FORM 10-QSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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|--------------------------------------------- |  | ----------------------------------------------------------------------------------------
|(Mark One)                                    |  |                                                                                         
|(X)                                           |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|                                             
|                                             
|                                             
|                                             
|For the quarterly period ended: June 30, 2001
|                                             
|                                             
|                                             
|                                             
|OR                                           
|                                             
|                                             
|                                             
|                                             
|(  )                                          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from_______________________

Commission file Number: 333-49743
UNIVERSAL HOSPITAL SERVICES, INC.(Exact Name of Registrant as specified in its charter)

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Minnesota                                                      |  | 41-0760940                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer Identification No.)

1250 Northland Plaza
3800 West 80th StreetBloomington, Minnesota 55431-4442(Address of principal executive offices)
(Zip Code)

952-893-3200(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes      X      No





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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

Universal Hospital Services, Inc.

STATEMENTS OF OPERATIONS
(dollars in thousands)
(unaudited)

|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |        |   |        |        |        | 
|----------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------------- | ------ | ------------------ | ------ | - | ---------------- | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                          |                                                                                      |                                                |        | Three Months Ended |        |   | Six Months Ended |       
|                                          |                                                                                      |                                                |        | June 30,           |        |   | June 30,         |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |       
|                                          |                                                                                      |                                                |        | 2001               |        |   | 2000             |        |        | 2001 |        |        | 2000   |  
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |        |  
|Revenues:                                
|                                         
|                                         
|                                         
|                                         
|                                          | Equipment outsourcing                                                                |                                                | $      | 26,905             |        |   | $                | 22,085 |        |      | $      | 54,731 |        |   | $      | 45,818 |       
|                                         
|                                         
|                                         
|                                         
|                                          | Sales of supplies and equipment, and other                                           |                                                |        | 3,087              |        |   |                  | 2,970  |        |      |        | 6,130  |        |   |        | 6,127  |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                                                                      | Total revenues                                 |        |                    | 29,992 |   |                  |        | 25,055 |      |        |        | 60,861 |   |        |        | 51,945 | 
|Costs of equipment outsourcing and sales:
|                                         
|                                         
|                                         
|                                         
|                                          | Cost of equipment outsourcing                                                        |                                                |        | 7,840              |        |   |                  | 6,090  |        |      |        | 15,577 |        |   |        | 12,483 |       
|                                         
|                                         
|                                         
|                                         
|                                          | Movable medical equipment depreciation                                               |                                                |        | 6,445              |        |   |                  | 5,426  |        |      |        | 12,652 |        |   |        | 10,593 |       
|                                         
|                                         
|                                         
|                                         
|                                          | Cost of supplies and equipment sales                                                 |                                                |        | 1,860              |        |   |                  | 2,009  |        |      |        | 3,718  |        |   |        | 4,313  |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|                                          |                                                                                      | Total costs of equipment outsourcing and sales |        |                    | 16,145 |   |                  |        | 13,525 |      |        |        | 31,947 |   |        |        | 27,389 | 
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|Gross profit                              |                                                                                      |                                                | 13,847 |                    |        |   | 11,530           |        |        |      | 28,914 |        |        |   | 24,556 |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |        |  
|                                         
|                                         
|                                         
|                                         
|Selling, general and administrative:     
|                                         
|                                         
|                                         
|                                         
|                                          | Selling, general and administrative,
excluding additional retirement benefits        |                                                |        | 9,351              |        |   |                  | 8,607  |        |      |        | 18,919 |        |   |        | 17,013 |       
|                                         
|                                         
|                                         
|                                         
|                                          | Additional
retirement benefits including $1.2 million of
non-cash stock compensation |                                                |        | 1,553              |        |   |                  |        |        |      |        | 1,553  |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|                                          |                                                                                      | Total selling, general and administrative      |        |                    | 10,904 |   |                  |        | 8,607  |      |        |        | 20,472 |   |        |        | 17,013 | 
|                                         
|                                         
|                                         
|                                         
|Operating income                          |                                                                                      |                                                | 2,943  |                    |        |   | 2,923            |        |        |      | 8,442  |        |        |   | 7,543  |       
|                                         
|                                         
|                                         
|                                         
|Interest expense                          |                                                                                      |                                                | 4,949  |                    |        |   | 5,160            |        |        |      | 10,104 |        |        |   | 10,222 |       
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|Loss before income taxes                  |                                                                                      |                                                | (2,006 | )                  |        |   | (2,237           | )      |        |      | (1,662 | )      |        |   | (2,679 | )     
|                                         
|                                         
|                                         
|                                         
|Provision (benefit) for income taxes      |                                                                                      |                                                | 14     |                    |        |   | (63              | )      |        |      | 28     |        |        |   | (92    | )     
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       
|Net loss                                  |                                                                                      | $                                              | (2,020 | )                  |        | $ | (2,174           | )      |        | $    | (1,690 | )      |        | $ | (2,587 | )     
|                                          |                                                                                      |                                                |        |                    |        |   |                  |        |        |      |        |        |       

The accompanying notes are an integral part of the unaudited financial statements.

2



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Universal Hospital Services, Inc.

