UNIVERSAL HEALTH SERVICES INC

Previous wording

As of September 30, 2024, we owned and/or operated 361 inpatient facilities and 49 outpatient and other facilities, including the following, located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

Current wording

As of March 31, 2025, we owned and/or operated 362 inpatient facilities and 60 outpatient and other facilities, including the following, located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

Previous wording

28 free-standing emergency departments, and;

Current wording

33 free-standing emergency departments, and;

Previous wording

Behavioral health care facilities (334 inpatient facilities and 10 outpatient facilities):

Current wording

Behavioral health care facilities (334 inpatient facilities and 16 outpatient facilities):

Previous wording

8 outpatient behavioral health care facilities.

Current wording

14 outpatient behavioral health care facilities.

Previous wording

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 57% of our consolidated net revenues during each of the three-month periods ended September 30, 2024 and 2023, and 56% and 57% during the nine-month periods ended September 30, 2024 and 2023, respectively. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 43% of our consolidated net revenues during each of the three-month periods ended September 30, 2024 and 2023, and 44% and 43% during nine-month periods ended September 30, 2024 and 2023, respectively.

Current wording

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 57% of our consolidated net revenues during each of the three-month periods ended March 31, 2025 and 2024. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 43% of our consolidated net revenues during each of the three-month periods ended March 31, 2025 and 2024.

Previous wording

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $230 million and $203 million during the three-month periods ended September 30, 2024 and 2023, respectively, and $651 million and $561 million during the nine-month periods ended September 30, 2024 and 2023, respectively. Total assets at our U.K. behavioral health care facilities were approximately $1.442 billion as of September 30, 2024 and $1.327 billion as of December 31, 2023.

Current wording

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $227 million and $208 million during the three-month periods ended March 31, 2025 and 2024, respectively. Total assets at our U.K. behavioral health care facilities were approximately $1.423 billion as of March 31, 2025 and $1.358 billion as of December 31, 2024.

Previous wording

President Biden signed into law fiscal year 2025 appropriations to federal agencies for continuing projects and activities through December 20, 2024. We cannot predict whether or not there will be future legislation averting a federal government shutdown, however, our operating cash flows and results of operations could be materially unfavorably impacted by a federal government shutdown;

Current wording

the Full-Year Continuing Appropriations and Extensions Act, 2025 extended appropriations to federal agencies for continuing projects and activities through September 30, 2025. We cannot predict whether or not there will be future legislation averting a federal government shutdown, however, our operating cash flows and results of operations could be materially unfavorably impacted by a federal government shutdown;

Previous wording

an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the "Legislation") as part of the Tax Cuts and Jobs Act. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the Legislation or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for the Centers for Medicare and Medicaid Services ("CMS") to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through a Legislation exchange, which the IRA continued through 2025, is anticipated to increase exchange enrollment. However, if the subsidies are not extended beyond 2025, exchange enrollment may be adversely impacted;

Current wording

an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the "Legislation") as part of the Tax Cuts and Jobs Act. The Biden administration had issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the Legislation or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for the Centers for Medicare and Medicaid Services ("CMS") to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through a Legislation exchange, which the IRA continued through 2025, has increased exchange enrollment. However, the Trump administration has already taken steps to undo certain Biden-era executive orders, including those intended to lower drug costs for beneficiaries, and to freeze funding for federal programs. While the administration’s initial freeze has since been rescinded, the administration is likely to make other attempts to reduce federal program expenditures and can generally be expected to oppose increases in ACA and Medicaid enrollment. If the subsidies are not extended beyond 2025, exchange enrollment may be adversely impacted;

Previous wording

there have been numerous political and legal efforts to expand, repeal, replace or modify the Legislation, since its enactment, some of which have been successful, in part, in modifying the Legislation, as well as court challenges to the constitutionality of the Legislation. The U.S. Supreme Court held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation’s requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. As a result, the Legislation will continue to remain law, in its entirety, likely for the foreseeable future. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. The decision was appealed to the U.S. Court of Appeals for the Fifth Circuit, which on June 21, 2024, affirmed the District Court’s ruling regarding preventive services recommended by United States Preventive Services Task Force being unconstitutional. However, the Fifth Circuit overturned the nationwide injunction imposed by the District Court, preserving access to the majority of preventive services in dispute for now. On September 19, 2024, the U.S. Government filed a Petition for Writ of Certiorari, seeking review by the U.S. Supreme Court. The outcome and impacts of this litigation cannot be predicted. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown. See below in Sources of Revenues and Health Care Reformfor additional disclosure;

