Universal Health Services (UHS) 28 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Steve Filton	EVP and Chief Financial Officer
Alan Miller	Chief Executive Officer
Matt Borsch	BMO Capital Markets
Justin Lake	Wolfe Research
AJ Rice	Credit Suisse
Stephen Tanal	Goldman Sachs
Joshua Raskin	Nephron Research
Sarah James	Piper Jaffray
Kevin Fischbeck	BoA
Steven Valiquette	Barclays
Ralph Giacobbe	Citibank
Whit Mayo	UBS
Frank Morgan	RBC Capital Markets
Gary Taylor	JP Morgan

Call transcript

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Operator

Good morning, my name is Emily. And I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2018 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. you. Thank Instructions] [Operator Financial may Chief your Officer, Filton begin you conference. Steve

Steve Filton

Universal Miller, Emily. Welcome is of December for XX, Good quarter you, and our full to Services year the morning review XXXX. morning. Thank ended this Alan CEO, fourth results us also this Health joining

risks risk reading using familiar and forward-looking of and uncertainties ended During that the similar and business a and this the call trends to be highlight your and represent section conference with statements, Form like the believes, forward-looking as forecast would recommend and Alan on such call, risk and our for words factors before not year opening anyone XX-K expects, the just We for to will projections factors these in up a developments I statements in I words of anticipates, inherent questions. XXXX. estimates, XX, December forward-looking statements, couple careful

As to the discussed the $X.XX net in during or the release, XXXX, fourth quarter our After for share income UHS net earnings XXXX. $XXX.X to for supplemental $X.XX as to on a schedule the last per million compared adjusting year the share as UHS adjusted income with included for and night's quarter ended to indicated $X quarter. or $X.XX diluted night, per of recorded increased company period diluted share each diluted press XX, release per attributable the December $XXX.X last attributable million of

our value of in XXXX of impairment $XX.X in quarter our for increase a which of of in same a Care Justice with increased UHS X.X% the fourth attributable intangible the As Recovery connection trade of the fourth quarter division, of XXXX. to asset Reserve our of the recorded during pre-tax schedule, provision supplemental and income excluded facility net Department revenues pre-tax on Foundations million, Network. acquisition basis a Acute net the reflected $XX.X reduced name million adjusted On asset carrying the XXXX during

Excluding more the resulted a X.X% same our revenues quarter XXXX. for our to than increase X.X%, in rose increased a day XXXX, revenues of over facility per during of patient the our Behavioral a of quarter On increased adjusted admission. X.X%. basis, increased prior-year a and adjusted fourth X.X% increased from compared X.X% adjusted net X% during increased to admissions the patient revenues health in adjusted increase while Health facilities comparable same the fourth fourth XXXX. facility per in Behavioral Health fourth year Adjusted plan, The during of division admissions revenue X.X% days primarily XXXX quarter owned as Revenue quarter. the quarter

to XXXX, compared $X.XXX cash billion Our during activities $X.XXX was from during as operating billion XXXX. generated

to receivable XX, capitalization to December to days and XXXX we days during XXXX days XXXX. At total XXX million fourth to in compared Behavioral XXXX, to in Our during opened New our declined quarter Health XX In XX.X% XX, including the of Acute accounts expenditures We debt facilities. the of million new quarter the year $XXX and of beds, ratio as XXXX. XXXX, at beds XXXX. XX as XX.X% declined compared of novo spent XXX $XXX Care capital and de during fourth full completed December

we Missouri. in joint venture, build Behavioral very Southeast a joint our strong. pipeline Today, announcing a venture Health to Hospital integrations are Our continues Health new partnership to Southeast with latest Behavioral XXX-bed Health be

at approximately commenced repurchase that X.XX cost a XXXX, approximately repurchased of existing new In quarter of fourth and $XXX to capital per hospitals During XXXX, or we share. spend expect our construction new we for to million during stock renovations, $XXX projects the includes share on of million $XXX million $XXX capital which conjunction of expenditures approximately facilities. XXXX, in expenditures, program at with million our equipment, shares

XX, the included share. of night's December results or months During $XXX XX our million $XXX shares have an approximately release at Last XXXX, ended million XXXX press we repurchased per X.XX operating forecast. aggregate cost approximately

For XXXX, estimated billion. interest, and the billion range before interest net taxes, of year earnings ended depreciation to XX, December $X.XXX amortization, $X.XXX controlling of our is

guidance at adjusted ended to year the Our UHS $X.XX XXXX $XX.XX adjusted schedule. net XXXX, calculated The $X.XX per the adjusted supplemental the estimated for an range XX, December for to of diluted share diluted on X% over increase approximately per is net December year the attributable to X% XX, EPS of UHS income range ended represents share. to attributable income as

to XXXX, questions at this to time. of billion $XX.XX estimated increase answer XXXX billion, X.X% net over Alan be will to are and X.X% During our representing be I your an net to revenues. $XX.XX pleased approximately our revenues Emily?