BALANCE SHEETS
(dollars in thousands except share and per share information)

|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |         |              |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------- | ------- | ----------- | ------- | ------- | ------------ | - | ------- | -
|ASSETS                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         | June 30,    |         |         | December 31, |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         | 2001        |         |         | 2000         |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |         |              |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         | (unaudited) |        
|Current assets:                                                                                                                                                                                                                
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Accounts receivable, less allowance for doubtful accounts of $1,850                                                                                                |  | $                                              | 28,111  |             |         | $       | 26,998       |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | at June 30, 2001 and $1,625 at December 31, 2000                                                                                                                  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Inventories                                                                                                                                                        |  |                                                | 2,525   |             |         |         | 2,767        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Deferred income taxes                                                                                                                                              |  |                                                | 1,750   |             |         |         | 1,593        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Other current assets                                                                                                                                               |  |                                                | 1,033   |             |         |         | 839          |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total current assets                           |         |             | 33,419  |         |              |   | 32,197  |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Property and equipment:                                                                                                                                                                                                        
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Movable medical equipment, at cost less accumulated depreciation                                                                                                   |  |                                                | 100,105 |             |         |         | 99,149       |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Property and office equipment, at cost less accumulated depreciation                                                                                               |  |                                                | 5,451   |             |         |         | 5,014        |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total property and equipment, net              |         |             | 105,556 |         |              |   | 104,163 |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Intangible and other assets:                                                                                                                                                                                                   
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Goodwill, less accumulated amortization                                                                                                                            |  |                                                | 35,839  |             |         |         | 37,204       |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Other primarily deferred financing costs, less accumulated amortization                                                                                            |  |                                                | 5,973   |             |         |         | 6,506        |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total assets                                   |         | $           | 180,787 |         |              | $ | 180,070 |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|LIABILITIES AND SHAREHOLDERS DEFICIENCY                                                                                                                                                                                       
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Current liabilities:                                                                                                                                                                                                           
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Current portion of long-term debt                                                                                                                                  |  | $                                              | 294     |             |         | $       | 255          |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Accounts payable                                                                                                                                                   |  |                                                | 10,006  |             |         |         | 10,895       |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Accrued compensation and pension                                                                                                                                   |  |                                                | 4,486   |             |         |         | 4,333        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Accrued interest                                                                                                                                                   |  |                                                | 5,104   |             |         |         | 5,442        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Other accrued expenses                                                                                                                                             |  |                                                | 1,586   |             |         |         | 1,233        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Bank overdrafts                                                                                                                                                    |  |                                                | 1,402   |             |         |         | 461          |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total current liabilities                      |         |             | 22,878  |         |              |   | 22,619  |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Long-term debt, less current portion                                                                                                                                                                                            |                                                                                                                                                                    |  | 193,706                                        |         |             |         | 193,353 |             
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Deferred compensation and pension                                                                                                                                                                                               |                                                                                                                                                                    |  | 2,865                                          |         |             |         | 2,588   |             
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Deferred income taxes                                                                                                                                                                                                           |                                                                                                                                                                    |  | 1,750                                          |         |             |         | 1,593   |             
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Series B, 13% Cumulative Preferred Stock, $0.01 par value; 25,000 shares
authorized, 6,246 shares issued and outstanding at June 30, 2001 and
December 31, 2000, net of unamortized discount, including accrued stock
dividends |                                                                                                                                                                    |  | 7,811                                          |         |             |         | 7,236   |             
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Common stock subject to put                                                                                                                                                                                                     |                                                                                                                                                                    |  | 3,445                                          |        
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|Commitments
and contingenciesShareholders deficiency:                                                                                                                                                                         
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Common Stock, $0.01 par value; 50,000,000 authorized,
16,107,214 and 16,089,214 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively |  |                                                | 161     |             |         |         | 161          |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Additional paid-in capital                                                                                                                                         |  |                                                | 1,361   |             |         |         | 2,335        |  
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Accumulated deficit                                                                                                                                                |  |                                                | (52,053 | )           |         |         | (49,815      | )
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                | Deferred compensation                                                                                                                                              |  |                                                | (1,137  | )          
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total shareholders deficiency                 |         |             | (51,668 | )       |              |   | (47,319 | )
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  | Total liabilities and shareholders deficiency |         | $           | 180,787 |         |              | $ | 180,070 |  
|                                                                                                                                                                                                                                |                                                                                                                                                                    |  |                                                |         |             |         |        

The accompanying notes are an integral part of the unaudited financial statements.

3



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Universal Hospital Services, Inc.

STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)

