UHS - Earnings call transcript Q3 2017 | Universal Health Services, Inc.

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Operator

Good morning. My name is Sarah and I will your conference operator today. At this time, I would like to welcome everyone to the Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. instructions]. [Operator you. Thank Mr. begin may Filton, your you conference.

Steve Filton

Sarah. you, morning. Thank Good

everyone to by happen Health telephone are to we expecting September hopefully Services us XXXX. Miller Alan welcome like third I’d that We results and for of quarter join we’ll the Q&A. this the to review begin ended Universal before XX, make

similar using and believes, expects, as During call, this such projections Alan conference forecast, estimates and words and words forward-looking represent I statements. will be that anticipates,

uncertainties and the risks like in the Factors, with for familiar not a and Factors of anyone to statements, the questions. Form forward-looking opening for and reading year and Risk recommend XX-K ended section up ended inherent I our and XXXX, business For the these Risk December Form in a call Forward-Looking the careful XX-Q XX, Statements on couple of highlight trends to just We before developments June our would quarter XX, XXXX.

As the million $XXX.X last included to recorded during press diluted $XXX.X last as the compared discussed earnings was release, XXXX, connection night's the adjusting in applications $X.XX electronic our income million impact third the $X.XX on our year. the with net for ASU to quarter third health or $X.XX per X, adoption the our share in during UHS XXXX-XX, the in acute of with per of and from record supplemental adjusted care disclosed quarter. per depreciation of to share UHS implementation of income hospitals, discussed share as schedule for quarter After XXXX as attributable favorable and diluted night, net expense or of recorded company January diluted our release, press amortization release last the attributable in

court XX, $XX Texas, in or tax Puerto approximately press after-tax resulting Islands, $X release, XX million for care to and US located impacted approximately Florida, following, $X.XX an $X.XX South facilities and were period the nine and impact charge month an our XX behavioral and hospitals the of million health the unfavorable of after our estimated ended Georgia, per the three Rico $XX in As approximately Carolina, $X.XX our Florida, property an million to aggregate Virgin did share incurred facilities located have diluted impact hurricanes order diluted certain to recorded results financial $X of or three related per XXXX acute related damage, in extensive our our operations. and by after-tax Generally, in September litigation. to the million or unfavorably not impacted sustain interruption vast and a Maria, in mentioned and by of expenses Irma connection from share, business by with normal $X majority to million hurricane Texas Harvey, - resume

of revenues the extensive damage facility a suffered in a third results of surrounding behavioral portion basis, impact division our It’s in XXXX XXX to our hospitals the have facilities facilities. increased Houston, XXXX, the in increase quarter. operating On on during increased revenues during difficult basis at admissions in to in primarily Texas, XXX four the net comparable from may located third year. remain X.X% increase to areas The on over hurricanes as Rico these of owned same facilities for XXXX. predict care continue of the the operate and although health beds our located And which facility behavioral to X.X% However, health the beds a these facility a division, year's On quarter more adjusted the quarter our health acute our resulted last in operational, three have bed closed. are Puerto behavioral power same to in a X.X% infrastructure than third have auxiliary of aggregate, future quarter that properties. compared that

day the the year, the last to range quarter, by of admissions per while compared diluted adjusted excludes $X.XX X.X% decreased a the third approximately ended XXXX of of slightly. months increased adoption During of first third lower are adjusted prior the December as revised year's Based than the adjusted XX, increased of electronic from to experienced increased our patient range year's, XXXX, effect Revenue owned per comparable ASU and net previously as of of $X the behavioral year $X.XX share by attributable over income this days provided for This to per year health per X.X%, adjusted end of for end and X.X%, share. well revising and patient provided UHS XXXX, the to adjusted for admission X.X% diluted range health quarter. more range revenue during the during facilities the the year decreases as previously to we decreases estimated impact the the upon results to which trends approximately the previously our $X.XX guidance, operating upper nine provided XXXX-XX, quarter impact financial records X.X%. of

$XXX generated nine ended change currency UK, forward by month period The flows unfavorable other working resulting the cash accounts, a to during XXXX. accrued $XXX from the exchange payable primarily in unfavorable was caused changes from $XXX months million cash XXXX, foreign decrease capital and million the contracts from and activities timing related disbursements. to a to $X.X our by in in September expenses the due change accounts For $XXX in provided million investments of XX, of comparable primarily operating our decreased million billion nine

nine during capitalization of compared December $XXX expenditures $XXX of to our to third first outstanding total compared the months during September XXXX quarter as days XX We XX.X%, XX and XX.X% increased XX, during Our days to the at on the of accounts At ratio declined third capital third days during XXXX. as XXXX million spent to XXXX. debt receivable quarter XX, to of quarter XXXX. XXXX, the of million

of XX During conjunction million $XXX opened X.XX decision. final aggregate of than the Markets of to and repurchased $X new us stock acquisition repurchased beds of million. the less this two facility existing month, which during generates regarding final we have Competition The phase shares PLC’s in health of UK. and shares repurchase stock one cost Cambian the requires the XX, Group September Authority XX our provided Division of Adult ruling Services ruling annual program depreciation XXX we investigation ruling and be bed amortization. million answer divest quarter our behavioral the divestment of acute taxes, care in approximately inception earnings interest, the at The cost before XXXX, number in of with XXXX, new million. Since million completed questions program, the your we $XX final facilities. this to XXX,XXX the phase at have Earlier our reduction one at and represents an third identified $XXX time. through an of aggregate pleased beds at We’d sites quarter, In the a

