024 |
|
Acute Care |
|
|
Behavioral |
|
|
Total |
|
|||
|
|
(amounts in thousands) |
|
|||||||||
Net revenue from reportable segments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of Net Revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Total Net Revenue |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
|
|
|
|||
Other segment item operating expenses (a) |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
|
|||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Other expense (income), net |
|
|
|
|
|
( |
) |
|
|
|
||
Reportable segment income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Reconciliation of non-segment revenue/expenses to consolidated income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Non-segment revenue |
|
|
|
|
|
|
|
|
|
|||
Non-segment operating expenses (b) |
|
|
|
|
|
|
|
|
|
|||
Non-segment interest expense, net |
|
|
|
|
|
|
|
|
|
|||
Non-segment other (income) expense, net |
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
22
(8) Earnings Per Share Data and Stock Based Compensation
Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Basic and Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to UHS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Net income attributable to unvested restricted share |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Net income attributable to UHS – basic and diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net effect of dilutive stock options and grants based on the |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per basic share attributable to UHS: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Earnings per diluted share attributable to UHS: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The “Net effect of dilutive stock options and grants based on the treasury stock method” for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled
Stock-Based Compensation:
During the three-month periods ended June 30, 2025 and 2024, pre-tax compensation costs of $
The expense associated with stock-based compensation arrangements is a non-cash charge. In the condensed consolidated statements of cash flows, stock-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $
23
(9) Dispositions and acquisitions
Six-month period ended June 30 2025:
Acquisitions:
During the first six months of 2025, we spent $
Divestitures:
During the first six months of 2025, we received $
Six-month period ended June 30 2024:
Acquisitions:
During the first six months of 2024, there were no acquisitions.
Divestitures:
During the first six months of 2024, we received $
(10) Dividends
We declared and paid dividends of $
(11) Income Taxes
Our effective income tax rates were
On July 4, 2025, the One Big Beautiful Bill Act (“the Act”), which includes a broad range of tax reform provisions, was signed into law in the United States and we continue to assess its impact. We currently do not expect the Act to have a material impact on our estimated annual effective tax rate in 2025.
As of January 1, 2025, our unrecognized tax benefits were approximately $
We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of June 30, 2025, we have less than $
We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. We believe that adequate accruals have been provided for federal, foreign and state taxes.
24
(12) Revenue Recognition
We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue. However, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.
The performance obligation is separately identifiable from other promises in the customer contract. As the performance obligations are met (i.e. room, board, ancillary services, level of care), revenue is recognized based upon allocated transaction price. The transaction price is allocated to separate performance obligations based upon the relative standalone selling price. In instances where we determine there are multiple performance obligations across multiple months, the transaction price will be allocated by applying an estimated implicit and explicit rate to gross charges based on the separate performance obligations.
In assessing collectability, we have elected the portfolio approach. This portfolio approach is being used as we have large volume of similar contracts with similar classes of customers. We reasonably expect that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately. Management’s judgment to group the contracts by portfolio is based on the payment behavior expected in each portfolio category. As a result, aggregating all of the contracts (which are at the patient level) by the particular payer or group of payers, will result in the recognition of the same amount of revenue as applying the analysis at the individual patient level.
We group our revenues into categories based on payment behaviors. Each component has its own reimbursement structure which allows us to disaggregate the revenue into categories that share the nature and timing of payments. The other patient revenue consists primarily of self-pay, government-funded non-Medicaid, and other.
The following table disaggregates our revenue by major source for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):
Note: prior year amounts related to certain facilities previously included in our Behavioral Health Care Services’ results have been reclassified into our Acute Care Hospital Services' results as of May 1, 2024 to conform with current year presentation.
25
|
For the three months ended June 30, 2025 |
|
||||||||||||||||||||||
|
Acute Care |
|
|
Behavioral Health |
|
|
Other |
|
|
Total |
|
|||||||||||||
Medicare |
$ |
|
|
% |
|
$ |
|
|
% |
|
|
|
|
$ |
|
|
% |
|||||||
Managed Medicare |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Care (HMO and PPOs) |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
UK Revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other patient revenue and adjustments, net |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other non-patient revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Total Net Revenue |
$ |
|
|
% |
|
$ |
|
|
% |
|
$ |
|
|
|
|
|
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended June 30, 2025 |
|
||||||||||||||||||||||
|
Acute Care |
|
|
Behavioral Health |
|
|
Other |
|
|
Total |
|
|||||||||||||
Medicare |
$ |
|
|
% |
|
$ |
|
|
% |
|
|
|
|
$ |
|
|
% |
|||||||
Managed Medicare |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Care (HMO and PPOs) |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
UK Revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other patient revenue and adjustments, net |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other non-patient revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Total Net Revenue |
$ |
|
|
% |
|
$ |
|
|
% |
|
$ |
|
|
$ |
|
|
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended June 30, 2024 |
|
||||||||||||||||||||||
|
Acute Care |
|
|
Behavioral Health |
|
|
Other |
|
|
Total |
|
|||||||||||||
Medicare |
$ |
|
|
% |
|
$ |
|
|
% |
|
|
|
|
$ |
|
|
% |
|||||||
Managed Medicare |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Care (HMO and PPOs) |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
UK Revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other patient revenue and adjustments, net |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other non-patient revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Total Net Revenue |
$ |
|
|
% |
|
$ |
|
|
% |
|
$ |
|
|
$ |
|
|
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended June 30, 2024 |
|
||||||||||||||||||||||
|
Acute Care |
|
|
Behavioral Health |
|
|
Other |
|
|
Total |
|
|||||||||||||
Medicare |
$ |
|
|
% |
|
$ |
|
|
% |
|
|
|
|
$ |
|
|
% |
|||||||
Managed Medicare |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Medicaid |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Managed Care (HMO and PPOs) |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
UK Revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other patient revenue and adjustments, net |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Other non-patient revenue |
|
|
|
% |
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|||||||
Total Net Revenue |
$ |
|
|
% |
|
$ |
|
|
% |
|
$ |
|
|
$ |
|
|
% |
|||||||
26
(13) Lease Accounting
Our operating leases are primarily for real estate, including certain acute care facilities, off-campus outpatient facilities, medical office buildings, and corporate and other administrative offices. Our real estate lease agreements typically have initial terms of five to
Supplemental cash flow information related to leases for the six-month periods ended June 30, 2025 and 2024 are as follows (in thousands):
|
Six months ended |
|
|||||
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
||
Operating cash flows from operating leases |
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
$ |
|
|
$ |
|
||
Financing cash flows from finance leases |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
||
Operating leases |
$ |
|
|
$ |
|
||
Finance leases |
$ |
|
|
$ |
|
||
(14) Recent Accounting Standards
During 2024, we adopted ASU 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280)”. ASU 2023-07 modifies reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses categorized as significant or regularly provided to the Chief Operating Decision Maker (CODM). The standard was applied retrospectively to all periods presented in the financial statements. See Note 7 - Segment Reporting for the required disclosures.
In November 2024, the Financial Accounting Standards Board ("FASB") issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (subtopic 220-40)". ASU 2024-03 requires disclosures, in the notes to financial statements, of specified information about certain costs and expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact this new standard will have on the related disclosures in the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures (Topic 740)”. ASU 2023-09 requires enhanced disclosures on income taxes paid, adds disaggregation of continuing operations before income taxes between foreign and domestic earnings and defines specific categories for the reconciliation of jurisdictional tax rate to effective tax rate. This ASU is effective for fiscal years beginning after December 15, 2024, and can be applied on a prospective basis. We are currently evaluating the impact this new standard will have on the related disclosures in the consolidated financial statements.
From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by us as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. We have assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, we believe the new guidance will not have a material impact on our results of operations, cash flows or financial position.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
As of June 30, 2025, we owned and/or operated 367 inpatient facilities and 61 outpatient and other facilities, including the following, located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:
Acute care facilities located in the U.S.:
Behavioral health care facilities (338 inpatient facilities and 16 outpatient facilities):
Located in the U.S.:
Located in the U.K.:
Located in Puerto Rico:
Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 56% of our consolidated net revenues during each of the three-month periods ended June 30, 2025 and 2024, and 57% and 56% of our consolidated net revenues during the six-month periods ended June 30, 2025 and 2024, respectively. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 44% of our consolidated net revenues during each of the three-month periods ended June 30, 2025 and 2024, and 43% and 44% of our consolidated net revenues during the six-month periods ended June 30, 2025 and 2024, respectively.
Our behavioral health care facilities located in the U.K. generated net revenues of approximately $247 million and $213 million during the three-month periods ended June 30, 2025 and 2024, respectively, and $474 million and $421 million during the six-month periods ended June 30, 2025 and 2024, respectively. Total assets at our U.K. behavioral health care facilities were approximately $1.512 billion as of June 30, 2025 and $1.358 billion as of December 31, 2024.
Services provided by our hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. We provide capital resources as well as a variety of management services to our facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing and public relations.
Forward-Looking Statements and Risk Factors
You should carefully review the information contained in this Quarterly Report and should particularly consider any risk factors that we set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the “SEC”). In this Quarterly Report, we state our beliefs of future events and of our future financial performance. This Quarterly Report contains “forward-looking statements” that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of our goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements. In evaluating those statements, you should specifically consider various factors, including the risks related to healthcare industry trends and those set forth herein in Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Forward Looking Statements and Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 and in Item 2. Management’s Discussion and Analysis of Financial Condition
28
and Results of Operations-Forward Looking Statements and Risk Factors, as included herein. Those factors may cause our actual results to differ materially from any of our forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or our good faith belief with respect to future events, and is subject to risks and uncertainties that are difficult to predict and many of which are outside of our control. Many factors, including those set forth herein in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, and other important factors disclosed in this Quarterly Report, and from time to time in our other filings with the SEC, could cause actual performance or results to differ materially from those expressed in the statements. Such factors include, among other things, the following:
29
30
31
Given these uncertainties, risks and assumptions, as outlined above, you are cautioned not to place undue reliance on such forward-looking statements. Our actual results and financial condition could differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to publicly update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as may be required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies or estimates from those disclosed in our 2024 Annual Report on Form 10-K.
Recent Accounting Standards: For a summary of accounting standards, please see Note 14 to the Condensed Consolidated Financial Statements, as included herein.
Results of Operations
Clinical Staffing, Inflation, future Medicaid reductions and Tariffs:
The healthcare industry is labor intensive and salaries, wages and benefits are subject to inflationary pressures, as are supplies expense and other operating expenses. In the past, staffing shortages have, at times, required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, there have been occasions when we were unable to fill all vacant positions and, consequently, we were required to limit patient volumes. We have also experienced general inflationary cost increases related to certain of our other operating expenses. Many of these factors, which had a material unfavorable impact on our results of operations in prior years, have moderated more recently. However, we cannot predict future inflationary increases, which if significant, could have a material unfavorable impact on our future results of operations.
We have experienced inflationary pressures, primarily in personnel costs, although those pressures have moderated more recently. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws, which in certain circumstances, limit our ability to increase prices.
Legislation adopted on July 4, 2025 attaches work and community service requirements to eligibility for Medicaid benefits that will have the effect of limiting Medicaid enrollment and expenditures and the legislation also places limits on provider taxes used to increase federal Medicaid funding to states. In addition, insurance exchange subsidies are scheduled to expire later this year which could unfavorably impact insurance exchange enrollment. As these provisions become effective over the next several years, they may
32
be expected to reduce our revenues and likely increase the level of uncompensated care provided by our facilities. Please see Sources of Revenue below for additional disclosure related to Medicaid supplemental payment programs in various states in which we operate.
Significant tariffs or other restrictions, if imposed on our imported pharmaceutical ingredients, medical devices, medical equipment and their ingredients and components, could escalate costs of medications, medical devices and medical equipment and disrupt our supply chains. While we continue to evaluate the potential impact of the new tariffs on our business, given the uncertainty regarding the scope and duration of any new tariffs, as well as the potential for additional tariffs or trade barriers by the U.S. and the impacted foreign countries, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful. Therefore, changes in laws or policies governing the terms of foreign trade, and in particular, increased trade restrictions, tariffs or taxes on imports from where our products or materials are made (either directly or through our suppliers) could have an impact on our competitive position, business operations and financial results.
Although our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited, as discussed above, we have been requesting and negotiating increased rates from commercial insurers to defray our increased cost of providing patient care. In addition, we have implemented various productivity enhancement programs and cost reduction initiatives including, but not limited to, the following: team-based patient care initiatives designed to optimize the level of patient care services provided by our licensed nurses/clinicians; efforts to reduce utilization of, and rates paid for, premium pay labor; consolidation of medical supply vendors to increase purchasing discounts; review and reduction of clinical variation in connection with the utilization of medical supplies, and; various other efforts to increase productivity and/or reduce costs including investments in new information technology applications.
Financial results for the three-month periods ended June 30, 2025 and 2024:
The following table summarizes our results of operations and is used in the discussion below for the three-month periods ended June 30, 2025 and 2024 (dollar amounts in thousands):
|
|
Three months ended |
|
|
Three months ended |
|
||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||
Net revenues |
|
$ |
4,283,816 |
|
|
|
100.0 |
% |
|
$ |
3,907,604 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and benefits |
|
|
2,014,951 |
|
|
|
47.0 |
% |
|
|
1,856,372 |
|
|
|
47.5 |
% |
Other operating expenses |
|
|
1,162,566 |
|
|
|
27.1 |
% |
|
|
1,043,116 |
|
|
|
26.7 |
% |
Supplies expense |
|
|
418,785 |
|
|
|
9.8 |
% |
|
|
388,063 |
|
|
|
9.9 |
% |
Depreciation and amortization |
|
|
152,004 |
|
|
|
3.5 |
% |
|
|
147,480 |
|
|
|
3.8 |
% |
Lease and rental expense |
|
|
35,240 |
|
|
|
0.8 |
% |
|
|
36,175 |
|
|
|
0.9 |
% |
Subtotal-operating expenses |
|
|
3,783,546 |
|
|
|
88.3 |
% |
|
|
3,471,206 |
|
|
|
88.8 |
% |
Income from operations |
|
|
500,270 |
|
|
|
11.7 |
% |
|
|
436,398 |
|
|
|
11.2 |
% |
Interest expense, net |
|
|
35,364 |
|
|
|
0.8 |
% |
|
|
48,899 |
|
|
|
1.3 |
% |
Other (income) expense, net |
|
|
(8,479 |
) |
|
|
(0.2 |
)% |
|
|
5,493 |
|
|
|
0.1 |
% |
Income before income taxes |
|
|
473,385 |
|
|
|
11.1 |
% |
|
|
382,006 |
|
|
|
9.8 |
% |
Provision for income taxes |
|
|
110,773 |
|
|
|
2.6 |
% |
|
|
87,676 |
|
|
|
2.2 |
% |
Net income |
|
|
362,612 |
|
|
|
8.5 |
% |
|
|
294,330 |
|
|
|
7.5 |
% |
Less: Income (loss) attributable to noncontrolling interests |
|
|
9,394 |
|
|
|
0.2 |
% |
|
|
5,178 |
|
|
|
0.1 |
% |
Net income attributable to UHS |
|
$ |
353,218 |
|
|
|
8.2 |
% |
|
$ |
289,152 |
|
|
|
7.4 |
% |
Net revenues increased by 9.6%, or $376 million, to $4.284 billion during the three-month period ended June 30, 2025, as compared to $3.908 billion during the second quarter of 2024. The net increase was primarily attributable to: (i) a $317 million, or 8.4%, increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods (which we refer to as “Same Facility”), and; (ii) an other combined net increase of $59 million, consisting primarily of $43 million of combined net revenues generated during the second quarter of 2025 at two newly constructed acute care hospitals located in Las Vegas, Nevada (West Henderson Hospital which opened during the fourth quarter of 2024), and Washington, D.C. (Cedar Hill Regional Medical Center which opened during the second quarter of 2025).
Income before income taxes (before income attributable to noncontrolling interests) increased by $91 million, or 24%, to $473 million during the three-month period ended June 30, 2025 as compared to $382 million during the second quarter of 2024. The net increase was due to:
33
Net income attributable to UHS increased by $64 million, or 22%, to $353 million during the three-month period ended June 30, 2025, as compared to $289 million during the second quarter of 2024. This increase was attributable to:
Financial results for the six-month periods ended June 30, 2025 and 2024:
The following table summarizes our results of operations and is used in the discussion below for the six-month periods ended June 30, 2025 and 2024 (dollar amounts in thousands):
|
|
Six months ended |
|
|
Six months ended |
|
||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||
Net revenues |
|
$ |
8,383,536 |
|
|
|
100.0 |
% |
|
$ |
7,751,186 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and benefits |
|
|
3,966,055 |
|
|
|
47.3 |
% |
|
|
3,698,996 |
|
|
|
47.7 |
% |
Other operating expenses |
|
|
2,268,318 |
|
|
|
27.1 |
% |
|
|
2,075,286 |
|
|
|
26.8 |
% |
Supplies expense |
|
|
821,666 |
|
|
|
9.8 |
% |
|
|
791,636 |
|
|
|
10.2 |
% |
Depreciation and amortization |
|
|
300,349 |
|
|
|
3.6 |
% |
|
|
288,483 |
|
|
|
3.7 |
% |
Lease and rental expense |
|
|
72,053 |
|
|
|
0.9 |
% |
|
|
71,625 |
|
|
|
0.9 |
% |
Subtotal-operating expenses |
|
|
7,428,441 |
|
|
|
88.6 |
% |
|
|
6,926,026 |
|
|
|
89.4 |
% |
Income from operations |
|
|
955,095 |
|
|
|
11.4 |
% |
|
|
825,160 |
|
|
|
10.6 |
% |
Interest expense, net |
|
|
75,420 |
|
|
|
0.9 |
% |
|
|
101,725 |
|
|
|
1.3 |
% |
Other (income) expense, net |
|
|
(14,138 |
) |
|
|
(0.2 |
)% |
|
|
5,343 |
|
|
|
0.1 |
% |
Income before income taxes |
|
|
893,813 |
|
|
|
10.7 |
% |
|
|
718,092 |
|
|
|
9.3 |
% |
Provision for income taxes |
|
|
209,573 |
|
|
|
2.5 |
% |
|
|
157,940 |
|
|
|
2.0 |
% |
Net income |
|
|
684,240 |
|
|
|
8.2 |
% |
|
|
560,152 |
|
|
|
7.2 |
% |
Less: Income (loss) attributable to noncontrolling interests |
|
|
14,342 |
|
|
|
0.2 |
% |
|
|
9,166 |
|
|
|
0.1 |
% |
Net income attributable to UHS |
|
$ |
669,898 |
|
|
|
8.0 |
% |
|
$ |
550,986 |
|
|
|
7.1 |
% |
Net revenues increased by 8.2%, or $632 million, to $8.384 billion during the six-month period ended June 30, 2025, as compared to $7.751 billion during the first six months of 2024. The net increase was primarily attributable to: (i) a $542 million, or 7.2%, increase in net revenues generated from our acute care hospital services and behavioral health services, on a Same Facility basis, and; (ii) an other combined net increase of $90 million consisting primarily of $70 million of combined net revenues generated during the first six months of 2025 at two newly constructed and recently opened acute care hospitals, as mentioned above.
