# EDGAR Filing Document

**Accession Number:** 0000352915
**File Stem:** 0000950170-23-004656
**Filing Date:** 2023-2
**Character Count:** 857505
**Document Hash:** 8fa426212cc8bc863fa836835e2cb903
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-004656.hdr.sgml**: 20230227

**ACCESSION NUMBER**: 0000950170-23-004656

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 111

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230227

**DATE AS OF CHANGE**: 20230227

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** UNIVERSAL HEALTH SERVICES INC
- **CENTRAL INDEX KEY:** 0000352915
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062]
- **IRS NUMBER:** 232077891
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-10765
- **FILM NUMBER:** 23675126

**BUSINESS ADDRESS:**
- **STREET 1:** 367 S GULPH RD
- **CITY:** KING OF PRUSSIA
- **STATE:** PA
- **ZIP:** 19406
- **BUSINESS PHONE:** 6107683300

**MAIL ADDRESS:**
- **STREET 1:** 367 S GULPH ROAD
- **CITY:** KING OF PRUSSIA
- **STATE:** PA
- **ZIP:** 19406

?xml version="1.0" encoding="ASCII"? 10-K

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM** 10-K

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**(MARK ONE)**

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended** **December 31,** 2022

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from to** 

**Commission File No.** 1-10765

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UNIVERSAL HEALTH SERVICES, INC.

**(Exact name of registrant as specified in its charter)**

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| | |
|:---|:---|
| Delaware | 23-2077891 |
| **(State or other jurisdiction of**<br>**incorporation or organization)** | **(I.R.S. Employer**<br>**Identification Number)** |
| UNIVERSAL CORPORATE CENTER |  |
| 367 South Gulph Road<br>P.O. Box 61558<br>King of Prussia**,** Pennsylvania | 19406-0958 |
| **(Address of principal executive offices)** | **(Zip Code)** |

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**Registrant's telephone number, including area code: (**610**)** 768-3300

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**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Title of each class | &nbsp;&nbsp;Trading Symbol(s) | &nbsp;&nbsp;Name of each exchange on which registered |
| &nbsp;&nbsp;Class B Common Stock, $0.01 par value | &nbsp;&nbsp;UHS | &nbsp;&nbsp;New York Stock Exchange |

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**Securities registered pursuant to Section 12(g) of the Act:**

**Class D Common Stock, $.01 par value**

**(Title of each Class)**

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☐ |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of voting stock held by non-affiliates at June 30, 2022 was $6.4 billion. (For the purpose of this calculation, it was assumed that Class A, Class C, and Class D Common Stock, which are not traded but are convertible share-for-share into Class B Common Stock, have the same market value as Class B Common Stock. Also, for purposes of this calculation only, all directors are deemed to be affiliates.)

The number of shares of the registrant's Class A Common Stock, $.01 par value, Class B Common Stock, $.01 par value, Class C Common Stock, $.01 par value, and Class D Common Stock, $.01 par value, outstanding as of January 31, 2023, were 6,577,100; 63,417,294; 661,688 and 14,170, respectively.

**DOCUMENTS INCORPORATED BY REFERENCE:**

Portions of the registrant's definitive proxy statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2022 (incorporated by reference under Part III).

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**UNIVERSAL HEALTH SERVICES, INC.**

**2022 FORM 10-K ANNUAL REPORT**

**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
| PART I | PART I |  |
| Item 1 | [<u>Business</u>](#item_1_business) | 1 |
| Item 1A | [<u>Risk Factors</u>](#item_1a_risk_factors) | 12 |
| Item 1B | [<u>Unresolved Staff Comments</u>](#item_1b_unresolved_staff_comments) | 26 |
| Item 2 | [<u>Properties</u>](#item_2_properties) | 26 |
| Item 3 | [<u>Legal Proceedings</u>](#item_3_legal_proceedings) | 35 |
| Item 4 | [<u>Mine Safety Disclosure</u>](#item_4_mine_safety_disclosures) | 35 |
| PART II | PART II |  |
| Item 5 | [<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5_market) | 36 |
| Item 6 | [<u>\[RESERVED\]</u>](#item_6_reserved) | 37 |
| Item 7 | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_7_managements_discussion_analysis_f) | 38 |
| Item 7A | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_7a_quantitative_qualitative_disclos) | 75 |
| Item 8 | [<u>Financial Statements and Supplementary Data</u>](#item_8_financial_statements_supplementar) | 76 |
| Item 9 | [<u>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>](#item_9_changes_in_disagreements_with_acc) | 76 |
| Item 9A | [<u>Controls and Procedures</u>](#item_9a_controls_procedures) | 76 |
| Item 9B | [<u>Other Information</u>](#item_9b_or_information) | 77 |
| Item 9C | [<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c_disclosure_regarding_foreign) | 77 |
| PART III | PART III |  |
| Item 10 | [<u>Directors, Executive Officers and Corporate Governance</u>](#item_10_directors_executive_ficers_corpo) | 78 |
| Item 11 | [<u>Executive Compensation</u>](#item_11_executive_compensation) | 78 |
| Item 12 | [<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12_security_ownership_certain_benef) | 78 |
| Item 13 | [<u>Certain Relationships and Related Transactions, and Director Independence</u>](#item_13_certain_relationships_related_tr) | 78 |
| Item 14 | [<u>Principal Accountant Fees and Services</u>](#item_14_principal_accountant_fees_servic) | 78 |
| PART IV | PART IV |  |
| Item 15 | [<u>Exhibits and Financial Statement Schedules</u>](#item_15_exhibits_financial_statement_sch) | 79 |
| Item 16 | [<u>Form 10-K Summary</u>](#item_16_form_10_k_summary) | 86 |
| [<u>SIGNATURES</u>](#signatures) | [<u>SIGNATURES</u>](#signatures) | 87 |

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This Annual Report on Form 10-K is for the year ended December 31, 2022. This Annual Report modifies and supersedes documents filed prior to this Annual Report. Information that we file with the Securities and Exchange Commission (the "SEC") in the future will automatically update and supersede information contained in this Annual Report.

In this Annual Report, "we," "us," "our" "UHS" and the "Company" refer to Universal Health Services, Inc. and its subsidiaries. UHS is a registered trademark of UHS of Delaware, Inc., the management company for, and a wholly-owned subsidiary of Universal Health Services, Inc. Universal Health Services, Inc. is a holding company and operates through its subsidiaries including its management company, UHS of Delaware, Inc. All healthcare and management operations are conducted by subsidiaries of Universal Health Services, Inc. To the extent any reference to "UHS" or "UHS facilities" in this report including letters, narratives or other forms contained herein relates to our healthcare or management operations it is referring to Universal Health Services, Inc.'s subsidiaries including UHS of Delaware, Inc. Further, the terms "we," "us," "our" or the "Company" in such context similarly refer to the operations of Universal Health Services Inc.'s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment with or employees of the subsidiaries of Universal Health Services, Inc. including UHS of Delaware, Inc.

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 **PART I**

**ITEM 1. Business**

Our principal business is owning and operating, through our subsidiaries, acute care hospitals and outpatient facilities and behavioral health care facilities.

As of February 27, 2023, we owned and/or operated 359 inpatient facilities and 39 outpatient and other facilities including the following located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

**<u>Acute care facilities located in the U.S.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•28 inpatient acute care hospitals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•21 free-standing emergency departments, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•7 outpatient centers & 1 surgical hospital.

**<u>Behavioral health care facilities (331 inpatient facilities and 10 outpatient facilities):</u>** 

**<u>Located in the U.S.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•185 inpatient behavioral health care facilities, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•8 outpatient behavioral health care facilities.

**<u>Located in the U.K.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•143 inpatient behavioral health care facilities, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2 outpatient behavioral health care facilities.

**<u>Located in Puerto Rico:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•3 inpatient behavioral health care facilities.

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 57% of our consolidated net revenues during 2022 and 56% during 2021. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 43% of our consolidated net revenues during 2022 and 44% during 2021.

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $685 million in 2022 and $688 million in 2021. Total assets at our U.K. behavioral health care facilities were approximately $1.235 billion as of December 31, 2022 and $1.351 billion as of December 31, 2021.

Services provided by our hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. We provide capital resources as well as a variety of management services to our facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing and public relations.

**Available Information**

We are a Delaware corporation that was organized in 1979. Our principal executive offices are located at Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of Prussia, PA 19406. Our telephone number is (610) 768-3300.

Our website is located at www.uhs.com. Copies of our annual, quarterly and current reports that we file with the SEC, and any amendments to those reports, are available free of charge on our website. Our filings are also available to the public at the website maintained by the SEC, www.sec.gov. The information posted on our website is not incorporated into this Annual Report. Our Board of Directors' committee charters (Audit Committee, Compensation Committee, Nominating & Governance Committee and Quality and Compliance Committee), Code of Business Conduct and Corporate Standards applicable to all employees, Code of Ethics for Senior Financial Officers, Corporate Governance Guidelines and our Code of Conduct, Corporate Compliance Manual and Compliance Policies and Procedures are available free of charge on our website. Copies of such reports and charters are available in print to any stockholder who makes a request. Such requests should be made to our Secretary at our King of Prussia, PA corporate headquarters. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers of any provision of our Code of Ethics for Senior Financial Officers by promptly posting this information on our website.

In accordance with Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, we submitted our CEO's certification to the New York Stock Exchange in 2022. Additionally, contained in Exhibits 31.1 and 31.2 of this Annual Report on Form 10-K, are our CEO's and CFO's certifications regarding the quality of our public disclosures under Section 302 of the Sarbanes-Oxley Act of 2002.

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**Our Mission**

Our company mission is:

To provide superior quality healthcare services that

PATIENTS recommend to families and friends,

PHYSICIANS prefer for their patients,

PURCHASERS select for their clients,

EMPLOYEES are proud of, and

INVESTORS seek for long-term returns.

To achieve this, we have a commitment to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•service excellence

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•continuous improvement in measurable ways

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•employee development

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•ethical and fair treatment of all

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•teamwork

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•compassion

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•innovation in service delivery

**Business Strategy**

We believe community-based hospitals will remain the focal point of the healthcare delivery network and we are committed to a philosophy of self-determination for both the company and our hospitals.

**Acquisition of Additional Hospitals.** We selectively seek opportunities to expand our base of operations by acquiring, constructing or leasing additional hospital facilities. We are committed to a program of rational growth around our core businesses, while retaining the missions of the hospitals we manage and the communities we serve. Such expansion may provide us with access to new markets and new healthcare delivery capabilities. We also continue to examine our facilities and consider divestiture of those facilities that we believe do not have the potential to contribute to our growth or operating strategy. In recent years our behavioral health services segment has been focused on efforts to partner with non-UHS acute care hospitals to help operate their behavioral health services. These arrangements include hospital purchases, leased beds and joint venture operating agreements.

**Improvement of Operations of Existing Hospitals and Services.** We also seek to increase the operating revenues and profitability of owned hospitals by the introduction of new services, improvement of existing services, physician recruitment and the application of financial and operational controls.

We are involved in continual development activities for the benefit of our existing facilities. From time-to-time applications are filed with state health planning agencies to add new services in existing hospitals in states which require certificates of need, or CONs. Although we expect that some of these applications will result in the addition of new facilities or services to our operations, no assurances can be made for ultimate success by us in these efforts.

**Quality and Efficiency of Services.** Pressures to contain healthcare costs and technological developments allowing more procedures to be performed on an outpatient basis have led payers to demand a shift to ambulatory or outpatient care wherever possible. We are responding to this trend by emphasizing the expansion of outpatient services. In addition, in response to cost containment pressures, we continue to implement programs at our facilities designed to improve financial performance and efficiency while continuing to provide quality care, including more efficient use of professional and paraprofessional staff, monitoring and adjusting staffing levels and equipment usage, improving patient management and reporting procedures and implementing more efficient billing and collection procedures. In addition, we will continue to emphasize innovation in our response to the rapid changes in regulatory trends and market conditions while fulfilling our commitment to patients, physicians, employees, communities and our stockholders.

In addition, our aggressive recruiting of highly qualified physicians and developing provider networks help to establish our facilities as an important source of quality healthcare in their respective communities.

**Hospital Utilization**

We believe that the most important factors relating to the overall utilization of a hospital include the quality and market position of the hospital and the number, quality and specialties of physicians providing patient care within the facility. Generally, we believe that the ability of a hospital to meet the health care needs of its community is determined by its breadth of services, level of technology, emphasis on quality of care and convenience for patients and physicians. Other factors that affect utilization include general and local economic conditions, market penetration of managed care programs, the degree of outpatient use, the availability of

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reimbursement programs such as Medicare and Medicaid, and demographic changes such as the growth in local populations. Utilization across the industry also is being affected by improvements in clinical practice, medical technology and pharmacology. Current industry trends in utilization and occupancy have been significantly affected by changes in reimbursement policies of third party payers. We are also unable to predict the extent to which these industry trends will continue or accelerate. In addition, our acute care services business is typically subject to certain seasonal fluctuations, such as higher patient volumes and net patient service revenues in the first and fourth quarters of the year.

**Sources of Revenue**

We receive payments for services rendered from private insurers, including managed care plans, the federal government under the Medicare program, state governments under their respective Medicaid programs and directly from patients. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Sources of Revenue for additional disclosure. Other information related to our revenues, income and other operating information for each reporting segment of our business is provided in Note 12 to our Consolidated Financial Statements, Segment Reporting.

**Regulation and Other Factors**

**Overview:** The healthcare industry is subject to numerous laws, regulations and rules including, among others, those related to government healthcare participation requirements, various licensure and accreditations, reimbursement for patient services, health information privacy and security rules, and Medicare and Medicaid fraud and abuse provisions (including, but not limited to, federal statutes and regulations prohibiting kickbacks and other illegal inducements to potential referral sources, false claims submitted to federal or state health care programs and self-referrals by physicians). Providers that are found to have violated any of these laws and regulations may be excluded from participating in government healthcare programs, subjected to significant fines or penalties and/or required to repay amounts received from the government for previously billed patient services. Although we believe our policies, procedures and practices comply with governmental regulations, no assurance can be given that we will not be subjected to additional governmental inquiries or actions, or that we would not be faced with sanctions, fines or penalties if so subjected. Even if we were to ultimately prevail, a significant governmental inquiry or action under one of the above laws, regulations or rules could have a material adverse impact on us.

**Licensing, Certification and Accreditation:** All of our U.S. hospitals are subject to compliance with various federal, state and local statutes and regulations in the U.S. and receive periodic inspection by state licensing agencies to review standards of medical care, equipment and cleanliness. Our hospitals must also comply with the conditions of participation and licensing requirements of federal, state and local health agencies, as well as the requirements of municipal building codes, health codes and local fire departments. Various other licenses and permits are also required in order to dispense narcotics, operate pharmacies, handle radioactive materials and operate certain equipment. Our facilities in the United Kingdom are also subject to various laws and regulations.

All of our eligible hospitals have been accredited by The Joint Commission. All of our acute care hospitals and most of our behavioral health centers in the U.S. are certified as providers of Medicare and Medicaid services by the appropriate governmental authorities.

If any of our facilities were to lose its Joint Commission accreditation or otherwise lose its certification under the Medicare and Medicaid programs, the facility may be unable to receive reimbursement from the Medicare and Medicaid programs and other payers. We believe our facilities are in substantial compliance with current applicable federal, state, local and independent review body regulations and standards. The requirements for licensure, certification and accreditation are subject to change and, in order to remain qualified, it may become necessary for us to make changes in our facilities, equipment, personnel and services in the future, which could have a material adverse impact on operations.

**Certificates of Need:** Many of the states in which we operate hospitals have enacted certificates of need ("CON") laws as a condition prior to hospital capital expenditures, construction, expansion, modernization or initiation of major new services. Failure to obtain necessary state approval can result in our inability to complete an acquisition, expansion or replacement, the imposition of civil or, in some cases, criminal sanctions, the inability to receive Medicare or Medicaid reimbursement or the revocation of a facility's license, which could harm our business. In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material adverse effects from those requirements, but we cannot predict the impact of these changes upon our operations.

**Conversion Legislation:** Many states have enacted or are considering enacting laws affecting the conversion or sale of not-for-profit hospitals to for-profit entities. These laws generally require prior approval from the attorney general, advance notification and community involvement. In addition, attorneys general in states without specific conversion legislation may exercise discretionary authority over these transactions. Although the level of government involvement varies from state to state, the trend is to provide for increased governmental review and, in some cases, approval of a transaction in which a not-for-profit entity sells a health care facility to a for-profit entity. The adoption of new or expanded conversion legislation and the increased review of not-for-profit hospital conversions may limit our ability to grow through acquisitions of not-for-profit hospitals.

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**Utilization Review:** Federal regulations require that admissions and utilization of facilities by Medicare and Medicaid patients must be reviewed in order to ensure efficient utilization of facilities and services. The law and regulations require Peer Review Organizations ("PROs") to review the appropriateness of Medicare and Medicaid patient admissions and discharges, the quality of care provided, the validity of diagnosis related group ("DRG") classifications and the appropriateness of cases of extraordinary length of stay. PROs may deny payment for services provided, assess fines and also have the authority to recommend to the Department of Health and Human Services ("HHS") that a provider that is in substantial non-compliance with the standards of the PRO be excluded from participating in the Medicare program. We have contracted with PROs in each state where we do business to perform the required reviews.

**Audits:** Most hospitals are subject to federal audits to validate the accuracy of Medicare and Medicaid program submitted claims. If these audits identify overpayments, we could be required to pay a substantial rebate of prior years' payments subject to various administrative appeal rights. The federal government contracts with third-party "recovery audit contractors" ("RACs") and "Medicaid integrity contractors" ("MICs"), on a contingent fee basis, to audit the propriety of payments to Medicare and Medicaid providers. Similarly, Medicare zone program integrity contractors ("ZPICs") target claims for potential fraud and abuse. Additionally, Medicare administrative contractors ("MACs") must ensure they pay the right amount for covered and correctly coded services rendered to eligible beneficiaries by legitimate providers. The Centers for Medicare and Medicaid Services ("CMS") consolidated many of these Medicare and Medicaid program integrity functions into new unified program integrity contractors ("UPICs"), though it remains unclear what effect, if any, this consolidation may have. We have undergone claims audits related to our receipt of federal healthcare payments during the last three years, the results of which have not required material adjustments to our consolidated results of operations. However, potential liability from future federal or state audits could ultimately exceed established reserves, and any excess could potentially be substantial. Further, Medicare and Medicaid regulations also provide for withholding Medicare and Medicaid overpayments in certain circumstances, which could adversely affect our cash flow.

**Self-Referral and Anti-Kickback Legislation**

**The Stark Law:** The Social Security Act includes a provision commonly known as the "Stark Law." This law prohibits physicians from referring Medicare and Medicaid patients to entities with which they or any of their immediate family members have a financial relationship, unless an exception is met. These types of referrals are known as "self-referrals." Sanctions for violating the Stark Law include civil penalties up to $27,750 for each violation, and up to $185,009 for sham arrangements. There are a number of exceptions to the self-referral prohibition, including an exception for a physician's ownership interest in an entire hospital as opposed to an ownership interest in a hospital department unit, service or subpart. However, federal laws and regulations now limit the ability of hospitals relying on this exception to expand aggregate physician ownership interest or to expand certain hospital facilities. This regulation also places a number of compliance requirements on physician-owned hospitals related to reporting of ownership interest. There are also exceptions for many of the customary financial arrangements between physicians and providers, including employment contracts, leases and recruitment agreements that adhere to certain enumerated requirements. CMS issued a final rule in 2020 that created a new Stark exception for value-based models. Although the final regulations provide exceptions to the Stark Law, there may remain regulatory risks for participating hospitals, as well as financial and operational risks.

We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards. Nonetheless, because the law in this area is complex and constantly evolving, there can be no assurance that federal regulatory authorities will not determine that any of our arrangements with physicians violate the Stark Law.

**Anti-kickback Statute:** A provision of the Social Security Act known as the "anti-kickback statute" prohibits healthcare providers and others from directly or indirectly soliciting, receiving, offering or paying money or other remuneration to other individuals and entities in return for using, referring, ordering, recommending or arranging for such referrals or orders of services or other items covered by a federal or state health care program. However, changes to the anti-kickback statute have reduced the intent required for violation; one is no longer required to have actual knowledge or specific intent to commit a violation of the anti-kickback statute in order to be found in violation of such law.

The anti-kickback statute contains certain exceptions, and the Office of the Inspector General of the Department of Health and Human Services ("OIG") has issued regulations that provide for "safe harbors," from the federal anti-kickback statute for various activities. These activities, which must meet certain requirements, include (but are not limited to) the following: investment interests, space rental, equipment rental, practitioner recruitment, personnel services and management contracts, sale of practice, referral services, warranties, discounts, employees, group purchasing organizations, waiver of beneficiary coinsurance and deductible amounts, managed care arrangements, obstetrical malpractice insurance subsidies, investments in group practices, freestanding surgery centers, donation of technology for electronic health records and referral agreements for specialty services. In 2020, the OIG issued a final rule that established an anti-kickback statute safe harbor for value based models. Although the final regulations provide safe harbors, there may remain regulatory risks for participating hospitals, as well as financial and operational risks. The fact that conduct or a business arrangement does not fall within a safe harbor or exception does not automatically render the conduct or business arrangement illegal under the anti-kickback statute. However, such conduct and business arrangements may lead to increased scrutiny by government enforcement authorities.

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Although we believe that our arrangements with physicians and other referral sources have been structured to comply with current law and available interpretations, there can be no assurance that all arrangements comply with an available safe harbor or that regulatory authorities enforcing these laws will determine these financial arrangements do not violate the anti-kickback statute or other applicable laws. Violations of the anti-kickback statute may be punished by a criminal fine of up to $100,000 for each violation or imprisonment, however, under 18 U.S.C. Section 3571, this fine may be increased to $250,000 for individuals and $500,000 for organizations. Civil money penalties may include fines of up to $112,131 per violation and damages of up to three times the total amount of the remuneration and/or exclusion from participation in Medicare and Medicaid.

**Similar State Laws:** Many of the states in which we operate have adopted laws that prohibit payments to physicians in exchange for referrals similar to the anti-kickback statute and the Stark Law, some of which apply regardless of the source of payment for care. These statutes typically provide criminal and civil penalties as well as loss of licensure. In many instances, the state statutes provide that any arrangement falling in a federal safe harbor will be immune from scrutiny under the state statutes. However, in most cases, little precedent exists for the interpretation or enforcement of these state laws.

These laws and regulations are extremely complex and, in many cases, we don't have the benefit of regulatory or judicial interpretation. It is possible that different interpretations or enforcement of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment, personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or more of these laws, or the public announcement that we are being investigated for possible violations of one or more of these laws (see Item 3. Legal Proceedings), could have a material adverse effect on our business, financial condition or results of operations and our business reputation could suffer significantly. In addition, we cannot predict whether other legislation or regulations at the federal or state level will be adopted, what form such legislation or regulations may take or what their impact on us may be.

If we are deemed to have failed to comply with the anti-kickback statute, the Stark Law or other applicable laws and regulations, we could be subjected to liabilities, including criminal penalties, civil penalties (including the loss of our licenses to operate one or more facilities), and exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state health care programs. The imposition of such penalties could have a material adverse effect on our business, financial condition or results of operations.

**Federal False Claims Act and Similar State Regulations:** A current trend affecting the health care industry is the increased use of the federal False Claims Act, and, in particular, actions being brought by individuals on the government's behalf under the False Claims Act's qui tam, or whistleblower, provisions. Whistleblower provisions allow private individuals to bring actions on behalf of the government by alleging that the defendant has defrauded the Federal government.

When a defendant is determined by a court of law to have violated the False Claims Act, the defendant may be liable for up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $13,508 to $27,018 for each separate false claim. There are many potential bases for liability under the False Claims Act. Liability often arises when an entity knowingly submits a false claim for reimbursement to the federal government. The Fraud Enforcement and Recovery Act of 2009 ("FERA") amended and expanded the number of actions for which liability may attach under the False Claims Act, eliminating requirements that false claims be presented to federal officials or directly involve federal funds. FERA also clarifies that a false claim violation occurs upon the knowing retention, as well as the receipt, of overpayments. In addition, recent changes to the anti-kickback statute have made violations of that law punishable under the civil False Claims Act. Further, a number of states have adopted their own false claims provisions as well as their own whistleblower provisions whereby a private party may file a civil lawsuit on behalf of the state in state court. The False Claims Act require that federal healthcare program overpayments be returned within 60 days from the date the overpayment was identified, or by the date any corresponding cost report was due, whichever is later. Failure to return an overpayment within this period may result in additional civil False Claims Act liability.

**Other Fraud and Abuse Provisions:** The Social Security Act also imposes criminal and civil penalties for submitting false claims to Medicare and Medicaid. False claims include, but are not limited to, billing for services not rendered, billing for services without prescribed documentation, misrepresenting actual services rendered in order to obtain higher reimbursement and cost report fraud. Like the anti-kickback statute, these provisions are very broad.

Further, the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") broadened the scope of the fraud and abuse laws by adding several criminal provisions for health care fraud offenses that apply to all health benefit programs, whether or not payments under such programs are paid pursuant to federal programs. HIPAA also introduced enforcement mechanisms to prevent fraud and abuse in Medicare. There are civil penalties for prohibited conduct, including, but not limited to billing for medically unnecessary products or services.

**HIPAA Administrative Simplification and Privacy Requirements:** The administrative simplification provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), require the use of uniform electronic data transmission standards for health care claims and payment transactions submitted or received electronically. These provisions are intended to encourage electronic commerce in the health care industry. HIPAA also established federal rules protecting the privacy and security of personal health information. The privacy and security regulations address the use and disclosure of

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individual health care information and the rights of patients to understand and control how such information is used and disclosed. Violations of HIPAA can result in both criminal and civil fines and penalties.

We believe that we are in material compliance with the privacy regulations of HIPAA, as we continue to develop training and revise procedures to address ongoing compliance. The HIPAA security regulations require health care providers to implement administrative, physical and technical safeguards to protect the confidentiality, integrity and availability of patient information. HITECH has since strengthened certain HIPAA rules regarding the use and disclosure of protected health information, extended certain HIPAA provisions to business associates, and created new security breach notification requirements. HITECH has also extended the ability to impose civil money penalties on providers not knowing that a HIPAA violation has occurred. We believe that we have been in substantial compliance with HIPAA and HITECH requirements to date. Recent changes to the HIPAA regulations may result in greater compliance requirements for healthcare providers, including expanded obligations to report breaches of unsecured patient data, as well as create new liabilities for the actions of parties acting as business associates on our behalf.

**Red Flags Rule:** In addition, the Federal Trade Commission ("FTC") Red Flags Rule requires financial institutions and businesses maintaining accounts to address the risk of identity theft. The Red Flag Program Clarification Act of 2010, signed on December 18, 2010, appears to exclude certain healthcare providers from the Red Flags Rule, but permits the FTC or relevant agencies to designate additional creditors subject to the Red Flags Rule through future rulemaking if the agencies determine that the person in question maintains accounts subject to foreseeable risk of identity theft. Compliance with any such future rulemaking may require additional expenditures in the future.

**Patient Safety and Quality Improvement Act of 2005:** On July 29, 2005, the Patient Safety and Quality Improvement Act of 2005 was enacted, which has the goal of reducing medical errors and increasing patient safety. This legislation establishes a confidential reporting structure in which providers can voluntarily report "Patient Safety Work Product" ("PSWP") to "Patient Safety Organizations" ("PSOs"). Under the system, PSWP is made privileged, confidential and legally protected from disclosure. PSWP does not include medical, discharge or billing records or any other original patient or provider records but does include information gathered specifically in connection with the reporting of medical errors and improving patient safety. This legislation does not preempt state or federal mandatory disclosure laws concerning information that does not constitute PSWP. PSOs are certified by the Secretary of the HHS for three-year periods and analyze PSWP, provide feedback to providers and may report non-identifiable PSWP to a database. In addition, PSOs are expected to generate patient safety improvement strategies.

**Environmental Regulations:** Our healthcare operations generate medical waste that must be disposed of in compliance with federal, state and local environmental laws, rules and regulations. Infectious waste generators, including hospitals, face substantial penalties for improper disposal of medical waste, including civil penalties of up to $25,000 per day of noncompliance, criminal penalties of up to $50,000 per day, imprisonment, and remedial costs. In addition, our operations, as well as our purchases and sales of facilities are subject to various other environmental laws, rules and regulations. We believe that our disposal of such wastes is in material compliance with all state and federal laws.

**Corporate Practice of Medicine:** Several states, including Florida, Nevada, California and Texas, have laws and/or regulations that prohibit corporations and other entities from employing physicians and practicing medicine for a profit or that prohibit certain direct and indirect payments or fee-splitting arrangements between health care providers that are designed to induce or encourage the referral of patients to, or the recommendation of, particular providers for medical products and services. Possible sanctions for violation of these restrictions include loss of license and civil and criminal penalties. In addition, agreements between the corporation and the physician may be considered void and unenforceable. These statutes and/or regulations vary from state to state, are often vague and have seldom been interpreted by the courts or regulatory agencies. We do not expect these state corporate practice of medicine proscriptions to significantly affect our operations. Many states have laws and regulations which prohibit payments for referral of patients and fee-splitting with physicians. We do not make any such payments or have any such arrangements.

**EMTALA:** All of our hospitals are subject to the Emergency Medical Treatment and Active Labor Act ("EMTALA"). This federal law generally requires hospitals with an emergency department that are certified providers under Medicare to conduct a medical screening examination of every person who visits the hospital's emergency room for treatment and, if the patient is suffering from a medical emergency, to either stabilize the patient's condition or transfer the patient to a facility that can better handle the condition. Our obligation to screen and stabilize emergency medical conditions exists regardless of a patient's ability to pay for treatment. There are severe penalties under EMTALA if a hospital fails to screen or appropriately stabilize or transfer a patient or if the hospital delays appropriate treatment in order to first inquire about the patient's ability to pay. Penalties for violations of EMTALA include civil monetary penalties and exclusion from participation in the Medicare program. In addition to any liabilities that a hospital may incur under EMTALA, an injured patient, the patient's family or a medical facility that suffers a financial loss as a direct result of another hospital's violation of the law can bring a civil suit against the hospital unrelated to the rights granted under that statute.

The federal government broadly interprets EMTALA to cover situations in which patients do not actually present to a hospital's emergency room, but present for emergency examination or treatment to the hospital's campus, generally, or to a hospital-based clinic that treats emergency medical conditions or are transported in a hospital-owned ambulance, subject to certain exceptions. EMTALA does not generally apply to patients admitted for inpatient services; however, CMS has sought industry comments on the potential applicability of EMTALA to hospital inpatients and the responsibilities of hospitals with specialized capabilities, respectively. CMS

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has not yet issued regulations or guidance in response to that request for comments. The government also has expressed its intent to investigate and enforce EMTALA violations actively in the future. We believe that we operate in substantial compliance with EMTALA.

**Health Care Industry Investigations:** We are subject to claims and suits in the ordinary course of business, including those arising from care and treatment afforded by our hospitals and are party to various government investigations and litigation. Please see Item 3. Legal Proceedings included herein for additional disclosure. In addition, currently, and from time to time, some of our facilities are subjected to inquiries and/or actions and receive notices of potential non-compliance of laws and regulations from various federal and state agencies. Providers that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to potential licensure, certification, and/or accreditation revocation, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services.

We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards. Because the law in this area is complex and constantly evolving, governmental investigation or litigation may result in interpretations that are inconsistent with industry practices, including ours. Although we believe our policies, procedures and practices comply with governmental regulations, no assurance can be given that we will not be subjected to inquiries or actions, or that we will not be faced with sanctions, fines or penalties in connection with the investigations. Even if we were to ultimately prevail, the government's inquiry and/or action in connection with these matters could have a material adverse effect on our future operating results.

Our substantial Medicare, Medicaid and other governmental billings may result in heightened scrutiny of our operations. It is possible that governmental entities could initiate additional investigations or litigation in the future and that such matters could result in significant penalties as well as adverse publicity. It is also possible that our executives and/or managers could be included as targets or witnesses in governmental investigations or litigation and/or named as defendants in private litigation.

**Revenue Rulings 98-15 and 2004-51:** In March 1998 and May 2004, the IRS issued guidance regarding the tax consequences of joint ventures between for-profit and not-for-profit hospitals. As a result of the tax rulings, the IRS has proposed, and may in the future propose, to revoke the tax-exempt or public charity status of certain not-for-profit entities which participate in such joint ventures or to treat joint venture income as unrelated business taxable income to them. The tax rulings have limited development of joint ventures and any adverse determination by the IRS or the courts regarding the tax-exempt or public charity status of a not-for-profit partner or the characterization of joint venture income as unrelated business taxable income could further limit joint venture development with not-for-profit hospitals, and/or require the restructuring of certain existing joint ventures with not-for-profits.

**State Rate Review:** Some states where we operate hospitals have adopted legislation mandating rate or budget review for hospitals or have adopted taxes on hospital revenues, assessments or licensure fees to fund indigent health care within the state. In the aggregate, state rate reviews and indigent tax provisions have not materially, adversely affected our results of operations.

**Medical Malpractice Tort Law Reform:** Medical malpractice tort law has historically been maintained at the state level. All states have laws governing medical liability lawsuits. Over half of the states have limits on damages awards. Almost all states have eliminated joint and several liability in malpractice lawsuits, and many states have established limits on attorney fees. Many states had bills introduced in their legislative sessions to address medical malpractice tort reform. Proposed solutions include enacting limits on non-economic damages, malpractice insurance reform, and gathering lawsuit claims data from malpractice insurance companies and the courts for the purpose of assessing the connection between malpractice settlements and premium rates. Reform legislation has also been proposed, but not adopted, at the federal level that could preempt additional state legislation in this area.

**Compliance Program:** Our company-wide compliance program has been in place since 1998. Currently, the program's elements include a Code of Conduct, risk area specific policies and procedures, employee education and training, an internal system for reporting concerns, auditing and monitoring programs, and a means for enforcing the program's policies.

Since its initial adoption, the compliance program continues to be expanded and developed to meet the industry's expectations and our needs. Specific written policies, procedures, training and educational materials and programs, as well as auditing and monitoring activities have been prepared and implemented to address the functional and operational aspects of our business. Specific areas identified through regulatory interpretation and enforcement activities have also been addressed in our program. Claims preparation and submission, including coding, billing, and cost reports, comprise the bulk of these areas. Financial arrangements with physicians and other referral sources, including compliance with anti-kickback and Stark laws and emergency department treatment and transfer requirements are also the focus of policy and training, standardized documentation requirements, and review and audit.

**United Kingdom Regulation:** Our operations in the United Kingdom are also subject to a high level of regulation relating to registration and licensing requirements, employee regulation, clinical standards, environmental rules as well as other areas. We are also subject to a highly regulated business environment, and failure to comply with the various laws and regulations applicable to us could lead to substantial penalties and other adverse effects on our business.

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**Human Capital Management**

**Employees and Medical Staff**

As of December 31, 2022, we had approximately 93,800 total employees consisting of: (i) approximately 82,300 employees located in the U.S., of which approximately 59,700 were employed full-time, and; (ii) approximately 11,500 employees located in the U.K. Our hospitals are staffed by licensed physicians who have been admitted to the medical staff of individual hospitals. In a number of our markets, physicians may have admitting privileges at other hospitals in addition to ours. Within our acute care division, approximately 370 physicians are employed by physician practice management subsidiaries of ours either directly or through contracts with affiliated group practices structured as 501A corporations. Members of the medical staffs of our hospitals also serve on the medical staffs of hospitals not owned by us and may terminate their affiliation with our hospitals at any time. In addition, within our behavioral health division, approximately 490 psychiatrists are employed by subsidiaries of ours either directly or through contracts with affiliated group practices structured as 501A corporations. Each of our hospitals is managed on a day-to-day basis by a managing director employed by a subsidiary of ours. In addition, a Board of Governors, including members of the hospital's medical staff, governs the medical, professional and ethical practices at each hospital. We believe that our relations with our employees are satisfactory.

**Labor Relations**

Approximately 825 of our employees at four of our hospitals are unionized. At Valley Hospital Medical Center, housekeeping and dietary employees are represented by the Culinary Workers Union, Local 226, and engineers are represented by the International Union of Operating Engineers. At Desert Springs Hospital, which is scheduled to discontinue all inpatient operations by March of 2023, engineers are represented by the International Union of Operating Engineers and registered nurses are represented by the Service Employees International Union ("SEIU"). At HRI Hospital in Boston, registered nurses, licensed practical nurses, certain technicians and some clerical employees are represented by the SEIU. At Brooke Glen Behavioral Hospital, unionized employees are represented by the Teamsters, and registered nurses are represented by the Northwestern Nurses Association/Pennsylvania Association of Staff Nurses and Allied Professionals.

**Culture and Work Environment**

During orientation, newly hired employees learn our mission, vision, principles and values, key policies and procedures, a summary of the various benefits and resources available, and perhaps most notably, an overview of our founding principle, Service Excellence. Learning key attributes of our Service Excellence standards, which include continuous improvement, employee development, ethical and fair treatment of all, teamwork, compassion and innovation in service delivery, provides newly hired employees a thorough understanding of our company culture. Other components of our Service Excellence standards, which include treating everyone as a guest, demonstrating professionalism and excellence and practicing teamwork, are shared to help guide the desired approach to day-to-day activities.

Service Excellence Facilitator Certification Workshops are available for facility employees identified by their leadership for consistently upholding and demonstrating our Service Excellence standards. Certified facilitators foster the Service Excellence culture and deliver training at their facilities.

During 2022, we strengthened our recruitment efforts, improved the overall hiring and onboarding experience, expanded the training resources employees need to do their jobs effectively and safely, facilitated more teamwork and collaboration, addressed burnout, expanded mentorship and increased employee engagement.

**Ethical Standards**

Each member of our Board of Directors and senior management is committed to healthcare operations that are ethical and in compliance with all applicable laws and regulations.

We are committed to fostering a culture of accountability at all levels and encourage our employees to report anything they believe could be noncompliant with our values. We prohibit retaliation for the good faith reporting of compliance concerns and offer the ability for individuals to anonymously elevate any concerns. Our commitment to fairness and integrity extends to everyone with whom we interact and do business.

**Health and Safety**

Policies and training programs to encourage work safety are a major focus in our organization. Leading into 2022, we launched a new employee assistance program which has provided a superior level of service to all our employees and members of their households. They also provided support on site at any of our hospitals. We have continuous training on workplace safety and launched a "We Care" program guide to ensure our hospitals support employees in a detailed way in the event of an employee injury.

**Employee Development**

In keeping with our culture of continuous improvement, training opportunities are available for all employees, regardless of level or status. These include formal instructor-led, in-person or virtual training, informal mentoring or networking opportunities or self-administered online courses.

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Training programs are designed to assist with personal and skill development, career advancement and succession planning. In addition to mandatory training that focus on keeping employees mindful and informed of key policies and skill sets, many are voluntary. All training is tailored to include potential Americans with Disabilities Act accommodations.

Across the company, we offer educational and work opportunities, including internships, externships and clinical field placement opportunities.

We also offer financial assistance programs, such as tuition reimbursement, to support employees participating in degree or certification programs.

**Equal Employment Opportunity**

We are committed to the principle of Equal Employment Opportunity ("EEO") for all employees and applicants. As an EEO Employer, we support and are fully committed to recruitment, selection, placement, promotion and compensation of all individuals without regard to race, color, religion, age, sex (including pregnancy, gender identity, and sexual orientation), genetic information, national origin, disability status, protected veteran status or any other characteristic protected by federal, state or local laws.

**Diversity and Inclusion**

We value each member of our team and are committed to treating everyone with dignity and respect. Our commitment to diversity, equality and inclusion includes regularly monitoring employment practices to ensure equity, regardless of an employee's gender, race or ethnicity and championing for inclusive behaviors through leadership example, policies and procedures, training and special events.

**Employee Assistance** 

We continue to support the overall health and financial well-being of our employees across the extensive programs and benefit plans that we offer. In 2022, we continued to expand the UHS Resource Guide which provides details on access to the benefits, resources and support tools available to employees throughout our organization.

In 2022, the UHS Foundation continued to support employees and their families who suffered losses due to natural disasters across the country, including fires in Boulder, Colorado, Hurricane Ida, Hurricane Ian, and the storms that impacted Kentucky.

**Competition**

The health care industry is highly competitive. In recent years, competition among healthcare providers for patients has intensified in the United States due to, among other things, regulatory and technological changes, increasing use of managed care payment systems, cost containment pressures and a shift toward outpatient treatment. In all of the geographical areas in which we operate, there are other facilities that provide services comparable to those offered by our facilities. In addition, some of our competitors include hospitals that are owned by tax-supported governmental agencies or by nonprofit corporations and may be supported by endowments and charitable contributions and exempt from property, sale and income taxes. Such exemptions and support are not available to us.

In some markets, certain of our competitors may have greater financial resources, be better equipped and offer a broader range of services than us. Certain hospitals that are located in the areas served by our facilities are specialty or large hospitals that provide medical, surgical and behavioral health services, facilities and equipment that are not available at our hospitals. The increase in outpatient treatment and diagnostic facilities, outpatient surgical centers and freestanding ambulatory surgical also increases competition for us. In addition, some of our hospitals face competition from hospitals or surgery centers that are physician owned.

The number and quality of the physicians on a hospital's staff are important factors in determining a hospital's success and competitive advantage. Typically, physicians are responsible for making hospital admissions decisions and for directing the course of patient treatment. We believe that physicians refer patients to a hospital primarily on the basis of the patient's needs, the quality of other physicians on the medical staff, the location of the hospital and the breadth and scope of services offered at the hospital's facilities. We strive to retain and attract qualified doctors by maintaining high ethical and professional standards and providing adequate support personnel, technologically advanced equipment and facilities that meet the needs of those physicians.

In addition, we depend on the efforts, abilities, and experience of our medical support personnel, including our nurses, pharmacists and lab technicians and other health care professionals. We compete with other health care providers in recruiting and retaining qualified hospital management, nurses and other medical personnel. Our acute care and behavioral health care facilities are experiencing the effects of a nationwide staffing shortage, which has caused and may continue to cause an increase in salaries, wages and benefits expense in excess of the inflation rate. In addition, in some markets like California, there are requirements to maintain specified nurse-staffing levels. To the extent we cannot meet those levels, we may be required to limit the healthcare services provided in these markets which would have a corresponding adverse effect on our net operating revenues.

Many states in which we operate hospitals have CON laws. The application process for approval of additional covered services, new facilities, changes in operations and capital expenditures is, therefore, highly competitive in these states. In those states that do not have CON laws or which set relatively high levels of expenditures before they become reviewable by state authorities, competition in the form of new services, facilities and capital spending is more prevalent. See "Regulation and Other Factors."

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Our ability to negotiate favorable service contracts with purchasers of group health care services also affects our competitive position and significantly affects the revenues and operating results of our hospitals. Managed care plans attempt to direct and control the use of hospital services and to demand that we accept lower rates of payment. In addition, employers and traditional health insurers are increasingly interested in containing costs through negotiations with hospitals for managed care programs and discounts from established charges. In return, hospitals secure commitments for a larger number of potential patients. Generally, hospitals compete for service contracts with group health care service purchasers on the basis of price, market reputation, geographic location, quality and range of services, quality of the medical staff and convenience. The importance of obtaining contracts with managed care organizations varies from market to market depending on the market strength of such organizations.

A key element of our growth strategy is expansion through the acquisition of additional hospitals in select markets. The competition to acquire hospitals is significant. We compete for acquisitions with other for-profit health care companies, private equity and venture capital firms, as well as not-for-profit entities. Some of our competitors have greater resources than we do. We intend to selectively seek opportunities to expand our base of operations by adhering to our disciplined program of rational growth, but may not be successful in accomplishing acquisitions on favorable terms.

**Relationship with Universal Health Realty Income Trust**

At December 31, 2022, we held approximately 5.7% of the outstanding shares of Universal Health Realty Income Trust (the "Trust"). We serve as Advisor to the Trust under an annually renewable advisory agreement, which is scheduled to expire on December 31<sup>st</sup> of each year, pursuant to the terms of which we conduct the Trust's day-to-day affairs, provide administrative services and present investment opportunities. The advisory agreement was renewed by the Trust for 2023 at the same rate in place for 2022, 2021 and 2020, providing for an advisory computation at 0.70% of the Trust's average invested real estate assets. We earned an advisory fee from the Trust, which is included in net revenues in the accompanying consolidated statements of income, of approximately $5.1 million during 2022, $4.4 million during 2021 and $4.1 million during 2020.

In addition, certain of our officers and directors are also officers and/or directors of the Trust. Management believes that it has the ability to exercise significant influence over the Trust, therefore we account for our investment in the Trust using the equity method of accounting.

Our pre-tax share of income from the Trust was $1.2 million during 2022, $6.2 million during 2021 and $1.1 million during 2020 , which are included in other income, net, on the accompanying consolidated statements of income for each year. We received dividends from the Trust amounting to $2.2 million during each of 2022, 2021 and 2020. Included in our share of the Trust's income during 2021 was approximately $5.0 million related to our share of gains on various transactions recorded by the Trust, including an asset purchase and sale transaction between the Trust and UHS, as discussed below.

The carrying value of our investment in the Trust was $8.4 million and $9.4 million at December 31, 2022 and 2021, respectively, and is included in other assets in the accompanying consolidated balance sheets. The market value of our investment in the Trust was $37.6 million at December 31, 2022 and $46.8 million at December 31, 2021, based on the closing price of the Trust's stock on the respective dates.

The Trust commenced operations in 1986 by purchasing certain hospital properties from us and immediately leasing the properties back to our respective subsidiaries. The base rents are paid monthly and the bonus rents, which as of January 1, 2022 are applicable only to McAllen Medical Center, are computed and paid on a quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The leases with those subsidiaries are unconditionally guaranteed by us and are cross-defaulted with one another.

On December 31, 2021, we entered into an asset purchase and sale agreement with the Trust, which was amended during the first quarter of 2022, pursuant to the terms of which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a wholly-owned subsidiary of ours purchased from the Trust, the real estate assets of the Inland Valley Campus of Southwest Healthcare System located in Wildomar, California, at its fair market value of $79.6 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•two wholly-owned subsidiaries of ours transferred to the Trust, the real estate assets of the following properties:

oAiken Regional Medical Center ("Aiken"), located in Aiken, South Carolina (which includes a 211-bed acute care hospital and a 62-bed behavioral health facility), at its fair-market value of approximately $57.7 million, and;

oCanyon Creek Behavioral Health ("Canyon Creek"), located in Temple, Texas, at its fair-market value of approximately $26.0 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•in connection with this transaction, since the fair-market value of Aiken and Canyon Creek, which totaled approximately $83.7 million in the aggregate, exceeded the $79.6 million fair-market value of the Inland Valley Campus of Southwest Healthcare System, we received approximately $4.1 million in cash from the Trust. This transaction generated a gain of approximately $68.4 million for the Trust, our share of which (approximately $4.0 million) is included in our consolidated statement of income for the year ended December 31, 2021.

Also on December 31, 2021, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases (with the Trust as lessor), as amended, for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. Subject to the terms of the master lease, Aiken and Canyon Creek have the right to renew their leases, at the then current fair

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market rent (as defined in the master lease), for seven, five-year optional renewal terms. The aggregate annual rental during 2022 pursuant to the leases for these two facilities, amounted to approximately $5.7 million ($3.9 million related to Aiken and $1.8 million related to Canyon Creek). There is no bonus rental component applicable to either of these leases. On each January 1<sup>st</sup> through 2033, the annual rental will increase by 2.25% on a cumulative and compounded basis.

As a result of the purchase options within the lease agreements for Aiken and Canyon Creek, the asset purchase and sale transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP. We have accounted for the asset exchange and substitution transaction with the Trust as a financing arrangement and, since we did not derecognize the real property related to Aiken and Canyon Creek, we will continue to depreciate the assets. Our Consolidated Balance Sheet as of December 31, 2022 and 2021 reflects a financial liability of $80.9 million and $82.4 million, respectively, which is included in debt, for the fair value of real estate assets that we exchanged as part of the transaction. Our monthly lease payments payable to the Trust will be recorded to interest expense and as a reduction to the outstanding financial liability. The amount allocated to interest expense is determined using our incremental borrowing rate and is based on the outstanding financial liability.

The total aggregate rental for leases on the four wholly-owned hospital facilities with the Trust (excluding Clive Behavioral Health Hospital which is discussed below) was approximately $20.2 million during 2022. Total aggregate rent expense under the operating leases on three hospital facilities with the Trust (McAllen Medical Center, Wellington Regional Medical Center and Inland Valley Campus of Southwest Healthcare System) was $17.7 million and $17.1 million during 2021 and 2020, respectively.

Pursuant to the Master Leases by certain subsidiaries of ours and the Trust as described in the table below, dated 1986 and 2021 ("the Master Leases") which govern the leases of McAllen Medical Center and Wellington Regional Medical Center (each of which is governed by the Master Lease dated 1986), and Aiken Regional Medical Center and Canyon Creek Behavioral Health (each of which is governed by the Master Lease dated 2021), we have the option to renew the leases at the lease terms described above and below by providing notice to the Trust at least 90 days prior to the termination of the then current term. We also have the right to purchase the respective leased hospitals at their appraised fair market value upon any of the following: (i) at the end of the lease terms or any renewal terms; (ii) upon one month's notice should a change of control of the Trust occur, or; (iii) within the time period as specified in the lease in the event that we provide notice to the Trust of our intent to offer a substitution property/properties in exchange for one (or more) of the hospital properties leased from the Trust should we be unable to reach an agreement with the Trust on the properties to be substituted. In addition, we have rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days after the lease terms at the same price, terms and conditions of any third-party offer, or; (ii) renew the lease on the respective leased facility at the end of, and for 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer.

In addition, we are the managing, majority member in a joint venture with an unrelated third-party that operates Clive Behavioral Health, a 100-bed behavioral health care facility located in Clive, Iowa. The real property of this facility, which was completed and opened in late, 2020, is also leased from the Trust (annual rental of approximately $2.6 million and $2.5 million during 2022 and 2021, respectively) pursuant to the lease terms as provided in the table below. In connection with the lease on this facility, the joint venture has the right to purchase the leased facility from the Trust at its appraised fair market value upon either of the following: (i) by providing notice at least 270 days prior to the end of the lease terms or any renewal terms, or; (ii) upon 30 days' notice anytime within 12 months of a change of control of the Trust (UHS also has this right should the joint venture decline to exercise its purchase right). Additionally, the joint venture has rights of first offer to purchase the facility prior to any third-party sale.

The table below provides certain details for each of the hospitals leased from the Trust as of January 1, 2023:

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| | | | |
|:---|:---|:---|:---|
| **<u>Hospital Name</u>** | **Annual<br>Minimum<br>Rent** | **End of Lease Term** | **Renewal<br>Term<br>(years)** |
| McAllen Medical Center | $5485000 | December, 2026 | 5<br> (a) |
| Wellington Regional Medical Center | $6477000 | December, 2026 | 5<br> (b) |
| Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services | $3982000 | December, 2033 | 35<br> (c) |
| Canyon Creek Behavioral Health | $1800000 | December, 2033 | 35<br> (c) |
| Clive Behavioral Health Hospital | $2701000 | December, 2040 | 50<br> (d) |

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(a)We have one 5-year renewal option at existing lease rates (through 2031).

(b)We have one 5-year renewal option at fair market value lease rates (through 2031). Upon the December 31, 2021 expiration of the lease on Wellington Regional Medical Center, a wholly-owned subsidiary of ours exercised its fair market value renewal option and renewed the lease for a 5-year term scheduled to expire on December 31, 2026. Effective January 1, 2022, the annual fair market value lease rate for this hospital is $6.3 million (there is no longer a bonus rental component of the lease payment). On each January 1<sup>st</sup> through 2026, the annual rent will increase by 2.50% on a cumulative and compounded basis.

(c)We have seven 5-year renewal options at fair market value lease rates (2034 through 2068). On each January 1<sup>st</sup> through 2033, the annual rent will increase by 2.25% on a cumulative and compounded basis.

(d)This facility is operated by a joint venture in which we are the managing, majority member and an unrelated third-party holds a minority ownership interest. The joint venture has three, 10-year renewal options at computed lease rates as stipulated in the

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lease (2041 through 2070) and two additional, 10-year renewal options at fair market values lease rates (2071 through 2090). In each January through 2040 (and potentially through 2070 if three, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

In addition, certain of our subsidiaries are tenants in several medical office buildings ("MOBs") and two free-standing emergency departments owned by the Trust or by limited liability companies in which the Trust holds 95% to 100% of the ownership interest.

In January, 2022, the Trust commenced construction on a new 86,000 rentable square feet multi-tenant MOB that is located on the campus of Northern Nevada Sierra Medical Center in Reno, Nevada. Northern Nevada Sierra Medical Center, a 158-bed newly constructed acute care hospital owned and operated by a wholly-owned subsidiary of ours, was completed and opened in the April, 2022. In connection with this MOB, which is expected to be completed and opened during the first quarter of 2023, a ground lease and a master flex lease was executed between a wholly-owned subsidiary of ours and the Trust, pursuant to the terms of which our subsidiary will master lease approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually. The master flex lease could be reduced during the term if certain conditions are met.

**Executive Officers of the Registrant**

The executive officers, whose terms will expire at such time as their successors are elected, are as follows:

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| | |
|:---|:---|
| **<u>Name and Age</u>** | **<u>Present Position with the Company</u>** |
| Marc D. Miller (52) | Chief Executive Officer, President and Director |
| Alan B. Miller (85) | Executive Chairman of the Board |
| Steve G. Filton (65) | Executive Vice President, Chief Financial Officer and Secretary |
| Matthew J. Peterson (53) | Executive Vice President, President of Behavioral Health Division |
| Edward H. Sim (51) | Executive Vice President, President of Acute Care Division |

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Mr. Marc D. Miller was appointed Chief Executive Officer and President effective January 1, 2021. He has served as President since May, 2009 and prior thereto served as Senior Vice President and co-head of our Acute Care Hospitals since 2007. He was elected a Director in May, 2006 and Vice President in 2005. He has served in various capacities related to our acute care division since 2000. He was elected to the Board of Trustees of Universal Health Realty Income Trust in December, 2008. In August, 2015, he was appointed to the Board of Directors of Premier, Inc., a publicly traded healthcare performance improvement alliance. See Note 9 to the Consolidated Financial Statements-Relationship with Universal Health Realty Income Trust and Other Related Party Transactions for additional disclosure regarding the Company's group purchasing organization agreement with Premier, Inc. Marc D. Miller is the son of Alan B. Miller, our Executive Chairman of the Board.

Mr. Alan B. Miller was appointed Executive Chairman of the Board effective January 1, 2021. He had been Chairman of the Board and Chief Executive Officer since the Company's inception and also served as President from inception until May, 2009. Prior thereto, he was President, Chairman of the Board and Chief Executive Officer of American Medicorp, Inc. He currently serves as Chairman of the Board, Chief Executive Officer and President of Universal Health Realty Income Trust. He is the father of Marc D. Miller, our Chief Executive Officer, President and Director.

Mr. Filton was elected Executive Vice President in 2017 and continues to serve as Chief Financial Officer since his appointment in 2003. He has also served as Secretary since 1999. He had served as Senior Vice President since 2003, as Vice President and Controller since 1991, and as Director of Corporate Accounting since 1985.

Mr. Peterson's employment with us commenced in September, 2019 as Executive Vice President and President of our Behavioral Health Division. He was formerly employed at UnitedHealth Group for 11 years serving in various capacities including Chief Operating Officer for OptumGovernment, a health services and technology company, as well as various other Senior Vice President/Vice President roles. In addition to his civilian business career, Mr. Peterson also serves in the Air National Guard ("ANG"), U.S. Airforce, and was recently promoted to Brigadier General. He has also served for over 25 years with the ANG as a Healthcare Executive/Medical Service Corps Officer and has held numerous leadership roles.

Mr. Sim's employment with us commenced in December, 2022 as Executive Vice President and President of our Acute Care Division. He was formerly employed as Chief Operating Officer at Centura Health, since 2017. Prior to joining Centura Health, Mr. Sim served in senior leadership roles of increasing responsibility for 11 years at Baptist Health.

**ITEM 1A. Risk Factors**

We are subject to numerous known and unknown risks, many of which are described below and elsewhere in this Annual Report. Any of the events described below could have a material adverse effect on our business, financial condition and results of operations. Additional risks and uncertainties that we are not aware of, or that we currently deem to be immaterial, could also impact our business and results of operations.

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**Risks Related to Business Operations**

**A significant portion of our revenue is produced by facilities located in Texas, Nevada and California.**

**Texas:** We own 7 inpatient acute care hospitals, 12 free-standing emergency departments and 21 inpatient behavioral healthcare facilities as listed in Item 2. Properties. On a combined basis, these facilities contributed 17% and 16% of our consolidated net revenues during 2022 and 2021, respectively. On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated 27% in 2022 and 13% in 2021, of our income from operations after net income attributable to noncontrolling interest.

**Nevada:** We own 10 inpatient acute care hospitals, 5 free-standing emergency departments, 1 acute outpatient center and 3 inpatient behavioral healthcare facilities as listed in Item 2. Properties. On a combined basis, these facilities contributed 17% and 18% of our consolidated net revenues during 2022 and 2021, respectively. On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated 14% in 2022 and 24% in 2021, of our income from operations after net income attributable to noncontrolling interest. Excluding the impact of the $57.6 million provision for asset impairment recorded during 2022, as discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Provision for Asset Impairments, after deducting an allocation for corporate overhead expense, these facilities generated 18% of our income from operations after net income attributable to noncontrolling interest during 2022.

**California:** We own 5 inpatient acute care hospitals, 2 acute outpatient centers, 8 inpatient behavioral healthcare facilities and 3 behavioral healthcare outpatient facilities as listed in Item 2. Properties. On a combined basis, these facilities contributed 11% of our consolidated net revenues during each of 2022 and 2021. On a combined basis, after deducting an allocation for corporate overhead expense, these facilities generated 15% in 2022 and 14% in 2021, of our income from operations after net income attributable to noncontrolling interest.

**Our revenues and results of operations are significantly affected by payments received from the government and other third party payers.**

We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, California, Nevada, Illinois, Pennsylvania, Washington, D.C., Florida, Kentucky and Massachusetts. We also receive Medicaid disproportionate share hospital payments from certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states.

In addition to changes in government reimbursement programs, our ability to negotiate favorable contracts with private payers, including managed care organizations, significantly affects the revenues and operating results of our hospitals. Private payers, including managed care organizations, increasingly are demanding that we accept lower rates of payment.

We expect continued third-party efforts to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payers could have a material adverse effect on our financial position and our results of operations.

**If we are not able to provide high quality medical care at a reasonable price, patients may choose to receive their health care from our competitors.**

In recent years, the number of quality measures that hospitals are required to report publicly has increased. Centers for Medicare and Medicaid Services ("CMS") publishes performance data related to quality measures and data on patient satisfaction surveys that hospitals submit in connection with the Medicare program. Federal law provides for the future expansion of the number of quality measures that must be reported. Additionally, the Patient Protection and Affordable Care Act (the "Legislation") requires all hospitals to annually establish, update and make public a list of their standard charges for products and services. Also, the No Surprises Act, adopted as part of the Consolidated Appropriations Act, 2021 ("CAA"), creates additional price transparency requirements beginning January 1, 2022, including requiring providers to send health plans of insured patients and uninsured patients a good faith estimate of the expected charges and diagnostic codes prior to the scheduled date of the service or item. If any of our hospitals achieve poor

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results on the quality measures or patient satisfaction surveys (or results that are lower than our competitors) or if our standard charges are higher than our competitors, our patient volume could decline because patients may elect to use competing hospitals or other health care providers that have better metrics and pricing. This circumstance could harm our business and results of operations.

**An increase in uninsured and underinsured patients in our acute care facilities or the deterioration in the collectability of the accounts of such patients could harm our results of operations.**

Collection of receivables from third-party payers and patients is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient's responsibility, which primarily includes co-payments and deductibles. However, we also have substantial receivables due to us from certain state-based funding programs. We estimate our provisions for doubtful accounts based on general factors such as payer mix, the agings of the receivables, historical collection experience and assessment of probability of future collections. We routinely review accounts receivable balances in conjunction with these factors and other economic conditions that might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. Significant changes in business office operations, payer mix, economic conditions or trends in federal and state governmental health coverage could affect our collection of accounts receivable, cash flow and results of operations. If we experience unexpected increases in the growth of uninsured and underinsured patients or in bad debt expenses, our results of operations will be harmed.

**Our hospitals face competition for patients from other hospitals and health care providers.**

The healthcare industry is highly competitive, and competition among hospitals, and other healthcare providers for patients and physicians has intensified in recent years. In all of the geographical areas in which we operate, there are other facilities that provide services comparable to those offered by our facilities. Some of our competitors include hospitals that are owned by tax-supported governmental agencies or by nonprofit corporations and may be supported by endowments and charitable contributions and exempt from property, sales and income taxes. Such exemptions and support are not available to us.

In some markets, certain of our competitors may have greater financial resources, be better equipped and offer a broader range of services than we offer. The number of inpatient facilities, as well as outpatient surgical and diagnostic centers, many of which are fully or partially owned by physicians, in the geographic areas in which we operate has increased significantly. As a result, most of our hospitals operate in an increasingly competitive environment.

We also operate health care facilities in the United Kingdom where the National Health Service (the "NHS") is the principal provider of healthcare services. In addition to the NHS, we face competition in the United Kingdom from independent sector providers and other publicly funded entities for patients.

If our competitors are better able to attract patients, recruit physicians and other healthcare professionals, expand services or obtain favorable managed care contracts at their facilities, we may experience a decline in patient volume and our business may be harmed.

**Our performance depends on our ability to recruit and retain quality physicians.**

Typically, physicians are responsible for making hospital admissions decisions and for directing the course of patient treatment. As a result, the success and competitive advantage of our hospitals depends, in part, on the number and quality of the physicians on the medical staffs of our hospitals, the admitting practices of those physicians and our maintenance of good relations with those physicians. Physicians generally are not employees of our hospitals, and, in a number of our markets, physicians have admitting privileges at other hospitals in addition to our hospitals. They may terminate their affiliation with us at any time. If we are unable to maintain high ethical and professional standards, adequate support personnel and technologically advanced equipment and facilities that meet the needs of those physicians, they may be discouraged from referring patients to our facilities and our results of operations may decline.

It may become difficult for us to attract and retain an adequate number of physicians to practice in certain of the non-urban communities in which our hospitals are located. Our failure to recruit physicians to these communities or the loss of physicians in these communities could make it more difficult to attract patients to our hospitals and thereby may have a material adverse effect on our business, financial condition and results of operations.

Generally, the top ten attending physicians within each of our facilities represent a large share of our inpatient revenues and admissions. The loss of one or more of these physicians, even if temporary, could cause a material reduction in our revenues, which could take significant time to replace given the difficulty and cost associated with recruiting and retaining physicians.

**If we do not continually enhance our hospitals with the most recent technological advances in diagnostic and surgical equipment, our ability to maintain and expand our markets will be adversely affected.**

The technology used in medical equipment and related devices is constantly evolving and, as a result, manufacturers and distributors continue to offer new and upgraded products to health care providers. To compete effectively, we must continually assess our equipment needs and upgrade when significant technological advances occur. If our facilities do not stay current with

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technological advances in the health care industry, patients may seek treatment from other providers and/or physicians may refer their patients to alternate sources, which could adversely affect our results of operations and harm our business.

**Our performance depends on our ability to attract and retain qualified nurses and medical support staff and we face competition for staffing that may increase our labor costs and harm our results of operations.**

We depend on the efforts, abilities, and experience of our medical support personnel, including our nurses, pharmacists and lab technicians and other healthcare professionals. We compete with other healthcare providers in recruiting and retaining qualified hospital management, nurses and other medical personnel.

The nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. In particular, like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas, which shortage has been exacerbated by the COVID-19 pandemic. We are treating patients with COVID-19 in our facilities and, in some areas, the increased demand for care is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. The length and extent of the disruptions caused by the COVID-19 pandemic are currently unknown; however, we expect such disruptions to continue for the foreseeable future. This staffing shortage may require us to further enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel or require us to hire expensive temporary personnel. To the extent we cannot maintain sufficient staffing levels at our hospitals, we may be required to limit the acute and behavioral health care services provided at certain of our hospitals which would have a corresponding adverse effect on our net revenues. In addition, in some markets like California, there are requirements to maintain specified nurse-staffing levels which could adversely affect our net revenues to the extent we cannot meet those levels. If these states increase mandatory nurse-staffing ratios or additional states in which we operate adopt mandatory nurse-staffing ratios, such changes could significantly affect labor costs and have an adverse impact on revenues if we are required to limit admissions in order to meet the required ratios.

We cannot predict the degree to which we will be affected by the future availability or cost of attracting and retaining talented medical support staff. If our general labor and related expenses increase, we may not be able to raise our rates correspondingly. Our failure to either recruit and retain qualified hospital management, nurses and other medical support personnel or control our labor costs could harm our results of operations.

Increased labor union activity is another factor that could adversely affect our labor costs. Union organizing activities and certain potential changes in federal labor laws and regulations could increase the likelihood of employee unionization in the future, to the extent a greater portion of our employee base unionized, it is possible our labor costs could increase materially.

**The failure of certain employers, or the closure of certain facilities, could have a disproportionate impact on our hospitals.**

The economies in the communities in which our hospitals operate are often dependent on a small number of large employers. Those employers often provide income and health insurance for a disproportionately large number of community residents who may depend on our hospitals and other health care facilities for their care. The failure of one or more large employer or the closure or substantial reduction in the number of individuals employed at facilities located in or near the communities where our hospitals operate, could cause affected employees to move elsewhere to seek employment or lose insurance coverage that was otherwise available to them. The occurrence of these events could adversely affect our revenue and results of operations, thereby harming our business.

**The trend toward value-based purchasing may negatively impact our revenues.** 

We believe that value-based purchasing initiatives of both governmental and private payers tying financial incentives to quality and efficiency of care will increasingly affect the results of operations of our hospitals and other healthcare facilities and may negatively impact our revenues if we are unable to meet expected quality standards. The Legislation contains a number of provisions intended to promote value-based purchasing in federal healthcare programs. Medicare now requires providers to report certain quality measures in order to receive full reimbursement increases for inpatient and outpatient procedures that were previously awarded automatically. In addition, hospitals that meet or exceed certain quality performance standards will receive increased reimbursement payments, and hospitals that have "excess readmissions" for specified conditions will receive reduced reimbursement. Furthermore, Medicare no longer pays hospitals additional amounts for the treatment of certain hospital-acquired conditions unless the conditions were present at admission. Beginning in federal fiscal year 2015, hospitals that rank in the worst 25% of all hospitals nationally for hospital acquired conditions in the previous year were subject to reduced Medicare reimbursements. The Legislation also prohibits the use of federal funds under the Medicaid program to reimburse providers for treating certain provider-preventable conditions.

There is a trend among private payers toward value-based purchasing of healthcare services, as well. Many large commercial payers require hospitals to report quality data, and several of these payers will not reimburse hospitals for certain preventable adverse events. We expect value-based purchasing programs, including programs that condition reimbursement on patient outcome measures, to become more common and to involve a higher percentage of reimbursement amounts. We are unable at this time to predict how this trend will affect our results of operations, but it could negatively impact our revenues if we are unable to meet quality standards established by both governmental and private payers.

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**Controls designed to reduce inpatient services and increasing rates of "denials" may reduce our revenues.**

Controls imposed by third-party payers designed to reduce admissions and lengths of stay, commonly referred to as "utilization review," have affected and are expected to continue to affect our facilities. Utilization review entails the review of the admission and course of treatment of a patient by managed care plans. Inpatient utilization, average lengths of stay and occupancy rates continue to be negatively affected by payer-required preadmission authorization and utilization review and by payer pressure to maximize outpatient and alternative healthcare delivery services for less acutely ill patients. Efforts to impose more stringent cost controls are expected to continue. In addition, we have been experiencing increasing rates of denied claims ("denials") from managed care payers which have reduced our net revenues and increased our operating costs as we devote additional resources to enhanced documentation and collection efforts. Although we cannot predict the effect these factors will have on our operations, significant limits on the scope of services reimbursed, and reimbursements withheld due to denials, could have a material adverse effect on our business, financial position and results of operations.

**We depend heavily on key management personnel and the departure of one or more of our key executives or a significant portion of our local hospital management personnel could harm our business.**

The expertise and efforts of our senior executives and key members of our local hospital management personnel are critical to the success of our business. The loss of the services of one or more of our senior executives or of a significant portion of our local hospital management personnel could significantly undermine our management expertise and our ability to provide efficient, quality healthcare services at our facilities, which could harm our business. Effective January 1, 2021, Mr. Alan B. Miller, our Founder, Chairman and Chief Executive Officer stepped down as Chief Executive Officer and Mr. Marc D. Miller, our former President, was appointed and has been serving as our Chief Executive Officer. Mr. Alan B. Miller continues to serve in his current role as Executive Chairman of our Board of Directors in addition to retaining certain other management responsibilities within our Company.

**Risks Related to the COVID-19 Pandemic**

**COVID-19 and other pandemics, epidemics, or public health threats may adversely affect our business, results of operations and financial condition.**

The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The length and extent of the disruptions caused by the COVID-19 pandemic are currently unknown; however, we expect such disruptions to continue into the future. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results. However, developments related to the COVID-19 pandemic could continue to materially affect our financial performance.

The healthcare industry is labor intensive and salaries, wages and benefits are subject to inflationary pressures, as are supplies expense and other operating expenses. Our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws which, in certain circumstances, limit our ability to increase prices.

In addition, the nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. These factors, which had a material unfavorable impact on our results of operations during 2022, have been moderating to a certain degree but are expected to continue to have an unfavorable material impact on our results of operations for the foreseeable future.

The COVID-19 pandemic has led to a constrained supply environment which could result in higher cost to procure, and potential unavailability of, critical personal protection equipment, pharmaceuticals and medical supplies. Should a supply disruption result in the inability to obtain especially high margin drugs and compound components necessary for patient care, our consolidated financial statements could be negatively impacted.

In addition, CMS issued an Interim Final Rule ("IFR") effective November 5, 2021 mandating COVID-19 vaccinations for all applicable staff at all Medicare and Medicaid certified facilities. Under the IFR, facilities covered by this regulation must establish a policy ensuring all eligible staff have received the first dose of a two-dose COVID-19 vaccine or a one-dose COVID-19 vaccine prior to providing any care, treatment, or other services by December 5, 2021. All eligible staff must have received the necessary shots to be fully vaccinated – either two doses of Pfizer or Moderna or one dose of Johnson & Johnson – by January 4, 2022. The regulation also provides for exemptions based on recognized medical conditions or religious beliefs, observances, or practices. Under the IFR, facilities must develop a similar process or plan for permitting exemptions in alignment with federal law. If facilities fail to comply

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with the IFR by the deadlines established, they are subject to potential termination from the Medicare and Medicaid program for non-compliance. In addition, the Occupational Safety and Health Administration also issued an Emergency Temporary Standard ("ETS") requiring all businesses with 100 or more employees to be vaccinated by January 4, 2022. Pursuant to the ETS, those employees not vaccinated by that date will need to show a negative COVID-19 test weekly and wear a face mask in the workplace. Legal challenges to these rules ensued, and the U.S. Supreme Court upheld a stay of the ETS requirements but permitted the IFR vaccination requirements to go into effect pending additional litigation. CMS has indicated that hospitals in states not involved in the Supreme Court litigation are expected to be in compliance with IFR vaccination requirements consistent with the dates referenced above. Hospitals in states that were involved in the Supreme Court litigation were required to come into compliance with first dose requirements by February 13, 2022 and second dose requirements by March 15, 2022. Hospitals in Texas were required to come into compliance with the first dose requirements by February 19, 2022 and the second dose requirements by March 21, 2022. We cannot predict at this time the potential viability or impact of any such additional litigation. Implementation of these rules could have an impact on staffing at our facilities for those employees that are not vaccinated in accordance with IFR and ETS requirements, and associated loss of revenues and increased costs resulting from staffing issues could have a material adverse effect on our financial results.

The extent to which the COVID-19 pandemic and measures taken in response thereto impact our business, results of operations and financial condition will depend on numerous factors and future developments, most of which are beyond our control or ability to predict. The ultimate impact of the COVID-19 pandemic, including the future volumes and severity of COVID-19 patients caused by new variants of the virus, as well as related pressures on staffing and wage rates and the strained supply environment, is highly uncertain and subject to change. We are not able to fully quantify the impact that these factors will have on our future financial results, but expect developments related to the COVID-19 pandemic to materially affect our financial performance for the foreseeable future. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations as a result of its macroeconomic impact, including any recession that has occurred or may occur in the future. If general economic conditions, including inflation, deteriorate or remain volatile or uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be harmed and the trading price of our common stock could decline. These factors may affect the availability, terms or timing on which we may obtain any additional funding. There can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.

Despite these measures, there have been waves of escalated COVID-19 cases at various times, including the third and fourth quarters of 2021 and continuing into the first quarter of 2022, in many states in the U.S., including many states in which we operate hospitals. Recently, COVID-19 vaccinations have begun to be administered and while we expect the administration of vaccines will assist in easing the number of COVID-19 patients, the pace at which this is likely to occur is very difficult to predict. The extent to which the COVID-19 pandemic and measures taken in response thereto impact our business, results of operations and financial condition will depend on numerous factors and future developments, most of which are beyond our control or ability to predict. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We are not able to fully quantify the impact that these factors will have on our future financial results, but expect developments related to the COVID-19 pandemic to materially affect our financial performance for the foreseeable future. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations as a result of its macroeconomic impact, including any recession that has occurred or may occur in the future.

**There is a high degree of uncertainty regarding the implementation and impact of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and the Paycheck Protection Program and Health Care Enhancement Act ("PPPHCE Act").** 

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), a stimulus package signed into law on March 27, 2020, authorizes $100 billion in grant funding to hospitals and other healthcare providers to be distributed through the Public Health and Social Services Emergency Fund (the "PHSSEF"). These funds are not required to be repaid provided the recipients attest to and comply with certain terms and conditions, including limitations on balance billing and not using PHSSEF funds to reimburse expenses or losses that other sources are obligated to reimburse. However, since the expenses and losses will be ultimately measured over the life of the COVID-19 pandemic, potential retrospective unfavorable adjustments in future periods, of funds recorded as revenues in prior periods, could occur. The U.S. Department of Health and Human Services ("HHS") initially distributed $30 billion of this funding based on each provider's share of total Medicare fee-for-service reimbursement in 2019. Subsequently, HHS distributed $50 billion in CARES Act funding (including the $30 billion already distributed) proportional to providers' share of 2018 net patient revenue. We have received payments from these initial distributions of the PHSSEF as disclosed herein. HHS has indicated that distributions of the remaining $50 billion will be targeted primarily to hospitals in COVID-19 high impact areas, to rural providers, safety net hospitals and certain Medicaid providers and to reimburse providers for COVID-19-related treatment of uninsured patients. We have received payments from these targeted distributions of the PHSSEF, as disclosed herein. The CARES Act also makes other forms of financial assistance available to healthcare providers, including through Medicare and Medicaid payment adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which makes available accelerated payments of Medicare funds in order to increase cash flow to providers. On April 26, 2020, CMS announced it was reevaluating and temporarily suspending the Accelerated and Advance Payment Program in light of the availability of the PHSSEF and the significant funds available through other programs. We have received accelerated payments under this program as disclosed herein.

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The Paycheck Protection Program and Health Care Enhancement Act (the "PPPHCE Act"), a stimulus package signed into law on April 24, 2020, includes additional emergency appropriations for COVID-19 response, including $75 billion to be distributed to eligible providers through the PHSSEF. Recipients will not be required to repay the government for funds received, provided they comply with HHS-defined terms and conditions. A third phase of PHSSEF allocations was recently announced, under which $24.5 billion was made available for providers who previously received, rejected or accepted PHSSEF payments. Applicants that have not yet received PHSSEF payments of 2 percent of patient revenue will receive a payment that, when combined with prior payments (if any), equals 2 percent of patient care revenue. Providers that have already received payments of approximately 2 percent of annual revenue from patient care can submit more information and may be eligible for an additional payment. On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA") was signed into law. The CAA appropriated an additional $3 billion to the PHSSEF, codified flexibility for providers to calculate lost revenues and permitted parent organizations to allocate PHSSEF targeted distributions to subsidiary organizations. The CAA also provides that not less than 85 percent of the unobligated PHSSEF amounts and any future funds recovered from health care providers should be used for additional distributions that consider financial losses and changes in operating expenses in the third or fourth quarters of 2020 and the first quarter of 2021 that are attributable to the coronavirus. The CAA provided additional funding for testing, contact tracing and vaccine administration. Providers receiving payments were required to sign terms and conditions regarding utilization of the payments. Any provider receiving funds in excess of $10,000 in the aggregate will be required to report data elements to HHS detailing utilization of the payments. Providers will report healthcare related expenses attributable to COVID-19 that have not been reimbursed by another source, which may include general and administrative or healthcare related operating expenses. Funds may also be applied to lost revenues, represented as a negative change in year-over-year net patient care operating income. All such fund payments must be expended by June 30, 2021.

HHS had adopted certain reimbursement policies and regulatory flexibilities favorable to providers during the Public Health Emergency ("PHE") declared in response to the COVID-19 pandemic. HHS has published guidance indicating its intent for the PHE to expire on May 11, 2023. The end of the PHE status will result in the conclusion of those policies over various designated timeframes. We cannot predict whether the loss of any such favorable conditions available to providers during the declared PHE will ultimately have a negative financial impact on us.

There is a high degree of uncertainty surrounding the implementation of the CARES Act and the PPPHCE Act, and the federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional stimulus measures will be enacted or their impact. There can be no assurance as to the total amount of financial and other types of assistance we will receive under the CARES Act and the PPPHCE Act, and it is difficult to predict the impact of such legislation on our operations or how they will affect operations of our competitors. Moreover, we are unable to assess the extent to which anticipated negative impacts on us arising from the COVID-19 pandemic will be offset by amounts or benefits received or to be received under the CARES Act and the PPPHCE Act.

**Risks Related to the Regulatory Environment**

**Reductions or changes in Medicare and Medicaid funding could have a material adverse effect on our future results of operations.**

The Budget Control Act of 2011 (the "Budget Control Act") mandated significant reductions in federal spending for fiscal years 2012-2021, including a reduction of 2% on all Medicare payments during this period. Subsequent legislation enacted by Congress eliminated the 2% reduction through 2021 but extended these reductions through 2030 in exchange. The payment reduction suspension was extended through March 31, 2022, with a 1% payment reduction from then until June 30, 2022 and the full 2% payment reduction thereafter. The most recent legislation extended these reductions through 2032. Please see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Sources of Revenue-Medicare, for additional disclosure.

Beginning in 2024 and continuing through 2027, the Medicaid disproportionate share hospital ("DSH") allotment to the states from federal funds will be reduced. Such reductions have been delayed several times, most recently under the CAA, which further delays the DSH reductions through 2024. During the reduction period, state Medicaid DSH allotments from federal funds will be reduced by $8 billion annually. Reductions are imposed on states based on percentage of uninsured individuals, Medicaid utilization and uncompensated care.

**We are subject to uncertainties regarding health care reform.**

On March 23, 2010, President Obama signed into law the Legislation. Two primary goals of the Legislation are to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses.

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A 2012 U.S. Supreme Court ruling limited the federal government's ability to expand health insurance coverage by holding unconstitutional sections of the Legislation that sought to withdraw federal funding for state noncompliance with certain Medicaid coverage requirements. Pursuant to that decision, the federal government may not penalize states that choose not to participate in the Medicaid expansion program by reducing their existing Medicaid funding. Therefore, states can choose to accept or not to participate without risking the loss of federal Medicaid funding. As a result, many states, including Texas, have not expanded their Medicaid programs without the threat of loss of federal funding. CMS had granted section 1115 demonstration waivers providing for work and community engagement requirements for certain Medicaid eligible individuals. However, most recently, the Biden Administration has expressed disfavor with Medicaid program work requirements, with the understanding that such requirements pose a substantial risk that many potential demonstration beneficiaries would be prevented from initially enrolling in coverage or that the requirements would lead to a sizable number of eligibility suspensions and eventual disenrollments among beneficiaries who are initially able to enroll. Accordingly, CMS has recently revoked certain State Medicaid program approvals including work requirements.

The various provisions in the Legislation that directly or indirectly affect Medicare and Medicaid reimbursement are scheduled to take effect over a number of years. The impact of the Legislation on healthcare providers will be subject to implementing regulations, interpretive guidance and possible future legislation or legal challenges. Certain Legislation provisions, such as that creating the Medicare Shared Savings Program, create uncertainty in how healthcare may be reimbursed by federal programs in the future. Thus, we cannot predict the impact of the Legislation on our future reimbursement at this time and we can provide no assurance that the Legislation will not have a material adverse effect on our future results of operations.

The Legislation also contained provisions aimed at reducing fraud and abuse in healthcare. The Legislation amended several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. While Congress had previously revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to "have actual knowledge or specific intent to commit a violation of" the Anti-Kickback Statute in order to be found in violation of such law, the Legislation also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The Legislation provides that a healthcare provider that retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act, although certain final regulations implementing this statutory requirement remain pending. The Legislation also expands the Recovery Audit Contractor program to Medicaid. These amendments also make it easier for severe fines and penalties to be imposed on healthcare providers that violate applicable laws and regulations.

We have partnered with local physicians in the ownership of certain of our facilities. These investments have been permitted under an exception to the physician self-referral law. The Legislation permits existing physician investments in a hospital to continue under a "grandfather" clause if the arrangement satisfies certain requirements and restrictions, but physicians are prohibited from increasing the aggregate percentage of their ownership in the hospital. The Legislation also imposes certain compliance and disclosure requirements upon existing physician-owned hospitals and restricts the ability of physician-owned hospitals to expand the capacity of their facilities. As discussed below, should the Legislation be repealed in its entirety, this aspect of the Legislation would also be repealed restoring physician ownership of hospitals and expansion right to its position and practice as it existed prior to the Legislation.

The impact of the Legislation on each of our hospitals may vary. Because Legislation provisions are effective at various times over the next several years, we anticipate that many of the provisions in the Legislation may be subject to further revision. Initiatives to repeal the Legislation, in whole or in part, to delay elements of implementation or funding, and to offer amendments or supplements to modify its provisions have been persistent. The ultimate outcomes of legislative attempts to repeal or amend the Legislation and legal challenges to the Legislation are unknown. Legislation has already been enacted that has eliminated the penalty for failing to maintain health coverage that was part of the original Legislation. In addition, Congress has considered legislation that would, if enacted, in material part: (i) eliminate the large employer mandate to obtain or provide health insurance coverage, respectively; (ii) permit insurers to impose a surcharge up to 30 percent on individuals who go uninsured for more than two months and then purchase coverage; (iii) provide tax credits towards the purchase of health insurance, with a phase-out of tax credits accordingly to income level; (iv) expand health savings accounts; (v) impose a per capita cap on federal funding of state Medicaid programs, or, if elected by a state, transition federal funding to block grants, and; (vi) permit states to seek a waiver of certain federal requirements that would allow such state to define essential health benefits differently from federal standards and that would allow certain commercial health plans to take health status, including pre-existing conditions, into account in setting premiums.

While attempts to repeal the entirety of the Legislation have not been successful to date, a key provision of the Legislation was repealed as part of the Tax Cuts and Jobs Act and on December 14, 2018, a Texas Federal District Court Judge declared the Legislation unconstitutional, reasoning that the individual mandate tax penalty was essential to and not severable from the remainder

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of the Legislation. The case was appealed to the U.S. Supreme Court which ultimately held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation's requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. On September 7, 2022, the same Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that the requirement that certain health plans cover services with an "A" or "B" recommendation from the U.S. Preventive Services Task Force without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. We are unable to predict the outcome of this litigation or its potential impact at this time. While the results of the 2020 elections potentially reduce the risk of the Legislation being eliminated in whole or in part, the continued uncertainties regarding implementation of the Legislation create unpredictability for the strategic and business planning efforts of health care providers, which in itself constitutes a risk.

On March 11, 2021, President Biden signed the American Rescue Plan ("ARP") into law. The ARP extends eligibility for Legislation health insurance subsidies to people buying their own health coverage on the Marketplace who have household incomes above 400% of the federal poverty level. ARP also increased the amount of financial assistance for people at lower incomes who were already eligible under the Legislation. The Inflation Reduction Act of 2022 ("IRA") was passed on August 16, 2022, which among other things, allows for CMS to negotiate prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D, beginning with 10 high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond. The IRA also continued the expanded subsidies for individuals to obtain private health insurance under the Legislation through 2025. The effect of IRA on hospitals and the healthcare industry in general is not yet known.

Under the Legislation, hospitals are required to make public a list of their standard charges, and effective January 1, 2019, CMS has required that this disclosure be in machine-readable format and include charges for all hospital items and services and average charges for diagnosis-related groups. On November 27, 2019, CMS published a final rule on "Price Transparency Requirements for Hospitals to Make Standard Charges Public." This rule took effect on January 1, 2021 and requires all hospitals to also make public their payer-specific negotiated rates, minimum negotiated rates, maximum negotiated rates and cash for all items and services, including individual items and services and service packages, that could be provided by a hospital to a patient. Failure to comply with these requirements may result in daily monetary penalties.

As part of the CAA, Congress passed legislation aimed at preventing or limiting patient balance billing in certain circumstances. The CAA addresses surprise medical bills stemming from emergency services, out-of-network ancillary providers at in-network facilities, and air ambulance carriers. The legislation prohibits surprise billing when out-of-network emergency services or out-of-network services at an in-network facility are provided, unless informed consent is received. In these circumstances providers are prohibited from billing the patient for any amounts that exceed in-network cost-sharing requirements. On July 13, 2021, HHS, the Department of Labor and the Department of the Treasury issued an interim final rule, which begins to implement this legislation. The rule would limit our ability to receive payment for services at usually higher out-of-network rates in certain circumstances and prohibit out-of-network payments in other circumstances.

**We are required to treat patients with emergency medical conditions regardless of ability to pay.**

In accordance with our internal policies and procedures, as well as the Emergency Medical Treatment and Active Labor Act, or EMTALA, we provide a medical screening examination to any individual who comes to one of our hospitals while in active labor and/or seeking medical treatment (whether or not such individual is eligible for insurance benefits and regardless of ability to pay) to determine if such individual has an emergency medical condition. If it is determined that such person has an emergency medical condition, we provide such further medical examination and treatment as is required to stabilize the patient's medical condition, within the facility's capability, or arrange for transfer of such individual to another medical facility in accordance with applicable law and the treating hospital's written procedures. Our obligations under EMTALA may increase substantially going forward; CMS has sought stakeholder comments concerning the potential applicability of EMTALA to hospital inpatients and the responsibilities of hospitals with specialized capabilities, respectively, but has yet to issue further guidance in response to that request. If the number of indigent and charity care patients with emergency medical conditions we treat increases significantly, or if regulations expanding our obligations to inpatients under EMTALA is proposed and adopted, our results of operations will be harmed.

**If we fail to continue to meet the promoting interoperability criteria related to electronic health record systems ("EHR"), our operations could be harmed.**

Pursuant to Health Information Technology for Economic and Clinical Health ("HITECH") regulations, hospitals that did not qualify as a meaningful user of EHR by 2015 were subject to a reduced market basket update to the inpatient prospective payment system ("IPPS") standardized amount in 2015 and each subsequent fiscal year. In the 2019 IPPS final rule, CMS re-named the meaningful use program to "promoting interoperability". We believe that all of our acute care hospitals have met the applicable promoting interoperability criteria and therefore are not subject to a reduced market basked update to the IPPS standardized amount. However, under the HITECH Act, hospitals must continue to meet the applicable criteria in each fiscal year or they will be subject to a market basket update reduction in a subsequent fiscal year. Failure of our acute care hospitals to continue to meet the applicable meaningful use criteria would have an adverse effect on our future net revenues and results of operations.

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**If we fail to comply with extensive laws and government regulations, we could suffer civil or criminal penalties or be required to make significant changes to our operations that could reduce our revenue and profitability.**

The healthcare industry is required to comply with extensive and complex laws and regulations at the federal, state and local government levels relating to, among other things: hospital billing practices and prices for services; relationships with physicians and other referral sources; adequacy of medical care and quality of medical equipment and services; ownership of facilities; qualifications of medical and support personnel; confidentiality, maintenance, privacy and security issues associated with health-related information and patient medical records; the screening, stabilization and transfer of patients who have emergency medical conditions; certification, licensure and accreditation of our facilities; operating policies and procedures, and; construction or expansion of facilities and services.

Among these laws are the federal False Claims Act, the Health Insurance Portability and Accountability Act of 1996, ("HIPAA"), the federal anti-kickback statute and the provision of the Social Security Act commonly known as the "Stark Law." These laws, and particularly the anti-kickback statute and the Stark Law, impact the relationships that we may have with physicians and other referral sources. We have a variety of financial relationships with physicians who refer patients to our facilities, including employment contracts, leases and professional service agreements. We also provide financial incentives, including minimum revenue guarantees, to recruit physicians into communities served by our hospitals. The Office of the Inspector General of the Department of Health and Human Services, or OIG, has enacted safe harbor regulations that outline practices that are deemed protected from prosecution under the anti-kickback statute. A number of our current arrangements, including financial relationships with physicians and other referral sources, may not qualify for safe harbor protection under the anti-kickback statute. Failure to meet a safe harbor does not mean that the arrangement necessarily violates the anti-kickback statute, but may subject the arrangement to greater scrutiny. We cannot assure that practices that are outside of a safe harbor will not be found to violate the anti-kickback statute. CMS published a Medicare self-referral disclosure protocol, which is intended to allow providers to self-disclose actual or potential violations of the Stark law. Because there are only a few judicial decisions interpreting the Stark law, there can be no assurance that our hospitals will not be found in violation of the Stark Law or that self-disclosure of a potential violation would result in reduced penalties.

Federal regulations issued under HIPAA contain provisions that require us to implement and, in the future, may require us to implement additional costly electronic media security systems and to adopt new business practices designed to protect the privacy and security of each of our patient's health and related financial information. Such privacy and security regulations impose extensive administrative, physical and technical requirements on us, restrict our use and disclosure of certain patient health and financial information, provide patients with rights with respect to their health information and require us to enter into contracts extending many of the privacy and security regulatory requirements to third parties that perform duties on our behalf. Additionally, recent changes to HIPAA regulations may result in greater compliance requirements, including obligations to report breaches of unsecured patient data, as well as create new liabilities for the actions of parties acting as business associates on our behalf.

These laws and regulations are extremely complex, and, in many cases, we do not have the benefit of regulatory or judicial interpretation. In the future, it is possible that different interpretations or enforcement of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment, personnel, services, capital expenditure programs and operating expenses. A determination that we have violated one or more of these laws (see Note 8 to the Consolidated Financial Statements - Commitments and Contingencies, as included this Form 10-K), or the public announcement that we are being investigated for possible violations of one or more of these laws, could have a material adverse effect on our business, financial condition or results of operations and our business reputation could suffer significantly. In addition, we cannot predict whether other legislation or regulations at the federal or state level will be adopted, what form such legislation or regulations may take or what their impact on us may be. See Item 1 Business—Self-Referral and Anti-Kickback Legislation.

If we are deemed to have failed to comply with the anti-kickback statute, the Stark Law or other applicable laws and regulations, we could be subjected to liabilities, including criminal penalties, civil penalties (including the loss of our licenses to operate one or more facilities), and exclusion of one or more facilities from participation in the Medicare, Medicaid and other federal and state healthcare programs. The imposition of such penalties could have a material adverse effect on our business, financial condition or results of operations.

We also operate health care facilities in the United Kingdom and have operations and commercial relationships with companies in other foreign jurisdictions and, as a result, are subject to certain U.S. and foreign laws applicable to businesses generally, including anti-corruption laws. The Foreign Corrupt Practices Act regulates U.S. companies in their dealings with foreign officials, prohibiting bribes and similar practices, and requires that they maintain records that fairly and accurately reflect transactions and appropriate internal accounting controls. In addition, the United Kingdom Bribery Act has wide jurisdiction over certain activities that affect the United Kingdom.

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Our operations in the United Kingdom are also subject to a high level of regulation relating to registration and licensing requirements employee regulation, clinical standards, environmental rules as well as other areas. We are also subject to a highly regulated business environment, and failure to comply with the various laws and regulations, applicable to us could lead to substantial penalties, and other adverse effects on our business.

**We are subject to occupational health, safety and other similar regulations and failure to comply with such regulations could harm our business and results of operations.**

We are subject to a wide variety of federal, state and local occupational health and safety laws and regulations. Regulatory requirements affecting us include, but are not limited to, those covering: (i) air and water quality control; (ii) occupational health and safety (e.g., standards regarding blood-borne pathogens and ergonomics, etc.); (iii) waste management; (iv) the handling of asbestos, polychlorinated biphenyls and radioactive substances; and (v) other hazardous materials. If we fail to comply with those standards, we may be subject to sanctions and penalties that could harm our business and results of operations.

**We are subject to pending legal actions, purported stockholder class actions, governmental investigations and regulatory actions.**

We and our subsidiaries are subject to pending legal actions, governmental investigations and regulatory actions (see Note 8 to the Consolidated Financial Statements - Commitments and Contingencies, as included this Form 10-K). We may become subject to additional medical malpractice lawsuits, product liability lawsuits, class action lawsuits and other legal actions in the ordinary course of business.

Defending ourselves against the allegations in the lawsuits and governmental investigations, or similar matters and any related publicity, could potentially entail significant costs and could require significant attention from our management and our reputation could suffer significantly. We are unable to predict the outcome of these matters or to reasonably estimate the amount or range of any such loss; however, these lawsuits and the related publicity and news articles that have been published concerning these matters could have a material adverse effect on our business, financial condition, results of operations and/or cash flows which in turn could cause a decline in our stock price. In an effort to resolve one or more of these matters, we may choose to negotiate a settlement. Amounts we pay to settle any of these matters may be material. All professional and general liability insurance we purchase is subject to policy limitations. We believe that, based on our past experience and actuarial estimates, our insurance coverage is adequate considering the claims arising from the operations of our hospitals. While we continuously monitor our coverage, our ultimate liability for professional and general liability claims could change materially from our current estimates. If such policy limitations should be partially or fully exhausted in the future, or payments of claims exceed our estimates or are not covered by our insurance, it could have a material adverse effect on our operations.

We are and may become subject to other loss contingencies, both known and unknown, which may relate to past, present and future facts, events, circumstances and occurrences. Should an unfavorable outcome occur in some or all of our legal proceedings or other loss contingencies, or if successful claims and other actions are brought against us in the future, there could be a material adverse impact on our financial position, results of operations and liquidity.

In particular, government investigations, as well as qui tam and stockholder lawsuits, may lead to material fines, penalties, damages payments or other sanctions, including exclusion from government healthcare programs. The federal False Claims Act permits private parties to bring qui tam, or whistleblower, lawsuits on behalf of the government against companies alleging that the defendant has defrauded the federal government. These private parties are entitled to share in any amounts recovered by the government, and, as a result, the number of whistleblower lawsuits that have been filed against providers has increased significantly in recent years. Because qui tam lawsuits are filed under seal, we could be named in one or more such lawsuits of which we are not aware. Settlements of lawsuits involving Medicare and Medicaid issues routinely require both monetary payments and corporate integrity agreements, each of which could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

**The failure of certain employers, or the closure of certain facilities, could have a disproportionate impact on our hospitals.**

The economies in the communities in which our hospitals operate are often dependent on a small number of large employers. Those employers often provide income and health insurance for a disproportionately large number of community residents who may depend on our hospitals and other health care facilities for their care. The failure of one or more large employer or the closure or substantial reduction in the number of individuals employed at facilities located in or near the communities where our hospitals operate, could cause affected employees to move elsewhere to seek employment or lose insurance coverage that was otherwise available to them. The occurrence of these events could adversely affect our revenue and results of operations, thereby harming our business.

**If any of our existing health care facilities lose their accreditation or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid.**

The construction and operation of healthcare facilities are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate-setting and compliance with building codes and environmental protection. Additionally, such facilities are subject to periodic inspection by government authorities to assure their continued compliance with these various standards.

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All of our hospitals are deemed certified, meaning that they are accredited, properly licensed under the relevant state laws and regulations and certified under the Medicare program. The effect of maintaining certified facilities is to allow such facilities to participate in the Medicare and Medicaid programs. We believe that all of our healthcare facilities are in material compliance with applicable federal, state, local and other relevant regulations and standards. However, should any of our healthcare facilities lose their deemed certified status and thereby lose certification under the Medicare or Medicaid programs, such facilities would be unable to receive reimbursement from either of those programs and our business could be materially adversely effected.

**State efforts to regulate the construction or expansion of health care facilities could impair our ability to expand.**

Many of the states in which we operate hospitals have enacted Certificates of Need, or ("CON"), laws as a condition prior to hospital capital expenditures, construction, expansion, modernization or initiation of major new services. Our failure to obtain necessary state approval could result in our inability to complete a particular hospital acquisition, expansion or replacement, make a facility ineligible to receive reimbursement under the Medicare or Medicaid programs, result in the revocation of a facility's license or impose civil or criminal penalties on us, any of which could harm our business.

In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material adverse effects from those requirements, but we cannot predict the impact of these changes upon our operations.

**Risks Related to Information Technology**

**A cyber security incident could cause a violation of HIPAA, breach of member privacy, or other negative impacts.**

We rely extensively on our information technology ("IT") systems to manage clinical and financial data, communicate with our patients, payers, vendors and other third parties and summarize and analyze operating results. In addition, we have made significant investments in technology to adopt and utilize electronic health records and to become meaningful users of health information technology pursuant to the American Recovery and Reinvestment Act of 2009. Our IT systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches including credit card or personally identifiable information breaches, vandalism, theft, natural disasters, catastrophic events, human error and potential cyber threats, including malicious codes, worms, phishing attacks, denial of service attacks, ransomware and other sophisticated cyber-attacks, and our disaster recovery planning cannot account for all eventualities. As cyber criminals continue to become more sophisticated through evolution of their tactics, techniques and procedures, we have taken, and will continue to take, additional preventive measures to strengthen the cyber defenses of our networks and data. However, if any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience loss or corruption of critical data such as protected health information or other data subject to privacy laws and proprietary business information and interruptions or disruptions and delays in our ability to perform critical functions, which could materially and adversely affect our businesses and results of operations and could result in significant penalties or fines, litigation, loss of customers, significant damage to our reputation and business, and other losses. In addition, our future results of operations, as well as our reputation, could be adversely impacted by theft, destruction, loss, or misappropriation of public health information, other confidential data or proprietary business information.

In September, 2020, we had experienced an information technology security incident which led us to suspend user access to our information technology applications related to operations located in the United States. While our information technology applications were offline, patient care was delivered safely and effectively at our facilities across the country utilizing established back-up processes, including offline documentation methods. We have investigated the nature and potential impact of the security incident and engaged third-party information technology and forensic vendors to assist. No evidence of unauthorized access, copying or misuse of any patient or employee data has been identified to date. Promptly after the incident, our information technology applications were restored at our acute care and behavioral health hospitals, as well as at the corporate level, thereby re-establishing connections to all major systems and applications, including electronic medical records, laboratory and pharmacy systems and our hospitals resumed normal operations.

**Risks Related to the Market Conditions and Liquidity**

**Our revenues and volume trends may be adversely affected by certain factors over which we have no control.**

Our revenues and volume trends are dependent on many factors, including physicians' clinical decisions and availability, payer programs shifting to a more outpatient-based environment, whether or not certain services are offered, seasonal and severe weather conditions, including the effects of extreme low temperatures, hurricanes and tornadoes, earthquakes, climate change, current local economic and demographic changes. We have a high concentration of facilities in various geographic areas, including states that have a potentially higher risk of experiencing events such as severe weather conditions and earthquakes. Given the location of our facilities, we are particularly susceptible to revenue loss, cost increase, or damage caused by severe weather conditions or natural disasters such as hurricanes, wildfires, earthquakes, or tornadoes. Any significant loss due to a natural disaster may not be covered by insurance and may lead to an increase in the cost of insurance or unavailability on acceptable terms. Climate change may also have effects on our business by increasing the cost of property insurance or making coverage unavailable on acceptable terms. To the extent that significant changes in the climate occur in areas where our facilities are located, we may experience increased frequency of severe

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weather conditions or natural disasters or other changes to weather patterns, all of which may result in physical damage to or a decrease in demand for properties affected by these conditions. Should the impact of climate change be material in nature or occur for lengthy periods of time, our financial condition, revenues, results of operations, or cash flow may be adversely affected. In addition, government regulation intended to mitigate the impact of climate change, severe weather patterns, or natural disasters could result in additional required capital expenditures to comply with such regulation without a corresponding increase in our revenues. In addition, technological developments and pharmaceutical improvements may reduce the demand for healthcare services or the profitability of the services we offer. Further, the Medicare program's three-year phase out and eventual elimination of the Inpatient Only List, a list of surgeries and procedures that are only covered by Medicare when provided in an inpatient setting, may reduce inpatient volumes.

**A worsening of economic and employment conditions in the United States could materially affect our business and future results of operations.**

Our patient volumes, revenues and financial results depend significantly on the universe of patients with health insurance, which to a large extent is dependent on the employment status of individuals in our markets. Worsening of economic conditions, including inflation and rising interest rates, may result in a higher unemployment rate which may increase the number of individuals without health insurance. As a result, our facilities may experience a decrease in patient volumes, particularly in less intense, more elective service lines, or an increase in services provided to uninsured patients. These factors could have a material unfavorable impact on our future patient volumes, revenues and operating results.

In addition, as of December 31, 2022, we had approximately $3.9 billion of goodwill recorded on our consolidated balance sheet. Should the revenues and financial results of our acute care and/or behavioral health care facilities be materially, unfavorably impacted due to, among other things, a worsening of the economic and employment conditions in the United States that could negatively impact our patient volumes and reimbursement rates, a continued rise in the unemployment rate and increases in the number of uninsured patients treated at our facilities, we may incur future charges to recognize impairment in the carrying value of our goodwill and other intangible assets, which could have a material adverse effect on our financial results.

**Legal uncertainty or a worsening of the economic conditions in the United Kingdom could materially affect our business and future results of operations.**

On June 23, 2016, the United Kingdom affirmatively voted in a non-binding referendum in favor of the exit of the United Kingdom from the European Union ("Brexit") and it was approved by vote of the British legislature. On March 29, 2017, the United Kingdom triggered Article 50 of the Lisbon Treaty, formally starting negotiations regarding its exit from the European Union. On January 31, 2020, the United Kingdom formally exited the European Union. On December 24, 2020, the United Kingdom and the European Union reached a post-Brexit trade and cooperation agreement that created new business and security requirements and preserved the United Kingdom's tariff- and quota-free access to the European Union member states. The trade and cooperation agreement was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021, following ratification by the European Union.

Changes to the trading relationship between the United Kingdom and the European Union may result in increased cost of goods imported into the United Kingdom. Additional currency volatility could result in a weaker British pound, which may decrease the profitability of our operations in the United Kingdom. A weaker British pound versus the U.S. Dollar also causes local currency results of our United Kingdom operations to be translated into fewer U.S. Dollars during a reporting period. While we may elect to enter into hedging arrangements to protect our business against certain currency fluctuations, these hedging arrangements do not provide comprehensive protection, and our results of operations could be adversely affected by foreign exchange fluctuations.

Brexit could lead to legal and regulatory uncertainty as the United Kingdom determines which European Union laws to replace or replicate. Brexit could also lead to increased legal and regulatory complexity as national laws and regulations in the United Kingdom start to diverge from European Union laws and regulations. For instance, rules for data transfers outside of the United Kingdom and European Economic Area have changed significantly with Brexit and a recent Court of European Justice decision, and are subject to further revision and updated regulatory guidance, making necessary compliance measures challenging to ascertain and implement with respect to our United Kingdom operations. The exit of the United Kingdom from the European Union could also create future economic uncertainty, both in the United Kingdom and globally, and could cause disruptions to and create uncertainty surrounding our business. Any of these effects of Brexit, and others we cannot anticipate, could harm our business, financial condition or results of operations.

**We continue to see rising costs in construction materials and labor. Such increased costs could have an adverse effect on the cash flow return on investment relating to our capital projects.**

The cost of construction materials and labor has significantly increased. As we continue to invest in modern technologies, emergency rooms and operating room expansions, the construction of medical office buildings for physician expansion and reconfiguring the flow of patient care, we spend large amounts of money generated from our operating cash flow or borrowed funds. Although we evaluate the financial feasibility of such projects by determining whether the projected cash flow return on investment exceeds our cost of capital, such returns may not be achieved if the cost of construction continues to rise significantly or the expected patient volumes are not attained.

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**The deterioration of credit and capital markets may adversely affect our access to sources of funding and we cannot be certain of the availability and terms of capital to fund the growth of our business when needed.**

We require substantial capital resources to fund our acquisition growth strategy and our ongoing capital expenditure programs for renovation, expansion, construction and addition of medical equipment and technology. We believe that our capital expenditure program is adequate to expand, improve and equip our existing hospitals. We cannot predict, however, whether financing for our growth plans and capital expenditure programs will be available to us on satisfactory terms when needed, which could harm our business.

To fund all or a portion of our future financing needs, we rely on borrowings from various sources including fixed rate, long-term debt as well as borrowings pursuant to our revolving credit facility and accounts receivable securitization program. If any of the lenders were unable to fulfill their future commitments, our liquidity could be impacted, which could have a material unfavorable impact our results of operations and financial condition. The increase in interest rates has substantially increased our borrowing costs and reduced our ability to access the capital markets on favorable terms. Additional increases in interest rates and the effect on capital markets could adversely affect our ability to carry out our strategy.

**Risks Related to Our Common Stock**

**The number of outstanding shares of our Class B Common Stock is subject to potential increases or decreases.**

At December 31, 2022, 23.6 million shares of Class B Common Stock were reserved for issuance upon conversion of shares of Class A, C and D Common Stock outstanding, for issuance upon exercise of options to purchase Class B Common Stock and for issuance of stock under other incentive plans. Class A, C and D Common Stock are convertible on a share for share basis into Class B Common Stock. To the extent that these shares were converted into or exercised for shares of Class B Common Stock, the number of shares of Class B Common Stock available for trading in the public market place would increase substantially and the current holders of Class B Common Stock would own a smaller percentage of that class.

In addition, from time-to-time, our Board of Directors approve stock repurchase programs authorizing us to purchase shares of our Class B Common Stock on the open market at prevailing market prices or in negotiated transactions off the market. Such repurchases decrease the number of outstanding shares of our Class B Common Stock. During 2022, in conjunction with our stock repurchase program, we repurchased approximately 6.7 million shares at an aggregate cost of approximately $811 million. As of December 31, 2022, we had an aggregate available repurchase authorization of approximately $947 million pursuant to this program, including a $1.4 billion increase authorized by our Board of Directors in February, 2022. Pursuant to our stock repurchase program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. There is no expiration date for our stock repurchase programs.

Our ability to repurchase shares will depend upon, among other factors, our cash flows from operations, our available capital and potential future capital requirements for strategic transactions, including acquisitions, debt service requirements, and investing in our existing markets as well as our results of operations, financial condition, interest rates, our access to the capital markets and other factors beyond our control that our Board of Directors may deem relevant. A suspension or elimination of our share repurchase could have a negative effect on our stock price.

Conversely, as a potential means of generating additional funds to operate and expand our business, we may from time-to-time issue equity through the sale of stock which would increase the number of outstanding shares of our Class B Common Stock. Based upon factors such as, but not limited to, the market price of our stock, interest rate on borrowings and uses or potential uses for cash, repurchase or issuance of our stock could have a dilutive effect on our future basic and diluted earnings per share.

**The right to elect the majority of our Board of Directors and the majority of the general shareholder voting power resides with the holders of Class A and C Common Stock, the majority of which is owned by Alan B. Miller, Executive Chairman of our Board of Directors.**

Our Restated Certificate of Incorporation provides that, with respect to the election of directors, holders of Class A Common Stock vote as a class with the holders of Class C Common Stock, and holders of Class B Common Stock vote as a class with holders of Class D Common Stock, with holders of all classes of our Common Stock entitled to one vote per share.

As of March 24, 2022, the shares of Class A and Class C Common Stock constituted 9.7% of the aggregate outstanding shares of our Common Stock, had the right to elect five members of the Board of Directors and constituted 89.5% of our general voting power as of that date. As of March 24, 2022, the shares of Class B and Class D Common Stock (excluding shares issuable upon exercise of options) constituted 90.3% of the outstanding shares of our Common Stock, had the right to elect two members of the Board of Directors and constituted 10.5% of our general voting power as of that date.

As to matters other than the election of directors, our Restated Certificate of Incorporation provides that holders of Class A, Class B, Class C and Class D Common Stock all vote together as a single class, except as otherwise provided by law.

Each share of Class A Common Stock entitles the holder thereof to one vote; each share of Class B Common Stock entitles the holder thereof to one-tenth of a vote; each share of Class C Common Stock entitles the holder thereof to 100 votes (provided the holder of Class C Common Stock holds a number of shares of Class A Common Stock equal to ten times the number of shares of

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Class C Common Stock that holder holds); and each share of Class D Common Stock entitles the holder thereof to ten votes (provided the holder of Class D Common Stock holds a number of shares of Class B Common Stock equal to ten times the number of shares of Class D Common Stock that holder holds).

In the event a holder of Class C or Class D Common Stock holds a number of shares of Class A or Class B Common Stock, respectively, less than ten times the number of shares of Class C or Class D Common Stock that holder holds, then that holder will be entitled to only one vote for every share of Class C Common Stock, or one-tenth of a vote for every share of Class D Common Stock, which that holder holds in excess of one-tenth the number of shares of Class A or Class B Common Stock, respectively, held by that holder. The Board of Directors, in its discretion, may require beneficial owners to provide satisfactory evidence that such owner holds ten times as many shares of Class A or Class B Common Stock as Class C or Class D Common Stock, respectively, if such facts are not apparent from our stock records.

Since a substantial majority of the Class A shares and Class C shares are controlled by Mr. Alan B. Miller and members of his family, one of whom is Marc D. Miller, our Chief Executive Officer, President and a director, and they can elect a majority of our company's directors and effect or reject most actions requiring approval by stockholders without the vote of any other stockholders, there are potential conflicts of interest in overseeing the management of our company.

In addition, because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses, our business and prospects and the trading price of our securities could be adversely affected.

**ITEM 1B. Unresolved Staff Comments**

None.

**ITEM 2. Properties**

**Executive and Administrative Offices and Commercial Health Insurer**

We own various office buildings in King of Prussia and Wayne, Pennsylvania, Brentwood, Tennessee, Denton, Texas and Reno, Nevada.

**Facilities** 

The following tables set forth the name, location, type of facility and, for acute care hospitals and behavioral health care facilities, the number of licensed beds:

**Acute Care Hospitals** 

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| | | | |
|:---|:---|:---|:---|
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Aiken Regional Medical Centers (1)  | Aiken, South Carolina | 211 | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aurora Pavilion Behavioral Health Services (1)  | Aiken, South Carolina | 62 | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Sweetwater | North Augusta, South Carolina |  | Owned |
| Centennial Hills Hospital Medical Center | Las Vegas, Nevada | 339 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Valley Vista | North Las Vegas, Nevada |  | Owned |
| Corona Regional Medical Center | Corona, California | 238 | Owned |
| Desert Springs Hospital Medical Center | Las Vegas, Nevada | 282 | Owned |
| Desert View Hospital | Pahrump, Nevada | 25 | Owned |
| Doctors Hospital of Laredo (6) | Laredo, Texas | 183 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Doctors Hospital Emergency Room Saunders | Laredo, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Doctors Hospital Emergency Room South | Laredo, Texas |  | Leased |
| Fort Duncan Regional Medical Center | Eagle Pass, Texas | 101 | Owned |
| The George Washington University Hospital (19) | Washington, D.C. | 395 | Leased |
| Henderson Hospital  | Henderson, Nevada | 303 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Green Valley Ranch | Henderson, Nevada |  | Owned |
| Lakewood Ranch Medical Center | Lakewood Ranch, Florida | 120 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Fruitville | Sarasota, Florida |  | Owned |
| Manatee Memorial Hospital | Bradenton, Florida | 295 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Sun City | Wimauma, Florida | -- |  |
| Northern Nevada Medical Center | Sparks, Nevada | 219 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at McCarran NW | Reno, Nevada |  | Owned |
| Northern Nevada Sierra Medical Center | Reno, Nevada | 158 | Owned |
| Northwest Texas Healthcare System | Amarillo, Texas | 405 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Northwest Texas Healthcare System Behavioral Health | Amarillo, Texas | 90 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Northwest Emergency at Town Square | Amarillo, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Northwest Emergency on Georgia | Amarillo, Texas |  | Owned |
| Palmdale Regional Medical Center | Palmdale, California | 184 | Owned |
| South Texas Health System (2) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Edinburg Regional Medical Center/Children's Hospital (2) | Edinburg, Texas | 251 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System Behavioral (2) | McAllen, Texas | 134 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System Heart (2) | McAllen, Texas | 60 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System McAllen (1) (2) | McAllen, Texas | 431 | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER Alamo (2) | Alamo, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER McColl (2) | Edinburg, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER Mission (1) (2) | Mission, Texas |  | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER Monte Cristo (2) | Edinburg, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER Ware Road (2) | McAllen, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;South Texas Health System ER Weslaco (1) (2) | Weslaco, Texas |  | Leased |
| Southwest Healthcare System |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inland Valley Medical Center Campus  | Wildomar, California | 120 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rancho Springs Medical Center Campus | Murrieta, California | 120 | Owned |
| Spring Valley Hospital Medical Center | Las Vegas, Nevada | 364 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Blue Diamond | Las Vegas, Nevada |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valley Health Specialty Hospital | Las Vegas, Nevada | 66 | Owned |
| St. Mary's Regional Medical Center | Enid, Oklahoma | 229 | Owned |
| Summerlin Hospital Medical Center | Las Vegas, Nevada | 485 | Owned |
| Temecula Valley Hospital | Temecula, California | 140 | Owned |
| Texoma Medical Center | Denison, Texas | 354 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TMC Behavioral Health Center | Denison, Texas | 60 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Anna | Anna, Texas |  | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Sherman | Sherman, Texas |  | Owned |
| Valley Hospital Medical Center | Las Vegas, Nevada | 328 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Elite Medical Center (ER) | Las Vegas, Nevada |  | Owned |
| Wellington Regional Medical Center (1) | Wellington, Florida | 235 | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ER at Westlake | Westlake, Florida  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;— | &nbsp;&nbsp;&nbsp;&nbsp; Leased |

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**Inpatient Behavioral Health Care Facilities** 

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| | | | |
|:---|:---|:---|:---|
| **United States:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Alabama Clinical Schools | Birmingham, Alabama | 80 | Owned |
| Alliance Health Center | Meridian, Mississippi | 214 | Owned |
| Anchor Hospital | Atlanta, Georgia | 122 | Owned |
| Arbour Hospital | Jamaica Plain, Massachusetts | 136 | Owned |
| Arrowhead Behavioral Health (16)  | Maumee, Ohio | 48 | Owned |
| Austin Oaks Hospitals | Austin, Texas | 80 | Owned |
| Beaumont Behavioral Health (18)  | Dearborn, Michigan | 87 | Leased |
| Behavioral Hospital of Bellaire | Houston, Texas | 124 | Leased |
| Belmont Pines Hospital | Youngstown, Ohio | 121 | Owned |
| Benchmark Behavioral Health Systems | Woods Cross, Utah | 94 | Owned |
| BHC Alhambra Hospital | Rosemead, California | 115 | Owned |
| Black Bear Lodge | Sautee Nacoochee, Georgia | 115 | Owned |
| Bloomington Meadows Hospital | Bloomington, Indiana | 78 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **United States:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Brentwood Behavioral Healthcare | Flowood, Mississippi | 121 | Owned |
| Brentwood Hospital | Shreveport, Louisiana | 260 | Owned |
| The Bridgeway | North Little Rock, Arkansas | 127 | Owned |
| The Brook Hospital—Dupont | Louisville, Kentucky | 88 | Owned |
| The Brook Hospital—KMI | Louisville, Kentucky | 110 | Owned |
| Brooke Glen Behavioral Hospital | Fort Washington, Pennsylvania | 146 | Owned |
| Brynn Marr Hospital | Jacksonville, North Carolina | 102 | Owned |
| Calvary Center | Phoenix, Arizona | 68 | Owned |
| Canyon Creek Behavioral Health | Temple, Texas | 102 | Leased |
| Canyon Ridge Hospital | Chino, California | 157 | Owned |
| The Carolina Center for Behavioral Health | Greer, South Carolina | 156 | Owned |
| Cedar Creek Hospital | St. Johns, Michigan  | 54 | Owned |
| Cedar Grove Residential Treatment Center | Murfreesboro, Tennessee | 45 | Owned |
| Cedar Hills Hospital (7) | Portland, Oregon | 98 | Owned |
| Cedar Ridge Behavioral Hospital | Oklahoma City, Oklahoma | 60 | Owned |
| Cedar Ridge Residential Treatment Center | Oklahoma City, Oklahoma | 56 | Owned |
| Cedar Ridge Bethany | Bethany, Oklahoma | 56 | Owned |
| Cedar Springs Hospital | Colorado Springs, Colorado | 110 | Owned |
| Centennial Peaks Hospital | Louisville, Colorado | 104 | Owned |
| Center for Change | Orem, Utah | 58 | Owned |
| Central Florida Behavioral Hospital | Orlando, Florida | 174 | Owned |
| Chris Kyle Patriots Hospital | Anchorage, Alaska | 36 | Owned |
| Clarion Psychiatric Center | Clarion, Pennsylvania | 112 | Owned |
| Clive Behavioral Health (11) | Clive, Iowa | 100 | Leased |
| Coastal Behavioral Health | Savannah, Georgia | 50 | Owned |
| Coastal Harbor Treatment Center | Savannah, Georgia | 141 | Owned |
| Columbus Behavioral Center for Children and Adolescents | Columbus, Indiana | 57 | Owned |
| Compass Intervention Center | Memphis, Tennessee | 108 | Owned |
| Copper Hills Youth Center | West Jordan, Utah | 197 | Owned |
| Coral Shores Behavioral Health | Stuart, Florida | 80 | Owned |
| Cumberland Hall Hospital | Hopkinsville, Kentucky | 97 | Owned |
| Cumberland Hospital for Children and Adolescents | New Kent, Virginia | 108 | Owned |
| Cypress Creek Hospital | Houston, Texas | 128 | Owned |
| DeBarr Residential Treatment Center | Anchorage, Alaska | 30 | Owned |
| Del Amo Behavioral Health System | Torrance, California | 166 | Owned |
| Diamond Grove Center | Louisville, Mississippi | 55 | Owned |
| Dover Behavioral Health System | Dover, Delaware | 104 | Owned |
| El Paso Behavioral Health System | El Paso, Texas | 166 | Owned |
| Emerald Coast Behavioral Hospital | Panama City, Florida | 86 | Owned |
| Fairmount Behavioral Health System | Philadelphia, Pennsylvania | 239 | Owned |
| Fairfax |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fairfax Behavioral Health | Kirkland, Washington | 157 | Owned |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fairfax Behavioral Health—Everett | Everett, Washington | 30 | Leased |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fairfax Behavioral Health—Monroe | Monroe, Washington | 34 | Leased |
| Forest View Hospital | Grand Rapids, Michigan | 108 | Owned |
| Fort Lauderdale Behavioral Health Center | Fort Lauderdale, Florida | 182 | Owned |
| Foundations Behavioral Health | Doylestown, Pennsylvania | 122 | Leased |
| Foundations for Living | Mansfield, Ohio | 84 | Owned |
| Fox Run Center | St. Clairsville, Ohio | 100 | Owned |
| Fremont Hospital | Fremont, California | 148 | Owned |
| Friends Hospital (15) | Philadelphia, Pennsylvania | 219 | Owned |
| Fuller Hospital | Attleboro, Massachusetts | 109 | Owned |
| Garfield Park Behavioral Hospital | Chicago, Illinois | 88 | Owned |
| Glen Oaks Hospital | Greenville, Texas | 54 | Owned |
| Granite Hills Hospital | West Allis, Wisconsin | 120 | Leased |
| Gulf Coast Treatment Center | Fort Walton Beach, Florida | 28 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **United States:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Gulfport Behavioral Health System | Gulfport, Mississippi | 109 | Owned |
| Hampton Behavioral Health Center | Westhampton, New Jersey | 120 | Owned |
| Harbour Point Behavioral Health Center | Portsmouth, Virginia | 186 | Owned |
| Hartgrove Behavioral Health System | Chicago, Illinois | 160 | Owned |
| Havenwyck Hospital | Auburn Hills, Michigan | 243 | Owned |
| Heartland Behavioral Health Services | Nevada, Missouri | 151 | Owned |
| Hermitage Hall | Nashville, Tennessee | 111 | Owned |
| Heritage Oaks Hospital | Sacramento, California | 125 | Owned |
| Heritage Oaks Patient Enrichment Center | Sacramento, California | 16 | Owned |
| Hickory Trail Hospital | DeSoto, Texas | 86 | Owned |
| Highlands Behavioral Health System | Highlands Ranch, Colorado | 86 | Owned |
| Hill Crest Behavioral Health Services | Birmingham, Alabama | 221 | Owned |
| Holly Hill Hospital | Raleigh, North Carolina | 296 | Owned |
| The Horsham Clinic | Ambler, Pennsylvania | 206 | Owned |
| HRI Hospital | Brookline, Massachusetts | 62 | Owned |
| The Hughes Center | Danville, Virginia | 64 | Owned |
| Inland Northwest Behavioral Health (9) | Spokane, Washington | 100 | Owned |
| Intermountain Hospital | Boise, Idaho | 155 | Owned |
| Kempsville Center of Behavioral Health | Norfolk, Virginia | 106 | Owned |
| KeyStone Center | Wallingford, Pennsylvania | 153 | Owned |
| Kingwood Pines Hospital | Kingwood, Texas | 116 | Owned |
| La Amistad Behavioral Health Services | Maitland, Florida | 85 | Owned |
| Lakeside Behavioral Health System | Memphis, Tennessee | 373 | Owned |
| Lancaster Behavioral Health Hospital (8) | Lancaster, Pennsylvania | 126 | Owned |
| Laurel Heights Hospital | Atlanta, Georgia | 124 | Owned |
| Laurel Oaks Behavioral Health Center | Dothan, Alabama | 118 | Owned |
| Laurel Ridge Treatment Center | San Antonio, Texas | 330 | Owned |
| Liberty Point Behavioral Healthcare | Stauton, Virginia | 58 | Owned |
| Lighthouse Behavioral Health Hospital | Conway, South Carolina | 105 | Owned |
| Lighthouse Care Center of Augusta | Augusta, Georgia | 82 | Owned |
| Lincoln Prairie Behavioral Health Center | Springfield, Illinois | 97 | Owned |
| Lincoln Trail Behavioral Health System | Radcliff, Kentucky | 140 | Owned |
| Mayhill Hospital | Denton, Texas | 59 | Leased |
| McDowell Center for Children | Dyersburg, Tennessee | 32 | Owned |
| The Meadows Psychiatric Center | Centre Hall, Pennsylvania | 119 | Owned |
| Meridell Achievement Center | Austin, Texas | 134 | Owned |
| Mesilla Valley Hospital | Las Cruces, New Mexico | 120 | Owned |
| Michael's House | Palm Springs, California | 110 | Owned |
| Michiana Behavioral Health | Plymouth, Indiana | 83 | Owned |
| Midwest Center for Youth and Families | Kouts, Indiana | 74 | Owned |
| Millwood Hospital | Arlington, Texas | 134 | Leased |
| Mountain Youth Academy | Mountain City, Tennessee | 90 | Owned |
| Natchez Trace Youth Academy | Waverly, Tennessee | 115 | Owned |
| Newport News Behavioral Health Center | Newport News, Virginia | 132 | Owned |
| North Spring Behavioral Healthcare | Leesburg, Virginia | 127 | Leased |
| North Star Hospital | Anchorage, Alaska | 74 | Owned |
| North Star Bragaw | Anchorage, Alaska | 30 | Owned |
| Oak Plains Academy | Ashland City, Tennessee | 98 | Owned |
| Okaloosa Youth Academy | Crestview, Florida | 75 | Leased |
| Old Vineyard Behavioral Health Services | Winston-Salem, North Carolina | 164 | Owned |
| Palmer Residential Treatment Center | Palmer, Alaska | 30 | Owned |
| Palmetto Lowcountry Behavioral Health | North Charleston, South Carolina | 108 | Owned |
| Palmetto Summerville Behavioral Health | Summerville, South Carolina | 64 | Leased |
| Palm Point Behavioral Health | Titusville, FL | 74 | Owned |
| Palm Shores Behavioral Health Center | Bradenton, Florida | 65 | Owned |
| Palo Verde Behavioral Health | Tucson, Arizona | 84 | Leased |

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| | | | |
|:---|:---|:---|:---|
| **United States:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Parkwood Behavioral Health System | Olive Branch, Mississippi | 148 | Owned |
| The Pavilion Behavioral Health System | Champaign, Illinois | 122 | Owned |
| Peachford Hospital | Atlanta, Georgia | 246 | Owned |
| Pembroke Hospital | Pembroke, Massachusetts | 120 | Owned |
| Pinnacle Pointe Behavioral Healthcare System | Little Rock, Arkansas | 127 | Owned |
| Poplar Springs Hospital | Petersburg, Virginia | 208 | Owned |
| Prairie St John's | Fargo, North Dakota | 158 | Owned |
| PRIDE Institute | Eden Prairie, Minnesota | 42 | Owned |
| Provo Canyon Behavioral Hospital | Orem, Utah | 80 | Owned |
| Provo Canyon School | Provo, Utah | 274 | Owned |
| Psychiatric Institute of Washington | Washington, D.C. | 130 | Owned |
| Quail Run Behavioral Health | Phoenix, Arizona | 116 | Owned |
| The Recovery Center | Wichita Falls, Texas | 34 | Leased |
| The Ridge Behavioral Health System | Lexington, Kentucky | 110 | Owned |
| Rivendell Behavioral Health Hospital | Bowling Green, Kentucky | 125 | Owned |
| Rivendell Behavioral Health Services of Arkansas | Benton, Arkansas | 80 | Owned |
| River Crest Hospital | San Angelo, Texas | 80 | Owned |
| Riveredge Hospital | Forest Park, Illinois | 210 | Owned |
| River Oaks Hospital | Harahan , Louisiana | 126 | Owned |
| River Park Hospital | Huntington, West Virginia | 187 | Owned |
| River Point Behavioral Health | Jacksonville, Florida | 84 | Owned |
| Rockford Center | Newark, Delaware | 148 | Owned |
| Rolling Hills Hospital | Franklin, Tennessee | 130 | Owned |
| Roxbury Treatment Center | Shippensburg, Pennsylvania | 112 | Owned |
| Salt Lake Behavioral Health | Salt Lake City, Utah | 118 | Leased |
| San Marcos Treatment Center | San Marcos, Texas | 265 | Owned |
| SandyPines Residential Treatment Center  | Jupiter , Florida | 149 | Owned |
| Sierra Vista Hospital | Sacramento, California | 171 | Owned |
| Saint Simons by the Sea | Saint Simons Island , Georgia | 101 | Owned |
| Skywood Recovery | Augusta, Michigan | 100 | Owned |
| Southeast Behavioral Health (17) | Cape Girardeau, Missouri | 102 | Owned |
| Spring Mountain Sahara | Las Vegas, Nevada | 30 | Owned |
| Spring Mountain Treatment Center | Las Vegas, Nevada | 110 | Owned |
| Springwoods Behavioral Health | Fayetteville, Arkansas | 80 | Owned |
| Stonington Institute | North Stonington, Connecticut | 64 | Owned |
| Streamwood Behavioral Healthcare System | Streamwood, Illinois | 178 | Owned |
| Summit Oaks Hospital | Summit, New Jersey | 126 | Owned |
| SummitRidge Hospital | Lawrenceville, Georgia | 96 | Owned |
| Suncoast Behavioral Health Center | Bradenton, Florida | 60 | Owned |
| Texas NeuroRehab Center | Austin, Texas | 137 | Owned |
| Three Rivers Behavioral Health | West Columbia, South Carolina | 129 | Owned |
| Three Rivers Midlands | West Columbia, South Carolina | 64 | Owned |
| Turning Point Care Center | Moultrie, Georgia | 79 | Owned |
| University Behavioral Center | Orlando, Florida | 112 | Owned |
| University Behavioral Health of Denton | Denton, Texas | 104 | Owned |
| Valle Vista Health System | Greenwood, Indiana | 140 | Owned |
| Valley Hospital | Phoenix, Arizona | 122 | Owned |
| Via Linda BHS (14) | Scottsdale, Arizona | 120 | Leased |
| The Vines Hospital | Ocala, Florida | 98 | Owned |
| Virginia Beach Psychiatric Center | Virginia Beach, Virginia | 100 | Owned |
| Wekiva Springs Center | Jacksonville, Florida | 120 | Owned |
| Wellstone Regional Hospital | Jeffersonville, Indiana | 100 | Owned |
| West Oaks Hospital | Houston, Texas | 176 | Owned |
| Willow Springs Center | Reno, Nevada | 116 | Owned |
| Windmoor Healthcare of Clearwater | Clearwater, Florida | 144 | Owned |
| Windsor Laurelwood Center for Behavioral Medicine | Willoughby, Ohio | 160 | Leased |