|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |   |         |       |         |  
|--------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------------------------------- | ------- | ------------------------- | ------- | - | ------- | ----- | ------- | -
|                                        |                                                                                 |                                                                  |                                                                       |         | Six Months Ended June 30, |        
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |        
|                                        |                                                                                 |                                                                  |                                                                       |         | 2001                      |         |   | 2000    |      
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |   |         |      
|Cash flows from operating activities:  
|                                       
|                                       
|                                       
|                                       
|                                        | Net loss                                                                        |                                                                  | $                                                                     | (1,690  | )                         |         | $ | (2,587  | )    
|                                       
|                                       
|                                       
|                                       
|                                        | Adjustments to reconcile net loss to net
cash provided by operating activities:
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Depreciation                                                          |         |                           | 13,509  |   |         |       | 11,200  |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Amortization of intangibles                                           |         |                           | 1,895   |   |         |       | 2,096   |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Accretion of bond discount                                            |         |                           | 265     |   |         |       | 265     |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Provision for doubtful accounts                                       |         |                           | 989     |   |         |       | 574     |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Non-cash stock compensation expense
   upon
issuance of stock options |         |                           | 1,247   |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Loss on sales of equipment                                            |         |                           | 345     |   |         |       | 267     |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Deferred income taxes                                                 |         |                           |         |   |         |       | (92     | )
|                                       
|                                       
|                                       
|                                       
|                                        | Changes in operating assets and liabilities, net of impact of acquisitions:    
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Accounts receivable                                                   |         |                           | (2,143  | ) |         |       | 1,052   |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Inventories and other operating assets                                |         |                           | 49      |   |         |       | 371     |  
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 |                                                                  | Accounts payable and accrued expenses                                 |         |                           | (1,328  | ) |         |       | 2,995   |  
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|                                        |                                                                                 |                                                                  | Net cash provided by operating activities                             |         |                           | 13,138  |   |         |       | 16,141  |  
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|Cash flows from investing activities:  
|                                       
|                                       
|                                       
|                                       
|                                        | Movable medical equipment purchases                                             |                                                                  |                                                                       | (13,537 | )                         |         |   | (14,325 | )    
|                                       
|                                       
|                                       
|                                       
|                                        | Property and office equipment purchases                                         |                                                                  |                                                                       | (1,004  | )                         |         |   | (821    | )    
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds from disposition of movable medical equipment                          |                                                                  |                                                                       | 417     |                           |         |   | 277     |      
|                                       
|                                       
|                                       
|                                       
|                                        | Other                                                                           |                                                                  |                                                                       | 43      |                           |         |   | 162     |      
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|                                        |                                                                                 |                                                                  | Net cash used in investing activities                                 |         |                           | (14,081 | ) |         |       | (14,707 | )
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|Cash flows from financing activities:  
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds under loan agreements                                                  |                                                                  |                                                                       | 28,550  |                           |         |   | 21,625  |      
|                                       
|                                       
|                                       
|                                       
|                                        | Payments under loan agreements                                                  |                                                                  |                                                                       | (28,635 | )                         |         |   | (21,124 | )    
|                                       
|                                       
|                                       
|                                       
|                                        | Repurchase of common stock                                                      |                                                                  |                                                                       | (7      | )                        
|                                       
|                                       
|                                       
|                                       
|                                        | Proceeds from issuance of common stock, net of offering costs                   |                                                                  |                                                                       | 94      |                           |         |   | 92      |      
|                                       
|                                       
|                                       
|                                       
|                                        | Change in book overdraft                                                        |                                                                  |                                                                       | 941     |                           |         |   | (2,027  | )    
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|                                        |                                                                                 |                                                                  | Net cash provided by (used in) financing activities                   |         |                           | 943     |   |         |       | (1,434  | )
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|Net change in cash and cash equivalents |                                                                                 | $                                                                |                                                                      |         |                           | $       |  |        
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|Supplemental cash flow information:    
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                 | Interest paid                                                    |                                                                       | $       | 10,151                    |         |   | $       | 9,592 |        
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|                                        |                                                                                 | Movable medical equipment purchases included in accounts payable |                                                                       | $       | 3,886                     |         |   | $       | 2,383 |        
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  
|                                        |                                                                                 | Income taxes received                                            |                                                                       | $       | 92                        |         |   | $       | 59    |        
|                                        |                                                                                 |                                                                  |                                                                       |         |                           |         |  

The accompanying notes are an integral part of the unaudited financial
statements.

4



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Universal Hospital Services, Inc.

NOTES TO UNAUDITED QUARTERLY REPORT FINANCIAL STATEMENTS



|1. |  | Basis of Presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The condensed financial statements included in this Form 10-Q have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed, or omitted, pursuant to such rules and
regulations. These condensed financial statements should be read in
conjunction with the financial statements and related notes included in
the Companys Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 14, 2001.
|  
|   |  | The interim financial statements presented herein as of June 30, 2000 and
2001, and for the three and six months ended June 30, 2000 and 2001,
reflect, in the opinion of management, all adjustments necessary for a
fair presentation of financial position and the results of operations for
the periods presented. These adjustments are all of a normal, recurring
nature. The results of operations for any interim period are not
necessarily indicative of results for the full year.                                                                                                                                                                                    
|  
|   |  | The December 31, 2000 Balance Sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|2. |  | Recent Accounting
Pronouncement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In July 2001, the Financial
Accounting Standards Board (FASB) issued Statements of Financial
Accounting Standards (SFAS) No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." The Company
must adopt these standards no later than January 1, 2002.  All
business combinations under SFAS No. 141 are to be accounted for
using the purchase method of accounting.  SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other
intangible assets upon their acquisition and how they should be
accounted for after initial recognition.  SFAS No. 142 states that an
intangible asset with a finite useful life be amortized over the
period the asset is expected to contribute to the future
cash flows of the entity.  An intangible asset with an indefinite
life is not to be amortized.  All intangible assets are subject to
periodic impairment tests.  The Company is reviewing the requirements
of these standards.  The Company expects that these standards will
impact its future results of operations, including, among other
things, the elimination of the amortization of goodwill.



|3. |  | Subsequent Event:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On July 27, 2001, the
Company filed a registration statement in Form S-1 for the initial
public offering of up to $90 million of the
Company's common stock. The
shares will be sold by the
Company, except that up to an additional 15% of the
offering size may be sold by existing shareholders to cover
over-allotments.  The
Company intends to use the net proceeds from the offering primarily for the retirement of debt under
the revolving credit facility and the redemption of the outstanding
shares of series B preferred
stock and related warrant to purchase 350,000 shares.