Income before income taxes (before income attributable to noncontrolling interests) increased by $176 million, or 25%, to $894 million during the six-month period ended June 30, 2025 as compared to $718 million during the first six months of 2024. The net increase was due to:
34
Net income attributable to UHS increased by $119 million, or 22%, to $670 million during the six-month period ended June 30, 2025, as compared to $551 million during the first six months of 2024. This increase was attributable to:
Adjustments to self-insured professional and general liability reserves:
Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimates of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies.
There were no adjustments recorded to our reserves for self-insured professional and general liability claims during the first six months of 2025. As a result of unfavorable trends experienced, included in our results of operations were increases to our reserves for self-insured professional and general liability claims amounting to approximately $7 million and $14 million during the three and six-month periods ended June 30, 2024, respectively. Approximately $5 million and $10 million of the increase is included in our same facility basis acute care hospital services' results during the three and six-month periods ended June 30, 2024, respectively, and approximately $2 million and $4 million is included in our same facility basis behavioral health services' results during the three and six-month periods ended June 30, 2024, respectively.
Acute Care Hospital Services
The following table sets forth certain operating statistics for our acute care hospital services for the three and six-month periods ended June 30, 2025 and 2024.
|
Same Facility Basis |
|
|
All |
|
|
Same Facility Basis |
|
|
All |
|
||||||||||||||||||||
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||||||
Average licensed beds |
|
6,820 |
|
|
|
6,750 |
|
|
|
7,112 |
|
|
|
6,750 |
|
|
|
6,762 |
|
|
|
6,704 |
|
|
|
6,983 |
|
|
|
6,704 |
|
Average available beds |
|
6,648 |
|
|
|
6,578 |
|
|
|
6,940 |
|
|
|
6,578 |
|
|
|
6,590 |
|
|
|
6,532 |
|
|
|
6,811 |
|
|
|
6,532 |
|
Patient days |
|
400,910 |
|
|
|
395,868 |
|
|
|
410,246 |
|
|
|
395,868 |
|
|
|
815,640 |
|
|
|
811,192 |
|
|
|
830,935 |
|
|
|
811,192 |
|
Average daily census |
|
4,405.6 |
|
|
|
4,350.2 |
|
|
|
4,508.2 |
|
|
|
4,350.2 |
|
|
|
4,506.3 |
|
|
|
4,457.1 |
|
|
|
4,590.8 |
|
|
|
4,457.1 |
|
Occupancy-licensed beds |
|
64.6 |
% |
|
|
64.4 |
% |
|
|
63.4 |
% |
|
|
64.4 |
% |
|
|
66.6 |
% |
|
|
66.5 |
% |
|
|
65.7 |
% |
|
|
66.5 |
% |
Occupancy-available beds |
|
66.3 |
% |
|
|
66.1 |
% |
|
|
65.0 |
% |
|
|
66.1 |
% |
|
|
68.4 |
% |
|
|
68.2 |
% |
|
|
67.4 |
% |
|
|
68.2 |
% |
Admissions |
|
84,529 |
|
|
|
82,744 |
|
|
|
86,823 |
|
|
|
82,744 |
|
|
|
169,773 |
|
|
|
166,325 |
|
|
|
173,475 |
|
|
|
166,325 |
|
Length of stay |
|
4.7 |
|
|
|
4.8 |
|
|
|
4.7 |
|
|
|
4.8 |
|
|
|
4.8 |
|
|
|
4.9 |
|
|
|
4.8 |
|
|
|
4.9 |
|
Acute Care Hospital Services-Same Facility Basis
We believe that providing our results on a “Same Facility” basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods.
Our Same Facility basis results reflected on the table below also exclude from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Summary of Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. Prior year amounts related to certain facilities previously included in our Behavioral Health Care Services’ results have been reclassified into our Acute Care Hospital Services' results as of May 1, 2024 to conform with current year presentation. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.
The following table summarizes the results of operations for our acute care facilities on a Same Facility basis and is used in the discussion below for the three and six-month periods ended June 30, 2025 and 2024 (dollar amounts in thousands):
35
|
|
Three months ended |
|
|
Three months ended |
|
|
Six months ended |
|
|
Six months ended |
|
||||||||||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||||||
Net revenues |
|
$ |
2,272,316 |
|
|
|
100.0 |
% |
|
$ |
2,105,189 |
|
|
|
100.0 |
% |
|
$ |
4,516,378 |
|
|
|
100.0 |
% |
|
$ |
4,213,234 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries, wages and benefits |
|
|
905,960 |
|
|
|
39.9 |
% |
|
|
858,559 |
|
|
|
40.8 |
% |
|
|
1,800,061 |
|
|
|
39.9 |
% |
|
|
1,719,645 |
|
|
|
40.8 |
% |
Other operating expenses |
|
|
646,546 |
|
|
|
28.5 |
% |
|
|
579,981 |
|
|
|
27.6 |
% |
|
|
1,276,571 |
|
|
|
28.3 |
% |
|
|
1,157,563 |
|
|
|
27.5 |
% |
Supplies expense |
|
|
352,075 |
|
|
|
15.5 |
% |
|
|
331,901 |
|
|
|
15.8 |
% |
|
|
695,545 |
|
|
|
15.4 |
% |
|
|
679,031 |
|
|
|
16.1 |
% |
Depreciation and amortization |
|
|
89,190 |
|
|
|
3.9 |
% |
|
|
94,337 |
|
|
|
4.5 |
% |
|
|
177,274 |
|
|
|
3.9 |
% |
|
|
184,620 |
|
|
|
4.4 |
% |
Lease and rental expense |
|
|
24,101 |
|
|
|
1.1 |
% |
|
|
24,314 |
|
|
|
1.2 |
% |
|
|
49,172 |
|
|
|
1.1 |
% |
|
|
48,147 |
|
|
|
1.1 |
% |
Subtotal-operating expenses |
|
|
2,017,872 |
|
|
|
88.8 |
% |
|
|
1,889,092 |
|
|
|
89.7 |
% |
|
|
3,998,623 |
|
|
|
88.5 |
% |
|
|
3,789,006 |
|
|
|
89.9 |
% |
Income from operations |
|
|
254,444 |
|
|
|
11.2 |
% |
|
|
216,097 |
|
|
|
10.3 |
% |
|
|
517,755 |
|
|
|
11.5 |
% |
|
|
424,228 |
|
|
|
10.1 |
% |
Interest expense, net |
|
|
(1,613 |
) |
|
|
(0.1 |
)% |
|
|
986 |
|
|
|
0.0 |
% |
|
|
649 |
|
|
|
0.0 |
% |
|
|
2,286 |
|
|
|
0.1 |
% |
Other (income) expense, net |
|
|
(1,011 |
) |
|
|
(0.0 |
)% |
|
|
(677 |
) |
|
|
(0.0 |
)% |
|
|
(9,583 |
) |
|
|
(0.2 |
)% |
|
|
(517 |
) |
|
|
(0.0 |
)% |
Income before income taxes |
|
$ |
257,068 |
|
|
|
11.3 |
% |
|
$ |
215,788 |
|
|
|
10.3 |
% |
|
$ |
526,689 |
|
|
|
11.7 |
% |
|
$ |
422,459 |
|
|
|
10.0 |
% |
Three-month periods ended June 30, 2025 and 2024:
During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, net revenues from our acute care hospital services, on a Same Facility basis, increased by $167 million or 7.9%. Income before income taxes (and before income attributable to noncontrolling interests) increased by $41 million, or 19%, amounting to $258 million, or 11.3% of net revenues during the second quarter of 2025, as compared to $216 million, or 10.3% of net revenues during the second quarter of 2024.
During the three-month period ended June 30, 2025, net revenue per adjusted admission increased by 3.8% while net revenue per adjusted patient day increased 4.7%, as compared to the comparable quarter of 2024. During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased by 2.2% while adjusted admissions (adjusted for outpatient activity) increased by 2.0%. Patient days at these facilities increased by 1.3% and adjusted patient days increased by 1.1% during the three-month period ended June 30, 2025, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 4.7 days and 4.8 days during the three-month periods ended June 30, 2025 and 2024, respectively. The occupancy rate, based on the average available beds at these facilities, was 66% during each of the three-month periods ended June 30, 2025 and 2024, respectively.
On a Same Facility basis, during the three-month period ended June 30, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $47 million, or 5.5%. Contributing to the increase in salaries, wages and benefits was an increase in our patient volumes during the second quarter of 2025 as compared to the comparable quarter of 2024. As a percentage of net revenues, salaries, wages and benefits expense decreased to 39.9% during the second quarter of 2025 as compared to 40.8% during the second quarter of 2024.
Other operating expenses increased by $67 million, or 11.5%, during the second quarter of 2025, as compared to the comparable quarter of 2025. Operating expenses incurred by our commercial health insurer, consisting primarily of medical costs, increased by $52 million, or 43.5% (due to a corresponding increase in membership), during the second quarter of 2025, as compared to the comparable quarter of 2024. Excluding the operating costs of our commercial insurer from each period, other operating expenses increased by $14 million, or 3.1%. As a percentage of net revenues, other operating expenses increased to 28.5% during the second quarter of 2025, as compared to 27.6% during the comparable quarter of 2024.
Supplies expense increased by $20 million, or 6.1%, during the second quarter of 2025, as compared to the second quarter of 2024, due, in part, to an increase in patient volumes. As a percentage of net revenues, supplies expense decreased to 15.5% during the three-month period ended June 30, 2025, as compared to 15.8% during the second quarter of 2024.
Six-month periods ended June 30, 2025 and 2024:
During the six-month period ended June 30, 2025, as compared to the comparable prior year period, net revenues from our acute care hospital services, on a Same Facility basis, increased by $303 million or 7.2%. Income before income taxes (and before income attributable to noncontrolling interests) increased by $104 million, or 25%, amounting to $527 million, or 11.7% of net revenues during the first six months of 2025, as compared to $422 million, or 10.0% of net revenues during the first six months of 2024.
During the six-month period ended June 30, 2025, net revenue per adjusted admission increased by 3.2% while net revenue per adjusted patient day increased 4.7%, as compared to the comparable period of 2024. During the six-month period ended June 30, 2025, as compared to the comparable prior year period, inpatient admissions to our acute care hospitals increased by 2.1% while adjusted admissions increased by 2.2%. Patient days at these facilities increased by 0.5% and adjusted patient days increased by 0.7% during the six-month period ended June 30, 2025, as compared to the comparable prior year period. The average length of inpatient stay at these facilities was 4.8 days and 4.9 days during the six-month periods ended June 30, 2025 and 2024, respectively. The
36
occupancy rate, based on the average available beds at these facilities, was 68% during each of the six-month periods ended June 30, 2025 and 2024, respectively.
On a Same Facility basis, during the six-month period ended June 30, 2025, as compared to the comparable period of 2024, salaries, wages and benefits expense increased by $80 million, or 4.7%. As a percentage of net revenues, salaries, wages and benefits expense decreased to 39.9% during the first six months of 2025 as compared to 40.8% during the first six months of 2024.
Other operating expenses increased by $119 million, or 10.3%, during the first six months of 2025, as compared to the comparable period of 2025. Operating expenses incurred by our commercial health insurer, consisting primarily of medical costs, increased by $93 million, or 38.1% (due to a corresponding increase in membership), during the first six months of 2025, as compared to the comparable period of 2024. Excluding the operating costs of our commercial insurer from each period, other operating expenses increased by $26 million, or 2.9%. As a percentage of net revenues, other operating expenses increased to 28.3% during the first six months of 2025, as compared to 27.5% during the comparable period of 2024.
Supplies expense increased by $17 million, or 2.4%, during the second quarter of 2025, as compared to the second quarter of 2024. As a percentage of net revenues, supplies expense decreased to 15.4% during the six-month period ended June 30, 2025, as compared to 16.1% during the first six months of 2024.
All Acute Care Hospital Services
The following table summarizes the results of operations for all our acute care operations during the three and six-month periods ended June 30, 2025 and 2024. These amounts include: (i) our acute care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of recently acquired and/or opened facilities and businesses. Dollar amounts below are reflected in thousands.
|
|
Three months ended |
|
|
Three months ended |
|
|
Six months ended |
|
|
Six months ended |
|
||||||||||||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||||||
Net revenues |
|
$ |
2,401,034 |
|
|
|
100.0 |
% |
|
$ |
2,178,686 |
|
|
|
100.0 |
% |
|
$ |
4,750,263 |
|
|
|
100.0 |
% |
|
$ |
4,363,767 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries, wages and benefits |
|
|
937,105 |
|
|
|
39.0 |
% |
|
|
859,147 |
|
|
|
39.4 |
% |
|
|
1,847,829 |
|
|
|
38.9 |
% |
|
|
1,720,694 |
|
|
|
39.4 |
% |
Other operating expenses |
|
|
757,120 |
|
|
|
31.5 |
% |
|
|
655,760 |
|
|
|
30.1 |
% |
|
|
1,472,460 |
|
|
|
31.0 |
% |
|
|
1,310,743 |
|
|
|
30.0 |
% |
Supplies expense |
|
|
360,985 |
|
|
|
15.0 |
% |
|
|
331,877 |
|
|
|
15.2 |
% |
|
|
709,378 |
|
|
|
14.9 |
% |
|
|
678,881 |
|
|
|
15.6 |
% |
Depreciation and amortization |
|
|
96,370 |
|
|
|
4.0 |
% |
|
|
94,361 |
|
|
|
4.3 |
% |
|
|
191,017 |
|
|
|
4.0 |
% |
|
|
184,673 |
|
|
|
4.2 |
% |
Lease and rental expense |
|
|
24,239 |
|
|
|
1.0 |
% |
|
|
24,316 |
|
|
|
1.1 |
% |
|
|
49,578 |
|
|
|
1.0 |
% |
|
|
48,149 |
|
|
|
1.1 |
% |
Subtotal-operating expenses |
|
|
2,175,819 |
|
|
|
90.6 |
% |
|
|
1,965,461 |
|
|
|
90.2 |
% |
|
|
4,270,262 |
|
|
|
89.9 |
% |
|
|
3,943,140 |
|
|
|
90.4 |
% |
Income from operations |
|
|
225,215 |
|
|
|
9.4 |
% |
|
|
213,225 |
|
|
|
9.8 |
% |
|
|
480,001 |
|
|
|
10.1 |
% |
|
|
420,627 |
|
|
|
9.6 |
% |
Interest expense, net |
|
|
(1,613 |
) |
|
|
(0.1 |
)% |
|
|
986 |
|
|
|
0.0 |
% |
|
|
649 |
|
|
|
0.0 |
% |
|
|
2,286 |
|
|
|
0.1 |
% |
Other (income) expense, net |
|
|
(916 |
) |
|
|
(0.0 |
)% |
|
|
(461 |
) |
|
|
(0.0 |
)% |
|
|
(9,183 |
) |
|
|
(0.2 |
)% |
|
|
173 |
|
|
|
0.0 |
% |
Income before income taxes |
|
$ |
227,744 |
|
|
|
9.5 |
% |
|
$ |
212,700 |
|
|
|
9.8 |
% |
|
$ |
488,535 |
|
|
|
10.3 |
% |
|
$ |
418,168 |
|
|
|
9.6 |
% |
Three-month periods ended June 30, 2025 and 2024:
During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, net revenues from our acute care hospital services increased by $222 million, or 10.2%, due to: (i) the $167 million, or 7.9% increase in Same Facility revenues, as discussed above, and; (ii) an other combined net increase of $55 million consisting primarily of $43 million of combined net revenues generated during the second quarter of 2025 at two newly constructed and recently opened acute care hospitals, as mentioned above.
Income before income taxes increased by $15 million, or 7%, to $228 million, or 9.5% of net revenues during the second quarter of 2025, as compared to $213 million, or 9.8% of net revenues during the comparable quarter of 2024. The increase resulted primarily from the $41 million, or 19%, increase in income before income taxes from our acute care hospital services, on a Same Facility basis, as discussed above, partially offset by $26 million of other combined net decreases resulting primarily from the pre-tax loss incurred during the second quarter of 2025 at the recently completed and opened Cedar Hill Regional Medical Center.
During the three-month period ended June 30, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $78 million, or 9.1%. The increase was due primarily to the above-mentioned $47 million increase related to our acute care hospital services, on a Same Facility basis, as well as the salaries, wages and benefits expense incurred at the two above-mentioned newly constructed and recently opened acute care hospitals.
