- Universal Health Services reported net revenue increased to $2.8 billion in the first quarter of 2019 — a 4% boost from the year prior, according to financial documents released Thursday. Results fell short of financial analysts' expectations, which placed net revenue at $2.82 billion.
- Net income grew to $234.2 million for the King of Prussia, Pennsylanvia-based hospital operator, up from $223.8 million in the same quarter of 2018. Adjusted admissions increased 4.9% year over year on the acute care side, while adjusted admissions for behavioral health grew 2.9%.
- UHS had been stowing away millions in a settlement fund related to the Department of Justice's investigation into its behavioral health facilities, but did not put any money toward the fund in the first quarter of 2019. CFO Steve Filton told investors negotiations with the government have continued.
UHS shares were down roughly 5% following the company's earnings call Friday morning, after analysts pushed the chain on a few of its weaker metrics over the quarter.
Revenue per admission dropped by 0.4% year over year on the acute care side, which Filton explained as a "measurable shift" in low revenue and high revenue patient intake compared to the first quarter of 2018. Filton said surgical volumes trailed expectations for the first quarter of 2019.
Despite acute care incomes revenue falling a few million short of what the company hoped, UHS' ER business "remains rather robust," according to Filton.
UHS saw adjusted earnings before interest, taxes, depreciation and amortization rise from $455.1 million during the first quarter of 2018 to $457.2 million during the first quarter of 2019. That figure excludes unfavorable impacts such as a $13 million pre-tax increase on UHS' DOJ reserve last year.
Filton said the company's DOJ penalty negotiations are largely "non-monetary" at the moment, and while UHS had hoped the investigation would have wrapped by now, the company acknowledged in its earnings release that it "cannot predict the ultimate resolution" of the matter.
The DOJ investigation relates to false claims allegedly submitted by the chain's behavioral health facilities and permanent closure of one such facility that was severely damaged in the California wildfires. While the reserve amounted to $123 million from the end of 2018 through to the end of the first quarter of this year, the company said changes in the reserve may be required in the future.
When pressured on labor shortages, Filton said the company has made a "great deal of progress" since late 2015, when staffing was a bigger pain point. Though the labor environment is still tight, it's "much less of a barrier to revenue growth" now than it has been in recent years, he said.
Next week will see earnings releases for peer for-profit health systems Community Health Systems, Tenet and HCA.