5



---



Item 2.   Managements Discussion and Analysis of Financial Condition and Results of Operations

The following should be read in conjunction with the accompanying financial statements and notes.

Results of Operations

The following table provides information on the percentages of certain items of selected financial data bear to total revenues and
also indicates the percentage increase or decrease of this information over the prior comparable period:

|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |   |             |      |      |      |      |       |      |  
|----------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------------- | ---- | ------------------------- | ----- | - | --------------------------- | ---- | ----- | ---- | ---------- | ---- | ---------- | - | ---- | ---- | ----- | - | ----------- | ---- | ---- | ---- | ---- | ----- | ---- | -
|                                          |                                                                                      |                                                |      | Percent of Total Revenues |       |   | Percent Increase (Decrease) |     
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |      
|                                          |                                                                                      |                                                |      | Three Months Ended        |       |   | Six Months Ended            |      |       |      | Qtr 2      |      | Six Months |  
|                                          |                                                                                      |                                                |      | June 30,                  |       |   | June 30,                    |      |       |      | 2001       |      | 2001       |  
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      | Over Qtr 2 |      | Over Six   |  
|                                          |                                                                                      |                                                |      | 2001                      |       |   | 2000                        |      |       | 2001 |            |      | 2000       |   |      |      | 2000  |   | Months 2000 |     
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |   |             |     
|Revenues:                                
|                                         
|                                         
|                                         
|                                         
|                                          | Equipment outsourcing                                                                |                                                |      | 89.7                      | %     |   |                             | 88.1 | %     |      |            | 89.9 | %          |   |      | 88.2 | %     |   |             |      | 21.8 | %    |      | 19.5  | %   
|                                         
|                                         
|                                         
|                                         
|                                          | Sales of supplies and equipment, and other                                           |                                                |      | 10.3                      | %     |   |                             | 11.9 | %     |      |            | 10.1 | %          |   |      | 11.8 | %     |   |             |      | 3.9  | %    |      | 0.0   | %   
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|                                          |                                                                                      | Total revenues                                 |      |                           | 100.0 | % |                             |      | 100.0 | %    |            |      | 100.0      | % |      |      | 100.0 | % |             |      |      | 19.7 | %    |       | 17.2 | %
|                                         
|                                         
|                                         
|                                         
|Costs of equipment outsourcing and sales:
|                                         
|                                         
|                                         
|                                         
|                                          | Cost of equipment outsourcing                                                        |                                                |      | 26.1                      | %     |   |                             | 24.3 | %     |      |            | 25.6 | %          |   |      | 24.0 | %     |   |             |      | 28.7 | %    |      | 24.8  | %   
|                                         
|                                         
|                                         
|                                         
|                                          | Movable medical equipment depreciation                                               |                                                |      | 21.5                      | %     |   |                             | 21.7 | %     |      |            | 20.8 | %          |   |      | 20.4 | %     |   |             |      | 18.8 | %    |      | 19.4  | %   
|                                         
|                                         
|                                         
|                                         
|                                          | Cost of supplies and equipment sales                                                 |                                                |      | 6.2                       | %     |   |                             | 8.0  | %     |      |            | 6.1  | %          |   |      | 8.3  | %     |   |             |      | (7.5 | )%   |      | (13.8 | )%  
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|                                          |                                                                                      | Total costs of equipment
outsourcing and sales |      |                           | 53.8  | % |                             |      | 54.0  | %    |            |      | 52.5       | % |      |      | 52.7  | % |             |      |      | 19.4 | %    |       | 16.6 | %
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|Gross profit                              |                                                                                      |                                                | 46.2 | %                         |       |   | 46.0                        | %    |       |      | 47.5       | %    |            |   | 47.3 | %    |       |   |             | 20.1 | %    |      | 17.7 | %    
|                                         
|                                         
|                                         
|                                         
|Selling, general and administrative:     
|                                         
|                                         
|                                         
|                                         
|                                          | Selling, general and administrative
excluding additional retirement benefits         |                                                |      | 31.2                      | %     |   |                             | 34.3 | %     |      |            | 31.1 | %          |   |      | 32.8 | %     |   |             |      | 8.7  | %    |      | 11.2  | %   
|                                         
|                                         
|                                         
|                                         
|                                          | Additional retirement benefits including
$1.2 million of non-cash stock compensation |                                                |      | 5.2                       | %     |   |                             |      |       |      |            | 2.5  | %          |   |      |      |       |   |             |      | NM   |      |      | NM    |     
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|                                          |                                                                                      | Total selling, general and administrative      |      |                           | 36.4  | % |                             |      | 34.3  | %    |            |      | 33.6       | % |      |      | 32.8  | % |             |      |      | 26.7 | %    |       | 20.3 | %
|                                         
|                                         
|                                         
|                                         
|Operating income                          |                                                                                      |                                                | 9.8  | %                         |       |   | 11.7                        | %    |       |      | 13.9       | %    |            |   | 14.5 | %    |       |   |             | 0.7  | %    |      | 11.9 | %    
|                                         
|                                         
|                                         
|                                         
|Interest expense                          |                                                                                      |                                                | 16.5 | %                         |       |   | 20.6                        | %    |       |      | 16.6       | %    |            |   | 19.7 | %    |       |   |             | (4.1 | )%   |      | (1.2 | )%   
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|Loss before income taxes                  |                                                                                      |                                                | (6.7 | )%                        |       |   | (8.9                        | )%   |       |      | (2.7       | )%   |            |   | (5.2 | )%   |       |   |             | NM   |      |      | NM   |      
|                                         
|                                         
|                                         
|                                         
|Provision (benefit) for income taxes      |                                                                                      |                                                | 0.0  | %                         |       |   | (0.2                        | )%   |       |      | 0.1        | %    |            |   | (0.2 | )%   |       |   |             | NM   |      |      | NM   |      
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  
|Net loss                                  |                                                                                      |                                                | (6.7 | )%                        |       |   | (8.7                        | )%   |       |      | (2.8       | )%   |            |   | (5.0 | )%   |       |   |             | NM   |      |      | NM   |      
|                                          |                                                                                      |                                                |      |                           |       |   |                             |      |       |      |            |      |            |   |      |      |       |  