Other operating expenses increased by $101 million, or 15.5%, during the second quarter of 2025, as compared to the comparable quarter of 2024. The increase was due primarily to the $67 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, as well as the other operating expenses incurred at the two above-mentioned newly constructed and recently opened acute care hospitals.
37
Supplies expense increased by $29 million, or 8.8%, during the second quarter of 2025, as compared to the comparable quarter of 2024. The increase was due to the above-mentioned $20 million increase related to our acute care hospital services, on a Same Facility basis, as well as the supplies expense incurred during the second quarter of 2025 at the two above-mentioned newly constructed and recently opened acute care hospitals.
Six-month periods ended June 30, 2025 and 2024:
During the six-month period ended June 30, 2025, as compared to the comparable prior year period, net revenues from our acute care hospital services increased by $386 million, or 8.9%, due to: (i) the $303 million, or 7.2% increase in Same Facility revenues, as discussed above, and; (ii) an other combined net increase of $83 million consisting primarily of $70 million of combined net revenues generated during the first six months of 2025 at the two above-mentioned newly constructed and recently opened acute care hospitals.
Income before income taxes increased by $70 million, or 17%, to $489 million, or 10.3% of net revenues during the first six months of 2025, as compared to $418 million, or 9.6% of net revenues during the comparable period of 2024. The increase resulted primarily from the $104 million, or 25%, increase in income before income taxes from our acute care hospital services, on a Same Facility basis, as discussed above, and $34 million of other combined net decreases resulting primarily from the pre-tax losses incurred during the first six months of 2025 at the above-mentioned West Henderson Hospital and Cedar Hill Regional Medical Center.
During the six-month period ended June 30, 2025, as compared to the comparable period of 2024, salaries, wages and benefits expense increased by $127 million, or 7.4%. The increase was due primarily to the above-mentioned $80 million increase related to our acute care hospital services, on a Same Facility basis, as well as the salaries, wages and benefits expense incurred at the two above-mentioned newly constructed and recently opened acute care hospitals.
Other operating expenses increased by $162 million, or 12.3%, during the first six months of 2025, as compared to the comparable period of 2024. The increase was due primarily to the $119 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, as well as the other operating expenses incurred at the two above-mentioned newly constructed and recently opened acute care hospitals.
Supplies expense increased by $30 million, or 4.5%, during the first six months of 2025, as compared to the comparable period of 2024. The increase was due to the above-mentioned $17 million increase related to our acute care hospital services, on a Same Facility basis, as well as the supplies expense incurred at the two above-mentioned newly constructed and recently opened acute care hospitals.
Charity Care and Uninsured Discounts:
The following tables show the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the three and six-month periods ended June 30, 2025 and 2024:
Uncompensated care:
Amounts in millions |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||||||
|
|
June 30, |
|
|
|
|
|
June 30, |
|
|
|
|
|
June 30, |
|
|
|
|
|
June 30, |
|
|
|
|
||||||||
|
|
2025 |
|
|
% |
|
|
2024 |
|
|
% |
|
|
2025 |
|
|
% |
|
|
2024 |
|
|
% |
|
||||||||
Charity care |
|
$ |
217 |
|
|
|
23 |
% |
|
$ |
200 |
|
|
|
24 |
% |
|
$ |
486 |
|
|
|
26 |
% |
|
$ |
417 |
|
|
|
25 |
% |
Uninsured discounts |
|
|
710 |
|
|
|
77 |
% |
|
|
632 |
|
|
|
76 |
% |
|
|
1,387 |
|
|
|
74 |
% |
|
1220 |
|
|
|
75 |
% |
|
Total uncompensated care |
|
$ |
927 |
|
|
|
100 |
% |
|
$ |
832 |
|
|
|
100 |
% |
|
$ |
1,873 |
|
|
|
100 |
% |
|
$ |
1,637 |
|
|
|
100 |
% |
Estimated cost of providing uncompensated care:
The estimated costs of providing uncompensated care as reflected below were based on a calculation which multiplied the percentage of operating expenses for our acute care hospitals to gross charges for those hospitals by the above-mentioned total uncompensated care amounts. The percentage of cost to gross charges is calculated based on the total operating expenses for our acute care facilities divided by gross patient service revenue for those facilities.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
||||
Amounts in millions |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Estimated cost of providing charity care |
|
$ |
19 |
|
|
$ |
18 |
|
|
$ |
42 |
|
|
$ |
37 |
|
Estimated cost of providing uninsured discounts |
|
|
63 |
|
|
|
57 |
|
|
|
121 |
|
|
|
109 |
|
Estimated cost of providing uncompensated care |
|
$ |
82 |
|
|
$ |
75 |
|
|
$ |
163 |
|
|
$ |
146 |
|
38
Behavioral Health Care Services
The following table sets forth certain operating statistics for our behavioral health care services for the three and six-month periods ended June 30, 2025 and 2024.
|
Same Facility Basis |
|
|
All |
|
|
Same Facility Basis |
|
|
All |
|
||||||||||||||||
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||
|
June 30, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
||||||||
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||||||
Average licensed beds |
|
24,130 |
|
|
23,861 |
|
|
|
24,301 |
|
|
24,326 |
|
|
|
24,114 |
|
|
23,888 |
|
|
|
24,263 |
|
|
24,353 |
|
Average available beds |
|
24,030 |
|
|
23,761 |
|
|
|
24,201 |
|
|
24,226 |
|
|
|
24,014 |
|
|
23,788 |
|
|
|
24,163 |
|
|
24,253 |
|
Patient days |
|
1,612,948 |
|
|
1,590,252 |
|
|
|
1,623,458 |
|
|
1,613,648 |
|
|
|
3,199,646 |
|
|
3,174,499 |
|
|
|
3,220,352 |
|
|
3,222,638 |
|
Average daily census |
|
17,724.7 |
|
|
17,475.3 |
|
|
|
17,840.2 |
|
|
17,732.4 |
|
|
|
17,677.6 |
|
|
17,442.3 |
|
|
|
17,792.0 |
|
|
17,706.8 |
|
Occupancy-licensed beds |
|
73.5 |
% |
|
73.2 |
% |
|
|
73.4 |
% |
|
72.9 |
% |
|
|
73.3 |
% |
|
73.0 |
% |
|
|
73.3 |
% |
|
72.7 |
% |
Occupancy-available beds |
|
73.8 |
% |
|
73.5 |
% |
|
|
73.7 |
% |
|
73.2 |
% |
|
|
73.6 |
% |
|
73.3 |
% |
|
|
73.6 |
% |
|
73.0 |
% |
Admissions |
|
118,170 |
|
|
117,423 |
|
|
|
118,974 |
|
|
118,912 |
|
|
|
235,245 |
|
|
235,831 |
|
|
|
236,762 |
|
|
238,842 |
|
Length of stay |
|
13.6 |
|
|
13.5 |
|
|
|
13.6 |
|
|
13.6 |
|
|
|
13.6 |
|
|
13.5 |
|
|
|
13.6 |
|
|
13.5 |
|
Behavioral Health Care Services-Same Facility Basis
We believe that providing our results on a Same Facility basis, which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods.
Our Same Facility basis results reflected on the table below also excludes from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Summary of Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. Prior year amounts related to certain facilities previously included in our Behavioral Health Care Services’ results have been reclassified into our Acute Care Hospital Services' results as of May 1, 2024 to conform with current year presentation. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Quarterly Report on Form 10-Q.
The following table summarizes the results of operations for our behavioral health care facilities, on a Same Facility basis, and is used in the discussions below for the three and six-month periods ended June 30, 2025 and 2024 (dollar amounts in thousands):
|
|
Three months ended |
|
|
Three months ended |
|
|
Six months ended |
|
|
Six months ended |
|
||||||||||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||||||
Net revenues |
|
$ |
1,827,519 |
|
|
|
100.0 |
% |
|
$ |
1,677,876 |
|
|
|
100.0 |
% |
|
$ |
3,533,381 |
|
|
|
100.0 |
% |
|
$ |
3,294,117 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries, wages and benefits |
|
|
974,476 |
|
|
|
53.3 |
% |
|
|
890,855 |
|
|
|
53.1 |
% |
|
|
1,900,013 |
|
|
|
53.8 |
% |
|
|
1,759,511 |
|
|
|
53.4 |
% |
Other operating expenses |
|
|
330,508 |
|
|
|
18.1 |
% |
|
|
307,502 |
|
|
|
18.3 |
% |
|
|
651,954 |
|
|
|
18.5 |
% |
|
|
621,503 |
|
|
|
18.9 |
% |
Supplies expense |
|
|
58,183 |
|
|
|
3.2 |
% |
|
|
56,777 |
|
|
|
3.4 |
% |
|
|
113,562 |
|
|
|
3.2 |
% |
|
|
113,486 |
|
|
|
3.4 |
% |
Depreciation and amortization |
|
|
52,963 |
|
|
|
2.9 |
% |
|
|
50,183 |
|
|
|
3.0 |
% |
|
|
104,331 |
|
|
|
3.0 |
% |
|
|
97,780 |
|
|
|
3.0 |
% |
Lease and rental expense |
|
|
10,695 |
|
|
|
0.6 |
% |
|
|
11,403 |
|
|
|
0.7 |
% |
|
|
21,822 |
|
|
|
0.6 |
% |
|
|
22,857 |
|
|
|
0.7 |
% |
Subtotal-operating expenses |
|
|
1,426,825 |
|
|
|
78.1 |
% |
|
|
1,316,720 |
|
|
|
78.5 |
% |
|
|
2,791,682 |
|
|
|
79.0 |
% |
|
|
2,615,137 |
|
|
|
79.4 |
% |
Income from operations |
|
|
400,694 |
|
|
|
21.9 |
% |
|
|
361,156 |
|
|
|
21.5 |
% |
|
|
741,699 |
|
|
|
21.0 |
% |
|
|
678,980 |
|
|
|
20.6 |
% |
Interest expense, net |
|
|
1,105 |
|
|
|
0.1 |
% |
|
|
1,008 |
|
|
|
0.1 |
% |
|
|
2,179 |
|
|
|
0.1 |
% |
|
|
2,035 |
|
|
|
0.1 |
% |
Other (income) expense, net |
|
|
(837 |
) |
|
|
(0.0 |
)% |
|
|
(871 |
) |
|
|
(0.1 |
)% |
|
|
(1,662 |
) |
|
|
(0.0 |
)% |
|
|
(1,547 |
) |
|
|
(0.0 |
)% |
Income before income taxes |
|
$ |
400,426 |
|
|
|
21.9 |
% |
|
$ |
361,019 |
|
|
|
21.5 |
% |
|
$ |
741,182 |
|
|
|
21.0 |
% |
|
$ |
678,492 |
|
|
|
20.6 |
% |
Three-month periods ended June 30, 2025 and 2024:
During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, net revenues from our behavioral health services, on a Same Facility basis, increased by $150 million or 8.9%. Income before income taxes increased by $39 million, or 11%, amounting to $400 million or 21.9% of net revenues during the second quarter of 2025, as compared to $361 million or 21.5% of net revenues during the second quarter of 2024.
39
During the three-month period ended June 30, 2025, net revenue per adjusted admission increased by 8.6% while net revenue per adjusted patient day increased by 7.8%, as compared to the comparable quarter of 2024. During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, inpatient admissions and adjusted admissions to our behavioral health care hospitals increased by 0.6% and 0.4%, respectively. Patient days at these facilities increased by 1.4% and adjusted patient days increased by 1.2% during the three-month period ended June 30, 2025, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 13.6 days and 13.5 days during the three-month periods ended June 30, 2025 and 2024, respectively. The occupancy rate, based on the average available beds at these facilities, was 74% during each of the three-month periods ended June 30, 2025 and 2024.
On a Same Facility basis during the three-month period ended June 30, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $84 million or 9.4%. The increase during the second quarter of 2025, as compared to the comparable quarter of 2024, was due to a 5.4% increase in salaries, wages and benefits expense per average full time equivalent employee, as well as a 3.8% increase in the average number of full-time equivalent employees. As a percentage of net revenues during each quarter, salaries, wages and benefits expense increased to 53.3% during the second quarter of 2025 as compared to 53.1% during the second quarter of 2024.
Other operating expenses increased by $23 million, or 7.5%, during the second quarter of 2025, as compared to the comparable quarter of 2024. Contributing to the increase was a $3 million loss on sale of assets incurred during the second quarter of 2025, as well as a $4 million, or 18%, increase in the operating expenses of our commercial insurer. As a percentage of net revenues during each quarter, other operating expenses decreased to 18.1% during the second quarter of 2025 as compared to 18.3% during the second quarter of 2024.
Supplies expense increased by $1 million, or 2.5%, during the second quarter of 2025, as compared to the comparable quarter of 2024. As a percentage of net revenues during each quarter, supplies expense decreased to 3.2% during the second quarter of 2025, as compared to 3.4% during the comparable quarter of 2024.
Six-month periods ended June 30, 2025 and 2024:
During the six-month period ended June 30, 2025, as compared to the comparable prior year period, net revenues from our behavioral health services, on a Same Facility basis, increased by $239 million or 7.3%. Income before income taxes increased by $63 million, or 9.2%, amounting to $741 million or 21.0% of net revenues during the first six months of 2025, as compared to $678 million or 20.6% of net revenues during the first six months of 2024.
During the six-month period ended June 30, 2025, net revenue per adjusted admission increased by 7.9% while net revenue per adjusted patient day increased by 6.8%, as compared to the comparable period of 2024. During the six-month period ended June 30, 2025, as compared to the comparable prior year period, inpatient admissions and adjusted admissions to our behavioral health care hospitals decreased by 0.2% and 0.6%, respectively. Patient days at these facilities increased by 0.8% and adjusted patient days increased by 0.4% during the six-month period ended June 30, 2025, as compared to the comparable prior year period. The average length of inpatient stay at these facilities was 13.6 days and 13.5 days during the six-month periods ended June 30, 2025 and 2024, respectively. The occupancy rate, based on the average available beds at these facilities, was 74% and 73% during the six-month periods ended June 30, 2025 and 2024, respectively.
On a Same Facility basis during the six-month period ended June 30, 2025, as compared to the comparable period of 2024, salaries, wages and benefits expense increased by $141 million or 8.0%. The increase during the first six months of 2025, as compared to the comparable period of 2024, was due to a 4.2% increase in salaries, wages and benefits expense per average full time equivalent employee, as well as a 3.6% increase in the average number of full-time equivalent employees. As a percentage of net revenues during each quarter, salaries, wages and benefits expense increased to 53.8% during the first six months of 2025 as compared to 53.4% during the first six months of 2024.
Other operating expenses increased by $30 million, or 4.9%, during the first six months of 2025, as compared to the comparable period of 2024. As a percentage of net revenues during each period, other operating expenses decreased to 18.5% during the first six months of 2025 as compared to 18.9% during the first six months of 2024.
Supplies expense remained relatively unchanged during the first six months of 2025 and 2024, comprising 3.2% and 3.4% of net revenues during the six-month periods ended June 30, 2025 and 2024, respectively.
All Behavioral Health Care Services
The following table summarizes the results of operations for all our behavioral health care services during the three and six-month periods ended June 30, 2025 and 2024. These amounts include: (i) our behavioral health care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no
40
impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the past year. Dollar amounts below are reflected in thousands.
|
|
Three months ended |
|
|
Three months ended |
|
|
Six months ended |
|
|
Six months ended |
|
||||||||||||||||||||
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
|
Amount |
|
|
% of Net |
|
||||||||
Net revenues |
|
$ |
1,880,076 |
|
|
|
100.0 |
% |
|
$ |
1,726,032 |
|
|
|
100.0 |
% |
|
$ |
3,627,725 |
|
|
|
100.0 |
% |
|
$ |
3,382,099 |
|
|
|
100.0 |
% |
Operating charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries, wages and benefits |
|
|
977,156 |
|
|
|
52.0 |
% |
|
|
895,494 |
|
|
|
51.9 |
% |
|
|
1,905,322 |
|
|
|
52.5 |
% |
|
|
1,767,690 |
|
|
|
52.3 |
% |
Other operating expenses |
|
|
383,841 |
|
|
|
20.4 |
% |
|
|
351,579 |
|
|
|
20.4 |
% |
|
|
747,425 |
|
|
|
20.6 |
% |
|
|
698,847 |
|
|
|
20.7 |
% |
Supplies expense |
|
|
58,401 |
|
|
|
3.1 |
% |
|
|
57,084 |
|
|
|
3.3 |
% |
|
|
113,848 |
|
|
|
3.1 |
% |
|
|
114,008 |
|
|
|
3.4 |
% |
Depreciation and amortization |
|
|
53,259 |
|
|
|
2.8 |
% |
|
|
50,478 |
|
|
|
2.9 |
% |
|
|
104,667 |
|
|
|
2.9 |
% |
|
|
98,350 |
|
|
|
2.9 |
% |
Lease and rental expense |
|
|
10,964 |
|
|
|
0.6 |
% |
|
|
11,760 |
|
|
|
0.7 |
% |
|
|
22,333 |
|
|
|
0.6 |
% |
|
|
23,278 |
|
|
|
0.7 |
% |
Subtotal-operating expenses |
|
|
1,483,621 |
|
|
|
78.9 |
% |
|
|
1,366,395 |
|
|
|
79.2 |
% |
|
|
2,893,595 |
|
|
|
79.8 |
% |
|
|
2,702,173 |
|
|
|
79.9 |
% |
Income from operations |
|
|
396,455 |
|
|
|
21.1 |
% |
|
|
359,637 |
|
|
|
20.8 |
% |
|
|
734,130 |
|
|
|
20.2 |
% |
|
|
679,926 |
|
|
|
20.1 |
% |
Interest expense, net |
|
|
1,104 |
|
|
|
0.1 |
% |
|
|
1,008 |
|
|
|
0.1 |
% |
|
|
2,179 |
|
|
|
0.1 |
% |
|
|
2,035 |
|
|
|
0.1 |
% |
Other (income) expense, net |
|
|
(837 |
) |
|
|
(0.0 |
)% |
|
|
(871 |
) |
|
|
(0.1 |
)% |
|
|
(1,662 |
) |
|
|
(0.0 |
)% |
|
|
(1,547 |
) |
|
|
(0.0 |
)% |
Income before income taxes |
|
$ |
396,188 |
|
|
|
21.1 |
% |
|
|
359,500 |
|
|
|
20.8 |
% |
|
$ |
733,613 |
|
|
|
20.2 |
% |
|
$ |
679,438 |
|
|
|
20.1 |
% |
Three-month periods ended June 30, 2025 and 2024:
During the three-month period ended June 30, 2025, as compared to the comparable prior year quarter, net revenues generated from our behavioral health services increased by $154 million, or 8.9%. The increase was primarily attributable to the above-mentioned $150 million, or 8.9%, increase in net revenues at our behavioral health facilities, on a Same Facility basis.
