Universal Health Services, Inc.

Good day. Thank you for standing by. Welcome to the UHS 2025 conference call here. At this time, all participants are in 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 that 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 like to now hand the conference over to today's speaker, Steve Filton, Executive Vice President and Chief Financial Officer. Please go ahead.

Good morning. Thank you. Mark Miller is also joining us this morning. We both welcome you to this review of Universal Health Services results. The first quarter ended March 31st, 2025. During the conference call, we'll be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast 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, 2024. 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 of $4.80 for the first quarter of 2025. After adjusting for the impact of the item as reflected on the supplemental schedule as included with the press release, our adjusted net income attributable to UHS for diluted share was $4.84 for the quarter ended March 31, 2025. During the first quarter of 2025, on a same facility basis, adjusted admissions to our acute care hospitals increased 2.4% over the first quarter of the prior year. Same facility net revenues in our acute care hospital segment increased by 5.0% during the first quarter of 2025 as compared to last year's first quarter after excluding the impact of our insurance subsidiary. Meanwhile, operating expenses continued to be well managed. Other operating expenses on the same facility basis increased by 2.6% over last year's first quarter after excluding the impact of our insurance subsidiary. For the first quarter of 2025, our solid acute care revenues combined with effective expense controls resulted in a 21% increase in EBITDA after excluding the impact of Medicaid supplemental payments. During the first quarter of 2025, same facility net revenues at our behavioral health hospitals increased by 5.5%, driven by a 5.8% increase in revenue per adjusted day. Adjusted patient days were relatively flat compared to the prior year quarter. The year-over-year patient day growth comparison was negatively impacted by the extra leap day in 2024 and challenging winter weather conditions experienced this year early in the first quarter in certain markets. We did experience a re-acceleration of patient day growth in March. Our cash generated from operating activities decreased from 396 million during the first quarter of 2024 to 360 million this year due in part to delays in receipt of funds in connection with certain Medicaid supplemental payments in various states. We did receive $82 million of payments related to the Nevada supplemental program in April that were related to revenues recorded in the first quarter. In the first quarter of 2025, we spent $239 million on capital expenditures and acquired 1 million of our own shares at a cost of approximately $181 million. Since January 2019, we have repurchased approximately 30.3 million shares representing 33% of our shares outstanding as of that date. As of March 31, 2025, we had $1.02 billion of aggregate available borrowing capacity pursuant to our $1.3 billion revolving credit facility. I will now turn the call over to Mark Miller, President and CEO, for closing comments.

Thank you, Steve. We are pleased with our first quarter operating results, which on a consolidated basis exceeded our internal expectations. We were particularly encouraged by the control of our operating expenses in both business segments. Our first quarter operating results exclude any supplemental Medicaid revenues in Tennessee and the District of Columbia, pending CMS approval of these new programs. For programs that were originally approved in previous years, we have continued to record those revenues under the assumption that programs will be re-approved. As these programs have been a recent focal point, I believe it is worth reminding people that these are federally authorized and state-approved programs in place for many years, and they are designed to allow providers who have been historically underpaid by Medicaid to provide quality care to over 70 million Medicaid recipients nationally. Even where these programs exist, our net Medicaid reimbursement generally remains below both average commercial and Medicare reimbursement. West Henderson Hospital in Las Vegas opened in late 2024 and posted a modestly positive EBITDA in the first quarter. Cedar Hill Regional Medical Center in Washington, D.C. opened recently and has experienced strong demand for its emergency room services from the outset. While we acknowledge a great deal of uncertainty in our external operating environment, we feel confident in our underlying businesses and based on current reimbursement and operating cost levels, reiterate our full year earnings guidance. We're pleased to answer questions at this time.