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| | | | |
|:---|:---|:---|:---|
| **United States:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Wyoming Behavioral Institute | Casper, Wyoming | 129 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **United Kingdom:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Acer Clinic  | Chesterfield, UK | 14 | Owned |
| Acer Clinic 2 | Chesterfield, UK | 14 | Owned |
| Adele Cottage | Rainworth, UK | 2 | Owned  |
| Albert Ward  | Darlington, UK | 26 | Owned |
| Amberwood Lodge  | Dorset, UK | 9 | Owned |
| Ashbrook | Birmingham, UK | 16 | Owned |
| Ashfield House  | Huddersfield, UK | 6 | Owned |
| Beacon Lower  | Bradford, UK | 8 | Owned |
| Beacon Upper  | Bradford, UK | 8 | Owned |
| Beckly  | Halifax, UK | 12 | Owned |
| Beeches | Retford, UK | 12 | Owned |
| Birches | Newark, UK | 6 | Owned |
| Broughton House | Lincolnshire, UK | 34 | Owned |
| Broughton Lodge | Macclesfield, UK | 20 | Owned |
| CAS Brunel | Bristol, UK | 32 | Owned |
| Chaseways | Sawbridgeworth, UK | 6 | Owned |
| Cherry Tree House | Mansfield Woodhouse, UK | 6 | Owned |
| Conifers | Derby, UK | 7 | Owned |
| Cygnet Alders Clinic  | Gloucester, UK | 20 | Owned |
| Cygnet Appletree  | Meadowfield, UK | 26 | Owned |
| Cygnet Aspen House  | Doncaster, UK | 20 | Owned |
| Cygnet Aspen Lodge  | Doncaster, UK | 16 | Owned |
| Cygnet Bostall House  | Abbey Wood, UK | 6 | Owned |
| Cygnet Cedars | Birmingham, UK | 24 | Owned |
| Cygnet Cedar Vale | East Bridgeford, UK | 14 | Owned |
| Cygnet Churchill | London, UK | 57 | Owned |
| Cygnet Delfryn House | Flintshire, UK | 28 | Owned |
| Cygnet Delfryn Lodge | Flintshire, UK | 24 | Owned |
| Cygnet Elms | Birmingham, UK | 10 | Owned |
| Cygnet Fountains | Blackburn, UK | 32 | Owned |
| Cygnet Grange | Sutton-in-Ashfield, UK | 8 | Owned |
| Cygnet Heathers | West Bromwich, UK | 20 | Owned |
| Cygnet Hospital—Beckton | London, UK | 62 | Owned |
| Cygnet Hospital—Bierley | Bradford, UK | 63 | Owned |
| Cygnet Hospital—Blackheath | London, UK | 32 | Leased |
| Cygnet Hospital Bury | Bury, UK | 167 | Owned |
| Cygnet Hospital Clifton | Nottingham, UK | 25 | Owned |
| Cygnet Hospital—Derby | Derby, UK | 50 | Owned |
| Cygnet Hospital—Ealing | Ealing, UK | 26 | Owned |
| Cygnet Hospital—Godden Green | Sevenoaks, UK | 39 | Owned |
| Cygnet Hospital—Harrogate | Middlesex, UK | 36 | Owned |
| Cygnet Hospital—Harrow | Harrow, UK | 61 | Owned |
| Cygnet Hospital Hexham | Northumberland, UK | 27 | Owned |
| Cygnet Hospital—Kewstoke | Weston-super-Mare, UK | 72 | Owned |
| Cygnet Hospital Sheffield | Sheffield, UK | 57 | Owned |
| Cygnet Hospital—Stevenage | Stevenage, UK | 88 | Owned |
| Cygnet Hospital—Taunton | Taunton, UK | 57 | Owned |
| Cygnet Hospital Woking | Woking, UK | 60 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **United Kingdom:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Cygnet Hospital—Wyke | Bradford, UK | 52 | Owned |
| Cygnet Joyce Parker Hospital | Coventry, UK | 56 | Owned |
| Cygnet Lodge | Sutton-in-Ashfield, UK | 8 | Owned |
| Cygnet Lodge—Brighouse | Brighouse, UK | 25 | Owned |
| Cygnet Lodge – Kenton | Middlesex, UK | 15 | Owned |
| Cygnet Lodge—Lewisham | London, UK | 17 | Owned |
| Cygnet Lodge – Salford | Manchester, UK | 24 | Owned |
| Cygnet Lodge – Woking | Woking, UK | 31 | Owned |
| Cygnet Manor | Shirebrook, UK | 20 | Owned |
| Cygnet Newham House | Middlesbrough, UK | 20 | Owned |
| Cygnet Nield House | Crewe, UK | 30 | Owned |
| Cygnet Oaks | Barnsley, UK | 35 | Owned |
| Cygnet Pindar House | Barnsley, UK | 22 | Owned |
| Cygnet Raglan House | West Midlands, UK | 25 | Owned |
| Cygnet Sedgley House | Wolverhampton, UK | 20 | Owned |
| Cygnet Sedgley Lodge | Wolverhampton, UK | 14 | Owned |
| Cygnet Sherwood House | Mansfield, UK | 30 | Owned |
| Cygnet Sherwood Lodge | Mansfield, UK | 17 | Owned |
| Cygnet St. Augustine's | Stoke on Trent, UK | 32 | Owned |
| Cygnet St. Teilo House | Gwent, UK | 23 | Owned |
| Cygnet St. Williams | Darlington, UK | 12 | Owned |
| Cygnet Storthfield House | Derbyshire, UK | 22 | Owned |
| Cygnet Victoria House | Darlington, UK | 6 | Owned |
| Cygnet Views | Matlock, UK | 10 | Owned |
| Cygnet Wallace Hospital | Dundee, UK | 10 | Owned |
| Cygnet Wast Hills | Birmingham, UK | 26 | Owned |
| Cygnet Woodside | Bradford, UK | 9 | Owned |
| Dene Brook | Rotherham, UK | 13 | Owned |
| Devon Lodge | Southampton, UK | 12 | Owned |
| Dove Valley Mews | Barnsley, UK | 10 | Owned |
| Ducks Halt | Essex, UK | 5 | Owned |
| Eleni House | Essex, UK | 8 | Owned |
| Ellen Mhor | Dundee, UK | 12 | Owned |
| Elston House | Newark, UK | 8 | Owned |
| Fairways | Ipswich, UK | 8 | Owned |
| Farm Lodge | Rainham, UK | 5 | Owned |
| The Fields | Sheffield, UK | 54 | Owned |
| Highwoods | Colchester, UK | 20 | Owned |
| Gables | Essex, UK | 7 | Owned |
| Gledcliffe Road | Huddersfield, UK | 6 | Owned |
| Gledholt | Huddersfield, UK | 9 | Owned |
| Gledholt Mews | Huddersfield, UK | 21 | Owned |
| Glyn House | Stoke on Trent, UK | 5 | Owned |
| Hawkstone | Keighley, UK | 10 | Owned |
| Hollyhurst | Darlington, UK | 19 | Owned |
| Hope House | Hartlepool, UK | 11 | Owned |
| Kirkside House | Leeds, UK | 7 | Owned |
| Kirkside Lodge | Leeds, UK | 8 | Owned |
| Langdale Coach House | Huddersfield, UK | 3 | Owned |
| Langdale House | Huddersfield, UK | 8 | Owned |
| Larch Court | Essex, UK | 4 | Owned |
| Limes Houses | Mansfield, UK | 6 | Owned |
| Lindsay House  | Dundee, UK | 2 | Owned |
| Longfield House | Bradford, UK | 9 | Owned |
| Lowry House | Hyde, UK | 12 | Owned |
| Maidstone | Maidstone, UK | 65 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **United Kingdom:** |  |  |  |
| **Name of Facility**<br>| **Location** <br>| **Number of<br>Beds** <br>| **Real<br>Property<br>Ownership<br>Interest** <br>|
| Marion House | Derby, UK | 5 | Owned |
| Meadows Mews | Tipton, UK | 10 | Owned |
| Morgan House | Stoke on Trent, UK | 5 | Owned |
| Newbus Grange | Neasham, UK | 17 | Owned |
| Nightingale | Dorset, UK | 10 | Owned |
| Norcott House | Liversedge, UK | 11 | Owned |
| Norcott Lodge | Liversedge, UK | 9 | Owned |
| Oak Court | Essex, UK | 12 | Owned |
| Oakhurst Lodge | Hampshire, UK | 8 | Owned |
| Oaklands | Northumberland, UK | 19 | Owned |
| Old Leigh House | Essex, UK | 7 | Leased |
| The Orchards | Essex, UK | 5 | Owned |
| Outwood | Leeds, UK | 10 | Owned |
| Oxley Lodge | Huddersfield, UK | 4 | Owned |
| Oxley Woodhouse | Huddersfield, UK | 13 | Owned |
| Pines | Mansfield Woodhouse, UK | 7 | Owned |
| Ramsey | Colchester, UK | 21 | Owned |
| Ranaich House | Dunblane, UK | 14 | Owned |
| Redlands | Darlington, UK | 5 | Owned |
| Rhyd Alyn | Flintshire, UK | 6 | Owned |
| Shear Meadow | Hemel Hempstead, UK | 4 | Owned |
| Sherwood Lodge Step Down | Mansfield, UK | 9 | Owned |
| The Squirrels | Hampshire, UK | 9 | Owned |
| 4, 5, 7 The Sycamores | South Normanton, UK | 6 | Owned |
| 15 The Sycamores | South Normanton, UK | 4 | Owned |
| Tabley House Nursing Home | Knutsford, UK | 51 | Leased |
| Thistle House | Dundee, UK | 10 | Owned |
| Thornfield Grange | Bishop Auckland, UK | 9 | Owned |
| Thornfield House | Bradford, UK | 7 | Owned |
| Thors Park | Essex, UK | 14 | Owned |
| Toller Road | Leicestershire, UK | 8 | Owned |
| Trinity House | Galloway, UK | 13 | Owned |
| Tupwood Gate Nursing Home | Caterham, UK | 33 | Owned |
| 1Vincent Court | Lancashire, UK | 5 | Owned |
| Walkern Lodge | Stevenage, UK | 4 | Owned |
| Willow House | Birmingham, UK | 8 | Owned |
| 12 Woodcross Street | Wolverhampton, UK | 8 | Owned |
| Woodrow House | Stockport, UK | 9 | Owned |
| Yew Trees | Essex, UK | 10 | Owned |

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| | | | |
|:---|:---|:---|:---|
| **Puerto Rico:** |  |  |  |
| **Name of Facility**<br>| &nbsp;&nbsp;&nbsp;**Location** <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Number of<br>Beds** <br>| &nbsp;&nbsp;&nbsp;**Real<br>Property<br>Ownership<br>Interest** <br>|
| First Hospital Panamericano—Cidra | &nbsp;&nbsp;Cidra, Puerto Rico | &nbsp;&nbsp;165 | &nbsp;&nbsp;Owned |
| First Hospital Panamericano—San Juan | &nbsp;&nbsp;San Juan, Puerto Rico | &nbsp;&nbsp;45 | &nbsp;&nbsp;Leased |
| First Hospital Panamericano—Ponce | &nbsp;&nbsp;Ponce, Puerto Rico | &nbsp;&nbsp;30 | &nbsp;&nbsp;Leased |

---

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**Outpatient Behavioral Health Care Facilities** 

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| | | |
|:---|:---|:---|
| **United States:** |  |  |
| **Name of Facility**<br>| &nbsp;&nbsp;&nbsp;**Location** <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Real<br>Property<br>Ownership<br>Interest** <br>|
| Arbour Counseling Services | &nbsp;&nbsp;Rockland, Massachusetts | &nbsp;&nbsp;Owned |
| The Canyon at Santa Monica | &nbsp;&nbsp;Santa Monica, California | &nbsp;&nbsp;Leased |
| Foundations San Francisco | &nbsp;&nbsp;San Francisco, California | &nbsp;&nbsp;Leased |
| Michael's House Outpatient | &nbsp;&nbsp;Palm Springs, California | &nbsp;&nbsp;Leased |
| The Pointe Outpatient Behavioral Health Services | &nbsp;&nbsp;Little Rock, Arkansas | &nbsp;&nbsp;Leased |
| Saint Louis Behavioral Medicine Institute | &nbsp;&nbsp;St. Louis, Missouri | &nbsp;&nbsp;Owned |
| Skywood Outpatient | &nbsp;&nbsp;Royal Oak, Michigan | &nbsp;&nbsp;Leased |
| Talbott Recovery | &nbsp;&nbsp;Atlanta, Georgia | &nbsp;&nbsp;Owned |

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---

| | | |
|:---|:---|:---|
| **United Kingdom:** |  |  |
| **Name of Facility**<br>| &nbsp;&nbsp;&nbsp;**Location** <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Real<br>Property<br>Ownership<br>Interest** <br>|
| Long Eaton Day Services | &nbsp;&nbsp;Nottingham, UK | &nbsp;&nbsp;Owned |
| Sheffield Day Services | &nbsp;&nbsp;Sheffield, UK | &nbsp;&nbsp;Owned |

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| | | |
|:---|:---|:---|
| **Outpatient Centers and Surgical Hospital** | **Outpatient Centers and Surgical Hospital** | **Outpatient Centers and Surgical Hospital** |
| **Name of Facility**<br>| &nbsp;&nbsp;&nbsp;**Location** <br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Real<br>Property<br>Ownership<br>Interest** <br>|
| Aiken Surgery Center | &nbsp;&nbsp;Aiken, South Carolina | &nbsp;&nbsp;Owned |
| Cancer Care Institute of Carolina | &nbsp;&nbsp;Aiken, South Carolina | &nbsp;&nbsp;Owned |
| Cornerstone Regional Hospital (3) | &nbsp;&nbsp;Edinburg, Texas | &nbsp;&nbsp;Leased |
| Manatee Diagnostic Center | &nbsp;&nbsp;Bradenton, Florida | &nbsp;&nbsp;Leased |
| Palms Westside Clinic ASC (5) | &nbsp;&nbsp;Royal Palm Beach, Florida | &nbsp;&nbsp;Leased |
| Quail Surgical and Pain Management Center (10) | &nbsp;&nbsp;Reno, Nevada | &nbsp;&nbsp;Leased |
| Riverside Medical Clinic Surgery Center | &nbsp;&nbsp;Riverside, California | &nbsp;&nbsp;Leased |
| Temecula Valley Day Surgery (4) | &nbsp;&nbsp;Murrieta, California | &nbsp;&nbsp;Leased |

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(1)Real property leased from Universal Health Realty Income Trust.

(2)These entities are consolidated under one license operating as the South Texas Health System.

(3)We manage and own a noncontrolling interest of approximately 50% in the entity that operates this facility.

(4)We manage and own a majority interest in an LLC that owns and operates this center.

(5)We own a noncontrolling ownership interest of approximately 50% in the entity that operates this facility that is managed by a third-party.

(6)We hold an 93% ownership interest in this facility through both general and limited partnership interests. The remaining 7% ownership interest is held by unaffiliated third parties.

(7)Land of this facility is leased.

(8)We manage and own a noncontrolling interest of 50% in this facility. The remaining 50% ownership interest is held by an unaffiliated third party. Land of this facility is leased from the unaffiliated third party member.

(9)We manage and hold an 80% ownership interest in this facility. The remaining 20% ownership interest is held by an unaffiliated third party.

(10)We hold a 51% ownership interest in this facility. The remaining 49% ownership interest is held by unaffiliated third parties.

(11)We manage and hold a 52% ownership interest in this facility. The remaining 48% ownership interest is held by an unaffiliated third party.

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(12)We manage and hold a 74.1% ownership interest in this facility. The remaining 25.9% ownership interest is held by an unaffiliated third party.

(13)We manage and hold a 75% ownership interest in this facility. The remaining 25% ownership interest is held by an unaffiliated third party.

(14)We manage and hold a 51% ownership interest in this facility. The remaining 49% ownership interest is held by an unaffiliated third party.

(15)We manage and hold a 80% ownership interest in this facility. The remaining 20% ownership interest is held by an unaffiliated third party.

(16)We manage and hold a 70% ownership interest in this facility. The remaining 30% ownership interest is held by an unaffiliated third party.

(17)We manage and hold a 75% ownership interest in this facility. The remaining 25% ownership interest is held by an unaffiliated third party.

(18)We manage and hold a 74% ownership interest in this facility. The remaining 26% ownership interest is held by an unaffiliated third party.

(19)The land of this facility is leased pursuant to the terms of a lease that is scheduled to expire in August, 2082. The lease contains one, twenty-five year renewal option.

We own or lease medical office buildings adjoining some of our hospitals. We believe that the leases on the facilities, medical office buildings and other real estate leased or owned by us do not impose any material limitation on our operations. The aggregate lease payments on facilities leased by us were $104 million in 2022, $93 million in 2021 and $82 million in 2020.

**ITEM 3. Legal Proceedings**

The information regarding our legal proceedings is contained in Note 8 to the Consolidated Financial Statements - Commitments and Contingencies, as included this Form 10-K, is incorporated herein by reference.

**ITEM 4. Mine Safety Disclosures**

Not applicable.

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**PART II**

**ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

Our Class B Common Stock is traded on the New York Stock Exchange under the symbol UHS. Shares of our Class A, Class C and Class D Common Stock are not traded in any public market, but are each convertible into shares of our Class B Common Stock on a share-for-share basis.

The number of stockholders of record as of January 31, 2023, were as follows:

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| | |
|:---|:---|
| Class A Common | 17 |
| Class B Common | 729 |
| Class C Common | 1 |
| Class D Common | 85 |

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**Stock Repurchase Programs**

As of December 31, 2021, we had an aggregate available purchase authorization of $358.2 million. In February, 2022, our Board of Directors authorized a $1.4 billion increase to the program. As of December 31, 2022, we had an aggregate available repurchase authorization of $947.37 million. Pursuant to this program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. There is no expiration date for our stock repurchase programs.

As reflected below, during the fourth quarter of 2022, we have repurchased approximately 812,141 shares at an aggregate cost of approximately $107.23 million (approximately $132.03 per share) pursuant to the terms of our stock repurchase program. In addition, during the three-month period ended December 31, 2022, 17,727 shares were repurchased in connection with income tax withholding obligations resulting from stock-based compensation programs. For the year ended December 31, 2022, we have repurchased approximately 6.67 million shares at an aggregate cost of approximately $810.86 million (approximately $121.63 per share). In addition, for the year ended December 31, 2022, 153,305 shares were repurchased in connection with income tax withholding obligations resulting from stock-based compensation programs.

During the period of October 1, 2022 through December 31, 2022, we repurchased the following shares:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Additional<br>Dollars<br>Authorized<br>For<br>Repurchase<br>(in<br>thousands)** | **Total<br>number of<br>shares<br>purchased (1)** | **Total<br>number of<br>shares<br>cancelled** | **Average<br>price paid<br>per share<br>for forfeited<br>restricted<br>shares** | **Total<br>Number<br>of shares<br>purchased<br>as part of<br>publicly<br>announced<br>programs (2)** | **Average<br>price paid<br>per share<br>for shares<br>purchased<br>as part of<br>publicly<br>announced<br>program** | **Aggregate<br>purchase<br>price paid<br>(in thousands)** | **Maximum<br>number of<br>dollars that<br>may yet be<br>purchased<br>under the<br>program<br>(in<br>thousands)** |
| October, 2022 |  | 1730 | 745 | $0.01 |  | $— | $— | $1054597 |
| November, 2022 |  | 191955 | 286 | $0.01 | 182141 | $129.64 | $23612 | $1030985 |
| December, 2022 |  | 637764 | 550 | $0.01 | 630000 | $132.73 | $83617 | $947368 |
| Total October through<br> December | $- | 831449 | 1581 | $0.01 | 812141 | $132.03 | $107229 |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Includes shares that were repurchased in connection with income tax withholding obligations resulting from the exercise of stock options and the vesting of restricted stock grants. Also includes 745, 286 and 550 restricted shares that were forfeited and canceled by former employees pursuant to the terms of our restricted stock purchase plan during October, November and December, 2022, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The only publicly announced program pursuant to which the shares were repurchased was the share repurchase program described above. There is no other plan or program that has expired during this time period. Also, there is no other plan or program that we have determined to terminate prior to expiration, or under which we do not intend to make further purchases.

**Dividends**

During the year ended December 31, 2022 we paid dividends of $0.80 per share. Dividend equivalents are accrued on unvested restricted stock units and are paid upon vesting of the restricted stock unit.

Our Credit Agreement contains covenants that include limitations on, among other things, dividends and stock repurchases (see below in Capital Resources-Credit Facilities and Outstanding Debt Securities).

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**Equity Compensation**

Refer to Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this report for information regarding securities authorized for issuance under our equity compensation plans.

**Stock Price Performance Graph**

The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on the stock included in the Standard & Poor's 500 Index and a Peer Group Index during the five-year period ended December 31, 2022. The graph assumes an investment of $100 made in our common stock and each Index as of January 1, 2018 and has been weighted based on market capitalization. Note that our common stock price performance shown below should not be viewed as being indicative of future performance.

Companies in the peer group, which consist of companies in the S&P 500 Index or S&P MidCap 400 Index are as follows: Acadia Healthcare Company, Inc., Community Health Systems, Inc., HCA Healthcare, Inc., LifePoint Health, Inc. (included until November, 2018, when it was acquired by Apollo Management) and Tenet Healthcare Corporation.

![img191780138_0.jpg](img191780138_0.jpg)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **<u>Company Name / Index</u>** | **2017 Base** | **2018** | **2019** | **2020** | **2021** | **2022** |
| Universal Health Services, Inc. | $100.00 | $103.16 | $127.53 | $122.42 | $116.10 | $126.98 |
| S&P 500 Index | $100.00 | $95.62 | $125.72 | $148.85 | $191.58 | $156.88 |
| Peer Group | $100.00 | $135.63 | $168.65 | $192.34 | $304.63 | $281.64 |

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**ITEM 6. [RESERVED]**

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**ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to promote an understanding of our operating results and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the Consolidated Financial Statements, as included in this Annual Report on Form 10-K. The MD&A contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under Item 1A. Risk Factors, and below in Forward-Looking Statements and Risk Factors and as included elsewhere in this Annual Report on Form 10-K. This section generally discusses our results of operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021. For discussion of our result of operations and changes in our financial condition for the year ended December 31, 2021 as compared to the year ended December 31, 2020, please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on February 24, 2022.

**Overview**

Our principal business is owning and operating, through our subsidiaries, acute care hospitals and outpatient facilities and behavioral health care facilities.

As of February 27, 2023, we owned and/or operated 359 inpatient facilities and 39 outpatient and other facilities including the following located in 39 states, Washington, D.C., the United Kingdom and Puerto Rico:

**<u>Acute care facilities located in the U.S.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•28 inpatient acute care hospitals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•21 free-standing emergency departments, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•7 outpatient centers & 1 surgical hospital.

**<u>Behavioral health care facilities (331 inpatient facilities and 10 outpatient facilities):</u>** 

**<u>Located in the U.S.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•185 inpatient behavioral health care facilities, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•8 outpatient behavioral health care facilities.

**<u>Located in the U.K.:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•143 inpatient behavioral health care facilities, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•2 outpatient behavioral health care facilities.

**<u>Located in Puerto Rico:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•3 inpatient behavioral health care facilities.

Net revenues from our acute care hospitals, outpatient facilities and commercial health insurer accounted for 57% of our consolidated net revenues during 2022 and 56% during 2021. Net revenues from our behavioral health care facilities and commercial health insurer accounted for 43% of our consolidated net revenues during 2022 and 44% during 2021.

Our behavioral health care facilities located in the U.K. generated net revenues of approximately $685 million in 2022 and $688 million in 2021. Total assets at our U.K. behavioral health care facilities were approximately $1.235 billion as of December 31, 2022 and $1.351 billion as of December 31, 2021.

Services provided by our hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. We provide capital resources as well as a variety of management services to our facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing and public relations.

**Forward-Looking Statements and Risk Factors**

You should carefully review the information contained in this Annual Report, and should particularly consider any risk factors that we set forth in this Annual Report on Form 10-K for the year ended December 31, 2022, and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the "SEC"). In this Annual Report, we state our beliefs of future events and of our future financial performance. This Annual Report contains "forward-looking statements" that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future results of operations, business and growth

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strategies, financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, and statements of our goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, or the negative of those words and expressions, as well as statements in future tense, identify forward-looking statements. In evaluating those statements, you should specifically consider various factors, including the risks related to healthcare industry trends and those set forth herein in Item 1A. Risk Factors. Those factors may cause our actual results to differ materially from any of our forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or our good faith belief with respect to future events, and is subject to risks and uncertainties that are difficult to predict and many of which are outside of our control. Many factors, including those set forth herein in Item 1A. Risk Factors, and other important factors disclosed in this report, and from time to time in our other filings with the SEC, could cause actual performance or results to differ materially from those expressed in the statements. Such factors include, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we are subject to risks associated with public health threats and epidemics, including the health concerns relating to the COVID-19 pandemic. In January 2020, the Centers for Disease Control and Prevention ("CDC") confirmed the spread of the disease to the United States. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The federal government has declared COVID-19 a national emergency, as many federal and state authorities have implemented aggressive measures to "flatten the curve" of confirmed individuals diagnosed with COVID-19 in an attempt to curtail the spread of the virus and to avoid overwhelming the health care system;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The length and extent of the disruptions caused by the COVID-19 pandemic are currently unknown; however, we expect such disruptions to continue into the future. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results. However, developments related to the COVID-19 pandemic could continue to materially affect our financial performance. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations as a result of its macroeconomic impact, including the risks of a global recession or a recession in one or more of our key markets, the impact they may have on us and our customers and our assessment of that impact, and any disruptions and inefficiencies in the supply chain, and many of our known risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2022;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. These factors, which had a material unfavorable impact on our results of operations during 2022, are expected to continue to have an unfavorable material impact on our results of operations for the foreseeable future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Centers for Medicare and Medicaid Services ("CMS") issued an Interim Final Rule ("IFR") effective November 5, 2021 mandating COVID-19 vaccinations for all applicable staff at all Medicare and Medicaid certified facilities. Under the IFR, facilities covered by this regulation must establish a policy ensuring all eligible staff have received the COVID-19 vaccine prior to providing any care, treatment, or other services. All eligible staff must have received the necessary shots to be fully vaccinated. The regulation also provides for exemptions based on recognized medical conditions or religious beliefs, observances, or practices. Under the IFR, facilities must develop a similar process or plan for permitting exemptions in alignment with federal law. If facilities fail to comply with the IFR by the deadlines established, they are subject to potential termination from the Medicare and Medicaid program for non-compliance. We cannot predict at this time the potential viability or impact of any additional vaccination requirements. Implementation of these rules could have an impact on staffing at our facilities for those employees that are not vaccinated in accordance with IFR requirements, and associated loss of revenues and increased costs resulting from staffing issues could have a material adverse effect on our financial results;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), a stimulus package signed into law on March 27, 2020, authorizes $100 billion in grant funding to hospitals and other healthcare providers to be distributed through the Public Health and Social Services Emergency Fund (the "PHSSEF"). These funds are not required to be repaid provided the recipients attest to and comply with certain terms and conditions, including limitations on balance billing and not using PHSSEF funds to reimburse expenses or losses that other sources are obligated to reimburse. However, since the expenses and losses will be ultimately measured over the life of the COVID-19 pandemic, potential retrospective unfavorable adjustments in future periods, of funds recorded as revenues in prior periods, could occur. The U.S. Department of Health and Human Services ("HHS") initially distributed $30 billion of this funding based on each provider's share of total Medicare fee-for-service reimbursement in 2019. Subsequently, HHS determined that CARES Act funding (including the $30 billion already distributed) would be allocated proportional to providers' share of 2018 net patient revenue. We have received payments from these initial distributions of the PHSSEF as disclosed herein. HHS has indicated that distributions of the remaining $50 billion will be targeted primarily to hospitals in COVID-19 high impact areas, to rural providers, safety net hospitals and certain Medicaid providers and to reimburse providers for COVID-19 related treatment of uninsured patients. We have received payments from these targeted distributions of the PHSSEF, as disclosed herein. The CARES Act also makes other forms of financial assistance available to healthcare providers, including through Medicare and Medicaid payment adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which made available accelerated payments of Medicare funds in order to increase cash flow to providers. On April 26, 2020, CMS announced it was reevaluating and temporarily suspending the Medicare Accelerated and Advance Payment Program in light of the availability of the PHSSEF and the significant funds available through other programs. We have received accelerated payments under this program during 2020, and returned early all of those funds during the first quarter of 2021, as disclosed herein. The Paycheck Protection Program and Health Care Enhancement Act (the "PPPHCE Act"), a stimulus package signed into law on April 24, 2020, includes additional emergency appropriations for COVID-19 response, including $75 billion to be distributed to eligible providers through the PHSSEF. A third phase of PHSSEF allocations made $24.5 billion available for providers who previously received, rejected or accepted PHSSEF payments. Applicants that had not yet received PHSSEF payments of 2 percent of patient revenue were to receive a payment that, when combined with prior payments (if any), equals 2 percent of patient care revenue. Providers that have already received payments of approximately 2 percent of annual revenue from patient care were potentially eligible for an additional payment. Recipients will not be required to repay the government for PHSSEF funds received, provided they comply with HHS defined terms and conditions. On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA") was signed into law. The CAA appropriated an additional $3 billion to the PHSSEF, codified flexibility for providers to calculate lost revenues, and permitted parent organizations to allocate PHSSEF targeted distributions to subsidiary organizations. The CAA also provides that not less than 85 percent of the unobligated PHSSEF amounts and any future funds recovered from health care providers should be used for additional distributions that consider financial losses and changes in operating expenses in the third or fourth quarters of 2020 and the first quarter of 2021 that are attributable to the coronavirus. The CAA provided additional funding for testing, contact tracing and vaccine administration. Providers receiving payments were required to sign terms and conditions regarding utilization of the payments. Any provider receiving funds in excess of $10,000 in the aggregate will be required to report data elements to HHS detailing utilization of the payments, and we will be required to file such reports. We, and other providers, will report healthcare related expenses attributable to COVID-19 that have not been reimbursed by another source, which may include general and administrative or healthcare related operating expenses. Funds may also be applied to lost revenues, represented as a negative change in year-over-year net patient care operating income. The deadline for using all Provider Relief Fund payments depends on the date of the payment received period; payments received in the first period of April 10, 2020 to June 30, 2020 were to have been expended by June 30, 2021 and payments received in the fourth period of July 1, 2021 to December 31, 2021 were to have been expended by December 31, 2022. The American Rescue Plan Act of 2021 ("ARPA"), enacted on March 11, 2021, included funding directed at detecting, diagnosing, tracing, and monitoring COVID-19 infections; establishing community vaccination centers and mobile vaccine units; promoting, distributing, and tracking COVID-19 vaccines; and reimbursing rural hospitals and facilities for healthcare-related expenses and lost revenues attributable to COVID-19. ARPA increased the eligibility for, and amount of, premium tax credits to purchase health coverage through Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the "Legislation"). Further, ARPA set the Medicaid program's federal medical assistance percentage ("FMAP") at 100 percent for amounts expended for COVID-19 vaccines and vaccine administration. ARPA also increases the FMAP by 5 percent for eight calendar quarters to incentivize states to expand their Medicaid programs. Finally, ARPA provides subsidies to cover 100 percent of health insurance premiums under the Consolidated Omnibus Budget Reconciliation Act through September 30, 2021. There is a high degree of uncertainty surrounding the implementation of the CARES Act, the PPPHCE Act, the CAA and ARPA, and the federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional stimulus measures will be enacted or their impact. On December 29, 2022, the Consolidated Appropriations Act, 2023, was signed into law and phases out the enhanced FMAP rate and fully eliminates the increase on December 31, 2023. States are also permitted to begin Medicaid eligibility redeterminations on March 31, 2023, which is anticipated to result in a large decrease in Medicaid enrollment. There can be no assurance as to the total amount of financial and other types of assistance we will

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receive under the CARES Act, the PPPHCE Act, the CAA and the ARPA, and it is difficult to predict the impact of such legislation on our operations or how they will affect operations of our competitors. Moreover, we are unable to assess the extent to which anticipated negative impacts on us arising from the COVID-19 pandemic will be offset by amounts or benefits received or to be received under the CARES Act, the PPPHCE Act, the CAA and the ARPA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•HHS had adopted certain reimbursement policies and regulatory flexibilities favorable to providers during the Public Health Emergency ("PHE") declared in response to the COVID-19 pandemic. HHS has published guidance indicating its intent for the PHE to expire on May 11, 2023. The end of the PHE status will result in the conclusion of those policies over various designated timeframes. We cannot predict whether the loss of any such favorable conditions available to providers during the declared PHE will ultimately have a negative financial impact on us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to comply with the existing laws and government regulations, and/or changes in laws and government regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an increasing number of legislative initiatives have been passed into law that may result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Legislation as part of the Tax Cuts and Jobs Act. President Biden has undertaken and is expected to undertake additional executive actions that will strengthen the Legislation and reverse the policies of the prior administration. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the Legislation or the Medicaid program. The Inflation Reduction Act of 2022 ("IRA") was passed on August 16, 2022, which among other things, allows for CMS to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The ARPA's expansion of subsidies to purchase coverage through a Legislation exchange, which the IRA continued through 2025, is anticipated to increase exchange enrollment. The Trump Administration had directed the issuance of final rules (i) enabling the formation of association health plans that would be exempt from certain Legislation requirements such as the provision of essential health benefits, (ii) expanding the availability of short-term, limited duration health insurance, (iii) eliminating cost-sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty level, (iv) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans and (v) incentivizing the use of health reimbursement arrangements by employers to permit employees to purchase health insurance in the individual market. The uncertainty resulting from these Executive Branch policies may have led to reduced Exchange enrollment in 2018, 2019 and 2020. It is also anticipated that these policies, to the extent that they remain as implemented, may create additional cost and reimbursement pressures on hospitals, including ours. In addition, there have been numerous political and legal efforts to expand, repeal, replace or modify the Legislation since its enactment, some of which have been successful, in part, in modifying the Legislation, as well as court challenges to the constitutionality of the Legislation. The U.S. Supreme Court rejected the latest such case on June 17, 2021, when the Court held in California v. Texas that the plaintiffs lacked standing to challenge the Legislation's requirement to obtain minimum essential health insurance coverage, or the individual mandate. The Court dismissed the case without specifically ruling on the constitutionality of the Legislation. As a result, the Legislation will continue to remain law, in its entirety, likely for the foreseeable future. On September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act. Any future efforts to challenge, replace or replace the Legislation or expand or substantially amend its provision is unknown. See below in Sources of Revenue and Health Care Reform for additional disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•under the Legislation, hospitals are required to make public a list of their standard charges, and effective January 1, 2019, CMS has required that this disclosure be in machine-readable format and include charges for all hospital items and services and average charges for diagnosis-related groups. On November 27, 2019, CMS published a final rule on "Price Transparency Requirements for Hospitals to Make Standard Charges Public." This rule took effect on January 1, 2021 and requires all hospitals to also make public their payer-specific negotiated rates, minimum negotiated rates, maximum negotiated rates, and discounted cash rates, for all items and services, including individual items and services and service packages, that could be provided by a hospital to a patient. Failure to comply with these requirements may result in daily monetary penalties. On November 2, 2021, CMS released a final rule amending several hospital price transparency policies and increasing the amount of penalties for noncompliance through the use of a scaling factor based on hospital bed count;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•as part of the CAA, Congress passed legislation aimed at preventing or limiting patient balance billing in certain circumstances. The CAA addresses surprise medical bills stemming from emergency services, out-of-network ancillary providers at in-network facilities, and air ambulance carriers. The legislation prohibits surprise billing when out-of-network emergency services or out-of-network services at an in-network facility are provided, unless informed consent is

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received. In these circumstances providers are prohibited from billing the patient for any amounts that exceed in-network cost-sharing requirements. HHS, the Department of Labor and the Department of the Treasury have issued interim final rules, which begin to implement the legislation. The rules are expected to limit our ability to receive payment for services at usually higher out-of-network rates in certain circumstances and prohibit out-of-network payments in other circumstances. On February 28, 2022, a district judge in the Eastern District of Texas invalidated portions of the rule governing aspects of the Independent Dispute Resolution ("IDR") process. In light of this decision, the government issued a final rule on August 19, 2022 eliminating the rebuttable presumption in favor of the qualifying payment amount ("QPA") by the IDR entity and providing additional factors the IDR entity should consider when choosing between two competing offers. On September 22, 2022, the Texas Medical Association filed a lawsuit challenging the IDR process provided in the updated final rule and alleging that the final rule unlawfully elevates the QPA above other factors the IDR entity must consider. The American Hospital Association and American Medical Association have announced their intent to join this case as amici supporting the Texas Medical Association;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•possible unfavorable changes in the levels and terms of reimbursement for our charges by third party payers or government based payers, including Medicare or Medicaid in the United States, and government based payers in the United Kingdom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to enter into managed care provider agreements on acceptable terms and the ability of our competitors to do the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the outcome of known and unknown litigation, government investigations, false claims act allegations, and liabilities and other claims asserted against us and other matters as disclosed in Note 8 to the Consolidated Financial Statements - Commitments and Contingencies and the effects of adverse publicity relating to such matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•competition from other healthcare providers (including physician owned facilities) in certain markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for healthcare;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to attract and retain qualified personnel, nurses, physicians and other healthcare professionals and the impact on our labor expenses resulting from a shortage of nurses and other healthcare professionals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•demographic changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•there is a heightened risk of future cybersecurity threats, including ransomware attacks targeting healthcare providers. If successful, future cyberattacks could have a material adverse effect on our business. Any costs that we incur as a result of a data security incident or breach, including costs to update our security protocols to mitigate such an incident or breach could be significant. Any breach or failure in our operational security systems can result in loss of data or an unauthorized disclosure of or access to sensitive or confidential member or protected personal or health information and could result in significant penalties or fines, litigation, loss of customers, significant damage to our reputation and business, and other losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the availability of suitable acquisition and divestiture opportunities and our ability to successfully integrate and improve our acquisitions since failure to achieve expected acquisition benefits from certain of our prior or future acquisitions could result in impairment charges for goodwill and purchased intangibles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the impact of severe weather conditions, including the effects of hurricanes and climate change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•as discussed below in Sources of Revenue, we receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, California, Nevada, Illinois, Pennsylvania, Washington, D.C., Florida, Kentucky and Massachusetts. We also receive Medicaid disproportionate share hospital payments in certain states including Texas and South Carolina. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, and the effect of the COVID-19 pandemic on state budgets, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to continue to obtain capital on acceptable terms, including borrowed funds, to fund the future growth of our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our inpatient acute care and behavioral health care facilities may experience decreasing admission and length of stay trends;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our financial statements reflect large amounts due from various commercial and private payers and there can be no assurance that failure of the payers to remit amounts due to us will not have a material adverse effect on our future results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Budget Control Act of 2011 (the "2011 Act") imposed annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Select Committee on Deficit Reduction (the "Joint Committee"), which was tasked with making recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year with a uniform percentage reduction across all Medicare programs. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, continued the 2% reductions to Medicare reimbursement imposed under the 2011 Act. Recent legislation suspended payment reductions through December 31, 2021 in exchange for extended cuts through 2030. Subsequent legislation extended the payment reduction suspension through March 31, 2022, with a 1% payment reduction from then until June 30, 2022 and the full 2% payment reduction thereafter. The most recent legislation extended these reductions through 2032. We cannot predict whether Congress will restructure the implemented Medicare payment reductions or what other federal budget deficit reduction initiatives may be proposed by Congress going forward. See below in 2019 Novel Coronavirus Disease Medicare and Medicaid Payment Related Legislation – Medicare Sequestration Relief, for additional disclosure related to the favorable effect the legislative extensions have had on our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•uninsured and self-pay patients treated at our acute care facilities unfavorably impact our ability to satisfactorily and timely collect our self-pay patient accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in our business strategies or development plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•in June, 2016, the United Kingdom affirmatively voted in a non-binding referendum in favor of the exit of the United Kingdom ("U.K.") from the European Union (the "Brexit") and it was approved by vote of the British legislature. On March 29, 2017, the United Kingdom triggered Article 50 of the Lisbon Treaty, formally starting negotiations regarding its exit from the European Union. On January 31, 2020, the U.K. formally exited the European Union. On December 24, 2020, the United Kingdom and the European Union reached a post-Brexit trade and cooperation agreement that created new business and security requirements and preserved the United Kingdom's tariff- and quota-free access to the European Union member states. The trade and cooperation agreement was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021, following ratification by the European Union. We do not know to what extent Brexit will ultimately impact the business and regulatory environment in the U.K., the European Union, or other countries. Any of these effects of Brexit, and others we cannot anticipate, could harm our business, financial condition and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•in 2021, the rate of inflation in the United States began to increase and has since risen to levels not experienced in over 40 years. We are experiencing inflationary pressures, primarily in personnel costs, and we anticipate impacts on other cost areas within the next twelve months. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. Although we have hedged some of our floating rate indebtedness, the rapid increase in interest rates have increased our interest expense significantly increasing our expenses and reducing our free cash flow and our ability to access the capital markets on favorable terms. As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•we have exposure to fluctuations in foreign currency exchange rates, primarily the pound sterling. We have international subsidiaries that operate in the United Kingdom. We routinely hedge our exposures to foreign currencies with certain financial institutions in an effort to minimize the impact of certain currency exchange rate fluctuations, but these hedges may be inadequate to protect us from currency exchange rate fluctuations. To the extent that these hedges are inadequate, our reported financial results or the way we conduct our business could be adversely affected. Furthermore, if a financial counterparty to our hedges experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience material financial losses, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other factors referenced herein or in our other filings with the Securities and Exchange Commission.

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Given these uncertainties, risks and assumptions, as outlined above, you are cautioned not to place undue reliance on such forward-looking statements. Our actual results and financial condition could differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We assume no obligation to publicly update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as may be required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

**Critical Accounting Policies and Estimates**

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

A summary of our significant accounting policies is outlined in Note 1 to the financial statements. We consider our critical accounting policies to be those that require us to make significant judgments and estimates when we prepare our financial statements, including the following:

**Revenue Recognition:** We report net patient service revenue at the estimated net realizable amounts from patients and third-party payers and others for services rendered. We have agreements with third-party payers that provide for payments to us at amounts different from our established rates. Payment arrangements include rates per discharge, reimbursed costs, discounted charges and per diem payments. Estimates of contractual allowances under managed care plans, which represent explicit price concessions, are based upon the payment terms specified in the related contractual agreements. We closely monitor our historical collection rates, as well as changes in applicable laws, rules and regulations and contract terms, to assure that provisions are made using the most accurate information available. However, due to the complexities involved in these estimations, actual payments from payers may be different from the amounts we estimate and record.

See Note 10 to the Consolidated Financial Statements-Revenue Recognition, for additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein.

We estimate our Medicare and Medicaid revenues using the latest available financial information, patient utilization data, government provided data and in accordance with applicable Medicare and Medicaid payment rules and regulations. The laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation and as a result, there is at least a reasonable possibility that recorded estimates will change by material amounts in the near term. Certain types of payments by the Medicare program and state Medicaid programs (e.g. Medicare Disproportionate Share Hospital, Medicare Allowable Bad Debts and Inpatient Psychiatric Services) are subject to retroactive adjustment in future periods as a result of administrative review and audit and our estimates may vary from the final settlements. Such amounts are included in accounts receivable, net, on our Consolidated Balance Sheets. The funding of both federal Medicare and state Medicaid programs are subject to legislative and regulatory changes. As such, we cannot provide any assurance that future legislation and regulations, if enacted, will not have a material impact on our future Medicare and Medicaid reimbursements. Adjustments related to the final settlement of these retrospectively determined amounts did not materially impact our results in 2022, 2021 or 2020. If it were to occur, each 1% adjustment to our estimated net Medicare revenues that are subject to retrospective review and settlement as of December 31, 2022, would change our after-tax net income by approximately $1 million.

**Charity Care, Uninsured Discounts and Other Adjustments to Revenue:** Collection of receivables from third-party payers and patients is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill which is the patient's responsibility, primarily co-payments and deductibles. We estimate our revenue adjustments for implicit price concessions based on general factors such as payer mix, the aging of the receivables and historical collection experience. We routinely review accounts receivable balances in conjunction with these factors and other economic conditions which might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. At our acute care hospitals, third party liability accounts are pursued until all payment and adjustments are posted to the patient account. For those accounts with a patient balance after third party liability is finalized or accounts for uninsured patients, the patient receives statements and collection letters.

Historically, a significant portion of the patients treated throughout our portfolio of acute care hospitals are uninsured patients which, in part, has resulted from patients who are employed but do not have health insurance or who have policies with relatively high deductibles. Patients treated at our hospitals for non-elective services, who have gross income of various amounts, dependent upon the state, ranging from 200% to 400% of the federal poverty guidelines, are deemed eligible for charity care. The federal poverty guidelines are established by the federal government and are based on income and family size. Because we do not pursue collection of amounts that qualify as charity care, the transaction price is fully adjusted and there is no impact in our net revenues or in our accounts receivable, net.

A portion of the accounts receivable at our acute care facilities are comprised of Medicaid accounts that are pending approval from third-party payers but we also have smaller amounts due from other miscellaneous payers such as county indigent programs in certain states. Our patient registration process includes an interview of the patient or the patient's responsible party at the time of

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registration. At that time, an insurance eligibility determination is made and an insurance plan code is assigned. There are various pre-established insurance profiles in our patient accounting system which determine the expected insurance reimbursement for each patient based on the insurance plan code assigned and the services rendered. Certain patients may be classified as Medicaid pending at registration based upon a screening evaluation if we are unable to definitively determine if they are currently Medicaid eligible. When a patient is registered as Medicaid eligible or Medicaid pending, our patient accounting system records net revenues for services provided to that patient based upon the established Medicaid reimbursement rates, subject to the ultimate disposition of the patient's Medicaid eligibility. When the patient's ultimate eligibility is determined, reclassifications may occur which impacts net revenues in future periods. Although the patient's ultimate eligibility determination may result in adjustments to net revenues, these adjustments did not have a material impact on our results of operations in 2022 or 2021 since our facilities make estimates at each financial reporting period to adjust revenue based on historical collections.

We also provide discounts to uninsured patients (included in "uninsured discounts" amounts below) who do not qualify for Medicaid or charity care. Because we do not pursue collection of amounts classified as uninsured discounts, the transaction price is fully adjusted and there is no impact in our net revenues or in our net accounts receivable. In implementing the discount policy, we first attempt to qualify uninsured patients for governmental programs, charity care or any other discount program. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

**Uncompensated care (charity care and uninsured discounts):**

The following table shows the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the years ended December 31, 2022 and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Amount** | **%** | **Amount** | **%** |
| Charity care | $786962 | 35% | $661965 | 33% |
| Uninsured discounts | 1474933 | 65% | 1336319 | 67% |
| Total uncompensated care | $2261895 | 100% | $1998284 | 100% |

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**The estimated cost of providing uncompensated care:**

The estimated cost of providing uncompensated care, as reflected below, were based on a calculation which multiplied the percentage of operating expenses for our acute care hospitals to gross charges for those hospitals by the above-mentioned total uncompensated care amounts. The percentage of cost to gross charges is calculated based on the total operating expenses for our acute care facilities divided by gross patient service revenue for those facilities. An increase in the level of uninsured patients to our facilities and the resulting adverse trends in the adjustments to net revenues and uncompensated care provided could have a material unfavorable impact on our future operating results.

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| | | |
|:---|:---|:---|
|  | (amounts in thousands) | (amounts in thousands) |
|  | **2022** | **2021** |
| Estimated cost of providing charity care | $85434 | $72095 |
| Estimated cost of providing uninsured discounts related care | 160122 | 145538 |
| Estimated cost of providing uncompensated care | $245556 | $217633 |

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**Self-Insured/Other Insurance Risks:** We provide for self-insured risks, primarily general and professional liability claims, workers' compensation claims and healthcare and dental claims. Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimate of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. All relevant information, including our own historical experience is used in estimating the expected amount of claims. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Our estimated self-insured reserves are reviewed and changed, if necessary, at each reporting date and changes are recognized currently as additional expense or as a reduction of expense.

In addition, we also: (i) own commercial health insurers headquartered in Nevada and Puerto Rico, and; (ii) maintain self-insured employee benefits programs for employee healthcare and dental claims. The ultimate costs related to these programs/operations include expenses for claims incurred and paid in addition to an accrual for the estimated expenses incurred in connection with claims incurred but not yet reported. Given our significant insurance-related exposure, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations.

See Note 8 to the Consolidated Financial Statements-Commitments and Contingencies for additional disclosure related to our self-insured general and professional liability and workers' compensation liability.

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**Long-Lived Assets:** We review our long-lived assets for impairment whenever events or circumstances indicate that the carrying value of these assets may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of our asset based on our estimate of its undiscounted future cash flow. If the analysis indicates that the carrying value is not recoverable from future cash flows, the asset is written down to its estimated fair value and an impairment loss is recognized. Fair values are determined based on estimated future cash flows using appropriate discount rates. Please see additional disclosure below in Provision for Asset Impairment.

**Goodwill and Intangible Assets:** Goodwill and indefinite-lived intangible assets are reviewed for impairment at the reporting unit level on an annual basis or more often if indicators of impairment arise. Our judgments regarding the existence of impairment indicators are based on market conditions and operational performance of each reporting unit. We have designated October 1<sup>st</sup> as our annual impairment assessment date for our goodwill and indefinite-lived intangible assets.

We performed an impairment assessment as of October 1, 2022 which indicated no impairment of goodwill. There was no goodwill impairment during 2021.

Future changes in the estimates used to conduct the impairment review, including profitability and market value projections, could indicate impairment in future periods potentially resulting in a write-off of a portion or all of our goodwill or indefinite-lived intangible assets.

**Income Taxes:** Deferred tax assets and liabilities are recognized for the amount of taxes payable or deductible in future years as a result of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. We believe that future income will enable us to realize our deferred tax assets net of recorded valuation allowances relating to state and foreign net operating loss carry-forwards, tax credits, and interest deduction limitations.

We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. Our tax returns have been examined by the Internal Revenue Service through the year ended December 31, 2006. We believe that adequate accruals have been provided for federal, foreign and state taxes.

See Note 6 to the Consolidated Financial Statements-Income Taxes for additional disclosure of our effective tax rates.

**Recent Accounting Pronouncements:** For a summary of recent accounting pronouncements, please see Note 1 to the Consolidated Financial Statements-Accounting Standards as included in this Report on Form 10-K for the year ended December 31, 2022.

**CARES Act and Other Governmental Grants and Medicare Accelerated Payments:** Please see Sources of Revenue- 2019 Novel Coronavirus Disease Medicare and Medicaid Payment Related Legislation below for additional disclosure.

**Results of Operations**

**<u>COVID-19, Clinical Staffing Shortage and Effects of Inflation:</u>** 

The impact of the COVID-19 pandemic, which began during the second half of March, 2020, has had a material effect on our operations and financial results since that time. The length and extent of the disruptions caused by the COVID-19 pandemic are currently unknown; however, we expect such disruptions to continue into the future. Since the future volumes and severity of COVID-19 patients remain highly uncertain and subject to change, including potential increases in future COVID-19 patient volumes caused by new variants of the virus, as well as related pressures on staffing and wage rates, we are not able to fully quantify the impact that these factors will have on our future financial results. However, developments related to the COVID-19 pandemic could continue to materially affect our financial performance.

The healthcare industry is labor intensive and salaries, wages and benefits are subject to inflationary pressures, as are supplies expense and other operating expenses. In addition, the nationwide shortage of nurses and other clinical staff and support personnel has been a significant operating issue facing us and other healthcare providers. Like others in the healthcare industry, we continue to experience a shortage of nurses and other clinical staff and support personnel at our acute care and behavioral health care hospitals in many geographic areas. In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes. This staffing shortage may require us to further enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel or require us to hire expensive temporary personnel. We have also experienced cost increases related to the procurement of medical supplies as well as certain of our other operating expenses which we believe resulted from supply chain disruptions as well as general inflationary pressures. These factors, which had a material unfavorable impact on our results of operations during 2022, have been moderating to a certain degree but are expected to continue to have an unfavorable material impact on our results of operations for the foreseeable future.

Although our ability to pass on increased costs associated with providing healthcare to Medicare and Medicaid patients is limited due to various federal, state and local laws which, in certain circumstances, limit our ability to increase prices, we have been

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negotiating increased rates from commercial insurers to defray our increased cost of providing patient care. In addition, we have implemented various productivity enhancement programs and cost reduction initiatives including, but not limited to, the following: team-based patient care initiatives designed to optimize the level of patient care services provided by our licensed nurses/clinicians; efforts to reduce utilization of, and rates paid for, premium pay labor; consolidation of medical supply vendors to increase purchasing discounts; review and reduction of clinical variation in connection with the utilization of medical supplies, and; various other efforts to increase productivity and/or reduce costs including investments in new information technology applications.

The following table summarizes our results of operations, and is used in the discussion below, for the years ended December 31, 2022 and 2021 (dollar amounts in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2022** | **2021** | **2021** | **2020** | **2020** |
|  |  | **% of Net** |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **Revenues** | **Amount** | **Revenues** |
| Net revenues | $13399370 | 100.0% | $12642117 | 100.0% | $11558897 | 100.0% |
| Operating charges: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 6762256 | 50.5% | 6163944 | 48.8% | 5613097 | 48.6% |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 3445733 | 25.7% | 3035869 | 24.0% | 2672762 | 23.1% |
| &nbsp;&nbsp;&nbsp;Supplies expense | 1474339 | 11.0% | 1427134 | 11.3% | 1288132 | 11.1% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 581861 | 4.3% | 533213 | 4.2% | 510493 | 4.4% |
| &nbsp;&nbsp;&nbsp;Lease and rental expense | 131626 | 1.0% | 118863 | 0.9% | 116059 | 1.0% |
| Subtotal-operating expenses | 12395815 | 92.5% | 11279023 | 89.2% | 10200543 | 88.2% |
| Income from operations | 1003555 | 7.5% | 1363094 | 10.8% | 1358354 | 11.8% |
| Interest expense, net | 126889 | 0.9% | 83672 | 0.7% | 106285 | 0.9% |
| Other (income) expense, net | 10406 | 0.1% | (13891) | -0.1% | (14) | 0.0% |
| Income before income taxes | 866260 | 6.5% | 1293313 | 10.2% | 1252083 | 10.8% |
| Provision for income taxes | 209278 | 1.6% | 305681 | 2.4% | 299293 | 2.6% |
| Net income | 656982 | 4.9% | 987632 | 7.8% | 952790 | 8.2% |
| Less: Net income (loss) attributable <br> to noncontrolling interests | (18627) | -0.1% | (3958) | 0.0% | 8837 | 0.1% |
| Net income attributable to UHS | $675609 | 5.0% | $991590 | 7.8% | $943953 | 8.2% |

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Net revenues increased by 6.0%, or $757 million, to $13.40 billion during 2022 as compared to $12.64 billion during 2021. The increase in net revenues was primarily attributable to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a $507 million or 4.1% increase in net revenues generated from our acute care and behavioral health care operations owned during both periods (which we refer to as "same facility"), and;

Income before income taxes decreased by $427 million to $866 million during 2022 as compared to $1.29 billion during 2021. The decrease was attributable to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a decrease of $305 million at our acute care facilities, as discussed below in Acute Care Hospital Services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a decrease of $45 million at our behavioral health care facilities, as discussed below in Behavioral Health Services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a decrease of $43 million due to an increase in interest expense due to an increase in our aggregate average outstanding borrowings as well as an increase in our weighted average cost of borrowings, as discussed below in Other Operating Results-Interest Expense, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$34 million of other combined net decreases.

Net income attributable to UHS decreased by $316 million to $675 million during 2022 as compared to $992 million during 2021. This decrease was attributable to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a decrease of $427 million in income before income taxes, as discussed above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an increase of $15 million due to an increase in the loss attributable to noncontrolling interests, and;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an increase of $96 million resulting from a net decrease in the provision for income taxes due primarily to the income tax benefit recorded in connection with the $412 million decrease in pre-tax income. Please see additional disclosure below in Other Operating Results-Provision for Income Taxes and Effective Tax Rates.

**<u>Increase to self-insured professional and general liability reserves:</u>**

Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimates of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies.

As a result of unfavorable trends experienced during 2022 and 2021, included in our results of operations were pre-tax increases of $16 million during 2022, and $52 million during 2021, to our reserves for self-insured professional and general liability claims. During 2022, approximately $10 million of the reserves increase is included in our Same Facility basis acute care hospitals services' results, and approximately $6 million is included in our behavioral health services' results. During 2021, approximately $39 million of the reserves increase is included in our Same Facility basis acute care hospitals services' results, and approximately $13 million is included in our behavioral health services' results.

**Acute Care Hospital Services**

The following table sets forth certain operating statistics for our acute care hospital services for the years ended December 31, 2022 and 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Same Facility Basis** | **Same Facility Basis** | **All** | **All** |
|  | **2022** | **2021** | **2022** | **2021** |
| Average licensed beds | 6760 | 6566 | 6923 | 6566 |
| Average available beds | 6588 | 6394 | 6751 | 6394 |
| Patient days | 1546067 | 1568639 | 1569611 | 1568639 |
| Average daily census | 4235.8 | 4297.6 | 4300.3 | 4297.6 |
| Occupancy-licensed beds | 62.7% | 65.5% | 62.1% | 65.5% |
| Occupancy-available beds | 64.3% | 67.2% | 63.7% | 67.2% |
| Admissions | 307462 | 305296 | 311537 | 305296 |
| Length of stay | 5.0 | 5.1 | 5.0 | 5.1 |

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**<u>Acute Care Hospital Services-Same Facility Basis</u>**

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods.

Our Same Facility basis results reflected on the tables below also exclude from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Annual Report on Form 10-K.

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The following table summarizes the results of operations for our acute care hospital services on a same facility basis and is used in the discussions below for the years ended December 31, 2022 and 2021 (dollar amounts in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **Revenues** |
| Net revenues | $7281739 | 100.0% | $6998257 | 100.0% |
| Operating charges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 3221550 | 44.2% | 2964934 | 42.4% |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 1860791 | 25.6% | 1661418 | 23.7% |
| &nbsp;&nbsp;&nbsp;Supplies expense | 1224070 | 16.8% | 1224499 | 17.5% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 361354 | 5.0% | 329755 | 4.7% |
| &nbsp;&nbsp;&nbsp;Lease and rental expense | 76649 | 1.1% | 75391 | 1.1% |
| Subtotal-operating expenses | 6744414 | 92.6% | 6255997 | 89.4% |
| Income from operations | 537325 | 7.4% | 742260 | 10.6% |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 1109 | 0.0% | 1006 | 0.0% |
| &nbsp;&nbsp;&nbsp;Other (income) expense, net | 1493 | 0.0% | 567 | 0.0% |
| Income before income taxes | $534723 | 7.3% | $740687 | 10.6% |

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During 2022, as compared to 2021, net revenues from our acute care hospital services, on a Same Facility basis, increased by $283 million or 4.1%. Income before income taxes (and before income attributable to noncontrolling interests) decreased by $206 million, or 28%, amounting to $535 million, or 7.3% of net revenues during 2022, as compared to $741 million, or 10.6% of net revenues during 2021.

During 2022, net revenue per adjusted admission decreased by 0.3% while net revenue per adjusted patient day increased by 1.9%, as compared to 2021. During 2022, as compared to 2021, inpatient admissions to our acute care hospitals increased by 0.7% and adjusted admissions (adjusted for outpatient activity) increased by 3.1%. Patient days at these facilities decreased by 1.4% and adjusted patient days increased by 0.9% during 2022, as compared to 2021. The average length of inpatient stay at these facilities was 5.0 days during 2022 and 5.1 days during 2021. The occupancy rate, based on the average available beds at these facilities, was 64% during 2022, as compared to 67% during 2021.

On a Same Facility basis during 2022, as compared to 2021, salaries, wages and benefits expense increased $257 million or 8.7%. The increase during 2022, as compared to 2021, was due primarily to higher labor costs due, in part, to the healthcare labor shortage as well as an increase in patients at our hospitals, during the first quarter of 2022, with COVID-19 which increased the demand for care and pressured our staffing resources requiring us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers. As compared to the first quarter of 2022, we experienced a decrease in patients with COVID-19 during the remaining 9 months of the year which eased the need for higher-cost temporary labor and pay premiums.

Other operating expenses increased $199 million, or 12.0%, during 2022, as compared to 2021. Operating expenses incurred in connection with our commercial health insurer, consisting primarily of medical costs, increased approximately $97 million during 2022, as compared to 2021. Excluding the operating expenses incurred in connection with our commercial health insurer, other operating expenses increased $103 million, or 7.6%.

Supplies expense decreased slightly during 2022, as compared to 2021. Offsetting the increased cost of supplies experienced during 2022, as compared to 2021, was a decrease in the number of patients treated with COVID-19 at our hospitals during 2022, as compared to 2021. Patients diagnosed with COVID-19 generally require more intensive medical resources and supplies.

