- Universal Health Services said it has reached an agreement "in principle" with the DOJ's civil division regarding the government's ongoing investigation of fraud at its behavioral health facilities. The hospital chain expects to pay a $127 million settlement, which is still subject to approvals.
- A separate criminal investigation by the DOJ has been closed, UHS said in its second quarter earnings release on Thursday evening.
- Shares soared Friday morning, trading up nearly 12% following the release of the earnings results. The hospital operator saw both net income and revenue increase in the quarter.
The King of Prussia, Pennsylvania-based health system has been dogged by the DOJ investigation into false claims allegedly submitted by its behavioral health facilities and permanent closure of one such facility that was severely damaged in the California wildfires. The chain seems to be starting to put these inquiries behind it.
The operator of some 353 hospital and behavioral facilities across 37 states and Washington, D.C. reported a strong quarter with a 5% uptick in adjusted admissions, which factors in outpatient activity. The system collected more revenue on each individual admission, noting a 3.5% increase on revenue per admission.
UHS reported $238 million in net income on revenue of $2.85 billion. As the company noted an increase in both net income and revenue, it also reported a rebound in its acute care business from the first quarter of the year.
A.J. Rice of Credit Suisse characterized acute care as a big bright spot in the quarter.
Analysts with UBS also said the system's acute care trends look "incredibly strong" and the quarter's results defy the company's patterns in recent years.
Company executives characterized the admissions growth as broad based and pointed to geographic locations that had strong performance, including Las Vegas and north Dallas.
Helping the rebound are substantial capital investments in facilities including in north Dallas, company officials noted during the call.
UHS was also able to recapture some of the lost surgical business that was noted in the first quarter.
However, at its behavioral health facilities, adjusted admissions were basically flat for the quarter though revenue per admission increased by 2.2%.
In terms of its settlement with the DOJ, it seems the company has stowed enough away in its reserve to satisfy the settlement. In preparation, UHS has been saving money to pay to the feds. As of June 30, its DOJ reserve reached $134 million.
As part of the settlement, the company does not expect to have to make any significant changes to the way it does business.