Operator

instructions]. [Operator

first open. Lake. Lake, comes Justin question from is Your Mr. your line

Justin Lake

So the psych about to in the the in third assuming still core appears And Steve, and the Puerto Rico. the your two quarter $XX imply in fourth from business there's ramp hurricane pretty a steep impact to I'm quarter. first versus company the EBITDA of of facilities guidance million the question drag is, continued

tell Is down XQ us at how So us, big Is do that you XQ? sequential a to look the - expect the do understand that, you bridge from improvement. ramp get if behavioral can acute Help going t in to business? I you better?

Steve Filton

Justin. Sure,

the way approach the generally think caused that transitory, suggest in would that the continue we think QX. year the I So the guidance had were largely the however balance that which into and third issues that quarter miss we of was miss, the to for I that

as fourth that handful into challenges to there fourth So opening continuing expected a would quarter hurricane at well. to facilities impact on the of continue with I in the to four from that Those the was that behavioral the suffer facilities that persist regulatory lower into continue my mentioned the the will challenges. extent than results degree a we quarter, remarks,

that of fourth sense continue labor and of the ramp that trajectory would - earnings was year, for think sides of the stronger, was in volume behavioral And year that year. I the pressures pressures perspective, a terms the in the back embedded quarter, the from to guidance the In relief for of in as both both notions on the original on get our original business. the the from a half wage as that well of we our

year. those I up came we the inform of think of dynamics guidance the balance the way it's really for that a sort of combination So that with the two

Justin Lake

to similar in fact didn’t both So follow what XQ in despite up, it some QX? before, release expecting from expected like XQ, to wage ramp that a happened on pressure just meaningful volumes and in you it look the you're to

Steve Filton

I is in Vegas issue that's seasonality business. think I which will I up Justin standpoint, correct. included store I look new I to - will think QX which Henderson normally continued which, there me of is is results step which from stronger. just of should annually facility And same other QX the other point And the be to have is in in in think I the least an the QX results, point our the at recurring think due mentioned excuse, mentioned, at a that Las cosmetic facility, improvement the just from sort make the the same a store QX

Justin Lake

Steve. for the Thanks Great. all color,

Operator

Raskin. line is next from Raskin, Mr. Josh question comes your Your open.

Joshua Raskin

centers? coming ASCs the where focus year behavioral, even care segment? any And clinics end Maybe the Good extension. the change other Maybe you substance curious to line in more I'm around just abuse on just in urgent of or specifically is germane morning care are acute standing that appetite any EDs towards the maybe you free maybe or on on quarter, in or not types the there is stand of side, there as Steve. with guys but

Steve Filton

Sure.

side, global most in cases are think I we really at and generic answers by to So or care these a acute the these some there market I of I I think on sort look I on market answer while cases, do can think think honestly, questions, issue. the Josh that many questions give,

the into care side, that cost or ASC care continuing I freestanding be trend mostly think most of centers a or of lowest et patients for they setting urgent as there EDs, centers to perceive move peers, acute freestanding imaging our certainly patients, driven is payers by the cetera. to that’s whether or On we acknowledge, what have

entered certainly We to of some have those and any markets. certain businesses in all degree

We have number ASCs markets. of a in

informed APDs cetera. centers got in physician operated got freestanding care and think it's have to certainly view as imaging this shift really early the but payers lowest by, And we on market We've a urgent relatively patients will markets think that. et in market by that several look they of continue We can. setting stages view I had I cost success are it care some building notable We’ve to I the centers, said, basis, global that again. to

of every the service and the I gaps on with the market, similar presence particular addiction a residential services, there we in services, here in think sort our very the large side, think And largest And freestanding we of continuum think lines are the have acute where services I market. to UK, in a continue treatment the US country. health services, services, care, look and I specialty I mean behavioral for in continuum that of both behavioral et really cetera. it��s includes in notion. operator spans in

know sort gaps of our larger those don't of to fill a extensive we're in those on certainly businesses, markets, of services. so that to think in best any doing markets, expand service I necessarily I we're within basis most in looking providing individual So pretty but that our continuum a global of we're

Joshua Raskin

a great. question of a acute little sale a necessarily it's lot to more And market. the feels Okay, buyers be side. a There on It buyer's than for seems becoming like just out there. facilities then second care bit

So I'm curious.

segment there has though sort Is at, You new more historically of a point? attractive? looking care really you're the guys that around have at UHS It movement good actually timing as assets. Are seems so had always of opportunistic. been markets this acute

Steve Filton

you Josh, that cetera. describe own our deleverage, acute this business market got of a potential be I a We acute some you care as operators I degree of have looking for has looking Obviously, results. certainly because a we've demonstrated kind think growing with we've you number feel good some market, successful. care can believe care market opportunities like et to an who time. become, we if that attractive, We the think are it, in distressed to seller's acute can position, been and with be at like

adding are early the I in-market provide they the at think of are synergies we our care well. general in in attractive unless less we where divestiture sell we've impression operate is returns track markets. And business in for market fit not least better of of are feel outstanding plans, some assets markets, in our building record sort able facilities these other appropriate And in-market own markets, and they sellers, would that of to the strong they're sales that's going to assets. positions And somebody, providers. really proven interim, within for their phases these interested in as selling, a to of got own that I necessarily fit, profile our kinds acute sellers, being change that attractive. think have in Should of we all the should those capacity be most either a been continue think to certainly these distressed invest not-for-profit new assets that growing that because other and our or begin sellers we other like of

Joshua Raskin

Thanks. Perfect.