Current wording

there have been numerous political and legal efforts to expand, repeal, replace or modify the Legislation, since its enactment, some of which have been successful, in part, in modifying the Legislation, as well as court challenges to the constitutionality of the Legislation. The U.S. Supreme Court held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation’s requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. As a result, the Legislation will continue to remain law, in its entirety, likely for the foreseeable future. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. The decision was ultimately appealed to the U.S. Supreme Court and a decision remains pending. The outcome and impacts of this litigation cannot be predicted. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown. See below in Sources of Revenues and Health Care Reformfor additional disclosure;

Previous wording

the outcome of known and unknown litigation, government investigations, inquiries, false claims act allegations, and liabilities and other claims asserted against us and other matters, and the effects of adverse publicity relating to such matters, including, but not limited to, the jury verdicts returned against The Pavilion Behavioral Health System (the "Pavilion") and Cumberland Hospital for Children and Adolescents ("Cumberland"), two of our indirect subsidiaries, as disclosed in Note 6 to the Condensed Consolidated Financial Statements - Commitments and Contingencies, Legal Proceedings. We are uncertain as to the ultimate financial exposure related to the Pavilion and Cumberland matters (which relate to occurrences in 2020) and we can make no assurances regarding timing or substance of their outcome, or the amount of damages that may be ultimately held recoverable after post-judgment proceedings and appeals. As of September 30, 2024, without reduction for any potential amounts related to the Pavilion and Cumberland matters, the Company and its subsidiaries have aggregate insurance coverage of approximately $221 million remaining under commercial policies for matters applicable to the 2020 policy year (in excess of the applicable self-insured retention amounts of $10 million per occurrence for professional liability claims and $3 million per occurrence for general liability claims). In the event the resolution of the Pavilion and Cumberland matters exhausts all or a significant portion of the remaining commercial insurance coverage available to the Company and its subsidiaries related to other matters that occurred in 2020, or the Pavilion and Cumberland matters cause the posting of large bonds or other collateral during the appeal processes, our future results of operations and capital resources could be materially adversely impacted;

Current wording

Proceedings. We have reached an agreement in principle with respect to the Pavilion matter which is subject to the execution of a final settlement agreement and court approval of that agreement. Although the terms of the settlement are confidential, we expect that the settlement, if finalized and approved by the Court, will be covered by our commercial excess insurance and our existing reserves for that matter. We can make no assurances regarding the ultimate financial exposure, timing, substance or outcome of the Pavilion and Cumberland matters (which related to occurrences in the 2020 policy year), or the amount of damages that may be ultimately held recoverable after post-judgment proceedings and appeals, should the above-mentioned agreement in principle related to the Pavilion matter not be finalized. As of March 31, 2025, without reduction for any potential amounts related to the Pavilion and Cumberland matters, the Company and its subsidiaries have aggregate insurance coverage of approximately $221 million remaining under commercial policies for matters applicable to the 2020 policy year (in excess of the applicable self-insured retention amounts of $10 million per single occurrence/$25 million for multi-plaintiff matters for professional liability claims and $3 million per occurrence for general liability claims). In the event the resolution of the Pavilion and/or Cumberland matters exhausts all or a significant portion of the remaining commercial insurance coverage available to the Company and its subsidiaries related to other matters that occurred in 2020, or the Pavilion and Cumberland matters cause the posting of large bonds or other collateral during the appeal processes, our future results of operations and capital resources would be materially adversely impacted;

Previous wording

as discussed below in Sources of Revenue, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, Nevada, California, Illinois, Pennsylvania, Washington, D.C., Kentucky, Massachusetts, Virginia, Mississippi and Florida,. We also receive Medicaid DSH payments in certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states;