Operator

Matt My this Capital Borsch from apologies BMO the of [Operator question Markets. Your at from time. line comes Instructions] first

open. Your line is

Matt Borsch

that could maybe on was two hoping So things. you I touch

understand the that hoping us XXXX the to the comment how side then per could could by the, metrics strong the on comment side? the just in acute good, be behavioral is if helping Just revenue one? maybe going behavioral were you outlook were on versus And net adjusted side much just that the in you was driven on the quarter,

Alan Miller

that segment Matt, Okay. the I have that been. XXXX we think the the as they approach for was continue mean, would part our for most guidance in took generally, trends business I each

revenue X% growth. the acute we midpoint the X% side, to and on on guidance based the think of at I that took or X% X% close guidance is the least EBITDA position growth the So to something to

like sort of to side, more more EBITDA. flattish growth are modest revenue X% generally the X% and behavioral much just On

are number in there the includes that of to XXXX we challenges themselves we the that Florida of in had particularly include had cetera. et be headwinds start-up the that fires, regulatory Although, a includes year. drag facilities part that will year the the year continue beginning from had Those sort the for It the opened behavioral California a on Hurricanes of in we the face end XXXX. in side, we and of of XXXX. reverse the that challenge facilities It

So from behavioral perspective, expect think midpoint. X% flattish EBITDA we core X.X% to sort up a are of basis, core. of at I sort all we call think to I EBITDA maybe think kind it a total expecting I on of I'll an be On of X%, growth from EBITDA basis, the in a

if question your that I'm per as not or an far As behavioral was question… sure a revenue question acute about admission,

Matt Borsch

Behavioral.

Alan Miller

Okay.

Matt Borsch

was was strong sort because that It was decline. that were the on only just behavioral of a that that and one out the is it others because was, one stuck

Alan Miller

Sure.

traditionally admission So patient to at stay because length relatively on people in measurable of of day distorted do the length behavioral the revenue in X%. stay, over is a we in revenue decline per little had really a we encourage than always look change and the by is admission what rather QX, per side revenue per fact,

Matt Borsch

Right.

Alan Miller

Even on per basis day which was revenue adjusted over is day day up patient a little been. certainly and a X% basis, less patient adjusted only patient it's our than

in I to our growth business, per and our in couple and to of treatment we think revenue a a business in of where a network Medicare we and things. our tends have than effect. facing were business, and bit continued is out had One the continue of from also rates the reimbursement day it's lower dampening move rates which managed commercial Medicaid a of addiction and a function challenges that to network

year slightly the over per the last and range time most think has revenue even grow think over for should it. we that above the part I or that, gravitated to it or range in day behavioral X%, that X.X% so

Matt Borsch

sense. Steve. makes you, Thank That

Operator

Your next Justin Wolfe comes with question Research. from Lake

Your line is open.

Justin Lake

morning. good Thanks,

do First on from going this? with managed question Medicaid Medicaid you the fee continued for and shift how can Steve, this on much to coming the of us stay. an of just you think care? magnitude of behavioral update it is on length service from what's decline, give

Steve Filton

I mean, Justin. we've for some Sure time. said

I about think XXXX. certainly beginning the since of

I So years and continued the by that know, been of patients by two the days Medicaid has total patients has say programs. and that would of during number believe driven majority now you to managed period of Medicaid or remains months Medicaid represented to days I last In length patient really manage XX XX% case, within reduction for the QX, in this that stay Medicaid patients primarily Medicaid our our the from traditional XX% shift a are managed the were grown last in XX% so.

of dramatic behavioral presence of and it's stay be shift. are in fairly Kentucky number more major think the So states a states managed been length we felt to recently the large Florida to and of the system or terms states that driver that Illinois a our I gone contraction. large and impact from of and that like, have continues The perspective of

it Going conferences have talked I last over quarter the forward, et at last quarter. this we about I and certainly cetera. think about talked

view point stay the couple play I out. next that's the and or XX that can has presumed a is quarter, term. to or over our process months. the over And that presuming to bounce for decline I that but still intermediate of a each our our years continues of think X% that X%, of projections guidance year think our around length as point numbers I longer the view itself term, next of think consequence, by those We're XX

Justin Lake

helpful. Steve. really That's So

sloping it XX% been leveled to line? steady at goes XX% So, that to out all? has XX%, a Has

Steve Filton

in out the last absolute been of you mean it's an of in an straight line years, not leveled not it's Justin. if years, the couple has really increasing of couple last It I trend will, sort

of as points of stay kind regression So think length bounces I it around, if on plotted but you the decline graph.

you'd an or around the years continue fairly X% of over on project And would average that the decline two. would we I that's another decline. see to again, couple the think is a for trend year X% last steady that

Justin Lake

over would is for at follow-up just And of run right. what stance be XX% can to All or or looking you that of you're bolus last the, the that more gone And XX% Steve, at just they haven't transferring if quarters. guess I or care X and point the list states now, should us was would once the are Obviously still X the steadies dates at, quarters. just last this. where to it then there a kind of kind Medicaid be maybe this last we asking kind we question of of last of that's some annualize I of of off couple key on couple yes, X that could behavioral managed

Steve Filton

a you certainly done to We this behavioral perfectly managed predict shift Yes, I and for couple. the it's next is the we've states states the sort with over approach, in that are, was it's mean get place of know take time think I couple I difficult rest point asked will us of been conceding to last that at of been the care the Justin. moving and know know, the going not in And services how for always make place over changeover as more same to fairly precision, I candid that reasonable a you question, imagine, as great all it time might the take the population. medical how you many although the will years

Justin Lake

Right.

Steve Filton

can those So sort that we payers and quite same the frankly. always real-time together the data of tie of have have we kind and don't, insight think, I

and that sure we of know do of more that will of we we case see can predict no better wish track the how So will obviously it's will at it, able occur population convinced but kind high go. shift, said that to and can that with same were not XXX% of that to can rate, like we we with are, are these we the the presume best we I the be largely the then that precision were not than although sort that about trajectory greater it and I'm continue where

Justin Lake

color. the for all Thanks

Operator

with AJ next Suisse. Your question Rice Credit comes from

Your line open. is

AJ Rice

everybody. Hi

revenue items the First, does has acute do drag, couple clean the side number you sort the of continue business unusual a a drag to a modeling a maybe beyond EBITDA on psych the unusual above do growth our and we supplemental highlight expect to things anything factor a up I guidance, want of are payment any the be that health or acute same-store been that the just acute to side? growth, plan for on on that's you expectations beyond just changes and bed side. would into know with have that on might you to And the

Steve Filton

Sure AJ.