6



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General

We are the leading nationwide provider of movable medical equipment outsourcing
services (excluding bed outsourcing) to the healthcare industry, based on
revenues. Our customers include more than 5,200 acute care hospitals and
alternate site providers. We offer our customers a wide range of programs to
help them increase productivity and reduce costs. Our principal program is the
innovative Pay-Per-Use program where we charge our customers a per use fee
based on daily use of equipment per patient. We also offer other programs where
we charge customers an equipment fee on a daily, weekly or monthly basis. Through our Asset Management
Partnership Program, or AMPP, we enable customers to outsource substantially
all, or a significant portion of, their movable medical equipment needs by
providing, maintaining, managing and tracking that equipment for
them. Our fees are paid directly by our customers rather than
through reimbursement from government or other third-party payors.

All of our outsourcing programs include a comprehensive range of support services,
including equipment delivery, training, technical and educational support,
inspection, maintenance and comprehensive documentation. We seek to maintain
high utilization of our equipment by pooling and redeploying that equipment
among a diverse customer base and adjusting pricing on a customer-by-customer
basis to compensate for their varying usage rates. We also
sell disposable medical supplies to customers in conjunction with our
outsourcing programs. In addition, we offer repair, inspection, preventive maintenance
and logistic services for the movable medical equipment that our
customers own.

Industry Background

In recent years, particularly following the enactment of the Balanced Budget Act of 1997, acute care hospitals and
alternate site providers have faced increasing pressure due to a reduction in resources and the increased
complexity in delivering healthcare services. Reimbursement pressure from government
payors, such as Medicare and Medicaid, and private insurers are forcing healthcare providers to
contain costs. The national shortage of medical support staff, including nurses, has
placed greater constraints on such individuals, requiring them to perform more tasks in less time.

As a result of these pressures, acute care hospitals and alternate site providers have increasingly turned
to equipment outsourcing. We believe the demand for outsourcing movable medical equipment will
continue to expand as acute care hospitals and alternate site providers continue to try to reduce costs
and increase medical staff satisfaction while providing high quality, patient-specific medical care.

The following discussion addresses our financial condition as of June 30, 2001
and the results of operations and cash flows for the three and six months ended
June 30, 2001 and 2000. This discussion should be read in conjunction with the
financial statements included elsewhere in this report and the Managements
Discussion and Analysis and Financial sections included in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 14, 2001.

Safe Harbor Statements under the Private Securities Litigation Reform Act of
1995:We believe statements in this Form 10-Q looking forward in time involve
risks and uncertainties. The following factors, among others, could adversely
affect our business, operations and financial condition causing our actual
results to differ materially from those expressed in any forward-looking
statements: our substantial outstanding debt and high degree of leverage and
the continued availability, terms and deployment of capital, including our
ability to service or refinance debt; restrictions imposed by the terms of our
debt; adverse regulatory developments affecting, among other things, the
ability of our customers to obtain reimbursement of payments made to us;
changes and trends in customer preferences, including increased purchasing of
movable medical equipment; difficulties or delays in our continued expansion
into certain markets and development of new markets; unanticipated costs or
difficulties or delays in implementing the components of our strategy and plan
and possible adverse consequences relating to our ability to successfully
integrate recent acquisitions; effect of and changes in economic conditions,
including inflation and monetary conditions; actions by competitors and
availability of and ability to retain qualified personnel. For a more complete
discussion see the caption Industry Assessment and in our Form 10-K filing
filed with the Securities and Exchange Commission on March 14, 2001 under the
caption Item 7, Managements Discussion and Analysis of Financial Condition
and Results of Operations  Industry Assessment.