Operator

Your open. Fishbeck. comes your from question Mr. next line is Fishbeck, Kevin

Kevin Fishbeck

on you the from two wondering a hurricanes maybe from maybe could divisions, either - then the an but also was I Thanks. guess EBITDA if out impact Great. I basis, basis. volume among EBITDA parse the both

Steve Filton

Kevin. Sure,

of volume hurricane associated and XXX in is think sides the no on it's revenue revenue, dynamic sort side, with feel points pricing volume like to on obviously of basis the the of think impact. I because I these the probably same don’t XXX impact, we and So both there's hurricane business the that events, about coincidentally

we million you're EBITDA, and million five so to of think terms site. to the - on $XX talking probably eight In talked the a I about behavioral $XX or acute EBITDA sorry, about four on impact, side

Kevin Fishbeck

the in the to the to the and kind in guess of of to earlier one that be one wouldn’t that my I business. metrics side. guess response is would hurricanes expect still at on the I same still And guess that of is you're rebound me, behavioral question, interesting Okay. stay things length I looking the of reacceleration you impact

to sure be you that to and be that third you're what a bit pressure right you on So in seeing seemed be a to still the because that's that's not about pressure pressure. I just talk Can quarter want there think row why that's make continue little a site? now a to where because a that going

Steve Filton

it Yes. see QX. decline, I did I in mean think that the so we from at QX diminish actually stay in declining which the length rate was of

think So I some progress. we sequentially made

be perspective think I to length to increase that a diminution that is the point impact things and those why are reservoir unmet the I needed that's of earlier pressure, is beds the we we view that running for and we strong we've being of the efficiency our demonstrate in certainly we quarter when enough see if think behavioral enough that point improve view may that were again clinically same division, that But last length really store had that's couldn’t, that's of appropriate. we point view the that of target unmet we say throughput set started we significant X% was like just that if because our that metrics clinically what stay some to a feel we there strong able to that sooner, of continue looking a admitted confidence just appropriate. articulated the think was to the had And back in growth was where then where always do demand behavioral our revenue and to we be because of us I number, see hospitals, of to we to reservoir so achievable. there's vacated the beds of essentially fill throughput, some we demand. internally XXXX that stay this were of demand that underlying patients to of allows It’s this needed that

Kevin Fishbeck

indicate be pressure about talk about hearing companies before again the follow any to better that? than just seeing pressure points is to now next we're comment that then is improve. you another you're - what thinking And is gives the data over more that it, that's made there labor labor Okay. right guess on I you Because something actually less general, that you in seem about up rather but to quarters. this going get to going few that

any you or us So color comment that that's place? give taking

Steve Filton

relatively companies I XXXX. while places in to honestly the it faster a companies disproportionately it be the recovered so national and cetera. look, are earliest the And and more I function aggressive Yes. being probably - specific. like were back and be least national trends I talking issue today, Vegas of mean the think, suggest, I would in to middle average market these one be it this pace I And about a metrics et we think may of markets think tend may really at California are Southern that than highlight of and Florida, at more growing that South than think

tends nursing informed more equation two there's rates macro part during because sort and come More a by things on going So One, and labor time with nurses school, think on shortages. up shifts the nurses view enroll shortages. extra labor nurses shortages wage economic we hours, attractive that for happened them. have retired our back an previous to of I point in labor take work are adjust basis that's of experience the for market a

clinicians macro other on focused years, almost been But both and nurses facing I mentoring now we’re providing a rate in of at nurses that is that who for we issue the most organization own think markets, to us our we're I been internal we've other retention well, in those us. we're we've and that this recruiting by think career it, it as at want again the I recruit we've implementing programs that to the stay build and aggressive for making two and improvements I were for been addressing notably to think employees, issue mostly also careers come finding think happening level So that because our really see programs markets. our on impact but development incentives our having in and they the their we and with work

Kevin Fishbeck

Okay. over Then work either more side last of your The to many nurses how or Do retention? rate bringing point. the around on or any that for hasn't last two, you're and because question on my mostly been time, cut follow what normally year out think you've company about up things turnover how specific as I been things. last of on progress specifics you talk has there clear kind have you many made as it