**<u>All Acute Care Hospital Services</u>**

The following table summarizes the results of operations for all our acute care operations during 2022 and 2021. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including, if applicable, the operating results of businesses the were acquired/opened, or divested/closed, during the past year as well as provisions for asset impairments. Dollar amounts below are reflected in thousands.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **Revenues** |
| Net revenues | $7646749 | 100.0% | $7108254 | 100.0% |
| Operating charges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 3332535 | 43.6% | 2968140 | 41.8% |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 2146196 | 28.1% | 1772312 | 24.9% |
| &nbsp;&nbsp;&nbsp;Supplies expense | 1264688 | 16.5% | 1224664 | 17.2% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 383115 | 5.0% | 331508 | 4.7% |
| &nbsp;&nbsp;&nbsp;Lease and rental expense | 86654 | 1.1% | 75391 | 1.1% |
| Subtotal-operating expenses | 7213188 | 94.3% | 6372015 | 89.6% |
| Income from operations | 433561 | 5.7% | 736239 | 10.4% |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 1109 | 0.0% | 1006 | 0.0% |
| &nbsp;&nbsp;&nbsp;Other (income) expense, net | 2788 | 0.0% | 567 | 0.0% |
| Income before income taxes | $429664 | 5.6% | $734666 | 10.3% |

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Income before income taxes decreased by $305 million, or 42%, to $430 million, or 5.6% of net revenues during 2022, as compared to $735 million, or 10.3% of net revenues during 2021. The decrease in income before income taxes resulted from: (i) the $206 million, or 28%, decrease in income before income taxes at our hospitals, on a Same Facility basis, as discussed above; (ii) a $58 million provision for asset impairment recorded during 2022, as discussed below in Other Operating Results-Provision for Asset Impairments, and; (iii) $41 million of other combined net decreases related primarily to the start-up losses incurred at the newly constructed acute care hospital located in Reno, Nevada, that opened during the first quarter of 2022.

During 2022, as compared to 2021, salaries, wages and benefits expense increased $364 million or 12.3%. The increase was due to the $257 million, or 8.7%, above-mentioned increase related to our acute care hospital services, on a Same Facility basis, as well as a combined increase of $107 million related to the facilities and businesses acquired/opened during the past year.

Other operating expenses increased $374 million, or 21.1%, during 2022, as compared to 2021. The increase was due to the $199 million, or 12.0%, above-mentioned increase related to our acute care hospital services, on a Same Facility basis, a combined increase of $109 million related to the facilities and businesses acquired/opened during the past year, and a $66 million increase in provider tax assessments.

Supplies expense increased $40 million, or 3.3%, during 2022, as compared to 2021. Since, as discussed above, supplies expense decreased slightly for our acute care hospital services, on a Same Facility basis, the increase was due to the expense incurred at the facilities and businesses acquired/opened during the past year.

Please see Results of Operations - COVID-19, Clinical Staffing Shortage and Effects of Inflation above for additional disclosure regarding the factors impacting our operating costs.

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**Behavioral Health Care Services**

The following table sets forth certain operating statistics for our behavioral health care services for the years ended December 31, 2022 and 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Same Facility Basis** | **Same Facility Basis** | **All** | **All** |
|  | **2022** | **2021** | **2022** | **2021** |
| Average licensed beds | 23835 | 23749 | 24259 | 24132 |
| Average available beds | 23735 | 23647 | 24159 | 24030 |
| Patient days | 6164887 | 6091704 | 6230124 | 6162780 |
| Average daily census | 16890.1 | 16689.6 | 17068.8 | 16884.3 |
| Occupancy-licensed beds | 70.9% | 70.3% | 70.4% | 70.0% |
| Occupancy-available beds | 71.2% | 70.6% | 70.7% | 70.3% |
| Admissions | 452772 | 449670 | 459245 | 457006 |
| Length of stay | 13.6 | 13.5 | 13.6 | 13.5 |

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**<u>Behavioral Health Care Services-Same Facility Basis</u>**

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the effect of items that are non-operational in nature including items such as, but not limited to, gains/losses on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits, impairments of long-lived and intangible assets and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods.

Our Same Facility basis results reflected on the table below also excludes from net revenues and other operating expenses, provider tax assessments incurred in each period as discussed below Sources of Revenue-Various State Medicaid Supplemental Payment Programs. However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table below under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the tables below since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with U.S. GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in this Annual Report on Form 10-K.

The following table summarizes the results of operations for our behavioral health care services, on a same facility basis, and is used in the discussions below for the years ended December 31, 2022 and 2021 (dollar amounts in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **Revenues** |
| Net revenues | $5595179 | 100.0% | $5371512 | 100.0% |
| Operating charges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 3075718 | 55.0% | 2863708 | 53.3% |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 1071443 | 19.1% | 1036089 | 19.3% |
| &nbsp;&nbsp;&nbsp;Supplies expense | 210136 | 3.8% | 202816 | 3.8% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 180958 | 3.2% | 183843 | 3.4% |
| &nbsp;&nbsp;&nbsp;Lease and rental expense | 42657 | 0.8% | 40438 | 0.8% |
| Subtotal-operating expenses | 4580912 | 81.9% | 4326894 | 80.6% |
| Income from operations | 1014267 | 18.1% | 1044618 | 19.4% |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 3749 | 0.1% | 3312 | 0.1% |
| &nbsp;&nbsp;&nbsp;Other (income) expense, net | (6343) | -0.1% | 96 | 0.0% |
| Income before income taxes | $1016861 | 18.2% | $1041210 | 19.4% |

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During 2022, as compared to 2021, net revenues from our behavioral health services, on a Same Facility basis, increased by $224 million or 4.2%. Income before income taxes (and before income attributable to noncontrolling interests) decreased by $24 million, or 2%, amounting to $1.02 billion or 18.2% of net revenues during 2022 as compared to $1.04 billion or 19.4% of net revenues during 2021.

During 2022, net revenue per adjusted admission increased by 4.0% while net revenue per adjusted patient day increased by 3.5%, as compared to 2021. During 2022, as compared to 2021, inpatient admissions and adjusted admissions to our behavioral health care hospitals each increased by 0.7%. Patient days and adjusted patient days at these facilities each increased by 1.2% during 2022, as

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compared to 2021. The average length of inpatient stay at these facilities was 13.6 days during 2022 and 13.5 days during 2021. The occupancy rate, based on the average available beds at these facilities, was 71% during each of 2022 and 2021.

On a Same Facility basis during 2022, as compared to 2021, salaries, wages and benefits expense increased $212 million or 7.4%. The increase during 2022, as compared to 2021, was due, in part, to a nationwide shortage of nurses and other clinical staff and support personnel at our behavioral health care hospitals which pressured our staffing resources and required us to pay premiums above standard compensation for essential workers and to utilize higher-cost temporary labor.

Other operating expenses increased $35 million, or 3.4%, during 2022, as compared to 2021. Supplies expense increased $7 million, or 3.6%, during 2022, as compared to 2021.

**<u>All Behavioral Health Care Services</u>**

The following table summarizes the results of operations for all our behavioral health care services during 2022 and 2021. These amounts include: (i) our behavioral health care results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts, if applicable, including the results of facilities acquired or opened during the past year as well as the results of certain facilities that were closed or restructured during the past year. Dollar amounts below are reflected in thousands.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended** | **Year Ended** | **Year Ended** | **Year Ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  |  | **% of Net** |  | **% of Net** |
|  | **Amount** | **Revenues** | **Amount** | **Revenues** |
| Net revenues | $5729758 | 100.0% | $5503644 | 100.0% |
| Operating charges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 3107216 | 54.2% | 2893028 | 52.6% |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 1201563 | 21.0% | 1145879 | 20.8% |
| &nbsp;&nbsp;&nbsp;Supplies expense | 211786 | 3.7% | 204840 | 3.7% |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 186555 | 3.3% | 187761 | 3.4% |
| &nbsp;&nbsp;&nbsp;Lease and rental expense | 43868 | 0.8% | 41703 | 0.8% |
| Subtotal-operating expenses | 4750988 | 82.9% | 4473211 | 81.3% |
| Income from operations | 978770 | 17.1% | 1030433 | 18.7% |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 5323 | 0.1% | 4780 | 0.1% |
| &nbsp;&nbsp;&nbsp;Other (income) expense, net | (6843) | -0.1% | 96 | 0.0% |
| Income before income taxes | $980290 | 17.1% | $1025557 | 18.6% |

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During 2022, as compared to 2021, net revenues generated from our behavioral health services increased by $226 million, or 4.1% due primarily to the above-mentioned $224 million, or 4.2% increase in net revenues on a Same Facility basis.

Income before income taxes decreased by $45 million, or 4%, to $980 million or 17.1% of net revenues during 2022, as compared to $1.03 billion or 18.6% of net revenues during 2021. The decrease during 2022, as compared to 2021, was attributable to: (i) the $24 million, or 2% decrease in income before income taxes experienced at our behavioral health facilities, on a Same Facility basis, as discussed above, and; (ii) $21 million of other combined net decreases consisting primarily of the startup losses incurred at various facilities opened during the past year.

During 2022, as compared to 2021, salaries, wages and benefits expense increased $215 million or 7.4%. The increase was due primarily to the $212 million, or 7.4%, increase related to our behavioral health services, on a Same Facility basis, as discussed above.

Other operating expenses increased $56 million, or 4.9%, during 2022, as compared to 2021. The increase was due primarily to the $35 million, or 3.4%, above-mentioned increase related to our behavioral health services, on a Same Facility basis, as well as the other operating expenses incurred at various facilities opened during the past year.

Supplies expense increased $7 million, or 3.4%, during 2022, as compared to 2021, due to the above-mentioned increase related to our behavioral health services, on a Same Facility basis.

Please see Results of Operations - COVID-19, Clinical Staffing Shortage and Effects of Inflation above for additional disclosure regarding the factors impacting our operating costs.

**Sources of Revenue**

**Overview:** We receive payments for services rendered from private insurers, including managed care plans, the federal government under the Medicare program, state governments under their respective Medicaid programs and directly from patients.

Hospital revenues depend upon inpatient occupancy levels, the medical and ancillary services and therapy programs ordered by physicians and provided to patients, the volume of outpatient procedures and the charges or negotiated payment rates for such services. Charges and reimbursement rates for inpatient routine services vary depending on the type of services provided (e.g., medical/surgical, intensive care or behavioral health) and the geographic location of the hospital. Inpatient occupancy levels fluctuate

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for various reasons, many of which are beyond our control. The percentage of patient service revenue attributable to outpatient services has generally increased in recent years, primarily as a result of advances in medical technology that allow more services to be provided on an outpatient basis, as well as increased pressure from Medicare, Medicaid and private insurers to reduce hospital stays and provide services, where possible, on a less expensive outpatient basis. We believe that our experience with respect to our increased outpatient levels mirrors the general trend occurring in the health care industry and we are unable to predict the rate of growth and resulting impact on our future revenues.

Patients are generally not responsible for any difference between customary hospital charges and amounts reimbursed for such services under Medicare, Medicaid, some private insurance plans, and managed care plans, but are responsible for services not covered by such plans, exclusions, deductibles or co-insurance features of their coverage. The amount of such exclusions, deductibles and co-insurance has generally been increasing each year. Indications from recent federal and state legislation are that this trend will continue. Collection of amounts due from individuals is typically more difficult than from governmental or business payers which unfavorably impacts the collectability of our patient accounts.

As described below in the section titled 2019 Novel Coronavirus Disease Medicare and Medicaid Payment Related Legislation, the federal government has enacted multiple pieces of legislation to assist healthcare providers during the COVID-19 world-wide pandemic and U.S. National Emergency declaration. We have outlined those legislative changes related to Medicare and Medicaid payment and their estimated impact on our financial results, where estimates are possible.

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

On March 23, 2010, President Obama signed into law the Legislation. Two primary goals of the Legislation are to provide for increased access to coverage for healthcare and to reduce healthcare-related expenses.

The Legislation revises reimbursement under the Medicare and Medicaid programs to emphasize the efficient delivery of high-quality care and contains a number of incentives and penalties under these programs to achieve these goals. The Legislation and subsequent revisions provide for reductions to both Medicare DSH and Medicaid DSH payments. The Medicare DSH reductions began in October, 2013 while the Medicaid DSH reductions are scheduled to begin in 2024. The Legislation implemented a value-based purchasing program, which will reward the delivery of efficient care. Conversely, certain facilities will receive reduced reimbursement for failing to meet quality parameters; such hospitals will include those with excessive readmission or hospital-acquired condition rates.

A 2012 U.S. Supreme Court ruling limited the federal government's ability to expand health insurance coverage by holding unconstitutional sections of the Legislation that sought to withdraw federal funding for state noncompliance with certain Medicaid coverage requirements. Pursuant to that decision, the federal government may not penalize states that choose not to participate in the Medicaid expansion by reducing their existing Medicaid funding. Therefore, states can choose to expand or not to expand their Medicaid program without risking the loss of federal Medicaid funding. As a result, many states, including Texas, have not expanded their Medicaid programs without the threat of loss of federal funding. CMS has previously granted section 1115 demonstration waivers providing for work and community engagement requirements for certain Medicaid eligible individuals. CMS has also released guidance to states interested in receiving their Medicaid funding through a block grant mechanism. The Biden administration has signaled its intent to withdraw previously issued section 1115 demonstrations aligned with these policies. However, if implemented, the previously issued section 1115 demonstrations are anticipated to lead to reductions in coverage, and likely increases in uncompensated care, in states where these demonstration waivers are granted.

On December 14, 2018, a Texas Federal District Court deemed the Legislation to be unconstitutional in its entirety. The Court concluded that the Individual Mandate is no longer permissible under Congress's taxing power as a result of the Tax Cut and Jobs Act of 2017 ("TCJA") reducing the individual mandate's tax to $0 (i.e., it no longer produces revenue, which is an essential feature of a tax), rendering the Legislation unconstitutional. The Court also held that because the individual mandate is "essential" to the Legislation and is inseverable from the rest of the law, the entire Legislation is unconstitutional. That ruling was ultimately appealed to the United States Supreme Court, which decided in California v. Texas that the plaintiffs in the matter lacked standing to bring their constitutionality claims. The Court did not reach the plaintiffs' merits arguments, which specifically challenged the constitutionality of the Legislation's individual mandate and the entirety of the Legislation itself. As a result, the Legislation will continue to be law, and HHS and its respective agencies will continue to enforce regulations implementing the law. However, on September 7, 2022, the Legislation faced its most recent challenge when a Texas Federal District Court judge, in the case of Braidwood Management v. Becerra, ruled that a requirement that certain health plans cover services without cost sharing violates the Appointments Clause of the U.S. Constitution and that the coverage of certain HIV prevention medication violates the Religious Freedom Restoration Act.

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The various provisions in the Legislation that directly or indirectly affect Medicare and Medicaid reimbursement took effect over a number of years. The impact of the Legislation on healthcare providers will be subject to implementing regulations, interpretive guidance and possible future legislation or legal challenges. Certain Legislation provisions, such as that creating the Medicare Shared Savings Program creates uncertainty in how healthcare may be reimbursed by federal programs in the future. Thus, we cannot predict the impact of the Legislation on our future reimbursement at this time and we can provide no assurance that the Legislation will not have a material adverse effect on our future results of operations.

The Legislation also contained provisions aimed at reducing fraud and abuse in healthcare. The Legislation amends several existing laws, including the federal Anti-Kickback Statute and the False Claims Act, making it easier for government agencies and private plaintiffs to prevail in lawsuits brought against healthcare providers. While Congress had previously revised the intent requirement of the Anti-Kickback Statute to provide that a person is not required to "have actual knowledge or specific intent to commit a violation of" the Anti-Kickback Statute in order to be found in violation of such law, the Legislation also provides that any claims for items or services that violate the Anti-Kickback Statute are also considered false claims for purposes of the federal civil False Claims Act. The Legislation provides that a healthcare provider that retains an overpayment in excess of 60 days is subject to the federal civil False Claims Act. The Legislation also expands the Recovery Audit Contractor program to Medicaid. These amendments also make it easier for severe fines and penalties to be imposed on healthcare providers that violate applicable laws and regulations.

We have partnered with local physicians in the ownership of certain of our facilities. These investments have been permitted under an exception to the physician self-referral law. The Legislation permits existing physician investments in a hospital to continue under a "grandfather" clause if the arrangement satisfies certain requirements and restrictions, but physicians are prohibited from increasing the aggregate percentage of their ownership in the hospital. The Legislation also imposes certain compliance and disclosure requirements upon existing physician-owned hospitals and restricts the ability of physician-owned hospitals to expand the capacity of their facilities. As discussed below, should the Legislation be repealed in its entirety, this aspect of the Legislation would also be repealed restoring physician ownership of hospitals and expansion right to its position and practice as it existed prior to the Legislation.

The impact of the Legislation on each of our hospitals may vary. Because Legislation provisions are effective at various times over the next several years, we anticipate that many of the provisions in the Legislation may be subject to further revision. Initiatives to repeal the Legislation, in whole or in part, to delay elements of implementation or funding, and to offer amendments or supplements to modify its provisions have been persistent. The ultimate outcomes of legislative attempts to repeal or amend the Legislation and legal challenges to the Legislation are unknown. Legislation has already been enacted that eliminated the individual mandate penalty, effective January 1, 2019, related to the obligation to obtain health insurance that was part of the original Legislation. In addition, Congress previously considered legislation that would, in material part: (i) eliminate the large employer mandate to offer health insurance coverage to full-time employees; (ii) permit insurers to impose a surcharge up to 30 percent on individuals who go uninsured for more than two months and then purchase coverage; (iii) provide tax credits towards the purchase of health insurance, with a phase-out of tax credits accordingly to income level; (iv) expand health savings accounts; (v) impose a per capita cap on federal funding of state Medicaid programs, or, if elected by a state, transition federal funding to block grants, and; (vi) permit states to seek a waiver of certain federal requirements that would allow such state to define essential health benefits differently from federal standards and that would allow certain commercial health plans to take health status, including pre-existing conditions, into account in setting premiums.

In addition to legislative changes, the Legislation can be significantly impacted by executive branch actions. President Biden is expected to undertake executive actions that will strengthen the Legislation and may reverse the policies of the prior administration. To date, the Biden administration has issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the ACA or the Medicaid program. The ARPA's expansion of subsidies to purchase coverage through an exchange contributed to increased exchange enrollment in 2021. The IRA's extension of the subsidies through 2025 is expected to increase exchange enrollment in future years. The recent and on-going COVID-19 pandemic and related U.S. National Emergency declaration may significantly increase the number of uninsured patients treated at our facilities extending beyond the most recent CBO published estimates due to increased unemployment and loss of group health plan health insurance coverage. It is also anticipated that these policies may create additional cost and reimbursement pressures on hospitals.

For additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein, please see Note 10 to the Consolidated Financial Statements-Revenue Recognition.

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**Medicare:** Medicare is a federal program that provides certain hospital and medical insurance benefits to persons aged 65 and over, some disabled persons and persons with end-stage renal disease. All of our acute care hospitals and many of our behavioral health centers are certified as providers of Medicare services by the appropriate governmental authorities. Amounts received under the Medicare program are generally significantly less than a hospital's customary charges for services provided. Since a substantial portion of our revenues will come from patients under the Medicare program, our ability to operate our business successfully in the future will depend in large measure on our ability to adapt to changes in this program.

Under the Medicare program, for inpatient services, our general acute care hospitals receive reimbursement under the inpatient prospective payment system ("IPPS"). Under the IPPS, hospitals are paid a predetermined fixed payment amount for each hospital discharge. The fixed payment amount is based upon each patient's Medicare severity diagnosis related group ("MS-DRG"). Every MS-DRG is assigned a payment rate based upon the estimated intensity of hospital resources necessary to treat the average patient with that particular diagnosis. The MS-DRG payment rates are based upon historical national average costs and do not consider the actual costs incurred by a hospital in providing care. This MS-DRG assignment also affects the predetermined capital rate paid with each MS-DRG. The MS-DRG and capital payment rates are adjusted annually by the predetermined geographic adjustment factor for the geographic region in which a particular hospital is located and are weighted based upon a statistically normal distribution of severity. While we generally will not receive payment from Medicare for inpatient services, other than the MS-DRG payment, a hospital may qualify for an "outlier" payment if a particular patient's treatment costs are extraordinarily high and exceed a specified threshold. MS-DRG rates are adjusted by an update factor each federal fiscal year, which begins on October 1. The index used to adjust the MS-DRG rates, known as the "hospital market basket index," gives consideration to the inflation experienced by hospitals in purchasing goods and services. Generally, however, the percentage increases in the MS-DRG payments have been lower than the projected increase in the cost of goods and services purchased by hospitals.

In August, 2022, CMS published its IPPS 2023 final payment rule which provides for a 4.1% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments, and adjustments mandated by the Legislation are considered, without consideration for the required Medicare DSH payments changes and increase to the Medicare Outlier threshold, the overall increase in IPPS payments is approximately 4.6.%. Including DSH payments, an increase to the Medicare Outlier threshold and certain other adjustments, we estimate our overall increase from the final IPPS 2023 rule (covering the period of October 1, 2022 through September 30, 2023) will approximate 4.4%. This projected impact from the IPPS 2023 final rule includes an increase of approximately 0.5% to partially restore cuts made as a result of the American Taxpayer Relief Act of 2012 ("ATRA"), as required by the 21st Century Cures Act, but excludes the impact of the sequestration reductions related to the 2011 Act, Bipartisan Budget Act of 2015, and Bipartisan Budget Act of 2018, as discussed below.

In August, 2021, CMS published its IPPS 2022 final payment rule which provides for a 2.7% market basket increase to the base Medicare MS-DRG blended rate. When statutorily mandated budget neutrality factors, annual geographic wage index updates, documenting and coding adjustments, and adjustments mandated by the Legislation are considered, without consideration for the required Medicare DSH payments changes and increase to the Medicare Outlier threshold, the overall final increase in IPPS payments is approximately 2.5%. Including DSH payments and certain other adjustments, we estimate our overall increase from the final IPPS 2022 rule (covering the period of October 1, 2021 through September 30, 2022) will approximate 1.5%. This projected impact from the IPPS 2022 final rule includes an increase of approximately 0.5% to partially restore cuts made as a result of the ATRA, as required by the 21st Century Cures Act but excludes the impact of the sequestration reductions related to the 2011 Act, Bipartisan Budget Act of 2015, and Bipartisan Budget Act of 2018, as discussed below.

In June, 2019, the Supreme Court of the United States issued a decision favorable to hospitals impacting prior year Medicare DSH payments (Azar v. Allina Health Services, No. 17-1484 (U.S. Jun. 3, 2019)). In Allina, the hospitals challenged the Medicare DSH adjustments for federal fiscal year 2012, specifically challenging CMS's decision to include inpatient hospital days attributable to Medicare Part C enrollee patients in the numerator and denominator of the Medicare/SSI fraction used to calculate a hospital's DSH payments. This ruling addresses CMS's attempts to impose the policy espoused in its vacated 2004 rulemaking to a fiscal year in the 2004–2013 time period without using notice-and-comment rulemaking. This decision should require CMS to recalculate hospitals' DSH Medicare/SSI fractions, with Medicare Part C days excluded, for at least federal fiscal year 2012, but likely federal fiscal years 2005 through 2013. In August, 2020, CMS issued a rule that proposed to retroactively negate the effects of the aforementioned Supreme Court decision, which rule has yet to be finalized. Although we can provide no assurance that we will ultimately receive additional funds, we estimate that the favorable impact of this court ruling on certain prior year hospital Medicare DSH payments could range between $18 million to $28 million in the aggregate.

The 2011 Act included the imposition of annual spending limits for most federal agencies and programs aimed at reducing budget deficits by $917 billion between 2012 and 2021, according to a report released by the Congressional Budget Office. Among its other provisions, the law established a bipartisan Congressional committee, known as the Joint Committee, which was responsible for developing recommendations aimed at reducing future federal budget deficits by an additional $1.5 trillion over 10 years. The Joint Committee was unable to reach an agreement by the November 23, 2011 deadline and, as a result, across-the-board cuts to discretionary, national defense and Medicare spending were implemented on March 1, 2013 resulting in Medicare payment reductions of up to 2% per fiscal year. Recent legislation suspended payment reductions through December 31, 2021, in exchange for extended

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cuts through 2030. In December, 2021, the suspended 2% payment reduction was extended until June 30, 2022 and partially suspended at a 1% payment reduction for an additional three-month period that ended on June 30, 2022.

Inpatient services furnished by psychiatric hospitals under the Medicare program are paid under a Psychiatric Prospective Payment System ("Psych PPS"). Medicare payments to psychiatric hospitals are based on a prospective per diem rate with adjustments to account for certain facility and patient characteristics. The Psych PPS also contains provisions for outlier payments and an adjustment to a psychiatric hospital's base payment if it maintains a full-service emergency department.

In July, 2022, CMS published its Psych PPS final rule for the federal fiscal year 2023. Under this final rule, payments to our behavioral health care hospitals and units are estimated to increase by 3.8% compared to federal fiscal year 2022. This amount includes the effect of the 4.1% net market basket update which reflects the offset of a 0.3% productivity adjustment.

In July, 2021, CMS published its Psych PPS final rule for the federal fiscal year 2022. Under this final rule, payments to our psychiatric hospitals and units are estimated to increase by 2.2% compared to federal fiscal year 2021. This amount includes the effect of the 2.0% net market basket update which reflects the offset of a 0.7% productivity adjustment.

CMS's calendar year 2018 final OPPS rule, issued on November 13, 2017, substantially reduced Medicare Part B reimbursement for 340B Program drugs paid to hospitals. Beginning January 1, 2018, CMS reimbursement for certain separately payable drugs or biologicals that are acquired through the 340B Program by a hospital paid under the OPPS (and not excepted from the payment adjustment policy) is the average sales price of the drug or biological minus 22.5 percent, an effective reduction of 26.89% in payments for 340B program drugs. In December, 2018, the U.S. District Court for the District of Columbia ruled that HHS did not have statutory authority to implement the 2018 Medicare OPPS rate reduction related to hospitals that qualify for drug discounts under the federal 340B Program and granted a permanent injunction against the payment reduction. On July 31, 2020, the U.S. Court of Appeals for the D.C. Circuit reversed the District Court and held that HHS's decision to lower drug reimbursement rates for 340B hospitals rests on a reasonable interpretation of the Medicare statute. As a result, we recognized $8 million of revenues during 2020 that were previously reserved in a prior year. These payment reductions were challenged before the U.S. Supreme Court, which held in American Hospital Association v. Becerra that because HHS did not conduct a survey of hospitals' acquisition costs in 2018 and 2019, its decision to vary reimbursement rates only for 340B hospitals in those years was unlawful. As a result of the Supreme Court's decision, CMS finalized for calendar year 2023 a payment rate of average sales price plus 6% for 340B Program drugs, consistent with CMS policy for drugs not acquired through the program. CMS further implemented a 3.09% reduction to payment rates for non-drug services to achieve budget neutrality for the 340B Program payment rate change for calendar year 2023. CMS will address the remedy for 340B drug payments from 2018-2022 in future rulemaking prior to the calendar year 2024 OPPS proposed rule.

&nbsp;&nbsp;&nbsp;&nbsp;In November, 2022, CMS issued its OPPS final rule for 2023. The hospital market basket increase is 4.1% and the productivity adjustment reduction is -0.3% for a net market basket increase of 3.8%. The final rule provides that in light of the Supreme Court decision in American Hospital Association v. Becerra, CMS is applying the default rate, generally average sales price plus 6 percent, to 340B acquired drugs and biologicals for 2023. CMS stated they will address the remedy for 340B drug payments from 2018-2022 in future rulemaking prior to the CY 2024 OPPS/ASC proposed rule. During the 2018-2022 time period, we recorded an aggregate of approximately $45 million to $50 million of Medicare revenues related to the prior 340B payment policy. When other statutorily required adjustments and hospital patient service mix are considered as well as impact of the aforementioned 340B Program policy change, we estimate that our overall Medicare OPPS update for 2023 will aggregate to a net increase of 0.9% which includes a 0.3% increase to behavioral health division partial hospitalization rates.

On November 2, 2021, CMS issued its OPPS final rule for 2022. The hospital market basket increase is 2.7% and the productivity adjustment reduction is -0.7% for a net market basket increase of 2.0%. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2022 will aggregate to a net increase of 2.4% which includes a 3.0% increase to behavioral health division partial hospitalization rates.

In December, 2020, CMS published its OPPS final rule for 2021. The hospital market basket increase is 2.4% and there is no productivity adjustment reduction to the 2021 OPPS market basket. When other statutorily required adjustments and hospital patient service mix are considered, we estimate that our overall Medicare OPPS update for 2021 will aggregate to a net increase of 3.3% which includes a 9.2% increase to behavioral health division partial hospitalization rates.

In November, 2019, CMS finalized its Hospital Price Transparency rule that implements certain requirements under the June 24, 2019 Presidential Executive Order related to Improving Price and Quality Transparency in American Healthcare to Put Patients First. Under this final rule, effective January 1, 2021, CMS will require: (1) hospitals make public their standard changes (both gross charges and payer-specific negotiated charges) for all items and services online in a machine-readable format, and; (2) hospitals to make public standard charge data for a limited set of "shoppable services" the hospital provides in a form and manner that is more consumer friendly. On November 2, 2021, CMS released a final rule increasing the monetary penalty that CMS can impose on hospitals that fail to comply with the price transparency requirements. We believe that our hospitals are in full compliance with the applicable federal regulations.

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**Medicaid:** Medicaid is a joint federal-state funded health care benefit program that is administered by the states to provide benefits to qualifying individuals. Most state Medicaid payments are made under a PPS-like system, or under programs that negotiate payment levels with individual hospitals. Amounts received under the Medicaid program are generally significantly less than a hospital's customary charges for services provided. In addition to revenues received pursuant to the Medicare program, we receive a large portion of our revenues either directly from Medicaid programs or from managed care companies managing Medicaid. All of our acute care hospitals and most of our behavioral health centers are certified as providers of Medicaid services by the appropriate governmental authorities.

We receive revenues from various state and county-based programs, including Medicaid in all the states in which we operate. We receive annual Medicaid revenues of approximately $100 million, or greater, from each of Texas, California, Nevada, Illinois, Pennsylvania, Washington, D.C., Florida, Kentucky and Massachusetts. We also receive Medicaid disproportionate share hospital payments from certain states including, most significantly, Texas. We are therefore particularly sensitive to potential reductions in Medicaid and other state-based revenue programs as well as regulatory, economic, environmental and competitive changes in those states. We can provide no assurance that reductions to revenues earned pursuant to these programs, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.

The Legislation substantially increases the federally and state-funded Medicaid insurance program, and authorizes states to establish federally subsidized non-Medicaid health plans for low-income residents not eligible for Medicaid starting in 2014. However, the Supreme Court has struck down portions of the Legislation requiring states to expand their Medicaid programs in exchange for increased federal funding. Accordingly, many states in which we operate have not expanded Medicaid coverage to individuals at 133% of the federal poverty level. Facilities in states not opting to expand Medicaid coverage under the Legislation may be additionally penalized by corresponding reductions to Medicaid disproportionate share hospital payments beginning in fiscal year 2024, as discussed below. We can provide no assurance that further reductions to Medicaid revenues, particularly in the above-mentioned states, will not have a material adverse effect on our future results of operations.

In January, 2020, CMS announced a new opportunity to support states with greater flexibility to improve the health of their Medicaid populations. The new 1115 Waiver Block Grant Type Demonstration program, titled Healthy Adult Opportunity ("HAO"), emphasizes the concept of value-based care while granting states extensive flexibility to administer and design their programs within a defined budget. CMS believes this state opportunity will enhance the Medicaid program's integrity through its focus on accountability for results and quality improvement, making the Medicaid program stronger for states and beneficiaries. The Biden administration has signaled its intent to withdraw the HAO demonstration. Accordingly, we are unable to predict whether the HAO demonstration will impact our future results of operations.

**Various State Medicaid Supplemental Payment Programs:**

We incur health-care related taxes ("Provider Taxes") imposed by states in the form of a licensing fee, assessment or other mandatory payment which are related to: (i) healthcare items or services; (ii) the provision of, or the authority to provide, the health care items or services, or; (iii) the payment for the health care items or services. Such Provider Taxes are subject to various federal regulations that limit the scope and amount of the taxes that can be levied by states in order to secure federal matching funds as part of their respective state Medicaid programs. As outlined below, we derive a related Medicaid reimbursement benefit from assessed Provider Taxes in the form of Medicaid claims based payment increases and/or lump sum Medicaid supplemental payments.

Included in these Provider Tax programs are reimbursements received in connection with the Texas Uncompensated Care/Upper Payment Limit program ("UC/UPL") and Texas Delivery System Reform Incentive Payments program ("DSRIP"). Additional disclosure related to the Texas UC/UPL and DSRIP programs is provided below.

Texas Uncompensated Care/Upper Payment Limit Payments:

Certain of our acute care hospitals located in various counties of Texas (Grayson, Hidalgo, Maverick, Potter and Webb) participate in Medicaid supplemental payment Section 1115 Waiver indigent care programs. Section 1115 Waiver Uncompensated Care ("UC") payments replace the former Upper Payment Limit ("UPL") payments. These hospitals also have affiliation agreements with third-party hospitals to provide free hospital and physician care to qualifying indigent residents of these counties. Our hospitals receive both supplemental payments from the Medicaid program and indigent care payments from third-party, affiliated hospitals. The supplemental payments are contingent on the county or hospital district making an Inter-Governmental Transfer ("IGT") to the state Medicaid program while the indigent care payment is contingent on a transfer of funds from the applicable affiliated hospitals. However, the county or hospital district is prohibited from entering into an agreement to condition any IGT on the amount of any private hospital's indigent care obligation.

On December 21, 2017, CMS approved the 1115 Waiver for the period January 1, 2018 to September 30, 2022. The Waiver continued to include UC and DSRIP payment pools with modifications and new state specific reporting deadlines that if not met by THHSC will result in material decreases in the size of the UC and DSRIP pools. For UC during the initial two years of this renewal, the UC program will remain relatively the same in size and allocation methodology. For year three of this waiver renewal, the federal fiscal year ("FFY") 2020, and through FFY 2022, the size and distribution of the UC pool will be determined based on charity care costs reported to HHSC in accordance with Medicare cost report Worksheet S-10 principles. In September 2019, CMS approved the

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annual UC pool size in the amount of $3.9 billion for demonstration years ("DYs") 9, 10 and 11 (October 1, 2019 to September 30, 2022). In June 2022, HHSC announced that CMS approved the UC Pool size for Demonstration Years 12 through 16 (October 1, 2022 to September 30, 2027) for the current 1115 Waiver which will be $4.51 billion per year. The UC pool will be resized again in 2027 for DYs 17 through 19 (October 1, 2027 to September 30, 2030).

On April 16, 2021, CMS rescinded its January 15, 2021, 1115 Waiver ten year expedited renewal approval that was effective through September 30, 2030. In July, 2021, HHSC submitted another 1115 Waiver renewal application to CMS which reflects the same terms and conditions agreed to by CMS on January 15, 2021, in order to receive an extension beyond September 30, 2022. On April 22, 2022, CMS withdrew its rescission of the 1115 Waiver and now considers the 1115 Waiver approved as extended and governed by the special terms and conditions that CMS approved on January 15, 2021.

Effective April 1, 2018, certain of our acute care hospitals located in Texas began to receive Medicaid managed care rate enhancements under the Uniform Hospital Rate Increase Program ("UHRIP"). The non-federal share component of these UHRIP rate enhancements are financed by Provider Taxes. The Texas 1115 Waiver rules require UHRIP rate enhancements be considered in the Texas UC payment methodology which results in a reduction to our UC payments. The UC amounts reported in the State Medicaid Supplemental Payment Program Table below reflect the impact of this new UHRIP program. In July 2020, THHSC announced CMS approval of an increase to UHRIP pool for the state's 2021 fiscal year to $2.7 billion from its prior funding level of $1.6 billion.

On March 26, 2021, HHSC published a final rule that will apply to program periods on or after September 1, 2021, and UHRIP was re-named the Comprehensive Hospital Increase Reimbursement Program ("CHIRP"). CHIRP is comprised of a UHRIP component and an Average Commercial Incentive Award component. CHIRP has a pool size of $4.7 billion. On March 25, 2022, CMS approved the CHIRP program retroactive to September 1, 2021 through August 31, 2022. The impact of the CHIRP program is reflected in the State Medicaid Supplemental Payment Program Table below including approximately $12 million of estimated CHIRP revenues which were recorded during the first quarter of 2022, attributable to the period September 1, 2021 through December 31, 2021, net of associated provider taxes. On August 1, 2022, CMS approved the CHIRP program, with a pool of $5.2 billion, for the rate period effective September 1, 2022 to August 31, 2023.

During, 2022, certain of our acute care hospitals located in Texas recorded an aggregate of $33 million in Quality Incentive Fund ("QIF") payments, applicable to the period September 1, 2020 to August 31, 2021 in connection with the state's UHRIP program. This revenue was earned pursuant to contract terms with various Medicaid managed care plans which requires the annual payout of QIF funds when a managed care service delivery area's actual claims-based UHRIP payments are less than targeted UHRIP payments for a specific rate year. We also anticipate that these hospitals may be entitled to a comparable amount of aggregate QIF revenue during 2023.

On January 11, 2021, HHSC announced that CMS approved the pre-print modification that HHSC submitted for UHRIP period March 1, 2021 through August 31, 2021. CMS approved rate changes that will now increase rates for private Institutions of Mental Disease ("IMD") for services provided to patients under age 21 or patients 65 years of age or older. Subsequent CMS UHRIP and CHIRP program approvals continue to include IMD's eligible patient population. The impact of these programs are included in the Medicaid Supplemental Payment Programs table below.

On September 24, 2021, HHSC finalized New Fee-for-Service Supplemental Payment Program: Hospital Augmented Reimbursement Program ("HARP") to be effective October 1, 2021. The HARP program continues the financial transition for providers who have historically participated in the Delivery System Reform Incentive Payment program described below. The program will provide additional funding to hospitals to help offset the cost hospitals incur while providing Medicaid services. HHSC financial model released concurrent with the publication of the final rule indicates net potential incremental Medicaid reimbursements to us of approximately $15 million annually, without consideration of any potential adverse impact on future Medicaid DSH or Medicaid UC payments. This program remains subject to CMS approval.

Texas Delivery System Reform Incentive Payments:

In addition, the Texas Medicaid Section 1115 Waiver included a DSRIP pool to incentivize hospitals and other providers to transform their service delivery practices to improve quality, health status, patient experience, coordination, and cost-effectiveness. DSRIP pool payments are incentive payments to hospitals and other providers that develop programs or strategies to enhance access to health care, increase the quality of care, the cost-effectiveness of care provided and the health of the patients and families served. In FFY 2022, DSRIP funding under the waiver is eliminated except for certain carryover DSRIP projects. In connection with this DSRIP program, our results of operations included revenues of approximately $18 million in 2022 and $34 million in 2021.

**Summary of Amounts Related To The Above-Mentioned Various State Medicaid Supplemental Payment Programs:** 

The following table summarizes the revenues, Provider Taxes and net benefit related to each of the above-mentioned Medicaid supplemental programs for the years ended December 31, 2022 and 2021. The Provider Taxes are recorded in other operating expenses on the Condensed Consolidated Statements of Income as included herein.

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| | | |
|:---|:---|:---|
|  | **(amounts in millions)** | **(amounts in millions)** |
|  | **2022** | **2021** |
| **<u>Texas UC/UPL:</u>** |  |  |
| Revenues | $258 | $120 |
| Provider Taxes | (101) | (35) |
| Net benefit | $157 | $85 |
| **<u>Texas DSRIP:</u>** |  |  |
| Revenues | $27 | $49 |
| Provider Taxes | (9) | (16) |
| Net benefit | $18 | $33 |
| **<u>Various other state programs:</u>** |  |  |
| Revenues | $499 | $472 |
| Provider Taxes | (177) | (160) |
| Net benefit | $322 | $312 |
| **<u>Total all Provider Tax programs:</u>** |  |  |
| Revenues | $784 | $641 |
| Provider Taxes | (287) | (211) |
| Net benefit | $497 | $430 |

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We estimate that our aggregate net benefit from the Texas and various other state Medicaid supplemental payment programs will approximate $469 million (net of Provider Taxes of $278 million) during the year ending December 31, 2023. These amounts are based upon various terms and conditions that are out of our control including, but not limited to, the states'/CMS's continued approval of the programs and the applicable hospital district or county making IGTs consistent with 2022 levels.

Future changes to these terms and conditions could materially reduce our net benefit derived from the programs which could have a material adverse impact on our future consolidated results of operations. In addition, Provider Taxes are governed by both federal and state laws and are subject to future legislative changes that, if reduced from current rates in several states, could have a material adverse impact on our future consolidated results of operations. As described below in 2019 Novel Coronavirus Disease Medicare and Medicaid Payment Related Legislation, a 6.2% increase to the Medicaid Federal Matching Assistance Percentage ("FMAP") is included in the Families First Coronavirus Response Act. The impact of the enhanced FMAP Medicaid supplemental and DSH payments are reflected in our financial results during 2022 and 2021. We are unable to estimate the prospective financial impact of this provision at this time as our financial impact is contingent on unknown state action during future eligible federal fiscal quarters.

**Texas and South Carolina Medicaid Disproportionate Share Hospital Payments:**

Hospitals that have an unusually large number of low-income patients (i.e., those with a Medicaid utilization rate of at least one standard deviation above the mean Medicaid utilization, or having a low income patient utilization rate exceeding 25%) are eligible to receive a DSH adjustment. Congress established a national limit on DSH adjustments. Although this legislation and the resulting state broad-based provider taxes have affected the payments we receive under the Medicaid program, to date the net impact has not been materially adverse.

Upon meeting certain conditions and serving a disproportionately high share of Texas' and South Carolina's low income patients, five of our facilities located in Texas and one facility located in South Carolina received additional reimbursement from each state's DSH fund. The South Carolina and Texas DSH programs were renewed for each state's 2023 DSH fiscal year (covering the period of October 1, 2022 through September 30, 2023).

In connection with these DSH programs, included in our financial results was an aggregate of approximately $54 million during 2022 and $51 million during 2021. We expect the aggregate reimbursements to our hospitals pursuant to the Texas and South Carolina 2023 fiscal year programs to be approximately $49 million.

The Legislation and subsequent federal legislation provides for a significant reduction in Medicaid disproportionate share payments beginning in federal fiscal year 2024 (see above in Sources of Revenues and Health Care Reform-Medicaid for additional disclosure related to the delay of these DSH reductions). HHS is to determine the amount of Medicaid DSH payment cuts imposed on each state based on a defined methodology. As Medicaid DSH payments to states will be cut, consequently, payments to Medicaid-participating providers, including our hospitals in Texas and South Carolina, will be reduced in the coming years. Based on the CMS final rule published in September, 2019, beginning in fiscal year 2024 (as amended by the CARES Act and the CAA), annual Medicaid DSH payments in South Carolina and Texas could be reduced by approximately 65% and 41%, respectively, from 2022 DSH payment levels.

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Our behavioral health care facilities in Texas have been receiving Medicaid DSH payments since FFY 2016. As with all Medicaid DSH payments, hospitals are subject to state audits that typically occur up to three years after their receipt. DSH payments are subject to a federal Hospital Specific Limit ("HSL") and are not fully known until the DSH audit results are concluded. In general, freestanding psychiatric hospitals tend to provide significantly less charity care than acute care hospitals and therefore are at more risk for retroactive recoupment of prior year DSH payments in excess of their respective HSL. In light of the retroactive HSL audit risk for freestanding psychiatric hospitals, we have established DSH reserves for our facilities that have been receiving funds since FFY 2016. These DSH reserves are also impacted by the resolution of federal DSH litigation related to Children's Hospital Association of Texas v. Azar ("CHAT") where the calculation of HSL was being challenged. In August, 2019, DC Circuit Court of Appeals issued a unanimous decision in CHAT and reversed the judgment of the district court in favor of CMS and ordered that CMS's "2017 Rule" (regarding Medicaid DSH Payments—Treatment of Third Party Payers in Calculating Uncompensated Care Costs) be reinstated. CMS has not issued any additional guidance post the ruling. In April 2020, the plaintiffs in the case have petitioned the Supreme Court of the United States to hear their case. Additionally, there have been separate legal challenges on this same issue in the Fifth and Eight Circuits. On November 4, 2019, in Missouri Hosp. Ass'n v. Azar, the United States Court of Appeals for the Eighth Circuit issued an opinion upholding the 2017 Rule. On April 20, 2020, in Baptist Memorial Hospital v. Azar, the United States Court of Appeals of the Fifth Circuit issued a decision also upholding the 2017 Rule. In light of these court decisions, we continue to maintain reserves in the financial statements for cumulative Medicaid DSH and UC reimbursements related to our behavioral health hospitals located in Texas that amounted to $42 million as of December 31, 2022 and $40 million as of December 31, 2021.

**Nevada - SPA and SDP:**

State Plan Amendment ("SPA")

CMS initially approved an SPA in Nevada in August, 2014 and this SPA has been approved for additional state fiscal years, including the 2022 fiscal year covering the period of July 1, 2021 through June 30, 2022. CMS's approval for the 2023 fiscal year, which is still pending, is expected to occur.

In connection with this program, included in our financial results was approximately $21 million during 2022 and approximately $23 million during 2021. We estimate that our reimbursements pursuant to this program will approximate $19 million during the year ended December 31, 2023.

State Directed Payment Program ("SDP")

On February 7, 2023, the Division of Health Care Financing and Policy ("DHCFP") held a public workshop that outlined a new provider fee on private hospitals located in Nevada that would effectively capture new Medicaid federal share for certain categories of services eligible for the new payment programs. Final approval of each of these Medicaid supplemental payment programs is subject to various state and federal actions. If ultimately approved, DHCFP intends to have both components implemented retroactively to January 1, 2023.

DHCFP indicated the new Medicaid supplemental payments will include two components as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Medicaid fee for service upper payment limit component.

oWe anticipate state and federal approval of the fee for service upper payment limit component to occur during 2023. If approved, we estimate that our aggregate net reimbursements pursuant to this program (net of related provider taxes) will approximate $25 million during the year ended December 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Medicaid managed care component.

oWe cannot predict whether or not the managed care component will ultimately receive state and federal approval. If approved, we cannot predict the timing and aggregate net reimbursements that we may receive in connection with this program.

**California SPA:**

In California, CMS issued formal approval of the 2017-19 Hospital Fee Program in December, 2017 retroactive to January 1, 2017 through September 30, 2019. In September, 2019, the state submitted a request to renew the Hospital Fee Program for the period July 1, 2019 to December 31, 2021. On February 25, 2020, CMS approved this renewed program. These approvals include the Medicaid inpatient and outpatient fee-for-service supplemental payments and the overall provider tax structure but did not yet include the approval of the managed care rate setting payment component for certain rate periods (see table below). The managed care payment component consists of two categories of payments, "pass-through" payments and "directed" payments. The pass-through payments are similar in nature to the prior Hospital Fee Program payment method whereas the directed payment method will be based on actual concurrent hospital Medicaid managed care in-network patient volume.

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California Hospital Fee Program CMS Approval Status:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Hospital Fee Program Component** | &nbsp;&nbsp;**CMS Methodology Approval Status** | &nbsp;&nbsp;**CMS Rate Setting Approval Status** |
| &nbsp;&nbsp;Fee For Service Payment | &nbsp;&nbsp;Approved through December 31, 2022 | &nbsp;&nbsp;Approved through December 31, 2022; Paid through June 30, 2022 |
| &nbsp;&nbsp;Managed Care-Pass-Through Payment | &nbsp;&nbsp;Approved through December 31, 2022 | &nbsp;&nbsp;Approved through June 30, 2019; Paid in advance of approval through December 31, 2021 |
| &nbsp;&nbsp;Managed Care-Directed Payment | &nbsp;&nbsp;Approved through December 31, 2022 | &nbsp;&nbsp;Approved through June 30, 2019; Paid in advance of approval through December 30, 2020 |

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In connection with the existing program, included in our financial results was approximately $50 million during 2022 and $46 million during 2021. We estimate that our reimbursements pursuant to this program will approximate $51 million during the year ended December 31, 2023. The aggregate impact of the California supplemental payment program, as outlined above, is included in the above State Medicaid Supplemental Payment Program table.

**Kentucky Hospital Rate Increase Program ("HRIP"):**

In early 2021, CMS approved the Kentucky Medicaid Managed Care Hospital Rate Increase Program ("HRIP") for SFY 2021, which covered the period of July 1, 2020 through June 30, 2021. In December 2021, CMS approved the HRIP program period for the period July 1, 2021 to December 31, 2021. Included in our financial results was approximately $69 million during 2022 and approximately $97 million during 2021 (covering the eighteen month period of July 1, 2020 through December 31, 2021), respectively.

Programs such as HRIP require an annual state submission and approval by CMS. In December, 2021, CMS approved the program for the period of January 1, 2022 through December 31, 2022 at rates similar to the prior year. We estimate that our reimbursements pursuant to HRIP will approximate $60 million during the year ended December 31, 2023.

**Florida Medicaid Managed Care Directed Payment Program ("DPP"):**

The Florida Medicaid Managed Care Directed Payment Program ("DPP") provides for an additional payment for Medicaid managed care contracted services. The DPP program requires various related legislative and regulatory approvals each year. In connection with this program, included in our financial results was approximately $36 million during 2022 and $23 million during 2021 (recorded during fourth quarters of each year). We estimate that our reimbursements pursuant to this DPP will approximate $34 million during the year ended December 31, 2023.

**Oklahoma Transition to Managed Care and Implementation of a Medicaid Managed Care DPP**

In May, 2022, Oklahoma enacted legislation (SB 1337 and SB 1396) that directs the Oklahoma Health Care Authority ("OHCA") to: (i) transition its Medicaid program from a fee for service payment model to a managed care payment model by no later than October 1, 2023, and: (ii) concurrently implement a Medicaid managed care DPP using a managed care gap of ninety percent (90%) average commercial rates. In December, 2022, the OHCA delayed the implementation date of the Medicaid managed care change and related DPP until April 1, 2024. Although we estimate that the DPP as enacted may have a favorable impact on our future results of operations, we are unable to quantify the ultimate impact since implementation of this legislation is subject to various administrative and regulatory steps including the awarding of managed care contracts as well as CMS's approval of the DPP.

**Illinois Medicaid Supplemental Payment Programs**

The Illinois Medicaid Supplemental Payment Programs are comprised of three components (1) Medicaid managed care directed payment program (2) Medicaid managed care pass-through program and (3) Medicaid fee for service supplemental payment program. The results of this program are included in the above State Medicaid Supplemental Payment Program table. These programs require various related legislative and regulatory approvals each year. In connection with this program, included in our financial results was approximately $49 million during 2022 and $30 million during 2021. Included in the 2022 amount was a non-recurring Medicaid managed care claims processing catchup payment amounting to approximately $10 million. We estimate that our reimbursements pursuant to these supplemental payment programs will approximate $39 million during the year ended December 31, 2023.

**Risk Factors Related To State Supplemental Medicaid Payments:**

As outlined above, we receive substantial reimbursement from multiple states in connection with various supplemental Medicaid payment programs. The states include, but are not limited to, Texas, Kentucky, California, Illinois, Indiana and Nevada. Failure to renew these programs beyond their scheduled termination dates, failure of the public hospitals to provide the necessary IGTs for the states' share of the DSH programs, failure of our hospitals that currently receive supplemental Medicaid revenues to

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qualify for future funds under these programs, or reductions in reimbursements, could have a material adverse effect on our future results of operations.

In April, 2016, CMS published its final Medicaid Managed Care Rule which explicitly permits but phases out the use of pass-through payments (including supplemental payments) by Medicaid Managed Care Organizations ("MCO") to hospitals over ten years but allows for a transition of the pass-through payments into value-based payment structures, delivery system reform initiatives or payments tied to services under a MCO contract. Since we are unable to determine the financial impact of this aspect of the final rule, we can provide no assurance that the final rule will not have a material adverse effect on our future results of operations. In November, 2020, CMS issued a final rule permitting pass-through supplemental provider payments during a time-limited period when states transition populations or services from fee-for-service Medicaid to managed care.

**HITECH Act:** In July 2010, HHS published final regulations implementing the health information technology ("HIT") provisions of the American Recovery and Reinvestment Act (referred to as the "HITECH Act"). The final regulation defines the "meaningful use" of Electronic Health Records ("EHR") and establishes the requirements for the Medicare and Medicaid EHR payment incentive programs. The final rule established an initial set of standards and certification criteria. The implementation period for these Medicare and Medicaid incentive payments started in federal fiscal year 2011 and can end as late as 2016 for Medicare and 2021 for the state Medicaid programs. State Medicaid program participation in this federally funded incentive program is voluntary but all of the states in which our eligible hospitals operate have chosen to participate. Our acute care hospitals qualified for these EHR incentive payments upon implementation of the EHR application assuming they meet the "meaningful use" criteria. The government's ultimate goal is to promote more effective (quality) and efficient healthcare delivery through the use of technology to reduce the total cost of healthcare for all Americans and utilizing the cost savings to expand access to the healthcare system.

All of our acute care hospitals have met the applicable meaningful use criteria. However, under the HITECH Act, hospitals must continue to meet the applicable meaningful use criteria in each fiscal year or they will be subject to a market basket update reduction in a subsequent fiscal year. Failure of our acute care hospitals to continue to meet the applicable meaningful use criteria would have an adverse effect on our future net revenues and results of operations.

In the 2019 IPPS final rule, CMS overhauled the Medicare and Medicaid EHR Incentive Program to focus on interoperability, improve flexibility, relieve burden and place emphasis on measures that require the electronic exchange of health information between providers and patients. We can provide no assurance that the changes will not have a material adverse effect on our future results of operations.

**Managed Care:** A significant portion of our net patient revenues are generated from managed care companies, which include health maintenance organizations, preferred provider organizations and managed Medicare (referred to as Medicare Part C or Medicare Advantage) and Medicaid programs. In general, we expect the percentage of our business from managed care programs to continue to grow. The consequent growth in managed care networks and the resulting impact of these networks on the operating results of our facilities vary among the markets in which we operate. Typically, we receive lower payments per patient from managed care payers than we do from traditional indemnity insurers, however, during the past few years we have secured price increases from many of our commercial payers including managed care companies.

**Commercial Insurance:** Our hospitals also provide services to individuals covered by private health care insurance. Private insurance carriers typically make direct payments to hospitals or, in some cases, reimburse their policy holders, based upon the particular hospital's established charges and the particular coverage provided in the insurance policy. Private insurance reimbursement varies among payers and states and is generally based on contracts negotiated between the hospital and the payer.

Commercial insurers are continuing efforts to limit the payments for hospital services by adopting discounted payment mechanisms, including predetermined payment or DRG-based payment systems, for more inpatient and outpatient services. To the extent that such efforts are successful and reduce the insurers' reimbursement to hospitals and the costs of providing services to their beneficiaries, such reduced levels of reimbursement may have a negative impact on the operating results of our hospitals.

**Surprise Billing Interim Final Rule:** On September 30, 2021, the Department of Labor, and the Department of the Treasury, along with the Office of Personnel Management ("OPM"), released an interim final rule with comment period, entitled "Requirements Related to Surprise Billing; Part II." This rule is related to Title I (the "No Surprises Act") of Division BB of the Consolidated Appropriations Act, 2021, and establishes new protections from surprise billing and excessive cost sharing for consumers receiving health care items/services. It implements additional protections against surprise medical bills under the No Surprises Act, including provisions related to the independent dispute resolution process, good faith estimates for uninsured (or self-pay) individuals, the patient-provider dispute resolution process, and expanded rights to external review. On February 28, 2022, a district judge in the Eastern District of Texas invalidated portions of the rule governing aspects of the Independent Dispute Resolution ("IDR") process. In light of this decision, the government issued a final rule on August 19, 2022 eliminating the rebuttable presumption in favor of the qualifying payment amount ("QPA") by the IDR entity and providing additional factors the IDR entity should consider when choosing between two competing offers. On September 22, 2022, the Texas Medical Association filed a lawsuit challenging the IDR process provided in the updated final rule and alleging that the final rule unlawfully elevates the QPA above other factors the IDR entity must consider. The American Hospital Association and American Medical Association have announced their intent to join this case as

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amici supporting the Texas Medical Association. On February 10, 2023, CMS instructed certified IDR entities to hold all payment determinations until further guidance is issued by the departments of Health & Human Services, Labor, and Treasury. This decision stems from the February 6, 2023, court decision that vacated the federal government's revised IDR process for determining payment for out-of-network services under the No Surprises Act. Certified IDR entities have also been instructed to recall any payment determinations issued after February 6, 2023. We do not expect the interim final rule or the August 19, 2022, final rule to have a material impact on our results of operations.

**Other Sources:** Our hospitals provide services to individuals that do not have any form of health care coverage. Such patients are evaluated, at the time of service or shortly thereafter, for their ability to pay based upon federal and state poverty guidelines, qualifications for Medicaid or other state assistance programs, as well as our local hospitals' indigent and charity care policy. Patients without health care coverage who do not qualify for Medicaid or indigent care write-offs are offered substantial discounts in an effort to settle their outstanding account balances.

**Health Care Reform:** Many Medicare, Medicaid and other health care industry changes were implemented as a result of the Legislation. Some of these key changes are outlined below.

**Medicaid Federal DSH Allotment**:

Although the implementation has been delayed several times, the Legislation (as amended by subsequent federal legislation) requires annual aggregate reductions in federal Medicaid DSH allotment from FFY 2024 through FFY 2027. Commencing in federal fiscal year 2024, and continuing through 2027, DSH payments are scheduled to be reduced by $8 billion annually.

**Value-Based Purchasing:**

There is a trend in the healthcare industry toward value-based purchasing of healthcare services. These value-based purchasing programs include both public reporting of quality data and preventable adverse events tied to the quality and efficiency of care provided by facilities. Governmental programs including Medicare and Medicaid currently require hospitals to report certain quality data to receive full reimbursement updates. In addition, Medicare does not reimburse for care related to certain preventable adverse events. Many large commercial payers currently require hospitals to report quality data, and several commercial payers do not reimburse hospitals for certain preventable adverse events.

**Hospital Acquired Conditions:**

The Legislation prohibits the use of federal funds under the Medicaid program to reimburse providers for medical assistance provided to treat hospital acquired conditions ("HAC"). Beginning in FFY 2015, hospitals that fall into the top 25% of national risk-adjusted HAC rates for all hospitals in the previous year will receive a 1% reduction in their total Medicare payments. As part of the FFY 2023 final rule discussed above, and as a result of the on-going COVID-19 pandemic, CMS will suppress all six measures in the HAC Reduction Program for the FY 2023 program year and eliminate the HAC reduction program's one percent payment penalty.

**Readmission Reduction Program:**

In the Legislation, Congress also mandated implementation of the hospital readmission reduction program ("HRRP"). Hospitals with excessive readmissions for conditions designated by HHS will receive reduced payments for all inpatient discharges, not just discharges relating to the conditions subject to the excessive readmission standard. The HRRP currently assesses penalties on hospitals having excess readmission rates for heart failure, myocardial infarction, pneumonia, acute exacerbation of chronic obstructive pulmonary disease (COPD) and elective total hip arthroplasty (THA) and/or total knee arthroplasty (TKA), excluding planned readmissions, when compared to expected rates. In the fiscal year 2015 IPPS final rule, CMS added readmissions for coronary artery bypass graft (CABG) surgical procedures beginning in fiscal year 2017. To account for excess readmissions, an applicable hospital's base operating DRG payment amount is adjusted for each discharge occurring during the fiscal year. Readmissions payment adjustment factors can be no more than a 3 percent reduction. As part of the FFY 2023 IPPS final rule discussed above, CMS will modify all of the condition-specific readmission measures to include an adjustment for patient history of COVID-19 for FFY 2024.

**Accountable Care Organizations:**

The Legislation requires HHS to establish a Medicare Shared Savings Program that promotes accountability and coordination of care through the creation of accountable care organizations ("ACOs"). The ACO program allows providers (including hospitals), physicians and other designated professionals and suppliers to voluntarily work together to invest in infrastructure and redesign delivery processes to achieve high quality and efficient delivery of services. The program is intended to produce savings as a result of

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improved quality and operational efficiency. ACOs that achieve quality performance standards established by HHS will be eligible to share in a portion of the amounts saved by the Medicare program. CMS is also developing and implementing more advanced ACO payment models that require ACOs to assume greater risk for attributed beneficiaries. On December 21, 2018, CMS published a final rule that, in general, requires ACO participants to take on additional risk associated with participation in the program. On April 30, 2020, CMS issued an interim final rule with comment in response to the COVID-19 national emergency permitting ACOs with current agreement periods expiring on December 31, 2020 the option to extend their existing agreement period by one year, and permitting certain ACOs to retain their participation level through 2021. It remains unclear to what extent providers will pursue federal ACO status or whether the required investment would be warranted by increased payment.

**2019 Novel Coronavirus Disease Medicare and Medicaid Payment Related Legislation**

In response to the growing threat of COVID-19, on March 13, 2020 a national emergency was declared. The declaration empowered the HHS Secretary to waive certain Medicare, Medicaid and Children's Health Insurance Program ("CHIP") program requirements and Medicare conditions of participation under Section 1135 of the Social Security Act. Having been granted this authority by HHS, CMS issued a broad range of blanket waivers, which eased certain requirements for impacted providers, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Waivers and Flexibilities for Hospitals and other Healthcare Facilities including those for physical environment requirements and certain Emergency Medical Treatment & Labor Act provisions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Provider Enrollment Flexibilities

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Flexibility and Relief for State Medicaid Programs including those under section 1135 Waivers

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Suspension of Certain Enforcement Activities

In addition to the national emergency declaration, Congress passed and Presidents Trump and Biden have signed various forms of legislation intended to support state and local authority responses to COVID-19 as well as provide fiscal support to businesses, individuals, financial markets, hospitals and other healthcare providers.

Some of the financial support included in the various legislative actions include:

&nbsp;&nbsp;&nbsp;&nbsp;•Medicaid FMAP Enhancement

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The FMAP was increased by 6.2% retroactive to the federal fiscal quarter beginning January 1, 2020 and each subsequent federal fiscal quarter for all states and U.S. territories during the declared public health emergency through December 31, 2022, in accordance with specified conditions. The Consolidated Appropriations Act of 2023 ("CAA of 2023"), signed into law on December 29, 2022, provides for the transitional reduction of the 6.2% enhanced FMAP during 2023 to 5.0% during the second quarter, 2.5% during the third quarter and 1.5% during the fourth quarter of 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Effective April 1, 2023, the CAA of 2023 allows states to initiate Medicaid renewals, post-enrollment verifications, and redeterminations over a 12-month period for all individuals who are enrolled in such plan (or waiver) as of April 1, 2023. This activity was previously prohibited as a condition for the receipt of the enhanced FMAP during the PHE. This Medicaid enrollment related activity is likely to reduce Medicaid beneficiary enrollment as states initiate this activity but the level of Medicaid disenrollment cannot be predicted.

&nbsp;&nbsp;&nbsp;&nbsp;•Public Health Emergency Declaration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The HHS Secretary renewed the PHE effective January 11, 2023, for 90 days. As a result, certain Medicare payment provisions contingent on the PHE are extended including the twenty percent (20%) Medicare add-on for inpatient hospital COVID-19 patients noted below. However, HHS has published guidance indicating its intent for the PHE to expire on May 11, 2023. We cannot predict whether the loss of any such favorable payment provisions available to providers during the declared PHE will ultimately have a negative financial impact on us.

&nbsp;&nbsp;&nbsp;&nbsp;•Creation of a $250 billion Public Health and Social Services Emergency Fund ("PHSSEF")

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Makes grants available to hospitals and other healthcare providers to cover unreimbursed healthcare related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•During 2021, we received approximately $189 million in PHSSEF grants from the federal government as provided for by the CARES Act. As previously disclosed, we returned these funds to HHS during the second quarter of 2021. Since our intent was to return these funds, our financial results for the year ended December 31, 2021 include no impact from the receipt of these federal funds. Reimbursements recorded pursuant the PHSSEF and other various state and local governmental stimulus programs did not have a significant impact on our financial results during the nine-month period ended September 30, 2022. Our results of operations for the nine-month period ended September 30, 2021 included approximately $13 million of reimbursements recorded in connection with these programs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•During the year ended December 31, 2020, we received approximately $417 million of funds from various governmental stimulus programs, most notably the PHSSEF as provided for by the CARES Act. As mentioned above,

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included financial results for the year ended December 31, 2020 was approximately $413 million of revenues recognized in connection with funds received from these federal, state and local governmental stimulus programs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•All PHSSEF receipts are subject to meeting the applicable terms and conditions of the various distribution programs as of September 30, 2021. The Consolidated Appropriations Act, 2021 (H.R. 133) enacted on December 27, 2020 includes language that provides specific instructions on: (1) the redistribution of PHSSEF grant payments by a parent company among its subsidiaries, and; (2) the calculation of lost revenue in a PHSSEF grant entitlement determination. The HHS terms and conditions for all grant recipients and specific fund distributions are located at <u>https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/for-providers/index.html</u>

&nbsp;&nbsp;&nbsp;&nbsp;•Reimburse hospitals at Medicare rates for uncompensated COVID-19 care for the uninsured

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our financial results for the years ended December 31, 2022 and 2021 included approximately $22 million and $71 million, respectively, of revenues recorded in connection with this COVID-19 uninsured program. Revenue for the eligible patient encounters is recorded in the period in which the encounter is deemed eligible for this program net of any normal accounting reserves.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Effective March 22, 2022, HHS announced that the HRSA COVID-19 Uninsured Program and Coverage Assistance Fund is no longer accepting claims due to insufficient funding.