Equipment Outsourcing Revenues

Equipment outsourcing revenues for the three months ended June 30, 2001 were
$26.9 million, representing a $4.8 million, or 21.8%, increase from equipment
outsourcing revenues of $22.1 million for the same period of 2000. Equipment
outsourcing revenues for the six months ended June 30, 2001 were $54.7 million,
representing an $8.9 million, or 19.5%, increase from equipment outsourcing
revenues of $45.8 million for the same period of 2000. The
outsourcing revenue growth resulted from outsourcing equipment additions due to
customer demand, increased utilization of existing equipment and
price increases.

Sales of Supplies and Equipment, and Other

Sales of supplies and equipment, and other for the three months ended June 30,
2001 were $3.1 million, representing a $0.1 million, or 3.9%, increase from
sales of supplies and equipment, and other of $3.0 million for the same period
of 2000. Sales of supplies and equipment, and other for the six months ended
June 30, 2001 and 2000, were $6.1 million.

7



---



Sales revenue decreased as a result
of eliminating lower margin sales while increasing emphasis on outsourcing
revenue growth. This decrease in sales revenue was offset by
increases in other
service revenue.

Cost of Equipment Outsourcing

Cost of equipment outsourcing for the three months
ended June 30, 2001 was $7.8
million, representing a $1.7 million, or 28.7%, increase from cost of equipment
outsourcing of $6.1 million for the same period of 2000. Cost of equipment
outsourcing for the six months ended June 30, 2001 was $15.6 million,
representing a $3.1 million, or 24.8%, increase from cost of equipment
outsourcing of $12.5 million for the same period of 2000. For the three months
ended June 30, 2001, cost of equipment outsourcing as a percentage of equipment
outsourcing revenues increased to 29.1% from 27.6% for the same period of 2000.
For the six months ended June 30, 2001, cost of equipment outsourcing as a
percentage of equipment outsourcing revenues increased to 28.5% from 27.2% for
the same period of 2000. This increase was a result of higher energy costs
associated with utilities, gasoline and freight costs, increased rent expense
from new office openings and related support personnel combined with costs to
support the equipment outsourcing revenue growth.

Movable Medical Equipment Depreciation

Movable medical equipment depreciation for the three months ended June 30, 2001
was $6.4 million, representing a $1.0 million, or 18.8%, increase from movable
medical equipment depreciation of $5.4 million for the same period of 2000.
Movable medical equipment depreciation for the six months ended June 30, 2001
was $12.7 million, representing a $2.1 million, or 19.4%, increase from movable
medical equipment depreciation of $10.6 million for the same period of 2000.
This increase was a result of movable medical equipment purchases during 2000
and 2001. For the three months ended June 30, 2001, movable medical equipment
depreciation as a percentage of equipment outsourcing revenues decreased to
24.0% from 24.6% for the same period of 2000, and for the six months ended June
30, 2000 and 2001, movable medical equipment depreciation as a percentage of
equipment outsourcing revenues was 23.1%. This was due to strong
equipment outsourcing revenue in the six months ended June 30, 2001
which was offset by movable medical equipment
additions late in the period in preparation for new Asset Management
Partnership Program, or AMPP, accounts to start in the third quarter of 2001.

Gross Profit

Total gross profit for the three months ended June 30, 2001 was $13.8 million,
representing a $2.3 million, or 20.1%, increase from gross profit of $11.5
million for the same period of 2000. Total gross profit for the six months
ended June 30, 2001 was $28.9 million, representing a $4.3 million, or 17.7%,
increase from gross profit of $24.6 million for the same period of 2000. For the six months ended
June 30, 2001, total gross profit, as a percentage of total revenues, increased slightly to 47.5%
from 47.3% for the same period of 2000. The
increase in gross profit is due to outsourcing revenue growth, partially offset
by the increased cost of movable medical equipment outsourcing and movable
medical equipment depreciation discussed above.

Gross profit on equipment outsourcing revenue represents outsourcing revenues
reduced by the cost of outsourcing and movable medical equipment depreciation.
Gross profit on outsourcing revenue for the three months ended June 30, 2001
decreased to 46.9% from 47.9% for the same period in 2000. Gross profit on
outsourcing revenue for the six months ended June 30, 2001 decreased to 48.4%
from 49.6% for the same period of 2000. The decreased margin for the periods
reflects increased energy related costs and new office openings and related
support personnel, partially offset by increased equipment productivity.

Gross margin on sales of supplies and equipment and other for the three months
ended June 30, 2001 increased to 39.7% from 32.4% for the same period of 2000.
Gross profit on sales of supplies and equipment and other for the six months
ended June 30, 2001 increased to 39.3% from 29.6% for the same period of 2000.
This is a result of increased emphasis on higher margin sales and increased
service revenue, as mentioned earlier.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses excluding additional retirement
benefits for the three months ended June 30, 2001 were $9.4 million,
representing a $0.8 million, or 8.7%, increase from selling, general and
administrative expenses of $8.6 million for the same period of 2000. Selling,
general and administrative expenses for the six months ended June 30, 2001 were
$18.9 million, representing a $1.9 million, or 11.2%, increase from $17.0
million for the same period of 2000. The increase was primarily due to higher
medical, auto and workers compensation insurance expenses, the impact of the
promotional employee incentive plan and the impact of

8



---



administrative fees associated with Group Purchasing Organizations. Selling, general and administrative expenses
as a percentage of total revenue for the three months ended June 30, 2001
decreased to 31.2% from 34.3% for the same period of 2000. Selling, general
and administrative expenses as a percentage of total revenue for the six months
ended June 30, 2001 decreased to 31.1% from 32.8% for the same period of 2000.
These decreases were due to increased efficiencies at the selling, general, and
administrative expense level.

