Universal Health Services, Inc. (NYSE:UHS) 2023 Q4 Financial Results Call Record February 28, 2024
Universal Health Services Inc. wasn't among the 30 most popular stocks among hedge funds at the end of the third quarter (see the details).
operator: Hello. Thank you for always being by my side. Welcome to the 2023 Fourth Quarter Universal Health Services Earnings Conference Call. All participants are currently in listening-only mode. There will be a question and answer session after the speakers' presentations. [Operator Instructions] Please note that today's meeting is being recorded. I would now like to turn the conference over to our first speaker today, Steve Filton, Executive Vice President and Chief Financial Officer. Please move on.
Steve Filton: Thank you and good morning. Mark Millar joins us this morning and welcomes everyone to this review where he reviews the results of his Universal Health service from the fourth quarter to December 31, 2023. During conference calls, we use words such as believe, expect, and anticipate. Estimates and similar terms that describe predictions and forward-looking statements. Those who are not familiar with the risks and uncertainties inherent in these forward-looking statements may be referred to the Risk Factors and Forward-Looking Statements and Risk Factors sections of our Form 10-K for the year ended December 31, 2023. We recommend that you read it carefully. Before taking questions, I would like to highlight some developments and business trends.
As explained in a press release last night, the company reported net income attributable to UHS of $3.16 per diluted share for the fourth quarter of 2023. After adjusting for the impact of items reflected in the supplementary schedule included in this press release, the Company's adjusted net income attributable to UHS per diluted share for the quarter ended December 31, 2023 was It was $3.13.
Mark Miller: Our acute care hospitals continued to see strong demand for services in the fourth quarter. Adjusted enrollment increased 5.6% year over year. Overall surgery volume was also strong, increasing 4% year over year. Adjusted net revenue per admission, which lagged for much of the year, increased compared to the fourth quarter of 2022 as sharp trends and payer pressures began to stabilize. increased by 3.7%. Meanwhile, premium payments for the quarter decreased from a peak of $153 million in the first quarter of 2022 to $67 million in the fourth quarter of 2023, similar to the third quarter. For the full year 2023, strong Acute Care revenues were largely offset by higher expenses, particularly physician subsidies, resulting in flat full-year margins.
During the fourth quarter, same-facility revenue at our behavioral health hospitals increased 7.2%. This was primarily due to a 6.1% increase in adjusted revenue per patient day. Patient-day growth for the quarter was greater for acute behavioral hospitals compared to lower-acute residential care centers, which resulted in daily revenue consistent with our year-to-date performance. It has tended to push up to a relatively solid level. Additionally, as we discussed last quarter, we continue to see a negative impact on health behavior volumes from Medicaid redetermination in certain states, but that impact appears to be starting to stabilize. Due to an 8% increase in revenue, his EBITDA for Behavioral Hospital Same Facility increased by approximately 9% in his 2023 full year compared to 2022.
Steve Filton: The company also noted in the fourth quarter that it recorded approximately $18 million related to the recently approved Mississippi Hospital Access Program, which covers a six-month period from July to December 2023. please. Cash generated from operating activities in the fourth quarter was $452 million. Capital expenditures for 2023 were $1,268 million for the full year 2023, compared to $297 million in the same period of 2022 and $996 million in 2022. In 2023, he spent $743 million on capital expenditures, which was in line with his initial expectations. Year. During 2023, the Company acquired $525 million of his shares pursuant to its share repurchase program. Since January 1, 2019, the Company has repurchased more than 26 million shares, representing nearly 30% of its outstanding shares as of that date.
As of December 31, 2023, we had total available borrowing capacity of $701 million under our $1.2 billion revolving credit facility.
Mark Miller: The core operating assumptions underlying our 2024 financial results provided in last night's release primarily reflect pre-COVID-19 historical trends in our respective businesses. We expect acute sector volumes to slow from their high levels in 2023, but conversely, acute sector acuity and pricing will increase, with both indicators for the full year following the pattern experienced pre-pandemic. I expect it to look similar to. The shift in services from inpatient to outpatient settings continues, despite pressure from payers to curb reimbursement growth in a variety of ways. Premium labor trends and general cost trends are expected to continue to improve and remain broadly stable in 2024.
Specifically, physician costs, which were a major headwind in 2023, are expected to increase in 2024 due to the overall rate of inflation. As stated in the press release, the 2024 earnings forecast includes $149 million in additional approved Nevada revenue. It was filed by CMS in late December and disclosed by the company in an 8-K filed in early January. We believe demand for our behavioral services remains strong, and same-store-adjusted patient day growth in 2024 is projected to exceed the 2.1% growth in 2023. An important factor in the increase in activity volume is due to the successful filling of vacancies. However, we recognize that the lack of specialized talent in certain markets continues to be an impediment to further volume growth.
We are pleased to see improvements in patient satisfaction and quality of care metrics in 2023 in both of our business segments and remain focused on continued improvement in these metrics in 2024. We will be happy to answer any questions you may have at this time.
operator: thank you. [Operator Instructions] The first question comes from Anne Hines from Mizuho. Please move on.
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