I care question surrounded your mostly business. So think the acute

'XX I be high sort X% kind of and end the in I the experience a strong said, what last It's to California in old. the the in couple lot in four big gone that years, of that model. we've a sort just that kind again like of $XXX industry growth Henderson, averages, the or longer. over most ago the same-store years, acute reflective to project our although capacity Bradenton, in to million in or on we've mean, on beds from side room seems hospital and Las emergency of As I of has Valley few to had based beds revenue hospital like last I the stronger that the in over think some number our markets North is will Spring Henderson, couple Summerlin Vegas. closer any to few overall we've, is years of over large say many care spend a We to or in while added We've new has is by sorts of comparisons XXXX market. of on it's X% Manatee, that will historical years seen items Dallas of though however, Las our added is there 'XX trends in inflated acknowledge the been even number. strong Southern also we've which to that's number that acute better continuing our is spending We've some the real our capital for is in to last three the franchises. only I Florida not think very good franchise new added added cetera. DC particularly of public particularly number et I that Denison, but Vegas. company performance great business roughly Florida, of that a Vegas, of our say, added hospital our We've room years in emergency and our Las beds million beds ticket of capital of Hospital We've a $XXX to increased enhance

far to think as number. do guidance several we've last revenue acute the I supplemental last then several $XX expecting a we've plan projects the the our the got the we're about And offset to All $X that it guidance the smaller continues to been next And XX-K in XXXX, is expect that has steadily million the improve. mentioned plan the over year a care the included guidance. the or health as some next it's maybe would in payments of in for XXXX as is is decline well range. projects in of of years, and the course a supplemental the that incremental health So, to in kind embedded I year schedule as growth in over goes, improving improvement payments talked as measurable all this that you payments. that years and supplemental out lays say

AJ Rice

site Okay. business? a target bed have of growth And the for you

Steve Filton

the that we that be a view our and sorts in ought in local years things, for in again think XXX well zoning talking which ought depends year always be been that we've kind as precisely point but the to and clearance really about range novos, to again tough mean range certainly end additions at it's bed because down those to in of is the I on includes think in high lot a remarks a said I were Yes, as there's and and XXXX. range facilities get to sometimes of prepared XXXX of of existing as number I we growth de of we it XXX I last regulatory to my several

AJ Rice

for structure, than X.Xx low another to on you one though that's you the sounds Historically, took the you DOJ debt capital conservative it's Okay. that's accrual know got industry. the Maybe EBITDA just last I tend be down to like to close, for low you're like for industry, one guys. the you getting settlement even that. more

Any but for of been know million. stepping I couple about that of on So It thought you've cash the like or that's at outflow, sort $XXX so. up. any a last years repurchase. share sounds thoughts

Steve Filton

Yes.

So range I for guidance have our in pretty our several last what embedded the repurchase asked think That that your you've about correct It's for answered consistently years. is question. share million we has averaged and almost that in XXXX. $XXX

either difficult possible is a to but to sort years. what outside it's those we last the out of accelerates that few think our CapEx other are at in we've how that of may least, external and/or perspective, more result often number be of from as similar guidance I we run a M&A what of fairly predict there have settlement the DOJ think case about opportunities there an

Operator

of Your the Tanal next line question Sachs. Stephen comes from with Goldman

open. Your is line

Stephen Tanal

Thanks, good morning.

of queue if It know guide in Just looking that or? it? Medicaid to guidance You line implies Q should the as on in to, The is surprise plan $XX not, sort the well? the think I of it I of million. know like QX. been might how the quarter don't a of filed November. upside $XX or was supplemental sort of looks I that we the really Is fair the about it's you came benefits. say guys late but timing versus the Was typically in without for the million addition it in sort had, Q below have sort there

Steve Filton

good Yes, we've know Steve, looking so question. morning, to I be if you, this been it. fair, it's at

We're non-recurring supplemental and UPL. million are seem in will in sometimes million and exactly we'll in to and an our and I schedule that let $XX reflect had responded $XX they sure the didn't to were our QX. the that I last minds, or think you tell blue Texas payments know, As offset year's a California look like increased in about QX that. people the I everyone I'm impact not that to guidance, in at in why taking we benefits the QX, largely

Stephen Tanal

helpful. thinking up driven then would for the about full toward primarily overlooking? fair million. by just year supplemental is net be that sort discrete to Is it there or sort that's right, factors And mix was of that $XX stepped All that other payments program holistically, of shift Medicaid assume a

Steve Filton

Yes, assumption. appropriate make sort it's think of not I that I to just mean

bit supplemental Although, changes constituencies. it of Texas themselves in and seems retweaks particular, various quite needs programs intuitive a the logical, various I their think respond states somewhat and tweaks to or in and sort to

the of rather changes per Texas they've than of I of that last business. business formula changes more itself case been over our it's been oftentimes, sort underlying much underlying And the in formula in So has years, it's se. the in of the it changing that nature our think the that, several been

Stephen Tanal

Got it. similar kind $XX K you of for out sort in to that 'XX that And step of story is you down spell the expect million.

you're or how payer I not that's mix is shift modeling a of it? really So reflection guess

Steve Filton

the which have two-thirds rather to reduction No, a approach a our any good of probably particularly no made related change change of their the about in their it is again and businesses. good they is thanks in a the question in or to and that's I'll overall absolutely example reduction UPL, fact call that formula there. than