Income before income taxes increased by $37 million, or 10.2%, to $396 million or 21.1% of net revenues during the second quarter of 2025, as compared to $360 million or 20.8% of net revenues during the second quarter of 2024. The increase in income before income taxes at our behavioral health facilities during the second quarter of 2025, as compared to the comparable quarter of 2024, was primarily attributable to the $39 million, or 10.9% increase in income before income taxes generated at our behavioral health facilities, on a Same Facility basis.
During the three-month period ended June 30, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $82 million or 9.1%. The increase was due primarily to the above-mentioned $84 million increase related to our behavioral health facilities, on a Same Facility basis.
Other operating expenses increased by $32 million, or 9.2%, during the second quarter of 2025, as compared to the comparable quarter of 2024. The increase was due primarily to the above-mentioned $23 million increase related to our behavioral health facilities, on a Same Facility basis, as well as a $9 million increase in provider tax assessments.
Supplies expense increased by $1 million, or 2.3%, during the second quarter of 2025, as compared to the comparable quarter of 2024, due to the above-mentioned increase related to our behavioral health facilities, on a Same Facility basis.
Six-month periods ended June 30, 2025 and 2024:
During the six-month period ended June 30, 2025, as compared to the comparable prior year period, net revenues generated from our behavioral health services increased by $246 million, or 7.3%. The increase was primarily attributable to the above-mentioned $239 million, or 7.3%, increase in net revenues at our behavioral health facilities, on a Same Facility basis.
Income before income taxes increased by $54 million, or 8.0%, to $734 million or 20.2% of net revenues during the first six months of 2025, as compared to $679 million or 20.1% of net revenues during the first six months of 2024. The increase in income before income taxes at our behavioral health facilities during the first six months of 2025, as compared to the comparable period of 2024, was primarily attributable to the $63 million, or 9.2% increase in income before income taxes generated at our behavioral health facilities, on a Same Facility basis, partially offset by the losses incurred at recently closed facilities.
During the six-month period ended June 30, 2025, as compared to the comparable period of 2024, salaries, wages and benefits expense increased by $138 million or 7.8%. The increase was due primarily to the above-mentioned $141 million increase related to our behavioral health facilities, on a Same Facility basis.
Other operating expenses increased by $49 million, or 7.0%, during the first six months of 2025, as compared to the comparable period of 2024. The increase was due primarily to the above-mentioned $30 million increase related to our behavioral health facilities, on a Same Facility basis, as well as $19 million of other combined net increases consisting primarily of increased provider tax assessments.
Supplies expense remained relatively unchanged during the first six months of 2025 and 2024.
41
Sources of Revenue
Overview: We receive payments for services rendered from private insurers, including managed care plans, the federal government under the Medicare program, state governments under their respective Medicaid programs and directly from patients.
Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services and therapy programs ordered by physicians and provided to patients, the volume of outpatient procedures and the charges or negotiated payment rates for such services. Charges and reimbursement rates for inpatient routine services vary depending on the type of services provided (e.g., medical/surgical, intensive care or behavioral health) and the geographic location of the hospital. Inpatient occupancy levels fluctuate for various reasons, many of which are beyond our control. The percentage of patient service revenue attributable to outpatient services has generally increased in recent years, primarily as a result of advances in medical technology that allow more services to be provided on an outpatient basis, as well as increased pressure from Medicare, Medicaid and private insurers to reduce hospital stays and provide services, where possible, on a less expensive outpatient basis. We believe that our experience with respect to our increased outpatient levels mirrors the general trend occurring in the health care industry and we are unable to predict the rate of growth and resulting impact on our future revenues.
Patients are generally not responsible for any difference between customary hospital charges and amounts reimbursed for such services under Medicare, Medicaid, some private insurance plans, and managed care plans, but are responsible for services not covered by such plans, exclusions, deductibles or co-insurance features of their coverage. The amount of such exclusions, deductibles and co-insurance has generally been increasing each year. Indications from recent federal and state legislation are that this trend will continue. Collection of amounts due from individuals is typically more difficult than from governmental or business payers which unfavorably impacts the collectability of our patient accounts.
Sources of Revenues and Health Care Reform: Given increasing budget deficits, the federal government and many states are currently considering additional ways to limit increases in levels of Medicare and Medicaid funding, which could also adversely affect future payments received by our hospitals. In addition, the uncertainty and fiscal pressures placed upon the federal government as a result of, among other things, economic recovery stimulus packages, responses to natural disasters, and the federal and state budget deficits in general may affect the availability of government funds to provide additional relief in the future. Changes resulting from the outcome of the 2024 elections and subsequent legislative and administrative initiatives have included increased scrutiny of Medicare Advantage programs, work requirements for Medicaid waiver program eligibility, increased focus on hospital outpatient site neutral payment policies, and similar initiatives that may reduce the availability of funding for federal healthcare programs or make eligibility for benefits more difficult. Legislation adopted on July 4, 2025 will have the effect of substantially decreasing federal funding for state Medicaid Programs. Any significant reduction in federal Medicaid funding to states would likely result in states reducing Medicaid payments to us which would have a material adverse effect on us. We are unable to predict the effect of future policy changes on our operations.
In 2010, the Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the “ACA”) was enacted and its two primary goals were to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses. The ACA revised reimbursement under the Medicare and Medicaid programs to emphasize the efficient delivery of high-quality care and contains a number of incentives and penalties under these programs to achieve these goals. The ACA provides for reductions to Medicaid DSH payments which are scheduled to begin in 2026.
A 2012 U.S. Supreme Court ruling limited the federal government’s ability to expand health insurance coverage by holding unconstitutional sections of the ACA that sought to withdraw federal funding for state noncompliance with certain Medicaid coverage requirements. Pursuant to that decision, the federal government may not penalize states that choose not to participate in the Medicaid expansion by reducing their existing Medicaid funding. Therefore, states can choose to expand or not to expand their Medicaid program without risking the loss of federal Medicaid funding. As a result, many states, including Texas, have not expanded their Medicaid programs without the threat of loss of federal funding. CMS has previously granted section 1115 demonstration waivers providing for work and community engagement requirements for certain Medicaid eligible individuals. CMS has also released guidance to states interested in receiving their Medicaid funding through a block grant mechanism. The Biden administration withdrew certain previously issued section 1115 demonstrations aligned with these policies, but Georgia had imposed work and community engagement requirements under a Medicaid demonstration program that launched July 1, 2023. President Trump, more favorable to work and community engagement requirements in his first administration, sought and obtained legislative work and community engagement applicable to a significant percentage of Medicaid program beneficiaries. We anticipate this change will lead to reductions in Medicaid coverage and likely increases in uncompensated care.
On December 14, 2018, a Texas Federal District Court deemed the ACA to be unconstitutional in its entirety. The Court concluded that the ACA mandate that individuals maintain coverage was no longer permissible under Congress’s taxing power as a result of the Tax Cut and Jobs Act of 2017 reducing the individual mandate’s tax to $0 (i.e., it no longer produces revenue, which is an essential feature of a tax). The Court also held that because the individual mandate is “essential” to the ACA and is inseverable from the rest of the law, the entire ACA is unconstitutional. That ruling was ultimately appealed to the United States Supreme Court, which decided in California v. Texas that the plaintiffs in the matter lacked standing to bring their constitutionality claims. The Court did not reach the
42
plaintiffs’ merits arguments, which specifically challenged the constitutionality of the ACA's individual mandate and the entirety of the ACA itself. As a result, the ACA will continue to be law, and the Department of Health and Human Services ("HHS") and its respective agencies will continue to enforce regulations implementing the law. However, on September 7, 2022, the ACA faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. The decision was ultimately appealed to the U.S. Supreme Court, which opined in favor of the ACA HIV prevention coverage. The impact of this litigation cannot be predicted.
The ACA also contained provisions aimed at reducing fraud and abuse in healthcare. The ACA amends several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. While Congress had previously revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to “have actual knowledge or specific intent to commit a violation of” the Anti-Kickback Statute in order to be found in violation of such law, the ACA also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The ACA provides that a healthcare provider that retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act. In December, 2024, CMS changed the standard for identification of an overpayment and now requires the report and return of an overpayment if a provider or supplier has actual knowledge of the existence of an overpayment or acts in reckless disregard or deliberate ignorance of an overpayment. The ACA also expanded the Recovery Audit Contractor program to Medicaid. These amendments also make it easier for severe fines and penalties to be imposed on healthcare providers that violate applicable laws and regulations.
We have partnered with local physicians in the ownership of certain of our facilities. These investments have been permitted under an exception to the physician self-referral law. The ACA permits existing physician investments in a hospital to continue under a “grandfather” clause if the arrangement satisfies certain requirements and restrictions, but physicians are prohibited from increasing the aggregate percentage of their ownership in the hospital. The ACA also imposes certain compliance and disclosure requirements upon existing physician-owned hospitals and restricts the ability of physician-owned hospitals to expand the capacity of their facilities. A repeal of the ACA, in whole or in relevant part, may result in physicians being able to expand ownership interest in hospitals.
In addition to legislative changes, the ACA can be significantly impacted by executive branch actions. The Biden administration had issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the ACA or the Medicaid program. The American Rescue Plan Act of 2021's expansion of subsidies to purchase coverage through an exchange contributed to increased exchange enrollment in 2021. The IRA’s extension of subsidies through 2025 was expected to increase exchange enrollment in future years. However, the Trump administration has already taken steps to undo these Biden-era initiatives, including those intended to increase ACA exchange and Medicaid enrollment.
It remains unclear what portions of the ACA may remain, or whether any replacement or alternative programs may be created by any future legislation. Any such future repeal or replacement may have significant impact on the reimbursement for healthcare services generally, and may create reimbursement for services competing with the services offered by our hospitals. Accordingly, there can be no assurance that the adoption of any future federal or state healthcare reform legislation will not have a negative financial impact on our hospitals, including their ability to compete with alternative healthcare services funded by such potential legislation, or for our hospitals to receive payment for services.
For additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein, please see Note 12 to the Consolidated Financial Statements-Revenue Recognition.
Medicare: Medicare is a federal program that provides certain hospital and medical insurance benefits to persons aged 65 and over, some disabled persons and persons with end-stage renal disease. All of our acute care hospitals and many of our behavioral health centers are certified as providers of Medicare services by the appropriate governmental authorities. Amounts received under the Medicare program are generally significantly less than a hospital’s customary charges for services provided. Since a substantial portion of our revenues will come from patients under the Medicare program, our ability to operate our business successfully in the future will depend in large measure on our ability to adapt to changes in this program.
Under the Medicare program, for inpatient services, our general acute care hospitals receive reimbursement under the inpatient prospective payment system (“IPPS”). Under the IPPS, hospitals are paid a predetermined fixed payment amount for each hospital discharge. The fixed payment amount is based upon each patient’s Medicare severity diagnosis related group (“MS-DRG”). Every MS-DRG is assigned a payment rate based upon the estimated intensity of hospital resources necessary to treat the average patient with that particular diagnosis. The MS-DRG payment rates are based upon historical national average costs and do not consider the actual costs incurred by a hospital in providing care. This MS-DRG assignment also affects the predetermined capital rate paid with each MS-DRG. The MS-DRG and capital payment rates are adjusted annually by the predetermined geographic adjustment factor for the geographic region in which a particular hospital is located and are weighted based upon a statistically normal distribution of
43
severity. While we generally will not receive payment from Medicare for inpatient services, other than the MS-DRG payment, a hospital may qualify for an “outlier” payment if a particular patient’s treatment costs are extraordinarily high and exceed a specified threshold. MS-DRG rates are adjusted by an update factor each federal fiscal year, which begins on October 1. The index used to adjust the MS-DRG rates, known as the “hospital market basket index,” gives consideration to the inflation experienced by hospitals in purchasing goods and services. Generally, however, the percentage increases in the MS-DRG payments have been lower than the projected increase in the cost of goods and services purchased by hospitals.
In July, 2025, CMS published its IPPS 2026 final payment rule which provides for a 3.3% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments, and adjustments mandated by the Legislation are considered (including a -0.7% productivity adjustment offset), without consideration for the required Medicare DSH payments changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 1.0%. Instead of applying a state-level rural floor budget neutrality adjustment to the wage index, the final rule has applied a uniform, national budget neutrality adjustment to the FY 2026 wage index for the rural floor. Nevada will be subject to a 5.0% reduction in the wage index adjustment as a result of a decrease in the wage index rural floor in that state. Including DSH payments, a decrease to the Medicare Outlier threshold and certain other adjustments, we estimate our overall increase from the final IPPS 2026 rule (covering the period of October 1, 2025 through September 30, 2026) will approximate 2.7%.
In August, 2024, CMS published its IPPS 2025 final payment rule which provides for a 2.9% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments, and adjustments mandated by the ACA are considered, without consideration for the required Medicare DSH payments changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 1.8%. Including DSH payments, an increase to the Medicare Outlier threshold and certain other adjustments, we estimate our overall increase from the final IPPS 2025 rule (covering the period of October 1, 2024 through September 30, 2025) will approximate 1.2%.
In August, 2023, CMS published its IPPS 2024 final payment rule which provides for a 3.1% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates (including a change in the Medicare Rural Floor calculation), documenting and coding adjustments, and adjustments mandated by the ACA are considered, without consideration for the required Medicare DSH payments changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 6.6%. Including DSH payments, an increase to the Medicare Outlier threshold and certain other adjustments, our overall increase from the final IPPS 2024 rule (covering the period of October 1, 2023 through September 30, 2024) was approximately 5.4%.
In June, 2019, the Supreme Court of the United States issued a decision favorable to hospitals impacting prior year Medicare DSH payments (Azar v. Allina Health Services, No. 17-1484 (U.S. Jun. 3, 2019)). In Allina, the hospitals challenged the Medicare DSH adjustments for federal fiscal year 2012, specifically challenging CMS’s decision to include inpatient hospital days attributable to Medicare Part C enrollee patients in the numerator and denominator of the Medicare/SSI fraction used to calculate a hospital’s DSH payments. This ruling addresses CMS’s attempts to impose the policy espoused in its vacated 2004 rulemaking to a fiscal year in the 2004–2013 time period without using notice-and-comment rulemaking. This decision should require CMS to recalculate hospitals’ DSH Medicare/SSI fractions, with Medicare Part C days excluded, for at least federal fiscal year 2012, but likely federal fiscal years 2005 through 2013. In June, 2023, CMS issued a rule to retroactively negate the effects of the aforementioned Supreme Court decision. Although we can provide no assurance that we will ultimately receive additional funds, we estimate that the court ruling and final impacts on prior year hospital Medicare DSH payments range between $18 million to $28 million in the aggregate.
The 2011 Act included the imposition of annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Committee, which was responsible for developing recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year. Subsequent legislation has extended this sequestration through 2032. The CARES Act, as amended, temporarily suspended or limited the application of this sequestration from May 1, 2020 through June 30, 2022, with a return to the full 2% Medicare payment reduction thereafter.
Inpatient services furnished by psychiatric hospitals under the Medicare program are paid under a Psychiatric Prospective Payment System (“Psych PPS”). Medicare payments to psychiatric hospitals are based on a prospective per diem rate with adjustments to account for certain facility and patient characteristics. The Psych PPS also contains provisions for outlier payments and an adjustment to a psychiatric hospital’s base payment if it maintains a full-service emergency department.
In August, 2025, CMS published its Psych PPS final rule for the federal fiscal year 2026. Under this final rule, payments to our behavioral health care hospitals and units from the market basket update are estimated to increase by 2.5% compared to federal fiscal
44
year 2025. This amount includes the effect of the 3.2% net market basket update which reflects the offset of a 0.7% productivity adjustment. When all of the final patient level adjustments described below as well as proposed wage index values are considered, we estimate that Psych PPS payments will increase by 1.7% in FFY 2026.
In July, 2024, CMS published its Psych PPS final rule for the federal fiscal year 2025. Under this final rule, payments to our behavioral health care hospitals and units from the market basket update are estimated to increase by 2.8% compared to federal fiscal year 2024. This amount includes the effect of the 3.3% net market basket update which reflects the offset of a 0.5% productivity adjustment. When all of the final patient level adjustments described below as well as proposed wage index values are considered, we estimate that Psych PPS payments will increase by 2.1% in FFY 2025.
In addition to the market basket update noted above, CMS made the following changes:
This final rule also includes two requests for information on future revisions to the IPF PPS facility-level adjustment factors and development of the new standardized IPF Patient Assessment Instrument, required by the CAA of 2023, which IPFs participating in the IPF Quality Reporting Program will be required to report for Rate Year 2028.
In July, 2023, CMS published its Psych PPS final rule for the federal fiscal year 2024. Under this final rule, payments to our behavioral health care hospitals and units increased by approximately 3.3% compared to federal fiscal year 2023. This amount includes the effect of the 3.5% net market basket update which reflects the offset of a 0.2% productivity adjustment.