Current wording

as discussed below in Sources of Revenue, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of California, Nevada, Texas, Illinois, Pennsylvania, Washington, D.C., Kentucky, Massachusetts, Florida, Virginia, and Mississippi. Most of these programs are approved on a year-to-year basis and there is no assurance that these revenues will continue at their current rates or at all. The prior President Trump administration had attempted to limit Medicaid expenditures by, for example, attaching work requirements to eligibility for Medicaid waiver benefits. The second Trump administration is likely to explore similar solutions to limit Medicaid enrollment or expenditure. The Trump administration has already taken steps to undo Biden-era executive orders and to freeze funding for federal programs. While the administration’s initial freeze has since been rescinded, the administration is likely to make other attempts to reduce federal program expenditures and can generally be expected to oppose increases in ACA and Medicaid enrollment. We also receive Medicaid DSH payments in certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states;

Previous wording

Net revenues increased by 11.2%, or $400 million, to $3.963 billion during the three-month period ended September 30, 2024, as compared to $3.563 billion during the third quarter of 2023. The net increase was primarily attributable to: (i) a $340 million, or 9.8%, increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods (which we refer to as “Same Facility”), and; (ii) an other combined net increase of $60 million due to an increase in provider tax assessments (which increased net revenues and other operating expenses but had no impact on income before income taxes).

Current wording

Net revenues increased by 6.7%, or $256 million, to $4.100 billion during the three-month period ended March 31, 2025, as compared to $3.844 billion during first quarter of 2024. The net increase was primarily attributable to: (i) a $226 million, or 6.1%, increase in net revenues generated from our acute care hospital services and behavioral health services operated during both periods (which we refer to as “Same Facility”), and; (ii) an other combined net increase of $30 million, consisting primarily of $27 million of net revenues generated during the first quarter of 2025 at West Henderson Hospital, a newly constructed, 150-bed acute care hospital located in Las Vegas, Nevada, that was completed and opened during the fourth quarter of 2024.

Previous wording

Income before income taxes (before income attributable to noncontrolling interests) increased by $121 million, or 55%, to $342 million during the three-month period ended September 30, 2024 as compared to $221 million during the third quarter of 2023. The net increase was due to:

Current wording

Income before income taxes (before income attributable to noncontrolling interests) increased by $84 million, or 25%, to $420 million during the three-month period ended March 31, 2025 as compared to $336 million during the first quarter of 2024. The net increase was due to:

Previous wording

an increase of $67 million at our acute care facilities, as discussed below in Acute Care Hospital Services;

Current wording

an increase of $55 million at our acute care facilities, as discussed below in Acute Care Hospital Services;

Previous wording

an increase of $57 million at our behavioral health care facilities, as discussed below in Behavioral Health Care Services, and;

Current wording

an increase of $17 million at our behavioral health care facilities, as discussed below in Behavioral Health Care Services;

Previous wording

Net income attributable to UHS increased by $92 million, or 55%, to $259 million during the three-month period ended September 30, 2024, as compared to $167 million during the third quarter of 2023. This increase was attributable to:

Current wording

Net income attributable to UHS increased by $55 million, or 21%, to $317 million during the three-month period ended March 31, 2025, as compared to $262 million during the first quarter of 2024. This increase was attributable to:

Previous wording

a decrease of $23 million resulting from an increase in the provision for income taxes resulting primarily from: (i) the increase in the provision for income taxes resulting from the $115 million increase in pre-tax income, partially offset by; (ii) a $4 million decrease in the provision for income taxes during the third quarter of 2024 from the net tax benefit recorded pursuant to ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), net of the impact of executive compensation limitations pursuant to IRC section 162(m).

Current wording

a decrease of $29 million resulting from an increase in the provision for income taxes resulting primarily from: (i) the increase in the provision for income taxes resulting from the $84 million increase in pre-tax income, and; (ii) a $9 million increase in the provision for income taxes due to a decrease in the net benefit recorded in connection with "ASU 2016-09", Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, net of the impact of executive compensation limitations pursuant to IRC section 162(m) ($.4 million net benefit recorded during the first quarter of 2025 as compared to $9.2 million during the first quarter of 2024).

Previous wording

As a result of unfavorable trends experienced during the past several years, included in our results of operations were increases to our reserves for self-insured professional and general liability claims amounting to approximately $30 million and $44 million during the three and nine-month periods ended September 30, 2024, respectively. Approximately $23 million and $33 million of the increase is included in our same facility basis acute care hospital services' results during the three and nine-month periods ended September 30, 2024, respectively, and approximately $7 million and $11 million is included in our same facility basis behavioral health services' results during the three and nine-month periods ended September 30, 2024, respectively.