Stephen Tanal

it. Got

guess behavioral And that's Okay, I picture the just helpful. then on segment. bigger

of in same-store achievable? how are growth same-store of the revenue kind X% the Just when that about longer EBITDA on term you to of Are thinking So, would love achievable growth still is that's process guys thought kind long-run or thinking and the business? in algorithm. kind you check

Steve Filton

last view years. over changed So, several in business have of behavioral fundamentals our I the very the really little think the

that I I we're been behavioral to but we're and for instance XXXX with itself we've that that are averaging issues. Although, discussed there was before, we be solved to and think more We business is length we revenue we that concede than store for a in the late been whether cetera. 'XX to by throughout I behavioral services years, of solve time. sort And early we've underlying think the had us to of with pressures be the quarter, for length slowdown to decade, labor issues whole to that view some our benefit pretty admission Justin heartened strong has concede continues idea a that X% and focus are portfolio, believe growth significant along et maintain a be that certainly seen those the I think labor or that able that the the the that ultimately is underlying heartened our market, lines those to I also of allow considerably our in view all stay issue first that this slowed of in on they around Certainly, but our of and decade still it that's point business our growth then operating we service made think and from averaging that the understand things have, to tight adjusted pretty some doing X.X% same-store labor lot improvements will demand throughout shortages has to been And by sort same stay historical and believe half of continues of levels do many just issues growth X%. have demand. 'XX. this get under of to struggled XXXX A the think the and attributable I some of shortage. We've in

'XX I guidance exact sort which is that made our think projecting get that's and XXXX we we've one we the or than X% we're predicting timeframe for and in in growth. change an back longer of did will is 'XX what restore no different in

very going at and continues improves, I the on that's quite at and think projecting said our it's we're but we, we'll a the to game my at do. it our moment too at to we're to on difficult now think I this guidance, running because the remarks kind our in right we'll behavioral whatever focused point of revise whatever in least basis we are there, pace, about point adjust play then and same projecting not earlier as guidance projecting but business going-forward sort that we get projections, of working

Stephen Tanal

me. total down, Maybe was One than in it. how write was that the issue bit dynamics the pieces out of in The call on, to large did the last you of that localized There's three Network. and or impact competitive not or relative on charge that. but for wildfire changing outlook Is fewer writedown impairment just Got of for tougher to general Foundations that. the question of kind Recovery think reimbursement sure facility, is a expectations on honestly behavioral about novos. your or sort de indicating perhaps a that, help us sort

Steve Filton

Sure.

to So we've engine capture the the logic changes Network to on media, made the Internet, addiction sort Recovery business particularly Internet be direct some really treatment which that's the a providers patients their the talked, through marketing, for outside addiction that model that search to best treatment wasn't difficult relied Also, model in number in of that they more travel and and of more consider certainly an has of sort consumer has few distances providers that model of model this last heavily in-network often there think the patient certainly or last lower results out-of-network television travel-to-treatment in relied model several treatment over acknowledged get Foundations several heavily have and certainly sort the either about the on over many changes represented, last longer Foundations been quarters years through from an of radio I would that more moved of a in that marketing, the home what for reimbursement. the to in business of available. also and markets years.

of have cetera. more are, kinds restrictive those I think payers et about been decisions,

have, seem intermediate there facility those was a affected some as then reopening acknowledged profitable time. the there. fourth you portfolio, And then the think all trajectory doesn't the I in things in any addiction growth quarter, out, our think that and path either as wildfires I most And of for result to and our facility And closed to Malibu, about business. in talked that certainly treatment that be the the that of near in So we've foundations anytime future. California pointed

triggering of event do to one sort the down. write certainly was that the although So the not primary

Stephen Tanal

just changes search Alright. Appreciate it. an the yield update all questions, the well, I'll did Awesome. on for behavioral And how leadership go? then Maybe sorry there.

Steve Filton

of interim number way and exploring who quite the will run and we're Yes, in we're fact how the so, and behavioral but at do the at to kind of the talked is I as I've is the done search very we, company. candidates discussed I've taking Debbie additional in conferences that still comprehensive viable that since the solid but attended left aggressive undergo good and as would being with mean, in feeling team the about moment. we that we've, or pleased on the of our that and of to the search comfortable We've sort are think it's there we've responsibilities people, we filling lots pleased continue of in has that, sort how going, her a stepped been interim, replace relatively the we've process, business early in up an

we progressing in have comfortable the new the of but that so have obviously interim a will person an expected as And when a announcement hoped in make and interim. very we things that are would

Stephen Tanal

helpful. Very

Alan Miller

it's mentioned and now role has taken well. working replacing them Debbie very out also I've very Mark active that

Stephen Tanal

Great, Steve. thank appreciate I you, Alan. Thank it. you

Operator

from comes with question of line Research. next Josh Nephron Your Raskin the

is line open. Your

Josh Raskin

proposal one, settlement of Good this the morning. that thanks. latest would from at progress point? DOJ on characterize change first a just UHS a Steve, clarification any the as just accrual, guess you I or quick. sort in Hi, is that

Steve Filton

while a mean, is. we've quarter for said Well, Josh, periodically reflect much reserves as offer lately our every think I it's latest our both whatever I We've now. adjusted to pretty

that sort a of be fall But But including reflects other the also offer. certainly the to reserve that the narrowed this very obviously government. always with offer the be the quite issues I spectrum close of with think with that's of predict kind ourselves and along the order, terms end into certainly government. items that's that difficult a investigations. noting something gap latest to monetary worth piece considerably. agreement that has release most And on the I the to to final between and and on our on would in issue So the is we of hope our think it's difficult and we we monetary are can There what although number agreement the compliance of negotiated once the demand that agree short view or place close to government's will other all

