UPMC Announces Strong First-Half Fiscal Year Results
- UPMC’s operating revenue grew 14 percent during the first half of FY09, with operating income up slightly from this time last year to $103 million, and operating EBIDA of $280 million.
- $2.5 billion investment reserve portfolio provides for long-term sustainability, despite market conditions.
- UPMC’s strong balance sheet, cash position and “AA” credit rating allow it to continue investing in the future of the global health enterprise and western Pennsylvania, as well as in strategic business initiatives to generate future revenue and jobs growth.
PITTSBURGH, Pa., February 13, 2009 — UPMC’s operating earnings before interest, depreciation and amortization (EBIDA), a key measure of financial performance and the ability to generate resources for reinvestment, remain on target to top $500 million for the fifth consecutive fiscal year. Operating EBIDA totaled $280 million in the first half of the fiscal year. Operating income was $103 million, up 3 percent from the year-ago period.
"UPMC’s strong operating results and prudent financial management during the global financial crisis allow us to continue growing, providing outstanding patient care and reinvesting in the future of western Pennsylvania," said Robert A. DeMichiei, UPMC senior vice president and chief financial officer.
"Even though UPMC’s financial results are strong and have improved since last year, it is clear the health care industry is not immune to the effects of the current economic downturn that shows no apparent timeline for a recovery," said DeMichiei. "In the face of this, we are thoroughly examining all aspects of our expenses, including possible consolidation and integration opportunities. At the same time, UPMC will continue to invest in key strategic initiatives to meet the needs of our patients today and generate future revenue and jobs."
UPMC’s core operations showed solid growth during the half. Total admissions at the system’s 20 hospitals grew 10 percent to 93,614, while outpatient activity rose 16 percent. Enrollment in insurance services grew to more than 1.3 million members compared to 1.2 million for the same period a year ago. The number of employed physicians grew by 12 percent to 2,787.
Despite lower returns in the financial markets compared to last year, UPMC’s diversified investment reserve portfolio stands at $2.5 billion. UPMC also maintains its "AA" credit rating, a further indication of its financial strength.
"Because we are solidly profitable in operating and cash flow income – and we continue to take swift actions to address the worsening economy – we do not need to draw on these long-term reserves to fund day-to-day operations or capital expenditures," noted UPMC Treasurer and Senior Vice President C. Talbot Heppenstall Jr. For the first half of FY 09, the investment reserve portfolio declined by $786 million, predominately an unrealized "paper" loss, due to mark-to-market accounting. The portfolio value is down 24 percent for calendar-year 2008, compared to a 37 percent decline for the Standard & Poor’s 500 index.
UPMC is an integrated global health enterprise headquartered in Pittsburgh, Pennsylvania, and one of the leading nonprofit health systems in the United States. As western Pennsylvania's largest employer, with 50,000 employees and $7 billion in revenue, UPMC is transforming the economy of the region into one based on medicine, research, and technology. By integrating 20 hospitals, 400 doctors' offices and outpatient sites, long-term care facilities, and a major health insurance services division, and in collaboration with its academic partner, the University of Pittsburgh Schools of the Health Sciences, UPMC has advanced the quality and efficiency of health care and developed internationally renowned programs in transplantation, cancer, neurosurgery, psychiatry, orthopaedics, and sports medicine, among others. UPMC is commercializing its medical and technological expertise by nurturing new companies, developing strategic business relationships with some of the world's leading multinational corporations, and expanding into international markets, including Italy, Ireland, the United Kingdom, and Qatar. For more information about UPMC, visit our website at www.upmc.com.