Must-read: Assessing Universal Health Services’ 3Q14 earnings
Key takeaways from Universal Health Services' 3Q14 earnings (Part 1 of 9)
Overview
Universal Health Services, founded in 1979 by chairman and CEO Alan B. Miller, owns and operates 225 facilities, including 25 acute care hospitals, 195 behavioral health facilities, and three surgery centers in 37 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. The company operates primarily in the markets of Nevada, California, and Texas.
Universal Health Services (UHS) is a healthcare company (XLV) with high market capitalization, amounting to about $11.1 billion. The other health care provider companies with high market capitalization are Community Health Services (CYH), HCA Holdings (HCA), and Tenet Healthcare (THC). For more information on Universal Health Services, please refer to Universal Health Services: A must-read company overview.
3Q14 earnings review
On October 27, 2014, Universal Health Services reported its 3Q14 financial results. The company reported revenues of $2 billion in the third quarter of 2014, which was an increase of 11.1% on a year-over-year basis. Universal Health Services also reported net income of $82.8 million in the third quarter of 2014, which is 27.7% less than the $114.6 million it reported in the third quarter of 2013.
Operating performance
Universal Health Services’ diluted earnings per share declined by 28.7% from $1.20 in the third quarter of 2013 to $0.80 in the third quarter of 2014. The company didn’t meet analyst expectations of $1.37 per share in its 3Q14 results. The decline is a result of one-time charges from legal cases against the company, debt, and electronic health record (or EHR) implementation expenses.
Psychiatric Solutions, a company Universal Health Services acquired in 2010, won a lawsuit against the company for violation of federal securities law, which resulted in a $44 million charge. The company also had to pay $36 million and $16 million to extinguish debt and for implementing its EHR, respectively.
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