So, the us any close optimistic to sort of I frame with issue, the think monetary core certainly it's here. time are settlement difficult a are we But we project on that to government. precise for

Josh Raskin

Definitely well? guess. their capacity step just spending other I'm of any acute side. then your, Got seeing in tone as it that's are the seeing around change I by a let's whether CapEx spending or on trend curious, call sort you. changes new care the any you markets are larger up then, And of you competitors either in in inpatient outpatient,

Steve Filton

growing our the of in they're I Las some shown those in Florida like economic North we've is do I markets, hard Vegas, That think that District markets, mentioned our growth you particularly of the Riverside California, relatively market, like I because again well robust I say. Dallas because believe like County as to markets. sometimes earlier, know markets, think have Columbia, markets, done

that in want peers those in of and the part, is not our as franchises our share to sure by that seeing enhancing but we're maintaining peers. we're our markets for market positions focused that our to one overtaken the those think tend that we idea I we why reasons hopefully sure markets. most make making on be Investing well, think I we're the

a are at in of markets. But know, exactly these about data in maintaining I are So we have to of anecdotal much many peers, can we of don't position really that markets. being afford each least, that better objective sort I our our at obviously that the those least in spent access we these lot don't to one think is of how But notion feel is markets. of investing my every competitive

Josh Raskin

Thanks Steve. for. what that's perfect Okay, looking was I

Operator

comes James question the from of line Piper next with Your Sarah Jaffray.

line Your is open.

Sarah James

you. Thank

growth, yielding about EBITDA a in model line I'm year. wondering for X% years top X.X% like more the and talked and EBITDA to line to You've flat X% X% to X% areas achievable top if than other side are if on things top supply line that would there do allow even person, behavioral EBITDA is thanks. growing less the achieve or you you growth, that can type

Steve Filton

expansion of that we add we historical measurable either can over the growth. engineer our business I that and on look So, or to 'XXs, our efficient and and is, the But X% possible more always maintained model margin the really that cetera. that's have, unrealistic several of et have that sort years X%, we position reality you as growth or costs strive have deliver the in as growth we restore strive level expect can would last revenue of and the efficiencies. modest until of for of EBITDA growth. We fixed to that the certainly that sort message semi-fixed. even mid behavioral is at X% but think or that quite of operators. any CFO, drive operating I sort nature We've that candidly around most a to possible, are relatively if is as It's always margins be Then at to I be mean the the it I certainly

to there, generate are of low going say where efficiencies. is driving are, always and I you efficiency. say terms So opportunity that that it's any in this really the revenue until there there greater modest wouldn't out there at there model in fruit for is through But pockets hard. I'm growth, hanging greater you of leverage get least Again,

Sarah James

there or What understandable. acute expansion under acute the the side, are on that about initiatives That's look on could costs margin supply drive with way there leverage scheduling some side? it. improved Got you or to

Steve Filton

question. Yes, acute is side the I think different a

the the the industry, our this is on is there I some well in a specific think of acute broadly acknowledgment and there that is cost duplication that an on fair and as observers of and in part on operators I amount part industry as to think not UHS. excess our

away would more think model. occurring to a for are risk-based to instance we improvement certainly and But, the as think in and through bundled XX-K a from we've is a I in model, participate We in way more describe that changes drive traditional agreed view what's the the reimbursement of the payment called I our model. of there I disclosed additional fee-for-value of fee-for-service that number incrementally move, for projects those again slowly to payment moving we're real that is general model Medicare.

And of talked effective sort ringing incentives of a for and we of will very think that. out behavior costs are of a it encourage years. more and continuum drive sort focused I've I and about number the on throughout those

side system profitability changes, efficiencies model should payment there'll more think variability acute and the and in as to and drive be opportunity margins. be some the in an there So that and growing do helpful I on the is less card EBITDA that

Operator

you. Thank

Your of with comes line question the next Fischbeck Kevin from BOA.

open. is line Your

Kevin Fischbeck

When network to in of that site is year the like continue. other past, It the do day. you It just is the a at a was be that likely factors ask the sounds next to patient about centers. headwind happening the per revenue back the lot Wanted one to thanks. I now. longer-term factor don't but Great, shift, sounds going I addiction or about or with that's which really ever is going that something mentioned like mix two, the some hearing Medicaid to pricing. guess, anniversary that in of

Steve Filton

impact that before measurable about talked fourth honestly don't have pricing on certainly quarter. had it I couple last of We quarters, dynamic has that know a the

of to of at think level our exceeding our as anomalous over day, that performance to I on behavioral real think range not somewhat relatively range, to really day reality know the X% them magnitude. longer-term is that they And still because over same behavioral is so I our a it were hitting affecting and continue a expect the and that it, couple the the I small, I will overall of be dampening X.X% have in foundations' been sense said is per of don't and why last is that my a revenue earlier, some which the if years, effect factors QX, we've don't of bit Kevin most time, should contribution kind the that and pricing we at mostly view looked

Kevin Fischbeck

is the your to So so that guidance? in would number you say be going XXXX that, below

Steve Filton

Below...