&nbsp;&nbsp;&nbsp;&nbsp;•Medicare Sequestration Relief

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Suspension of the 2% Medicare sequestration offset for Medicare services provided from May 1, 2020 through December 31, 2021 by various legislative extensions. In December, 2021, the suspended 2% payment reduction was extended until March 31, 2022 and partially suspended at a 1% payment reduction for an additional three-month period that ended on June 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our financial results for the years ended December 31, 2022 and 2021 included approximately $17 million and $45 million, respectively, of revenues recorded in connection with this Medicare sequestration relief program.

&nbsp;&nbsp;&nbsp;&nbsp;•Medicare add-on for inpatient hospital COVID-19 patients

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Increases the payment that would otherwise be made to a hospital for treating a Medicare patient admitted with COVID-19 by twenty percent (20%) for the duration of the COVID-19 public health emergency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our financial results for the years ended December 31, 2022 and 2021 included approximately $30 million and $34 million, respectively, of revenues recorded in connection with this COVID-19 Medicare add-on program. These payments were intended to offset the increased expenses associated with the treatment of Medicare COVID-19 patients.

&nbsp;&nbsp;&nbsp;&nbsp;•Expansion of the Medicare Accelerated and Advance Payment Program ("MAAPP")

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In March, 2021, we fully repaid the $695 million of Medicare Accelerated payments received during 2020.

In addition to statutory and regulatory changes to the Medicare program and each of the state Medicaid programs, our operations and reimbursement may be affected by administrative rulings, new or novel interpretations and determinations of existing laws and regulations, post-payment audits, requirements for utilization review and new governmental funding restrictions, all of which may materially increase or decrease program payments as well as affect the cost of providing services and the timing of payments to our facilities. The final determination of amounts we receive under the Medicare and Medicaid programs often takes many years, because of audits by the program representatives, providers' rights of appeal and the application of numerous technical reimbursement provisions. We believe that we have made adequate provisions for such potential adjustments. Nevertheless, until final adjustments are made, certain issues remain unresolved and previously determined allowances could become either inadequate or more than ultimately required.

Finally, we expect continued third-party efforts to aggressively manage reimbursement levels and cost controls. Reductions in reimbursement amounts received from third-party payers could have a material adverse effect on our financial position and our results.

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**<u>Other Operating Results</u>**

**Interest Expense**

Reflected below are the components of our interest expense which amounted to $127 million during 2022 and $84 million during 2021 (amounts in thousands):

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Revolving credit & demand notes (a.) | $9791 | $2318 |
| Tranche A term loan facility (a.) | 68782 | 26408 |
| Tranche B term loan facility (a.) |  | 5941 |
| $400 million, 5.00% Senior Notes due 2026 (b.) |  | 14000 |
| $800 million, 2.65% Senior Notes due 2030 (c.) | 21426 | 21470 |
| $700 million, 1.65% Senior Notes due 2026 (d.) | 11725 | 4137 |
| $500 million, 2.65% Senior Notes due 2032 (e.) | 13380 | 4720 |
| Accounts receivable securitization program (f.) | 39 | 787 |
| Subtotal - revolving credit, demand notes, Senior Notes, term <br> loan facilities and accounts receivable securitization <br> program | 125143 | 79781 |
| Amortization of financing fees | 4903 | 4310 |
| Other combined interest expense | 5844 | 5588 |
| Capitalized interest on major projects | (8623) | (4411) |
| Interest income | (378) | (1596) |
| Interest expense, net | $126889 | $83672 |

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(a.)In June, 2022 we entered into the ninth amendment to our credit agreement dated November 15, 2010, as amended (the "Credit Agreement"), which, among other things, added a new incremental tranche A term loan facility in the aggregate principal amount of $700 million. In September, 2021, we entered into an eighth amendment which modified the definition of "Adjusted LIBO Rate". In August, 2021, we entered into a seventh amendment to our Credit Agreement which provided for the amendment and restatement of the previously existing credit facility including, among other things, the following: (i) a $1.2 billion aggregate amount revolving credit facility that is scheduled to mature in August, 2026 ($310.4 million of borrowings outstanding as of December 31, 2022); (ii) a tranche A term loan facility with $2.34 billion of outstanding borrowings as of December 31, 2022 (including the $700 million increase provided for by the ninth amendment in June, 2022), and; (iii) repayment of a portion of the previously outstanding tranche A term loan facility borrowings ($150 million) and all of the tranche B term loan facility borrowings ($488 million). Repayment of the $638 million of previously outstanding borrowings under the tranche A and tranche B term loan facilities were funded utilizing a portion of the proceeds generated from the August, 2021, issuance of the $700 million, 1.65% Senior Notes due in 2026, and the $500 million, 2.65%, Senior Notes due in 2032.

(b.)In September, 2021 we redeemed the entire $400 million aggregate principal amount of our previously outstanding 5.00% Senior Secured Notes that were scheduled to mature in 2026 at a cash redemption price equal to the sum of 102.50% of the aggregate principal amount. This redemption was funded utilizing a portion of the proceeds generated from the August, 2021 issuance of the $700 million, 1.65% Senior Notes due in 2026, and the $500 million, 2.65% Senior Notes due in 2032, as discussed in (d.) and (e.) below.

(c.)In September, 2020, we completed the offering of $800 million aggregate principal amount of 2.65% Senior Notes due in 2030.

(d.)In August, 2021, we completed the offering of $700 million aggregate principal amount of 1.65% Senior Notes due in 2026.

(e.)In August, 2021, we completed the offering of $500 million aggregate principal amount of 2.65% Senior Notes due in 2032.

(f.)The accounts receivable securitization program was amended in April, 2021, to reduce the borrowing commitment to $20 million (from $450 million previously). As of the maturity date on December 20, 2022, the Securitization expired and was not renewed or replaced.

Interest expense increased by $43 million during 2022 to $127 million as compared to $84 million during 2021. The increase was primarily due to: (i) a net $45 million increase in aggregate interest expense on our revolving credit, demand notes, senior notes, term loan facilities and accounts receivable securitization program, resulting from an increase in our aggregate average cost of borrowings pursuant to these facilities (2.8% during 2022 as compared to 2.1% during 2021), as well as an increase in the aggregate average outstanding borrowings ($4.40 billion during 2022 as compared to $3.72 billion during 2021), partially offset by; (ii) a net $2 million decrease in other combined interest expenses, including a $4 million increase in capitalized interest on major projects.

The average effective interest rate, including amortization of deferred financing costs, original issue discount and designated interest rate swap expense/income, on borrowings outstanding under our revolving credit, demand notes, senior notes, term loan A and

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B facilities and accounts receivable securitization program, which amounted to approximately $4.40 billion during 2022 and $3.72 billion during 2021, were 2.9% during 2022 and 2.2% during 2021.

**Costs Related to Early Extinguishment of Debt** 

In connection with financing transactions completed during 2021, our 2021 results of operations included pre-tax charges of approximately $17 million, incurred for the costs related to the extinguishment of debt. These charges, which were included in other (income) expense, net, consisted of the write-off of deferred charges (approximately $7 million) as well as the make-whole premium paid on the early redemption of the $400 million, 5% senior notes (approximately $10 million).

**Provision for Asset Impairments** 

Our financial statements for the year ended December 31, 2022, include a pre-tax provision for asset impairment of approximately $58 million, which is included in other operating expenses on the accompanying consolidated statements of income, to write-down the asset value of Desert Springs Hospital Medical Center, a 282-bed acute care hospital located in Las Vegas, Nevada. In early 2023, as a result of various competitive pressures and operational challenges experienced in the market, which had a significant unfavorable impact on the hospital's results of operations during the past year, as well as physical plant constraints and limitations resulting from the advanced age of the facility (which opened in 1971), we announced plans to discontinue all inpatient operations by March of 2023. During the next two years, we plan to continue providing emergency department services within a portion of the existing facility while we construct a new free-standing emergency department on the hospital's campus. The provision for asset impairment reduced the asset values of the facility's real estate and equipment to their estimated fair values.

During 2021, in connection with the discontinuation of a certain module of a new clinical/financial information technology application under development, our financial results included a pre-tax provision for asset impairment of approximately $14 million to write-off the applicable portion of the capitalized costs incurred and is included in other operating expenses on the accompanying consolidated statement of income.

**Provision for Income Taxes and Effective Tax Rates**

The effective tax rates, as calculated by dividing the provision for income taxes by income before income taxes, were as follows for each of the years ended December 31, 2022 and 2021 (dollar amounts in thousands):

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Provision for income taxes | $209278 | $305681 |
| Income before income taxes | 866260 | 1293313 |
| Effective tax rate | 24.2% | 23.6% |

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The provision for income taxes decreased $96 million during 2022, as compared to 2021, due primarily to the income tax benefit recorded in connection with the $412 million decrease in pre-tax income ($427 million decrease in income before income taxes partially offset by a $15 million increase in net loss attributable to noncontrolling interests).

**Effects of Inflation and Seasonality**

**Seasonality** —Our acute care services business is typically seasonal, with higher patient volumes and net patient service revenue in the first and fourth quarters of the year. This seasonality occurs because, generally, more people become ill during the winter months, which results in significant increases in the number of patients treated in our hospitals during those months.

**Inflation** — See disclosure above in Results of Operations-COVID-19, Clinical Staffing Shortage and Effects of Inflation.

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**Liquidity**

**Year ended December 31, 2022 as compared to December 31, 2021:**

**Net cash provided by operating activities**

Net cash provided by operating activities was $996 million during 2022 as compared to $884 million during 2021. The net increase of $112 million was primarily attributable to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a favorable change of $695 million from the early return of the Medicare accelerated payments which were received during 2020 and repaid during the first quarter of 2021;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an unfavorable change of $249 million in accounts receivable due, in part, to increased receivables related to supplemental Medicaid programs in various states as well as amounts outstanding at December 31, 2022, related to facilities and businesses that were opened/acquired during the past year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an unfavorable change of $238 million resulting from a decrease in net income plus/minus depreciation and amortization expense, stock-based compensation, gain/loss on sale of assets and businesses, costs related to extinguishment of debt and provision for asset impairments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an unfavorable change of $193 million from other working capital accounts due primarily to the timing of disbursements for accounts payable, accrued expenses and accrued compensation, as well as the payment during 2022, of a portion of the employer's share of the 2020 Social Security taxes which were deferred pursuant to the CARES Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an unfavorable change of $62 million in accrued insurance expense, net of commercial premiums paid;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a favorable change of $59 million in other assets and deferred charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a favorable change of $25 million in accrued and deferred income taxes, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$75 million of other combined net favorable changes.

**Days sales outstanding ("DSO"):** Our DSO are calculated by dividing our net revenue by the number of days in the year. The result is divided into the accounts receivable balance at the end of the year. Our DSO were 55 days at December 31, 2022 and 50 days at December 31, 2021. The increase in our DSO at December 31, 2022, as compared to December 31, 2021, was due, in part, to the above-mentioned increase in receivables during 2022 related to supplemental Medicaid programs in various states and facilities that were opened or acquired during the year.

**Net cash used in investing activities**

Net cash used in investing activities was $647 million during 2022 and $914 million during 2021.

2022:

The $647 million of net cash used in investing activities during 2022 consisted of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$734 million spent on capital expenditures including capital expenditures for equipment, renovations and new projects at various existing facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$95 million received in connection with net cash inflows from forward exchange contracts that hedge our investment in the U.K. against movements in exchange rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$20 million spent on the acquisition of businesses and property, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$12 million of proceeds received from sales of assets and businesses.

2021:

The $914 million of net cash used in investing activities during 2021 consisted of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$856 million spent on capital expenditures including capital expenditures for equipment, renovations and new projects at various existing facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$105 million spent to acquire businesses and property, consisting primarily of a micro acute care hospital located in Las Vegas, Nevada, and a physician practice management company located in California;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$25 million of proceeds received from sales of assets and businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$20 million received in connection with the implementation of information technology applications (consists primarily of refunded costs previously paid), and;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$1 million received in connection with net cash inflows from forward exchange contracts that hedge our investment in the U.K. against movements in exchange rates.

**Net cash used in financing activities**

Net cash used in financing activities was $318 million during 2022 and $1.069 billion during 2021.

2022:

The $318 million of net cash used in financing activities during 2022 consisted of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•generated $705 million of proceeds from new borrowings consisting primarily of $700 million of proceeds generated from the new tranche A term loan facility which commenced in June, 2022;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $833 million to repurchase shares of our Class B Common Stock in connection with: (i) open market purchases pursuant to our stock repurchase program ($811 million), and; (ii) income tax withholding obligations related to stock-based compensation programs ($22 million);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $89 million on net repayment of debt as follows: (i) $51 million related to our tranche A term loan facility; (ii) $32 million related to our revolving credit facility, and; (iii) $6 million related to other debt facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $58 million to pay quarterly cash dividends of $.20 per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $49 million in connection with the purchase of ownership interests from minority members, net of sales, consisting primarily of our purchase of George Washington University's 20% ownership in the George Washington University Hospital (we now own 100% of the hospital);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•generated $14 million from the issuance of shares of our Class B Common Stock pursuant to the terms of employee stock purchase plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $5 million to pay profit distributions related to noncontrolling interests in majority owned businesses, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $3 million to pay financing costs.

2021:

The $1.069 billion of net cash used in financing activities during 2021 consisted of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $3.038 billion on net repayment of debt as follows: (i) $1.911 billion related to our tranche A term loan facility; (ii) $490 million related to our terminated tranche B term loan facility; (iii) $410 million related to the early redemption of our previously outstanding $400 million, 5.00% senior secured notes which were scheduled to mature in June, 2026; (iv) $225 million related to our accounts receivable securitization program, and; (v) $2 million related to other debt facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•generated $3.255 billion of proceeds related to new borrowings as follows: (i) $1.7 billion related to our tranche A term loan facility; (ii) $699 million (net of discount) related to the August, 2021 issuance of $700 million, 1.65% senior secured notes due in September, 2026; (iii) $499 million (net of discount) related to the August, 2021 issuance of $500 million, 2.65% senior secured notes due in January, 2032; (iv) $343 million pursuant to our revolving credit facility, and; (v) $14 million of proceeds received related to other debt facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $1.221 billion to repurchase shares of our Class B Common Stock in connection with: (i) open market purchases pursuant to our stock repurchase program ($1.201 billion), and; (ii) income tax withholding obligations related to stock-based compensation programs ($20 million);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $66 million to pay quarterly cash dividends of $.20 per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $19 million to pay financing costs incurred in connection with various financing transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•generated $13 million from the issuance of shares of our Class B Common Stock pursuant to the terms of employee stock purchase plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•received $13 million in capital contributions from minority members in majority owned businesses, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•spent $7 million to pay profit distributions related to noncontrolling interests in majority owned businesses.

**2023 Expected Capital Expenditures:**

During 2023, we expect to spend approximately $725 million to $875 million on capital expenditures which includes expenditures for capital equipment, construction of new facilities, and renovations and expansions at existing hospitals. We believe

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that our capital expenditure program is adequate to expand, improve and equip our existing hospitals. We expect to finance all capital expenditures and acquisitions with internally generated funds and/or additional funds, as discussed below.

**<u>Capital Resources:</u>**

**Credit Facilities and Outstanding Debt Securities**

In June, 2022 we entered into a ninth amendment to our credit agreement dated as of November 15, 2010, as amended and restated as of September, 2012, August, 2014, October, 2018, August, 2021, and September, 2021, among UHS, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, (the "Credit Agreement"). The ninth amendment provided for, among other things, the following: (i) a new incremental tranche A term loan facility in the aggregate principal amount of $700 million which is scheduled to mature on August 24, 2026, and; (ii) replaces the option to make Eurodollar borrowings (which bear interest by reference to the LIBO Rate) with Term Benchmark Loans, which will bear interest by reference to the Secured Overnight Financing Rate ("SOFR"). The net proceeds generated from the incremental tranche A term loan facility were used to repay a portion of the borrowings that were previously outstanding under our revolving credit facility.

In September, 2021 we entered into an eighth amendment to our Credit Agreement which modified the definition of "Adjusted LIBO Rate".

In August, 2021 we entered into a seventh amendment to our Credit Agreement which, among other things, provided for the following:

oa $1.2 billion aggregate amount revolving credit facility, which is scheduled to mature on August 24, 2026, representing an increase of $200 million over the $1.0 billion previous commitment. As of December 31, 2022, this facility had $310 million of borrowings outstanding and $886 million of available borrowing capacity, net of $4 million of outstanding letters of credit;

oa $1.7 billion initial tranche A term loan facility which was subsequently increased by $700 million in June, 2022 by the above-mentioned ninth amendment. The seventh amendment also provided for repayment of $150 million of borrowings outstanding pursuant to the previous tranche A term loan facility, and;

orepayment of approximately $488 million of outstanding borrowings and termination of the previous tranche B term loan facility.

The terms of the tranche A term loan facility, as amended, which had $2.338 billion of outstanding borrowings as of December 31, 2022, provides for installment payments of $15.0 million per quarter during the period of September, 2022 through September, 2023, and $30.0 million per quarter during the period of December, 2023 through June, 2026. The unpaid principal balance at June 30, 2026 is payable on the August 24, 2026 scheduled maturity date of the Credit Agreement.

Revolving credit and tranche A term loan borrowings under the Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender's prime rate, (b) the weighted average of the federal funds rate, plus 0.5% and (c) one month SOFR rate plus 1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.25% to 0.625%, or (2) the one, three or six month SOFR rate plus 0.1% (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 1.25% to 1.625%. As of December 31, 2022, the applicable margins were 0.50% for ABR-based loans and 1.50% for SOFR-based loans under the revolving credit and term loan A facilities. The revolving credit facility includes a $125 million sub-limit for letters of credit. The Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.

The Credit Agreement includes a material adverse change clause that must be represented at each draw. The Credit Agreement also contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens, indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We were in compliance with all required covenants as of December 31, 2022 and December 31, 2021.

On August 24, 2021, we completed the following via private offerings to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended:

oIssued $700 million of aggregate principal amount of 1.65% senior secured notes due on September 1, 2026, and;

oIssued $500 million of aggregate principal amount of 2.65% senior secured notes due on January 15, 2032.

In April, 2021 our accounts receivable securitization program ("Securitization") was amended (the eighth amendment) to: (i) reduce the aggregate borrowing commitments to $20 million (from $450 million previously); (ii) slightly reduce the borrowing rates and commitment fee, and; (iii) extend the maturity date to April 25, 2022. At various times from April, 2022 to September, 2022, the

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Securitization was amended to extend the maturity date to various dates including, most recently, December 20, 2022. As of the December 20, 2022 maturity date, the Securitization expired and was not renewed or replaced.

On September 13, 2021, we redeemed $400 million of aggregate principal amount of 5.00% senior secured notes, that were scheduled to mature on June 1, 2026, at 102.50% of the aggregate principal, or $410 million.

As of December 31, 2022, we had combined aggregate principal of $2.0 billion from the following senior secured notes:

o$700 million aggregate principal amount of 1.65% senior secured notes due in September, 2026 ("2026 Notes") which were issued on August 24, 2021.

o$800 million aggregate principal amount of 2.65% senior secured notes due in October, 2030 ("2030 Notes") which were issued on September 21, 2020.

o$500 million of aggregate principal amount of 2.65% senior secured notes due in January, 2032 ("2032 Notes") which were issued on August 24, 2021.

Interest on the 2026 Notes is payable on March 1st and September 1st until the maturity date of September 1, 2026. Interest on the 2030 Notes payable on April 15th and October 15th, until the maturity date of October 15, 2030. Interest on the 2032 Notes is payable on January 15<sup>th</sup>and July 15<sup>th</sup> until the maturity date of January 15, 2032.

The 2026 Notes, 2030 Notes and 2032 Notes (collectively "The Notes") were initially issued only to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). In December, 2022, we completed a registered exchange offer in which virtually all previously outstanding Notes were exchanged for identical Notes that were registered under the Securities Act, and thereby became freely transferable (subject to certain restrictions applicable to affiliates and broker dealers). Notes originally issued under Rule 144A or Regulation S that were not exchanged in the exchange offer remain outstanding and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration requirements thereunder.

The Notes are guaranteed (the "Guarantees") on a senior secured basis by all of our existing and future direct and indirect subsidiaries (the "Subsidiary Guarantors") that guarantee our Credit Agreement, or other first lien obligations or any junior lien obligations. The Notes and the Guarantees are secured by first-priority liens, subject to permitted liens, on certain of the Company's and the Subsidiary Guarantors' assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to the Company's Existing Receivables Facility (as defined in the Indenture pursuant to which The Notes were issued (the "Indenture")), and certain other excluded assets). The Company's obligations with respect to The Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company's and the Subsidiary Guarantors' other obligations under the Indenture, are secured equally and ratably with the Company's and the Subsidiary Guarantors' obligations under the Credit Agreement and The Notes by a perfected first-priority security interest, subject to permitted liens, in the collateral owned by the Company and its Subsidiary Guarantors, whether now owned or hereafter acquired. However, the liens on the collateral securing The Notes and the Guarantees will be released if: (i) The Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and The Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no longer required to be pledged. The liens on any collateral securing The Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.

As discussed in Note 9 to the Consolidated Financial Statements-Relationship with Universal Health Realty Income Trust and Other Related Party Transactions, on December 31, 2021, we (through wholly-owned subsidiaries of ours) entered into an asset purchase and sale agreement with Universal Health Realty Income Trust (the "Trust"). Pursuant to the terms of the agreement, which was amended during the first quarter of 2022, we, among other things, transferred to the Trust, the real estate assets of Aiken Regional Medical Center ("Aiken") and Canyon Creek Behavioral Health ("Canyon Creek"). In connection with this transaction, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases, as amended, (with the Trust as lessor), for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. As a result of our purchase option within the Aiken and Canyon Creek lease agreements, this asset purchase and sale transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP and we have accounted for the transaction as a financing arrangement. Our lease payments payable to the Trust are recorded to interest expense and as a reduction of the outstanding financial liability, and the amount allocated to interest expense is determined based upon our incremental borrowing rate and the outstanding financial liability. In connection with this transaction, our Consolidated Balance Sheets at December 31, 2022 and December 31, 2021 reflect financial liabilities, which are included in debt, of approximately $81 million and $82 million, respectively.

At December 31, 2022, the carrying value and fair value of our debt were approximately $4.8 billion and $4.4 billion, respectively. At December 31, 2021, the carrying value and fair value of our debt were each approximately $4.2 billion. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be "level 2" in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.

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Our total debt as a percentage of total capitalization was approximately 45% at December 31, 2022 and 41% at December 31, 2021.

We expect to finance all capital expenditures and acquisitions and pay dividends and potentially repurchase shares of our common stock utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our existing revolving credit facility, which had $886 million of available borrowing capacity as of December 31, 2022, or through refinancing the existing Credit Agreement; (ii) the issuance of other short-term and/or long-term debt, and/or; (iii) the issuance of equity. We believe that our operating cash flows, cash and cash equivalents, available commitments under existing agreements, as well as access to the capital markets, provide us with sufficient capital resources to fund our operating, investing and financing requirements for the next twelve months. However, in the event we need to access the capital markets or other sources of financing, there can be no assurance that we will be able to obtain financing on acceptable terms or within an acceptable time. Our inability to obtain financing on terms acceptable to us could have a material unfavorable impact on our results of operations, financial condition and liquidity.

**Supplemental Guarantor Financial Information**

As of December 31, 2022, we had combined aggregate principal of $2.0 billion from The Notes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$700 million aggregate principal amount of the 2026 Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$800 million aggregate principal amount of the 2030 Notes, and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$500 million of aggregate principal amount of the 2032 Notes.

The Notes are fully and unconditionally guaranteed pursuant to the Guarantees on a senior secured basis by the Subsidiary Guarantors. The Notes and the Guarantees are secured by first-priority liens, subject to permitted liens, on certain of the Company's and the Subsidiary Guarantors' assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to the Company's existing receivables facility (as defined in the Indentures pursuant to which The Notes were issued), and certain other excluded assets). The Company's obligations with respect to The Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company's and the Subsidiary Guarantors' other obligations under the Indentures, are secured equally and ratably with the Company's and the Subsidiary Guarantors' obligations under the Credit Agreement and The Notes by a perfected first-priority security interest, subject to permitted liens, in the collateral owned by the Company and its Subsidiary Guarantors, whether now owned or hereafter acquired. However, the liens on the collateral securing The Notes and the Guarantees will be released if: (i) The Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and The Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no longer required to be pledged. The liens on any collateral securing The Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.

The Notes will be structurally subordinated to all obligations of our existing and future subsidiaries that are not and do not become Subsidiary Guarantors of The Notes. No appraisal of the value of the collateral has been made, and the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the collateral securing The Notes may not produce proceeds in an amount sufficient to pay any amounts due on The Notes.

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although our Credit Agreement contains restrictions on the incurrence of additional indebtedness and our Credit Agreement and The Notes contain restrictions on our ability to incur liens to secure additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, if we incur any additional indebtedness secured by liens that rank equally with The Notes, subject to collateral arrangements, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. This may have the effect of reducing the amount of proceeds paid to holders of The Notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of The Notes and the incurrence of the Guarantees. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, The Notes or the Guarantees (or the grant of collateral securing any such obligations) could be voided as a fraudulent transfer or conveyance if we or any of the Subsidiary Guarantors, as applicable, (a) issued The Notes or incurred the Guarantees with the intent of hindering, delaying or defrauding creditors or (b) under certain circumstances received less than reasonably equivalent value or fair consideration in return for either issuing The Notes or incurring the Guarantees.

**Basis of Presentation**

The following tables include summarized financial information of Universal Health Services, Inc. and the other obligors in respect of debt issued by Universal Health Services, Inc. The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of

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non-guarantor subsidiaries, which would otherwise be consolidated in accordance with GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.

The summarized balance sheet information for the consolidated obligor group of debt issued by Universal Health Services, Inc. is presented in the table below:

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| | | |
|:---|:---|:---|
| (in thousands) | **December 31, 2022** | **December 31, 2021** |
| Current assets | $2062900 | $1865568 |
| Noncurrent assets (1) | $8773036 | $8695985 |
| Current liabilities | $1686005 | $1818415 |
| Noncurrent liabilities | $5587141 | $6164650 |
| Due to non-guarantors | $942731 | $940852 |
| (1) Includes goodwill of $3,273 million and $3,257 million as of December 31, 2022 and 2021, respectively. | (1) Includes goodwill of $3,273 million and $3,257 million as of December 31, 2022 and 2021, respectively. | (1) Includes goodwill of $3,273 million and $3,257 million as of December 31, 2022 and 2021, respectively. |

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The summarized results of operations information for the consolidated obligor group of debt issued by Universal Health Services, Inc. is presented in the table below:

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| | | |
|:---|:---|:---|
|  | **Twelve Months Ended** | **Twelve Months Ended** |
| (in thousands) | **December 31, 2022** | **December 31, 2021** |
| Net revenues | $10853259 | $10310332 |
| Operating charges | 9947778 | 9044261 |
| Interest expense, net | 193486 | 149394 |
| Other (income) expense, net | 7487 | (14513) |
| Net income | $532047 | $878065 |

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**Affiliates Whose Securities Collateralize the Senior Secured Notes**

The Notes and the Guarantees are secured by, among other things, pledges of the capital stock of our subsidiaries held by us or by our secured Guarantors, in each case other than certain excluded assets and subject to permitted liens. Such collateral securities are secured equally and ratably with our and the Guarantors' obligations under our Credit Agreement. For a list of our subsidiaries the capital stock of which has been pledged to secure The Notes, see Exhibit 22.1 to this Report.

Upon the occurrence and during the continuance of an event of default under the indentures governing The Notes, subject to the terms of the Security Agreement relating to The Notes provide for (among other available remedies) the foreclosure upon and sale of the Collateral (including the pledged stock) and the distribution of the net proceeds of any such sale to the holders of The Notes, the lenders under the Credit Agreement and the holders of any other permitted first priority secured obligations on a pro rata basis, subject to any prior liens on the collateral.

No appraisal of the value of the collateral securities has been made, and the value of the collateral securities in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, liquidating the collateral securities securing The Notes may not produce proceeds in an amount sufficient to pay any amounts due on The Notes.

The security agreement relating to The Notes provides that the representative of the lenders under our Credit Agreement will initially control actions with respect to that collateral and, consequently, exercise of any right, remedy or power with respect to enforcing interests in or realizing upon such collateral will initially be at the direction of the representative of the lenders.

No trading market exists for the capital stock pledged as collateral.

The assets, liabilities and results of operations of the combined affiliates whose securities are pledged as collateral are not materially different than the corresponding amounts presented in the consolidated financial information of Universal Health Services, Inc.

**Contractual Obligations and Off-Balance Sheet Arrangements**

As of December 31, 2022 we were party to certain off balance sheet arrangements consisting of standby letters of credit and surety bonds which totaled $169 million consisting of: (i) $159 million related to our self-insurance programs, and; (ii) $10 million of other debt and public utility guarantees.

Obligations under operating leases for real property, real property master leases and equipment amount to $922 million as of December 31, 2022. The real property master leases are leases for buildings on or near hospital property for which we guarantee a certain level of rental income. We sublease space in these buildings and any amounts received from these subleases are offset against the expense. In addition, we lease certain hospital facilities from Universal Health Realty Trust (the "Trust") with terms scheduled to expire in 2026, 2033 and 2040. These leases contain various renewal options, as disclosed in Note 9 to the Consolidated Financial

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Statements-Relationship with Universal Health Realty Income Trust and Other Related Party Transactions. We also lease two free-standing emergency departments and space in certain medical office buildings which are owned by the Trust. In addition, we lease the real property of certain other facilities from non-related parties as indicated in Item 2. Properties, as included herein.

The following represents the scheduled maturities of our contractual obligations as of December 31, 2022:

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| | | | |
|:---|:---|:---|:---|
|  | **Payments Due by Period (dollars in thousands)** | **Payments Due by Period (dollars in thousands)** | **Payments Due by Period (dollars in thousands)** |
|  |  | **Less than** | **After** |
|  | **Total** | **1 year** | **5 years** |
| Long-term debt obligations (a) | $4807980 | $81447 | $1437502 |
| Estimated future interest payments on debt<br> outstanding as of December 31, 2022 (b) | 1031021 | 225637 | 195995 |
| Construction commitments (c) | 23563 | 5000 | 0 |
| Purchase and other obligations (d) | 369259 | 58589 | 126886 |
| Operating leases (e) | 921753 | 83573 | 595736 |
| Estimated future payments for defined benefit<br> pension plan, and other retirement plan (f) | 169337 | 19535 | 116156 |
| Health and dental unpaid claims (g) | 133624 | 133624 | 0 |
| Total contractual cash obligations | $7456537 | $607405 | $2472275 |

---

(a)Reflects debt outstanding, after unamortized financing costs, as of December 31, 2022 as discussed in Note 4 to the Consolidated Financial Statements.

(b)Assumes that all debt outstanding as of December 31, 2022, including borrowings under our Credit Agreement, remain outstanding until the final maturity of the debt agreements at the same interest rates (some of which are floating) which were in effect as of December 31, 2022. We have the right to repay borrowings upon short notice and without penalty, pursuant to the terms of the Credit Agreement.

(c)Our share of the estimated construction cost of a behavioral health care facility scheduled to be completed in 2025 that, subject to approval of certain regulatory conditions, we are required to build pursuant to a joint-venture agreement with a third party. In addition, we had various other projects under construction as of December 31, 2022. Because we can terminate substantially all of the construction contracts related to the various other projects at any time without paying a termination fee, these costs are excluded from the table above.

(d)Consists of: (i) $54 million related to long-term contracts with third-parties consisting primarily of certain revenue cycle data processing services for our acute care facilities; (ii) $224 million related to the future expected costs to be paid to a third-party vendor in connection with the ongoing operation of an electronic health records application and purchase and implementation of a revenue cycle and other applications for our facilities; (iii) $16 million for other software applications, and; (iv) $75 million in healthcare infrastructure in Washington D.C. in connection with various agreements with the District of Columbia, as discussed below.

(e)Reflects our future minimum operating lease payment obligations related to our operating lease agreements outstanding as of December 31, 2022 as discussed in Note 7 to the Consolidated Financial Statements. Some of the lease agreements provide us with the option to renew the lease and our future lease obligations would change if we exercised these renewal options. In connection with these operating lease commitments, our consolidated balance sheet as of December 31, 2022 includes right of use assets amounting to $455 million and aggregate operating lease liabilities of $463 million ($68 million included in current liabilities and $395 million included in noncurrent liabilities).

(f)Consists of $146 million of estimated future payments related to our non-contributory, defined benefit pension plan (estimated through 2080), as disclosed in Note 8 to the Consolidated Financial Statements, and $23 million of estimated future payments related to other retirement plan liabilities ($19 million of liabilities recorded in other non-current liabilities as of December 31, 2022 in connection with these retirement plans).

(g)Consists of accrued and unpaid estimated claims expense incurred in connection with our commercial health insurers and self-insured employee benefit plans.

As of December 31, 2022, the total net accrual for our professional and general liability claims was $372 million, of which $74 million is included in other current liabilities and $298 million is included in other non-current liabilities. We exclude the $372 million for professional and general liability claims from the contractual obligations table because there are no significant contractual obligations associated with these liabilities and because of the uncertainty of the dollar amounts to be ultimately paid as well as the timing of such payments. Please see Self-Insured/Other Insurance Risks above for additional disclosure related to our professional and general liability claims and reserves.

During 2020, we entered into a various agreements with the District of Columbia (the "District") related to the development, leasing and operation of an acute care hospital and certain other facilities/structures on land owned by the District ("District Facilities"). The agreements contemplate that we will serve as manager for development and construction of the District Facilities on behalf of the District, with a projected aggregate cost of approximately $439 million, approximately $64 million of which was

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incurred as of December 31, 2022, which will be entirely funded by the District. Construction of the District Facilities is expected to be completed during 2025. Upon completion of the District Facilities, we will lease the District Facilities for a nominal rental amount for a period of 75 years and are obligated to operate the District Facilities during the lease term. We have certain lease termination rights in connection with the District Facilities beginning on the tenth anniversary of the lease commencement date for various and decreasing amounts as provided for in the agreements. Additionally, any time after the 10<sup>th</sup> anniversary of the lease term, we have a right to purchase the District Facilities for a price equal to the greater of fair market value of the District Facilities or the amount necessary to defease the bonds issued by the District to fund the construction of the District Facilities. The lease agreement also entitles the District to participation rent should certain specified earnings before interest, taxes, depreciation and amortization thresholds be achieved by the acute care hospital. Additionally, we have committed to expend no less than $75 million, over a projected 12-year period, in healthcare infrastructure including expenditures related to the District Facilities as well as other healthcare related expenditures in certain specified areas of Washington, D.C. This financial commitment is included in "Purchase and other obligations" as reflected on the contractual obligations table above. Pursuant to the agreements, the District is entitled to certain termination fees and other amounts as specified in the agreements in the event we, within certain specified periods of time, cease to operate the acute care hospital or there is a transfer of control of us or our subsidiary operating the hospital.

**ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk**

We manage our ratio of fixed and floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this risk in a cost-effective manner, we, from time to time, enter into interest rate swap agreements in which we agree to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. We account for our derivative and hedging activities using the Financial Accounting Standard Board's guidance which requires all derivative instruments, including certain derivative instruments embedded in other contracts, to be carried at fair value on the balance sheet. For derivative transactions designated as hedges, we formally document all relationships between the hedging instrument and the related hedged item, as well as its risk-management objective and strategy for undertaking each hedge transaction.

Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in accumulated other comprehensive income ("AOCI") within shareholders' equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. From time to time, we use interest rate derivatives in our cash flow hedge transactions. Such derivatives are designed to be highly effective in offsetting changes in the cash flows related to the hedged liability.

For hedge transactions that do not qualify for the short-cut method, at the hedge's inception and on a regular basis thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in cash flows of the hedged items and whether they are expected to be highly effective in the future.

The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on estimates obtained from the counterparties. When applicable, we assess the effectiveness of our hedge instruments on a quarterly basis. Although we do not anticipate nonperformance by our counterparties to interest rate swap agreements, the counterparties expose us to credit risk in the event of nonperformance. We do not hold or issue derivative financial instruments for trading purposes.

During the years ended December 31, 2022, 2021 and 2020, we had no cash flow hedges outstanding.

When applicable, we measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from our counterparties. We consider those inputs to be "level 2" in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities.

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The table below presents information about our long-term financial instruments that are sensitive to changes in interest rates as of December 31, 2022. For debt obligations, the table presents principal cash flows and related weighted-average interest rates by contractual maturity dates.

**Maturity Date, Fiscal Year Ending December 31**

**(dollar amounts in thousands)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2023** | **2024** | **2025** | **2026** | **2027** | **Thereafter** | **Total** |
| **Long-term debt:** |  |  |  |  |  |  |  |
| Fixed rate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt | $6447 | $7008 | $6255 | $701345 | $7136 | $1437502 | $2165693 |
| &nbsp;&nbsp;&nbsp;&nbsp;Average interest rates | 2.4% | 2.4% | 2.4% | 2.4% | 2.8% | 3.2% | 2.6% |
| Variable rate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt | $75000 | $120000 | 120000 | 2327287 | 0 | 0 | $2642287 |
| &nbsp;&nbsp;&nbsp;&nbsp;Average interest rates | 5.9% | 5.9% | 5.9% | 5.9% | 0.0% | 0.0% | 5.9% |
| **Interest rate swaps:** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Notional amount |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Average interest rates |  |  |  |  |  |  |  |

---

As calculated based upon our variable rate debt outstanding as of December 31, 2022 that is subject to interest rate fluctuations, each 1% change in interest rates would impact our pre-tax income by approximately $26 million.

**ITEM 8. Financial Statements and Supplementary Data**

Our Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows and Consolidated Statements of Comprehensive Income, together with the reports of PricewaterhouseCoopers LLP, independent registered public accounting firm, are included elsewhere herein. Reference is made to the "Index to Financial Statements and Financial Statement Schedule."

**ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

None.

**ITEM 9A. Controls and Procedures.**

As of December 31, 2022, under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), we performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management on a timely basis in order to comply with our disclosure obligations under the Securities Exchange Act of 1934, as amended, and the SEC rules thereunder.

**Changes in Internal Control Over Financial Reporting**

There have been no changes in our internal control over financial reporting or in other factors during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Management's Report on Internal Control Over Financial Reporting**

Management is responsible for establishing and maintaining an adequate system of internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria on Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its assessment, management has concluded that we maintained effective internal control over financial reporting as of December 31, 2022, based on criteria in Internal Control—Integrated Framework (2013), issued by the COSO. The effectiveness of the Company's internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm as stated in its report which appears herein.

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**ITEM 9B Other Information**

None.

**ITEM 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Other Information**

Not applicable.

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**PART III**

**ITEM 10. Directors, Executive Officers and Corporate Governance**

There is hereby incorporated by reference the information to appear under the captions "Election of Directors", "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2022. See also "Executive Officers of the Registrant" appearing in Item 1 hereof.

**ITEM 11. Executive Compensation**

There is hereby incorporated by reference the information to appear under the caption "Executive Compensation" in our Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after December 31, 2022.

**ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

There is hereby incorporated by reference the information to appear under the caption "Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation" in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2022.

**ITEM 13. Certain Relationships and Related Transactions, and Director Independence**

There is hereby incorporated by reference the information to appear under the captions "Certain Relationships and Related Transactions" and "Corporate Governance" in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2022.

**ITEM 14. Principal Accountant Fees and Services.**

There is hereby incorporated by reference the information to appear under the caption "Relationship with Independent Auditors" in our Proxy Statement, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2022.

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**PART IV**

**ITEM 15. Exhibits and Financial Statement Schedules**

&nbsp;&nbsp;&nbsp;&nbsp;**(a) Documents filed as part of this report:**

&nbsp;&nbsp;&nbsp;&nbsp;**(1) Financial Statements:**

See "Index to Financial Statements and Financial Statement Schedule."

&nbsp;&nbsp;&nbsp;&nbsp;**(2) Financial Statement Schedules:**

See "Index to Financial Statements and Financial Statement Schedule."

&nbsp;&nbsp;&nbsp;&nbsp;**(3) Exhibits:**

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| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
| 3.1  | Registrant's Restated Certificate of Incorporation, and Amendments thereto, previously filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, are incorporated herein by reference (P). |
| 3.2 | [<u>Amended and Restated Bylaws of Registrant, previously filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated September 21, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022032142/uhs-ex31_9.htm) |
| 3.3  | [<u>Amendment to the Registrant's Restated Certificate of Incorporation previously filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 3, 2001 is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000095013001502858/dex31.txt) |
| 4.1 | [<u>Description of Securities of the Registrant</u> <u>previously filed as Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020006793/uhs-ex45_148.htm) |
| 4.2 | [<u>Indenture, dated as of September 21, 2020, by and among the Company, the Subsidiary Guarantors party thereto, MUFG Union Bank, N.A., as trustee, and JPMorgan Chase Bank, N.A., as collateral agent., previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated September 21, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459020044127/uhs-ex41_36.htm) |
| 4.3 | [<u>Additional Authorized Representative Joinder Agreement, dated as of September 21, 2020, among the Company, the Subsidiary Guarantors party thereto, JPMorgan Chase Bank, N.A., as collateral agent, the Authorized Representatives specified therein and MUFG Union Bank, N.A., as trustee, as an Additional Authorized Representative, previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated September 21, 2020, is incorporated herein by reference</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020044127/uhs-ex42_7.htm). |
| 4.4 | [<u>Registration Rights Agreement, dated as of September 21, 2020, by and among the Company, the Subsidiary Guarantors party thereto, and J.P. Morgan Securities LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC, as representatives of the several Initial Purchasers, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 21, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459020044127/uhs-ex101_8.htm)<br>|
| 4.5 | [<u>Indenture, dated as of August 24, 2021, by and among the Company, the Subsidiary Guarantors party thereto, U.S. Bank National Association, as Trustee, and JPMorgan Chase Bank, N.A., as collateral agent, previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated August 24, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex41_13.htm) |
| 4.6 | [<u>Additional Authorized Representative Joinder Agreement, dated as of August 24, 2021, among U.S. Bank National Association, as Trustee and Additional Authorized Representative, the Company, the Subsidiary Guarantors party thereto, and JPMorgan Chase Bank, N.A., as collateral agent and administrative agent, previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated August 24, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex42_11.htm) |
| 4.7 | [<u>Supplemental Indenture, dated as of August 24, 2021, among the Company, the Subsidiary Guarantors party thereto, U.S. Bank National Association (as successor to MUFG Union Bank, N.A.), as trustee, and JPMorgan Chase Bank, N.A., as collateral agent, to the indenture, dated as of September 21, 2020, governing the Existing 2030 Notes, previously filed as Exhibit 4.3 to the Company's Current Report on Form 8-K dated August 24, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex43_9.htm) |
| 4.8 | [<u>Registration Rights Agreement, dated as of August 24, 2021, by and among the Company, the Subsidiary Guarantors party thereto, and J.P. Morgan Securities LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC and Truist Securities,</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex101_12.htm) |

---

------

---

| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
|  | [<u>Inc., as representatives of the several Initial Purchasers, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 24, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex101_12.htm) |
| 4.9 | [<u>Second Supplemental Indenture, dated as of June 23, 2022, among the Company, the Subsidiary Guarantors party thereto, U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, and JPMorgan Chase Bank, N.A., as collateral agent, to the indenture, dated as of September 21, 2020, previously filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated June 27, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022024223/uhs-ex41_9.htm) |
| 4.10 | [<u>First Supplemental Indenture, dated as of June 23, 2022, among the Company, the Subsidiary Guarantors party thereto, U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, and JPMorgan Chase Bank, N.A., as collateral agent, to the indenture, dated as of August 24, 2021, previously filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated June 27, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022024223/uhs-ex42_7.htm) |
| 4.11 | [<u>Third Supplemental Indenture, dated as of November 4, 2022, among the Company, the Subsidiary Guarantors party thereto, U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, and JPMorgan Chase Bank, N.A., as collateral agent, to the indenture, dated as of September 21, 2020, previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q dated November 8, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022037046/uhs-ex41_48.htm) |
| 4.12 | [<u>Second Supplemental Indenture, dated as of November 4, 2022, among the Company, the Subsidiary Guarantors party thereto, U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, and JPMorgan Chase Bank, N.A., as collateral agent, to the indenture, dated as of August 24, 2021, previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q dated November 8, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022037046/uhs-ex42_47.htm) |
| 10.1  | [<u>Agreement, dated November 30, 2022, to renew Advisory Agreement dated as of December 24, 1986, and amended and restated effective as of January 1, 2019 between Universal Health Realty Income Trust and UHS of Delaware, Inc.</u>](uhs-ex10_1.htm) |
| 10.2  | [<u>Agreement, dated as of December 4, 2019, to renew Advisory Agreement, dated as of December 24, 1986, and amended and restated effective as of January 1, 2019 between Universal Health Realty Income Trust and UHS of Delaware, Inc., previously filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459019004919/uhs-ex103_37.htm) |
| 10.3  | Form of Leases, including Form of Master Lease Document for Leases, between certain subsidiaries of the Company and Universal Health Realty Income Trust, filed as Exhibit 10.3 to Amendment No. 3 of the Registration Statement on Form S-11 and Form S-2 of Registrant and Universal Health Realty Income Trust (Registration No. 33-7872), is incorporated herein by reference (P). |
| 10.4  | Corporate Guaranty of Obligations of Subsidiaries Pursuant to Leases and Contract of Acquisition, dated December 24, 1986, issued by the Company in favor of Universal Health Realty Income Trust, previously filed as Exhibit 10.5 to the Company's Current Report on Form 8-K dated December 24, 1986, is incorporated herein by reference (P). |
| 10.5 | [<u>Universal Health Services, Inc. Executive Retirement Income Plan dated January 1, 1993, previously filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000093176303000570/dex107.txt) |
| 10.6 | [<u>Universal Health Services, Inc. Supplemental Executive Retirement Income Plan effective as of June 1, 2018, dated as of June 18, 2018, previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459019017239/uhs-ex101_23.htm) |
| 10.7  | Asset Purchase Agreement dated as of February 6, 1996, among Amarillo Hospital District, UHS of Amarillo, Inc. and Universal Health Services, Inc., previously filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference (P). |
| 10.8\* | [<u>Amended and Restated Universal Health Services, Inc. Supplemental Deferred Compensation Plan dated as of January 1, 2002, previously filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000093176303000570/dex1029.txt) |

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| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
| 10.9\* | [<u>Universal Health Services, Inc. Employee Stock Purchase Plan, previously filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (File No. 333-122188), dated January 21, 2005 is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312505009505/dex41.htm) |
| 10.10\* | [<u>Universal Health Services, Inc. Third Amended and Restated 2005 Stock Incentive Plan as Amended, previously filed as Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No.333-218359), dated May 31, 2017, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312517188941/d514264dex991.htm) |
| 10.11\* | [<u>Form of Stock Option Agreement, previously filed as Exhibit 10.4 to the Company's Current Report on Form 8-K, dated June 8, 2005, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312505121907/dex104.htm) |
| 10.12\* | [<u>Form of Stock Option Agreement for Non-Employee Directors, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, dated October 3, 2005, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312505195725/dex102.htm) |
| 10.13 | [<u>Amendment No. 1 to the Master Lease Document, between certain subsidiaries of Universal Health Services, Inc. and Universal Health Realty Income Trust, dated April 24, 2006, previously filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended December 31, 2006, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312507042808/dex1029.htm) |
| 10.14\* | [<u>Amended and Restated Universal Health Services, Inc. 2010 Employees' Restricted Stock Purchase Plan, previously filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2015, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312515281740/d941004dex102.htm) |
| 10.15\* | [<u>Universal Health Services, Inc. 2010 Executive Incentive Plan, previously filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2015, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312515281740/d941004dex103.htm) |
| 10.16 | [<u>Omnibus Amendment to Receivables Sale Agreements, dated as of October 27, 2010, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 2, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510243987/dex101.htm) |
| 10.17 | [<u>Amended and Restated Credit and Security Agreement, dated as of October 27, 2010, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated November 2, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510243987/dex102.htm) |
| 10.18 | [<u>Second Amendment to Amended and Restated Credit and Security Agreement, dated as of October 25, 2013, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 30, 2013, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312513417091/d619136dex101.htm) |
| 10.19 | [<u>Third Amendment to Amended and Restated Credit and Security Agreement, dated as of August 1, 2014, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 4, 2014, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312514293450/d768656dex101.htm) |
| 10.20 | [<u>Fourth Amendment to Amended and Restated Credit and Security Agreement, dated as of December 22, 2015, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 22, 2015, is incorporated herein by reference</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312515416088/d106645dex101.htm). |
| 10.21 | [<u>Fifth Amendment to Amended and Restated Credit and Security Agreement, dated as of July 7, 2017, previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2017, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459017016003/uhs-ex101_20.htm) |
| 10.22 | [<u>Sixth Amendment to Amended and Restated Credit and Security Agreement, dated as of April 26, 2018, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 27, 2018, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459018009467/uhs-ex101_6.htm)<br>|
| 10.23 | [<u>Eighth Amendment to Amended and Restated Credit and Security Agreement, dated as of April 26, 2021, previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q dated May 7, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459021025562/uhs-ex101_23.htm) |
| 10.24 | [<u>Ninth Amendment to Amended and Restated Credit and Security Agreement, dated as of April 22, 2022. previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the Quarter dated May 6, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022018570/uhs-ex101_24.htm) |

---

------

---

| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
| 10.25 | [<u>Tenth Amendment to Amended and Restated Credit and Security Agreement, dated as of July 22, 2022, previously filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q dated August 8, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022028437/uhs-ex105_27.htm) |
| 10.26 | [<u>Eleventh Amendment to Amended and Restated Credit and Security Agreement, dated as of September 20, 2022, previously filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q dated November 8, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022037046/uhs-ex102_25.htm) |
| 10.27 | [<u>Assignment and Assumption Agreement, dated as of October 27, 2010, previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated November 2, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510243987/dex103.htm) |
| 10.28 | [<u>Credit Agreement, dated as of November 15, 2010, by and among Universal Health Services, Inc., JPMorgan Chase Bank, N.A. and the various financial institutions as are or may become parties thereto, as Lenders, SunTrust Bank, The Royal Bank of Scotland, Plc, Bank of Tokyo-Mitsubishi UFJ Trust Company and Credit Agricole Corporate and Investment Bank, as co-documentation agents, Deutsche Bank Securities Inc. and Bank of America N.A. as co-syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and as collateral agent for the secured parties, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 17, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000095015710002042/ex10-1.htm) |
| 10.29 | [<u>First Amendment, dated as of March 15, 2011, to the Credit Agreement, dated as of November 15, 2010, by and among Universal Health Services, Inc., JPMorgan Chase Bank, N.A. and the various financial institutions as are or may become parties thereto, as Lenders, certain banks as co-documentation agents, and as co-syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and as collateral agent for the secured parties, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 15, 2011, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312511067583/dex101.htm) |
| 10.30 | [<u>Credit Agreement, dated as of November 15, 2010 and amended and restated as of September 21, 2012, by and among Universal Health Services, Inc. (the borrower), the several lenders from time to time parties thereto, Credit Agricole Corporate and Investment Bank, Mizuho Corporate Bank LTD., Royal Bank of Canada and The Royal Bank of Scotland PLC (as co-documentation agents), Bank of Tokyo-Mitsubishi UFJ Trust Company, Bank of America N.A. and SunTrust Bank (as co-syndication agents), and JPMorgan Chase Bank, N.A. (as administrative agent), previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 26, 2012, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312512404549/d415922dex101.htm) |
| 10.31 | [<u>Second Amendment, dated as of September 21, 2012, to the Credit Agreement, dated as of November 15, 2010 (as amended from time to time), among Universal Health Services, Inc., a Delaware corporation, the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated September 26, 2012, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312512404549/d415922dex102.htm) |
| 10.32 | [<u>Third Amendment, dated as of May 16, 2013, to the Credit Agreement, dated as of November 15, 2010, as amended from time to time, among Universal Health Services, Inc., a Delaware corporation, the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 17, 2013, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312513225260/d540638dex101.htm) |
| 10.33 | [<u>Fourth Amendment, dated as of August 7, 2014, to the Credit Agreement, dated as of November 15, 2010, as previously amended from time to time, by and among Universal Health Services, Inc., the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex101.htm)<br>|
| 10.34 | [<u>Credit Agreement, dated as of November 15, 2010 and amended and restated as of August 7, 2014, by and among Universal Health Services, Inc., the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex102.htm) |
| 10.35 | [<u>Fifth Amendment to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013 and August 7, 2014, among the Company, as borrower, the several banks and other financial</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312516616699/d200774dex101.htm) |

---

------

---

| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
|  | [<u>institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated June 8, 2016, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312516616699/d200774dex101.htm)<br>|
| 10.36 | [<u>Sixth Amendment, dated as of October 23, 2018, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014 and June 7, 2016, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 24, 2018, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459018024906/uhs-ex101_7.htm) |
| 10.37 | [<u>Increased Facility Activation Notice – Incremental Term Loans, dated as of October 31, 2018, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014, June 7, 2016 and October 23, 2018, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 2, 2018, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459018026508/uhs-ex101_7.htm) |
| 10.38 | [<u>Seventh Amendment, dated as of August 24, 2021, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014, June 7, 2016 and October 23, 2018, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated August 24, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021045588/uhs-ex102_10.htm) |
| 10.39 | [<u>Eighth Amendment, dated as of September 10, 2021, to the Credit Agreement, dated as of November 15, 2010, as amended on March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014, June 7, 2016, October 23, 2018 and August 24, 2021, among the Company, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto, previously filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q dated November 8, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021055254/uhs-ex103_23.htm) |
| 10.40 | [<u>Ninth Amendment and Increased Facility Activation Notice dated as of June 23, 2022, to Credit Agreement, dated as of November 15, 2010 and as amended and restated as of March 15, 2011, September 21, 2012, May 16, 2013, August 7, 2014, June 7, 2016, October 23, 2018, August 24, 2021 and September 10, 2021, among the Company, JP Morgan Chase Bank, N.A., as administrative agent and other financial institutions or entities from time to time parties thereto, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated June 27, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022024223/uhs-ex101_8.htm) |
| 10.41\* | [<u>Form of Supplemental Life Insurance Plan and Agreement Part A: Alan B. Miller 1998 Dual Life Insurance Trust (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the "Company"), and Anthony Pantaleoni as Trustee), previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex101.htm) |
| 10.42\* | [<u>Form of Supplemental Life Insurance Plan and Agreement Part B: Alan B. Miller 2002 Trust (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the "Company"), and Anthony Pantaleoni as Trustee), previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex102.htm) |
| 10.43\* | [<u>Universal Health Services, Inc. Termination, Assignment and Release Agreement (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the "Company"), Anthony Pantaleoni as Trustee of the Alan B. Miller 1998 Dual Life Insurance Trust, and Alan B. Miller, Executive), previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex103.htm) |
| 10.44\* | [<u>Universal Health Services, Inc. Termination, Assignment and Release Agreement (effective December 9, 2010, by and between Universal Health Services, Inc., a Delaware corporation (the "Company"), Anthony Pantaleoni as Trustee of the Alan B. Miller 2002 Trust, and Alan B. Miller, Executive), previously filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated December 10, 2010, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312510278167/dex104.htm) |
| 10.45 | [<u>Collateral Agreement, dated as of August 7, 2014, among Universal Health Services, Inc., the subsidiary guarantors party thereto, MUFG Union Bank, N.A., as 2014 Trustee, The Bank of New York Mellon Trust Company, N.A., as 2006</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex104.htm) |

---

------

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| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
|  | [<u>Trustee, and JPMorgan Chase Bank, N.A., as collateral agent, previously filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated August 12, 2014, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000119312514306618/d773872dex104.htm) |
| 10.46 | [<u>Universal Health Services, Inc. 2020 Omnibus Stock and Incentive Plan, previously filed as Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-238880) dated June 2, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020028068/uhs-s8.htm) |
| 10.47 | [<u>Form of Stock Option Award Agreement under the Universal Health Services, Inc. 2020 Omnibus Stock and Incentive Plan, previously filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020038367/uhs-ex105_114.htm) |
| 10.48 | [<u>Form of Restricted Stock Award Agreement under the Universal Health Services, Inc. 2020 Omnibus Stock and Incentive Plan,</u> <u>previously filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020038367/uhs-ex106_115.htm) |
| 10.49 | [<u>Form of Restricted Stock Unit Award Agreement under the Universal Health Services, Inc. 2020 Omnibus Stock and Incentive Plan, previously filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020038367/uhs-ex107_113.htm) |
| 10.50 | [<u>Settlement Agreement among: (i) the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General (OIG-HHS) of the Department of Health and Human Services (HHS); the Defense Health Agency (DHA), acting on behalf of the TRICARE Program; the Office of Personnel Management (OPM), which administers the Federal Employees Health Benefits Program (FEHBP); and the United States Department of Veteran Affairs (VA) (collectively, the United States); (ii) Universal Health Services, Inc. ("UHS, Inc.") and UHS of Delaware, Inc. ("UHS of Delaware, Inc."), acting on behalf of the entities listed on Exhibits A and B, (collectively the "Defendants" or "UHS"); and (iii) various individuals (collectively, the "Relators"), previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 10, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020032190/uhs-ex101_17.htm) |
| 10.51 | [<u>Form of Settlement Agreement between various states and Universal Health Services, Inc. and UHS of Delaware, Inc., acting on behalf of the entities listed on Exhibits A and B, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated July 10, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020032190/uhs-ex102_15.htm) |
| 10.52 | [<u>Corporate Integrity Agreement between the Office of Inspector General of the Department of Health and Human Services and Universal Health Services, Inc. and UHS of Delaware, Inc., previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated July 10, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020032190/uhs-ex103_16.htm)<br>|
| 10.53 | [<u>Stipulation and Agreement of Settlement, dated as of September 15, 2021, by and among (a) lead plaintiffs in the stockholder derivative action captioned In re Universal Health Services, Inc., Derivative Litigation, Case No. 2:17-cv-02187-JHS (including each of its member cases, the "Federal Action"),</u> <u>pending in the United States District Court for the Eastern District of Pennsylvania; (b) plaintiffs in the stockholder derivative litigation captioned Delaware County Employees' Retirement Fund and the Chester County Employees' Retirement System v. Alan B. Miller, et al., C.A. No. 2017-0475-JTL (the "Delaware Action"), brought in the Court of Chancery of the State of Delaware; (c) Dr. Eli Inzlicht-Sprei; (d) defendants in the Federal Action; (e) defendants in the Delaware Action; and (f) nominal defendant in the Federal Action and Delaware Action: Universal Health Services, Inc., by and through their respective undersigned counsel, previously filed as Exhibit 99.3 to the Company's Current Report on Form 8-K dated October 25, 2021, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459021051847/uhs-ex993_9.htm) |
| 10.54\* | [<u>Employment Agreement between Universal Health Services, Inc. and Marc D. Miller dated as of December 23, 2020, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 23, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020058584/uhs-ex101_6.htm) |
| 10.55\* | [<u>Amendment, dated as of March 23, 2022, to Employment Agreement, dated as of December 23, 2020, between Universal Health Services, Inc. and Marc D. Miller, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 23, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022011986/uhs-ex102_7.htm) |
| 10.56\* | [<u>Employment Agreement between Universal Health Services, Inc. and Alan B. Miller dated as of December 23, 2020, previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated December 23, 2020, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020058584/uhs-ex102_7.htm) |

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| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
| 10.57\* | [<u>Amendment, dated as of March 23, 2022, to Employment Agreement, dated as of December 23, 2020, between Universal Health Services, Inc. and Alan B. Miller, previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 23, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022011986/uhs-ex103_8.htm) |
| 10.58 | [<u>Master Lease Document between certain subsidiaries of Universal Health Services, Inc. and Universal Health Realty Income Trust, dated December 31, 2021 previously filed as Exhibit 10.54 to the Company's Annual Report on Form 10-K dated February 24, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022006717/uhs-ex1054_42.htm) |
| 10.59\* | [<u>Universal Health Services, Inc. 2022 Executive Incentive Plan, previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 23, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022011986/uhs-ex101_6.htm) |
| 10.60 | [<u>Universal Health Services, Inc. Amended and Restated 2020 Omnibus Stock and Incentive Plan, previously filed as Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-265495) dated June 9, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022022864/uhs-ex991_6.htm) |
| 10.61 | [<u>Form of Restricted Stock Unit Award Agreement under the Universal Health Services, Inc. 2020 Omnibus Stock and Incentive Plan, previously filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on August 8, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022028437/uhs-ex104_238.htm) |
| 10.62\* | [<u>Form of Restricted Stock Units Award Agreement for Named Executive Officers with Employment Agreements, , previously filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed on May 6, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022018570/uhs-ex105_113.htm) |
| 10.63\* | [<u>Form of Restricted Stock Units Award Agreement for Named Executive Officers without Employment Agreements, previously filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on May 6, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022018570/uhs-ex106_115.htm) |
| 10.64\* | [<u>Form of Restricted Stock Units Award Agreement for Directors, previously filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q filed on May 6, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022018570/uhs-ex107_114.htm) |
| 10.65\* | [<u>Separation Agreement and General Release by and between UHS of Delaware, Inc. and Marvin Pember effective as of December 31, 2022, previously filed as Exhibit 99.1 to the Company's Current Report on Form 8-K/A dated December 7, 2022, is incorporated herein by reference.</u>](https://www.sec.gov/Archives/edgar/data/352915/000156459022039115/uhs-ex991_6.htm) |
| 10.66\* | [<u>Employment Agreement between Universal Health Services, Inc. and Edward Sim dated October 18, 2022.</u>](https://www.sec.gov/Archives/edgar/data/0000352915/000156459020058584/uhs-ex101_6.htm) |
| 11 | [<u>Statement regarding computation of per share earnings is set forth in Note 1 of the Notes to the Consolidated Financial Statements.</u>](#exhibit11) |
| 21 | [<u>Subsidiaries of Registrant.</u>](uhs-ex21.htm) |
| 22.1 | [<u>List of Guarantor Subsidiaries and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant.</u>](uhs-ex22_1.htm) |
| 23.1 | [<u>Consent of Independent Registered Public Accounting Firm-PricewaterhouseCoopers LLP.</u>](uhs-ex23_1.htm) |
| 31.1 | [<u>Certification from the Company's Chief Executive Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934.</u>](uhs-ex31_1.htm) |
| 31.2 | [<u>Certification from the Company's Chief Financial Officer Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934.</u>](uhs-ex31_2.htm) |
| 32.1 | [<u>Certification from the Company's Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](uhs-ex32_1.htm) |
| 32.2 | [<u>Certification from the Company's Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](uhs-ex32_2.htm) |

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| | |
|:---|:---|
| **<u>No.</u>** | **<u>Description</u>** |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

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\* Management contract or compensatory plan or arrangement.

