Universal Health Services, the King of Prussia, Pa.-based chain with both acute-care and behavioral health hospitals, benefited from increased patient volume in the third quarter, which boosted profits.
The company reported an 81.5% increase in net income Tuesday afternoon, providing the first bright spot in an otherwise lackluster third-quarter earnings season for hospital operators. Both HCA and Community Health Systems missed their marks.
After adjusting for outpatient activity, UHS reported a 5.1% increase in admissions at its acute-care hospitals for the quarter and a 3% increase in revenue per adjusted admission. However, the chain also noted that its operating margin for the acute-care division declined to 15.4%, down from 17.1% during the same period last year.
Charity care and uninsured discounts increased to $322 million in the quarter, up from the year-ago period's $266 million. The chain's provision for doubtful accounts also jumped to $185 million from $129 million. However, UHS said that it is still seeing a year-to-date decrease in charity care, uninsured discounts and its provision for doubtful accounts compared with the first three quarters of 2014.
In its behavioral health hospitals, admissions increased 1.6% while revenue per adjusted admission was up 3.1%. Its operating margin in that division was 27.5%, nearly flat over the year-ago period's 27.6%.
The company also continued to add behavioral health beds through acquisitions. In August, it bought Alpha Hospital Holdings, a United Kingdom-based behavioral health provider with four hospitals. And it forged a $350 million deal for Brentwood, Tenn.-based Foundations Recovery Network, which has four inpatient facilities and eight outpatient centers. That deal closed on October.
UHS reported net income of $150.3 million on $2.2 billion in revenue for the quarter compared with $82.8 million in net income on $2 billion in revenue during the third quarter of last year.
The company also lowered the upper end of its earnings projections about 1%. It now expects earnings per share to be in the range of $6.75 to $7.05 after previously forecasting a range of $6.75 to $7.15.