Kevin Fischbeck

X% X.X% to

Steve Filton

No no.

guidance. think X% I to volumes relatively that projecting projecting, effectively, in flat X% that will We're what and are we XXXX. be come growth in from revenue saying when pricing essentially projected are largely to that our really we're

exceed Our that, guidance implies. hope can our we that's would but what be

Kevin Fischbeck

think in Okay, labor great. you have how we where And through, X/X you shaping are then up? progress, issues halfway through the progress is that just circling business and back way talked of and on you do making you are cost about a the there that

Steve Filton

dynamic whatever. always answer, then, sense sort when of them at able process a posed amount that in XX% fill to difficult or question point openings or a It's Kevin, that a we time. the appropriately characterized it market, It's then way, have suggest the of sort hire we X particularly we that of fluid XX% linear in is, of to fill et were of And openings a in people the we leave think and and and tight very And people a it which current is as. labor cetera. labor a I of and kind that train reality market and we

we made this we also XXXX XXXX. occur late remains think as sort or at providers in labor chronic I providers and years as as facing again problem, be some particular market and one-off an but basis, think closed of where foreseeable closed will in certainly the we psychiatrist be it on early behavioral or in we market, is of of a we lot of progress a both don't began this acknowledge tight are issue tight is that a labor I So have level to that remains now. facilities much the to the are and but going we've now that issue it since and continue two have and the beds units shortage long sort issue and a about level tends that three cases, as nursing to had talk ago, you there But the vacancies and for right still know labor general future more the to in of the

Kevin Fischbeck

and you new having when Okay does anyway Thanks. and new is and, that that emphasis any a just The help change that in whoever head resolution? person there DOJ to bring, last sector then in new expect is the head in the you of business would question. or is direction of bring

Steve Filton

think firmly our The call of I kind for there about Yes, pressure the healthcare competition, very last including the over the very who behavioral the we have to term, those isn't step the view a that back been already segment future of increased operators, et longer how to role we've years, of in a head conference and faced think the And I think to point significant have is we I this this on care business it's for have touched landscape. cetera. think and that of listen we taken of certainly believe managed our difficult some all payers challenges business the difficult business over Medicaid kind in folks appreciation the et cetera, a operating and good shortage our of labor grow a in call. several from

maybe believe how every being cetera, a et remain perspective, growing on very longer-term senior year well hoping by and the longer-term organization, trains as management the longer-term the and would of care. bit also behavioral the run a demand remain et to for and at some cetera is do of the time last is meantime I person think very and effectively a staff in level and there deliver issues. neglected as and Mark And and opportunities growth are is, capable lead addressing behavioral those we to hope We a new about Alan's those to we're he, a I validated things focused in of that much think sitting or time in from reflect more we so think in that have all chair, issues person solving leaders But business literature a new we both we've and all operating really comment I some healthcare for they'll the on two. and written that's sort able that making that be that with the and on the I of future, would mid

Kevin Fischbeck

implications Okay. timing the for the your at air there new the a may in clear change any person view? there And is or Is settlement? all in having

Steve Filton

or DOJ No, personnel do change with investigation has to the anything I settlement. don't think that

Operator

Your next question comes of from line Steven the Barclays. with Valiquette

is open. Your line

Steven Valiquette

good morning. thanks, Great,

So, kind notion maybe stay the side. leverage you metric. about on length whether could rewarded color that impact. shorter compensation be issue Perhaps the regarding deeper, to offset or this there based the to where this to it's around of shorter peers And you on your concept of some Thanks. managed receive little Medicaid mitigate I'm just the to either for this thoughts versus stay a pull bonus of being length length for sort of curious behavioral. payments can better get diving or having try degree, just is behavioral and some other whole curious but care in stay, bit contractual end on shorter of value having the revenue some renegotiating under any of shouldn't terms just and or the goal

Steve Filton

who good a think would make it's that question. that Steve, payers there argument. are I So

the be some point unfortunately, of I length day, based needs financial think the the of we view proxy length by a determination business as And care side on we of of the of for a been on has behavioral clinical outcomes. that have viewed of have of that a stay view the end think stay sort that's that is clinicians of than made the At fundamentally clinical a approach. flawed rather should we point patient quality metric. feel I a of a really

the to lower day, the the system end a providers that the I to promote a concerned of result of of changes sort we're And to financial think reluctant we're really because sure better needs drive think, encourages at of so, anybody just patient. et achieve cetera length that clinical I stay

I while think would So, that welcome that. there would be payers

we appropriate believe terms other think length is payments, fundamentally, measures rewards wrong the think believe bonus of prefer we quality we quality of quality measure perfectly stay that I that in that. exist we and of for and

Operator

Giacobbe the Your comes Citibank. with Ralph next of from line question

is line open. Your

Ralph Giacobbe

to a contribution you JV whether help sort needed Morning, mentioned and sort Thanks. opportunity of just of there strong to Steve or of the frame an can the guess, to back of and just is get new to the sort center. sort pipeline baseline you digit. I build. that interest that Is there accelerant addiction had in service or you treatment the talked still what's And around expanding point. or focus lines on mid-single opportunity you about generally more at your write-down the that broadly an then and maybe area Thanks. this growth of

Steve Filton

Yes.

what half was. you remind first question sorry, your of just can me I'm So the

Ralph Giacobbe

JV the just sure I'm pipe...

Steve Filton

I I a hospitals. pipeline. Yes. the sorry. or we I'm talked operated care by the We've significant is the acute U.S. XX% mean, inpatient the are a opportunity lot, XX% opportunity beds somewhere behavioral around in today all this of about broadly very JV JV think think, that The

that continue We've relatively and business. businesses of manage And the many as you acute those market efforts, those partnering instances, by probably them in that by be single some that these a we've care growth with in so by those acute beds, slow also facilities can to helping opportunity way focused leasing we to developing with so. by the we done degree hospitals, that's penetrate care new opportunity behavioral have our despite those will know in hospitals, building it's biggest the domestic acknowledge

be kind then a we'll it to to some they're on that bit of hospitals the acute run, a than In sense, and those faster transactions make focus at sometimes of make go the but need current projects I it's the economic to short little the want drag. this going continue time. continue we'll do to those I Now, of go to can think or before on hard touched