In July, 2025, CMS issued its OPPS proposed rule for 2026. The hospital market basket increase is 3.2% and the productivity adjustment reduction is 0.8% for a net market basket increase of 2.4%. When other statutorily required adjustments (including a 1.95% reduction for the 340B remedy discussed below) and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2026 will aggregate to a net increase of 0.1%.
Some key changes in the 2026 OPPS proposed rule include:
340B Remedy Recoupment:
CMS is proposing to shorten the 340B Remedy recoupment transition from 16 years to 5 years. A 2023 CMS final rule had implemented a negative OPPS recoupment adjustment of 0.5 percent for approximately 16 years to offset $7.8 billion paid to hospitals for non-drug OPPS payments between 2018 and 2022 – following the US Supreme Court decision overturning the Trump Administration’s 340B reduction policy. CMS now proposes to increase the annual offset of 0.5 percent to 2 percent effective CY 2026 and to remain in effect until the estimated payment reduction reaches $7.8 billion, which CMS estimates will occur in CY 2031.
Eliminating the Inpatient Only (IPO) List:
CMS is proposing to phase out the IPO list over a 3-year period, beginning with removing 285 mostly musculoskeletal procedures for CY 2026. Procedures removed from the IPO list would be exempted from certain medical review activities related to the two-midnight policy for CY 2026 and subsequent years until CMS determines the service or procedure is more commonly performed in the Medicare population in the outpatient setting. We are unable to estimate the potential financial impact of this proposal.
On November 2, 2023, in light of the Supreme Court’s decision in American Hospital Association v. Becerra (142 S. Ct. 1896 (2022)) and the district court’s remand to the agency, CMS issued a final rule outlining the remedy for the 340B-acquired drug payment policy for calendar years 2018-2022. CMS published the final rule to remedy the payment rates the Court held were invalid aspects of their past policy and will affect nearly all hospitals paid under the OPPS. As part of the final remedy, CMS will make an adjustment to the update factor to maintain budget neutrality as required by statute. CMS finalized the 340B policy for calendar year 2018 in 2017 in a budget neutral manner that included increasing payments for non-drug items and services; this payment increase was in effect from calendar years 2018 through 2022. CMS estimates that hospitals were paid $7.8 billion more for non-drug items and services during this time period than they would have been paid in the absence of the 340B payment policy. Because CMS is now making additional payments to affected 340B covered entity hospitals to pay them what they would have been paid had the 340B policy never been
45
implemented, CMS will make a corresponding offset to maintain budget neutrality as if the 340B payment policy had never been in effect. To carry out this required $7.8 billion budget neutrality adjustment, CMS will reduce future non-drug item and service payments by adjusting the OPPS conversion factor by minus 0.5% starting in calendar year 2026 and continuing for 16 years. As discussed above, as noted in the 2026 OPPS proposed rule, CMS is proposing to shorten the recovery period of the $7.8 billion from 17 years to 5 years starting in calendar year 2026 with a 2.0% reduction to non-drug item and service payments.
The estimated impact of this 2.0% reduction on our projected 2026 results of operations related to both Medicare and Medicare Advantage is approximately $13 million.
In November, 2024, CMS issued its OPPS final rule for 2025. The hospital market basket increase is 3.4% and the productivity adjustment reduction is 0.5% for a net market basket increase of 2.9%. When other statutorily required adjustments and hospital patient service mix are considered, including a 14.2% increase to the partial hospitalization rate, we estimate that our overall Medicare OPPS update for 2025 will aggregate to a net increase of 3.6%.
In November, 2023, CMS issued its OPPS final rule for 2024. The hospital market basket increase is 3.3% and the productivity adjustment reduction is 0.2% for a net market basket increase of 3.1%. When other statutorily required adjustments and hospital patient service mix are considered, our overall Medicare OPPS update for 2024 aggregated to a net increase of approximately 9.7%. This percentage reflects the impact resulting from rural floor changes to the Medicare wage index adjustment factor where certain states, such as California and Nevada, will materially benefit from this change.
In November, 2022, CMS issued its OPPS final rule for 2023. The hospital market basket increase is 4.1% and the productivity adjustment reduction is -0.3% for a net market basket increase of 3.8%. The final rule provides that in light of the Supreme Court decision in American Hospital Association v. Becerra, CMS applied the default rate, generally average sales price plus 6%, to 340B acquired drugs and biologicals for 2023. During the 2018-2022 time period, we recorded an aggregate of approximately $45 million to $50 million of Medicare revenues related to the prior 340B payment policy. When other statutorily required adjustments and hospital patient service mix are considered, as well as impact of the aforementioned 340B Program policy change, our overall Medicare OPPS update for 2023 aggregated to a net increase of approximately 0.9% which includes a 0.3% increase to behavioral health division partial hospitalization rates.
In November, 2019, CMS finalized its Hospital Price Transparency rule that implements certain requirements under the June 24, 2019 Presidential Executive Order related to Improving Price and Quality Transparency in American Healthcare to Put Patients First. Under this final rule, effective January 1, 2021, CMS will require: hospitals to make public: (1) their standard changes (both gross charges and payer-specific negotiated charges) for all items and services online in a machine-readable format, and; (2) standard charge data for a limited set of “shoppable services” the hospital provides in a form and manner that is more consumer friendly. On November 2, 2021, CMS released a final rule increasing the monetary penalty that CMS can impose on hospitals that fail to comply with the price transparency requirements. We believe that our hospitals are in full compliance with the applicable federal regulations. In November, 2023, CMS finalized multiple provisions, effective as of January 1, 2024, focused on increasing hospital price transparency and compliance enforcement including but not limited to: (1) standard charges data would be posted online using a CMS template, instead of using the hospital’s own form/format; (2) all standard charge information would be encoded with a specified set of data elements (e.g., hospital name; license number; payer/plan name; description of service; billing codes, among others); (3) other technical changes related to increasing consumers’ automated accessibility to hospital standard charges, and; (4) certifications regarding accuracy of standard charge data and related compliance warning notices from CMS and requiring accessibility to health system leadership regarding transparency noncompliance.
In September, 2024, the Departments of Labor, Health and Human Services and the Treasury published final rules that:
While these rules will likely improve patient access to inpatient and outpatient mental health services, we are unable to estimate the related potential impact on our results of operations.
Medicaid: Medicaid is a joint federal-state funded health care benefit program that is administered by the states to provide benefits to qualifying individuals. Most state Medicaid payments are made under a PPS-like system, or under programs that negotiate payment levels with individual hospitals. Amounts received under the Medicaid program are generally significantly less than a hospital’s customary charges for services provided. In addition to revenues received pursuant to the Medicare program, we receive a large portion of our revenues either directly from Medicaid programs or from managed care companies managing Medicaid. All of our
46
acute care hospitals and most of our behavioral health centers are certified as providers of Medicaid services by the appropriate governmental authorities.
We receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of California, Texas, Nevada, Illinois, Pennsylvania, Washington, D.C., Kentucky, Tennessee, Massachusetts, Virginia, Mississippi and Florida. We also receive Medicaid disproportionate share hospital payments in certain states including, most significantly, Texas. Many of these programs have a Medicaid supplemental payment component that are subject to approval on a year-to-year basis and there is no assurance that these supplemental payment revenues will continue at their current rates or at all. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.
The ACA substantially increases the federally and state-funded Medicaid insurance program, and authorizes states to establish federally subsidized non-Medicaid health plans for low-income residents not eligible for Medicaid starting in 2014. However, the Supreme Court has struck down portions of the ACA requiring states to expand their Medicaid programs in exchange for increased federal funding. Accordingly, many states in which we operate have not expanded Medicaid coverage to individuals at 133% of the federal poverty level. Facilities in states not opting to expand Medicaid coverage under the ACA may be additionally penalized by corresponding reductions to Medicaid disproportionate share hospital payments beginning in fiscal year 2024, as discussed below. We can provide no assurance that further reductions to Medicaid revenues, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.
Summary of Various State Medicaid Supplemental Payment Programs:
The following table summarizes the revenues, healthcare provider taxes (“Provider Taxes”) and net benefit related to each of the below-mentioned Medicaid supplemental programs for the three and six-month periods ended June 30, 2025 and 2024. The Provider Taxes are recorded in other operating expenses on the condensed consolidated statements of income, as included herein. The "Projected Full Year 2025" amounts reflected on the table below are, in many cases, subject to federal and potentially state approval and may be affected by any reductions or other changes in federal funding for these programs.
47
|
(amounts in millions) |
|
|||||||||||||||
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|||||||||
|
Projected |
|
|
June 30, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
|||||
|
Full Year 2025 |
|
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
|||||
Texas Supplemental Payment Programs: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
325 |
|
|
$ |
49 |
|
$ |
56 |
|
|
$ |
96 |
|
$ |
119 |
|
Provider Taxes |
|
(128 |
) |
|
|
(19 |
) |
|
(23 |
) |
|
|
(38 |
) |
|
(49 |
) |
Net benefit |
$ |
197 |
|
|
$ |
30 |
|
$ |
33 |
|
|
$ |
58 |
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Nevada SDP: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
353 |
|
|
$ |
88 |
|
$ |
67 |
|
|
$ |
175 |
|
$ |
133 |
|
Provider Taxes |
|
(125 |
) |
|
|
(31 |
) |
|
(27 |
) |
|
|
(62 |
) |
|
(54 |
) |
Net benefit |
$ |
228 |
|
|
$ |
57 |
|
$ |
40 |
|
|
$ |
113 |
|
$ |
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Various Other State Programs: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
1,029 |
|
|
$ |
315 |
|
$ |
218 |
|
|
$ |
522 |
|
$ |
391 |
|
Provider Taxes |
|
(318 |
) |
|
|
(84 |
) |
|
(67 |
) |
|
|
(151 |
) |
|
(126 |
) |
Net benefit |
$ |
711 |
|
|
$ |
231 |
|
$ |
151 |
|
|
$ |
371 |
|
$ |
265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Subtotal-Provider Tax Programs: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
1,707 |
|
|
$ |
452 |
|
$ |
341 |
|
|
$ |
793 |
|
$ |
643 |
|
Provider Taxes |
|
(571 |
) |
|
|
(134 |
) |
|
(117 |
) |
|
|
(251 |
) |
|
(229 |
) |
Aggregate net benefit from Provider Tax Programs |
$ |
1,136 |
|
|
$ |
318 |
|
$ |
224 |
|
|
$ |
542 |
|
$ |
414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Texas DSH and Nevada SPA Programs: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
47 |
|
|
$ |
12 |
|
$ |
11 |
|
|
$ |
24 |
|
$ |
23 |
|
Provider Taxes |
|
0 |
|
|
|
0 |
|
|
0 |
|
|
|
0 |
|
|
0 |
|
Net benefit |
$ |
47 |
|
|
$ |
12 |
|
$ |
11 |
|
|
$ |
24 |
|
$ |
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Supplemental Medicaid Programs: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
$ |
1,754 |
|
|
$ |
464 |
|
$ |
352 |
|
|
$ |
817 |
|
$ |
666 |
|
Provider Taxes |
|
(571 |
) |
|
|
(134 |
) |
|
(117 |
) |
|
|
(251 |
) |
|
(229 |
) |
Aggregate net benefit from all Supplemental Programs |
$ |
1,183 |
|
|
$ |
330 |
|
$ |
235 |
|
|
$ |
566 |
|
$ |
437 |
|
Texas Supplemental Payment Programs:
Certain of our acute care hospitals located in various counties of Texas participate in Medicaid supplemental payment Section 1115 Waiver indigent care programs. The 1115 Waiver has been approved by CMS through September 30, 2030. These hospitals also have affiliation agreements with third-party hospitals to provide free hospital and physician care to qualifying indigent residents of these counties. Our hospitals receive both supplemental payments from the Medicaid program and indigent care payments from third-party, affiliated hospitals. The supplemental payments are contingent on the county or hospital district making an Inter-Governmental Transfer (“IGT”) to the state Medicaid program while the indigent care payment is contingent on a transfer of funds from the applicable affiliated hospitals. However, the county or hospital district is prohibited from entering into an agreement to condition any IGT on the amount of any private hospital’s indigent care obligation.
CHIRP (including QIF)
On August 1, 2022, CMS approved the Comprehensive Hospital Increase Reimbursement Program ("CHIRP"), with a pool of $5.2 billion, for the rate period effective September 1, 2022 to August 31, 2023. On July 31, 2023, CMS approved the CHIRP program, with a pool of $6.5 billion, for the rate period of September 1, 2023 to August 31, 2024. On September 13, 2024, CMS approved the CHIRP program with a pool of $6.5 billion for the rate period September 1, 2024 to August 31, 2025 (with an amended CMS approval
48
on October 1, 2024). A CHIRP preprint for the rate period September 1, 2025 to August 31, 2026 was submitted to CMS. If approved as submitted, this program is estimated to increase reimbursement to our hospitals by approximately $20 million to $23 million.
On January 26, 2024, the Texas Health and Human Services Commission ("THHSC") issued a final rule that will modify the CHIRP payments beginning with the State Fiscal Year (SFY) 2025 rate period to promote the advancement of the quality goals and strategies the program is designed to advance.
The final modifications include:
CHIRP payment levels could be reduced materially if our hospitals are not able meet the required APHRIQA pay-for-performance metrics. The Company’s hospitals in this program have met 100% of the applicable APHRIQA pay-for-performance metrics for SFY 2025.
In connection with the Quality Incentive Fund (“QIF”), the results of operations of certain of our acute care hospitals located in Texas included no revenues for the three and six-month periods ended June 30, 2025 and 2024, respectively. QIF revenues are earned pursuant to contract terms with various Medicaid managed care plans which requires the annual payout of QIF funds when a managed care service delivery area’s actual claims-based CHIRP payments are less than targeted CHIRP payments for a specific rate year.
We estimate that these hospitals will be entitled to approximately $31 million of aggregate QIF revenues during the year ended December 31, 2025.
UC
Included in these provider tax programs are reimbursements received in connection with the Texas Uncompensated Care program ("UC"). The size and distribution of the UC pool are determined based on charity care costs reported to THHSC in accordance with Medicare cost report Worksheet S-10 principles.
HARP
On September 24, 2021, THHSC finalized New Fee-for-Service Supplemental Payment Program: Hospital Augmented Reimbursement Program (“HARP”) to be effective October 1, 2021. The HARP program continues the financial transition for providers who have historically participated in the Delivery System Reform Incentive Payment program described below. The program, which was approved by CMS on August 15, 2023, will provide additional funding to hospitals to help offset the cost hospitals incur while providing Medicaid services. HARP is technically a Medicaid Upper Payment Limit as payment under this program is based on a reasonable estimate of the amount that would be paid for the services under Medicare payment principles but is referred to as HARP by THHSC.
In connection with this program, included in our results of operations was approximately $6 million and $7 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $12 million and $14 million during the six-month periods ended June 30, 2025 and 2024, respectively.
We expect our net reimbursements pursuant to HARP to approximate $24 million during the year ended December 31, 2025.
Nevada State Directed Payment Program ("SDP"):
As previously reported, in February, 2023, the Nevada Division of Health Care Financing and Policy (“DHCFP”) outlined a new provider fee on private hospitals located in Nevada that would effectively capture new Medicaid federal share for certain categories of services eligible for the new payment program. In late December, 2023, CMS approved the Medicaid managed care component of the Nevada SDP program, with an effective date of January 1, 2024. In November 2024, CMS approved an increased assessment rate which funded an increase in the SDP pool size covering the period of July 1, 2024 through December 31, 2024. Payments made pursuant to this component of the Nevada SDP program, which requires annual approval by CMS, are subject to reconciliation by DHCFP based on actual Medicaid managed care utilization during 2024. There can be no assurance that the Medicaid managed care component of the Nevada SDP will continue for any period after December 31, 2025, or that it will not be modified.
In connection with this program, included in our results of operations was approximately $57 million and $40 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $113 million and $79 million during the six-month periods ended June 30, 2025 and 2024, respectively.
49
We estimate that our aggregate net reimbursements pursuant to both components of the Nevada SDP program (net of related provider taxes) will approximate $229 million during the year ended December 31, 2025. The Nevada SDP for the period of January 1, 2025 through December 31, 2025 has been approved by CMS.
Various Other State Programs:
We receive substantial reimbursement from multiple states in connection with various supplemental Medicaid payment programs. The states include, but are not limited to, the state programs listed below from which we receive significant reimbursements.
Kentucky Hospital Rate Increase Program (“HRIP”)
In early 2021, CMS approved the Kentucky Medicaid Managed Care Hospital Rate Increase Program. In connection with this program, included in our results of operations was approximately $21 million and $20 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $43 million and $41 million during the six-month periods ended June 30, 2025 and 2024, respectively. In December, 2024, CMS approved the program for the period of January 1, 2025 through December 31, 2025 at rates comparable to the prior year.
We estimate that our net reimbursements pursuant to HRIP will approximate $88 million during the year ended December 31, 2025.
California Supplemental Payments
In California, the state continues to operate Medicaid supplemental payment programs consisting of three components: Fee For Service Payment, Managed Care-Pass-Through Payment and Managed Care-Directed Payment. The non-federal share for these programs are financed by a statewide provider tax. The Directed Payment method will be based on actual concurrent hospital Medicaid managed care in-network patient volume whereas the other programs are based on prior year Medicaid utilization. The CMS program approval status is outlined in the table below.
California Hospital Fee Program CMS Approval Status:
Hospital Fee Program Component |
CMS Methodology Approval |
CMS Rate Setting Approval Status |
|
Status |
|
Fee For Service Payment |
Approved through December 31, 2024 |
Approved through December 31, 2024; Paid through December 31, 2024
|
Managed Care-Pass-Through Payment |
Approved through December 31, 2024 |
Approved through December 31, 2022 and paid in advance through December 31, 2024
|
Managed Care-Directed Payment |
Approved through December 31, 2024 |
Approved through December 31, 2022 and paid in advance through June 30, 2023
|
In connection with this program, included in our results of operations was approximately $16 million and $13 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $32 million and $25 million during the six-month periods ended June 30, 2025 and 2024, respectively. During the first quarter of 2025, the Department of Health Care Services submitted a final draft of the Hospital Quality Assurance Fee program 9 fee to CMS for approval for the period January 1, 2025 to December 31, 2025. This submission includes the Managed Care-Directed Payment preprint. We are unable to predict the outcome, amount or timing of any related increase that may result from this submission.