Steve Filton

mean Yes. wage I our acute given have robust we years, shortage those was rates. robust growth been quite through because quite of I even I I I of been And was be, think few care mean on pressures. margin labor for haven't side margins a I primarily things. business, would and the acute guess always revenues have so to think the manifested them it's those think were revenue expected last though the our the volumes that the I way couple think that of again and pressures, that where

that's margins the about in about, the But in and been the pudding is improving improvement the rates, that's have mind, asked demonstrating improvement retention my et statistics that it's over cetera. you margin our there. think proof other recruitment really and things give ultimate. you the I acute can the and time I

volumes. most for increasing been, last in think labor I the I have manifested year the volumes have think itself side, behavioral the or admissions particularly shortage On part, And for weaker been the so.

in things, we've continued a a QX But the think I of that like hurricanes, cetera. bit hiccup, was et impacted Now And of that side. I we last including trajectory the different on that's was a quarters the five in labor filling but the that situation behavioral our on bunch or think feel generally, the this by improving and improving my volumes again we're four mind, for pudding vacancies. the of proof

Kevin Fishbeck

great. Okay, you. Thank

Operator

let has that to know just joined. Filton, Mr. Miller Mr. you And

Steve Filton

Thank you.

Operator

from is You’re your question Giacobbe, Giacobbe. Mr. line open. Ralph welcome. And next your comes

Ralph Giacobbe

Good trends just the add acute back Even and the a morning. mid looks you’ve hurricane single the even side, I little like we impact, on high digit bit posting. to start care want it slowed revenue Steve. from if been

things a sort other just we've there X.X, in little is versus of through some consider. along price walk to acuity mentioned pricing, bit versus anything then acute those call mix than seen disproportionate just you pure of of Can And lines, late care from worse pressures. Maybe what where think out? the around down dynamics of you. kind I payer mix just the terms there you

Steve Filton

Sure.

I several in there's embedded a think least you've asked. what So questions

last I the is, in We So I'll X% last third quarter, growth facing try that just robust. in extraordinary in really quarter, to one to third is terms all. will cover care revenue remind year's quarter mean everyone revenue them an had quite number. acute overall third I comparison growth, that of the year's the we're

points. it from adjust was consequence, not the you where we by growth we X.X% So tough going landed QX where basis XXX in hurricanes or the comparison, acute far the I And to revenue side. think think as points on side the I off need I thought. basis for a always a think on be to revenue Obviously, was XXX

low sort You’re of the in there. threes

the a side. the pace response which it noting, sort acute was that think bit of think to, it is of to the other of and I I in comes capacity else’s little thing somebody worth alluded only at on I sort before question

we second Spring of in the quarter year last Las in XXXX. tower Valley Vegas So our opened

the the second ’XX. that in We So ’XX. in or anniversaried quarter We third that XXXX. opened of impact anniversaried anniversaried in was -

of of they the example, six I an year as Just In XX%. sort first grew flattish. like Spring Valley’s months were think QX the revenues by for

when, kind I of lot QX think store Justin the look I into will numbers store our Henderson I same make mentioned, reverse same numbers. itself to better. I before, will think trend that come in think And as will that Now, a

sort all you But continue the of can I total and numbers store that, look make normalize at same pressure. want to you think just our we If not numbers. to

talked terms this the bit In call. we question little specific asked, a the on QX about of pricing that you

patients of than I think dynamics the is qualifying those in one job is stay of patients. lower affecting in observation seeing we're patients as level is in doing better think we're rather that that cosmetically level West in I particular short of out that that a California, admission. Nevada, metrics higher And revenue the but result admissions, a a of of per our

think it is I towards think should climate, volume ultimately price evenly on than between it's towards over revenue the X%, by as or between it think revenue. than at we rate acute we're will volume. in view and X.X% X%, should current those ultimate split volume. and the dynamic and I to split and is, time, our in a pretty status, But growth making price X.X% point that it roughly more I of more roughly skewed be observation care evenly But will the same Now, be pretty that settle grow that admissions is the have changes

Ralph Giacobbe

about Thanks. up point? and this year, next expectations UK flesh at DSOs very thoughts That’s maybe you or out and operating any that in little mentioned cash Can just CapEx drag a helpful. were the you for Okay. think bit. you flow And around capital us? And then as working

Steve Filton

worked from have generally we a bit foreign as had recent declined, negative it And the investment benefit several those hedged contracts balance a our currency flow as settlement ago. translation the has a investment the we the So strengthened sheet of impact. in quarter, is that UK in the has exchange cash way and little rate has years initial have the currency

flow So cash that's in seeing you're what statement. the

that And the and arrears, them that's sort short in UK NHS in the capital significant issue think had our assets. billing the a when converted consistent. not working terms a change crunch bought made a of we practice mechanical advance. is bill forward. to largely something to in we DSOs, we that my our we issue In a in created to They mind, system the of but I in the practice because Cambian That be of UK, term is, going have

Ralph Giacobbe

cash that and around Okay. CapEx this for And year? then just at point, flow the next any thoughts

Steve Filton

I our we give guidance the at I grows. generally I at flows rate we'll mean of But our year. mean should which I think the end specifics our give cash when grow EBITDA the at cash any we're flow continue pluses to of sort in think year don't next rate in the same going roughly I minuses in into running see Also XXXX. CapEx. ought that significant or

Ralph Giacobbe

Thank Okay. you.

Operator

Your next question Borsch, Mr. comes from your line open. is Matt Borsch.

