Universal Health Services' wishful thinking earlier this year proved for naught as a “significant shortfall in operating results” during April and May has forced the for-profit system to revise its annual forecast downward.
Unlike some of its contemporaries, UHS had stood pat on its projections after a rough first quarter dominated by numerous COVID-19 admissions and heavy labor costs. Leadership defended the decision by describing its initial estimates as conservative and outlining “early indicators” of gradual recovery.
In a new statement issued Thursday morning, the company disclosed a slow return in non-COVID volumes during the first two months of its second quarter.
"The decrease in COVID-related patient volumes during the second quarter of 2022 was not offset by an equivalent increase in non-COVID-related patients resulting in significant shortfalls in revenues and earnings as compared to our original forecasts for that period,” UHS wrote in a statement to investors.
“Although the decreased patient volumes at our acute care hospitals has relieved some of the staffing shortages and related cost escalations previously experienced at those facilities, recovery from the effects of the labor pressures has been occurring at a somewhat slower pace than expected.”
UHS noted that volumes, revenues and incomes from its behavioral health care facilities were also below expectations, although these were “relatively consistent” with what it already saw during the first quarter.
The system’s original prediction issued in February anticipated net revenues ranging from $13.4 billion to $13.69 billion. These have now been decreased 1.4% and 2.4% for a range of $13.2 billion to $13.37 billion.
UHS’ adjusted EBITDA (net of non-controlling interest) dropped 10.7% and 11.2% for a range of $1.6 billion to $1.7 billion. The adjusted earnings per share-diluted fell nearly 20% to a range $9.60 to $10.40 per share, according to the announcement.
UHS said the new projections assume staffing challenges and their related expenses will diminish over the remainder of the year, due in part to “our continuing recruitment and retention initiatives, by changes to our historical patient care models, by other cost-cutting measures and by aggressive contractual negotiations and renegotiations with our managed care payers.”
UHS owns and operates 28 inpatient acute care hospitals, 19 free-standing emergency departments, six ambulatory surgery centers and one surgical hospital. Its behavioral health business unit comprises 335 inpatient facilities and 14 outpatient facilities.
The chain employs roughly 89,000 people and reported $12.6 billion in revenue and nearly $992 million in net income during 2021. This was up slightly from $11.6 billion and $944 million, respectively, during the year prior.
UHS’s full second-quarter results will likely land near the end of July, although the system has not yet announced a date.