Current wording

There were no adjustments recorded to our reserves for self-insured professional and general liability claims during the first quarter of 2025. During the first quarter of 2024, as a result of unfavorable trends experienced, our results of operations included a $7 million increase to our reserves for self-insured professional and general liability claims, of which approximately $5 million is included in our same facility basis acute care hospital services' results and approximately $2 million is included in our same facility basis behavioral health services' results.

Previous wording

The following table sets forth certain operating statistics for our acute care hospital services for the three and nine-month periods ended September 30, 2024 and 2023.

Current wording

The following table sets forth certain operating statistics for our acute care hospital services for the three-month periods ended March 31, 2025 and 2024.

Previous wording

The following table summarizes the results of operations for our acute care facilities on a Same Facility basis and is used in the discussion below for the three and nine-month periods ended September 30, 2024 and 2023 (dollar amounts in thousands):

Current wording

The following table summarizes the results of operations for our acute care facilities on a Same Facility basis and is used in the discussion below for the three-month periods ended March 31, 2025 and 2024 (dollar amounts in thousands):

Previous wording

During the three-month period ended September 30, 2024, net revenue per adjusted admission increased by 7.0% while net revenue per adjusted patient day increased 6.5%, as compared to the comparable quarter of 2023. During the three-month period ended September 30, 2024, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased by 2.1% while adjusted admissions (adjusted for outpatient activity) increased by 1.5%. Patient days at these facilities increased by 2.4% and adjusted patient days increased by 2.0% during the three-month period ended September 30, 2024, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 4.8 days during each of the three-month periods ended September 30, 2024 and 2023. The occupancy rate, based on the average available beds at these facilities, was 66% and 64% during the three-month periods ended September 30, 2024 and 2023, respectively.

Current wording

During the three-month period ended March 31, 2025, net revenue per adjusted admission increased by 2.5% while net revenue per adjusted patient day increased 4.7%, as compared to the comparable quarter of 2024. During the three-month period ended March 31, 2025, as compared to the comparable prior year quarter, inpatient admissions to our acute care hospitals increased by 2.0% while adjusted admissions (adjusted for outpatient activity) increased by 2.4%. Patient days at these facilities decreased by 0.1% and adjusted patient days increased by 0.3% during the three-month period ended March 31, 2025, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 4.9 days and 5.0 days during the three-month periods ended March 31, 2025 and 2024, respectively. The occupancy rate, based on the average available beds at these facilities, was 71% and 70% during the three-month periods ended March 31, 2025 and 2024, respectively.

Previous wording

Other operating expenses increased by $55 million, or 10.2%, during the third quarter of 2024, as compared to the comparable quarter of 2023. Operating expenses incurred by our commercial health insurer, consisting primarily of medical costs, increased by $19 million during the third quarter of 2024, as compared to the comparable quarter of 2023. In addition, as discussed above in Results of Operations-Adjustments to self-insured professional and general liability reserves, included in the other operating expenses of our acute care hospital services during the third quarter of 2024, as compared to the comparable quarter of 2023, was a $19 million increase in the adjustments made to our self-insured professional and general liability reserves. Excluding these expense items from each period, other operating expenses increased by $17 million, or 4.0%. As a percentage of net revenues, other operating expenses increased to 27.9% during the third quarter of 2024, as compared to 27.6% during the comparable quarter of 2023.

Current wording

Other operating expenses increased by $52 million, or 9.1%, during the first quarter of 2025, as compared to the comparable quarter of 2025. Operating expenses incurred by our commercial health insurer, consisting primarily of medical costs, increased by $41 million, or 32.9%, during the first quarter of 2025, as compared to the comparable quarter of 2024. Excluding the operating costs of our commercial insurer from each period, other operating expenses increased by $12 million, or 2.6%. As a percentage of net revenues, other operating expenses increased to 28.1% during the first quarter of 2025, as compared to 27.4% during the comparable quarter of 2024.

Previous wording

Supplies expense increased by $9 million, or 2.8%, during the third quarter of 2024, as compared to the third quarter of 2023. As a percentage of net revenues, supplies expense decreased to 15.5% during the three-month period ended September 30, 2024, as compared to 16.5% during the third quarter of 2023.

Current wording

Supplies expense decreased by $4 million, or 1.1%, during the first quarter of 2025, as compared to the first quarter of 2024. As a percentage of net revenues, supplies expense decreased to 15.3% during the three-month period ended March 31, 2025, as compared to 16.5% during the first quarter of 2024.