We estimate that our net reimbursements pursuant to this program will approximate $63 million during the year ended December 31, 2025.
Mississippi Hospital Access Program
In September, 2023, subject to CMS approval, Mississippi announced a $689 million, two-part Medicaid payment proposal, effective retroactively to July 1, 2023, that would be funded by annual hospital assessments to the state's Medicaid program. These hospital assessments are calculated using a formula provided under state law. The first part of the program, known as the Mississippi Hospital Access Program (“MHAP”), provides direct payments for hospitals that serve patients in the state's Medicaid managed care delivery system. Hospitals are reimbursed near the average commercial rate, which is the upper limit ("UPL") for Medicaid managed care reimbursements. The second part of the program supplements traditional Medicaid payment rates for hospitals providing inpatient and outpatient services up to Medicaid's regulated UPL. In June 2024, CMS approved the MHAP program component for the period July 1, 2024 to June 30, 2025. The UPL component was approved in April 2024.
In connection with this program, included in our results of operations was approximately $19 million and $16 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $29 million and $27 million was recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
50
We estimate that our net reimbursements pursuant to these supplemental payment programs will approximate $51 million during the year ended December 31, 2025.
Florida Medicaid Managed Care Directed Payment Program (“DPP”) and Low Income Payment (“LIP”)
The Florida DPP provides for an additional payment for Medicaid managed care contracted services. The LIP program provides payment for hospital uncompensated care under the 1115 Medicaid Waiver. For the three and six-month periods ended June 30, 2025 and 2024 no revenue was recorded in connection with the DPP program (substantially all of this DPP revenue is recorded during the fourth quarters of each year). During the three-month period ended June 30, 2025, the Company recorded $9 million in LIP reimbursement (net of provider taxes).
We estimate that our reimbursements pursuant to this DPP and LIP will approximate $57 million during the year ended December 31, 2025. The Florida DPP for the period of October 1, 2024 to September 30, 2025 is under CMS' review for approval. The submitted DPP preprint includes a request to increase the size of the program and related DPP add-on payment levels based on a percentage of average commercial rates. If approved as submitted, we estimate the program net benefit could increase by approximately $47 million on an annual basis and would likely be recorded during the fourth quarter of 2025.
Illinois Medicaid Supplemental Payment Programs
The Illinois Medicaid Supplemental Payment Programs are comprised of three components: (1) Medicaid managed care directed payment program; (2) Medicaid managed care pass-through program, and; (3) Medicaid fee for service supplemental payment program. These programs require various related legislative and regulatory approvals each year.
In connection with this program, included in our results of operations was approximately $8 million and $9 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $18 million and $19 million was recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursements pursuant to these supplemental payment programs will approximate $34 million during the year ended December 31, 2025. Approval of these programs for the period of January 1, 2025 to December 31, 2025 is under CMS' review.
Indiana Medicaid Managed Care DPP
The Indiana DPP provides for an additional payment for Medicaid managed care contracted services. In connection with this program, included in our results of operations was approximately $8 million and $7 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $16 million and $15 million was recorded during the six-month periods ended June 30, 2025 and 2024. CMS has approved this program through September 30, 2025.
We estimate that our net reimbursements pursuant to this program will approximate $33 million during the year ended December 31, 2025.
Oklahoma (Transition to Managed Care and Implementation of a Medicaid Managed Care DPP)
The current Oklahoma Medicaid supplemental payment program in effect, prior to the planned implementation of the new DPP in 2024, is the Supplemental Hospital Offset Payment Program (“SHOPP”). The SHOPP component will remain in place for certain categories of Medicaid patients that will continue to be enrolled in the traditional Medicaid Fee for Service program.
In May, 2022, Oklahoma enacted legislation that directs the Oklahoma Health Care Authority ("OHCA") to: (i) transition its Medicaid program from a fee for service payment model to a managed care payment model by no later than October 1, 2023, and: (ii) concurrently implement a Medicaid managed care DPP using a managed care gap of 90% of average commercial rates. In December, 2022, the OHCA delayed the implementation date of the Medicaid managed care change and related DPP until April 1, 2024. In September, 2023, CMS approved the DPP program for the 15-month period effective as of April 1, 2024 through June 30, 2025.
In connection with this program, included in our results of operations was approximately $5 million and $6 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $12 million and $9 million recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursements pursuant to these two supplemental payment programs (i.e. SHOPP and DPP) will approximate $26 million during the year ended December 31, 2025.
South Carolina Health Access, Workforce and Quality (“HAWQ”) Program
In September 2023, CMS approved the South Carolina HAWQ Program retroactive to July 1, 2023 and subsequently approved by CMS in July, 2024 for the period of July 1, 2024 to June 30, 2025. This program is a Medicaid managed care directed payment program that provides for a rate enhancement to Medicaid managed care encounters. In connection with this program, included in our results of operations was approximately $9 million and $5 million during the three-month periods ended June 30, 2025 and 2024,
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respectively and, approximately $18 million and $11 million recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursements pursuant to this program will approximate $34 million during the year ended December 31, 2025.
Michigan Directed Payment Program (“DPP”)
In March 2024, CMS approved the Michigan Medicaid DPP retroactive to October 1, 2023 based on average commercial rates. The Michigan DPP provides for an additional payment for Medicaid managed care contracted services. In connection with this program, included in our results of operations was approximately $15 million and $13 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $22 million and $20 million was recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursements pursuant to this program will approximate $44 million during the year ended December 31, 2025. The Michigan DPP for the period of October 1, 2024 to September 30, 2025 was approved by CMS.
Idaho Upper Payment Limit (“UPL”)
In April 2024, the Idaho Department of Health and Welfare (“IDHW”) released its updated Medicaid UPL calculation for SFY 2024 (July 1, 2023 to June 30, 2024) and revised its SFY 2023 (July 1, 2022 to June 30, 2023) UPL calculation. Subject to CMS approval, the IDHW plans to continue this UPL program through SFY 2025 (July 1, 2024 to June 30, 2025) at payment levels comparable to SFY 2024. In SFY 2026, the IDHW intends to replace the UPL program with a Medicaid managed care state directed payment program. We are unable to predict whether payments levels under the planned new state directed payment program will be comparable to the SFY 2025 UPL payment levels.
In connection with this program, included in our results of operations was approximately $11 million and $19 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $16 million and $22 million recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursements pursuant to this program will approximate $26 million during the year ended December 31, 2025.
Washington Safety Net Assessment Program
On April 2, 2024, CMS approved an expanded state directed payment program in Washington whereby payments will now be based on the average commercial rates. The program was approved retroactively for the period January 1, 2024 to December 31, 2024.
In connection with this program, included in our results of operations was approximately $14 million and $19 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $26 million and $19 million recorded during the six-month periods ended June 30, 2025 and 2024, respectively.
We estimate that our net reimbursement pursuant to this expanded program will approximate $52 million during the year ended December 31, 2025. The program for the period of January 1, 2025 to December 31, 2025 was approved by CMS.
New Mexico State Directed Payment Program (“SDP”)
In November, 2024, CMS approved the New Mexico Medicaid SDP, retroactive to July 1, 2024, based on average commercial rates. The New Mexico SDP provides for an additional payment for Medicaid managed care contracted services. The program requires the submission of an annual report that demonstrates that 75% of the incremental net funds were used for the delivery of and access to healthcare services in the state.
The New Mexico SDP for the period of January 1, 2025 to December 31, 2025 was approved by CMS.
In connection with this program, included in our results of operations was approximately $10 million during the three-month period ended June 30, 2025 and, approximately $15 million during the six-month period ended June 30, 2025. No revenue was recorded during the three-month or six-month periods ended June 30, 2024.
We estimate that our net reimbursements pursuant to this program will approximate $23 million during the year ended December 31, 2025.
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Tennessee Directed Payment Program (“DPP”)
Tennessee SB1740, enacted in May, 2024, imposes an annual coverage assessment on covered hospitals for fiscal year 2024-2025. The total assessment on all covered hospitals in the aggregate will be equal to 6% of the federally recognized annual coverage assessment base. The assessment proceeds will be used to fund an increase to the state’s DPP payment pool to be based on average commercial rates.
In January, 2025, CMS approved the DPP payment increase for the period July 1, 2024 to December 31, 2024, contingent upon CMS' approval of the state's 1115 Medicaid Waiver amendment. In addition, the DPP program for calendar year 2025 (January 1, 2025 to December 31, 2025) was approved by CMS in April, 2025, also contingent upon CMS' approval of the state's 1115 Medicaid Waiver amendment which was approved by CMS in June, 2025.
During the three-month period ending June 30, 2025, we recorded $58 million in net reimbursements from this program, $29 million of which related to the six-month period July 1, 2024 to December 31, 2024. We estimate that our net reimbursements pursuant to this program will approximate $87 million during the year ended December 31, 2025.
Washington, D.C. State Directed Payment program (“SDP”)
In September, 2024, the Fiscal Year 2025 Budget Support Act (B25-0784) was approved. This legislation includes a new Medicaid managed care directed payment program effective for the period of October 1, 2024 through September 30, 2025, with potential subsequent annual programs. Finalization of this program remains contingent upon CMS' approval. Estimated amounts related to this program are subject to change for various reasons including modifications based upon CMS' review of the preprint payment methodology terms, as well as actual Medicaid managed care utilization for hospitals that operate in the District of Columbia, including ours. If ultimately approved, there can be no assurance that this program will continue for any period after September 30, 2025, or that it will not be modified. The Washington, D.C., Medicaid agency submitted the SDP preprint to CMS in July 2024, for review and approval.
Although we cannot predict if this new SDP program will be ultimately approved, or the timing of such approval should it occur, if approved in its current form, we estimate that our aggregate net benefit from this program for the period of October 1, 2024 through September 30, 2025, related to our two existing hospitals in the market (that operated in that market prior to April, 2025), will approximate $85 million. The "Projected Full Year 2025" amounts reflected on the table above do not include any net reimbursements in connection with the Washington, D.C. SDP program.
Texas DSH and Nevada SPA Programs:
Texas DSH
Upon meeting certain conditions and serving a disproportionately high share of Texas’ low income patients, our qualifying facilities located in Texas receive additional reimbursement from the state’s DSH fund. The Texas DSH program was renewed for the state’s 2025 DSH fiscal year (covering the period of October 1, 2024 through September 30, 2025).
In connection with this program, included in our results of operations was approximately $8 million and $7 million during the three-month periods ended June 30, 2025 and 2024, respectively and, approximately $15 million was recorded during both six-month periods ended June 30, 2025 and 2024.
We estimate that our aggregate net reimbursements earned pursuant to the Texas DSH program will approximate $29 million during year ended December 31, 2025.
The ACA and subsequent federal legislation provides for a significant reduction in Medicaid disproportionate share payments beginning in federal fiscal year 2025 (see above in Sources of Revenues and Health Care Reform-Medicaid for additional disclosure related to the delay of these DSH reductions). HHS is to determine the amount of Medicaid DSH payment cuts imposed on each state based on a defined methodology. As Medicaid DSH payments to states will be cut, consequently, payments to Medicaid-participating providers, including our hospitals in Texas, will be reduced in the coming years. Based on the CMS final rule published in September, 2019 (as amended by the CARES Act and the CAA), beginning in fiscal year 2025, annual Medicaid DSH payments in Texas could be reduced by approximately 41% from current DSH payment levels. A series of federal continuing resolutions were passed by the federal government which provided for ongoing federal funding.
In connection with certain previous DSH and UC adverse federal court decisions, including the Children’s Hospital Association of Texas v. Azar, we continue to maintain reserves in the financial statements for cumulative Medicaid DSH and UC reimbursements related to our behavioral health hospitals located in Texas that amounted to $33 million as of June 30, 2025 and $34 million as of December 31, 2024.
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Nevada State Plan Amendment ("SPA")
CMS initially approved an SPA in Nevada in August, 2014 and this SPA has been approved for additional state fiscal years, including the 2024 fiscal year covering the period of July 1, 2023 through June 30, 2024. CMS approval for the 2025 fiscal year, which is still pending, is expected to occur.
In connection with this program, included in our results of operations was approximately $4 million during both three-month periods ended June 30, 2025 and 2024, respectively and, approximately $9 million was recorded during both the six-month periods ended June 30, 2025 and 2024.
We estimate that our net reimbursements pursuant to this program will approximate $18 million during the year ended December 31, 2025.
Legislation Commonly Known as the One Big Beautiful Bill Act ("OBBBA")
The OBBBA was enacted into law on July 4, 2025. This legislation includes material changes to the Medicaid program and other healthcare related programs including but not limited to:
Medicaid State Directed Payments (“SDP”)
Limits on Provider Taxes
Rural Health Transformation Program
Medicaid Eligibility:
As noted above, the OBBBA has specific legislative language that will reduce SDP payments as well as limit Provider Taxes used by states to finance the non-federal share of Medicaid supplemental payments. However, certain OBBBA provisions that would impact payment levels could be subject to some interpretation by CMS and related future federal rulemaking such as the definition of an SDP grandfathered program.
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Based upon our current projected 2025 full year net benefit related to various state Medicaid supplemental payment programs, amounting to approximately $1.182 billion, as reflected on the table above in Summary of Various State Medicaid Supplemental Payment Programs, we estimate that, commencing with the 2028 state fiscal years, our aggregate annual net benefit will be reduced, on an annually increasing and relatively pro rata basis, by approximately $360 million to $400 million in 2032. We cannot predict, among other things, if this legislation will ultimately be implemented as enacted, or if certain states may attempt to modify their respective SDP program in response to the OBBBA legislation. Given the various uncertainties and evolving state-by-state interpretations and computations related to this legislation, our forecasted estimates are subject to change, potentially by material amounts.
Other Risk Factors Related To State Supplemental Medicaid Payments:
As outlined above, we receive substantial reimbursement from multiple states in connection with various supplemental Medicaid payment programs. Failure to renew these programs beyond their scheduled termination dates, failure of the public hospitals to provide the necessary IGTs for the states’ share of the DSH programs, failure of our hospitals that currently receive supplemental Medicaid revenues to qualify for future funds under these programs, or reductions in reimbursements, could cause our estimates to differ by material amounts which could have a material adverse effect on our future results of operations.
In April, 2016, CMS published its final Medicaid Managed Care Rule which explicitly permits but phases out the use of pass-through payments (including supplemental payments) by Medicaid Managed Care Organizations (“MCO”) to hospitals over ten years but allows for a transition of the pass-through payments into value-based payment structures, delivery system reform initiatives or payments tied to services under a MCO contract. Since we are unable to determine the financial impact of this aspect of the final rule, we can provide no assurance that the final rule will not have a material adverse effect on our future results of operations. In November, 2020, CMS issued a final rule permitting pass-through supplemental provider payments during a time-limited period when states transition populations or services from fee-for-service Medicaid to managed care.
We receive Medicaid SDP payments from MCOs authorized by CMS under 42 CFR § 438.6(c). Consistent with capitated rates paid by Medicaid state agencies to MCO’s for managing Medicaid beneficiary lives under a risk-based arrangement, SDP program related capitated rates must also be developed by the state in accordance with actuarial soundness standards noted at 42 CFR § 438.4 and non-compliance could result in a reduction to SDP payment levels. In general, Medicaid SDP payments under 42 CFR § 438.6(c) are subject to annual CMS approval via the submission of a preprint application by a state agency which provides details of the SDP payment methodology and conformity with the applicable federal regulations. CMS SDP preprint approval, and the timing of such approval (if it occurs), are uncertain, which can affect both the SDP payment level and the timing of SDP revenue we record.
We incur 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 that are used by respective states to finance the non-federal share of SDP’s (or other Medicaid supplemental payment programs). 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 supplemental payment programs. States are subject to CMS both concurrent and retrospective review for their compliance with the applicable Provider Tax regulations and related federal statute. If CMS determines Provider Taxes used by a state Medicaid program to finance the non-federal share of a SDP (or other Medicaid supplemental payment programs) are not in compliance with the applicable Provider Tax regulations and related federal statute, Company SDP payments (and other Medicaid supplemental payments) could be subject to recoupment by the respective state agency when non-compliance is determined by CMS to exist.
We believe that the SDP (and other state supplemental payment) programs are designed by each state to be in full compliance with the applicable federal regulations and federal statutes. However, we are unable to provide assurance CMS will determine on a retroactive basis that a state’s SDP (or other Medicaid supplemental payment program) design and Medicaid financing structures is in full compliance with the applicable federal regulations and federal statute(s).
On April 22, 2024, CMS issued Medicaid and Children’s Health Insurance Program ("CHIP") Managed Care Access, Finance, and Quality Final Rule (“Managed Care Rule”). CMS intends for the Managed Care Rule to:
The SDP provisions included in the Managed Care Rule:
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Fee-For-Service Short-Doyle Medi-Cal (“SD/MC”) Hospitals Change In Payment Methodology:
Under the California Medicaid prepaid inpatient health plan program, counties are required to ensure delivery of mental health services utilizing a system of county operated and contract providers. The California Medicaid program has adopted a new reimbursement method for inpatient psychiatric services with an effective date of December 12, 2023, incorporated a cost-based ceiling to negotiated rates. This change may require renegotiation of contracts Company hospitals have had with counties, retroactive to December 12, 2023, and may also impact prospective rate negotiations. New California Medicaid rates could be materially lower than prior payment rates particularly if counties look to limit payment rates to a cost-based methodology rather than a market-based negotiated rate. We are awaiting formal guidance from California as to the manner in which this change will be implemented and whether the reimbursement method will change prospectively. Further, it is uncertain at this time whether and how counties will retroactively apply this change in method retroactively to December 12, 2023, given the previously negotiated payment terms. We are unable to predict with certainty the impact of this SPA at this time. However, under some scenarios, the adverse financial impact could be material.