Additional retirement benefits of $1.6 million for the three months ended June 30, 2001
are primarily non-cash charges
due to the reissuance of stock options to a retiring
employee at exercise prices below the estimated fair market value.

EBITDA

We believe earnings before interest, taxes, depreciation, and amortization, or
EBITDA, to be useful in analyzing our operating performance and our ability to
service our debt. EBITDA for the three months ended June 30, 2001 was $10.8
million, representing a $1.0 million, or 10.4%, increase from $9.8 million for
the same period of 2000. EBITDA for the six months ended June 30, 2001 was
$23.8 million, representing a $3.0 million, or 14.4%, increase from $20.8
million for the same period of 2000. EBITDA as a percentage of total revenue
for the three months ended June 30, 2001 decreased to 35.9% from 38.9% for the
same period of 2000. EBITDA as a percentage of total revenue for the first six
months ended June 30, 2001 decreased to 39.2% from 40.1% for the same period of
2000. This decrease was due to the additional retirement benefits
discussed above.

Adjusted EBITDA

Adjusted EBITDA for the three months ended June 30, 2001 was $12.4 million,
representing a $2.6 million, or 26.2%, increase from $9.8 million for the same
period of 2000. Adjusted EBITDA excludes from EBITDA management fees to J.W. Childs
Associates, L.P. and the additional retirement benefits discussed
above. Adjusted EBITDA as a percentage of total
revenue for the six months ended June 30, 2001 was $25.5 million, representing
a $4.5 million, or 21.7%, increase from $21.0 for the same period of 2000.
Adjusted EBITDA as a percentage of total revenue for the three months ended
June 30, 2001 increased to 41.3% from 39.2% for the same period of 2000.
Adjusted EBITDA as a percentage of total revenue for the first six months of
2001 increased to 42.0% from 40.4% for the same period of 2000.

Interest Expense

Interest expense for the three months ended June 30, 2001 was $4.9 million,
representing a $0.3 million, or 4.1%, decrease from interest expense of $5.2
million for the same period of 2000. Interest expense for the six months ended
June 30, 2001 was $10.1 million, representing a $0.1 million, or 1.2%, decrease
from $10.2 million for the same period of 2000. These decreases primarily
reflect a reduced effective interest rate for our revolving credit facility,
partially offset by additional borrowings. Average borrowings increased for
the three months ended June 30, 2001 to $199.1 million from $195.4 million for
the same period in 2000, and for the six months ended June 30, 2001 to $198.3
million from $193.9 million during the same period of 2000.

Income Taxes

Our effective income tax rate for the six months
ended June 30, 2001 was 1.9%
compared to a statutory federal income tax rate of 34.0%. Tax expense for the
six months ended June 30, 2001 consists of minimum state taxes. We had a taxable loss for the six
months ended June 30, 2001, and estimate a taxable loss for the year. We do
not anticipate any federal tax or benefit for the year, as any net operating
loss generated during the year will be fully offset by a valuation allowance.

Net Loss

We incurred a net loss for the three months ended
June 30, 2001 of $2.0
million, compared to a net loss of $2.2 million in the same period of 2000. We
incurred a net loss for the six months ended June 30, 2001 of
$1.7 million,
compared to a net loss of $2.6 million in the same period of 2000. This net
loss reflects interest expense related to debt service obligations and the
additional retirement benefits discussed above.

9



---



Quarterly Financial Information:   Seasonality

Quarterly operating results are typically affected by seasonal factors.
Historically, our first and fourth quarters are the strongest, reflecting
increased hospital utilization during the fall and winter months.

Liquidity and Capital Resources

Historically, we have financed our equipment
purchases primarily through internally
generated funds and borrowings under our revolving credit facility.
As an asset intensive business, we need continued access to capital to support
the acquisition of equipment for outsourcing to our customers. We purchased
and received $42.6 million, $41.6 million and $31.2 million of outsourcing
equipment in 1998, 1999, and 2000, respectively. For the first half of 2000
and 2001, we purchased and received $13.7 million and $14.4 million of movable
medical equipment, respectively.

During the first six months of 2000 and 2001, net cash flows provided by
operating activities were $16.1 million and $13.1 million, respectively. Net
cash flows (used in) investing activities were ($14.7) million
and ($14.1) million in
each of these periods. Net cash flows (used in) provided by financing
activities were ($1.4) million and $0.9 million in each of these periods.

Our principal sources of liquidity are expected to be cash flows from operating
activities and borrowings under our revolving credit facility. It is
anticipated that our principal uses of liquidity will be to fund capital
expenditures related to purchases of movable medical equipment, provide working
capital, meet debt service requirements and finance our strategic plans.