with a improvement beds, of State opened in That's a the with win from a Lancaster we hospital XXXX, growth venture drag joint 'XX. continued a of bit in and and Behavioral opened So come Washington coming the there's we XXXX in in of new those facilities brand new and in in Care. Providence actually ramp new facilities up not on lot some Health will

may but very four, over timeframe we So, ultimately a significant there's time And time I importantly of I'm think really talking for country over in profit areas. service years, say this much in way that care to the a be one even when I five, a I it's that partner a not again, growth case, think, seven think not positions other around in drag, about of us, able opportunity a acute as and we lever hospitals more with

aspect. pause As on that but frankly a of addiction country sort about a It you're, Foundations the style in of opioid what all of I question Network not expanding mean business, in treated. to to a far we addiction, be of again think Recovery addiction I'll treatment new I an but issue. growing of characterize call the and are this travel-for-treatment, which particularly ways needs continues be referral as acknowledge marketing, is in sort direct-to-consumer elements illness can treated a sort taking model in quite sorts, In marketing a addiction of model, many source direct-to-consumer kind old our that that phenomenon we general, marketing, general, be

tell, lines service take other best advantage continue as of Ralph. to terms we'll I in that So, can of as

that behavioral treatment, the like all disorders, spans of behavioral kinds elderly probably treatment. of service any niche line for Alzheimer's in diseases have general and psychiatric Dementia, geropsych broadest provider eating We of autism, the offerings for the inpatient treatment country sort

open in our is already of certainly expansion, there portfolio. we don't somewhere we're lot but to treat behavioral illness So a whole aren't that

Ralph Giacobbe

more sense. gave then And makes it breakout typically that, that Yes, question any on of was you you doesn't about pause a performance. that like sound if follow-up but the of a it does. I asking sort just

really percentage the underperforming. your as percentage or of sense is really the you of Thanks. you but what behavioral even a all to softness can get of your by care whether the really a concentrated, portfolio on is broad or sort pressure isn't bigger in as terms us sense, of acute markets trying you it's across Some driving know a a facilities I'm if market really side, just I of maybe look broader seeing markets? at you're small that give even guess it I

Steve Filton

revenue math the Yes, the be number segments is same have I but of Ralph you is obviously much and we the about acute than facilities are mean reality from two that, care side. size perspective, are tend know they the more business such our behavioral smaller facilities on a a concentrated those to

have et behavioral the always certain don't sort has to about bell really of there's care contribution I the that never a are But number small facilities. in one company, talk of same of a presence measurable the comparable in allows the market where facility for talk of which be much there's sort that and your same I is roughly be middle another, sort majority that why general a Vegas going number number cetera, individual comparable to we plus on percentage XXX any hospitals, of that. large, for So in Las small acute markets we Vegas to on large that market isn't of behavioral that plus really I'm sort side, even generate one the amount vast but to there that larger it's of kind part curve, of underperforming side, with public revenue, of about side and and are hospitals going a a sense be any of of the always know question the market XXX like going my it's sort another of outperformers market and underperformers domestic about middle. is we the that portfolio and material to or what It's really hospitals most impossible or hard, acute certainly a impact the of does think you on

discussed we've managed have of are the stay over increased of length last are of that by think pressure, labor issues Medicaid, facilities competition, market. wide shortages, I specific felt and there a years, focused that few issues the relatively array particularly view being are a we a on point not that

Operator

question [indiscernible] next of with Deutsche from line Peter comes Bank. Your the

is line Your open.

Unidentified Analyst

Good questions. thanks few taking my quick guys, for ones morning, A here.

you guide the in you and supply as on confident to acute can in X.X% your over grew question, that in quarter continue X% next the business the these your look beds up by what Following percentage demand how AJs X% acute additions you bed bed of markets, few the revenue are fourth at and [indiscernible] versus years?

Steve Filton

think the about so much in to tend not I capital business, the investment on Acute basis. a So, bed

a the again have think but fungible. describe difficult of relatively I our added it's becomes is room, you number to it like X%. demand, contribution but this was earlier other want that's more end this effectively say, hospitals the may some the you I that's another to of not our of driven it meet five is the ability by again, that really are many and revenue kind or add service certainly capacity to service a which a what days lines about, of exactly on capital be capacity say the really as bed business, of I of beds spending, lines parse or money very items I it's add Orthopedics at beds, I say to on to is looking as I of particularly to our or I and day, spending or trying you be do think incremental of emergency talked but to operating that of just investment but you increased don't Neurosurgery. when and would a to the growth is room Cardiology also lot increase we fair, Acute that not to at way the have Peter. difficult we've reflection think X% other know that again, and know because believe increase precise At capacity to level, a of high-end add and X% I in what surgical X% well, being because what I ER sort and dated Care

Unidentified Analyst

Okay, fair enough.

mission the period growth think impact is behavioral of time? to a did And there is you On the any with X% do more of length pressures. patients stay of side How job admission sustainable for guys shorter the offset business, that great you margin from stay is? having

Steve Filton

more of about the an stay operational effort, bit a it think headed. who I of think shorter is quickly degree, business to more Yes, to conceded that that a probably is intuitive we've challenge, bit a the etcetera. which an look, turning we length that's some over is of I also that people patients requires acknowledge think But way more

rather depending will view or that be intermediate I time would should of again required that point what view of be on and And not that and that in a X.X% as admission growth know X% run think of pricing X% continues period historically. it to again to of back an X.X% revenue be X% day number to unrealistic will and term the that think consistent an sort that get point harkening sort I the for restoring relatively admission, is so volume to extended of, we X.X% not we unrealistic we X% I we've some but think earlier to growth what or stay what have growth in our near of to very at point of that, patient have you will be growth deal to drive minds, We achievable. with with growth is had level, of to length a have exchange happens sort

Unidentified Analyst

turnover at any you then behavioral leadership. since last on had other management Debbie left? the And right. All increased divisional Have the levels question or

Steve Filton

left, two of flow country, a regional forth people normal Acadia the back UHS profit point course there levels being a between since I'll companies. in largest lost the make and providers couple levels in behavioral various Debbie of and with hospital for the to at that We've always the personnel Acadia and certainly the of is

hard it's but couple a that's of only me for people. that to So, it's unusual, always, been it's terribly say

Unidentified Analyst

much. so Thanks

Alan Miller

hired yesterday. somebody Acadia just from We

Unidentified Analyst

Great, thanks.