As disclosed herein, we receive a significant amount of Medicaid and Medicaid managed care revenue from both base payments and supplemental payments. Although we are unable to estimate the impact of the Managed Care Rule on our future results of operations, if implemented as proposed, Managed Care Rule related changes could have a material adverse impact on our future results of operations.
Future changes to the terms and conditions of the various programs outlined above could materially reduce our net benefit derived from the programs which could have a material adverse impact on our future results of operations. In addition, Provider Taxes are governed by both federal and state laws and are subject to future legislative changes that, if reduced from current rates in several states, could have a material adverse impact on our future results of operations.
A 6.2% increase to the Medicaid Federal Matching Assistance Percentage (“FMAP”) was included in the Families First Coronavirus Response Act. The CAA of 2023 provided for the transitional reduction of the 6.2% enhanced FMAP during 2023 to 5.0% during the second quarter, 2.5% during the third quarter and 1.5% during the fourth quarter of 2023.
HITECH Act: In July 2010, HHS published final regulations implementing the health information technology provisions of the American Recovery and Reinvestment Act (referred to as the “HITECH Act”). The final regulation defines the “meaningful use” of Electronic Health Records (“EHR”) and establishes the requirements for the Medicare and Medicaid EHR payment incentive programs. The final rule established an initial set of standards and certification criteria. The implementation period for these Medicare and Medicaid incentive payments started in federal fiscal year 2011 and can end as late as 2016 for Medicare and 2021 for the state Medicaid programs. State Medicaid program participation in this federally funded incentive program is voluntary but all of the states in which our eligible hospitals operate have chosen to participate. Our acute care hospitals qualified for these EHR incentive payments upon implementation of the EHR application assuming they meet the “meaningful use” criteria. The government’s ultimate goal is to promote more effective (quality) and efficient healthcare delivery through the use of technology to reduce the total cost of healthcare for all Americans and utilizing the cost savings to expand access to the healthcare system.
All of our acute care hospitals have met the applicable meaningful use criteria. However, 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. Failure of our acute care hospitals to continue to meet the applicable meaningful use criteria would have an adverse effect on our future net revenues and results of operations.
In the 2019 IPPS final rule, CMS overhauled the Medicare and Medicaid EHR Incentive Program to focus on interoperability, improve flexibility, relieve burden and place emphasis on measures that require the electronic exchange of health information between providers and patients. We can provide no assurance that the changes will not have a material adverse effect on our future results of operations.
Managed Care: A significant portion of our net patient revenues are generated from managed care companies, which include health maintenance organizations, preferred provider organizations and managed Medicare (referred to as Medicare Part C or Medicare Advantage) and Medicaid programs. In general, we expect the percentage of our business from managed care programs to continue to
56
grow. The consequent growth in managed care networks and the resulting impact of these networks on the operating results of our facilities vary among the markets in which we operate. Typically, we receive lower payments per patient from managed care payers than we do from traditional indemnity insurers, however, during the past few years we have secured price increases from many of our commercial payers including managed care companies.
Commercial Insurance: Our hospitals also provide services to individuals covered by private health care insurance. Private insurance carriers typically make direct payments to hospitals or, in some cases, reimburse their policy holders, based upon the particular hospital’s established charges and the particular coverage provided in the insurance policy. Private insurance reimbursement varies among payers and states and is generally based on contracts negotiated between the hospital and the payer.
Commercial insurers are continuing efforts to limit the payments for hospital services by adopting discounted payment mechanisms, including predetermined payment or DRG-based payment systems, for more inpatient and outpatient services. To the extent that such efforts are successful and reduce the insurers’ reimbursement to hospitals and the costs of providing services to their beneficiaries, such reduced levels of reimbursement may have a negative impact on the operating results of our hospitals.
Surprise Billing Interim Final Rule: On September 30, 2021, the Department of Labor, and the Department of the Treasury, along with the Office of Personnel Management (“OPM”), released an interim final rule with comment period, entitled “Requirements Related to Surprise Billing; Part II.” This rule is related to Title I (the “No Surprises Act”) of Division BB of the Consolidated Appropriations Act, 2021, and establishes new protections from surprise billing and excessive cost sharing for consumers receiving health care items/services. It implements additional protections against surprise medical bills under the No Surprises Act, including provisions related to the independent dispute resolution ("IDR") process, good faith estimates for uninsured (or self-pay) individuals, the patient-provider dispute resolution process, and expanded rights to external review. On February 28, 2022, a district judge in the Eastern District of Texas invalidated portions of the rule governing aspects of the IDR process. In light of this decision, the government issued a final rule on August 19, 2022 eliminating the rebuttable presumption in favor of the qualifying payment amount by the IDR entity and providing additional factors the IDR entity should consider when choosing between two competing offers. CMS regulations and guidance implementing the IDR process has been subject to a significant amount of provider-initiated litigation. As a result, portions of those regulations and guidance materials have been vacated by a federal district court, causing CMS to, on several occasions, pause and resume IDR process operations, causing significant delay in the processing of claims. On October 27, 2023, HHS, the Department of Labor, the Department of the Treasury, and OPM issued a proposed rule intended to improve the functioning of the federal IDR process. Additionally, arguments made by the plaintiffs in such litigation have included allegations that CMS’s regulations and guidance materials are favorable to payers. We cannot predict the impact of the proposed rule on our operations at this time.
Other Sources: Our hospitals provide services to individuals that do not have any form of health care coverage. Such patients are evaluated, at the time of service or shortly thereafter, for their ability to pay based upon federal and state poverty guidelines, qualifications for Medicaid or other state assistance programs, as well as our local hospitals’ indigent and charity care policy. Patients without health care coverage who do not qualify for Medicaid or indigent care write-offs are offered substantial discounts in an effort to settle their outstanding account balances.
Health Care Reform: Listed below are the Medicare, Medicaid and other health care industry changes which have been, or are scheduled to be, implemented as a result of the ACA.
Medicaid Federal DSH Allotment:
Although the implementation has been delayed several times, the ACA (as amended by subsequent federal legislation) requires annual aggregate reductions in federal Medicaid DSH allotment. Commencing in federal fiscal year 2026, and continuing through 2028, DSH payments are scheduled to be reduced by $8 billion annually. The American Relief Act, 2025 (HR 10545, Public Law No. 118-158) enacted into law on December 21, 2024 postponed the scheduled ACA Medicaid DSH cuts that were to take effect January 1, 2025 to April 1, 2025. Subsequently H.R.1968 - Full-Year Continuing Appropriations and Extensions Act, 2025 enacted into law on March 15, 2024 further postponed the scheduled ACA Medicaid DSH cuts that were to take effect April 1, 2025 to October 1, 2025.
Value-Based Purchasing:
There is a trend in the healthcare industry toward value-based purchasing of healthcare services. These value-based purchasing programs include both public reporting of quality data and preventable adverse events tied to the quality and efficiency of care provided by facilities. Governmental programs including Medicare and Medicaid currently require hospitals to report certain quality data to receive full reimbursement updates. In addition, Medicare does not reimburse for care related to certain preventable adverse events. Many large commercial payers currently require hospitals to report quality data, and several commercial payers do not reimburse hospitals for certain preventable adverse events.
The ACA required HHS to implement a value-based purchasing program for inpatient hospital services which became effective on October 1, 2012. The ACA requires HHS to reduce inpatient hospital payments for all discharges by 2% in FFY 2017 and subsequent years. HHS will pool the amount collected from these reductions to fund payments to reward hospitals that meet or exceed certain quality performance standards established by HHS. HHS will determine the amount each hospital that meets or exceeds the quality
57
performance standards will receive from the pool of dollars created by these payment reductions. As part of the FFY 2022 IPPS final rule and FFY 2023 final rule, as discussed above, and as a result of the COVID-19 pandemic, CMS has implemented a budget neutral payment policy to fully offset the 2% VBP withhold during each of FFY 2022 and FFY 2023. In FFY 2024, as part of the FFY 2024 IPPS final rule, CMS removed the budget neutral policy that was in place in FFY 2022 and FFY 2023.
Hospital Acquired Conditions:
The ACA prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance provided to treat hospital acquired conditions (“HAC”). Beginning in FFY 2015, hospitals that fall into the top 25% of national risk-adjusted HAC rates for all hospitals in the previous year will receive a 1% reduction in their total Medicare payments. As part of the FFY 2023 final rule discussed above, and as a result of the on-going COVID-19 pandemic, CMS suppressed all nine measures in the HAC Reduction Program for the FY 2023 program year and eliminated the HAC reduction program’s one percent payment penalty. In FFY 2024, as part of the FFY 2024 IPPS final rule, CMS eliminated the suppression of the applicable HAC measures and as a result reinstated the HAC reduction program.
Readmission Reduction Program:
In the ACA, Congress also mandated implementation of the hospital readmission reduction program (“HRRP”). Hospitals with excessive readmissions for conditions designated by HHS will receive reduced payments for all inpatient discharges, not just discharges relating to the conditions subject to the excessive readmission standard. The HRRP currently assesses penalties on hospitals having excess readmission rates for heart failure, myocardial infarction, pneumonia, acute exacerbation of chronic obstructive pulmonary disease ("COPD") and elective total hip arthroplasty ("THA") and/or total knee arthroplasty ("TKA"), excluding planned readmissions, when compared to expected rates. In the fiscal year 2015 IPPS final rule, CMS added readmissions for coronary artery bypass graft ("CABG") surgical procedures beginning in fiscal year 2017. To account for excess readmissions, an applicable hospital's base operating DRG payment amount is adjusted for each discharge occurring during the fiscal year. Readmissions payment adjustment factors can be no more than a 3% reduction. As part of the FFY 2023 IPPS final rule discussed above, CMS modified all of the condition-specific readmission measures to include an adjustment for patient history of COVID-19 for FFY 2024.
Accountable Care Organizations:
The ACA requires HHS to establish a Medicare Shared Savings Program that promotes accountability and coordination of care through the creation of accountable care organizations (“ACOs”). The ACO program allows providers (including hospitals), physicians and other designated professionals and suppliers to voluntarily work together to invest in infrastructure and redesign delivery processes to achieve high quality and efficient delivery of services. The program is intended to produce savings as a result of improved quality and operational efficiency. ACOs that achieve quality performance standards established by HHS will be eligible to share in a portion of the amounts saved by the Medicare program. CMS also developed and implemented more advanced ACO payment models that require ACOs to assume greater risk for attributed beneficiaries. Through various subsidiaries, we participate in ACOs in many of our acute care hospital markets.
Infectious Disease Outbreaks, Pandemics, or Other Public Health Emergencies or Crisis
Our business and financial results may be harmed by an international, national or localized outbreak of a highly contagious or epidemic disease, including but not limited to, COVID-19 or similar corona viruses, Ebola or Zika, may put stress on the capacity of all or a part of our health care facilities, could result in an abnormally high demand for health care services, require that resources be diverted from one part of operations to another part, or disrupt the supply chain for equipment and supplies necessary for operations. In addition, unaffected individuals may decide to defer elective procedures or otherwise avoid medical treatment, resulting in reduced patient volumes and operating revenues.
In addition to statutory and regulatory changes to the Medicare program and each of the state Medicaid programs, our operations and reimbursement may be affected by administrative rulings, new or novel interpretations and determinations of existing laws and regulations, post-payment audits, requirements for utilization review and new governmental funding restrictions, all of which may materially increase or decrease program payments as well as affect the cost of providing services and the timing of payments to our facilities. The final determination of amounts we receive under the Medicare and Medicaid programs often takes many years, because of audits by the program representatives, providers’ rights of appeal and the application of numerous technical reimbursement provisions. We believe that we have made adequate provisions for such potential adjustments. Nevertheless, until final adjustments are made, certain issues remain unresolved and previously determined allowances could become either inadequate or more than ultimately required.
Finally, we expect continued third-party efforts to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payers could have a material adverse effect on our financial position and our results.
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Other Operating Results
Interest Expense:
As reflected on the schedule below, interest expense was $35 million and $49 million for the three-month periods ended June 30, 2025 and 2024, respectively, and $75 million and $102 million during the six-month periods ended June 30, 2025 and 2024, respectively (amounts in thousands):
|
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
|
||||
Revolving credit facility (a.) |
|
$ |
2,692 |
|
|
$ |
5,324 |
|
|
$ |
4,486 |
|
|
$ |
12,570 |
|
Tranche A term loan, extinguished (a.) |
|
|
- |
|
|
|
38,305 |
|
|
|
- |
|
|
|
77,777 |
|
Tranche A term loan, 2029 (a.) |
|
|
16,996 |
|
|
|
- |
|
|
|
34,188 |
|
|
|
- |
|
$800 million, 2.65% Senior Notes due 2030 |
|
|
5,357 |
|
|
|
5,357 |
|
|
|
10,713 |
|
|
|
10,713 |
|
$700 million, 1.65% Senior Notes due 2026 |
|
|
2,931 |
|
|
|
2,930 |
|
|
|
5,863 |
|
|
|
5,862 |
|
$500 million, 2.65% Senior Notes due 2032 |
|
|
3,345 |
|
|
|
3,345 |
|
|
|
6,690 |
|
|
|
6,690 |
|
$500 million, 4.625% Senior Notes due 2029 (b.) |
|
|
5,791 |
|
|
|
- |
|
|
|
11,583 |
|
|
|
- |
|
$500 million, 5.050% Senior Notes due 2034 (c.) |
|
|
6,352 |
|
|
|
- |
|
|
|
12,704 |
|
|
|
- |
|
Subtotal-revolving credit, term loan A and Senior Notes |
|
|
43,464 |
|
|
|
55,261 |
|
|
|
86,227 |
|
|
|
113,612 |
|
Amortization of financing fees |
|
|
1,252 |
|
|
|
1,258 |
|
|
|
2,504 |
|
|
|
2,514 |
|
Other combined interest expense |
|
|
(837 |
) |
|
|
1,732 |
|
|
|
2,194 |
|
|
|
3,844 |
|
Capitalized interest on major projects |
|
|
(8,166 |
) |
|
|
(8,999 |
) |
|
|
(14,749 |
) |
|
|
(17,577 |
) |
Interest income |
|
|
(349 |
) |
|
|
(353 |
) |
|
|
(756 |
) |
|
|
(668 |
) |
Interest expense, net |
|
$ |
35,364 |
|
|
$ |
48,899 |
|
|
$ |
75,420 |
|
|
$ |
101,725 |
|
Interest expense decreased by $14 million, or 28%, during the three-month period ended June 30, 2025, as compared to the three-month period ended June 30, 2024. The decrease was due to: (i) a net $12 million decrease in aggregate interest expense on our revolving credit, term loan A and senior notes resulting from a decrease in our aggregate average cost of borrowings pursuant to these facilities (3.95% during the second quarter of 2025 as compared to 4.84% during the comparable quarter of 2024), as well as a decrease in the aggregate average outstanding borrowings pursuant to these facilities ($4.34 billion during the second quarter of 2025 as compared to $4.51 billion during the second quarter of 2024); (ii) a $1 million increase resulting from a decrease in capitalized interest on major projects, and; (iii) a net $3 million decrease in other combined interest expense.
Interest expense decreased by $26 million, or 26%, during the six-month period ended June 30, 2025, as compared to the six-month period ended June 30, 2024. The decrease was due to: (i) a net $27 million decrease in aggregate interest expense on our revolving credit, term loan A and senior notes resulting from a decrease in our aggregate average cost of borrowings pursuant to these facilities (3.96% during the first six months of 2025 as compared to 4.90% during the comparable period of 2024), as well as a decrease in the aggregate average outstanding borrowings pursuant to these facilities ($4.31 billion during the first six months of 2025 as compared to $4.58 billion during the first six months of 2024); (ii) a $3 million increase resulting from a decrease in capitalized interest on major projects, and; (iii) a net $2 million decrease in other combined interest expense.
The average outstanding borrowings and the average effective interest rate, which includes amortization of deferred financing costs and original issue discount, under our revolving credit, term loan A and senior notes, were approximately $4.34 billion and 4.1%, respectively, during the second quarter of 2025, and $4.51 billion and 5.0%, respectively, during the second quarter of 2024. The
59
average outstanding borrowings and average effective interest rate on these facilities were approximately $4.31 billion and 4.1%, respectively, during the first six months of 2025, and $4.58 billion and 5.0%, respectively, during the first six months of 2024.
Provision for Income Taxes and Effective Tax Rates:
The effective tax rates, as calculated by dividing the provision for income taxes by income before income taxes, were as follows for the three and six-month periods ended June 30, 2025 and 2024 (dollar amounts in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Provision for income taxes |
|
$ |
110,773 |
|
|
$ |
87,676 |
|
|
$ |
209,573 |
|
|
$ |
157,940 |
|
Income before income taxes |
|
|
473,385 |
|
|
|
382,006 |
|
|
|
893,813 |
|
|
|
718,092 |
|
Effective tax rate |
|
|
23.4 |
% |
|
|
23.0 |
% |
|
|
23.4 |
% |
|
|
22.0 |
% |
The provision for income taxes increased $23 million during the second quarter of 2025, as compared to the comparable quarter of 2024, due primarily to: (i) the increase in the provision for income taxes resulting from the $87 million increase in pre-tax income (consisting of $91 million increase in income before income taxes and a $4 million unfavorable change in the income/loss attributable to noncontrolling interest), and; (ii) a $2 million increase in the provision for income taxes due to a decrease in the net benefit recorded in connection with ASU 2016-09 ($0.8 million net benefit recorded during the second quarter of 2025 as compared to $2.5 million during the second quarter of 2024). Excluding the impact of ASU 2019-09, our effective tax rates were 24.0% and 23.9% during the second quarters of 2025 and 2024, respectively.
