Universal Health Services, King of Prussia, Pa., has replaced Kirk Gorman as CFO, effective yesterday, because of what Gorman termed a "philosophical difference" with company auditor KPMG. In a written statement, UHS Chairman, CEO and President Alan Miller said that KPMG took issue with a "recent communication from Gorman . . . regarding his views on their respective responsibilities and the level of expertise required of a CFO with respect to the company's financial statements." Miller told healthcare stock analysts in a conference call that there was no question about the company's financial statements or Gorman's integrity; however, the board's audit committee decided a CFO change was in shareholders' best interests. Controller Steve Filton, an 18-year UHS veteran, was named interim CFO. As of midday today, Universal's shares had fallen to $32.65, down more than $9 per share from yesterday's close. During the conference call, Gorman said he asked KPMG a general question about the relationship between auditors' work and advice and the responsibilities of any CFO. "I never had any specific situation in mind," he said. Gorman, who joined UHS in 1987, will continue to work with the company until a permanent CFO is hired.
UHS also announced financial results for the fourth quarter and full year ended Dec. 31. The company earned $43.9 million, or 69 cents per share, in the fourth quarter, compared with $927,000, or 2 cents per share, in the year-ago quarter. The 2001 fourth quarter included a $25.2 million after-tax charge to boost reserves for malpractice liability brought on by the collapse of PHICO Insurance Co. Revenue climbed 15% to $835.5 million. For the fiscal year, UHS earned $175.4 million, or $2.74 per share, compared with $99.7 million, or $1.60 per share, in 2001. Revenue rose 14.7% to nearly $3.3 billion. UHS owns or operates 25 acute-care and 37 behavioral-health hospitals. -- by Vince Galloro