Exhibits, other than those incorporated by reference, have been included in copies of this Annual Report filed with the Securities and Exchange Commission. Stockholders of the Company will be provided with copies of those exhibits upon written request to the Company.

**ITEM 16. Form 10-K Summary**

None.

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**SIGNATURES**

**Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.**

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| | |
|:---|:---|
| UNIVERSAL HEALTH SERVICES, INC. | UNIVERSAL HEALTH SERVICES, INC. |
| By: | /s/ MARC D. MILLER  |
|  | **Marc D. Miller**<br>**Chief Executive Officer**<br>February 27, 2023 |

---

**Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.**

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| | | |
|:---|:---|:---|
| **Signatures** | **Title** | **Date** |
| /s/ ALAN B. MILLER<br>**Alan B. Miller** | Executive Chairman of the Board | February 27, 2023 |
| /s/ MARC D. MILLER<br>**Marc D. Miller** | Director, President and Chief Executive Officer (Principal Executive Officer) | February 27, 2023 |
| /s/ NINA CHEN-LANGENMAYR | Director | February 27, 2023 |
| **Nina Chen-Langenmayr** |  |  |
| /s/ LAWRENCE S. GIBBS | Director | February 27, 2023 |
| **Lawrence S. Gibbs** |  |  |
| /s/ EILEEN C. MCDONNELL<br>**Eileen C. McDonnell** | Director | February 27, 2023 |
| /s/ WARREN J. NIMETZ<br>**Warren J. Nimetz** | Director | February 27, 2023 |
| /s/ MARIA SINGER<br>**Maria Singer**  | Director | February 27, 2023 |
| /s/ ELLIOTT J. SUSSMAN M.D.<br>**Elliot J. Sussman M.D.** | Director | February 27, 2023 |
| /s/ STEVE FILTON<br>**Steve Filton** | &nbsp;&nbsp;&nbsp;Executive Vice President, Chief Financial Officer and Secretary<br>(Principal Financial and Accounting Officer) | February 27, 2023 |

---

------

**UNIVERSAL HEALTH SERVICES, INC.**

**INDEX TO FINANCIAL STATEMENTS**

**AND FINANCIAL STATEMENT SCHEDULE**

---

| | |
|:---|:---|
| Consolidated Financial Statements: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Report of Independent Registered Public Accounting Firm</u>](#reportofindependentregisteredpublic)<u>(</u>PCAOB ID: 238) | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Income for December 31, 2022, 2021, and 2020</u>](#consolidated_statements_income) | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Comprehensive Income for December 31, 2022, 2021, and 2020</u>](#consolidated_statements_comprehensive_in) | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Balance Sheets as of December 31, 2022 and 2021</u>](#consolidated_balance_sheets) | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Changes in Equity for December 31, 2022, 2021 and 2020</u>](#consolidated_statements_changes_in_equit) | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Consolidated Statements of Cash Flows for December 31, 2022, 2021 and 2020</u>](#consolidated_statements_cash_flows) | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | 98 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[<u>Supplemental Financial Statement Schedule II: Valuation and Qualifying Accounts as of and for December 31, 2022, 2021, and 2020</u>](#scheduleii_valuation) | 128 |

---

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Stockholders of Universal Health Services, Inc.

**Opinions on the Financial Statements and Internal Control over Financial Reporting**

We have audited the accompanying consolidated balance sheets of Universal Health Services, Inc. and its subsidiaries (the "Company") as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

**Basis for Opinions**

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

**Definition and Limitations of Internal Control over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

**Critical Audit Matters**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are

------

material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of accounts receivable

As described in Notes 1, 10 and 12 to the consolidated financial statements, the Company reports net patient service revenue at the estimated net realizable amounts from patients and third-party payers and others for services rendered. The Company has agreements with third-party payers that provide for payments to the Company at amounts different from established rates. Payment arrangements include rates per discharge, reimbursed costs, discounted charges and per diem payments. Estimates of contractual allowances, which represent explicit price concessions, under managed care plans are based upon the payment terms specified in the related contractual agreements. Management estimates Medicare and Medicaid revenues using the latest available financial information, patient utilization data, government provided data and in accordance with applicable Medicare and Medicaid payment rules and regulations. Management monitors the historical collection rates, as well as changes in applicable laws, rules and regulations and contract terms, to assure that provisions are made using the most accurate information available. In addition to explicit price concessions, management estimates revenue adjustments for implicit price concessions based on general factors such as payer mix, the aging of the receivables and historical collection experience. Management routinely reviews accounts receivable balances in conjunction with these factors and other economic conditions which might ultimately affect the collectability of the patient accounts and make adjustments to the allowances as warranted. As of December 31, 2022, the net accounts receivable balance was $2.0 billion.

The principal considerations for our determination that performing procedures relating to the valuation of accounts receivable is a critical audit matter are the significant judgment by management in estimating net accounts receivable, specifically as it relates to developing the estimate for explicit and implicit price concessions, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence obtained related to the estimation of price concessions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of accounts receivable, including controls over management's valuation approach, assumptions and data used to estimate the explicit and implicit price concessions. These procedures also included, among others, (i) testing management's process for developing the estimate for price concessions, as well as the relevance of the historical billing and collection data as an input to the valuation approach; (ii) testing the accuracy of a sample of revenue transactions and a sample of cash collections from the historical billing data and historical collection data used in management's estimation of price concessions; (iii) evaluating the historical accuracy of management's process for developing the estimate of the amount which will ultimately be collected by comparing actual cash collections to the previously recorded net accounts receivable balance; and (iv) developing an independent expectation of the net accounts receivable balance. Developing an independent expectation involved calculating the percentage of cash collections as compared to the recorded net accounts receivable balance as of the end of the prior year, applying those calculated percentages to the recorded accounts receivable balance as of December 31, 2022, and comparing the calculated balance to management's estimate of the net accounts receivable balance.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

February 27, 2023

We have served as the Company's auditor since 2007.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF INCOME**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** |
|  | (in thousands, except per share data) | (in thousands, except per share data) | (in thousands, except per share data) |
| Net revenues | $13399370 | $12642117 | $11558897 |
| Operating charges: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries, wages and benefits | 6762256 | 6163944 | 5613097 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other operating expenses | 3445733 | 3035869 | 2672762 |
| &nbsp;&nbsp;&nbsp;&nbsp;Supplies expense | 1474339 | 1427134 | 1288132 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 581861 | 533213 | 510493 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease and rental expense | 131626 | 118863 | 116059 |
|  | 12395815 | 11279023 | 10200543 |
| Income from operations | 1003555 | 1363094 | 1358354 |
| Interest expense, net | 126889 | 83672 | 106285 |
| Other (income) expense, net | 10406 | (13891) | (14) |
| Income before income taxes | 866260 | 1293313 | 1252083 |
| Provision for income taxes | 209278 | 305681 | 299293 |
| Net income | 656982 | 987632 | 952790 |
| Less: Net (loss) income attributable to noncontrolling interests | (18627) | (3958) | 8837 |
| Net income attributable to UHS | $675609 | $991590 | $943953 |
| Basic earnings per share attributable to UHS | $9.23 | $11.99 | $11.06 |
| Diluted earnings per share attributable to UHS | $9.14 | $11.82 | $10.99 |
| Weighted average number of common shares—basic | 73118 | 82519 | 85061 |
| Add: Other share equivalents | 714 | 1173 | 526 |
| Weighted average number of common shares and equivalents—diluted | 73832 | 83692 | 85587 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** |
|  | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** |
| Net income | $656982 | $987632 | $952790 |
| Other comprehensive income (loss): |  |  |  |
| &nbsp;&nbsp;&nbsp;Minimum pension liability | (2869) | 1427 | 4428 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (37310) | (20743) | 13619 |
| Other comprehensive income before tax | (40179) | (19316) | 18047 |
| Income tax expense related to items of other<br> comprehensive income | (220) | (1487) | 1820 |
| Total other comprehensive income (loss), net of tax | (39959) | (17829) | 16227 |
| Comprehensive income | 617023 | 969803 | 969017 |
| Less: Comprehensive income attributable to noncontrolling<br> interests | (18627) | (3958) | 8837 |
| Comprehensive income attributable to UHS | $635650 | $973761 | $960180 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** |
| **Assets** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $102818 | $115301 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 2017722 | 1746635 |
| &nbsp;&nbsp;&nbsp;&nbsp;Supplies | 218517 | 206839 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 198283 | 194781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 2537340 | 2263556 |
| **Property and Equipment** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Land | 727313 | 732717 |
| &nbsp;&nbsp;&nbsp;&nbsp;Buildings and improvements | 6756228 | 6509629 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment | 2936992 | 2759934 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property under finance lease | 102494 | 102940 |
|  | 10523027 | 10105220 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation | (5167394) | (4896427) |
|  | 5355633 | 5208793 |
| &nbsp;&nbsp;&nbsp;&nbsp;Construction-in-progress | 562825 | 665482 |
|  | 5918458 | 5874275 |
| **Other assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 3909456 | 3962624 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 68397 | 45707 |
| &nbsp;&nbsp;&nbsp;&nbsp;Right of use assets-operating leases | 454650 | 367477 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred charges | 6264 | 6525 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 599623 | 573379 |
|  | 5038390 | 4955712 |
| **Total Assets** | $13494188 | $13093543 |
| **Liabilities and Stockholders' Equity** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term debt | $81447 | $48409 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 636601 | 658900 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation and related benefits | 470858 | 466353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest | 16243 | 14408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 110889 | 160793 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 67776 | 64484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Medicare accelerated payments and deferred CARES Act and other grants | 2397 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 523600 | 560036 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current federal and state income taxes | 4608 | 10720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 1914419 | 1984109 |
| Other noncurrent liabilities | 487669 | 464759 |
| Operating lease liabilities noncurrent | 395522 | 304624 |
| Long-term debt | 4726533 | 4141879 |
| Commitments and contingencies (Note 8) |  |  |
| Redeemable noncontrolling interest | 4695 | 5119 |
| **Equity:** |  |  |
| &nbsp;&nbsp;&nbsp;Class A Common Stock, voting, $.01 par value; authorized 12,000,000 shares: issued<br> and outstanding 6,577,100 shares in 2022 and 6,577,100 shares in 2021 | 66 | 66 |
| &nbsp;&nbsp;&nbsp;Class B Common Stock, limited voting, $.01 par value; authorized 150,000,000<br> shares: issued and outstanding 63,375,992 shares in 2022 and 69,694,091 shares in 2021 | 637 | 698 |
| &nbsp;&nbsp;&nbsp;Class C Common Stock, voting, $.01 par value; authorized 1,200,000 shares: issued<br> and outstanding 661,688 shares in 2022 and 661,688 shares in 2021 | 7 | 7 |
| &nbsp;&nbsp;&nbsp;Class D Common Stock, limited voting, $.01 par value; authorized 5,000,000 shares:<br> issued and outstanding 14,170 shares in 2022 and 17,956 shares in 2021 | 0 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cumulative dividends | (604127) | (545487) |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 6533667 | 6604089 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | (9668) | 30291 |
| Universal Health Services, Inc. common stockholders' equity | 5920582 | 6089664 |
| Noncontrolling interest | 44768 | 103389 |
| Total Equity | 5965350 | 6193053 |
| **Total Liabilities and Stockholders' Equity** | $13494188 | $13093543 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**For the Years Ended December 31, 2022, 2021 and 2020**

**(in thousands)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  |  | **Accumulated** | **UHS** |  |  |
|  | **Redeemable** |  |  |  |  |  |  | **Other** | **Common** |  |  |
|  | **Noncontrolling** | **Class A** | **Class B** | **Class C** | **Class D** | **Cumulative** | **Retained** | **Comprehensive** | **Stockholders'** | **Noncontrolling** |  |
|  | **Interest** | **Common** | **Common** | **Common** | **Common** | **Dividends** | **Earnings** | **Income (Loss)** | **Equity** | **Interest** | **Total** |
| Balance, January 1, 2020 | $4333 | $66 | $794 | $7 | $0 | $(462159) | $5933504 | $31893 | $5504105 | $74766 | $5578871 |
| Common Stock |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issued/(converted) including tax benefits from<br> exercise of stock options |  |  | 4 |  |  |  | 12754 |  | 12758 |  | 12758 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchased |  |  | (20) |  |  |  | (206699) |  | (206719) |  | (206719) |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted share-based compensation expense |  |  |  |  |  |  | 9505 |  | 9505 |  | 9505 |
| Dividends paid |  |  |  |  |  | (17344) |  |  | (17344) |  | (17344) |
| Stock option expense |  |  |  |  |  |  | 54661 |  | 54661 |  | 54661 |
| Distributions to noncontrolling interests | (500) |  |  |  |  |  |  |  |  | (19305) | (19305) |
| Purchase of ownership interests by minority members |  |  |  |  |  |  |  |  |  | 17959 | 17959 |
| Other |  |  |  |  |  |  |  |  |  | 3300 | 3300 |
| Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income to UHS / noncontrolling interests | 736 |  |  |  |  |  | 943953 |  | 943953 | 8101 | 952054 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments (net of income tax effect of $749) |  |  |  |  |  |  |  | 12870 | 12870 |  | 12870 |
| &nbsp;&nbsp;&nbsp;Minimum pension liability (net of income tax effect of $1,071) |  |  |  |  |  |  |  | 3357 | 3357 |  | 3357 |
| Subtotal - comprehensive income | 736 |  |  |  |  |  | 943953 | 16227 | 960180 | 8101 | 968281 |
| Balance, December 31, 2020 | $4569 | $66 | $778 | $7 | $— | $(479503) | $6747678 | $48120 | $6317146 | $84821 | $6401967 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)**

**For the Years Ended December 31, 2022, 2021 and 2020**

**(in thousands)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  |  | **Accumulated** | **UHS** |  |  |
|  | **Redeemable** |  |  |  |  |  |  | **Other** | **Common** |  |  |
|  | **Noncontrolling** | **Class A** | **Class B** | **Class C** | **Class D** | **Cumulative** | **Retained** | **Comprehensive** | **Stockholders'** | **Noncontrolling** |  |
|  | **Interest** | **Common** | **Common** | **Common** | **Common** | **Dividends** | **Earnings** | **Income (Loss)** | **Equity** | **Interest** | **Total** |
| Common Stock |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issued/(converted) including tax benefits from<br> exercise of stock options |  |  | 5 |  |  |  | 13369 |  | 13374 |  | 13374 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchased |  |  | (85) |  |  |  | (1220790) |  | (1220875) |  | (1220875) |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted share-based compensation expense |  |  |  |  |  |  | 12936 |  | 12936 |  | 12936 |
| Dividends paid |  |  |  |  |  | (65984) |  |  | (65984) |  | (65984) |
| Stock option expense |  |  |  |  |  |  | 59306 |  | 59306 |  | 59306 |
| Distributions to noncontrolling interests | (202) |  |  |  |  |  |  |  |  | (6878) | (6878) |
| Purchase of ownership interests by minority members |  |  |  |  |  |  |  |  |  | 13909 | 13909 |
| Other |  |  |  |  |  |  |  |  |  | 16247 | 16247 |
| Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income to UHS / noncontrolling interests | 752 |  |  |  |  |  | 991590 |  | 991590 | (4710) | 986880 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments (net of income tax effect of $1,829) |  |  |  |  |  |  |  | (18914) | (18914) |  | (18914) |
| &nbsp;&nbsp;&nbsp;Minimum pension liability (net of income tax effect of $342) |  |  |  |  |  |  |  | 1085 | 1085 |  | 1085 |
| Subtotal - comprehensive income | 752 |  |  |  |  |  | 991590 | (17829) | 973761 | (4710) | 969051 |
| Balance, December 31, 2021 | $5119 | $66 | $698 | $7 | $— | $(545487) | $6604089 | $30291 | $6089664 | $103389 | $6193053 |

---

The accompanying notes are an integral part of these consolidated financial statements.

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**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)**

**For the Years Ended December 31, 2022, 2021 and 2020**

**(in thousands)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  |  | **Accumulated** | **UHS** |  |  |
|  | **Redeemable** |  |  |  |  |  |  | **Other** | **Common** |  |  |
|  | **Noncontrolling** | **Class A** | **Class B** | **Class C** | **Class D** | **Cumulative** | **Retained** | **Comprehensive** | **Stockholders'** | **Noncontrolling** |  |
|  | **Interest** | **Common** | **Common** | **Common** | **Common** | **Dividends** | **Earnings** | **Income (Loss)** | **Equity** | **Interest** | **Total** |
| Common Stock |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issued/(converted) including tax benefits from<br> exercise of stock options |  |  | 11 |  |  |  | 14196 |  | 14207 |  | 14207 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchased |  |  | (72) |  |  |  | (832846) |  | (832918) |  | (832918) |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted share-based compensation expense |  |  |  |  |  |  | 17649 |  | 17649 |  | 17649 |
| Dividends paid |  |  |  |  |  | (58640) |  |  | (58640) |  | (58640) |
| Stock option expense |  |  |  |  |  |  | 66244 |  | 66244 |  | 66244 |
| Acquisition of noncontrolling interest in majority owned business |  |  |  |  |  |  | (11274) |  | (11274) | (37608) | (48882) |
| Distributions to noncontrolling interests | (650) |  |  |  |  |  |  |  |  | (4741) | (4741) |
| Purchase of ownership interests by minority members |  |  |  |  |  |  |  |  |  | 2581 | 2581 |
| Other |  |  |  |  |  |  |  |  |  |  |  |
| Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income to UHS / noncontrolling interests | 226 |  |  |  |  |  | 675609 |  | 675609 | (18853) | 656756 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments (net of income tax effect of $469) |  |  |  |  |  |  |  | (37779) | (37779) |  | (37779) |
| &nbsp;&nbsp;&nbsp;Minimum pension liability (net of income tax effect of $689) |  |  |  |  |  |  |  | (2180) | (2180) |  | (2180) |
| Subtotal - comprehensive income | 226 |  |  |  |  |  | 675609 | (39959) | 635650 | (18853) | 616797 |
| Balance, December 31, 2022 | $4695 | $66 | $637 | $7 | $— | $(604127) | $6533667 | $(9668) | $5920582 | $44768 | $5965350 |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** |
|  | (Amounts in thousands) | (Amounts in thousands) | (Amounts in thousands) |
| **Cash Flows from Operating Activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | $656982 | $987632 | $952790 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating<br> activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation & amortization | 581861 | 533213 | 510493 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on sales of assets and businesses | 584 | (5170) | 1957 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 85378 | 73686 | 65837 |
| &nbsp;&nbsp;&nbsp;&nbsp;Costs related to extinguishment of debt | 0 | 16831 | 1365 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for asset impairment | 57550 | 14391 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in assets & liabilities, net of effects from acquisitions and<br> dispositions: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (258338) | (8873) | (145901) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest | 1835 | 4950 | (10028) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued and deferred income taxes | (29510) | (54030) | 9593 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other working capital accounts | (146692) | 46526 | 124545 |
| &nbsp;&nbsp;&nbsp;&nbsp;Medicare accelerated payments and deferred CARES Act and other grants | 2391 | (698762) | 698768 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets and deferred charges | 19918 | (39337) | (4555) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (8676) | (82075) | 109167 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued insurance expense, net of commercial premiums paid | 174723 | 186215 | 159223 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments made in settlement of self-insurance claims | (141983) | (91502) | (113085) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 996023 | 883695 | 2360169 |
| **Cash Flows from Investing Activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment additions | (734001) | (855659) | (731307) |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of businesses and property | (20309) | (105415) | (52009) |
| &nbsp;&nbsp;&nbsp;&nbsp;Inflows (outflows) from foreign exchange contracts that hedge our net U.K. investment | 94913 | 1357 | (21740) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds received from sales of assets and businesses | 12001 | 25425 | 8168 |
| &nbsp;&nbsp;&nbsp;&nbsp;Costs incurred for purchase and implementation of information technology applications | 0 | 19726 | (2902) |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease (increase) in capital reserves of commercial insurance subsidiary | 100 | 100 | (100) |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment in, and advances to, joint ventures and other | 0 | 0 | (2672) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (647296) | (914466) | (802562) |
| **Cash Flows from Financing Activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayments of long-term debt | (89367) | (3037868) | (962567) |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional borrowings | 705321 | 3254974 | 801599 |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing costs | (3164) | (18770) | (10300) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of common shares | (832918) | (1220875) | (206719) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends paid | (58449) | (65896) | (17344) |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock | 14068 | 13372 | 12318 |
| &nbsp;&nbsp;&nbsp;&nbsp;Profit distributions to noncontrolling interests | (5391) | (7080) | (19805) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase (sale) of ownership interests by (from) minority member | (48500) | 13193 | 17959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (318400) | (1068950) | (384859) |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of exchange rate changes on cash and cash equivalents | (8424) | (499) | 739 |
| Increase (decrease) in cash, cash equivalents and restricted cash | 21903 | (1100220) | 1173487 |
| Cash, cash equivalents and restricted cash, beginning of period | 178934 | 1279154 | 105667 |
| Cash, cash equivalents and restricted cash, end of period | $200837 | $178934 | $1279154 |
| **Supplemental Disclosures of Cash Flow Information:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest paid | $120136 | $75607 | $112598 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid, net of refunds | $250759 | $362978 | $286247 |
| &nbsp;&nbsp;&nbsp;&nbsp;Noncash purchases of property and equipment | $72064 | $167234 | $74854 |

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The accompanying notes are an integral part of these consolidated financial statements.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1) BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Services provided by our hospitals, all of which are operated by subsidiaries of ours, include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. We, through our subsidiaries, provide capital resources as well as a variety of management services to our facilities, including central purchasing, information services, finance and control systems, facilities planning, physician recruitment services, administrative personnel management, marketing and public relations.

The more significant accounting policies follow:

**Principles of Consolidation:** The consolidated financial statements include the accounts of our majority-owned subsidiaries and partnerships controlled by us or our subsidiaries as the managing general partner. All intercompany accounts and transactions have been eliminated.

**Revenue Recognition:** We report net patient service revenue at the estimated net realizable amounts from patients and third-party payers and others for services rendered. We have agreements with third-party payers that provide for payments to us at amounts different from our established rates. Payment arrangements include rates per discharge, reimbursed costs, discounted charges and per diem payments. Estimates of contractual allowances under managed care plans, which represent explicit price concessions, are based upon the payment terms specified in the related contractual agreements. We closely monitor our historical collection rates, as well as changes in applicable laws, rules and regulations and contract terms, to assure that provisions are made using the most accurate information available. However, due to the complexities involved in these estimations, actual payments from payers may be different from the amounts we estimate and record.

See Note 10-Revenue Recognition, for additional disclosure related to our revenues including a disaggregation of our consolidated net revenues by major source for each of the periods presented herein.

We estimate our Medicare and Medicaid revenues using the latest available financial information, patient utilization data, government provided data and in accordance with applicable Medicare and Medicaid payment rules and regulations. The laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation and as a result, there is at least a reasonable possibility that recorded estimates will change by material amounts in the near term. Certain types of payments by the Medicare program and state Medicaid programs (e.g. Medicare Disproportionate Share Hospital, Medicare Allowable Bad Debts and Inpatient Psychiatric Services) are subject to retroactive adjustment in future periods as a result of administrative review and audit and our estimates may vary from the final settlements. Such amounts are included in accounts receivable, net, on our Consolidated Balance Sheets. The funding of both federal Medicare and state Medicaid programs are subject to legislative and regulatory changes. As such, we cannot provide any assurance that future legislation and regulations, if enacted, will not have a material impact on our future Medicare and Medicaid reimbursements. Adjustments related to the final settlement of these retrospectively determined amounts did not materially impact our results in 2022, 2021 or 2020. If it were to occur, each 1% adjustment to our estimated net Medicare revenues that are subject to retrospective review and settlement as of December 31, 2022, would change our after-tax net income by approximately $1 million.

**Charity Care, Uninsured Discounts and Other Adjustments to Revenue:** Collection of receivables from third-party payers and patients is our primary source of cash and is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill which is the patient's responsibility, primarily co-payments and deductibles. We estimate our revenue adjustments for implicit price concessions based on general factors such as payer mix, the aging of the receivables and historical collection experience. We routinely review accounts receivable balances in conjunction with these factors and other economic conditions which might ultimately affect the collectability of the patient accounts and make adjustments to our allowances as warranted. At our acute care hospitals, third party liability accounts are pursued until all payment and adjustments are posted to the patient account. For those accounts with a patient balance after third party liability is finalized or accounts for uninsured patients, the patient receives statements and collection letters.

Historically, a significant portion of the patients treated throughout our portfolio of acute care hospitals are uninsured patients which, in part, has resulted from patients who are employed but do not have health insurance or who have policies with relatively high deductibles. Patients treated at our hospitals for non-elective services, who have gross income of various amounts, dependent upon the state, ranging from 200% to 400% of the federal poverty guidelines, are deemed eligible for charity care. The federal poverty guidelines are established by the federal government and are based on income and family size. Because we do not pursue collection of amounts that qualify as charity care, the transaction price is fully adjusted and there is no impact in our net revenues or in our accounts receivable, net.

A portion of the accounts receivable at our acute care facilities are comprised of Medicaid accounts that are pending approval from third-party payers but we also have smaller amounts due from other miscellaneous payers such as county indigent programs in certain states. Our patient registration process includes an interview of the patient or the patient's responsible party at the time of registration. At that time, an insurance eligibility determination is made and an insurance plan code is assigned. There are various

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pre-established insurance profiles in our patient accounting system which determine the expected insurance reimbursement for each patient based on the insurance plan code assigned and the services rendered. Certain patients may be classified as Medicaid pending at registration based upon a screening evaluation if we are unable to definitively determine if they are currently Medicaid eligible. When a patient is registered as Medicaid eligible or Medicaid pending, our patient accounting system records net revenues for services provided to that patient based upon the established Medicaid reimbursement rates, subject to the ultimate disposition of the patient's Medicaid eligibility. When the patient's ultimate eligibility is determined, reclassifications may occur which impacts net revenues in future periods. Although the patient's ultimate eligibility determination may result in adjustments to net revenues, these adjustments do not have a material impact on our results of operations in 2022, 2021 or 2020 since our facilities make estimates at each financial reporting period to adjust revenue based on historical collections.

We also provide discounts to uninsured patients (included in "uninsured discounts" amounts below) who do not qualify for Medicaid or charity care. Because we do not pursue collection of amounts classified as uninsured discounts, the transaction price is fully adjusted and there is no impact in our net revenues or in our net accounts receivable. In implementing the discount policy, we first attempt to qualify uninsured patients for governmental programs, charity care or any other discount program. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

Uncompensated care (charity care and uninsured discounts):

The following table shows the amounts recorded at our acute care hospitals for charity care and uninsured discounts, based on charges at established rates, for the years ended December 31, 2022, 2021 and 2020:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) | (dollar amounts in thousands) |
|  | **2022** | **2022** | **2021** | **2021** | **2020** | **2020** |
|  | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| Charity care | $786962 | 35% | $661965 | 33% | $622668 | 28% |
| Uninsured discounts | 1474933 | 65% | 1336319 | 67% | 1578470 | 72% |
| Total uncompensated care | $2261895 | 100% | $1998284 | 100% | $2201138 | 100% |

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The estimated cost of providing uncompensated care:

The estimated cost of providing uncompensated care, as reflected below, were based on a calculation which multiplied the percentage of operating expenses for our acute care hospitals to gross charges for those hospitals by the above-mentioned total uncompensated care amounts. The percentage of cost to gross charges is calculated based on the total operating expenses for our acute care facilities divided by gross patient service revenue for those facilities. An increase in the level of uninsured patients to our facilities and the resulting adverse trends in the adjustments to net revenues and uncompensated care provided could have a material unfavorable impact on our future operating results.

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| | | | |
|:---|:---|:---|:---|
|  | (amounts in thousands) | (amounts in thousands) | (amounts in thousands) |
|  | **2022** | **2021** | **2020** |
| Estimated cost of providing charity care | $85434 | $72095 | $73690 |
| Estimated cost of providing uninsured discounts related care | 160122 | 145538 | 186804 |
| Estimated cost of providing uncompensated care | $245556 | $217633 | $260494 |

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**Concentration of Revenues:** Our eight acute care hospitals and four free-standing emergency departments in the Las Vegas, Nevada, market contributed, on a combined basis, 15% in 2022, 16% in 2021 and 16% in 2020 of our consolidated net revenues.

**Cash, Cash Equivalents and Restricted Cash:** We consider all highly liquid investments purchased with maturities of three months or less to be cash equivalents.

Cash, cash equivalents, and restricted cash as reported in the consolidated statements of cash flows are presented separately on our consolidated balance sheets as follow:

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| | | | |
|:---|:---|:---|:---|
|  | (amounts in thousands) | (amounts in thousands) | (amounts in thousands) |
|  | **2022** | **2021** | **2020** |
| Cash and cash equivalents | $102818 | $115301 | $1224490 |
| Restricted cash (a) | 98019 | 63633 | 54664 |
| Total cash, cash equivalents and restricted cash | $200837 | $178934 | $1279154 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Restricted cash is included in other assets on the accompanying consolidated balance sheet and consists of statutorily required capital reserves related to our commercial insurance subsidiary.<br>The fair value of our restricted cash was computed based upon quotes received from financial institutions. We consider these to be "level 1" in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with financial securities.<br>

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**Property and Equipment:** Property and equipment are stated at cost. Expenditures for renewals and improvements are charged to the property accounts. Replacements, maintenance and repairs which do not improve or extend the life of the respective asset are expensed as incurred. We remove the cost and the related accumulated depreciation from the accounts for assets sold or retired and the resulting gains or losses are included in the results of operations. Construction-in-progress includes both construction projects and equipment not yet placed into service.

Our financial statements for the year ended December 31, 2022, include a pre-tax provision for asset impairment of approximately $58 million, which is included in other operating expenses on the accompanying consolidated statements of income, to write-down the asset value of Desert Springs Hospital Medical Center, a 282-bed acute care hospital located in Las Vegas, Nevada. In early 2023, as a result of various competitive pressures and operational challenges experienced in the market, which had a significant unfavorable impact on the hospital's results of operations during the past year, as well as physical plant constraints and limitations resulting from the advanced age of the facility (which opened in 1971), we announced plans to discontinue all inpatient operations by March of 2023. During the next two years, we plan to continue providing emergency department services within a portion of the existing facility while we construct a new free-standing emergency department on the hospital's campus. The provision for asset impairment reduced the asset values of the facility's real estate and equipment to their estimated fair values.

We capitalized interest during the construction period of major construction projects and during the development and implementation of information technology applications amounting to $8.6 million during 2022, $4.4 million during 2021 and $4.3 million during 2020.

Depreciation is provided on the straight-line method over the estimated useful lives of buildings and improvements (twenty to forty years) and equipment (three to fifteen years). Depreciation expense was $544.0 million during 2022 $501.6 million during 2021 and $478.8 million during 2020.

**Long-Lived Assets:** We review our long-lived assets, including intangible assets, for impairment whenever events or circumstances indicate that the carrying value of these assets may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of our asset based on our estimate of its undiscounted future cash flows. If the analysis indicates that the carrying value is not recoverable from future cash flows, the asset is written down to its estimated fair value and an impairment loss is recognized. Fair values are determined based on estimated future cash flows using appropriate discount rates.

**Goodwill:** Goodwill is reviewed for impairment at the reporting unit level on an annual basis or sooner if the indicators of impairment arise. Our judgments regarding the existence of impairment indicators are based on market conditions and operational performance of each reporting unit. We have designated October 1<sup>st</sup> as our annual impairment assessment date and performed quantitative impairment assessments as of October 1, 2022 which indicated no impairment of goodwill. There were also no goodwill impairments during 2021 or 2020. Future changes in the estimates used to conduct the impairment reviews, including profitability and market value projections, could indicate impairment in future periods potentially resulting in a write-off of a portion or all of our goodwill.

Changes in the carrying amount of goodwill for the two years ended December 31, 2022 were as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Acute Care<br>Services** | **Behavioral<br>Health<br>Services** | **Total<br>Consolidated** |
| Balance, January 1, 2021 | $447021 | $3435694 | $3882715 |
| Goodwill acquired during the period | 55406 | 0 | 55406 |
| Goodwill divested during the period | 0 | 0 | 0 |
| Adjustments to goodwill (a) | 13509 | 10994 | 24503 |
| Balance, December 31, 2021 | 515936 | 3446688 | 3962624 |
| Goodwill acquired during the period | 0 | 0 | 0 |
| Goodwill divested during the period | 0 | 0 | 0 |
| Adjustments to goodwill (b) | 690 | (53858) | (53168) |
| Balance, December 31, 2022 | $516626 | $3392830 | $3909456 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Adjustments to goodwill during 2021 consist of the following: $13.5 million in Acute Care Services consists primarily of a measurement period adjustment to the preliminary purchase price allocation related to a 2020 acquisition; and the $11.0 million in Behavioral Health Services consists of $16.3 million recorded in connection with a third party minority ownership interest in a majority owned joint venture that constructed and owns a recently opened behavioral health facility, partially offset by a $5.3 million decrease related to foreign currency translation adjustments.

(b)The changes in the Behavioral Health Services' goodwill consists primarily of foreign currency translation adjustments.

**Other Assets and Intangible Assets:** Other assets consist primarily of amounts related to: (i) intangible assets acquired in connection with our acquisitions of Cambian Group, PLC's adult services' division during 2015, Ascend Health Corporation during 2012 and Psychiatric Solutions, Inc. during 2010; (ii) prepaid fees for various software and other applications used by our hospitals; (iii) costs incurred in connection with the purchase and implementation of an electronic health records application for each of our

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acute care facilities; (iv) statutorily required capital reserves related to our commercial insurance subsidiary ($116 million and $82 million as of December 31, 2022 and 2021, respectively); (v) deposits; (vi) investments in various businesses, including Universal Health Realty Income Trust ($8 million and $9 million as of as of December 31, 2022 and 2021, respectively) and Premier, Inc. ($78 million and $92 million as of December 31, 2022 and 2021, respectively); (vii) the invested assets related to a deferred compensation plan that is held by an independent trustee in a rabbi-trust and that has a related payable included in other noncurrent liabilities, and; (viii) other miscellaneous assets.

Intangible assets are reviewed for impairment on an annual basis or more often if indicators of impairment arise. Our judgments regarding the existence of impairment indicators are based on market conditions and operational performance of each asset. We have designated October 1<sup>st</sup> as our annual impairment assessment date and performed impairment assessments as of October 1, 2022. In connection with the discontinuation of a certain module of a new clinical/financial information technology application under development, our financial results for the year ended December 31, 2021 include a pre-tax provision for asset impairment of approximately $14 million to write-off the applicable portion of the capitalized costs incurred and is included in other operating expenses on the accompanying consolidated statement of income.

The following table shows the amounts recorded as net intangible assets for the years ended December 31, 2022 and 2021:

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| | | |
|:---|:---|:---|
|  | (amounts in thousands) | (amounts in thousands) |
|  | **2022** | **2021** |
| Medicare licenses | $57226 | $57226 |
| Certificates of need | 7989 | 8239 |
| Contract relationships and other (net of $55,353 and $54,134 of accumulated amortization for 2022 and 2021, respectively) | 12887 | 15576 |
| Net Intangible Assets | $78102 | $81041 |

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**Supplies:** Supplies, which consist primarily of medical supplies, are stated at the lower of cost (first-in, first-out basis) or market.

**Self-Insured/Other Insurance Risks:** We provide for self-insured risks, primarily general and professional liability claims, workers' compensation claims and healthcare and dental claims. Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimate of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. All relevant information, including our own historical experience is used in estimating the expected amount of claims. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Our estimated self-insured reserves are reviewed and changed, if necessary, at each reporting date and changes are recognized currently as additional expense or as a reduction of expense.

In addition, we also: (i) own commercial health insurers headquartered in Nevada and Puerto Rico, and; (ii) maintain self-insured employee benefits programs for employee healthcare and dental claims. The ultimate costs related to these programs/operations include expenses for claims incurred and paid in addition to an accrual for the estimated expenses incurred in connection with claims incurred but not yet reported. Given our significant insurance-related exposure, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations.

See Note 8 - Commitments and Contingencies for additional disclosure related to our self-insured general and professional liability and workers' compensation liability.

**Income Taxes:** Deferred tax assets and liabilities are recognized for the amount of taxes payable or deductible in future years as a result of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. We believe that future income will enable us to realize our deferred tax assets net of recorded valuation allowances relating to state and foreign net operating loss carry-forwards, tax credits, and interest deduction limitations.

We operate in multiple jurisdictions with varying tax laws. We are subject to audits by any of these taxing authorities. Our tax returns have been examined by the Internal Revenue Service ("IRS") through the year ended December 31, 2006. We believe that adequate accruals have been provided for federal, foreign and state taxes.

See Note 6-Income Taxes for additional disclosure.

**Other Noncurrent Liabilities:** Other noncurrent liabilities include the long-term portion of our professional and general liability, workers' compensation reserves, pension and deferred compensation liabilities, and liabilities incurred in connection with split-dollar life insurance agreements on the lives of our executive chairman of the board and his wife.

**Redeemable Noncontrolling Interests and Noncontrolling Interest:** As of December 31, 2022, outside owners held noncontrolling, minority ownership interests of: (i) approximately 7% in an acute care facility located in Texas; (ii) 49%, 20%, 30%, 20%, 25%, 48% and 26% in seven behavioral health care facilities located in Arizona, Pennsylvania, Ohio, Washington, Missouri,

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Iowa and Michigan, respectively, and; (iii) approximately 5% in an acute care facility located in Nevada. The noncontrolling interest and redeemable noncontrolling interest balances of $45 million and $5 million, respectively, as of December 31, 2022, consist primarily of the third-party ownership interests in these hospitals.

In August, 2022, we purchased the 20% noncontrolling ownership interest in a hospital majority owned by us, located in Washington D.C. for $51 million. We now have 100% ownership interest in the hospital. The noncontrolling interest balance was reclassified to retained earnings and is included in common stockholders' equity in the accompanying consolidated balance sheet and in retained earnings in the accompanying consolidated statements of changes in equity.

In connection with the two behavioral health care facilities located in Pennsylvania and Ohio, the minority ownership interests of which are reflected as redeemable noncontrolling interests on our consolidated balance sheet, the outside owners have "put options" to put their entire ownership interest to us at any time. If exercised, the put option requires us to purchase the minority member's interest at fair market value. Accordingly, the amounts recorded as redeemable noncontrolling interests on our consolidated balance sheet reflects the estimated fair market value of these ownership interests.

**Accumulated Other Comprehensive Income:** The accumulated other comprehensive income ("AOCI") component of stockholders' equity includes: net unrealized gains and losses on effective cash flow hedges, foreign currency translation adjustments and the net minimum pension liability of a non-contributory defined benefit pension plan which covers employees at one of our subsidiaries. See Note 11 - Pension Plan for additional disclosure regarding the defined benefit pension plan.

The amounts recognized in AOCI for the two years ended December 31, 2022 were as follows (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Net Unrealized<br>Gains (Losses) on<br>Effective Cash<br>Flow Hedges** | **Foreign<br>Currency<br>Translation<br>Adjustment** | **Minimum<br>Pension<br>Liability** | **Total<br>AOCI** |
| Balance, January 1, 2021, net of income tax | $(17) | $52438 | $(4301) | $48120 |
| 2021 activity: |  |  |  |  |
| Pretax amount | 0 | (20743) | 1427 | (19316) |
| Income tax effect | 0 | 1829 | (342) | 1487 |
| Change, net of income tax | 0 | (18914) | 1085 | (17829) |
| Balance, January 1, 2022, net of income tax | (17) | 33524 | (3216) | 30291 |
| 2022 activity: |  |  |  |  |
| Pretax amount | 0 | (37310) | (2869) | (40179) |
| Income tax effect | 0 | (469) | 689 | 220 |
| Change, net of income tax | 0 | (37779) | (2180) | (39959) |
| Balance, December 31, 2022, net of income tax | $(17) | $(4255) | $(5396) | $(9668) |

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**Accounting for Derivative Financial Investments and Hedging Activities and Foreign Currency Forward Exchange Contracts:** We manage our ratio of fixed and floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this risk in a cost-effective manner, we, from time to time, enter into interest rate swap agreements in which we agree to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. We account for our derivative and hedging activities using the Financial Accounting Standard Board's ("FASB") guidance which requires all derivative instruments, including certain derivative instruments embedded in other contracts, to be carried at fair value on the balance sheet. For derivative transactions designated as hedges, we formally document all relationships between the hedging instrument and the related hedged item, as well as its risk-management objective and strategy for undertaking each hedge transaction.

Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either an asset or liability, with a corresponding amount recorded in accumulated other comprehensive income ("AOCI") within shareholders' equity. Amounts are reclassified from AOCI to the income statement in the period or periods the hedged transaction affects earnings. From time to time, we use interest rate derivatives in our cash flow hedge transactions. Such derivatives are designed to be highly effective in offsetting changes in the cash flows related to the hedged liability.

For hedge transactions that do not qualify for the short-cut method, at the hedge's inception and on a regular basis thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in cash flows of the hedged items and whether they are expected to be highly effective in the future.

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In August, 2017, the FASB issued new guidance on hedge accounting (ASU 2017-12) that is intended to more closely align hedge accounting with companies' risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The new guidance amends the presentation and disclosure requirements, and changes how companies assess effectiveness. We adopted this guidance as of January 1, 2019 and applied to all existing hedges as of the adoption date. As of December 31, 2022 we have no cash flow hedges.

We use forward exchange contracts to hedge our net investment in foreign operations against movements in exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within accumulated other comprehensive income and remains there until either the sale or liquidation of the subsidiary. In conjunction with the January 1, 2019 adoption of ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities", we reclassified our presentation of the net cash inflows or outflows, which were received or paid in connection with foreign exchange contracts that hedge our net investment in foreign operations against movements in exchange rates, to investing cash flows on the consolidated statements of cash flows.

**Stock-Based Compensation:** We have a number of stock-based employee compensation plans. Pursuant to the FASB's guidance, we expense the grant-date fair value of stock options and other equity-based compensation pursuant to the straight-line method over the stated vesting period of the award using the Black-Scholes option-pricing model. The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities.

**Earnings per Share:** Basic earnings per share are based on the weighted average number of common shares outstanding during the year. Diluted earnings per share are based on the weighted average number of common shares outstanding during the year adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share, for the periods indicated:

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| | | | |
|:---|:---|:---|:---|
|  | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** |
|  | **2022** | **2021** | **2020** |
| Basic and diluted: |  |  |  |
| &nbsp;&nbsp;&nbsp;Net Income | $656982 | $987632 | $952790 |
| &nbsp;&nbsp;&nbsp;Less: Net (income) loss attributable to noncontrolling<br> interest ("NCI") | 18627 | 3958 | (8837) |
| &nbsp;&nbsp;&nbsp;Less: Net income attributable to unvested restricted share<br> grants | (748) | (2059) | (2981) |
| &nbsp;&nbsp;&nbsp;Net income attributable to UHS—basic and diluted | $674861 | $989531 | $940972 |
| &nbsp;&nbsp;&nbsp;Basic earnings per share attributable to UHS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Weighted average number of common shares—basic | 73118 | 82519 | 85061 |
| &nbsp;&nbsp;&nbsp;Total basic earnings per share | $9.23 | $11.99 | $11.06 |
| &nbsp;&nbsp;&nbsp;Diluted earnings per share attributable to UHS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Weighted average number of common shares | 73118 | 82519 | 85061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net effect of dilutive stock options and grants based<br> on the treasury stock method | 714 | 1173 | 526 |
| &nbsp;&nbsp;&nbsp;Weighted average number of common shares and<br> equivalents—diluted | 73832 | 83692 | 85587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total diluted earnings per share | $9.14 | $11.82 | $10.99 |

---

The "Net effect of dilutive stock options and grants based on the treasury stock method", for all years presented above, excludes certain outstanding stock options applicable to each year since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled approximately 6.0 million during 2022, 4.2 million during 2021 and 6.4 million during 2020.

**Fair Value of Financial Instruments:** The fair values of our debt and investments are based on quoted market prices. The fair values of other long-term debt, including capital lease obligations, are estimated by discounting cash flows using period-end interest rates and market conditions for instruments with similar maturities and credit quality. The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, and short-term borrowings approximates their fair values due to the short-term nature of these instruments. Accordingly, these items have been excluded from the fair value disclosures included elsewhere in these notes to consolidated financial statements.

**Use of Estimates:** The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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**Mergers and Acquisitions:** The acquisition method of accounting for business combinations requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values with limited exceptions. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are expensed as incurred. The fair value of intangible assets, including Medicare licenses, certificates of need, tradenames and certain contracts, is based on significant judgments made by our management, and accordingly, for significant items we typically obtain assistance from third party valuation specialists.

**GPO Agreement/Minority Ownership Interest:** During 2013, we entered into a new group purchasing organization agreement ("GPO") with Premier, Inc. ("Premier), a healthcare performance improvement alliance, and acquired a minority interest in the GPO for a nominal amount. During the fourth quarter of 2013, in connection with the completion of an initial public offering of the stock of Premier, we received cash proceeds for the sale of a portion of our ownership interest in the GPO, which were recorded as deferred income, on a pro rata basis, as a reduction to our supplies expense over the initial expected life of the GPO agreement. Also in connection with this GPO agreement, we received shares of restricted stock in Premier which vest ratably over a seven-year period (2014 through 2020), contingent upon our continued participation and minority ownership interest in the GPO. We recognized the fair value of this restricted stock, as a reduction to our supplies expense, in our consolidated statements of income, on a pro rata basis, over the vesting period. During the third quarter of 2020, we entered into an agreement with Premier pursuant to the terms of which, among other things, our ownership interest in Premier was converted into shares of Class A Common Stock of Premier. We have elected to retain a portion of the previously vested shares of Premier, the value of which is included in other assets on our consolidated balance sheet. Based upon the closing price of Premier's stock on each respective date, the market value of our shares of Premier was $78 million and $92 million as of December 31, 2022 and 2021, respectively. The change in market value of these shares is recorded as an unrealized gain and included in "Other (income) expense, net" on our consolidated statements of income. Additionally, Premier paid cash dividends of $1.8 million and $1.7 million as of December 31, 2022 and 2021, respectively, which are included in "Other (income) expense, net" in our condensed consolidated statements of income.

**Provider Taxes:** We incur health-care related taxes ("Provider Taxes") imposed by states in the form of a licensing fee, assessment or other mandatory payment which are related to: (i) healthcare items or services; (ii) the provision of, or the authority to provide, the health care items or services, or; (iii) the payment for the health care items or services. Such Provider Taxes are subject to various federal regulations that limit the scope and amount of the taxes that can be levied by states in order to secure federal matching funds as part of their respective state Medicaid programs. We derive a related Medicaid reimbursement benefit from assessed Provider Taxes in the form of Medicaid claims based payment increases and/or lump sum Medicaid supplemental payments.

Under these programs, including the impact of the Texas Uncompensated Care and Upper Payment Limit program, the Texas Delivery System Reform Incentive program, and various other state programs, we earned revenues (before Provider Taxes) of approximately $784 million during 2022, $641 million during 2021 and $488 million during 2020. These revenues were offset by Provider Taxes of approximately $287 million during 2022, $211 million during 2021 and $185 million during 2020, which are recorded in other operating expenses on the Consolidated Statements of Income as included herein. The aggregate net benefit from these programs was $497 million during 2022, $430 million during 2021 and $303 million during 2020. The aggregate net benefit pursuant to these programs is earned from multiple states and therefore no particular state's portion is individually material to our consolidated financial statements. In addition, under various disproportionate share hospital payment programs and the Nevada state plan amendment program, we earned revenues of $75 million in 2022, $74 million in 2021 and $73 million in 2020.

**CARES Act and Other Governmental Grants and Medicare Accelerated Payments:** During 2021, we received approximately $189 million of additional funds from the federal government in connection with the CARES Act, which we returned during the year utilizing a portion of our cash and cash equivalents held on deposit. Therefore, there was no impact on our earnings during 2021 in connection with receipt of those funds.

Also during 2021, we made an early repayment of $695 million of funds received during 2020 pursuant to the Medicare Accelerated and Advance Payment Program ("MAAPP"). These funds, which were required to be repaid to the government beginning in the second quarter of 2021 through the third quarter of 2022, were returned to the government utilizing a portion of our cash and cash equivalents held on deposit.

As of December 31, 2020, we received an aggregate of $1.112 billion of funds consisting of: (i) $417 million received pursuant to various governmental stimulus programs, most notably the Public Health and Social Services Emergency Fund (the "PHSSEF") as provided for by the CARES Act, of which approximately $413 million were recorded as net revenues during 2020 and approximately $4 million remained in the Medicare accelerated payments and deferred CARES Act and other grants liability account in our consolidated balance sheet, and; (ii) $695 million of MAAPP funds, which as discussed above, were repaid early to the government during 2021. There was no impact on our earnings during 2021 or 2020 in connection with receipt of the MAAPP funds.

**Recent Accounting Standards:** From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by us as of the effective date or, in some cases where early adoption is permitted, in advance of the effective

------

date. We have assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, we believe the new guidance will not have a material impact on our results of operations, cash flows or financial position.

**Foreign Currency Translation:** Assets and liabilities of our U.K. subsidiaries are denominated in pound sterling and translated into U.S. dollars at: (i) the rates of exchange at the balance sheet date, and; (ii) average rates of exchange prevailing during the year for revenues and expenses. The currency translation adjustments are reported as a component of accumulated other comprehensive income. See Note 3 - Financial Instruments, Foreign Currency Forward Exchange Contracts for additional disclosure.

**2) ACQUISITIONS AND DIVESTITURES**

**Year ended December 31, 2022:**

2022 Acquisitions of Assets and Businesses:

During 2022, we spent $20 million to acquire various businesses and properties.

2022 Divestiture of Assets:

During 2022, we received $12 million from the sales of various assets.

**Year ended December 31, 2021:**

2021 Acquisitions of Assets and Businesses:

During 2021, we spent $105 million on the acquisition of businesses and property, consisting primarily of a micro acute care hospital located in Las Vegas, Nevada, and a physician practice management company located in California.

2021 Divestiture of Assets and Businesses:

During 2021, we received $25 million from the sale of assets and businesses.

**Year ended December 31, 2020:**

2020 Acquisitions of Assets and Businesses:

During 2020, we spent $52 million on the acquisition of businesses and property, consisting primarily of the real estate assets of an acute care hospital located in Las Vegas, Nevada.

2020 Divestiture of Assets and Businesses:

During 2020, we received $8 million from the sale of assets and businesses.

**3) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT**

**Cash Flow Hedges:**

When applicable, we measure our interest rate swaps at fair value on a recurring basis. The fair value of our interest rate swaps is based on quotes from our counterparties. We consider those inputs to be "level 2" in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with derivative instruments and hedging activities. During the years ended December 31, 2022, 2021 and 2020, we had no cash flow hedges outstanding.

**Foreign Currency Forward Exchange Contracts:**

We use forward exchange contracts to hedge our net investment in foreign operations against movements in exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within accumulated other comprehensive income and remains there until either the sale or liquidation of the subsidiary. In connection with these forward exchange contracts, we recorded net cash inflows of approximately $95 million during 2022 and $1 million during 2021, and net cash outflows of approximately $22 million during 2020.

**Derivatives Hedging Relationships:**

The following table presents the effects of our foreign currency foreign exchange contracts on our results of operations for the three years ended December 31 (in thousands):

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---

| | | | |
|:---|:---|:---|:---|
|  | **Gain/(Loss) recognized in AOCI** | **Gain/(Loss) recognized in AOCI** | **Gain/(Loss) recognized in AOCI** |
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2020** |
| <u>Net Investment Hedge relationships</u> |  |  |  |
| Foreign currency foreign exchange contracts | $96698 | $(7272) | $(22097) |

---

No other gains or losses were recognized in income related to derivatives in Subtopic 815-20.

**Fair Value Measurement**

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These included quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 3: Unobservable inputs that reflect the reporting entity's own assumptions.

The following tables present the assets and liabilities recorded at fair value on a recurring basis:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Balance at** | **Balance Sheet** | **Basis of Fair Value Measurement** | **Basis of Fair Value Measurement** | **Basis of Fair Value Measurement** |
| (in thousands) | **December 31, 2022** | **Location** | **Level 1** | **Level 2** | **Level 3** |
| <u>Assets:</u> |  |  |  |  |  |
| Money market mutual funds | $113649 | Other assets | $113649 |  |  |
| Certificates of deposit | 2200 | Other assets |  | 2200 |  |
| Equity securities | 78099 | Other assets | 78099 |  |  |
| Deferred compensation assets | 38032 | Other assets | 38032 |  |  |
| Foreign currency exchange contracts | 3142 | Other current assets |  | 3142 |  |
|  | 235122 |  | 229780 | $5342 |  |
| <u>Liabilities:</u> |  |  |  |  |  |
| Deferred compensation liability | 38032 | Other noncurrent liabilities | $38032 |  |  |
|  | $38032 |  | $38032 | - |  |
|  | **Balance at** | **Balance Sheet** | **Basis of Fair Value Measurement** | **Basis of Fair Value Measurement** | **Basis of Fair Value Measurement** |
| (in thousands) | **December 31, 2021** | **Location** | **Level 1** | **Level 2** | **Level 3** |
| <u>Assets:</u> |  |  |  |  |  |
| Money market mutual funds | $79900 | Other assets | $79900 |  |  |
| Certificates of deposit | 2300 | Other assets |  | 2300 |  |
| Equity securities | 91919 | Other assets | 91919 |  |  |
| Deferred compensation assets | 45759 | Other assets | 45759 |  |  |
| Foreign currency exchange contracts | 1357 | Other current assets |  | 1357 |  |
|  | 221235 |  | $217578 | $3657 |  |
| <u>Liabilities:</u> |  |  |  |  |  |
| Deferred compensation liability | $45759 | Other noncurrent liabilities | $45759 |  |  |
|  | $45759 |  | $45759 | - |  |

---

The fair value of our money market mutual funds, certificates of deposit and equity securities with a readily determinable fair value are computed based upon quoted market prices in an active market. The fair value of deferred compensation assets and the offsetting liability are computed based on market prices in an active market held in a rabbi trust. The fair value of our interest rate swaps are based on quotes from our counter parties. The fair value of our foreign currency exchange contracts is valued using quoted forward exchange rates and spot rates at the reporting date.

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**4) LONG-TERM DEBT**

A summary of long-term debt follows:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(amounts in thousands)** | **(amounts in thousands)** |
| Long-term debt: |  |  |
| &nbsp;&nbsp;&nbsp;Notes and Mortgages payable (including obligations under finance leases of $75,595 in 2022 and $79,331 in 2021) and term loans with varying maturities through 2099; weighted average interest rates of 3.6% in 2022 and 5.6% in 2021 (see Note 7 regarding finance leases) | $184800 | $185027 |
| &nbsp;&nbsp;&nbsp;Tranche A term loan | 2338125 | 1689375 |
| &nbsp;&nbsp;&nbsp;Revolving credit facility | 310400 | 342600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.65% Senior Secured Notes due 2030, net of unamortized discount of $1,742 in 2022 and $1,968 in 2021 | 798258 | 798032 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.65% Senior Secured Notes due 2026, net of unamortized discount of $638 in 2022 and $813 in 2021 | 699362 | 699187 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.65% Senior Secured Notes due 2032, net of unamortized discount of $1,124 in 2022 and $1,254 in 2021 | 498876 | 498746 |
| Total debt before unamortized financing costs | 4829821 | 4212967 |
| Less-Unamortized financing costs | (21841) | (22679) |
| Total debt after unamortized financing costs | 4807980 | 4190288 |
| Less-Amounts due within one year | (81447) | (48409) |
| Long-term debt | $4726533 | $4141879 |

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**Credit Facilities and Outstanding Debt Securities**

In June, 2022 we entered into a ninth amendment to our credit agreement dated as of November 15, 2010, as amended and restated as of September, 2012, August, 2014, October, 2018, August, 2021, and September, 2021, among UHS, as borrower, the several banks and other financial institutions from time to time parties thereto, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, (the "Credit Agreement"). The ninth amendment provided for, among other things, the following: (i) a new incremental tranche A term loan facility in the aggregate principal amount of $700 million which is scheduled to mature on August 24, 2026, and; (ii) replaces the option to make Eurodollar borrowings (which bear interest by reference to the LIBO Rate) with Term Benchmark Loans, which will bear interest by reference to the Secured Overnight Financing Rate ("SOFR"). The net proceeds generated from the incremental tranche A term loan facility were used to repay a portion of the borrowings that were previously outstanding under our revolving credit facility.

In September, 2021 we entered into an eighth amendment to our Credit Agreement which modified the definition of "Adjusted LIBO Rate".

In August, 2021 we entered into a seventh amendment to our Credit Agreement which, among other things, provided for the following:

oa $1.2 billion aggregate amount revolving credit facility, which is scheduled to mature on August 24, 2026, representing an increase of $200 million over the $1.0 billion previous commitment. As of December 31, 2022, this facility had $310 million of borrowings outstanding and $886 million of available borrowing capacity, net of $4 million of outstanding letters of credit;

oa $1.7 billion initial tranche A term loan facility which was subsequently increased by $700 million in June, 2022 by the above-mentioned ninth amendment. The seventh amendment also provided for repayment of $150 million of borrowings outstanding pursuant to the previous tranche A term loan facility, and;

orepayment of approximately $488 million of outstanding borrowings and termination of the previous tranche B term loan facility.

The terms of the tranche A term loan facility, as amended, which had $2.338 billion of outstanding borrowings as of December 31, 2022, provides for installment payments of $15.0 million per quarter during the period of September, 2022 through September, 2023, and $30.0 million per quarter during the period of December, 2023 through June, 2026. The unpaid principal balance at June 30, 2026 is payable on the August 24, 2026 scheduled maturity date of the Credit Agreement.

Revolving credit and tranche A term loan borrowings under the Credit Agreement bear interest at our election at either (1) the ABR rate which is defined as the rate per annum equal to the greatest of (a) the lender's prime rate, (b) the weighted average of the federal funds rate, plus 0.5% and (c) one month SOFR rate plus 1%, in each case, plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from 0.25% to 0.625%, or (2) the one, three or six month SOFR rate plus 0.1% (at our election), plus an applicable margin based upon our consolidated leverage ratio at the end of each quarter ranging from

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1.25% to 1.625%. As of December 31, 2022, the applicable margins were 0.50% for ABR-based loans and 1.50% for SOFR-based loans under the revolving credit and term loan A facilities. The revolving credit facility includes a $125 million sub-limit for letters of credit. The Credit Agreement is secured by certain assets of the Company and our material subsidiaries (which generally excludes asset classes such as substantially all of the patient-related accounts receivable of our acute care hospitals, and certain real estate assets and assets held in joint-ventures with third parties) and is guaranteed by our material subsidiaries.

The Credit Agreement includes a material adverse change clause that must be represented at each draw. The Credit Agreement also contains covenants that include a limitation on sales of assets, mergers, change of ownership, liens, indebtedness, transactions with affiliates, dividends and stock repurchases; and requires compliance with financial covenants including maximum leverage. We were in compliance with all required covenants as of December 31, 2022 and December 31, 2021.

On August 24, 2021, we completed the following via private offerings to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended:

oIssued $700 million of aggregate principal amount of 1.65% senior secured notes due on September 1, 2026, and;

oIssued $500 million of aggregate principal amount of 2.65% senior secured notes due on January 15, 2032.

In April, 2021 our accounts receivable securitization program ("Securitization") was amended (the eighth amendment) to: (i) reduce the aggregate borrowing commitments to $20 million (from $450 million previously); (ii) slightly reduce the borrowing rates and commitment fee, and; (iii) extend the maturity date to April 25, 2022. At various times from April, 2022 to September, 2022, the Securitization was amended to extend the maturity date to various dates including, most recently, December 20, 2022. As of the December 20, 2022 maturity date, the Securitization expired and was not renewed or replaced.

On September 13, 2021, we redeemed $400 million of aggregate principal amount of 5.00% senior secured notes, that were scheduled to mature on June 1, 2026, at 102.50% of the aggregate principal, or $410 million.

As of December 31, 2022, we had combined aggregate principal of $2.0 billion from the following senior secured notes:

o$700 million aggregate principal amount of 1.65% senior secured notes due in September, 2026 ("2026 Notes") which were issued on August 24, 2021.

o$800 million aggregate principal amount of 2.65% senior secured notes due in October, 2030 ("2030 Notes") which were issued on September 21, 2020.

o$500 million of aggregate principal amount of 2.65% senior secured notes due in January, 2032 ("2032 Notes") which were issued on August 24, 2021.

Interest on the 2026 Notes is payable on March 1st and September 1st until the maturity date of September 1, 2026. Interest on the 2030 Notes payable on April 15th and October 15th, until the maturity date of October 15, 2030. Interest on the 2032 Notes is payable on January 15<sup>th</sup>and July 15<sup>th</sup> until the maturity date of January 15, 2032.

The 2026 Notes, 2030 Notes and 2032 Notes (collectively "The Notes") were initially issued only to qualified institutional buyers under Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). In December, 2022, we completed a registered exchange offer in which virtually all previously outstanding Notes were exchanged for identical Notes that were registered under the Securities Act, and thereby became freely transferable (subject to certain restrictions applicable to affiliates and broker dealers). Notes originally issued under Rule 144A or Regulation S that were not exchanged in the exchange offer remain outstanding and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration requirements thereunder.

The Notes are guaranteed (the "Guarantees") on a senior secured basis by all of our existing and future direct and indirect subsidiaries (the "Subsidiary Guarantors") that guarantee our Credit Agreement, or other first lien obligations or any junior lien obligations. The Notes and the Guarantees are secured by first-priority liens, subject to permitted liens, on certain of the Company's and the Subsidiary Guarantors' assets now owned or acquired in the future by the Company or the Subsidiary Guarantors (other than real property, accounts receivable sold pursuant to the Company's Existing Receivables Facility (as defined in the Indenture pursuant to which The Notes were issued (the "Indenture")), and certain other excluded assets). The Company's obligations with respect to The Notes, the obligations of the Subsidiary Guarantors under the Guarantees, and the performance of all of the Company's and the Subsidiary Guarantors' other obligations under the Indenture, are secured equally and ratably with the Company's and the Subsidiary Guarantors' obligations under the Credit Agreement and The Notes by a perfected first-priority security interest, subject to permitted liens, in the collateral owned by the Company and its Subsidiary Guarantors, whether now owned or hereafter acquired. However, the liens on the collateral securing The Notes and the Guarantees will be released if: (i) The Notes have investment grade ratings; (ii) no default has occurred and is continuing, and; (iii) the liens on the collateral securing all first lien obligations (including the Credit Agreement and The Notes) and any junior lien obligations are released or the collateral under the Credit Agreement, any other first lien obligations and any junior lien obligations is released or no longer required to be pledged. The liens on any collateral securing The Notes and the Guarantees will also be released if the liens on that collateral securing the Credit Agreement, other first lien obligations and any junior lien obligations are released.

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As discussed in Note 9 to the Consolidated Financial Statements-Relationship with Universal Health Realty Income Trust and Other Related Party Transactions, on December 31, 2021, we (through wholly-owned subsidiaries of ours) entered into an asset purchase and sale agreement with Universal Health Realty Income Trust (the "Trust"). Pursuant to the terms of the agreement, which was amended during the first quarter of 2022, we, among other things, transferred to the Trust, the real estate assets of Aiken Regional Medical Center ("Aiken") and Canyon Creek Behavioral Health ("Canyon Creek"). In connection with this transaction, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases, as amended, (with the Trust as lessor), for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. As a result of our purchase option within the Aiken and Canyon Creek lease agreements, this asset purchase and sale transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP and we have accounted for the transaction as a financing arrangement. Our lease payments payable to the Trust are recorded to interest expense and as a reduction of the outstanding financial liability, and the amount allocated to interest expense is determined based upon our incremental borrowing rate and the outstanding financial liability. In connection with this transaction, our Consolidated Balance Sheets at December 31, 2022 and December 31, 2021 reflect financial liabilities, which are included in debt, of approximately $81 million and $82 million, respectively.