The provision for income taxes increased $52 million during the first six months of 2025, as compared to the comparable period of 2024, due primarily to: (i) the increase in the provision for income taxes resulting from the $171 million increase in pre-tax income (consisting of $176 million increase in income before income taxes and a $5 million unfavorable change in the income/loss attributable to noncontrolling interest), and; (ii) a $10 million increase in the provision for income taxes due to a decrease in the net benefit recorded in connection with ASU 2016-09 ($1.3 million net benefit recorded during the six months of 2025 as compared to $11.6 million during the six months of 2024). Excluding the impact of ASU 2019-09, our effective tax rates were 24.0% and 23.9% during the first six months of 2025 and 2024, respectively.
Due to recent guidance and enacted laws surrounding the global 15% minimum tax rate that will be effective after 2024 from the Organization for Economic Co-operation and Development ("OECD") as well as jurisdictions that we operate in, we anticipate adverse effects to our provision for income taxes as well as cash taxes. We do not expect these adverse effects to be material and will continue to monitor changes in tax policies and laws issued by the OECD and jurisdictions that we operate in.
Liquidity
Net cash provided by operating activities
Net cash provided by operating activities was $909 million during the six-month period ended June 30, 2025 and $1.076 billion during the first six months of 2024. The net decrease of $167 million was attributable to the following:
Days sales outstanding (“DSO”): Our DSO are calculated by dividing our net revenue by the number of days in the six-month periods. The result is divided into the accounts receivable balance at June 30th of each year to obtain the DSO. Our DSO were 50 days and 51 days at June 30, 2025 and 2024, respectively.
60
Net cash used in investing activities
During the first six months of 2025, we used $577 million of net cash in investing activities as follows:
During the first six months of 2024, we used $437 million of net cash in investing activities as follows:
Net cash used in financing activities
During the first six months of 2025, we used $319 million of net cash in financing activities as follows:
During the first six months of 2024, we used $628 million of net cash in financing activities as follows:
Expected capital expenditures during remainder of 2025
During the full year of 2025, we expect to spend approximately $950 million to $1.1 billion on capital expenditures which includes expenditures for capital equipment, construction of new facilities, and renovations and expansions at existing hospitals. During the
61
first six months of 2025 we spent approximately $505 million on capital expenditures and expect to spend approximately $445 million to $595 million during the remainder of 2025.
We believe that our capital expenditure program is adequate to expand, improve and equip our existing hospitals. We expect to finance all capital expenditures and acquisitions with internally generated funds and/or additional funds, as discussed below.
Capital Resources
Credit Facilities and Outstanding Debt Securities
In September 2024, we entered into a tenth amendment ("Tenth Amendment") to our credit agreement ("Credit Agreement"), dated as of November 15, 2010, as amended and restated at various times from March, 2011 to June, 2022, among UHS, as borrower, the several banks and other financial institutions or entities from time to time parties thereto, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent. The Tenth Amendment provided for: (i) an extension of the maturity date to September 26, 2029; (ii) a new revolving credit facility of up to $1.3 billion (which as of June 30, 2025, had $1.08 billion of aggregate available borrowing capacity, net of $219 million of outstanding borrowings and $3 million of letters of credit), and; (iii) a new replacement tranche A term loan facility ("Tranche A Term Loan") of up to $1.2 billion (which had $1.18 billion of outstanding borrowings as of June 30, 2025).
Pursuant to the terms of the Tenth Amendment, the Tranche A Term Loan provides for installment payments of $7.5 million per quarter commencing on December 31, 2024 through September 30, 2026, and $15.0 million per quarter commencing on December 31, 2026 through June 30, 2029. The unpaid principal balance at June 30, 2029 (scheduled to be $975.0 million) is payable on the September 26, 2029 scheduled maturity date of the Credit Agreement.
Revolving credit and Tranche A Term Loan borrowings under the Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender’s prime rate, (b) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (c) one month term SOFR rate plus 1.1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.25% to 0.625%, or (2) the one, three or six month term SOFR rate plus 0.1% (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 1.25% to 1.625%. As of June 30, 2025, the applicable margins were 0.25% for ABR-based loans and 1.25% for SOFR-based loans under the revolving credit and term loan A facilities. The revolving credit facility includes a $125 million sub-limit for letters of credit. The Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, if sold to a receivables facility pursuant to the Credit Agreement, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.
The Credit Agreement includes a material adverse change clause that must be represented at each draw. The Credit Agreement also contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens, indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We were in compliance with all required covenants as of June 30, 2025 and December 31, 2024.
As of June 30, 2025, we had combined aggregate principal of $3.0 billion from the following senior secured notes:
The 2026, 2029, 2030, 2032 and 2034 Notes (collectively "All the Notes") are guaranteed (the “Guarantees”) on a senior secured basis by all of our existing and future direct and indirect subsidiaries that guarantee our Credit Agreement, other first lien obligations, or any junior lien obligations (the "Subsidiary Guarantors"). All the Notes and the Guarantees are secured by first-priority liens, subject to
62
permitted liens, on certain of the Company’s and the Subsidiary Guarantors’ assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to a Company-related receivables facility (as defined in the Indenture pursuant to which All the Notes were issued (the “Indentures”), and certain other excluded assets). The Company’s obligations with respect to All the Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company’s and the Subsidiary Guarantors’ other obligations under the Indentures, are secured equally and ratably with the Company’s and the Subsidiary Guarantors’ obligations under the Credit Agreement. However, the liens on the collateral securing All the Notes and the Guarantees will be released if: (i) All the Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and All the Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no longer required to be pledged. The liens on any collateral securing All the Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.
In connection with an asset purchase and sale agreement, and related lease agreements, completed with Universal Health Realty Income Trust ("Trust") in December 2021, our consolidated balance sheets at June 30, 2025 and December 31, 2024 reflect financial liabilities, which are included in debt, of approximately $72 million and $74 million, respectively. In connection with that transaction, as a result of our purchase option within the lease agreements related to two of our facilities, the asset purchase and sale transaction was accounted for as a failed sale leaseback in accordance with U.S. GAAP and we have accounted for the transaction as a financing arrangement. Our lease payments payable to the Trust are recorded to interest expense and as a reduction of the outstanding financial liability, and the amount allocated to interest expense is determined based upon our incremental borrowing rate and the outstanding financial liability.
At June 30, 2025, the carrying value and fair value of our debt were approximately $4.6 billion and $4.4 billion, respectively. At December 31, 2024, the carrying value and fair value of our debt were approximately $4.5 billion and $4.2 billion, respectively. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be “level 2” in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.
Our total debt as a percentage of total capitalization was approximately 40% as of both June 30, 2025 and December 31, 2024.
We expect to finance all capital expenditures and acquisitions and pay dividends and potentially repurchase shares of our common stock utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our existing revolving credit facility, which had $1.08 billion of available borrowing capacity as of June 30, 2025, or through refinancing the existing Credit Agreement; (ii) the issuance of other short-term and/or long-term debt, and/or; (iii) the issuance of equity. We believe that our operating cash flows, cash and cash equivalents, available commitments under existing agreements, as well as access to the capital markets, provide us with sufficient capital resources to fund our operating, investing and financing requirements for the next twelve months. However, in the event we need to access the capital markets or other sources of financing, there can be no assurance that we will be able to obtain financing on acceptable terms or within an acceptable time. Our inability to obtain financing on terms acceptable to us could have a material unfavorable impact on our results of operations, financial condition and liquidity.
Supplemental Guarantor Financial Information
As of June 30, 2025, we had combined aggregate principal of $3.0 billion from All the Notes:
All the Notes are fully and unconditionally guaranteed pursuant to the Guarantees on a senior secured basis by the Subsidiary Guarantors. All the Notes and the Guarantees are secured by first-priority liens, subject to permitted liens, on certain of the Company’s and the Subsidiary Guarantors’ assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to the Company’s existing receivables facility (as defined in the Indentures pursuant to which All the Notes were issued ), and certain other excluded assets). The Company’s obligations with respect to All the Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company’s and the Subsidiary Guarantors’ other obligations under the Indentures, are secured equally and ratably with the Company’s and the Subsidiary Guarantors’ obligations under the Credit Agreement. However, the liens on the collateral securing All the Notes and the Guarantees will be released if: (i) All the Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and All the Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no
63
longer required to be pledged. The liens on any collateral securing All the Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.
All the Notes will be structurally subordinated to all obligations of our existing and future subsidiaries that are not and do not become Subsidiary Guarantors of All the Notes. No appraisal of the value of the collateral has been made, and the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the collateral securing All the Notes may not produce proceeds in an amount sufficient to pay any amounts due on All the Notes.
We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although our Credit Agreement contains restrictions on the incurrence of additional indebtedness and our Credit Agreement and All the Notes contain restrictions on our ability to incur liens to secure additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, if we incur any additional indebtedness secured by liens that rank equally with All the Notes, subject to collateral arrangements, the holders of that debt will be entitled to share ratably with holders of All the Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. This may have the effect of reducing the amount of proceeds paid to holders of All the Notes.
Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of All the Notes and the incurrence of the Guarantees. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, All the Notes or the Guarantees (or the grant of collateral securing any such obligations) could be voided as a fraudulent transfer or conveyance if we or any of the Subsidiary Guarantors, as applicable, (a) issued All the Notes or incurred the Guarantees with the intent of hindering, delaying or defrauding creditors or (b) under certain circumstances received less than reasonably equivalent value or fair consideration in return for either issuing All the Notes or incurring the Guarantees.
Basis of Presentation
The following tables include summarized financial information of Universal Health Services, Inc. and the other obligors in respect of debt issued by Universal Health Services, Inc. The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.
The summarized balance sheet information for the consolidated obligor group of debt issued by Universal Health Services, Inc. is presented in the table below:
|
|
|
|
|
|
||
(in thousands) |
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Current assets |
$ |
2,384,312 |
|
|
$ |
2,279,988 |
|
Noncurrent assets (1) |
|
9,403,250 |
|
|
|
9,214,924 |
|
Current liabilities |
|
1,975,684 |
|
|
|
1,870,563 |
|
Noncurrent liabilities |
|
5,455,707 |
|
|
|
5,451,167 |
|
Due to non-guarantors |
|
912,957 |
|
|
|
912,958 |
|
(1) Includes goodwill of $3,262 million as of June 30, 2025 and December 31, 2024. |
|
||||||
The summarized results of operations information for the consolidated obligor group of debt issued by Universal Health Services, Inc. is presented in the table below:
|
Six Months Ended |
|
|
Twelve Months Ended |
|
||
(in thousands) |
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Net revenues |
$ |
6,688,094 |
|
|
$ |
12,642,381 |
|
Operating charges |
|
5,799,243 |
|
|
|
11,200,769 |
|
Interest expense, net |
|
75,632 |
|
|
|
248,568 |
|
Other (income) expense, net |
|
(14,350 |
) |
|
|
(3,186 |
) |
Net income |
$ |
613,593 |
|
|
$ |
920,944 |
|
64
Affiliates Whose Securities Collateralize the Senior Secured Notes
All the Notes and the Guarantees are secured by, among other things, pledges of the capital stock of our subsidiaries held by us or by our secured Guarantors, in each case other than certain excluded assets and subject to permitted liens. Such collateral securities are secured equally and ratably with our and the Guarantors’ obligations under our Credit Agreement. For a list of our subsidiaries the capital stock of which has been pledged to secure All the Notes, see Exhibit 22.1 to this Report.
Upon the occurrence and during the continuance of an event of default under the indentures governing All the Notes, subject to the terms of the Security Agreement relating to All the Notes provide for (among other available remedies) the foreclosure upon and sale of the Collateral (including the pledged stock) and the distribution of the net proceeds of any such sale to the holders of All the Notes, the lenders under the Credit Agreement and the holders of any other permitted first priority secured obligations on a pro rata basis, subject to any prior liens on the collateral.
No appraisal of the value of the collateral securities has been made, and the value of the collateral securities in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the collateral securities securing All the Notes may not produce proceeds in an amount sufficient to pay any amounts due on All the Notes.
The security agreement relating to All the Notes provides that the representative of the lenders under our Credit Agreement will initially control actions with respect to that collateral and, consequently, exercise of any right, remedy or power with respect to enforcing interests in or realizing upon such collateral will initially be at the direction of the representative of the lenders.
No trading market exists for the capital stock pledged as collateral.
The assets, liabilities and results of operations of the combined affiliates whose securities are pledged as collateral are not materially different than the corresponding amounts presented in the consolidated financial information of Universal Health Services, Inc.
Off-Balance Sheet Arrangements
During the three months ended June 30, 2025 there have been no material changes in the off-balance sheet arrangements consisting of standby letters of credit and surety bonds.
As of June 30, 2025 we were party to certain off balance sheet arrangements consisting of standby letters of credit and surety bonds which totaled $152 million consisting of: (i) $131 million related to our self-insurance programs, and; (ii) $21 million of other debt and public utility guarantees.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the quantitative and qualitative disclosures about market risk during the six months ended June 30, 2025. Reference is made to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 4. Controls and Procedures
As of June 30, 2025, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we performed an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “1934 Act”). Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management on a timely basis in order to comply with our disclosure obligations under the 1934 Act and the SEC rules thereunder.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
65
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 6 to the Condensed Consolidated Financial Statements-Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report for a description of our legal proceedings. Such information is hereby incorporated by reference.
Item 1A. Risk Factors
The following is an update to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Other than the following update, there have been no material changes to the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. You should carefully consider the risk factors contained in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our other filings made with the Securities and Exchange Commission.
We are sensitive to reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in certain states.
As described in Sources of Revenue elsewhere in this Report, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of California, Texas, Nevada, Illinois, Pennsylvania, Washington, D.C., Kentucky, Tennessee, Massachusetts, Virginia, Mississippi and Florida. Most of these programs are approved on a year-to-year basis and there is no assurance that these revenues will continue at their current rates or at all. We are therefore particularly sensitive to reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states.
We are subject to uncertainties regarding recent legislative changes to Medicaid program.
Legislation adopted on July 4, 2025 (the One Big Beautiful Budget Act), attaches work and community service requirements to eligibility for Medicaid benefits that will have the effect of limiting Medicaid enrollment and expenditure. That legislation also places limits on provider fees used to increase federal Medicaid funding to states. The legislation prohibits states not previously having expanded Medicaid eligibility to 138% of federal poverty level from increasing the rate of current provider fees which fund certain state supplemental payments or increasing the base of the fee to a class or items of services that the fee did not previously cover. That current provider fee threshold will remain at 6%. For states having expanded Medicaid eligibility under the legislation, the provider fee threshold will be reduced by 0.5% annually between federal fiscal years 2028 and 2032 with the resulting threshold ultimately becoming 3.5%. The legislation also eliminates certain insurance exchange premium tax credits beyond 2025 and exchange enrollment is expected to be adversely impacted. All of these factors, which could have a material unfavorable impact on our results of operations, may be expected to reduce our revenue and likely increase the level of uncompensated care provided by our facilities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
As of December 31, 2024, we had an aggregate available repurchase authorization of $824.4 million pursuant to our stock repurchase program. Pursuant to this program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. There is no expiration date for our stock repurchase program.
As reflected below, during the three-month period ended June 30, 2025, we have repurchased approximately 875,000 shares at an aggregate cost of approximately $150.8 million (average price of approximately $172 per share) pursuant to the terms of our stock repurchase program. In addition, during the three-month period ended June 30, 2025, 22,592 shares were repurchased in connection with income tax withholding obligations resulting from stock-based compensation programs.
During the period of April 1, 2025 through June 30, 2025, we repurchased the following shares:
|
|
Additional |
|
|
Total |
|
|
Total |
|
|
Average |
|
|
Total |
|
|
Average |
|
|
Aggregate |
|
|
Maximum |
|
|
Maximum |
|
|||||||||
April, 2025 |
|
$ |
- |
|
|
|
4,161 |
|
|
|
— |
|
|
$ |
0.01 |
|
|
|
— |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
— |
|
|
$ |
643,716 |
|
May, 2025 |
|
$ |
- |
|
|
|
16,563 |
|
|
|
— |
|
|
$ |
0.01 |
|
|
|
— |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
— |
|
|
$ |
643,716 |
|
June, 2025 |
|
$ |
- |
|
|
|
876,868 |
|
|
|
— |
|
|
$ |
0.01 |
|
|
|
875,000 |
|
|
$ |
172.40 |
|
|
$ |
150,849 |
|
|
|
— |
|
|
$ |
492,867 |
|
Total April through June, 2025 |
|
$ |
- |
|
|
|
897,592 |
|
|
|
— |
|
|
$ |
0.01 |
|
|
|
875,000 |
|
|
|
172.40 |
|
|
$ |
150,849 |
|
|
|
|
|
|
|
||
66
Dividends
During the quarter ended June 30, 2025, we declared and paid dividends of $.20 per share. Dividend equivalents are accrued on unvested restricted stock units and will be paid upon vesting of the restricted stock unit.
Item 5. Other Information
(c) None of the Company’s directors or officers
67
Item 6. Exhibits
22.1 |
List of Guarantor Subsidiaries and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant. |
31.1 |
Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934. |
31.2 |
Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934. |
32.1 |
Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 |
Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
Inline XBRL Instance Document –the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
104 |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, has been formatted in Inline XBRL. |
|
|
68
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Universal Health Services, Inc. |
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(Registrant) |
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Date: August 8, 2025 |
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/s/ Marc D. Miller |
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Marc D. Miller, |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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/s/ Steve Filton |
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Steve Filton, |
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Executive Vice President and |
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Chief Financial Officer |
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(Principal Financial Officer) |
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FAQ
What were UHS's net revenues and net income for Q2 2025?
How did UHS's EPS change year-over-year?
What cash flow and capital spending did UHS report?
What is UHS's debt and liquidity position?
What legal and insurance exposures did UHS disclose?