Previous wording

The following table summarizes the results of operations for all our acute care operations during the three and nine-month periods ended September 30, 2024 and 2023. These amounts include: (i) our acute care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including, if applicable, the results of recently acquired/opened facilities and businesses as well as the operating results for Desert Springs which discontinued all inpatient operations during the first quarter of 2023. Dollar amounts below are reflected in thousands.

Current wording

The following table summarizes the results of operations for all our acute care operations during the three-month periods ended March 31, 2025 and 2024. These amounts include: (i) our acute care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including, if applicable, the results of recently acquired/opened facilities and businesses. Dollar amounts below are reflected in thousands.

Previous wording

During the three-month period ended September 30, 2024, as compared to the comparable prior year quarter, net revenues from our acute care hospital services increased by $228 million, or 11.3%, due to: (i) the $181 million, or 9.2% increase in Same Facility revenues, as discussed above, and; (ii) a $47 million increase in provider tax assessments (which had no impact on income before income taxes since the amounts offset between net revenues and other operating expenses).

Current wording

During the three-month period ended March 31, 2025, as compared to the comparable prior year quarter, net revenues from our acute care hospital services increased by $164 million, or 7.5%, due to: (i) the $136 million, or 6.5% increase in Same Facility revenues, as discussed above, and; (ii) $28 million increase consisting primarily of the $27 million of net revenues generated during the first quarter of 2025 at West Henderson Hospital, a newly constructed, 150-bed acute care hospital located in Las Vegas, Nevada, that was completed and opened during the fourth quarter of 2024.

Previous wording

During the nine-month period ended September 30, 2024, as compared to the comparable period of 2023, salaries, wages and benefits expense increased by $77 million, or 3.0%. The increase was due primarily to the above-mentioned $92 million increase related to our acute care hospital services, on a Same Facility basis, offset by the decreased salaries, wages and benefits expense incurred at Desert Springs.

Current wording

During the three-month period ended March 31, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $49 million, or 5.7%. The increase was due primarily to the above-mentioned $33 million increase related to our acute care hospital services, on a Same Facility basis, as well as the salaries, wages and benefits expense incurred at West Henderson Hospital and Cedar Hill Regional Medical Center.

Previous wording

Other operating expenses increased by $102 million, or 17.2%, during the third quarter of 2024, as compared to the comparable quarter of 2023. The increase was due to the $55 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, and the $47 million above-mentioned increase in provider tax assessments.

Current wording

Other operating expenses increased by $60 million, or 9.2%, during the first quarter of 2025, as compared to the comparable quarter of 2024. The increase was due primarily to the $52 million above-mentioned increase related to our acute care hospital services, on a Same Facility basis, as well as the other operating expenses incurred at West Henderson Hospital and Cedar Hill Regional Medical Center.

Previous wording

The following tables show the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the three and nine-month periods ended September 30, 2024 and 2023:

Current wording

The following tables show the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the three-month periods ended March 31, 2025 and 2024:

Previous wording

The following table sets forth certain operating statistics for our behavioral health care services for the three and nine-month periods ended September 30, 2024 and 2023.

Current wording

The following table sets forth certain operating statistics for our behavioral health care services for the three-month periods ended March 31, 2025 and 2024.

Previous wording

The following table summarizes the results of operations for our behavioral health care facilities, on a Same Facility basis, and is used in the discussions below for the three and nine-month periods ended September 30, 2024 and 2023 (dollar amounts in thousands):

Current wording

The following table summarizes the results of operations for our behavioral health care facilities, on a Same Facility basis, and is used in the discussions below for the three-month periods ended March 31, 2025 and 2024 (dollar amounts in thousands):

Previous wording

During the nine-month period ended September 30, 2024, net revenue per adjusted admission increased by 5.0% while net revenue per adjusted patient day increased by 5.8%, as compared to the comparable period of 2023. During the nine-month period ended September 30, 2024, as compared to the comparable prior year period, inpatient admissions to our acute care hospitals increased by 3.7% while adjusted admissions increased by 3.1%. Patient days and adjusted patient days at these facilities increased by 2.8% and 2.3%, respectively, during the nine-month period ended September 30, 2024, as compared to the comparable prior year period. The average length of inpatient stay at these facilities was 4.9 days during each of the nine-month periods ended September 30, 2024 and 2023. The occupancy rate, based on the average available beds at these facilities, was 68% and 66% during the nine-month periods ended September 30, 2024 and 2023, respectively.