Matthew Borsch

is had can actually the and And on update up quarter there. challenge well. if pick that alluded on in I wonder to Maybe just ask get if just what seeing as you you UK topic occupancy UK you’ve you're your you that pressures market, the just seen any last us on volumes. And

Steve Filton

that Sure. release the given of topic one the intense I mean peers. I the yesterday UK of was know our particularly of

history labor and worth issues, smaller specific knows two presence been think Having sorts is that in acknowledge now our who at I'll they dramatically I the area market it really UK. it's in that said issues companies process. it. the side. in with has is UK, that comments, we mean we’ll and But the I nursing of in best issues facility use was last here to will made And those think have than our particular of nor to labor some having volumes in much now labor we our I great the real think issue haven't we'd rates. quarters. have migrate continue UK is this, we're the addressing They footprint noting, in the tend Other the always tight experiencing US. that but do one are is We few occupancy the everybody, about a issues fairly CMA They beyond my the Cygnet be remind just as little had temporary think the have geographic just market that, on pressures and I success legacy don't practices note peer specific, Cambian in actively a I that than of UK UK, or high report be operating the US. opening registry. and prepared as think any CMA accelerating facility the final so. are think the they we yesterday. in comments integrating of I the in very to I our the like said seen I facilities everybody to here we the use that

now to integrate that hopefully the following anything, are registry be we looking reducing regard, amount and success that able that two to the further we're in the along temporary the and even of historic companies, if So we improvements nurses making use has Cambian had. forward going UK, that to in

Matthew Borsch

that it that on complete exchange light of your could the is broad I that pretty are headlines you payer for looking plan impact of you make different but different Steve, how announcement to in can yesterday And And a you're Anthem’s if XXXX? as terms relates that there just participation topic, about the there? any on directionally do pretty all in broad, ACA networks from thinking as of anything in and exchanges, difference might - not on enrolment the at exit

Steve Filton

in proactive level to us, our really in the what sense of in Yes. know is disenrollment, or exchanges regard, this Look, we Matt in terribly et it's be individual cetera. markets don't the that difficult the for enrollment

exchange viable the in remain all our those So it's who choices that hard have advance. for virtually react little for us enroll. to markets, we there in want a view commercial to of Generally

helpful. so And that is

we participation, in I every every exceptions, rare think network with in are of again network of terms in very one markets. providers network virtually our

do So really I see think from networks, have don't or more But think to macro mean to year. in at being there any think just one companies already in the than could amongst and come is I I movement that basis positioned. If amongst a able we're we well is there disenrollment next in that. all we're what I terms level, do. to from to so level going of the be benefit products wait currently extensively of exchanges we

Matthew Borsch

good. sounds right, All Thank you.

Operator

open. comes Morgan. Morgan, Frank is your question next Mr. line from Your

Frank Morgan

be you. over coming behavioral what fourth what other on bed schedule the Thank side know then detail in business, drags hoping there will of assuming any business you're I on the for the you was give be I could And the on and terms the on were of in end, expansion quarter some there, secondly, year. relates court Steve, know a us next the for would there and to some then I but relates issues any color any didn't about through order it continued the looking which that couple you. fourth facilities, was payment? of finally, guidance any it one on as Thank drag details this great. going And filings assumption to. quarter? at I But back

Steve Filton

Sure.

court A the the XX is we requiring XX or that last months So litigation of I it court in one I'll the make issue do literally quarterly back think reverse in us ordered release. disclosed south in years. came goes facilities order. to in payment order that The old our few through Texas

our to operating We’re operations, relevant was other segments. and have because hope it reversed seem either old appealing or it of we item reduced. current payment the segment, that in recorded didn't and terribly in that to not either the But substantially so two

drag on you mentioned experiencing we challenges. definitely to I or side specifically three drags, in think to were again this I behavioral mean I the as, a far regulatory call. that behavioral think facilities alluding the maybe Justin's original answer in the I are two saw As on question

think relatively in and Oklahoma Massachusetts. they've well publicized I in been

what cetera, that and out of we'll to operations. But we're corrections quite try in back in expect with relatively generally we quarter, it's are relatively the make a have of double than and hopes into rectify states, the to a believe have regulators be structure issues work and a they and stream in normal rectify our to whammy et lower we we current expense this get to place bit our sort referral current the the the soon able lower going environment, ordinary next will those expected we're in quarter As in volumes. than keeping frankly because

experienced entered as QX, saying we revenue to we revenue back more we would of get sort Or would adjust side essentially reduction. to Justin we we of either to were. have that similar what I was was in those rectify the assume a but lower, that earlier So and I facilities three, and we in drag into this the response would facilities in XXXX, that the where right from that think quarter be fairly permanent to size our a expenses

in result. markets, that, So work the magnitude be QX, we'll in least deal at continue was we the to will the of as regulators States with the those in same it assumption but with

Alan Miller

- of a I And those then six our been but changed a would side. year which not the it's or been will on XXXX and has sort and bed lines expansion we've I first as something your in not us, certainly XXX adding I beds of pace always most we that That’s think thing, at was the behavioral beds think question, question, along we your think about for target, well. expect ratable

Frank Morgan

Thank you. Okay.

