Universal Health Services, Inc.

Good day and thank you for standing by. Welcome to the fourth quarter 2023 Universal Health Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Steve Filton, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, and good morning. Mark Miller is also joining us this morning, and we welcome you to this review of Universal Health Services results for the fourth quarter ended December 31, 2023. 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 statements, 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, 2023. We would 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 for diluted share $3.16 for the fourth quarter of 2023. After adjusting for the impact of the item reflected on the supplemental schedule as included with the press release, our adjusted net income attributable to UHS per diluted share was $3.13 for the quarter ended December 31, 2023.

Our acute hospitals continue to experience strong demand for their services in the fourth quarter. with adjusted admissions increasing 5.6% year-over-year. Overall surgical volumes were solid as well, increasing 4% year-over-year. Net revenue per adjusted admission, which has lagged for much of the year, increased by 3.7% as compared to the fourth quarter of 2022, as acuity trends and pressure from payers have started to stabilize. Meanwhile, the amount of premium pay in the quarter, which declined from a peak of 153 million in the first quarter of 2022, was 67 million in the fourth quarter of 2023, similar to what it was in the third quarter. For the full year 2023, our strong acute care revenues were largely offset by elevated expenses, especially physician subsidies. which resulted in flattish margins for the full year. During the fourth quarter, same facility revenues at our behavioral health hospitals increased by 7.2%, driven primarily by a 6.1% increase in revenue per adjusted patient day. The patient day growth in the quarter was greater at our acute behavioral hospitals versus our lower acuity residential treatment centers, which tended to drive up the revenue per day to relatively robust levels consistent with our year-to-date experience. Additionally, as we discussed last quarter, we continue to see a negative impact of Medicaid redeterminations in certain states on behavioral health volumes, although it appears that impact has also begun to stabilize. With 8% revenue growth, same facility EBITDA for our behavioral hospitals has increased approximately 9% for the full year of 2023 compared to 2022.