Current wording

During the three-month period ended March 31, 2025, net revenue per adjusted admission increased by 7.2% while net revenue per adjusted patient day increased by 5.8%, as compared to the comparable quarter of 2024. During the three-month period ended March

Previous wording

During the three-month period ended September 30, 2024, net revenue per adjusted admission increased by 8.0% while net revenue per adjusted patient day increased by 8.5%, as compared to the comparable quarter of 2023. During the three-month period ended September 30, 2024, as compared to the comparable prior year quarter, inpatient admissions and adjusted admissions to our behavioral health care hospitals increased by 2.4% and 2.2%, respectively. Patient days at these facilities increased by 2.0% and adjusted patient days increased by 1.8% during the three-month period ended September 30, 2024, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 13.4 days and 13.5 days during the three-month periods ended September 30, 2024 and 2023, respectively. The occupancy rate, based on the average available beds at these facilities, was 73% and 72% during the three-month periods ended September 30, 2024 and 2023, respectively.

Current wording

31, 2025, as compared to the comparable prior year quarter, inpatient admissions and adjusted admissions to our behavioral health care hospitals decreased by 1.1% and 1.6%, respectively. Patient days at these facilities increased by 0.2% and adjusted patient days decreased by 0.3% during the three-month period ended March 31, 2025, as compared to the comparable prior year quarter. The average length of inpatient stay at these facilities was 13.6 days and 13.4 days during the three-month periods ended March 31, 2025 and 2024, respectively. The occupancy rate, based on the average available beds at these facilities, was 74% and 73% during the three-month periods ended March 31, 2025 and 2024, respectively.

Previous wording

On a Same Facility basis during the three-month period ended September 30, 2024, as compared to the comparable quarter of 2023, salaries, wages and benefits expense increased by $74 million or 8.8%. The increase during the third quarter of 2024, as compared to the comparable quarter of 2023, was due to a 4.0% increase in salaries, wages and benefits expense per average full time equivalent employee, as well as a 4.5% increase in the average number of full-time equivalent employees. The increased staffing was due, in part, to increased patient volumes. As a percentage of net revenues during each quarter, salaries, wages and benefits expense decreased to 54.8% during the third quarter of 2024 as compared to 55.7% during the third quarter of 2023.

Current wording

On a Same Facility basis during the three-month period ended March 31, 2025, as compared to the comparable quarter of 2024, salaries, wages and benefits expense increased by $57 million or 6.5%. The increase during the first quarter of 2025, as compared to the comparable quarter of 2024, was due to a 3.1% increase in salaries, wages and benefits expense per average full time equivalent employee, as well as a 3.4% increase in the average number of full-time equivalent employees. As a percentage of net revenues during each quarter, salaries, wages and benefits expense increased to 54.3% during the first quarter of 2025 as compared to 53.7% during the first quarter of 2024.

Previous wording

Other operating expenses increased by $64 million, or 7.4%, during the first nine months of 2024, as compared to the comparable period of 2023. The increase during the first nine months of 2024, as compared to the comparable period of 2023, was due, in part, to increased patient volumes. As a percentage of net revenues during each period, other operating expenses decreased to 18.8% during the first nine months of 2024 as compared to 19.4% during the first nine months of 2023.

Current wording

Other operating expenses increased by $7 million, or 2.4%, during the first quarter of 2025, as compared to the comparable quarter of 2024. As a percentage of net revenues during each quarter, other operating expenses decreased to 18.8% during the first quarter of 2025 as compared to 19.4% during the first quarter of 2024.

Previous wording

Supplies expense increased by $3 million, or 4.7%, during the third quarter of 2024, as compared to the comparable quarter of 2023. As a percentage of net revenues during each quarter, supplies expense decreased to 3.5% during the third quarter of 2024, as compared to 3.6% during the comparable quarter of 2023.

Current wording

Supplies expense decreased by $1 million, or 2.3%, during the first quarter of 2025, as compared to the comparable quarter of 2024. As a percentage of net revenues during each quarter, supplies expense decreased to 3.2% during the first quarter of 2025, as compared to 3.5% during the comparable quarter of 2024.