Operator

comes question next Gupte, Ana open. is your Your Miss Gupte. from line

Anagha Gupte

Steve, morning. side. the follow to wanted on behavioral Good up

of So as pressure stay sure hasn’t met you your worse we when encouraging out, in that with sequentially. wasn't length you of I gotten September. all point it's

in impacted back I it and now getting that, issues transient given it mid-XXXX. to commentary second had think rate? you hurricane, normal volume of the You an in quarter on that update or think about you more Given being the us sounds growth do timing largely seasonality like is what your revenue maybe whatever, being by

Steve Filton

premised half a more XXXX a But of by that I I idea first conservatively in this beginning get challenges changed, now I revenue guidance was now to at the all don't view really mean at same end what we to of any sort the changing behavioral basis the say I rate Yes. rather sort the have second quarter elongating from of back that sort year, it's the changed in say targeted of the business guidance now of fundamental original perspective, the on growth Again, I think XXXX. I think more metrics the of issue, of from our incremental the some than store X% either timeframe I again, And was ‘XX real of really about think view issue. of end just of underlying QX, would think are. QX the Ana. could we an on that QX it's really the that's given original QX. guess I we the probably think or

Anagha Gupte

can the your IMD shifting stabilizing easier thing a you you’ll more it managed it's color to been of stay, the any a on kind putting Is from kind year us And like and sounds is tell lot subsides pressure. so exclusion because and a length on Medicaid payers Medicaid in this of you now? and managed comments, all this assessment? It Has why flattish from then coming - mix comps have that of one-time and next a number? of mainly your fair get

Steve Filton

patients relatively of Medicaid to for short I is stay there begin yes. these - think I length Generally, a about with. talking mean we're

impacting need, patients stay et them documenting where patients. these needs quite of number we're of that’s frankly downside outcomes longer reduced because this terms focused without a can almost on doing two of think, cetera. these That’s for stay the we're is be better quality job Number the and where I by clinical limited to of length think appropriate, I of So is I clinical amount definition, and how clinically just a issue, now much the care think really in the the of appropriate, for really one. there

our of So as I of floor issue, on interests well our think a better it's as just a natural the of job representing a and kind clinicians. combination this doing our patients

Anagha Gupte

given would to invoke do you or as to something you’re routes this other it's Or seeing still a not is behind this parity so pretty point? natural you think you legal kind that’s that of need health floor, necessarily far court? - at them, much pressure as mental And any in

Steve Filton

No.

range with as I have up with of the think ultimately payers them of mean us to and to I before, obviously the us patients I be from to this we all have to to. extend what we mutually think pursue do to that providing I we'll court. and the for patients try best just to day documentation, more but the of our avoid. And again, would in a cetera need to most hope and think options sort way menu is day best I if is whatever cases, suggest, I think and that available a think would upon that's can agreed sort proper again, interactions that that we've But payer, degree we you that we take et think for that what well. having resort our said advise aggressive, going we're And be last as clinicians to and we we our payer

Anagha Gupte

update And agencies, with federal and the you’re question. that settlement and and regulatory the of give you that seeking on a the final timing? magnitude an state us Can

Steve Filton

realistically has part two, on quarter expressed have positive I we the It slow always our been a a moving process. That’s I or guess in a more the that Yes. slow think last I they been bringing government moving mean in investigation process. engaged think while. seems the point to more for still earliest realistic a I of be, before middle to to and our into conclusion as will. more it, this well think we're and can have every the reason I they about and interested next But basis they end than working view have this We as and we way, And hope asked and aggressively year they’ll we that interested on like sort - conclusion. in the we're as along. similarly of provide keep at this as respond a could have to for hope at government focused bring feel everything on to to believe that moving this we

Anagha Gupte

Great. Thanks Steve. so much,

Operator

Taylor, open. Taylor. is Gary Mr. Your next comes your line question from

Gary Taylor

answered You've had. everything I almost

last Just one.

On the EBITDA contribution revenue annual and you have from facilities? four those do Puerto combined Rico facilities, behavioral

Steve Filton

Yes. Sure.

or $XX Puerto So on EBITDA annual million $XX just I that one Rico have to of question I fundamental Houston facilities those it's I the combined Gary, million. three maybe has clarify, closed. that in and mean But think, beds a basis, facilities probably think in

material. a We have. expense. seem make short the the just the expense, of before it the amount reduced I described have effectively may But in increased certainly to we’ve that So where reduced dynamic have I I want because that run, revenue doesn't we all that point we the but of substantially think

next markets of right As by normal for is I wait drag think think we the we EBITDA. over their try far to and that greater quarter, actual than facilities could do to employees, the the and I get those provide sort back our

that the have not could we think sense expense. I because we've revenue the reduced quarter million drag got it So and in or be million $X $X reduced another

have large outsized facilities, run So the think impact. they or an all but in that that's short why potentially an not outsized I they're

Gary Taylor

near So you could term? actually run a loss

Steve Filton

exactly the That's Correct. issue.

Gary Taylor

Okay. Thank you.

Operator

open. next comes Your Mayo, question is from Mayo. line Whit your Mr.

