Universal Health Services, Inc.

I'm Steve Filton. Mark Miller is joining us this morning. Welcome to this review of Universal Health Services results for the fourth quarter ended December 31, 2022. During the conference call, we'll be using words such as believes, expects, anticipates, estimates, and similar words that represent forecasts, projections, and forward-looking statements. For anyone not familiar with the risks and uncertainties inherent in these forward-looking I recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2022. We'd like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company reported net income attributable to UHS per diluted share of $2.43 for the fourth quarter of 2022. After adjusting for the impact of the items reflected on the supplemental schedule as included with the press release, primarily an asset impairment charge associated with an acute care hospital in Las Vegas, our adjusted net income attributable to UHS per diluted share was $3.02 for the quarter ended December 31, 2022.

During the fourth quarter, our acute care hospitals experienced a decrease in the number of patients with a COVID diagnosis treated in our hospitals as compared to the prior year quarter. As a percentage of total admissions, COVID-diagnosed patients made up 7% of our admissions in the fourth quarter of 2021, but only about half of that percentage of admissions in the fourth quarter of 2022. This decline in COVID patients resulted in reduced revenues due to the lower acuity and less of the incremental government reimbursement associated with COVID patients. While overall surgical volumes tended to recover to pre-pandemic levels, there was a measurable shift from inpatient to outpatient, resulting in further overall revenue softness, Meanwhile, the amount of premium pay in the quarter, which declined from a peak of 153 million in the first quarter, was 85 million in the fourth quarter, similar to what it was in the third quarter. In total, there was insufficient revenue growth to offset the accelerated rate of wage increases and other inflationary pressures, leading to an acute EBITDA result in the quarter below our internal forecasts. At the same time, this decline in COVID activity allowed our behavioral hospitals to continue to reduce their labor vacancies, resulting in a reduction of the capping of bed capacity. The effect of the increased revenue largely offset higher labor costs, leading to a behavioral EBITDA result in the quarter more in line with our internal forecasts.

We also note that the fourth quarter included approximately $10 million of losses related to startup facilities. Our cash generated from operating activities was $297 million during the fourth quarter of 2022, as compared to $322 million during the same quarter in 2021. The decline was largely due to the opening of new facilities and the timing of receipt of certain supplemental reimbursements. We spent $734 million on capital expenditures during 2022. In reaction to the earnings softness experienced during the year, we reduced the pace of our capital expenditures spend by about one quarter from our original plans for the year. Similarly, we moderated the trajectory of our share repurchases. For the full year of 2022, we acquired $811 million of our own shares pursuant to our share repurchase program. Since the inception of the current share repurchase program in 2014, we have repurchased more than 20% of the company's outstanding shares. As of December 31, 2022, we had $886 million of aggregate available borrowing capacity pursuant to our $1.2 billion revolving credit facility. Our 2023 operating results forecast