Previous wording

The following table summarizes the results of operations for all our behavioral health care services during the three and nine-month periods ended September 30, 2024 and 2023. These amounts include: (i) our behavioral health care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the past year. Dollar amounts below are reflected in thousands.

Current wording

The following table summarizes the results of operations for all our behavioral health care services during the three-month periods ended March 31, 2025 and 2024. These amounts include: (i) our behavioral health care results on a Same Facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the past year. Dollar amounts below are reflected in thousands.

Previous wording

During the three-month period ended September 30, 2024, as compared to the comparable prior year quarter, net revenues generated from our behavioral health services increased by $172 million, or 11.2%. The increase was primarily attributable to the above-mentioned $158 million, or 10.5%, increase in net revenues at our behavioral health facilities, on a Same Facility basis, as well as a

Current wording

During the three-month period ended March 31, 2025, as compared to the comparable prior year quarter, net revenues generated from our behavioral health services increased by $92 million, or 5.5%. The increase was primarily attributable to the above-mentioned $90 million, or 5.5%, increase in net revenues at our behavioral health facilities, on a Same Facility basis.

Previous wording

Income before income taxes increased by $57 million, or 22%, to $319 million or 18.6% of net revenues during the third quarter of 2024, as compared to $262 million or 17.0% of net revenues during the third quarter of 2023. The increase in income before income taxes at our behavioral health facilities during the third quarter of 2024, as compared to the comparable quarter of 2023, was primarily attributable to the $58 million, or 22% increase in income before income taxes generated at our behavioral health facilities, on a Same Facility basis, as discussed above.

Current wording

Income before income taxes increased by $17 million, or 5.5%, to $337 million or 19.3% of net revenues during the first quarter of 2025, as compared to $320 million or 19.3% of net revenues during the first quarter of 2024. The increase in income before income taxes at our behavioral health facilities during the first quarter of 2025, as compared to the comparable quarter of 2024, was primarily attributable to the $23 million, or 7.3% increase in income before income taxes generated at our behavioral health facilities, on a Same Facility basis, partially offset by the losses incurred at recently closed facilities.

Previous wording

Supplies expense increased by $3 million, or 4.6%, during the third quarter of 2024, as compared to the comparable quarter of 2023. As a percentage of net revenues, supplies expense decreased to 3.4% during the third quarter of 2024, as compared to 3.6% during the comparable quarter of 2023.

Current wording

Supplies expense decreased by $1 million, or 2.6%, during the first quarter of 2025, as compared to the comparable quarter of 2024 due to the above-mentioned decrease related to our behavioral health facilities, on a Same Facility basis. As a percentage of net revenues, supplies expense decreased to 3.2% during the first quarter of 2025, as compared to 3.4% during the comparable quarter of 2024.

Previous wording

Sources of Revenues and Health Care Reform: Given increasing budget deficits, the federal government and many states are currently considering additional ways to limit increases in levels of Medicare and Medicaid funding, which could also adversely affect future payments received by our hospitals. In addition, the uncertainty and fiscal pressures placed upon the federal government as a result of, among other things, impacts on state revenue and expenses resulting from the COVID-19 pandemic, economic recovery stimulus packages, responses to natural disasters, and the federal and state budget deficits in general may affect the availability of government funds to provide additional relief in the future. We are unable to predict the effect of future policy changes on our operations.

Current wording

Sources of Revenues and Health Care Reform: Given increasing budget deficits, the federal government and many states are currently considering additional ways to limit increases in levels of Medicare and Medicaid funding, which could also adversely affect future payments received by our hospitals. In addition, the uncertainty and fiscal pressures placed upon the federal government as a result of, among other things, economic recovery stimulus packages, responses to natural disasters, and the federal and state budget deficits in general may affect the availability of government funds to provide additional relief in the future. Changes resulting from the outcome of the 2024 elections may include increased reliance on Medicare Advantage programs, work requirements for Medicaid waiver program eligibility, increased focus on hospital outpatient site neutral payment policies, and similar initiatives that may reduce the availability of funding for federal healthcare programs or make eligibility for benefits more difficult. There have been proposals to substantially decrease federal funding for state Medicaid Programs. Any significant reduction in federal Medicaid funding to states would likely result in states reducing Medicaid payments to us which would have a material adverse effect on us. We are unable to predict the effect of future policy changes on our operations.