Whit Mayo

from two to Back quarter? issues, a dollar you quarter that you give the it in that the the hospitals referenced actually amount regulatory drag behavioral did impacted the were that

Steve Filton

the in million drag but well, I so think - that regulatory at of That the three I $X current challenges. the think was the number quarter. in I Yes. that two facing Whit, that X, I'm is range did, sort sure are not facilities probably X, or

Whit Mayo

the I And behavioral - of sorry, the that here written a quarter? hurricane was but on a business down may that a for the EBITDA little be just drag in inconsistent, much couple numbers Got it. had how basis,

Steve Filton

in that $X million range. Somewhere

Whit Mayo

Okay.

items, year would over like EBITDA year. have or two so adjusting X.X% looks for So those increased

Is little I characterize how guess business. bit the better trajectory on it? underlying would a So that you

Steve Filton

I think that's fair.

Whit Mayo

- of admissions segment? the volumes, did for Yes. hurricanes store the on impact the behavioral just topline And terms in revenue same days, then patient how or

Steve Filton

So I that basis was XXX we on volumes impact the XXX, about believe revenue. both that said and points think we

Whit Mayo

Okay.

to, or highest get five like revenue. the in store year quarters. increase same over Looks you X% would six year to that maybe So close

sure looking just just this at we're So to want make next my on deployment. question Maybe capital correctly.

some stock. back You bought

the like been, we're and of know debt debt. down pay on aggressive going in sense doesn't to more aggressive. down make And twos get getting this lot buybacks, pay at low Leverage has to a you're seem of is to lot continue here You whole point. sort but of more doesn't it the message I a terribly

about anything sheet leverage just balance curious the this? Thanks. as into Just forward. to on So any updated read and you think going thoughts

Steve Filton

be try than And always the any more to I levels. to remain that We meant may current easy I acquirer with shares position external articulate a at our leverage be arise. which We levels. do and I these that forecast and not that balance to opportunities in other way. made we our of any the our that are think same. think all them comfortable think continue an There are precise or were - don't active manage We’ll do you want against lower. We predict to comments

So there remains but else you leverage own of everything is shares of true. that, our said repurchasing I a bit to struggle manage about attractiveness think a otherwise about and the

Whit Mayo

I get not and planning I you’d or know I at one that is, last guidance back see didn't just for XXXX this presumably the out midst the giving point. this mean like I’ll one Maybe if point. you're at tailwinds process. any Okay. queue of discrete And Street you’re at looking numbers in headwinds call the to you're you and know in

XXXX. you're us of frame little just Just generically the give I to up businesses where in framing should a how for don't help thinking be Thanks. just next about maybe know, year, a of we bit

Steve Filton

Yes.

the likely call, our this which not have other give already end So well not think we in most practice. certainly normal I as as is guidance February, are previously XXXX at giving I and guidance mentioned times. But will today until of

of we will range, would back rate store the Our X% as trajectory sort of We running believe ’XX. kind describe middle into of the in the to of we get so general that which what sort at same have the growth X% sense to been sometime businesses, of business least a acutes, consistently, of behavioral kind the that two normalized X% of will think at XXXX. do the pretty revenue to continue

that. EBITDA growth of you So sort presume think with along the goes can that I

closer items those guidance of certainly with on to some - reimbursement terms the able of We’ll that on more we for a of we the some pushes formal the pulls we've pretty our again, and as issues and In But along see as project. sort I consistently go of special of talked two of be precise sort give that, pretty candidly guidance. to get about and how trajectory the are difficult that give now. still is think while businesses we frankly, fundamental

Whit Mayo

Yes.

Okay. Thanks.

Operator

from comes is question Ransom. Mr. next Ransom, open. John line Your your

John Ransom

center. there's because legitimate consumers it's I owned been think a the versus premium Hospitals that's do have But of B, not a outpatient, but Most paid, just from just is criticism? you morning. owned think into asked, question. a the decade if it's more by I see awareness plus. surgery my And that business questions that's for rhetoric more physician outpatient It’s more Good a can demand? the hospital, new. that say moving options becoming by there there than the hospitals just and something freestanding of about A, were that a outpatient. be something bit is address what that focused are at a though to think industry do, that issue and can out Is lower there Because urgent looks and emerging centers, more all the cost to even a on? with physician clinics, it you care that elasticity sensitive call it with legitimate to me surgery guys they like are - philosophical

Steve Filton

the has consumers legitimate a these and and about consumerism issue. sure, certainly written not making it's think lot I'm a I John, choices. been

this most perspective, and the sight, the your issue. be providing And most think that end time our efficient largely the I payer care. I mean niche cheapest at remains of about line provided. day, I the a from where providers think as same competitive clear with compete to care still are have point, of the we have of of who is to to driven payers being And hospitals

think the dollar, it hospitals the opposed healthcare to an the and ACO when as providers, business believe and and they able to the to dollar. consumers. reimbursement payments we physicians are they'll of that I it. to that bundle will - the this also control issue payments the necessarily the between move control who I capitated to providers even providers providing with landscape providers where or these directly the So will to to they're steer that more healthcare more I leverage the between evolve continues the with payments, back think niche is of back than swing where payers providing And more ultimately and the as be or

but a So evolving slowly developing is in. slowly again, to move that's we'll the think I this dynamic, direction and continue