At December 31, 2022, the carrying value and fair value of our debt were approximately $4.8 billion and $4.4 billion, respectively. At December 31, 2021, the carrying value and fair value of our debt were each approximately $4.2 billion. The fair value of our debt was computed based upon quotes received from financial institutions. We consider these to be "level 2" in the fair value hierarchy as outlined in the authoritative guidance for disclosures in connection with debt instruments.

The aggregate scheduled maturities of our total debt outstanding as of December 31, 2022 are as follows:

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| | |
|:---|:---|
|  | **(000s)** |
| 2023 | $81447 |
| 2024 | 127008 |
| 2025 | 126255 |
| 2026 | 3039496 |
| 2027 | 7136 |
| Later | 1448479 |
| Total maturities before unamortized financing costs | 4829821 |
| Less-Unamortized financing costs | (21841) |
| Total | $4807980 |

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**5) COMMON STOCK**

**Dividends**

We declared and paid cash dividends of $.80 per share ($58.4 million in the aggregate) during 2022. We declared and paid cash dividends of $.80 per share ($65.9 million in the aggregate) during 2021. We declared and paid cash dividends of $17.3 million, or $.20 per share, during the first quarter of 2020 (in April, 2020, as part of various COVID-19 initiatives, we suspended declaration and payment of quarterly dividends for the remainder of the 2020 year). All classes of our common stock have similar economic rights.

**Stock Repurchase Programs**

As of December 31, 2021, we had an aggregate available purchase authorization of $358.2 million. In February, 2022, our Board of Directors authorized a $1.4 billion increase to the program. As of December 31, 2022, we had an aggregate available repurchase authorization of $947.37 million. Pursuant to this program, shares of our Class B Common Stock may be repurchased, from time to time as conditions allow, on the open market or in negotiated private transactions. There is no expiration date for our stock repurchase programs.

The following schedule provides information related to our stock repurchase program for each of the three years ended December 31, 2022. During 2022, 6,666,547 shares ($810.9 million in the aggregate) were repurchased pursuant to the terms of the stock repurchase program and 153,305 shares ($22.0 million in the aggregate) were repurchased in connection with the income tax withholding obligations resulting from stock-based compensation programs. During 2021, 8,409,721 shares ($1.20 billion in the aggregate) were repurchased pursuant to the terms of the stock repurchase program and 134,464 shares ($19.5 million in the aggregate) were repurchased in connection with the income tax withholding obligations resulting from stock-based compensation programs. During 2020, 1,951,899 shares ($196.6 million in the aggregate) were repurchased pursuant to the terms of the stock repurchase program and 81,057 shares ($10.2 million in the aggregate) were repurchased in connection with the income tax withholding obligations resulting from stock-based compensation programs.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Additional<br>dollars<br>authorized<br>for<br>repurchase<br>(in<br>thousands)** | **Total<br>number of<br>shares<br>purchased (a.)** | **Total<br>number<br>of shares<br>cancelled** | **Average<br>price<br>paid per<br>share for<br>forfeited<br>restricted<br>shares** | **Total<br>number of<br>shares<br>purchased<br>as part of<br>publicly<br>announced<br>programs** | **Average<br>price paid<br>per share<br>for shares<br>purchased<br>as part of<br>publicly<br>announced<br>program** | **Aggregate<br>purchase<br>price paid<br>(in<br>thousands)** | **Aggregate<br>purchase<br>price paid<br>for shares<br>purchased<br>as part of<br>publicly<br>announced<br>program** | **Maximum<br>number of<br>dollars<br>that may<br>yet be<br>purchased<br>under the<br>program<br>(in<br>thousands)** |
| Balance as of<br> January 1, 2020 |  |  |  |  |  |  |  |  | $756123 |
| 2020 | $— | 2050735 | 17779 | $0.01 | 1951899 | $100.70 | $206719 | $196560 | $559563 |
| 2021 | $1000000 | 8559946 | 15756 | $0.01 | 8409721 | $142.85 | $1220876 | $1201330 | $358233 |
| 2022 | $1400000 | 6828319 | 8467 | $0.01 | 6666547 | $121.63 | $832915 | $810865 | $947368 |
| Total for three year<br> period ended<br> December 31, 2022 | $2400000 | 17439000 | 42002 | $0.01 | 17028167 | $129.71 | $2260510 | $2208755 |  |

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(a.) Includes 8,467, 15,761 and 17,779 of restricted shares that were forfeited by former employees pursuant to the terms of our restricted stock purchase plan during 2022, 2021 and 2020, respectively.

**Stock-based Compensation Plans**

At December 31, 2022, we have a number of stock-based employee compensation plans. Pursuant to the FASB's guidance, we expense the grant-date fair value of stock options (computed utilizing the Black-Scholes option-pricing model) and other equity-based compensation pursuant to the straight-line method over the stated vesting period of the awards.

Pre-tax share-based compensation costs of $66.2 million during 2022, $59.3 million during 2021 and $54.7 million during 2020 were recognized related to outstanding stock options. In addition, pre-tax compensation costs of $19.1 million during 2022, $14.4 million during 2021 and $11.2 million during 2020 were recognized related to amortization of restricted stock and units as well as discounts provided in connection with shares purchased pursuant to our 2005 Employee Stock Purchase Plan. As of December 31, 2022, there was approximately $147.3 million of unrecognized compensation cost related to unvested stock options and restricted stock which is expected to be recognized over the remaining average vesting period of 2.6 years.

The expense associated with stock-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, stock-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $85.4 million in 2022, $73.7 million in 2021 and $65.8 million in 2020. In connection with our January 1, 2017 adoption of ASU 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", our provision for income taxes and our net income attributable to UHS were unfavorably impacted by $636,000 during 2022, favorably impacted by $2.4 million in 2021 and unfavorably impacted by $7.4 million during 2020.

In 2005, we adopted the 2005 Stock Incentive Plan (the "Stock Incentive Plan") which was amended in 2008, 2010, 2015 and 2017 and was canceled in 2020, as discussed below. An aggregate of 35.6 million shares of Class B Common Stock had been reserved under the Stock Incentive Plan, the remaining balance of which was canceled in 2020. During 2020 stock options, net of cancellations, of approximately 2.3 million were granted under the Stock Incentive Plan. Stock options to purchase Class B Common Stock have been granted to our officers, key employees and members of our Board of Directors. Commencing in 2018, our key employees and non-executive officers began receiving a portion of their stock-based compensation in the form of restricted stock (as discussed below) in addition to receiving options to purchase Class B Common Stock.

In 2020, we adopted the 2020 Omnibus Stock and Incentive Plan (the "2020 Stock Incentive Plan") which was amended in 2022. An aggregate of 12.1 million shares of Class B Common Stock has been reserved for issuance under the 2020 Stock Incentive Plan. Under the 2020 Stock Incentive Plan, shares that are subject to stock options shall be counted as one share per stock option, and every share that is subject to restricted stock awards or restricted stock units shall be counted as four shares. Various other types of equity awards are also permitted under the 2020 Stock Incentive Plan. During 2022, approximately 1.7 million stock options, net of cancellations, and 228,160 restricted stock units (including 65,768 performance based restricted stock units, net of cancellations) were granted under the 2020 Stock Incentive Plan. During 2021, approximately 2.1 million stock options, net of cancellations, and 126,015 of restricted stock units, net of cancellations, were granted under the 2020 Stock Incentive Plan. During 2020, 42,500 stock options, net of cancellations and 3,000 restricted stock units (there were no cancellations) were granted under the 2020 Stock Incentive Plan.

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Restricted stock and restricted stock units issued under the 2020 Stock Incentive Plan do not have rights to receive dividends on unvested restricted awards, however, the accrual of dividend equivalents on unvested restricted awards may be permitted. Upon adoption of the 2020 Stock Incentive Plan, no additional awards were granted under the 2005 Stock Incentive Plan or the 2010 Employees' Restricted Stock Purchase Plan (discussed below), and reserves for future issuance pursuant to each plan were canceled.

The per option weighted-average grant-date fair value of options granted during 2022 under the 2020 Stock Incentive Plan was $45.63. The per option weighted-average grant-date fair value of options granted during 2021 under the 2020 Stock Incentive Plan was $39.66. The per option weighted-average grant-date fair value of options granted during 2020 (including the 2005 and 2020 Stock Incentive Plans) was $14.60. All stock options issued in 2022 were granted with an exercise price equal to the fair market value on the date of the grant. Stock options granted during 2021 and 2020 were either granted with an exercise price equal to the fair market value on the date of grant, or for our named executive officers, half of their total option award value was issued with a premium exercise price of 10% above the grant date fair market value. The majority of options are exercisable ratably over a four-year period beginning one year after the date of the grant. All outstanding options expire five years after the date of the grant. As of December 31, 2022, approximately 6.85 million shares of Class B Common Stock remain available for issuance pursuant to the 2020 Stock Incentive Plan.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were derived from averaging the number of options granted during the most recent five-year period. The weighted-average assumptions reflected below were based upon twenty-nine option grants for the five-year period ending December 31, 2022, twenty-eight option grants for the five-year period ending December 31, 2021 and twenty-nine option grants for the five-year period ending December 31, 2020.

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| | | | |
|:---|:---|:---|:---|
| **<u>Year Ended December 31,</u>** | **2022** | **2021** | **2020** |
| Expected volatility | 33% | 31% | 28% |
| Risk free Interest rate | 2% | 2% | 2% |
| Expected life (years) | 3.6 | 3.5 | 3.5 |
| Forfeiture rate | 7% | 8% | 8% |
| Dividend yield | 0.6% | 0.5% | 0.5% |

---

The risk-free rate is based on the U.S. Treasury zero coupon four year yield curve in effect at the time of grant. The expected life of the stock options granted was estimated using the historical behavior of employees. Expected volatility was based on historical volatility for a period equal to the stock option's expected life. Expected dividend yield is based on our dividend yield at the time of grant. The forfeiture rate is based upon the actual historical forfeitures utilizing the 5-year term of the option.

The table below summarizes our stock option activity during the year ended December 31, 2022:

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| | | |
|:---|:---|:---|
| **<u>Outstanding Options</u>** | **Number<br>of Shares** | **Weighted Average<br>Exercise<br>Price** |
| Balance, January 1, 2022 | 8556115 | $116.80 |
| &nbsp;&nbsp;&nbsp;Granted | 1833573 | $143.47 |
| &nbsp;&nbsp;&nbsp;Exercised | (2022891) | $118.21 |
| &nbsp;&nbsp;&nbsp;Cancelled | (491130) | $126.67 |
| Balance, December 31, 2022 | 7875667 | $122.04 |
| Outstanding options vested and exercisable as of<br> December 31, 2022 | 3073714 | $116.89 |

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The following table provides information about unvested options for the year ended December 31, 2022:

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| | | |
|:---|:---|:---|
|  | **Shares** | **Weighted<br>Average<br>Grant Date<br>Fair Value** |
| Unvested options as of January 1, 2022 | 5558819 | $28.93 |
| Granted | 1833573 | $45.63 |
| Vested | (2141518) | $27.99 |
| Cancelled | (448921) | $35.81 |
| Unvested options as of December 31, 2022 | 4801953 | $35.09 |

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The following table provides information regarding all options outstanding at December 31, 2022:

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| | | |
|:---|:---|:---|
|  | **Options<br>Outstanding** | **Options<br>Exercisable** |
| Number of options outstanding | 7875667 | 3073714 |
| Weighted average exercise price | $122.04 | $116.89 |
| Aggregate intrinsic value as of December 31, 2022 | $158552816 | $75389444 |
| Weighted average remaining contractual life | 2.5 | 1.5 |

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The total in-the-money value of all stock options exercised during the years ended December 31, 2022, 2021 and 2020 were $49.4 million, $52.0 million and $22.2 million, respectively.

The weighted average remaining contractual life for options outstanding and weighted average exercise price per share for exercisable options at December 31, 2020, 2021 and 2022 were as follows:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **<u>Year Ended:</u>** | **Options<br>Outstanding** | **Weighted<br>Average<br>Exercise Price<br>Per Share** | **Weighted<br>Average<br>Remaining<br>Contractual Life<br>(in Years)** | **Exercisable<br>Options** | **Weighted<br>Average<br>Exercise Price<br>Per Share** | **Expected to<br>Vest<br>Options** | **Weighted<br>Average<br>Exercise Price<br>Per Share** |
|  | **Shares** |  |  | **Shares** |  | **Shares** |  |
| 2020 | 8238966 | $109.47 | 2.9 | 2522906 | $124.62 | 5099823 | $110.47 |
| 2021 | 8556115 | 116.80 | 2.6 | 2997296 | 119.00 | 5005113 | 116.94 |
| 2022 | 7875667 | 122.04 | 2.5 | 3073714 | 116.89 | 4508480 | 121.89 |

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Under our Amended and Restated 2010 Employees' Restricted Stock Purchase Plan (the "Restricted Stock Plan"), which was canceled during 2020 upon the approval of the 2020 Stock Incentive Plan, as mentioned above, eligible participants were allowed to purchase shares of Class B Common Stock at par value, subject to certain restrictions and had 600,000 shares of Class B Common Stock reserved. The reserve balance in the Restricted Stock Plan was canceled during 2020 and no shares were issued under the Restricted Stock Plan during 2021. During 2020 restricted shares, net of cancellations, of approximately 106,310 were granted and issued under the Restricted Stock Plan, with various ratable vesting periods ranging up to five years from the date of grant. The weighted-average grant-date fair value of the restricted shares granted during 2020 under the Restricted Stock Plan was $68.06. As mentioned above, in 2020, we adopted the 2020 Stock Incentive Plan. During 2022, 2021 and 2020 restricted stock units, net of cancellations, of approximately 228,160 (including 65,768 performance based restricted stock units, net of cancellations), 126,015 and 3,000, respectively, were granted under the 2020 Stock Incentive Plan with four-year vesting periods from the date of grant. The weighted average grant-date fair value of the restricted stock units issued during 2022, 2021 and 2020 under the 2020 Stock Incentive Plan was $142.70, $138.80 and $109.72, respectively. The fair value of each restricted stock grant or restricted stock unit was determined as the closing UHS market price on the date of grant. Restricted shares and/or units of Class B Common Stock have been granted to our officers, key employees and members of our Board of Directors.

In addition to the 2020 Stock Incentive Plan, we have our 2005 Employee Stock Purchase Plan (the "Employee Stock Plan") which allows eligible employees to purchase shares of Class B Common Stock at a ten percent discount. There were 127,538, 96,179 and 115,008 shares issued pursuant to the Employee Stock Purchase Plan during 2022, 2021 and 2020, respectively. In connection with the Employee Stock Plan, we have reserved 2.0 million shares of Class B Common Stock for issuance and have issued approximately 1.7 million shares as of December 31, 2022. As of December 31, 2022, approximately 300,000 shares of Class B Common Stock remain available for issuance pursuant to this plan.

At December 31, 2022, 23,581,951 shares of Class B Common Stock were reserved for issuance upon conversion of shares of Class A, C and D Common Stock outstanding, for issuance upon exercise of options to purchase Class B Common Stock and for issuance of stock under other incentive plans. Class A, C and D Common Stock are convertible on a share for share basis into Class B Common Stock.

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**6) INCOME TAXES**

Components of income tax expense/(benefit) are as follows (amounts in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** |
| Current |  |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $178666 | $276471 | $268974 |
| &nbsp;&nbsp;&nbsp;Foreign | 14740 | 13754 | 13978 |
| &nbsp;&nbsp;&nbsp;State | 33423 | 44993 | 43333 |
|  | 226829 | 335218 | 326285 |
| Deferred |  |  |  |
| &nbsp;&nbsp;&nbsp;Federal | (9935) | (26638) | (20382) |
| &nbsp;&nbsp;&nbsp;Foreign | (1509) | 1521 | (2496) |
| &nbsp;&nbsp;&nbsp;State | (6107) | (4420) | (4114) |
|  | (17551) | (29537) | (26992) |
| Total | $209278 | $305681 | $299293 |

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Our provision for income taxes for the years ended December 31, 2022, 2021 and 2020 included tax expenses of $1 million, tax benefits of $2 million and tax expenses of $7 million, respectively, related to employee share-based payments. Excess tax benefits (when the deductible amount related to the settlement of employee equity awards for tax purposes exceeds the cumulative compensation cost recognized for financial reporting purposes) and deficiencies, if applicable, are recorded as a component of our tax provision.

The foreign provision for income taxes is based on foreign pre-tax earnings of $76 million in 2022, $79 million in 2021 and $72 million in 2020. In the future, we anticipate repatriating only previously taxed foreign earnings subjected as well as any future earnings that would qualify for a full dividend received deduction for distributions post-December 31, 2017. As of December 31, 2022, the amount of previously taxed earnings and earnings that would qualify for a full dividend received deduction total $109 million. At this time, there are no material tax effects related to future cash repatriation of undistributed foreign earnings. As such, we have not recognized a deferred tax liability related to existing undistributed earnings

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act of 2022 ("the Act"). The Act includes tax provisions, among other things, which implements (i) a 15 percent minimum tax on book income of certain large corporations; (ii) a one percent excise tax on net stock repurchases; and (iii) several tax incentives to promote clean energy. We do not expect the Act to have a material impact on our income tax provision.

A reconciliation between the federal statutory rate and the effective tax rate is as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** | **2020** |
| Federal statutory rate | 21.0% | 21.0% | 21.0% |
| State taxes, net of federal income tax benefit | 2.4% | 2.5% | 2.5% |
| Tax effects of foreign operations | -0.3% | -0.1% | -0.3% |
| Tax benefit from settlement of employee equity awards | 0.1% | -0.2% | 0.5% |
| Other items | 0.5% | 0.3% | 0.4% |
| Impact of income attributable to noncontrolling interests | 0.5% | 0.1% | -0.2% |
| &nbsp;&nbsp;&nbsp;Effective tax rate | 24.2% | 23.6% | 23.9% |

---

Our effective tax rates were 24.2%, 23.6% and 23.9% for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in our effective tax rate for the year ended December 31, 2022, as compared to 2021, is due primarily to the decrease in net income attributable to noncontrolling interests during 2022, as compared to 2021. The decrease in our effective tax rate for the year ended December 31, 2021, as compared to 2020, is due primarily to the tax benefit of $2 million recorded during 2021, and the tax expense of $7 million recorded during 2020, resulting from employee share-based payments.

Included in "Other current assets" on our Consolidated Balance Sheet are prepaid federal, state and foreign income taxes amounting to approximately $17 million and $6 million as of December 31, 2022 and 2021, respectively.

The components of deferred taxes are as follows (amounts in thousands):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Assets** | **Assets** | **Liabilities** | **Assets** | **Assets** | **Liabilities** |
| Self-insurance reserves | $— | 103528 | $ | $— | 97024 | $ |
| Compensation accruals |  | 77269 |  |  | 77917 |  |
| Doubtful accounts and other reserves |  | 141511 |  |  | 127876 |  |
| Other currently non-deductible accrued liabilities |  | 12520 |  |  | 31240 |  |
| Depreciable and amortizable assets |  |  | 281203 |  |  | 303079 |
| Operating lease liabilities |  | 108704 |  |  | 86652 |  |
| Right of use assets-operating leases |  |  | 106675 |  |  | 86269 |
| State and foreign net operating loss carryforwards and other state and foreign deferred tax assets |  | 80823 |  |  | 79499 |  |
| Net pension liabilities – OCI only |  | 1702 |  |  | 1014 |  |
| Other liabilities |  |  | 6457 |  |  | 3811 |
|  | $— | 526057 | 394335 | $— | 501222 | 393159 |
| Valuation Allowance |  | (63325) | 0 |  | (62356) | 0 |
| Total deferred income taxes | $— | 462732 | 394335 | $— | 438866 | 393159 |

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At December 31, 2022, state net operating loss carryforwards (losses originating in tax years beginning prior to January 1, 2022, expiring in years 2023 through 2040), and credit carryforwards available to offset future taxable income approximated $890 million representing approximately $58 million in deferred state tax benefit (net of the federal benefit); and state related interest expense carryforwards approximated $170 million representing approximately $8 million in deferred state tax benefit (net of the federal benefit). At December 31, 2022, there were foreign net operating losses and interest expense carryforwards of approximately $49 million, most of which are carried forward indefinitely, representing approximately $12 million in deferred foreign tax benefit. At December 31, 2022, related to the acquisition of Riverside Medical Clinic Patient Services, LLC, there were federal net operating losses of approximately $10 million carried forward indefinitely for federal purposes representing approximately $2 million in deferred federal tax benefits.

A valuation allowance is required when it is more likely than not that some portion of the deferred tax assets will not be realized. Based on available evidence, it is more likely than not that certain of our state tax benefits will not be realized. Therefore, valuation allowances of approximately $59 million and $57 million have been reflected as of December 31, 2022 and 2021, respectively. During 2022, the valuation allowance on these state tax benefits increased by $2 million primarily due to additional state related interest expense carryforwards. In addition, valuation allowances of approximately $4 million and $5 million have been reflected as of December 31, 2022 and 2021, respectively, related to foreign net operating losses and credit carryforwards.

During 2022 and 2021, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were increased less than $1 million due to tax positions taken in the current and prior years. The balance at each of the years ended December 31, 2022 and 2021, if subsequently recognized, that would favorably affect the effective tax rate and the provision for income taxes is approximately $2 million as of each date.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2022 and 2021, we have accrued interest and penalties of less than $1 million as of each date. The U.S. federal statute of limitations remains open for the 2019 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging for 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months. It is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months, however, it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations.

The tabular reconciliation of unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020 is as follows (amounts in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2022** | **2021** | **2020** |
| Balance at January 1, | $2544 | $2806 | $2164 |
| Additions based on tax positions related to the current year | 500 | 500 | 500 |
| Additions for tax positions of prior years | 159 | 213 | 142 |
| Reductions for tax positions of prior years | (461) | (261) | 0 |
| Settlements | (15) | (714) | 0 |
| Balance at December 31, | $2727 | $2544 | $2806 |

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**7) LEASE COMMITMENTS**

We follow FASB ASU 2016-02 ("Topic 842") "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will be classified as either finance or operating.

We have elected the policy exemption that allows lessees to choose to not separate lease and non-lease components by class of underlying asset and are applying this expedient to all relevant asset classes.

We determine if an arrangement is or contains a lease at inception of the contract. Our right-of-use assets represent our right to use the underlying assets for the lease term and our lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the implicit rate noted within the contract if known or determinable. If the implicit rate is not readily available, we use our estimated incremental borrowing rate, which is derived using a collateralized borrowing rate for the same currency and term as the associated lease. A right-of-use asset and lease liability is not recognized for leases with an initial term of 12 months or less and we recognize lease expense for these leases on a straight-line basis over the lease term within lease and rental expense.

Our operating leases are primarily for real estate, including certain acute care facilities, off-campus outpatient facilities, medical office buildings, and corporate and other administrative offices. Our real estate lease agreements typically have initial terms of five to 10 years. These real estate leases may include one or more options to renew, with renewals that can extend the lease term from five to 10 years. The exercise of lease renewal options is at our sole discretion. When determining the lease term, we included options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Five of our hospital facilities are held under operating leases with Universal Health Realty Income Trust with two hospital terms expiring in 2026, two expiring in 2033, and one expiring in 2040 (see Note 9 for additional disclosure). We also lease the real property of certain facilities (see Item 2. Properties for additional disclosure).

The components of lease expense for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Twelve months ended<br>December 31,** | **Twelve months ended<br>December 31,** | **Twelve months ended<br>December 31,** |
|  | **2022** | **2021** | **2020** |
| Operating lease cost | $90326 | $77420 | $73841 |
| Variable and short term lease cost (a) | 41300 | 41443 | 42218 |
| Total lease and rental expense | $131626 | $118863 | $116059 |
| Finance lease cost: |  |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of property under capital lease | $5110 | $3626 | $1985 |
| &nbsp;&nbsp;&nbsp;Interest on debt of property under capital lease | 3903 | 4124 | 1763 |
| Total finance lease cost | $9013 | $7750 | $3748 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Includes equipment, month-to-month and leases with a maturity of less than 12 months.

Supplemental cash flow information related to leases for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Twelve months ended<br>December 31,** | **Twelve months ended<br>December 31,** | **Twelve months ended<br>December 31,** |
|  | **2022** | **2021** | **2020** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating cash flows from operating leases | $124704 | $118433 | $115270 |
| &nbsp;&nbsp;&nbsp;Operating cash flows from finance leases | $3963 | $4612 | $1885 |
| &nbsp;&nbsp;&nbsp;Financing cash flows from finance leases | $3454 | $2849 | $2586 |
| Right-of-use assets obtained in exchange for lease obligations: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | $163679 | $95805 | $69678 |
| &nbsp;&nbsp;&nbsp;Finance leases | $1066 | $28600 | $37029 |

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Supplemental balance sheet information related to leases as of December 31, 2022 and 2021 are as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| **Operating Leases** |  |  |
| Right of use assets-operating leases | $454650 | $367477 |
| Operating lease liabilities | $67776 | $64484 |
| Operating lease liabilities noncurrent | 395522 | 304624 |
| &nbsp;&nbsp;&nbsp;Total operating lease liabilities | $463298 | $369108 |
| **Finance Leases** |  |  |
| Property and equipment | $102494 | $102940 |
| Accumulated depreciation | (34455) | (30949) |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | $68039 | $71991 |
| Current maturities of long-term debt | $3046 | $2740 |
| Long-term debt | 72549 | 76591 |
| &nbsp;&nbsp;&nbsp;Total finance lease liabilities | $75595 | $79331 |
| Weighted Average remaining lease term, years |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating leases | 16.1 | 9.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance leases | 20.7 | 20.8 |
| Weighted Average discount rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating leases | 5.0% | 3.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance leases | 5.4% | 7.1% |

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Future maturities of lease liabilities as of December 31, 2022 are as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | Operating Leases | Finance Leases |
| Year ending December 31, |  |  |
| 2023 | $83573 | $6826 |
| 2024 | 75223 | 6990 |
| 2025 | 68411 | 5871 |
| 2026 | 58742 | 5876 |
| 2027 | 40068 | 6032 |
| Later years | 595736 | 101102 |
| Total lease payments | 921753 | 132697 |
| less imputed interest | (458455) | (57102) |
| Total | $463298 | $75595 |

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We assumed $1 million, $29 million and $37 million in finance lease obligations during 2022, 2021 and 2020, respectively. In the ordinary course of business, our facilities routinely lease equipment pursuant to new lease arrangements that will likely result in future lease and rental expense in excess of amounts indicated above.

**8) COMMITMENTS AND CONTINGENCIES**

**Professional and General Liability, Workers' Compensation Liability** 

The vast majority of our subsidiaries are self-insured for professional and general liability exposure up to: (i) $20 million for professional liability and $3 million for general liability per occurrence in 2022 and 2021; (ii) $10 million and $3 million per occurrence in 2020 (professional liability claims are also subject to an additional annual aggregate self-insured retention of $2.5 million for claims in excess of $10 million for 2020); (iii) $5 million and $3 million per occurrence, respectively, during 2019, 2018 and 2017, and; (iv) $10 million and $3 million per occurrence, respectively, prior to 2017.

These subsidiaries are provided with several excess policies through commercial insurance carriers which provide for coverage in excess of the applicable per occurrence and aggregate self-insured retention or underlying policy limits up to $162.5 million in

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2022; $155 million in 2021 and $250 million during each of2014 through 2020. In addition, from time to time based upon marketplace conditions, we may elect to purchase additional commercial coverage for certain of our facilities or businesses. Our behavioral health care facilities located in the U.K. have policies through a commercial insurance carrier located in the U.K. that provides for £16 million of professional liability coverage, and £25 million of general liability coverage.

As of December 31, 2022, the total net accrual for our professional and general liability claims was $372 million, of which $74 million was included in current liabilities. As of December 31, 2021, the total net accrual for our professional and general liability claims was $349 million, of which $74 million was included in current liabilities.

As a result of unfavorable trends experienced during the last three years, our results of operations included pre-tax increases to our reserves for self-insured professional and general liability claims amounting to approximately $16 million during 2022, $52 million during 2021 and $25 million during 2020. Our estimated liability for self-insured professional and general liability claims is based on a number of factors including, among other things, the number of asserted claims and reported incidents, estimates of losses for these claims based on recent and historical settlement amounts, estimates of incurred but not reported claims based on historical experience, and estimates of amounts recoverable under our commercial insurance policies. While we continuously monitor these factors, our ultimate liability for professional and general liability claims could change materially from our current estimates due to inherent uncertainties involved in making this estimate. Given our significant self-insured exposure for professional and general liability claims, there can be no assurance that a sharp increase in the number and/or severity of claims asserted against us will not have a material adverse effect on our future results of operations.

As of December 31, 2022, the total accrual for our workers' compensation liability claims was $125 million, $55 million of which was included in current liabilities. As of December 31, 2021, the total accrual for our workers' compensation liability claims was $115 million, $55 million of which was included in current liabilities.

Although we are unable to predict whether or not our future financial statements will require updates to estimates for our prior year reserves for self-insured general and professional and workers' compensation claims, given the relatively unpredictable nature of these potential liabilities and the factors impacting these reserves, as discussed above, it is reasonably likely that our future financial results may include material adjustments to prior period reserves.

Below is a schedule showing the changes in our general and professional liability and workers' compensation reserves during the three years ended December 31, 2022 (amount in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **General and** |  |  |
|  | **Professional** | **Workers'** |  |
|  | **Liability** | **Compensation** | **Total** |
| Balance at January 1, 2020 | $241820 | $81004 | $322824 |
| Plus: Accrued insurance expense, net of commercial <br> premiums paid | 91518 | 67705 | 159223 |
| Less: Payments made in settlement of self-insured claims | (69559) | (43524) | (113083) |
| Balance at January 1, 2021 | 263779 | 105185 | 368964 |
| Plus: Accrued insurance expense, net of commercial <br> premiums paid | 129690 | 56525 | 186215 |
| Less: Payments made in settlement of self-insured claims | (44776) | (46725) | (91501) |
| Balance at January 1, 2022 | 348693 | 114985 | 463678 |
| Plus: Accrued insurance expense, net of commercial <br> premiums paid | 111763 | 62960 | 174723 |
| Less: Payments made in settlement of self-insured claims | (88556) | (53429) | (141985) |
| Balance at December 31, 2022 | $371900 | $124516 | $496416 |

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**Property Insurance**

We have commercial property insurance policies for our properties covering catastrophic losses, including windstorm damage, up to a $1 billion policy limit, subject to a per occurrence/per location deductible of $2.5 million as of June 1, 2020. Losses resulting from named windstorms are subject to deductibles between 3% and 5% of the total insurable value of the property. In addition, we have commercial property insurance policies covering catastrophic losses resulting from earthquake and flood damage, each subject to aggregated loss limits (as opposed to per occurrence losses). Commercially insured earthquake coverage for our facilities is subject to various deductibles and limitations including: (i) $150 million limitation for our facilities located in California; (ii) $100 million limitation for our facilities located in fault zones within the United States; (iii) $40 million limitation for our facilities located in

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Puerto Rico, and; (iv) $250 million limitation for many of our facilities located in other states. Our commercially insured flood coverage has a limit of $100 million annually. There is also a $10 million sublimit for one of our facilities located in Houston, Texas, and a $1 million sublimit for our facilities located in Puerto Rico. Property insurance for our behavioral health facilities located in the U.K. are provided on an all risk basis up to a £1.5 billion policy limit, with coverage caps per location, that includes coverage for real and personal property as well as business interruption losses.

**Information Technology Incident**

We experienced an information technology security incident in late September, 2020. As a result of this cyberattack, we suspended user access to our information technology applications related to operations located in the United States. While our information technology applications were offline, patient care was delivered safely and effectively at our facilities across the country utilizing established back-up processes, including offline documentation methods. Our information technology applications were substantially restored at our acute care and behavioral health hospitals at various times in October, 2020, on a rolling/staggered basis, and our facilities generally resumed standard operating procedures at that time.

In connection with this incident, our results of operations for the years ended December 31, 2022 and 2021 were favorably impacted by an aggregate of approximately $13 million and $45 million, respectively, resulting from receipt of commercial cyber insurance proceeds (approximately $41 million in the aggregate during 2022 and 2021), and; (ii) collection of revenues previously reserved during 2020 (approximately $17 million during 2021).

**Other Contractual Commitments:**

In addition to our long-term debt obligations as discussed in Note 4 - Long-Term Debt and our operating lease obligations as discussed in Note 7 - Lease Commitments, we have various other contractual commitments outstanding as of December 31, 2022 as follows: (i) other combined estimated future purchase obligations of $369 million related to a long-term contract with third-parties consisting primarily of certain revenue cycle data processing services for our acute care facilities ($54 million), expected future costs to be paid to a third-party vendor in connection with the ongoing operation of an electronic health records application and purchase implementation of a revenue cycle and other applications for our acute care facilities ($224 million), healthcare infrastructure in Washington D.C. in connection with various agreements with the District of Columbia ($75 million), and other software applications ($16 million); (ii) estimated construction commitment of $24 million representing our share of the construction cost of a behavioral health care facility scheduled to be completed in 2025 that, subject to approval of certain regulatory conditions, we are required to build pursuant to a joint-venture agreement with a third-party; (iii) combined estimated future payments of $169 million related to our non-contributory, defined benefit pension plan ($146 million consisting of estimated payments through 2080) and other retirement plan liabilities ($23 million), and; (iv) accrued and unpaid estimated claims expense incurred in connection with our commercial health insurers and self-insured employee benefit plans ($135 million).

**Legal Proceedings**

We operate in a highly regulated and litigious industry which subjects us to various claims and lawsuits in the ordinary course of business as well as regulatory proceedings and government investigations. These claims or suits include claims for damages for personal injuries, medical malpractice, commercial/contractual disputes, wrongful restriction of, or interference with, physicians' staff privileges, and employment related claims. In addition, health care companies are subject to investigations and/or actions by various state and federal governmental agencies or those bringing claims on their behalf. Government action has increased with respect to investigations and/or allegations against healthcare providers concerning possible violations of fraud and abuse and false claims statutes as well as compliance with clinical and operational regulations. Currently, and from time to time, we and some of our facilities are subjected to inquiries in the form of subpoenas, Civil Investigative Demands, audits and other document requests from various federal and state agencies. These inquiries can lead to notices and/or actions including repayment obligations from state and federal government agencies associated with potential non-compliance with laws and regulations. Further, the federal False Claims Act allows private individuals to bring lawsuits (qui tam actions) against healthcare providers that submit claims for payments to the government. Various states have also adopted similar statutes. When such a claim is filed, the government will investigate the matter and decide if they are going to intervene in the pending case. These qui tam lawsuits are placed under seal by the court to comply with the False Claims Act's requirements. If the government chooses not to intervene, the private individual(s) can proceed independently on behalf of the government. Health care providers that are found to violate the False Claims Act may be subject to substantial monetary fines/penalties as well as face potential exclusion from participating in government health care programs or be required to comply with Corporate Integrity Agreements as a condition of a settlement of a False Claims Act matter. In September 2014, the Criminal Division of the Department of Justice ("DOJ") announced that all qui tam cases will be shared with their Division to determine if a parallel criminal investigation should be opened. The DOJ has also announced an intention to pursue civil and criminal actions against individuals within a company as well as the corporate entity or entities. In addition, health care facilities are subject to monitoring by state and federal surveyors to ensure compliance with program Conditions of Participation. In the event a facility is found to be out of compliance with a Condition of Participation and unable to remedy the alleged deficiency(s), the facility faces termination from the Medicare and Medicaid programs or compliance with a System Improvement Agreement to remedy deficiencies and ensure compliance.

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The laws and regulations governing the healthcare industry are complex covering, among other things, government healthcare participation requirements, licensure, certification and accreditation, privacy of patient information, reimbursement for patient services as well as fraud and abuse compliance. These laws and regulations are constantly evolving and expanding. Further, the Legislation has added additional obligations on healthcare providers to report and refund overpayments by government healthcare programs and authorizes the suspension of Medicare and Medicaid payments "pending an investigation of a credible allegation of fraud." We monitor our business and have developed an ethics and compliance program with respect to these complex laws, rules and regulations. Although we believe our policies, procedures and practices comply with government regulations, there is no assurance that we will not be faced with the sanctions referenced above which include fines, penalties and/or substantial damages, repayment obligations, payment suspensions, licensure revocation, and expulsion from government healthcare programs. Even if we were to ultimately prevail in any action brought against us or our facilities or in responding to any inquiry, such action or inquiry could have a material adverse effect on us.

Certain legal matters are described below:

Litigation:

Knight v. Miller, et. al.

In July 2021, a shareholder derivative lawsuit was filed by plaintiff, Robin Knight, in the Chancery Court in Delaware against the members of the Board of Directors of the Company as well as certain officers (C.A. No.: 2021-0581-SG). The Company was named as a nominal defendant. The lawsuit alleges that in March 2020 stock options were awarded with exercise prices that did not reflect the Company's fundamentals and business prospects, and in anticipation of future market rebound resulting in excessive gains. The lawsuit makes claims of breaches of fiduciary duties, waste of corporate assets, and unjust enrichment. The lawsuit seeks monetary damages allegedly incurred by the Company, disgorgement of the March 2020 stock awards as well as any proceeds derived therefrom and unspecified equitable relief. Defendants deny the allegations. We filed a motion to dismiss the complaint and the court granted part and denied part of our motion. During the third quarter of 2022, we have reached a preliminary settlement, which will not have a material impact on our consolidated financial statements. The settlement is currently pending final court approval. We are uncertain as to potential liability or financial exposure, if any, which may be associated with this matter in the event the settlement is not finalized and approved by the court.

Disproportionate Share Hospital Payment Matter:

In late September, 2015, many hospitals in Pennsylvania, including certain of our behavioral health care hospitals located in the state, received letters from the Pennsylvania Department of Human Services (the "Department") demanding repayment of allegedly excess Medicaid Disproportionate Share Hospital payments ("DSH"), primarily consisting of managed care payments characterized as DSH payments, for the federal fiscal year ("FFY") 2011 amounting to approximately $4 million in the aggregate. Since that time, certain of our behavioral health care hospitals in Pennsylvania have received similar requests for repayment for alleged DSH overpayments for FFYs 2012 through 2015. For FFY 2012, the claimed overpayment amounts to approximately $4 million. For FY 2013, FY 2014 and FY 2015 the initial claimed overpayments and attempted recoupment by the Department were approximately $7 million, $8 million and $7 million, respectively. The Department has agreed to a change in methodology which, upon confirmation of the underlying data being accepted by the Department, could reduce the initial claimed overpayments for FY 2013, FY 2014 and FY 2015 to approximately $2 million, $2 million and $3 million, respectively. We filed administrative appeals for all of our facilities contesting the recoupment efforts for FFYs 2011 through 2015 as we believe the Department's calculation methodology is inaccurate and conflicts with applicable federal and state laws and regulations. The Department has agreed to postpone the recoupment of the state's share for FY 2011 to 2013 until all hospital appeals are resolved but started recoupment of the federal share. For FY 2014 and FY 2015, the Department has initiated the recoupment of the alleged overpayments. Starting in FY 2016, the first full fiscal year after the January 1, 2015 effective date of Medicaid expansion in Pennsylvania, the Department no longer characterized managed care payments received by the hospitals as DSH payments. We can provide no assurance that we will ultimately be successful in our legal and administrative appeals related to the Department's repayment demands. If our legal and administrative appeals are unsuccessful, our future consolidated results of operations and financial condition could be adversely impacted by these repayments.

Boley, et al. v. UHS, et al.

Former UHS subsidiary facility employees Mary K. Boley, Kandie Sutter, and Phyllis Johnson, individually and on behalf of a putative class of participants in the UHS Retirement Savings Plan (the "Plan"), filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania against UHS, the Board of Directors of UHS, and the "Plan Committee" of UHS (Case No. 2:20-cv-02644). In subsequent amended complaints, Plaintiffs have dropped the Board of Directors and the "Plan Committee" as defendants and added the UHS Retirement Plans Investment Committee as a new defendant. Plaintiffs allege that UHS breached its fiduciary duties under the Employee Retirement Income Security Act ("ERISA") by offering to participants in the Plan overly expensive investment options when less expensive investment options were available in the marketplace; caused participants to pay excessive recordkeeping fees associated with the Plan; breached its duty to monitor appointed fiduciaries and: in the alternative, engaged in a "knowing breach of trust" separate from the alleged violations under ERISA. UHS disputes Plaintiffs' allegations and is actively defending against Plaintiffs' claims. UHS's motion for partial dismissal of Plaintiffs' claims was denied by the Court. In March 2021, the Court granted Plaintiffs' motion for class certification. Although the Third Circuit Court of Appeal agreed to hear an appeal

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of the trial court's order granting class certification, the appeal was denied and the class certification was affirmed. As a result, the stay of the case in the trial court pending conclusion of the appellate proceedings has been lifted. We maintain commercial insurance coverage for claims of this nature, subject to specified deductibles and limitations. During the third quarter of 2022, the parties have reached a preliminary settlement, within the policy limitations of our commercial insurance coverage after satisfaction of specified deductibles, for which the court has granted preliminary approval. A final settlement approval hearing is scheduled for March 30, 2023. We are uncertain as to potential liability or financial exposure, if any, which may be associated with this matter in the event the settlement is not approved by the court.

Other Matters:

Various other suits, claims and investigations, including government subpoenas, arising against, or issued to, us are pending and additional such matters may arise in the future. Management will consider additional disclosure from time to time to the extent it believes such matters may be or become material. The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters described above or that are otherwise pending because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including, but not limited to: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the matter is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties, or; (vii) there is a wide range of potential outcomes. It is possible that the outcome of these matters could have a material adverse impact on our future results of operations, financial position, cash flows and, potentially, our reputation.

**9) RELATIONSHIP WITH UNIVERSAL HEALTH REALTY INCOME TRUST AND OTHER RELATED PARTY TRANSACTIONS**

**Relationship with Universal Health Realty Income Trust:**

At December 31, 2022, we held approximately 5.7% of the outstanding shares of Universal Health Realty Income Trust (the "Trust"). We serve as Advisor to the Trust under an annually renewable advisory agreement, which is scheduled to expire on December 31<sup>st</sup> of each year, pursuant to the terms of which we conduct the Trust's day-to-day affairs, provide administrative services and present investment opportunities. The advisory agreement was renewed by the Trust for 2023 at the same rate in place for 2022, 2021 and 2020, providing for an advisory computation at 0.70% of the Trust's average invested real estate assets. We earned an advisory fee from the Trust, which is included in net revenues in the accompanying consolidated statements of income, of approximately $5.1 million during 2022, $4.4 million during 2021 and $4.1 million during 2020.

In addition, certain of our officers and directors are also officers and/or directors of the Trust. Management believes that it has the ability to exercise significant influence over the Trust, therefore we account for our investment in the Trust using the equity method of accounting.

Our pre-tax share of income from the Trust was $1.2 million during 2022, $6.2 million during 2021 and $1.1 million during 2020, which are included in other income, net, on the accompanying consolidated statements of income for each year. We received dividends from the Trust amounting to $2.2 million during each of 2022, 2021 and 2020. Included in our share of the Trust's income during 2021 was approximately $5.0 million related to our share of gains on various transactions recorded by the Trust, including an asset purchase and sale transaction between the Trust and UHS, as discussed below.

The carrying value of our investment in the Trust was $8.4 million and $9.4 million at December 31, 2022 and 2021, respectively, and is included in other assets in the accompanying consolidated balance sheets. The market value of our investment in the Trust was $37.6 million at December 31, 2022 and $46.8 million at December 31, 2021, based on the closing price of the Trust's stock on the respective dates.

The Trust commenced operations in 1986 by purchasing certain hospital properties from us and immediately leasing the properties back to our respective subsidiaries. The base rents are paid monthly and the bonus rents, which as of January 1, 2022 are applicable only to McAllen Medical Center, are computed and paid on a quarterly basis, based upon a computation that compares current quarter revenue to a corresponding quarter in the base year. The leases with those subsidiaries are unconditionally guaranteed by us and are cross-defaulted with one another.

On December 31, 2021, we entered into an asset purchase and sale agreement with the Trust, which was amended during the first quarter of 2022, pursuant to the terms of which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a wholly-owned subsidiary of ours purchased from the Trust, the real estate assets of the Inland Valley Campus of Southwest Healthcare System located in Wildomar, California, at its fair market value of $79.6 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•two wholly-owned subsidiaries of ours transferred to the Trust, the real estate assets of the following properties:

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oAiken Regional Medical Center ("Aiken"), located in Aiken, South Carolina (which includes a 211-bed acute care hospital and a 62-bed behavioral health facility), at its fair-market value of approximately $57.7 million, and;

oCanyon Creek Behavioral Health ("Canyon Creek"), located in Temple, Texas, at its fair-market value of approximately $26.0 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•in connection with this transaction, since the fair-market value of Aiken and Canyon Creek, which totaled approximately $83.7 million in the aggregate, exceeded the $79.6 million fair-market value of the Inland Valley Campus of Southwest Healthcare System, we received approximately $4.1 million in cash from the Trust. This transaction generated a gain of approximately $68.4 million for the Trust, our share of which (approximately $4.0 million) is included in our consolidated statement of income for the year ended December 31, 2021.

Also on December 31, 2021, Aiken and Canyon Creek (as lessees), entered into a master lease and individual property leases (with the Trust as lessor), as amended, for initial lease terms on each property of approximately twelve years, ending on December 31, 2033. Subject to the terms of the master lease, Aiken and Canyon Creek have the right to renew their leases, at the then current fair market rent (as defined in the master lease), for seven, five-year optional renewal terms. The aggregate annual rental during 2022 pursuant to the leases for these two facilities, amounted to approximately $5.7 million ($3.9 million related to Aiken and $1.8 million related to Canyon Creek). There is no bonus rental component applicable to either of these leases. On each January 1<sup>st</sup> through 2033, the annual rental will increase by 2.25% on a cumulative and compounded basis.

As a result of the purchase options within the lease agreements for Aiken and Canyon Creek, the asset purchase and sale transaction is accounted for as a failed sale leaseback in accordance with U.S. GAAP. We have accounted for the asset exchange and substitution transaction with the Trust as a financing arrangement and, since we did not derecognize the real property related to Aiken and Canyon Creek, we will continue to depreciate the assets. Our Consolidated Balance Sheet as of December 31, 2022 and 2021 reflects a financial liability of $80.9 million and $82.4 million, respectively, which is included in debt, for the fair value of real estate assets that we exchanged as part of the transaction. Our monthly lease payments payable to the Trust will be recorded to interest expense and as a reduction to the outstanding financial liability. The amount allocated to interest expense is determined using our incremental borrowing rate and is based on the outstanding financial liability.

The total aggregate rental for leases on the four wholly-owned hospital facilities with the Trust (excluding Clive Behavioral Health Hospital which is discussed below) was approximately $20.2 million during 2022. Total aggregate rent expense under the operating leases on three hospital facilities with the Trust (McAllen Medical Center, Wellington Regional Medical Center and Inland Valley Campus of Southwest Healthcare System) was $17.7 million and $17.1 million during 2021 and 2020, respectively.

Pursuant to the Master Leases by certain subsidiaries of ours and the Trust as described in the table below, dated 1986 and 2021 ("the Master Leases") which govern the leases of McAllen Medical Center and Wellington Regional Medical Center (each of which is governed by the Master Lease dated 1986), and Aiken Regional Medical Center and Canyon Creek Behavioral Health (each of which is governed by the Master Lease dated 2021), we have the option to renew the leases at the lease terms described above and below by providing notice to the Trust at least 90 days prior to the termination of the then current term. We also have the right to purchase the respective leased hospitals at their appraised fair market value upon any of the following: (i) at the end of the lease terms or any renewal terms; (ii) upon one month's notice should a change of control of the Trust occur, or; (iii) within the time period as specified in the lease in the event that we provide notice to the Trust of our intent to offer a substitution property/properties in exchange for one (or more) of the hospital properties leased from the Trust should we be unable to reach an agreement with the Trust on the properties to be substituted. In addition, we have rights of first refusal to: (i) purchase the respective leased facilities during and for 180 days after the lease terms at the same price, terms and conditions of any third-party offer, or; (ii) renew the lease on the respective leased facility at the end of, and for 180 days after, the lease term at the same terms and conditions pursuant to any third-party offer.

In addition, we are the managing, majority member in a joint venture with an unrelated third-party that operates Clive Behavioral Health, a 100-bed behavioral health care facility located in Clive, Iowa. The real property of this facility, which was completed and opened in late, 2020, is also leased from the Trust (annual rental of approximately $2.6 million and $2.5 million during 2022 and 2021, respectively) pursuant to the lease terms as provided in the table below. In connection with the lease on this facility, the joint venture has the right to purchase the leased facility from the Trust at its appraised fair market value upon either of the following: (i) by providing notice at least 270 days prior to the end of the lease terms or any renewal terms, or; (ii) upon 30 days' notice anytime within 12 months of a change of control of the Trust (UHS also has this right should the joint venture decline to exercise its purchase right). Additionally, the joint venture has rights of first offer to purchase the facility prior to any third-party sale.

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The table below provides certain details for each of the hospitals leased from the Trust as of January 1, 2023:

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| | | | |
|:---|:---|:---|:---|
| **<u>Hospital Name</u>** | **Annual<br>Minimum<br>Rent** | **End of Lease Term** | **Renewal<br>Term<br>(years)** |
| McAllen Medical Center | $5485000 | December, 2026 | 5<br> (a) |
| Wellington Regional Medical Center | $6477000 | December, 2026 | 5<br> (b) |
| Aiken Regional Medical Center/Aurora Pavilion Behavioral Health Services | $3982000 | December, 2033 | 35<br> (c) |
| Canyon Creek Behavioral Health | $1800000 | December, 2033 | 35<br> (c) |
| Clive Behavioral Health Hospital | $2701000 | December, 2040 | 50<br> (d) |

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(a)We have one 5-year renewal option at existing lease rates (through 2031).

(b)We have one 5-year renewal option at fair market value lease rates (through 2031). Upon the December 31, 2021 expiration of the lease on Wellington Regional Medical Center, a wholly-owned subsidiary of ours exercised its fair market value renewal option and renewed the lease for a 5-year term scheduled to expire on December 31, 2026. Effective January 1, 2022, the annual fair market value lease rate for this hospital is $6.3 million (there is no longer a bonus rental component of the lease payment). On each January 1<sup>st</sup> through 2026, the annual rent will increase by 2.50% on a cumulative and compounded basis.

(c)We have seven 5-year renewal options at fair market value lease rates (2034 through 2068). On each January 1<sup>st</sup> through 2033, the annual rent will increase by 2.25% on a cumulative and compounded basis.

(d)This facility is operated by a joint venture in which we are the managing, majority member and an unrelated third-party holds a minority ownership interest. The joint venture has three, 10-year renewal options at computed lease rates as stipulated in the lease (2041 through 2070) and two additional, 10-year renewal options at fair market values lease rates (2071 through 2090). In each January through 2040 (and potentially through 2070 if three, 10-year renewal options are exercised), the annual rental will increase by 2.75% on a cumulative and compounded basis.

In addition, certain of our subsidiaries are tenants in several medical office buildings ("MOBs") and two free-standing emergency departments owned by the Trust or by limited liability companies in which the Trust holds 95% to 100% of the ownership interest.

In January, 2022, the Trust commenced construction on a new 86,000 rentable square feet multi-tenant MOB that is located on the campus of Northern Nevada Sierra Medical Center in Reno, Nevada. Northern Nevada Sierra Medical Center, a 158-bed newly constructed acute care hospital owned and operated by a wholly-owned subsidiary of ours, was completed and opened in April, 2022. In connection with this MOB, which is expected to be completed and opened during the first quarter of 2023, a ground lease and a master flex lease was executed between a wholly-owned subsidiary of ours and the Trust, pursuant to the terms of which our subsidiary will master lease approximately 68% of the rentable square feet of the MOB at an initial minimum rent of $1.3 million annually. The master flex lease could be reduced during the term if certain conditions are met.

**Other Related Party Transactions:**

In December, 2010, our Board of Directors approved the Company's entering into supplemental life insurance plans and agreements on the lives of our chief executive officer ("CEO") and his wife. As a result of these agreements, as amended in October, 2016, based on actuarial tables and other assumptions, during the life expectancies of the insureds, we would pay approximately $28 million in premiums, and certain trusts owned by our CEO, would pay approximately $9 million in premiums. Based on the projected premiums mentioned above, and assuming the policies remain in effect until the death of the insureds, we will be entitled to receive death benefit proceeds of no less than approximately $37 million representing the $28 million of aggregate premiums paid by us as well as the $9 million of aggregate premiums paid by the trusts. In connection with these policies, we paid approximately $1.0 million, net, in premium payments during 2022 and 2021 and approximately $1.1 million, net, in premium payments during 2020.

In August, 2015, Marc D. Miller, our President and Chief Executive Officer and member of our Board of Directors, was appointed to the Board of Directors of Premier, Inc. ("Premier"), a healthcare performance improvement alliance. During 2013, we entered into a new group purchasing organization agreement ("GPO") with Premier. In conjunction with the GPO agreement, we acquired a minority interest in Premier for a nominal amount. During the fourth quarter of 2013, in connection with the completion of an initial public offering of the stock of Premier, we received cash proceeds for the sale of a portion of our ownership interest in the GPO. Also in connection with this GPO agreement, we received shares of restricted stock of Premier which vested ratably over a seven-year period (2014 through 2020), contingent upon our continued participation and minority ownership interest in the GPO. During the third quarter of 2020, we entered into an agreement with Premier pursuant to the terms of which, among other things, our ownership interest in Premier was converted into shares of Class A Common Stock of Premier. We have elected to retain a portion of the previously vested shares of Premier, the market value of which is included in other assets on our consolidated balance sheet. Based upon the closing price of Premier's stock on each respective date, the market value of our shares of Premier was $78 million as of December 31, 2022 and $92 million as of December 31, 2021. The $14 million decrease in market value of our vested Premier shares since December 31, 2021 was recorded as an unrealized loss and included in "Other (income) expense, net" in our consolidated statements of income for the year ended December 31, 2022. A $14 million increase in the market value of our vested Premier shares during 2021 was recorded as an unrealized gain and included in "Other (income) expense, net" in our consolidated statements of

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income for the year ended December 31, 2021. During 2022, Premier declared annual cash dividends of $.82 per share paid on a quarterly basis. Additionally, during 2021, Premier declared annual cash dividends of $.78 per share paid on a quarterly basis. Our share of the dividends for the years ended December 31, 2022 and 2021 are approximately $1.8 million and $1.7 million, respectively, and are included in "Other (income) expense, net" in our condensed consolidated statements of income for the years ended December 31, 2022 and 2021.

A member of our Board of Directors and member of the Executive Committee and Finance Committee is a partner in Norton Rose Fulbright US LLP, a law firm engaged by us for a variety of legal services. The Board member and his law firm also provide personal legal services to our Executive Chairman and he acts as trustee of certain trusts for the benefit of our Executive Chairman and his family.

**10) REVENUE RECOGNITION**

We recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue. However, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.

The performance obligation is separately identifiable from other promises in the customer contract. As the performance obligations are met (i.e.: room, board, ancillary services, level of care), revenue is recognized based upon allocated transaction price. The transaction price is allocated to separate performance obligations based upon the relative standalone selling price. In instances where we determine there are multiple performance obligations across multiple months, the transaction price will be allocated by applying an estimated implicit and explicit rate to gross charges based on the separate performance obligations.

In assessing collectability, we have elected the portfolio approach. This portfolio approach is being used as we have large volume of similar contracts with similar classes of customers. We reasonably expect that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately. Management's judgment to group the contracts by portfolio is based on the payment behavior expected in each portfolio category. As a result, aggregating all of the contracts (which are at the patient level) by the particular payer or group of payers, will result in the recognition of the same amount of revenue as applying the analysis at the individual patient level.

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We group our revenues into categories based on payment behaviors. Each component has its own reimbursement structure which allows us to disaggregate the revenue into categories that share the nature and timing of payments. The other patient revenue consists primarily of self-pay, government-funded non-Medicaid, and other.

The following table disaggregates our revenue by major source for the years ended December 31, 2022, 2021 and 2020 (in thousands):

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** | **For the year ended December 31, 2022** |
|  | Acute Care | Acute Care | Behavioral Health | Behavioral Health | Other | Total | Total |
| Medicare | $1289425 | 17% | $326337 | 6% |  | $1615762 | 12% |
| Managed Medicare | 1274719 | 17% | 285870 | 5% |  | 1560589 | 12% |
| Medicaid | 719870 | 9% | 792526 | 14% |  | 1512396 | 11% |
| Managed Medicaid | 757488 | 10% | 1449367 | 25% |  | 2206855 | 16% |
| Managed Care (HMO and PPOs) | 2536818 | 33% | 1476136 | 26% |  | 4012954 | 30% |
| UK Revenue | 0 | 0% | 684594 | 12% |  | 684594 | 5% |
| Other patient revenue and adjustments, net | 261879 | 3% | 483763 | 8% |  | 745642 | 6% |
| Other non-patient revenue | 806550 | 11% | 231165 | 4% | 22863 | 1060578 | 8% |
| Total Net Revenue | $7646749 | 100% | $5729758 | 100% | $22863 | 13399370 | 100% |
|  | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** | **For the year ended December 31, 2021** |
|  | Acute Care | Acute Care | Behavioral Health | Behavioral Health | Other | Total | Total |
| Medicare | $1292205 | 18% | $361914 | 7% |  | $1654119 | 13% |
| Managed Medicare | 1118901 | 16% | 244061 | 4% |  | 1362962 | 11% |
| Medicaid | 539741 | 8% | 751951 | 14% |  | 1291692 | 10% |
| Managed Medicaid | 618727 | 9% | 1328536 | 24% |  | 1947263 | 15% |
| Managed Care (HMO and PPOs) | 2521089 | 35% | 1435938 | 26% |  | 3957027 | 31% |
| UK Revenue | 0 | 0% | 687725 | 12% |  | 687725 | 5% |
| Other patient revenue and adjustments, net | 358458 | 5% | 484742 | 9% |  | 843200 | 7% |
| Other non-patient revenue | 659133 | 9% | 208777 | 4% | 30219 | 898129 | 7% |
| Total Net Revenue | $7108254 | 100% | $5503644 | 100% | $30219 | 12642117 | 100% |
|  | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** | **For the year ended December 31, 2020** |
|  | Acute Care | Acute Care | Behavioral Health | Behavioral Health | Other | Total | Total |
| Medicare | $1242268 | 20% | $448323 | 9% |  | $1690591 | 15% |
| Managed Medicare | 869488 | 14% | 235442 | 5% |  | 1104930 | 10% |
| Medicaid | 551551 | 9% | 651081 | 12% |  | 1202632 | 10% |
| Managed Medicaid | 491234 | 8% | 1224205 | 24% |  | 1715439 | 15% |
| Managed Care (HMO and PPOs) | 2146018 | 34% | 1280919 | 25% |  | 3426937 | 30% |
| UK Revenue | 0 | 0% | 584000 | 11% |  | 584000 | 5% |
| Other patient revenue and adjustments, net | 248047 | 4% | 497297 | 10% |  | 745344 | 6% |
| Other non-patient revenue (a) | 788698 | 12% | 287455 | 6% | 12871 | 1089024 | 9% |
| Total Net Revenue | $6337304 | 100% | $5208722 | 100% | $12871 | 11558897 | 100% |

---

(a) The 2020 other non-patient revenue includes Acute Care CARES Act and other grant revenue of $316 million and Behavioral Health CARES Act and other grant revenue of $97 million. As an accounting policy election, we have utilized ASC 958 by analogy to recognize funds received under the CARES Act from the Provider Relief Fund as revenue, given no direct authoritative guidance available to for-profit organizations to recognize revenue for government contributions and grants. CARES Act revenues may be subject to future adjustments based on future changes to statutes.

**11) PENSION PLAN**

We maintain contributory and non-contributory retirement plans for eligible employees. Our contributions to the contributory plan amounted to $72.0 million, $69.8 million and $67.1 million in 2022, 2021 and 2020, respectively. The non-contributory plan is a defined benefit pension plan which covers employees of one of our subsidiaries. The benefits are based on years of service and the employee's highest compensation for any five years of employment. Our funding policy is to contribute annually at least the minimum amount that should be funded in accordance with the provisions of ERISA.

For defined benefit pension plans, the benefit obligation is the "projected benefit obligation", the actuarial present value, as of December 31 measurement date, of all benefits attributed by the pension benefit formula to employee service rendered to that date. The amount of benefit to be paid depends on a number of future events incorporated into the pension benefit formula, including estimates of the average life of employees/survivors and average years of service rendered. It is measured based on assumptions

------

concerning future interest rates and future compensation levels. The following table shows the reconciliation of the defined benefit pension plan as of December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | **(000s)** | **(000s)** |
| **Change in plan assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets at beginning of year | $127360 | $131685 |
| &nbsp;&nbsp;&nbsp;Actual return (loss) on plan assets | (23674) | 2771 |
| &nbsp;&nbsp;&nbsp;Benefits paid | (6448) | (6389) |
| &nbsp;&nbsp;&nbsp;Administrative expenses | (611) | (707) |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets at end of year | $96627 | $127360 |
| **Change in benefit obligation:** |  |  |
| &nbsp;&nbsp;&nbsp;Benefit obligation at beginning of year | $116034 | $123237 |
| &nbsp;&nbsp;&nbsp;Service cost | $607 | $546 |
| &nbsp;&nbsp;&nbsp;Interest cost | $2836 | $2493 |
| &nbsp;&nbsp;&nbsp;Benefits paid | $(6448) | $(6389) |
| &nbsp;&nbsp;&nbsp;Actuarial (gain) loss | $(25752) | $(3853) |
| &nbsp;&nbsp;&nbsp;Benefit obligation at end of year | $87277 | $116034 |
| **Amounts recognized in the Consolidated Balance Sheet:** |  |  |
| &nbsp;&nbsp;&nbsp;Other non-current assets | $9350 | $11327 |
| &nbsp;&nbsp;&nbsp;Total amounts recognized at end of year | $9350 | $11327 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | **2021** | **2020** |
|  | **(000s)** | **(000s)** | **(000s)** |
| **Components of net periodic cost (benefit)** |  |  |  |
| &nbsp;&nbsp;&nbsp;Service cost | $607 | $546 | $615 |
| &nbsp;&nbsp;&nbsp;Interest cost | 2836 | 2493 | 3357 |
| &nbsp;&nbsp;&nbsp;Expected return on plan assets | (4335) | (4490) | (5261) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net periodic cost | $(892) | $(1451) | $(1289) |

---

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Measurement Dates** |  |  |
| &nbsp;&nbsp;&nbsp;Benefit obligations | 12/31/2022 | 12/31/2021 |
| &nbsp;&nbsp;&nbsp;Fair value of plan assets | 12/31/2022 | 12/31/2021 |

---

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Weighted average assumptions as of December 31** |  |  |
| &nbsp;&nbsp;&nbsp;Discount rate | 4.91% | 2.52% |
| &nbsp;&nbsp;&nbsp;Rate of compensation increase | 4.00% | 4.00% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | **2021** | **2020** |
| **Weighted-average assumptions for net periodic benefit<br> cost calculations** |  |  |  |
| &nbsp;&nbsp;&nbsp;Discount rate | 2.52% | 2.08% | 2.94% |
| &nbsp;&nbsp;&nbsp;Expected long-term rate of return on plan assets | 3.50% | 3.50% | 4.50% |
| &nbsp;&nbsp;&nbsp;Rate of compensation increase | 4.00% | 4.00% | 4.00% |

---

The "accumulated benefit obligation" for our pension plan represents the actuarial present value of benefits based on employee service and compensation as of a certain date and does not include an assumption about future compensation levels. The accumulated benefit obligation for our plan was $87.3 million and $116.0 million as of December 31, 2022 and 2021, respectively. The fair value of plan assets exceeded the accumulated benefit obligation by $9.4 million and $11.3 million as of December 31, 2022 and 2021, respectively.

