Universal Health Services, Inc
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UNIVERSAL HEALTH SERVICES, INC. BOARD OF DIRECTORS Alan B. Miller 3, 4 John H. Herrell 1 Robert A. Meister 2 Chairman of the Board, Former Chief Administrative Vice Chairman, Aon Group, Inc. President and Officer and former Trustee, West Palm Beach, FL Chief Executive Officer Mayo Foundation; Rochester, MN Marc D. Miller 4 Leatrice Ducat 1, 2, 5 Robert H. Hotz 1, 2, 3, 4, 5 Vice President of the Company President and Founder, National Senior Managing Director, Co-Head Anthony Pantaleoni 3, 4 Disease Research Interchange Corporate Finance, Co-Chairman of since 1980; President and Founder, Houlihan Lokey Howard & Zukin, Of Counsel, Fulbright & Jaworski, L.L.P. ON THE COVER: Hospitals from left to right. Top; Human Biological Data Interchange Member of the Board of Directors, New York, NY since 1988; Founder, Juvenile Member of the Operating Committee, 2, 5 Wellington Regional Medical Center, West Palm Beach, Diabetes Foundation, National and Houlihan Lokey Howard & Zukin, John F. Williams, Jr., M.D., Ed.D. International Organization New York, NY; Former Senior Vice Chairman, Provost and Vice President Florida. Middle; Rendering of Seton Healthcare Investment Banking for the Americas, for Health Affairs, The George Washington University UBS Warburg, LLC, New York, NY Network’s proposed new hospital, Williamson County, Texas; Spring Valley Hospital Medical Center, Las Committees of the Board: 1 Audit Committee, 2 Compensation Committee, 3 Executive Committee, 4 Finance Committee, 5 Vegas, Nevada. Bottom; Edinburg Children’s Hospital Nominating/Corporate Governance in Edinburg, Texas OFFICERS Universal Health Services, Inc. is one of the largest and most respected hospital management CORPORATE DIVISION companies in the nation. We have focused our efforts Alan B. Miller Acute Care INVESTING FOR President and Robert E. Minor on managing acute care hospitals, behavioral health Chief Executive Officer Kevin J. Gross Vice President, Development President hospitals, and ambulatory surgery and radiation Steve G. Filton Carothers H. Evans Senior Vice President and Michael Marquez Division Vice President, oncology centers. Chief Financial Officer Vice President Business Development We believe hospitals will remain the focal point Kevin J. Gross Marc D. Miller Karen E. Johnson Senior Vice President Vice President Vice President of the healthcare delivery system. We have built our Clinical Services Debra K. Osteen David E. Bussone Senior Vice President Karen M. Prince success by remaining committed to a program of rational Group Director Michael Marquez Assistant Vice President Moody L. Chisholm Business Development growth around our core businesses and seeking Vice President Group Director Tasha Hoffmann opportunities complementary to them. The future of Marc D. Miller Douglas A. Matney Vice President Assistant Vice President Group Director Admissions Services our industry remains bright for those whose focus is Richard C. Wright Mary Hoover Vice President Matthew W. Crouch providing quality healthcare on a cost-effective basis. Vice President— Group Director Paul Yakulis Universal Health Network Vice President Geoffrey Botak Behavioral Health Group Director Charles F. Boyle Controller Debra K. Osteen Raymond F. Heckerman Index President Group Director Bruce R. Gilbert General Counsel Martin C. Schappell Jana Trew Senior Vice President Assistant Vice President Cheryl K. Ramagano Financial Highlights.................................................. 1 Treasurer Gary M. Gilberti Ambulatory Division Vice President Shareholders Letter................................................ 2-3 John Paul Christen Assistant Vice President Barry L. Pipkin Joseph B. “Skip” Courtney Vice President D Division Vice President Acute and Behavioral Facilities .........................4-12 e s i g n e John E. Turner d UHS Development Company, Inc. Facilities Map............................................................12 b Division Vice President y D a k Robert A. Deney Richard C. Wright o Financial Results....................................... 10K: 1-132 t a President Regional Vice President D e s i g Norman King Carter, III Craig Conti Directory of Hospitals...............................10K: 34-37 n , I Vice President, Development n Regional Vice President c . , Corporate Information..........................................134 M Craig L. Nuckles Donald J. Pyskacek a l v Vice President, Design and Construction e Regional Vice President r n Board of Directors/Officers...................................135 , P A Betti T. Colucci Michael Urbach Regional Vice President Assistant Vice President, Development FINANCIAL HIGHLIGHTS PERCENTAGE YEAR ENDED DECEMBER 31 2006 2005CHANGE 2004 NET REVENUES $ 4,191,300,000 $ 3,935,480,000 7% $ 3,637,490,000 NET INCOME $ 259,458,000 $ 240,845,000 8% $ 169,492,000 EARNINGS PER SHARE (DILUTED) $ 4.56 $ 4.00 14% $ 2.75 PATIENT DAYS 2,950,681* 2,585,196 14% 2,385,034 ADMISSIONS 357,919* 357,205 — 346,398 AVERAGE NUMBER OF LICENSED BEDS 12,224 10,403 18% 9,870 * Excludes patient days