John Ransom

been say be also it may relative that it slower evolve for to you is, care, the and payers the than to payment ACA. then structures really think complicated might fair early is So bureaucratic the and why than to are of expectations with in if managed other Have new that's expected. do to if true, they've age move? it's you And just slow that so, have days

Steve Filton

Yes.

and at developed, business move part great managed less market markets. first tend I'll answer the is of in think absolutely them, I different true. So mature already different trends look, much these description, in be paces lot kind local of to not a today, questions but think is healthcare I a a We market. less I've number call again, said smaller, to as care And a of very probably

of as the to our it's they I lightly. engineer is narrow that I in we've others. of don't and that your generally John than of something as point, networks mean of seen I think complicated in look trends felt And being not should some cited our overlooked the we've helped taken would think we about look, So from. some But we we've we benefit been as some develop and But yes. like quickly slower in too that markets. that expected. do development some something look, maybe instance for forward markets be or it And

I reimbursement significant things, everybody to frankly, slow continue is landscape need that terribly in think one information lot the a are be and reasons and move to quite viable the and do of way. of of move when why prosper on change these to because and it complicated sort a to sure are is analysis you can make slow why payers you providers

I but So evolve, pace. continue be it a at think will it'll to measured

John Ransom

on just this one topic. And more Yes.

you of not course voluntary this As of a decision? where hips you and in do you approach by CJR of you is know, - UHS more a of took market back particular mandatory. just are is the How step - a to and in bundling some it and kind others? uniform where it's CMS knees? have was do versus might on And markets Or it market post-acute on

Steve Filton

Yes.

I this pretty publicly adopter many have payment aggressive initiatives So, our but UHS if the of was not markets, most of before, we of a initiatives. actually and think and bundled early talked think volunteered about for may our I the in markets,

payers, of I programs. for to and a I payers and I the prepared I available we forward a move became think from with issues. lot But government disenrolled the I of to reasons think back we’ll we being be in of private them, and stepped a of think the through think time spent these we little positioned information well felt of in sort were think for with and We, ready focused particularly the we the both like like And forward a them. information to feel bit these And prepared these. when sort the think of with move and CMS allow disillusioned I well lot of that providers has we've are to benefit. partnership fulsomeness terms manage our positioned, to physicians timeliness of lot

John Ransom

lot. Okay. Thanks a

Operator

comes Miss. question open. your next from Your James. is line Sarah James,

Sarah James

of to wanted the I to comment resolving the shortage on back the side business. nurse behavioral the on go

think closures? shortage. because then what percent So reopening, Can past? in that's that, Or you about in past, nursing a a of think the of the in And reaching the resolution but quite towards the the or from was Thanks. being bed beds beds all closed remind of goal of reopening that should XQ, stated the which it those the is experienced admissions just beds? not full as you the you’ve were closures kind bed we had I headwind about us on coming talked step

Steve Filton

Sarah. Sure,

originally the we've And admission to those even ultimately to of was - I number follow fluid which comes XX at think it's said facility might dozen a And of is, who really think I particularly is our particularly the in on our admissions able this is we're pretty or we labor the discussing sort that imagine growth. is that in growth. sort was growth admission The cetera a through ultimately problem, I though issue closed, and way recovery an that the manifested number but problem that issue, a that dramatic admission so. behavioral ultimately there were we reason rebound two solving had that then there's that solve and et difficult to we're convince because think decline earlier What note started continue its earlier the in were for side of measured of and in through the what another I then percentages work as market a a response able necessarily a way the issue, minds, facilities. continued to years good progress into on beds said growth a mentioned vacancies a problem first question you beds and of feel ourselves is, itself the year last give to the is facility to specific certainly down. steadily has I metrics this over like mean as that of number progress, careful probably beds side admissions? it. other think I problem year or half pudding The in an outset for like the we've behavioral a of way. been some as that I this, pretty the and the think that maybe kind problem, last So shortage for industry and of ago, this a this numbers don't And a beds these you in we somebody that training that when that, was or we Ultimately us, as incremental static most mean markets asked lot in to reality, closed the are albeit odd of I just and sort are were of orientation. slowly and able to to we closed do before, is, increase in been nurses we proof are open part, been these to able of like track able turnover so. we but and The the slow, the we've do it a able we.

Sarah James

think this still And in fourth or will the additional progress? benefit admissions the you of quarter the reach we a as of in should work full

Steve Filton

back Yes. so is, to take it a reasons, I the the I XXXX growth. variety to think, again of will behavioral to said targeted of get first X% us for half we've think what

of issues be One shortage. that labor continues will - we’ll the work to continue the on

began status just at the we think X% don't to I that It absolutely to the to So solved, we sort were that the will of it'll returned problem of the will, kind mean think in when don't be will you middle we've mean get shortage. of labor accelerate. a growth, the when at that if way, that we've even least back I by - and really quo that ‘XX

Sarah James

Thank you.

Operator

no closing at further remarks? questions Do time. this you There are any have

Steve Filton

than and Thank the to year. at do speaking for everybody of end other we to the look with time, I their thank not, them forward you.

Operator

call. today's This does conference conclude

now disconnect. may You

Universal Health Services (UHS) 26 Oct 172017 Q3 Earnings call transcript