In connection with our 1998 recapitalization, we issued $100.0 million of our
10.25% senior notes. In January 1999, we issued an additional $35.0 million of
our senior notes. The senior notes earn interest at a rate of 10.25% per year,
payable on March 1 and September 1 of each year. In October 1999, we
extinguished our prior revolving credit facility and entered into a new existing
$77.5 million revolving credit facility. Interest on loans outstanding under
our revolving credit facility is payable at a rate per annum, selected at our
option, equal to the base rate margin (which is the banks base rate plus
1.75%) or the adjusted eurodollar rate margin (which is the adjusted eurodollar
rate plus 3.00%).  Our revolving credit facility, which
terminates on October 31, 2004, contains certain covenants including
restrictions and limitations on dividends, capital expenditures, liens, leases,
incurrence of debt, transactions with affiliates, investments and certain
payments, and on mergers, acquisitions, consolidations and asset sales. As of
June 30, 2001, we had outstanding $135.0 million of our senior notes and
had borrowed $61.6 million under our revolving credit facility.

On August 17, 1998, we issued 6,000 shares of our Series A 12%
Cumulative Convertible Accruing Pay-In-Kind Preferred Stock to an affiliate of
J.W. Childs Equity Partners, L.P., the holder of approximately 78% of our
common stock, for an aggregate price of $6.0 million. On December 18,
1998, we redeemed our series A preferred stock with proceeds of $6.3
million from the sale to an insurance company of 6,246 shares of our Series B
13% Cumulative Preferred Stock together with a warrant to purchase 350,000
shares of our common stock.

We believe that, based on current levels of operations and anticipated growth,
our cash from operations, together with our other sources of liquidity,
including borrowings available under the revolving credit facility, will be
sufficient over the next three to seven quarters to fund anticipated capital
expenditures and make required payments of principal and interest on our debt,
including payments due on our senior notes and obligations under the revolving
credit facility. We believe that our ability to repay our senior notes and
amounts outstanding under the revolving credit facility at maturity will
require additional financing. There can be no assurance, however, that any
such financing will be available at such time to us, or that any such financing
will be on terms favorable to us.

Our expansion and acquisition strategy may require substantial capital, and no
assurance can be given that sufficient funding for such acquisitions will be
available under our revolving credit facility, or that we will be able to raise
any necessary additional funds through bank financing or the issuance of equity
or debt securities on terms acceptable to us, if at all.

On July 27, 2001, we filed a registration
statement for an initial public offering of our common stock, see Item 5 - Other Information.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

We do not have any liquid investments. Cash is kept to a minimum through the
use of our revolving credit facility. Our exposure to interest rate risk is
mainly through our borrowings under our revolving credit facility which permits
borrowings up to $77.5 million. At June 30, 2001, we were primarily
exposed to the eurodollar rate on our borrowings under the revolving credit
facility. We do not use derivative financial instruments.

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Part II  Other Information

Item 1.   Legal Proceedings

Not applicable.

Item 2.   Changes in Securities and Use of Proceeds

On June 29, 2001, we sold 20,000 shares of our Common Stock to Mike Cannizzaro,
a member of the Board of Directors, for an aggregate purchase price of $94,000.
The sale was completed pursuant to the exemption from registration provided by
Regulation D promulgated under the Securities Act of 1933, as amended (the
Securities Act). The proceeds from the sale of such shares were added to our
general funds and used for our general corporate purposes.

Item 3.   Defaults upon Senior Securities

Not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5.   Other Information

On July 27, 2001, we filed a registration statement in Form S-1 for the initial
public offering of up to $90 million of our common stock. The
shares will be sold by us, except that up to an additional 15% of the
offering size may be sold by existing shareholders to cover
over-allotments.  We intend to use
the net proceeds from the offering primarily for the retirement of debt under
our revolving credit facility and the redemption of the outstanding
shares of series B preferred
stock and the related warrant to purchase 350,000 shares.

In connection with the offering, we intend to amend
our existing revolving credit facility or secure a new credit
facility to provide for approximately $35 million in available
borrowings. We also intend to reincorporate in the
State of Delaware, adopt a 2001 Stock Incentive Plan for which 2,500,000 shares
of our common stock will be reserved and adopt a 2001 Employee Stock Purchase
Plan for which 500,000 shares of our common stock will be reserved.

Item 6.   Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:                              
| | --- |  | ---------------------------------------
|
| |     |  | 12.1 Ratio of Earnings to Fixed Charges
|
| | (b) |  | Reports on Form 8-K:                   
|
| |     |  | None                                   

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SIGNATURES



| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
|
| | Date: July 27, 2001                                                                                                                                                                         

| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Universal Hospital Services, Inc.                                                          
|
| | By       /s/ David E. Dovenberg
David E. Dovenberg,
President and Chief Executive
Officer  
|
| | By       /s/ John A. Gappa
John A. Gappa,
Senior Vice President and
Chief Financial Officer

12



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Universal Hospital Services, Inc.

EXHIBIT INDEX TO REPORT ON FORM 10-Q

|        |  |                                    |  |      |    | 
|------- |  | ---------------------------------- |  | ---- | -- | 
|Exhibit
|Number  |  | Description                        |  | Page |   
|        |  |                                    |  |      |   
|12.1    |  | Ratio of Earnings to Fixed Charges |  |      | 14 | 

13