and admissions related to our four acute care facilities located in Louisiana that were severely damaged and closed during the third quarter of 2005 as a result of Hurricane Katrina. Includes patient days and admissions related to our behavioral health care facilities acquired during 2006 and 2005. THE FUTURE NET REVENUES EARNINGS PER SHARE PATIENT DAYS ( IN MILLIONS) ( DILUTED) ( IN THOUSANDS) $4,400 $4.80 3,000 $3,850 $4.20 2,625 $3,300 $3.60 2,250 $2,500 $3.00 1,875 $2,200 $2.40 1,500 $1,650 $1.80 1,125 $1,100 $1.20 750 $550 $.60 375 $0 $0 $0 02 03 04 05 06 02 03 04 05 06 02 03 04 05 06 LETTER TO SHAREHOLDERS n a challenging health care actively explore potential Center in the acute area, and Ienvironment Universal acquisitions in search of high Hartgrove Hospital, Lakeside Health Services performed well quality facilities to add Behavioral Health System and this past year. We achieved to our portfolio. South Texas Behavioral Health record revenues of $4.2 billion, Our acute care facilities Center in the Behavioral Health a 7% increase over the prior in Las Vegas had a solid year. Care Division, all of which are year. Our 2006 adjusted We look forward to the opening among the most successful income from continuing of our fifth hospital in the facilities in our network. operations (primarily adjusted for market, Centennial Hills In 2002, UHS replaced Hurricane Katrina related issues) Hospital Medical Center in the aged George Washington increased to $157.5 million, or Las Vegas, a 170-bed facility University Hospital with a $2.80 per diluted share, representing which is currently under new 371-bed state-of-the-art a 9% increase over the $2.56 per construction and scheduled tertiary facility that is now one diluted share earned during to open during the fourth of the best equipped and most 2005. Our financial performance quarter of 2007. We also have respected in the nation. during the past year exceeded a new, 171-bed acute care We look forward to the both internal and external facility under construction in success of the new projects expectations, an enviable Palmdale, California, which now under construction and accomplishment during a year is scheduled to be completed expansion which will shortly in which most of our competitors during the fourth quarter of be placed in operation. reported disappointing results. 2008. In January of this year, One competitor in the proprietary we purchased the Texoma Quality industry is no longer public Healthcare System located and another announced a major in Denison, Texas, which write off and recapitalization. includes a 234-bed acute care Quality care is basic to Our behavioral health hospital, a 60-bed behavioral the mission of UHS. Our facilities, once again, performed health hospital and a 21-bed treatment philosophy is to very well during the year and rehabilitation hospital. develop an integrated team continue to operate at extremely approach that standardizes impressive occupancy and care, reducing variations to Successful New Hospital profitability levels. In an effort improve outcomes and Development Program to satisfy the growing demand patient safety. for the high quality services Notable in this journey that we provide, we continue Throughout its 28-year history to excellence: We are proud to add inpatient capacity at the company has engineered a that Wellington Regional many of our existing facilities. highly successful new hospital Medical Center was selected Construction on the Hartgrove and replacement program. In as a Top 100 Hospital in the Hospital replacement facility is recent years, UHS has built entire nation for the fourth nearly complete and the opening Spring Valley Hospital, Lakewood consecutive year. And Gallup is scheduled to occur during Ranch Medical Center, Edinburg will continue to conduct surveys the second quarter of this year. Children’s Hospital and Fort of our patients, physicians and In addition, we continue to Duncan Regional Medical employees to enable us to gauge INVESTING FOR THE FUTURE 2 how our services are perceived, to those in the community who which these pursuits are to help enable UHS to maintain are either indigent or cannot possible. At last count, 19 its high standard. afford insurance coverage. We are UHS facilities have personnel hopeful that the U.S. Congress serving abroad. and state legislatures will address To show our gratitude and A Strong Capital Position this problem, about which much support, the company has a has been written, in the very number of programs specifically UHS has built and maintains near future. directed to those who have been a strong financial base. UHS is deployed and their families. the only investment grade-rated For example, the “Hero Miles” A Positive Outlook publicly traded hospital company program provides free air trans- by Standard and Poor, Fitch and portation from donated frequent Moody’s, all the major rating We at UHS are privileged to flier miles. We urge you to lend agencies. This enables the company work in an industry that involves your support as well. to easily access the public capital helping people live better lives.