LV hospital operator lowers estimates

Michelle Swafford

Tuesday, Dec. 28, 2004 | 11:08 a.m.

Universal Health Services Inc., a large operator of behavioral health and acute-care hospitals locally and nationally, announced Monday afternoon its earnings would be lower than originally projected because of weak acute-care hospital admissions and rising bad debt in some cities.

The King of Prussia, Pa.-based company said its 2004 earnings-per-share guidance would be lower than the $2.75 to $2.85 per share that was originally reported. Universal Health declined to say how much lower the earnings would be, but said its earnings per share for the eleven months ended Nov. 30 were $2.48.

Shares of the company's common stock were trading at $44.03 per share, down 3 percent or $1.66 per share, in mid-morning trading on the New York Stock Exchange.

In Las Vegas, Universal Health operates Desert Springs, Valley, Summerlin and Spring Valley hospitals, two outpatient surgery centers and a behavioral health hospital.

Universal Health Chief Financial Officer Steve Filton said the Las Vegas Valley's acute-care hospital admissions are improving now that Spring Valley's figures are included in company results.

When Spring Valley opened in October 2003, Universal Health said the hospital "cannibalized" its sister hospitals. Today, Universal Health said the Las Vegas Valley hospitals continue to face challenges despite the improvements with Spring Valley.

"Even though the absolute level of profits has increased, our operating margins are relatively flat compared to the prior year quarter as bad debt and wage pressures persist," Filton told investors and analysts in a conference call this morning.

Most of the soft admissions and increased competition that is hurting Universal's financial results was in McAllen, Tex. Also, hospitals in Manatee County, Fla., and New Orleans, La., are posting operating losses.

Universal Health said it would announce its fourth-quarter and full-year operating results in late January.