- Though it was dinged by lower admissions and escalating expenses amid the COVID-19 pandemic, Universal Health Services still reported net income of $252 million in the second quarter, up slightly year over year despite dire economic projections for hospital operators. Almost $162 million in income was from congressional bailout packages, including grants from the Coronavirus Aid, Relief, and Economic Security Act.
- The King of Prussia, Pennsylvania-based system's revenue was down more than 4% year over year to $2.73 billion, still well above Wall Street expectations for its financial results released aftermarket Monday, including $218 million in revenue from government stimulus programs.
- UHS, which rescinded its full-year earnings forecasts after an ominous first quarter, is continuing to withhold earnings guidance due to ongoing uncertainty as COVID-19 cases surge again in the U.S.
The material impact of COVID-19 on UHS became evident in the last weeks of the first quarter, the company said. Its acute care and behavioral health facilities began to see improving patient volumes in May and June, as governors eased stay-at-home orders and elective surgeries were allowed to resume.
By mid-June, both acute and behavioral facilities were averaging 95% of pre-COVID levels, UHS CEO Alan Miller said on an earnings call Tuesday morning. However, in the last 10 days of June and throughout July, admissions began to tick back. Elective procedures, for example, are now running between 85% to 90% of pre-COVID levels.
And many of its acute hospitals are located in states with sharply rising caseloads, like Florida, Texas and Nevada, which complicates efforts to plan ahead for volume. Congress has appropriated $175 billion for provider grants through relief legislation in an effort to help hospitals and doctor's offices remain operational throughout the pandemic as volume slides.
UHS' acute care facilities' same-facility adjusted admissions dropped by about a fourth in the quarter, compared to the same time last year, while adjusted patient days decreased more than 18%. Acute care services brought in 3.5% less revenue than the second quarter of 2019, including CARES funds.
Excluding taxpayer bailout dollars, acute care revenue dropped 14%.
For its behavioral health facilities, UHS' same-facility adjusted admissions decreased by more than 15%, while adjusted patient days decreased more than 10% compared to same time last year. Excluding CARES funds, revenue from behavioral healthcare services decreased 8.5%. Including the congressionally appropriated dollars, behavioral health revenue dipped only 3.8%.
In the first half of the year, UHS' cash flow from operations ballooned to $1.45 billion, more than double the $673 million in cash reported in the first half of 2019. Of that increase, $477 million was due to accelerated Medicare loans ($375 million) and bailout grants ($102 million).
The operator reported net income of $394 million in the first six months of the year, down almost 17% compared to the first half of 2019. UHS, which has quickly freed up cash and embarked on cost reduction measures to weather the pandemic, had $540 million in cash and cash equivalents as of June 30, compared to just $61.3 million at the end of 2019.
The brunt of the pandemic's financial effects are beginning to surface as providers' second quarter earning season begins in earnest. Ongoing market volatility tanked stocks of publicly traded hospitals and health systems earlier this year, most of which were already struggling prior to COVID-19. Indications of a nascent recovery could be derailed by rising COVID-19 cases in the U.S. — almost 4.3 million confirmed to date.
Rival HCA Healthcare, which reported earlier this month, saw a corresponding dip in its second quarter volumes, by 20%. Revenue for the Nashville-based hospital operator fell more than 12% year over year to $11.1 billion, though HCA still swooped to net income of $1.1 billion, helped largely by taxpayer bailout dollars from congressional stimulus packages.
UHS, which has 26 acute care hospitals, 328 behavioral health facilities, and 42 outpatient facilities and ambulatory care access points in 37 states, has been looking for ways to diversify its offerings as patients increasingly seek out outpatient care. It inked a partnership with home health giant Bayada earlier this month to form a joint venture to provide care in the home for UHS patients.
Also earlier this month, UHS paid $122 million to the U.S. Department of Justice to settle a yearslong investigation into alleged billing fraud at its behavioral health facilities.