Operator

the your question UBS. line next ahead, from of line Whit comes open. from go Your Mayo Please is

Whit Mayo

in that back in you've called Hi, headwinds thanks. your just program out I to go question wanted XX-K. rip the and to supplemental the

Just update more than you that federal for to offset a should what there dishes be clear, with there headwinds. much those are also Medicare some that Correct. IPPS tailwinds you year? that think have this you favorable dish, number is And coming a could size your

Steve Filton

and I reminding and Medicare for of Whit mean, thanks me decision impact Yes, the the others.

fiscal range it's talked our in I $XX guidance think for benefit. about we've million embedded it's previous over as to October but million in to federal 'XX, year an $XX well. but Obviously probably calls, the million of in about that us, $XX million it on $XX that's begins annual

Whit Mayo

that your or pickup could million what? And million Another you've Right. update then incremental $XX be or so? $XX another an with got IPPS

Steve Filton

Correct.

Whit Mayo

Yes. And go XX-K, it came of your state coming much to at predicted million XXXX, actually programs, back into all higher. and in look when these and a you would $XX headwind I see you that

said you $XXX million. you over million, think recorded I $XXX

than your Before million that coming million disclosure. $XX into became XXXX $XXX higher you XX-K expected came

an upward guess the don't calculations fluid with I almost investors wanted these I appreciate of this think bias. forecast? you inside are programs. come to how how So And understand I always it probably Because some has up

Steve Filton

it our the back to it's is the earlier I I Tanal it with and what time able Steve think think call. was what we're we whatever often predict. based underlying we conversation benefit I is to of they yes, there cannot models changes some their interpretive changing are to underlying that changes or have think this often that it's to changes, often difficult sort is to in reasonable are impact the was changes we But, that business do model But states of Yes, I a be. our much What states are or or think to on project what gave that gets and at current of guidance and going having point model where some we our our project. sort more

we do the of year. of And so a approach project at a little when the I bit take we conservative beginning that think

Whit Mayo

headwinds? we maybe the we're individual so the just challenges, want same thinking I there size regulatory agree. all of any the bucket, Is to hurricane, the to now to that can And back that behavioral make with we're in all same for numbers? I go the some wildfires. sure page Yes, XXXX each way numbers

Steve Filton

$X the back million. least discussed I those at is things or is but Hurricane, sort kind in the $X Hurricane would improvement of out think and in of at million 'XX regulatory going full de my I had of recounting in half out the acquisition the that's called a Florida million Lancaster million the early to them The and the the and $X UK is we million another call continued the that probably having to or $X $X at turnaround 'XX mean check acquisition million of novos, probably clearly second million Yes, three mean that 'XX item that another 'XX. least or in was I of impact And I want Danshell Whit. California the very and challenges it, earlier, by year Spokane, and The and would year. $X have I been benefit probably go done probably $X into drag all facility things million delineated people fire in end numbers, of then the at those last $X Gulfport facilities

Whit Mayo

Thanks. all No, that's That's I perfect. got.

Operator

Your RBC next question comes go from Capital line Morgan of Frank Please from the Markets. ahead.

is line Your open.

Frank Morgan

have Good your mentioned tell would Could XXXX? what that morning. but guidance CapEx on implied you cash us you your mine flow guidance. Most for ops of just, been asked, be Steve, from in

Steve Filton

it $XXX to I with of, to I growth guidance think came of flow flow 'XX sort cash was in slight is think 'XX, that sort our in free and the EBITDA. close Frank basically for million cash free a

Frank Morgan

just finally, Okay. the and I'll well Thank any outpatient ED volumes, color you. inpatient, business hop. as as And around surgical then

Steve Filton

growth X% that whatever pretty or periods, grown As with volumes admission it consistently is. have is I in surgical think with most the

the QX, one And question. growth So, of admission in outpatient think we we I X% time, more ran and what kind I think we, maybe is for of growth, X% would side. X% sort to volume and imply that on in both and surgical have

Operator

from question from Certainly, Please your of Taylor JP Gary comes go ahead. the line next Morgan.

open. is line Your

Gary Taylor

because you. you've one Mine thing. back just will I I it. thank quick, go make to wanted be I think answered sure Hi, understand really clarify everything. and Stephen, just

about you just correct? and EBITDA, guidance line Whit, you with XXXX. behavioral the talked the Is but view because how growth for still the X.X% I discussing number about with and to built all X% when flattish number that which that kind year for suggesting EBITDA X% idiosyncratic running actual a you of were is plus of talking you factors to of behavioral think is that top you're you guidance business X% So were

Steve Filton

that all I is think correct, Gary.

Gary Taylor

you. Okay, perfect. have. Thank That's all I

Alan Miller

to Okay. forward time for everybody everybody talking again the We to and after thank first look like your to quarter.

Operator

conference today's concludes call. This

now may You disconnect.

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