We estimate that there will be no net loss or prior service cost amortized from accumulated other comprehensive income during 2023.

The market values of our pension plan assets at December 31, 2022 and December 31, 2021, reported using net asset value as a practical expedient, by asset category are as follows:

------

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Equities: |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Large Cap | $5301 | $7306 |
| &nbsp;&nbsp;&nbsp;U.S. Mid Cap | $1451 | $2014 |
| &nbsp;&nbsp;&nbsp;U.S. Small Cap | $1452 | $1913 |
| &nbsp;&nbsp;&nbsp;International Developed | $3867 | $5062 |
| &nbsp;&nbsp;&nbsp;Emerging Markets | $2426 | $3152 |
| Fixed income: |  |  |
| &nbsp;&nbsp;&nbsp;Core Fixed Income | $17074 | $22904 |
| &nbsp;&nbsp;&nbsp;Long Duration Fixed Income | $64277 | $84277 |
| Cash/Currency: |  |  |
| &nbsp;&nbsp;&nbsp;Cash Equivalents | $779 | $732 |
| **Total market value** | $96627 | $127360 |

---

To develop the expected long-term rate of return on plan assets assumption, we considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio.

The following table shows expected benefit payments for the years 2023 through 2032 for our defined pension plan. There will be benefit payments under this plan beyond 2032.

---

| | |
|:---|:---|
| **Estimated Future Benefit Payments (000s)** |  |
| &nbsp;&nbsp;&nbsp;2023 | $6804 |
| &nbsp;&nbsp;&nbsp;2024 | 6831 |
| &nbsp;&nbsp;&nbsp;2025 | 6819 |
| &nbsp;&nbsp;&nbsp;2026 | 6781 |
| &nbsp;&nbsp;&nbsp;2027 | 6732 |
| &nbsp;&nbsp;&nbsp;2028-2032 | 32152 |
| &nbsp;&nbsp;&nbsp;Total | $66119 |

---

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Plan Assets** |  |  |
| Asset Category |  |  |
| &nbsp;&nbsp;&nbsp;Equity securities | 15% | 15% |
| &nbsp;&nbsp;&nbsp;Fixed income securities | 84% | 84% |
| &nbsp;&nbsp;&nbsp;Other | 1% | 1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% |

---

Investment Policy, Guidelines and Objectives have been established for the defined benefit pension plan. The investment policy is in keeping with the fiduciary requirements under existing federal laws and managed in accordance with the Prudent Investor Rule. Total portfolio risk is regularly evaluated and compared to that of the plan's policy target allocation and judged on a relative basis over a market cycle. The following asset allocation policy and ranges have been established in accordance with the overall risk and return objectives of the portfolio:

---

| | | |
|:---|:---|:---|
|  | **As of 12/31/2022** | **PermittedRange** |
| Total Equity | 15% | 10-30% |
| Total Fixed Income | 84% | 70-90% |
| Other | 1% | 0-10% |

---

In accordance with the investment policy, the portfolio will invest in high quality, large and small capitalization companies traded on national exchanges, and investment grade securities. The investment managers will not write or buy options for speculative purposes; securities may not be margined or sold short. The manager may employ futures or options for the purpose of hedging exposure, and will not purchase unregistered sectors, private placements, partnerships or commodities.

**12) SEGMENT REPORTING**

Our reportable operating segments consist of acute care hospital services and behavioral health care services. The "Other" segment column below includes centralized services including, but not limited to, information technology, purchasing, reimbursement, accounting and finance, taxation, legal, advertising and design and construction. The chief operating decision making group for our acute care services and behavioral health care services is comprised of our Chief Executive Officer and the Presidents of each operating segment. The Presidents for each operating segment also manage the profitability of each respective segment's various facilities. The operating segments are managed separately because each operating segment represents a business unit that offers

------

different types of healthcare services or operates in different healthcare environments. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies included in Note 1-Business and Summary of Significant Accounting Policies. The corporate overhead allocations, as reflected below, are utilized for internal reporting purposes and are comprised of each period's projected corporate-level operating expenses (excluding interest expense). The overhead expenses are captured and allocated directly to each segment, to the extent possible, based upon each segment's respective percentage of total operating expenses.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<u>2022</u>** | **Acute Care<br>Hospital<br>Services (b.)** | **Behavioral<br>Health<br>Services (a.)** | **Other** | **Total<br>Consolidated** |
|  | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** |
| Gross inpatient revenues | $40004670 | $10116566 | $— | $50121236 |
| Gross outpatient revenues | $24813718 | $1031370 | $— | $25845088 |
| Total net revenues | $7646749 | $5729758 | $22863 | $13399370 |
| Income (loss) before allocation of corporate<br> overhead and income taxes | $429664 | $980290 | $(543694) | $866260 |
| Allocation of corporate overhead | $(252034) | $(179936) | $431970 | $0 |
| Income (loss) after allocation of corporate overhead<br> and before income taxes | $177630 | $800354 | $(111724) | $866260 |
| Total assets | $5993887 | $7277293 | $223008 | $13494188 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<u>2021</u>** | **Acute Care<br>Hospital<br>Services** | **Behavioral<br>Health<br>Services (a.)** | **Other** | **Total<br>Consolidated** |
|  | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** |
| Gross inpatient revenues | $36522155 | $9927401 | $— | $46449556 |
| Gross outpatient revenues | $20633921 | $1013547 | $— | $21647468 |
| Total net revenues | $7108254 | $5503644 | $30219 | $12642117 |
| Income (loss) before allocation of corporate<br> overhead and income taxes | $734666 | $1025557 | $(466910) | $1293313 |
| Allocation of corporate overhead | $(233298) | $(172512) | $405810 | $0 |
| Income (loss) after allocation of corporate overhead<br> and before income taxes | $501368 | $853045 | $(61100) | $1293313 |
| Total assets | $5534912 | $7250427 | $308204 | $13093543 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<u>2020</u>** | **Acute Care<br>Hospital<br>Services** | **Behavioral<br>Health<br>Services (a.)** | **Other** | **Total<br>Consolidated** |
|  | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** | **(Dollar amounts in thousands)** |
| Gross inpatient revenues | $30562093 | $9718934 | $— | $40281027 |
| Gross outpatient revenues | $16272520 | $963799 | $— | $17236319 |
| Total net revenues | $6337304 | $5208722 | $12871 | $11558897 |
| Income (loss) before allocation of corporate<br> overhead and income taxes | $693427 | $1023257 | $(464601) | $1252083 |
| Allocation of corporate overhead | $(223921) | $(170849) | $394770 | $0 |
| Income (loss) after allocation of corporate overhead<br> and before income taxes | $469506 | $852408 | $(69831) | $1252083 |
| Total assets | $4927456 | $7044617 | $1504806 | $13476879 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Includes net revenues generated from our behavioral health care facilities located in the U.K. amounting to approximately $685 million in 2022, $688 million in 2021 and $584 million in 2020. Total assets at our U.K. behavioral health care facilities were approximately $1.235 billion as of December 31, 2022, $1.351 billion as of December 31, 2021 and $1.334 billion as of December 31, 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Included in our 2022 acute care hospital services operating segment income (loss) before allocation of corporate overhead and income taxes is a pre-tax $58 million provision for asset impairment charge to reduce the carrying value of real property assets.

------

**SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS**

(amounts in thousands)

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance at** | **Charges to** | **Balance** |
|  | **beginning** | **costs and** | **at end** |
| **Valuation Allowance for Deferred Tax Assets:** | **of period** | **expenses** | **of period** |
| Year ended December 31, 2022 | $62356 | $969 | $63325 |
| Year ended December 31, 2021 | $68003 | $(5647) | $62356 |
| Year ended December 31, 2020 | $75277 | $(7274) | $68003 |

---

------

## Ex-10

Exhibit 10.1

November 30, 2022

Steve Filton

Executive Vice President & CFO

UHS of Delaware, Inc.

367 South Gulph Road

King of Prussia, PA 19406

Dear Steve:

The Board of Trustees of Universal Health Realty Income Trust, at today's meeting, authorized the renewal of the current Advisory Agreement between Universal Health Realty Income Trust and UHS of Delaware, Inc. ("Agreement") upon the same terms and conditions.

This letter constitutes Universal Health Realty Income Trust's offer to renew the Agreement, through December 31, 2023, upon the same terms and conditions. Please acknowledge UHS of Delaware's acceptance of this offer by signing in the space provided below and returning one copy of this letter to me. Thank you.

Sincerely,

<u>/s/ Cheryl K. Ramagano</u>

Cheryl K. Ramagano

Senior Vice President, Operations,

Treasurer and Secretary

**Agreed and Accepted**:

UHS OF DELAWARE, INC.

By: <u>/s/ Steve Filton</u>

Steve Filton

Executive Vice President and CFO

CC: Charles Boyle

------

## Ex-10

**Exhibit 10.66**

**EMPLOYMENT AGREEMENT**

**THIS EMPLOYMENT AGREEMENT** (hereinafter referred to as the "<u>Agreement</u>" or the "<u>Employment Agreement</u>") is made as of October 18th, 2022 between UHS OF DELAWARE, INC. a subsidiary of Universal Health Services, a Delaware corporation ("<u>Company</u>"), and Edward Sim ("<u>Executive</u>" or "You").

WHEREAS, the parties hereto wish to enter into an employment agreement for the employment of the Executive as the Executive Vice President, President, Acute Care, of the Company.

NOW, THEREFORE, in consideration of the mutual covenants and representations contained herein, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. At-Will Employment.** Executive's employment shall be at-will.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Duties and Responsibilities.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>Position</u>. Executive shall be employed as the Company's Executive Vice President and President, Acute Care Division on the terms and conditions set forth in this Agreement beginning on December 5th, 2022 ("Start Date"). Executive shall report to Marc Miller, President and Chief Executive Officer, Universal Health Services, Inc. and UHS of Delaware, Inc. During the Employment Period, the Executive shall perform all duties and functions and discharge such responsibilities that are reasonable and customary for such position and such other duties, responsibilities and authorities as may be assigned to him. The Executive agrees to devote substantially all of his business time, efforts and skills to the performance of his duties to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) <u>Standard of Care</u>. Executive agrees to carry out his duties hereunder in a reasonable, diligent, prudent and professional manner consistent with his fiduciary duties as an officer of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) <u>Requirements</u>. Executive shall comply with all written rules, policies and procedures of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Compensation and Benefits**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>Salary</u>. During the Employment Period, the Company shall pay to the Executive a base salary at the rate of $775,000.00 per annum (the "<u>Base Salary</u>"), payable semi-monthly in arrears in accordance with the normal payroll practices of the Company. Executive shall be classified as exempt for purposes of the Fair Labor Standards Act and shall not receive overtime pay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) <u>Sign-On Bonus</u> Executive will receive a sign-on bonus of $275,000.00, less applicable taxes and withholdings, to be paid in the first month of employment. This bonus is repayable if Executive's employment ends within two years of Executive's start date if Executive is terminated for cause by the Company or Executive resigns for any reason. Additional terms and conditions are included as part of a separate Sign-On Bonus Agreement, attached hereto as **Exhibit 1**, which you must complete, sign and return to the Company before any sign-on bonus will be paid to you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) <u>Recruitment Bonus</u> Executive will receive a recruitment bonus of $275,000.00, less applicable taxes and withholdings, to be paid after the first full year of employment. This bonus is repayable if Executive's employment ends within two years of receipt of payment if Executive is terminated for cause by the Company or Executive resigns for any reason. Additional terms and

------

conditions are included as part of a separate Sign-On Bonus Agreement, attached hereto as **Exhibit 2**, which you must complete, sign and return to the Company before any sign-on bonus will be paid to you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) <u>Other Bonus Compensation</u>. During the Employment Period, the Executive shall participate in the Company's Senior Management Annual Incentive Plan, as it may be amended from time to time. Beginning with plan year 2023, executive will be eligible for a target bonus of 100% of the Executive's base pay, payable in March or April of 2024. Executive shall be eligible to receive bonus compensation only if he is an employee of the Company as of the date on which such bonus is to be distributed as determined by the Company. For purposes of clarity, if your employment ends for any reason prior to the date on which bonus compensation is to be distributed by the Company, no bonus shall be owed, accrued, due or payable to you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) <u>Benefits</u>. You are eligible to participate in the Company's flexible benefits program. The benefits become effective on the 31st day of employment, to afford you time to review the plans and

make your selection. Benefit descriptions and enrollment information will be sent to you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) <u>Relocation</u>**.** You are eligible for relocation assistance. Terms and conditions regarding this assistance are contained in the UHS Repayment and Indemnity Agreement which is contained in the Relocation Policy Guide attached hereto as **Exhibit 3**. You must sign and return the Repayment and Indemnity Agreement before any relocation assistance will be provided. In order to provide you with the greatest flexibility in planning and completing your relocation, UHS, through its 3rd party relocation vendor Cartus, will coordinate your relocation from Greenwood Village, CO to the area surrounding King of Prussia, PA. Details of your benefits are included in the Relocation benefits summary and include a lump sum net $50,000 upon your commencement of the relocation process. Additionally, UHS, through Cartus, will pay for your household goods shipment, (2) car shipment(s) to the destination home and up to (4) return trip(s) to your departure home while you are in temporary living. After receiving your signed relocation agreement and successful completion of required background check and drug screen, you will be contacted by a Cartus Relocation Specialist to access these benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) <u>Stock Options</u>**.** On the date of the first regular meeting of the Board of Directors of Universal Health Services, Inc. held after the commencement of Executive's employment, Executive will be considered for a discretionary award of options to purchase 50,000 shares of the Company's Class B Common Stock at the closing market price on that day, and Executive will be eligible for future participation in the stock option program. These options will expire 5 years from the date of the grant. One quarter of Executive's options will vest each on the first, second, third and fourth anniversaries from the date of the grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h) <u>Business Expenses</u>. In accordance with the Company's normal written policies for expense reimbursement, the Company will reimburse you for all reasonable and necessary out-of-pocket expenses you incur for entertainment, travel, hotel accommodations and the like in the performance of your duties under this Agreement, subject to the presentment of receipts or other documentation acceptable to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Termination of Employment.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>Termination by the Company</u>. Subject to the respective continuing obligations of the parties under this Agreement, the Executive's employment hereunder may be terminated at any time prior to the end of the Employment Period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) By the Executive for any reason, upon (30) days prior written notice to the Company,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) By the Company without Cause, upon (30) days prior written notice to the Executive, provided, however, the Company may provide Executive with (30) days' pay in lieu of the notice required by this subsection; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) By the Company for Cause without prior notice, and, for the purposes of this Agreement, "<u>Cause</u>" shall include the following nonexclusive list of circumstances: (A) any violation of Company policy as determined by Company; (B) commission by the Executive of a felony or other crime; (C) any conduct or acts of moral turpitude; fraud, dishonesty or other misconduct by the Executive; (D) dereliction of duty by the Executive; (E) impermissible conflicts of interest; (F) pursuit or acceptance of employment outside the Company; and (G) action by the Executive that brings the Executive or Company into disrepute or otherwise harms or could reasonably harm Company's reputation or the reputation or community goodwill of any Company facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. Consequences of Termination.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>By The Company Without Cause</u>. If the Executive's employment under this Agreement

is terminated by the Company without Cause, then the Company shall pay to the Executive the amount of

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the Base Salary which has accrued but has not otherwise been paid as of the termination date, (B) twelve (12) months' Base Salary (such payment shall be the "<u>Severance Amount</u>", at current weekly rate for 52 weeks, up to and including the Severance Period, less all applicable withholding taxes required by law and other authorized withholdings, to be paid in accordance with the Employer's payroll practice on Employer's regularly scheduled pay dates, (C) Medical Benefits Continuation on the following terms:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>If you elect to continue the medical coverage you were enrolled in as of your</u> <u>Separation Date, Employer will pay the COBRA premium, less the contribution you would have made for</u> <u>such coverage as an active employee, up to and including one year from time of separation, or until such</u> <u>time as you secure re</u>-employment in the same or substantially equivalent position, whichever is sooner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If you elect to reduce coverage, Employer will pay the applicable COBRA

premium for the coverage you elect, less the contribution required as an active employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Payments by Employer under this section will be subject to applicable tax withholdings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) The stock option agreement that you have been issued will be used to administer your stock options after your Separation Date, except that your equity compensation agreements pertaining to stock options, restricted stock units and restricted stock grants, as applicable, will continue to vest during your Severance Period and you will have the right to exercise your equity compensation to the extent vested only until your Severance Period ends and (E) any other amounts that may be reimbursable by the Company to the Executive as expressly provided under this Agreement, paid in accordance with the Company's payroll practices, and the Company thereafter will have no further obligation to the Executive, his estate or his designee under this Agreement, other than for payment of any amounts accrued and vested under any employee benefit plans or programs of the Company and any payments or benefits required to be made or provided under applicable law. Payment of the Severance Amount is expressly conditioned upon Executive signing a general release in favor of the Company, its past and present officers, directors, shareholders, agents or employees in a form substantially similar to the template attached hereto as **Exhibit 3**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) <u>By the Company with Cause, or by Executive For Any Reason</u>. In the event that the Executive's employment with the Company is terminated for any reason other than by the Company for Cause, then the Company shall pay to the Executive the amount of (A) the Base Salary which has accrued

but has not otherwise been paid as of the termination date, and (B) any other amounts that may be reimbursable by the Company to the Executive as expressly provided under this Agreement, paid in a lump sum within thirty (30) days following the termination date, and the Company thereafter will have no further obligation to the Executive, his estate or his designee under this Agreement, other than for

payment of any amounts accrued and vested under any employee benefit plans or programs of the

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Company and any payments or benefits required to be made or provided under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) <u>Return of Records</u>. Upon any termination of employment for any reason, or upon the Company's request at any time, the Executive shall immediately return to the Company all documents and other materials, in any medium including but not limited to electronic, which relate in any way to the Company, including notebooks, correspondence, memos, spreadsheets, computer files and databases, graphics and formulas, and drawings or diagrams, whether prepared by the Executive or by others and whether required by the Executive's work or for his personal use, whether copies or originals, unless the Executive first obtains the Company's written consent to keep such records.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) <u>Effect of Termination</u>. Notwithstanding any termination of this Agreement and/or the Executive's employment with the Company, the Executive, in consideration of the Executive's employment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement that specifically relate to periods, activities or obligations upon or subsequent to the termination of the Executive's employment, including, but not limited to, the covenants contained in Section 6 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. Restrictive Covenants.** Executive acknowledges and agrees that his employment with the Company is contingent upon his acceptance of and agreement to the Confidentiality, Noncompetition and Non-Solicitation Addendum ("Addendum") attached hereto as **Exhibit 4**, which Executive must sign and return to the Company prior to his start date. Executive acknowledges that the post-employment restrictive covenants set forth in the Addendum shall be binding upon him regardless of when, how or why his employment with the Company concludes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. General.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>Executive Representations</u>. Executive hereby represents and warrants to the Company that: (i) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment, or decree to which Executive is a party or by which he is bound; and (ii) Executive is not bound by any employment agreement, non-solicitation agreement, non- compete agreement and/or confidentiality agreement ("Restrictive Covenant") with any other person or entity which will in any way prevent him from fully performing his duties under this Agreement, and agrees to indemnify the Company against any damages, including attorneys' fees, resulting from a breach of this provision or a breach of any such Restrictive Covenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) <u>Arbitration of All Disputes/Governing Law</u>. The parties agree that any dispute, controversy or claim arising from the employment relationship, including but not limited to any claim based on this Agreement and any exhibits, shall be submitted to final and binding arbitration before one of the following arbitration providers, in order of priority: the American Health Lawyers Association, JAMS, the American Arbitration Association, or the Federal Mediation and Conciliation Service. Any arbitration shall be held in Montgomery County, Pennsylvania. The initiation and conduct of any arbitration shall be in accordance with the then-in-place rules of the applicable arbitration provider. A judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Exclusive jurisdiction over, and proper venue for, any such court action will be in the federal or state courts within the Commonwealth of Pennsylvania, in the jurisdiction in which the Employer's corporate office is headquartered, and Employee hereby expressly consents to such exclusive jurisdiction and venue. The parties further agree that this provision for final and binding arbitration shall not preclude the Employer, at its election, from obtaining preliminary or other injunctive relief in court of competent jurisdiction to enforce the provisions contained in the Agreement including all Exhibits, without regard to whether any such claim has been or can be referred to arbitration. The parties further agree that this agreement and any arbitration or judicial action which may result shall be governed by the laws of the Commonwealth of Pennsylvania and the arbitration panel or Pennsylvania Court shall apply Pennsylvania substantive law to any claims made by either party relating to this agreement and the exhibits attached. If the Company brings an action in arbitration or court to enforce any aspect of this Agreement and its Exhibits and obtains any equitable or legal relief from the

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court or arbitrator, Employee must reimburse the Company for its reasonable attorneys' fees and costs incurred in bringing such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) <u>Waiver of Breach</u>. Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part either of the Executive or of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) <u>Non-Assignment; Successors</u>. Neither party hereto may assign his or its rights or delegate his or its duties under this Agreement without the prior written consent of the other party; <u>provided,</u> <u>however</u>, that (i) the Company may assign its rights and delegate its duties under this Agreement to any of its affiliates without the prior written consent of the Executive; (ii) this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company upon any sale of all or substantially all of the Company's assets, or upon any merger, consolidation or reorganization of the Company with or into any other corporation, all as though such successors and assigns of the Company and their respective successors and assigns were the Company; and (iii) this Agreement shall inure to the benefit of and be binding upon the heirs, assigns or designees of the Executive to the extent of any payments due to them hereunder. As used in this Agreement, the term "Company" shall be deemed to

refer to any such successor or assign of the Company referred to in the preceding sentence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) <u>Severability</u>. To the extent any provision of this Agreement or portion thereof shall be invalid or unenforceable, it shall be considered deleted therefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) <u>Entire Agreement</u>. This Agreement and the Exhibits attached hereto constitute the entire agreement by the Company and the Executive with respect to the subject matter hereof and except as specifically provided herein, supersedes any and all prior agreements or understandings between the Executive and the Company with respect to the subject matter hereof, whether written or oral. This Agreement may be amended or modified only by a written instrument executed by the Executive and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) <u>Tax Consequences</u>. Executive acknowledges and agrees that the Company has made no representations or warranties with respect to the tax consequences of any of the payments or other consideration provided by the Company to Executive under the terms of this Agreement, and that Executive is solely responsible for Executive's compliance with any and all laws applicable to such payments or other consideration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h) <u>Withholding of Taxes</u>. All payments required to be made by the Company to the Executive under this Agreement shall be subject to the withholding of such amounts, if any, relating to tax, excise tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) <u>Headings</u>. The headings of the various sections of this Agreement are inserted merely for the purpose of convenience and do not expressly or by implication limit, define or extend the specific terms of the section so designated.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.

UHS of Delaware, Inc.

By: /s/ Gerry Geckle

Name: Gerry Geckle

Title: SVP- Human Resources

10/18/2022

Date:

/s/ Edward Sim

Edward Sim

10/19/2022

Date:

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**EXHIBIT 1**

**<u>SIGN-ON BONUS AGREEMENT</u>**

**EMPLOYEE NAME: Edward Sim**

In consideration of my employment with UHS of Delaware, Inc. ("UHS") a sign-on bonus of $275,000.00 has been offered to me. This sign-on bonus is being offered as a recruitment bonus, and may be paid in installments, less applicable taxes, with specifications outlined in the agreement. I agree to accept payment of the sign-on bonus subject to the terms and conditions below.

I will receive the entire amount of the $275,000 sign-on bonus in a lump sum, less applicable taxes, after completing one month of employment.

I understand and acknowledge that should my employment be terminated within 2 years of receipt of any sign-on bonus payment because of a termination for cause or if I resign for any reason, I will be obligated to return to the Company all or a portion of bonus payments paid based on the following schedule:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Leave prior to one full year of receipt of sign-on bonus-repayment of 100% of $275,000 sign on bonus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Leave prior to two years of receipt of sign-on bonus-repayment of 50% of $275,000 sign on bonus

If I am terminated without cause, I will not be obligated to return any portion of bonus payments.

I acknowledge and agree that any such payment that is owed to UHS at the time of my termination will be made through payroll deduction on the final paycheck to the extent allowed by law. I also agree to sign any additional authorization that may be required in order to legally deduct such payments from my final pay. Should my final paycheck be insufficient to repay any amount owed to UHS, I further agree to make arrangements for prompt repayment including execution of a Promissory Note with UHS.

I understand that nothing contained in this Agreement confers the right to continued employment with

UHS for any period of time or to any right or benefit not set forth in this Agreement.

I affirm that it is not necessary for UHS of Delaware, Inc. to sign this Exhibit 1 for it to become binding upon UHS of Delaware, Inc. and me.

Edward Sim ("Employee") Signature: /s/ Edward Sim

Printed Name: Edward Sim

Date: 10/19/2022

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**EXHIBIT 2**

**<u>RECRUITMENT BONUS AGREEMENT</u>**

**EMPLOYEE NAME: Edward Sim**

In consideration of my employment with UHS of Delaware, Inc. ("UHS") a recruitment bonus of

$275,000.00 has been offered to me. This bonus is being offered as a recruitment bonus, and may be paid in installments, less applicable taxes, with specifications outlined in the agreement. I agree to accept payment of the recruitment bonus subject to the terms and conditions below.

I will receive the entire amount of the $275,000 sign-on bonus in a lump sum, less applicable taxes, after completing one year of employment. In the event I am terminated without cause prior to completing one year of employment, I will not be eligible to receive the recruitment bonus.

I understand and acknowledge that should my employment be terminated within 2 years of receipt of any recruitment bonus payment because of a termination for cause or if I resign for any reason, I will be obligated to return to the Company all or a portion of bonus payments paid based on the following schedule:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Leave prior to one full year of receipt of recruitment bonus-repayment of 100% of $275,000 sign on bonus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Leave prior to two years of receipt of sign-on bonus-repayment of 50% of $275,000 sign on bonus

If I am terminated without cause following receipt of the recruitment bonus, I will not be obligated to return any portion of bonus payments.

I acknowledge and agree that any such payment that is owed to UHS at the time of my termination will be made through payroll deduction on the final paycheck to the extent allowed by law. I also agree to sign any additional authorization that may be required in order to legally deduct such payments from my final pay. Should my final paycheck be insufficient to repay any amount owed to UHS, I further agree to make arrangements for prompt repayment including execution of a Promissory Note with UHS.

I understand that nothing contained in this Agreement confers the right to continued employment with

UHS for any period of time or to any right or benefit not set forth in this Agreement.

I affirm that it is not necessary for UHS of Delaware, Inc. to sign this Exhibit 1 for it to become binding upon UHS of Delaware, Inc. and me.

Edward Sim ("Employee") Signature: /s/ Edward Sim

Printed Name: Edward Sim

Date: 10/19/2022

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**EXHIBIT 3**

**<u>RELOCATION REPAYMENT AND INDEMNITY AGREEMENT</u>**

**EMPLOYEE NAME: Edward Sim**

UHS of Delaware, Inc. ("UHS" or "Company") agrees to provide you with Relocation Benefits relating to either commencement of employment or transfer to another position which is anticipated to result in relocation costs to you, in accordance with the UHS Relocation Policy Guide provided to you. By

signing below, you agree to accept the terms of this Repayment and Indemnity Agreement ("Agreement") in exchange for relocation and other benefits to which you would otherwise not be entitled. For purposes of your repayment obligations described below, Relocation Benefits refers to the total amount of relocation expenses paid by UHS on your behalf included but not limited to expenses described in the UHS Relocation Policy Guide and Cartus documents.

**<u>Repayment Obligations</u>**

I understand that if I do not establish a primary residence and relocate my family to my new work location by December 2026, I will be required to repay UHS immediately upon notification, the full amount of all Relocation Benefits paid to me or to a third party on my behalf. I understand that the establishment of a temporary residence at my new work location (for example, renting a hotel room) does not constitute establishment of a primary residence for purposes of this Agreement.

Should I resign my employment or be terminated for cause at any time during my relocation, all Relocation Benefits will immediately cease and I will be subject to the applicable repayment obligations described in this Agreement. If I am terminated without cause, I will not be obligated to return relocation benefits.

I understand that if my employment with UHS ends within one year following my acceptance of relocation benefits, for any reason, except disability, death, or termination without cause, I agree to repay to UHS 100% of all Relocation Benefits.

I understand that if my employment with UHS ends within two years year following my acceptance of relocation benefits, for any reason, except disability, death, or termination without cause, I agree to repay to UHS 50% of all Relocation Benefits.

Full repayment of my Relocation Benefits must be made within thirty (30) days of my termination date from UHS. If collection efforts or litigation are required to pursue my Repayment Obligations to UHS, I agree that UHS will be entitled to collect its costs and attorney's fees in addition to any other remedies available under the law. If I am obligated to repay any amounts to UHS at the time of my termination I expressly authorize UHS to withhold from my final pay or accrued benefits (e.g., PTO) towards my repayment obligations to the greatest extent permitted by law. I agree to execute any additional documents which may be necessary for UHS to effectuate such deductions.

My Repayment Obligations will cease altogether when I have completed twenty-four (24) months of continued service after acceptance of relocation benefits.

**<u>Waiver of Repayment Obligations</u>**.

No repayment of Relocation Benefits will be required if my employment ends due to the elimination of my position by UHS and no alternate employment is available.

------

**<u>Miscellaneous</u>**

I understand and acknowledge that the terms of this Agreement do not imply or constitute a contract of employment for any specific term and that my employment is "at will" and can be terminated for any reason, by the company, or by me, at any time.

I have read and understand this Agreement and will comply with the terms and conditions therein. No amendment, modification or waiver of this Agreement or any provision hereof, including this

paragraph, shall be effective or enforceable unless made in a written instrument which specifically

references this Agreement and which is signed by an authorized representative of both parties. This Agreement shall be construed in accordance with the laws of the State of Delaware. **Signatures:**

I affirm that it is not necessary for UHS of Delaware, Inc. to sign this Exhibit 2 for it to become binding upon UHS of Delaware, Inc. and me.

Edward Sim ("Employee")

Signature: /s/ Edward Sim

Print Name: Edward Sim

Date: 10/19/2022

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**EXHIBIT 4**

**[FORM OF GENERAL RELEASE]**

In consideration for the Severance Amount and other consideration to be paid as described in the Agreement, to which you agree you would not be entitled if you did not sign this document, you agree to the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Release of All Claims</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. You, on behalf of yourself and your heirs, assigns and estate, hereby agree to and do forever give up any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs (except as otherwise provided hereunder), losses, debts and expenses (including attorney's fees and costs actually incurred), of any nature whatsoever, whether known or unknown, suspected or unsuspected (collectively, "Claims") that you may have against the Employer including its ultimate corporate parent, Universal Health Services, Inc, and any and all subsidiaries, affiliates, divisions, controlling or related entities, predecessors, successors, and all of their past, present, and future officers, directors, partners, shareholders, owners, employees, agents, representatives, insurers, employee benefit plans (including such plans' sponsors, administrators and fiduciaries) (the "Releasees") relating your terms and conditions of employment and your termination or separation from employment as of the date you execute this Agreement. This means that you are agreeing to release and discharge the Employer and the Releasees from any and all Claims, including but not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. all Claims for monetary recovery or other relief arising under any federal, state or local law prohibiting discrimination or retaliation based upon any protected characteristic or activity including but not limited to Title VII of the Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code; the Americans with Disabilities Act, as amended; the Equal Pay Act, as amended; the Age Discrimination in Employment Act, as amended ("ADEA"); the Genetic Information Nondiscrimination Act of 2008 ("GINA"); and/or any other federal or state human rights, "whistleblower" and/or any other federal, state or local laws or regulations prohibiting employment discrimination or protecting employee rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. all Claims for monetary recovery or other relief arising under any federal, state or local law governing leaves, the payment of wages, benefits, and other compensation, and/or governing workplace safety, health, working standards and conditions (e.g. meal periods), including but not limited to all Claims arising under the Family and Medical Leave Act**,** the Occupational Health and Safety Act, as amended, the Workers Adjustment and Retraining Notification Act (WARN), and the Employee Retirement Income Security Act (except for any vested benefits under any tax qualified benefit plan), or any other claims arising under any other federal, state or local law, regulation or ordinance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. all claims based upon public policy, contract, tort, or common law, including but not limited to, all Claims for wrongful termination, invasion of privacy, defamation, breach of contract, interference with business or contractual relations, and infliction

of emotional distress and any allegation for costs, fees, or other expense**s**, including attorneys' fees incurred in these matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. all claims, complaints or actions under the jurisdiction of federal, state or local departments of public health or other federal, state or local administrative or regulatory agencies and any matter under the jurisdiction of The Joint Commission or similar deeming agency; and

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. all Claims for monetary recovery or other relief arising under any federal, state, or local law prohibiting fraudulent conduct and/or the submission of false or fraudulent claims to a governmental entity, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the False Claims Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. Nothing contained in this Agreement limits Employee's ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration or the Securities and Exchange Commission ("Government Agencies").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. If any claim is not subject to release, to the extent permitted by law, you agree the consideration provided in this agreement fully compensates you for such claims and waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a claim in which any of the Releasees identified in this agreement is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. You hereby forever release and discharge Employer and the Releasees from any liability or obligation to reinstate you to employment or reemploy you in any capacity and you hereby agree to not seek or apply for re-employment. Notwithstanding, this provision, in the event that Employee is employed by an entity that is subsequently acquired by Universal Health Services, Inc., she will not be required to resign nor be subject to immediate termination as a result of such acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. The foregoing release is effective up to and including the date you sign this Agreement. In order to receive the consideration provided in Section 1, you are required to sign the Supplemental Release Addendum attached hereto as Exhibit 1 on or after your last day of employment, without revoking it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Both Parties acknowledge that this agreement does not limit either party's right, where applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency. To the extent permitted by law, you agree that if such an administrative claim is made, you shall not be entitled to recover any individual monetary relief or other individual remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Affirmations</u>. Except as may be described below in Section 5, you affirm and acknowledge the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. You have not filed nor are you presently a party, participant or class member with respect to any Claim against the Employer or any of the Releasees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. You agree that you have been paid and/or have received all wages, bonuses, commissions, and/or compensation to which you are entitled. You agree that the consideration under this Agreement constitutes adequate and sufficient consideration for the Claims and rights you are waiving and the obligations imposed on you by this Agreement. You represent and agree that you are not owed any additional money or compensation by the Employer or any of the Releasees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. You have not been denied any leave to which you are or were entitled under the Family and Medical Leave Act, any state or local medical or family leave law or related disability accommodation laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. You have no known workplace illnesses or injuries or occupational diseases and you have not filed a claim or incident report pertaining to any workplace illness or injury.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. You are not aware of any wrongdoing, illegal acts or fraud (collectively "wrongdoing") committed by the Employer or any Releasee and you have not been retaliated against for reporting any allegations of wrongdoing by the Employer or any of the Releasees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. You have not been discriminated against or retaliated against due to your age, disability, race, color, sex, religion, national origin or any other classification or activity protected by law.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Communication, Professionalism, and Non-Disparagement.</u> You agree to comport yourself in a professional manner in your dealings, communications, and contacts concerning your employment and separation from employment with the Employer. In particular, you agree not to do or say anything which disparages, denigrates or defames Employer or any other Releasee or which disrupts or impairs the Employer or any Releasee's normal, ongoing business operations, or which harms the reputation of Employer, the Company or any Releasee with their employees, patients, suppliers, the public, press or other media. In the event that you are contacted by any media sources, publications or outlets, you agree not to provide any information regarding Employer or any Releasee or any aspects of your employment or operations of Employer and/or Universal Health Services, Inc. In the event you are contacted by any media sources requesting information about Employer, you will contact the Office of General Counsel for Employer. This provision shall not be construed to prohibit you from providing truthful testimony in any legal or administrative proceeding. Further, in consideration for the benefits referenced in Section 1, at Company's sole discretion and direction, you will agree to provide statements, interviews and/or information to media sources, reporters or others as required or requested by Company on any matters relating to your employment and operations of the Company and its subsidiary facilities. Company, through its public statements and/or senior officers, agrees that it will not do or say anything which disparages, denigrates or defames Employee. This mutual non- disparagement provision as it relates to the Company applies to official public statements of the Company and/or statements of the executive and senior corporate management team of Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>No Admission of Wrongdoing.</u> The parties agree that this mutual agreement between Employer and you shall not in any way be construed as an admission or an assertion by you, Employer or any other Releasee that any party has violated any law, regulation or prohibition or of any duty owed to the other. Employer disclaims any liability to or discrimination against you on the part of itself or any Releasee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Wrongdoing or Illegal Acts</u>. You represent that you are not aware of any possible violations by Employer or any other Releasee of any federal or state laws or regulations, including but not limited to governmental reimbursement programs or the "fraud and abuse" statutes and regulations; or, if you are aware of any possible such violations, they are listed below (attach additional pages if necessary):

**Other than any conduct that may be listed above, you confirm that you have no knowledge, understanding or belief that any of the Releasees has engaged in any conduct that violates any federal, state or local laws or regulations, including those related to governmental reimbursement programs or fraud and abuse.** You affirm that you have no knowledge or information that would

support an action under the False Claims Act, or state law equivalent. In the event such a claim is filed, you agree that you will not maintain the action if the government declines intervention. You agree that if a compliance-based claim is brought by you based on information known to you at the time of executing this Agreement, you shall not personally obtain or retain any remedy as a result of such a claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Cooperation/Future Inquires.</u> You agree that you will cooperate fully with the Company, upon request, in relation to Company's and/or Releasees defense, prosecution or other involvement in any continuing or future claims, lawsuits, charges, and internal or external investigation(s) including any governmental investigations that may already exist or arises out of events or business matters which occurred during your employment. Such continuing duty of cooperation shall include making yourself available to the Company and its legal counsel, upon reasonable notice, for depositions, interviews, and appearances as a witness, and furnishing information to Company and its legal counsel upon request. You agree to communicate as often as needed with Company and its legal counsel regularly and in a timely fashion as well as attend meetings with Company and their counsel if necessary in conjunction with this section. You agree to voluntarily testify as a witness at deposition and trial, if requested, without the need for a subpoena and even if you are outside of the distance covered by subpoena. To the extent permitted by law, Company will reimburse you for reasonable expenses incurred in testifying, such as travel, lodging and meals. In addition to the remedies for breach of this provision as well as any other, You expressly acknowledge and agree that failure to comply with the provisions of this section shall entitle the Company to repayment of any amounts paid as well as benefits provided and/or cessation of future payments or benefits due until and unless the breach is cured.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Review and Revocation Period.</u> You have been given at least twenty-one (21) days to consider this Agreement before signing it. You have the right to revoke the Agreement within seven (7) days of signing it by sending a written notice by email to the Sr. Vice President of Human Resources and certified mail-return receipt to the Employer to the attention of the General Counsel, Office of the General Counsel, Universal Health Services, Inc., 367 South Gulph Road, King of Prussia, PA 19406. Otherwise, the Agreement shall become effective and enforceable after eight (8) days following the date you sign it.

/s/ Edward Sim

Edward Sim

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**EXHIBIT 5**

**<u>Confidentiality, Noncompetition and Non-Solicitation Addendum</u>**

<u>EMPLOYEE NAME: Edward Sim</u>

**Edward Sim** ("Executive") acknowledges and agrees that in his capacity as senior executive he will be deeply involved in the planning, preparation and execution of strategies pertaining to all aspects of

the Company's acute care services businesses, including marketing, finance, development, operations,

personnel development and all other material aspects of the Company's acute care services business services and operations. Executive will also be involved in and be privy to information about various aspects of UHS's behavioral health operations including but not limited to strategic initiatives, services line expansion or reconfiguration, development plans, etc. Executive will have access to and routinely use the Company's Confidential Information (defined below). In addition, Executive will make relationships with the Company's key business, financial, and strategic partners during his tenure. Based on the foregoing knowledge and relationships, all of which Executive will acquire in connection with his employment with the Company, Executive's employment with a competitor or another entity that may engage or be involved in any way (including but not limited to private equity) in a business competitive to the acute care operations of the Company, or engaging in competitive activity on his own behalf or in any other capacity, would present an unfair competitive threat to the Company. Consequently, Executive agrees that the restrictions set forth below are (i) an essential part of his employment with the Company and (ii) reasonable and necessary to protect the Company's trade secrets and Confidential Information, customer relationships, employee relationships, business opportunities, market advantage and other business interests in event of Executive's future separation from the Company for any reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Non-Solicitation of Employees, Contractors and Others</u>

Executive agrees that, for a period of twelve (12) months following his separation from the Company for any reason, he shall not (i) directly or indirectly solicit or encourage in any manner the resignation or re-affiliation of any employee, physician, contractor, or professional health care provider or provider organization that is employed by, or affiliated or associated with the Company and/or any Company facility, Company affiliate or subsidiary, including but not limited to Prominence Health Plan and Independence Physician Management for which Executive rendered services or was engaged with during his employment by the Company; (ii) directly or indirectly solicit or divert patients, customers or business of any such Company facility; or (iii) attempt to influence, directly or indirectly, any person or entity to cease, reduce, alter or rearrange any business relationship with any such Company facility. Executive also shall not direct, instruct or encourage others with whom he may subsequently be employed or affiliated to solicit in violation of this section. "UHS" in this section shall mean Universal Health Services, Inc. or any of its subsidiaries (direct or indirect) including but not limited to its subsidiary facilities and UHS of Delaware, Inc. ("Company"). "Company facility" shall mean any subsidiary of the Company or Universal Health Services, Inc. which provides health care services in any manner. Company affiliate or subsidiary shall mean any subsidiary (direct or indirect) of Universal Health Services, Inc. as well as any joint venture or other partnership relationships where the Company or any subsidiary is a member or partner. These terms apply to all subsections of this Exhibit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Non-Competition</u>

Executive also agrees that, for a period of twelve (12) months following his separation from the Company for any reason, he shall not compete, directly or indirectly, in a market service area of UHS, or any of its subsidiaries, affiliates or joint ventures anywhere in the United States, Puerto Rico, the United Kingdom, or anywhere else in the world where UHS has operations or is planning to conduct operations during his tenure with the Company ("restricted area"). (For example, should Company begin to operate acute care facilities in New York during his employment with UHS or are developing strategic plans for such operations in New York, the non-compete would extend to the restricted area in New York.) "Market service area" means a fifty (50) mile radius of any "Acute Care" services, facilities, products or operations of UHS as referenced and defined below. Towards that end and as referenced above, Executive expressly agrees that the geographic scope of the non-compete is reasonable and necessary to protect the legitimate business interests of the Company today and during the term of the non-compete. "Compete" means and

------

includes rendering services, accepting employment, consulting, or entering into any other business relationship with any company, person, association, affiliation, consortium, or other organization (for- profit, non-profit, public, etc.) that provides, offers, finances, consults on or is any way associated with, directly or indirectly, primarily or secondarily, the provision of institutional or professional Acute Care Services as defined below or contracts or agreements for acute care services similar to those provided or offered by the Company in any market service area. This means that if the entity with which Executive would seek to be employed or affiliated with operates, owns or conducts Acute Care Services in any market service area of UHS or a UHS subsidiary, affiliate or joint venture, Executive would be prohibited from providing any services for that entity for twelve months. In addition, "Compete" and this Non-Competition provision shall also apply to and include any and all national or regional for-profit or not for profit healthcare facilities, systems or companies, including any subsidiaries, that operate or provide any Acute Care services, facilities, operations or products anywhere in the restricted area either directly or indirectly through subsidiaries, affiliates, joint ventures, etc. This expressly means that Executive may not be employed by or affiliated with in any manner a national or regional healthcare company that owns, operates, or conducts Acute Care services in any manner in any restricted area or service area. However, Executive shall not be restricted from taking a role with or being affiliated with a national not for profit healthcare care system that offers Acute Care Services within a restricted area so long as Executive does not have direct or indirect operational responsibility for the competing Acute Care Service, Facility, Operation or Product. This exception applies only to a national not for profit enterprise and does not apply to any for- profit companies like HCA, Tenet, Community Health Systems, etc. ("Acute Care Services, Facilities, Products or Operations" shall mean medical and/or surgical services and all related physical medicine care and treatment associated with acute care facilities including hospitals, ambulatory surgical centers, physician offices/practices/clinics, Accountable Care Organizations (ACOs), rehabilitation centers/units, home health care, pharmacies, etc. Further, Executive acknowledges that UHS owns and operates a health plan and in light of the fact that during Executive's employment, he will be responsible for oversight of UHS' managed care operations/subsidiary, Acute Care Services or Products will also include any managed care products including but not limited to Medicare Advantage, commercial insurance, Managed Medicaid and the like. "National not for profit" shall mean a not-for profit healthcare organization with operations in at least three (3) states or has consolidated annual revenue in excess of $1 billion for the fiscal year prior to separation of employment if less than 3 states.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>Confidential Information / Non-Disclosure</u>

Executive agrees that during the his employment with the Company, he will receive, have access to, use and contribute confidential information and/or proprietary information about the Company not generally available to the public, including, but not limited to, trade secrets, methods, models, passwords, access to computer files, business strategies and operations, financial information and records, budgets, forecasts, computer software programs, agreements and/or contracts, marketing materials, campaigns and strategies, public relations and public affairs campaigns, media materials, practices, concepts, strategies, methods of operation, technical and scientific information, discoveries, developments, formulas, specifications, know-how, design inventions, and information about or received from other companies with which the Company does business. The foregoing shall be collectively referred to as "<u>Confidential</u> <u>Information</u>."

The Executive understands and agrees that the Confidential Information, whether or not developed in whole or in part by the Executive, shall at all times be the Company's exclusive property. The Confidential Information has been compiled and developed by the Company at great expense and over an extended period of time and is continuously used in the business of the Company. The

Confidential Information gives the Company a competitive advantage over other businesses in its industry and has actual and potential economic value to the Company, all of which would be damaged or

destroyed if any of the Confidential Information were obtained by, disclosed to or used by any person or

entity other than the Company.

At all times during his employment with the Company and forever thereafter, the Executive will hold in the strictest confidence and will not disclose, use, or publish any of the Confidential Information, except as such disclosure, use or publication may be required in connection with the Executive's work for

------

the Company, unless the Company expressly authorizes such disclosure in writing. The Executive will obtain the Company's written approval before publishing or submitting for publication any material (written, verbal or otherwise) that relates to the Executive's work at the Company and/or incorporates any Confidential Information. The Executive hereby assigns to the Company any rights the Executive may have or acquire in the Confidential Information and recognizes that all of the Confidential Information is and shall be the sole property of the Company and its successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. <u>Remedies for Breach</u>

Executive hereby acknowledge and agree that the services he will provide to the Company are of a special, extraordinary and intellectual character which gives them particular value, and any violation by him of the confidentiality, non-solicit or non-compete covenants above would cause immediate and irreparable harm to the Company which cannot be adequately compensated by money damages alone. Therefore, Executive hereby agrees that in addition to whatever other remedies the Company may possess, the Company shall be entitled to preliminary and permanent injunctive and other equitable relief in the event of a breach or threatened breach of Sections (A), (B) or (C) of this Addendum, without need for posting a bond. Furthermore, Executive shall be obligated to reimburse the Company for its reasonable attorneys' fees and costs incurred in any litigation undertaken by the Company to enforce its rights herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. <u>Severability</u>

Each of the rights and remedies enumerated above shall be independent of the other, and shall be severally enforceable, and all such rights shall be cumulative and in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. If any of the covenants set forth in this Addendum are held to be unenforceable because of the duration of such restriction, the scope of the subject matter or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration, scope and/or area of such provision insofar as necessary to render the covenant enforceable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. <u>No Undue Hardship / Effect of Prior Breach by Company / Extension of Restrictions</u>

The Executive's promises herein do not constitute an unreasonable hardship to Executive in obtaining other employment following the termination of his employment with the Company. Moreover, the existence of any breach of the Employment Agreement by Company or claim of breach which Executive may have against the Company shall not constitute a defense or bar to the enforcement of any of the covenants in this Addendum. If Executive breaches any of the covenants which have a fixed term, then such term shall be extended for a period of time equal to the period of time Executive was in breach of such covenant(s).

I affirm that it is not necessary for UHS of Delaware, Inc. to sign this Exhibit 4 for it to become binding upon UHS of Delaware, Inc. and me.

Edward Sim ("Employee")

Signature: /s/ Edward Sim

Print Name: Edward Sim

Date:

10/19/2022

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## Ex-21

**Exhibit 21**

**Subsidiaries of Registrant**

**1001 Medical Park Drive LLC** 

Incorporated State: Michigan

**2012 W. University Properties, LLC** 

Incorporated State: Delaware

**2026 W. University Properties, LLC** 

Incorporated State: Delaware

**ABS LINCS KY, LLC** 

Incorporated State: Virginia

Business Name: Cumberland Hall Hospital

**ABS LINCS SC, Inc.**

Incorporated State: South Carolina

Business Name: Palmetto Summerville Behavioral Health

**ABS LINCS TN, Inc.**

Incorporated State: Virginia

**ABS LINCS VA, Inc.**

Incorporated State: Virginia

Business Name: First Home Care

**ACO Management Services, LLC**

Incorporated State: Nevada

ACO REACH California, LLC

Incorporated State: Delaware

ACO REACH DC, LLC

Incorporated State: Delaware

ACO REACH Florida, LLC

Incorporated State: Delaware

ACO REACH Nevada, LLC

Incorporated State: Delaware

ACO REACH NW Texas, LLC

Incorporated State: Delaware

ACO REACH South Texas, LLC

Incorporated State: Delaware

ACO REACH Texoma, LLC

Incorporated State: Delaware

**Aiken Professional Association, LLC** 

Incorporated State: South Carolina

**Aiken Regional Medical Centers, LLC** 

Incorporated State: South Carolina

Business Name: Aiken Regional Medical Centers, Aurora Pavilion Behavioral Health Services of Aiken Regional Medical Centers and The Surgery Center of Aiken

**Aiken Regional Medical Centers Surgery Center, LLC**

Incorporated State: Delaware

**Aiken Regional Receivables, L.L.C** 

Incorporated State: Delaware

**Alabama Clinical Schools, Inc.** 

Incorporated State: Alabama

Business Name: Alabama Clinical Schools

**Alliance Health Center, Inc.** 

Incorporated State: Mississippi

Business Name: Alliance Health Center

**Alternative Behavioral Services, Inc.** 

Incorporated State: Virginia

**Amarillo Clinical Services, Inc.** 

Incorporated State: Texas

**Ambulatory Surgery Center of Temecula Valley, Inc.** 

Incorporated State: California

**Ambulatory Surgical Center of Aiken, L.L.C.** 

Incorporated State: South Carolina

------

**Arbor Group, L.L.C.**

Incorporation State: District of Columbia

**Arbour Foundation, Inc.** 

Incorporated State: Massachusetts

**Arrowhead Behavioral Health, LLC** 

Incorporated State: Delaware

Business Name: Arrowhead Behavioral Health

**ASC of Aiken, Inc.**

Incorporated State: Delaware

**ASC of East New Orleans, Inc.** 

Incorporated State: Delaware

**ASC of Las Vegas, Inc.** 

Incorporated State: Nevada

**ASC of Midwest City, Inc.** 

Incorporated State: Oklahoma

**ASC of Puerto Rico, Inc.** 

Incorporated State: Delaware

**ASC of Wellington, Inc.** 

Incorporated State: Florida

**Ascend Health Corporation** 

Incorporated State: Delaware

**Atlantic Shores Hospital, LLC** 

Incorporated State: Delaware

**Auburn Regional Medical Center, Inc.** 

Incorporated State: Washington

**AZ Holding 4, LLC**

Incorporated State: Arizona

**Beach 77, LP** 

Incorporated State: Delaware

**Behavioral Educational Services, Inc.** 

Incorporated State: Delaware

**Behavioral Health Connections, Inc.** 

Incorporated State: Texas

**Behavioral Healthcare Corporation**

Incorporated State: Delaware

**Behavioral Health Management, LLC** 

Incorporated State: Delaware

Business Name: Behavioral Hospital of Bellaire

**Behavioral Health Realty, LLC** 

Incorporated State: Delaware

**Behavioral Healthcare LLC** 

Incorporated State: Delaware

**Benchmark Behavioral Health System, Inc.** 

Incorporated State: Utah

Business Name: Benchmark Behavioral Health System

**Bergen Drummers Lane GP, LLC** 

Incorporated State: Pennsylvania

**Bergen Drummers Lane Sub, LLC** 

Incorporated State: Pennsylvania

**BH AZ Master, LLC**

Incorporated State: Arizona

**BH JV Grand Rapids Employees, LLC**

Incorporated State: Delaware

**BH JV Grand Rapids, LLC**

Incorporated State: Michigan

**BH Newco Hospital, LLC**

Incorporated State:

Business Name: Via Linda Behavioral Hospital

**BHC Alhambra Hospital, Inc.** 

Incorporated State: Tennessee

------

Business Name: BHC Alhambra Hospital

**BHC Belmont Pines Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Belmont Pines Hospital

**BHC Fairfax Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Fairfax Behavioral Health, Fairfax Behavioral Health Monroe and Fairfax Behavioral Health Everett

**BHC Fox Run Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Fox Run Center

**BHC Fremont Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Fremont Hospital

**BHC Health Services of Nevada, Inc.** 

Incorporated State: Nevada

**BHC Heritage Oaks Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Heritage Oaks Hospital

**BHC Holdings, Inc.**

Incorporated State: Delaware

**BHC Intermountain Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Intermountain Hospital

**BHC Management Services of Streamwood, LLC** 

Incorporated State: Delaware

**BHC Mesilla Valley Hospital, LLC** 

Incorporated State: Delaware

Business Name: Mesilla Valley Hospital

**BHC Montevista Hospital, Inc.** 

Incorporated State: Nevada

**BHC Northwest Psychiatric Hospital, LLC** 

Incorporated State: Delaware

Business Name: Brooke Glen Behavioral Hospital

**BHC of Indiana, General Partnership** 

Incorporated State: Tennessee

**BHC Pinnacle Pointe Hospital, LLC** 

Incorporated State: Tennessee

Business Name: Pinnacle Pointe Behavioral Healthcare System and The Pointe Outpatient Behavioral Health Services

**BHC Properties, LLC** 

Incorporated State: Tennessee

**BHC Sierra Vista Hospital, Inc.** 

Incorporated State: Tennessee

Business Name: Sierra Vista Hospital

**BHC Streamwood Hospital, Inc.**

Incorporated State: Tennessee

Business Name: Streamwood Behavioral Health System

**Black Bear Treatment Center, LLC**

Incorporated State: Delaware

Business Name: Black Bear Lodge

**Bloomington Meadows, General Partnership** 

Incorporated State: Tennessee

Business Name: Bloomington Meadows Hospital

**Braden River Internal Medicine Associates, LLC** 

Incorporation State: Florida

**Brentwood Acquisition, Inc.** 

Incorporation State: Tennessee

Business Name: Brentwood Behavioral Healthcare

**Brentwood Acquisition-Shreveport, Inc.** 

Incorporation State: Delaware

Business Name: Brentwood Hospital

------

**Brynn Marr Hospital, Inc.** 

Incorporation State: North Carolina

Business Name: Brynn Marr Hospital

**Caireach Limited**

Incorporated State: United Kingdom

Business Name: Beacon Lower, Beacon Upper, Kirkside House, Kirkside Lodge and Cygnet Adarna House

**California ACO Holdings, LLC**

Incorporated State: California

**Calvary Center, Inc.** 

Incorporation State: Delaware

Business Name: Calvary Healing Center

**Canyon Ridge Hospital, Inc.** 

Incorporation State: California

Business Name: Canyon Ridge Hospital

**Canyon Ridge Real Estate, LLC** 

Incorporation State: Delaware

**Canyon West Los Angeles, LLC**

Incorporated State: Delaware

Business Name: The Canyon at Encino

**Cape Girardeau Behavioral Health, LLC**

Incorporated State: Missouri

Business Name: Southeast Behavioral Hospital

**Capitol Radiation Therapy, L.L.P.**

Incorporated State: Kentucky

**CAS Aspirations Properties Limited**

Incorporated State: United Kingdom

**CAS Aspirations Properties Limited (Jersey)**

Incorporated State: United Kingdom

**CAS Aspirations Properties III Limited**

Incorporated State: United Kingdom

**CAS Aspirations Properties V Limited**

Incorporated State: United Kingdom

**CAS Clifton Healthcare Limited**

Incorporated State: United Kingdom

**CAS Healthcare Properties Limited**

Incorporated State: United Kingdom

**CAS Learning Disabilities Services Limited**

Incorporated State: United Kingdom

**CAS St. Paul's Limited**

Incorporated State: United Kingdom

**CAT Realty, LLC** 

Incorporated State: Delaware

**CAT Seattle, LLC** 

Incorporated State: Delaware

Business Name: Schick Shadel Hospital

**CCS/Lansing, Inc.** 

Incorporated State: Michigan

**CDS of Nevada, Inc.** 

Incorporation State: Nevada

**Cedar Springs Hospital, Inc.** 

Incorporated State: Delaware

Business Name: Cedar Springs Hospital

**Central Montgomery Medical Center, L.L.C.** 

Incorporated State: Pennsylvania

**Chalmette Medical Center, Inc.** 

Incorporated State: Louisiana

**Children's Comprehensive Services, Inc.** 

Incorporated State: Tennessee

Clinical Trials JV, LLC

Incorporated State: Delaware

------

**Clive Behavioral Health, LLC** 

Incorporated State: Delaware

Business Name: Clive Behavioral Health

**Columbus Hospital Partners, LLC** 

Incorporated State: Tennessee

**Columbus Hospital, LLC** 

Incorporated State: Delaware

Business Name: Columbus Behavioral Center for Children and Adolescents

**Community Cornerstones, Inc.** 

Incorporated State: Puerto Rico

Coral Shores Behavioral Health, LLC

Incorporated State: Delaware

Business Name: Coral Shores Behavioral Health

**Cornerstone Hospital Management, LLC** 

Incorporated State: Texas

**Cornerstone Hospital Properties, LP** 

Incorporated State: Texas

**Cornerstone Regional Hospital, LP** 

Incorporated State: Texas

Business Name: Cornerstone Regional Hospital

**Crossings Healthcare Solutions, Inc.**

Incorporated State: Delaware

**Crossings Software Solutions, LLC**

Incorporated State: Delaware

**Crossings Supply Chain Solutions, LLC**

Incorporated State: Delaware

**Cumberland Hospital Partners, LLC** 

Incorporated State: Delaware

**Cumberland Hospital, LLC** 

Incorporated State: Virginia

Business Name: Cumberland Hospital

**Cygnet 2000 Limited**

Incorporated State: United Kingdom

**Cygnet 2002 Limited**

Incorporated State: United Kingdom

**Cygnet Aspirations Developments Limited**

Incorporated State: United Kingdom

**Cygnet Behavioural Health Limited**

Incorporated State: United Kingdom

Business Name: 1 Vincent Court, 12 Woodcross Street, 15 The Sycamores, 45 Portland Road, 4, 5, 7 The Sycamores, Adele Cottage, Cygnet Appletree, Cygnet Aspen Clinic, Cygnet Aspen House, Cygnet Brunel, Cygnet Churchill, Cygnet Delfryn Lodge, Cygnet Fountains, Cygnet Heathers, Cygnet Oaks, Cygnet Raglan House, Cygnet Sedgley House, Cygnet Sedgley Lodge, Sherwood House, Cygnet St. Augustine's, Cygnet Teilo House, Cygnet St. William's, Cygnet Storthfield House, Cygnet Victoria House, Cygnet Pindar House, Limes Houses, Cygnet Sherwood Lodge, Cygnet Foundations, Cygnet St. William's, CAS Tame Meadows and Cygnet Nield House

**Cygnet Care Services Limited**

Incorporated State: United Kingdom

Business Name: Amberwood Lodge, Broughton House, Broughton Lodge, Nightingale, Devon Lodge, Elston House, Oakhurst Lodge, The Squirrels and Cheshire SL

**Cygnet Clifton Limited**

Incorporated State: United Kingdom

Business Name: Cygnet Alders Clinic, Cygnet Acer Clinic and Cygnet Hospital Clifton

**Cygnet Health Care Limited**

Incorporated State: United Kingdom

Business Name: Cygnet Hospital Beckton, Cygnet Hospital Bierley, Cygnet Hospital Derby, Cygnet Hospital Ealing, Cygnet Hospital Godden Green, Cygnet Hospital Harrogate, Cygnet Hospital Harrow, Cygnet Hospital Kewstoke, Cygnet Hospital Stevenage, Cygnet Hospital Wyke, Cygnet Lodge Brighouse, Cygnet Lodge Kenton, Cygnet Lodge Kewstoke Cygnet Lodge Lewisham, Cygnet Wing Blackheath, Tabley House Nursing Home, Tupwood Gate Nursing Home, Springs Community, Cygnet Springside (NW), Cygnet Hospital Taunton, Cygnet Joyce Parker Hospital and Cygnet Hospital Maidstone

**Cygnet Health Developments Limited**

------

Incorporated State: United Kingdom

**Cygnet Health Properties Limited**

Incorporated State: United Kingdom

**Cygnet Health UK Limited**

Incorporated State: United Kingdom

**Cygnet Hospitals Holdings Limited**

Incorporated State: United Kingdom

**Cygnet Inter-Holdings Limited**

Incorporated State: United Kingdom

**Cygnet Learning Disabilities Limited**

Incorporated State: United Kingdom

Business Name: Cygnet Hospital Colchester and Eleni House

**Cygnet Learning Disabilities Midlands Limited**

Incorporated State: United Kingdom

Business Name: Beeches, Birches, Cygnet Cedars, Conifers, Cygnet Elms, , Cygnet Grange, Cygnet Lodge, Cygnet Manor, Pines, Cygnet Views, Fairways, The Fields, The Gables, Gledholt, Long Eaton Day Services, Sheffield Day Services, Chaseways, Marion House, Glyn House, Morgan House, Cherry Tree House, Gledholt Mews and Coach House, Hansa Lodge, Walkern Lodge and Shear Meadow

**Cygnet NW Limited**

Incorporated State: United Kingdom

Business Name: Cygnet Hospital Bury, Cygnet Hospital Sheffield, Cygnet Lodge Salford

**Cygnet Propco HoldCo II Limited**

Incorporated State: United Kingdom

**Cygnet Propco Holdco Limited**

Incorporated State: United Kingdom

**Cygnet Propco II Limited**

Incorporated State: United Kingdom

**Cygnet Propco Limited**

Incorporated State: United Kingdom

**Cygnet Supported Living Limited**

Incorporated State: United Kingdom

**Cygnet Surrey Limited**

Incorporated State: United Kingdom

Business Name: Cygnet Hospital Woking, Cygnet Lodge Woking

**Cygnet Trustees Limited**

Incorporated State: United Kingdom

**Cygnet (DH) Limited**

Incorporated State: United Kingdom

Business Name: Coulby Lodge, Cedar Vale, Wast Hills, Ellen Mohr, Ranaich House, Thistle Care Home, Trinity House, Wallace Hospital, Lindsay House, Hope House, Hollyhurst, Thornfield Grange, Oaklands, Redlands, River View, Staffordshire Supported Living, Newbus Grange, Toller Road, Whorlton Hall, Willow House, Cygnet Hospital Hexham, Duchess Nina, Helensea, Ashbrook and North East Supported Living

**Cygnet (OE) Limited**

Incorporated State: United Kingdom

Business Name: Bostall House, Ducks Halt, The Orchards, Old Leigh House, Yew Trees, Thors Park

**Cypress Creek Real Estate, L.P.** 

Incorporated State: Texas

**Del Amo Hospital, Inc.** 

Incorporated State: California

Business Name: Del Amo Behavioral Health System

**DHP 2131 K ST, LLC**

Incorporated State: Delaware

**Diamond Grove Center, LLC** 

Incorporated State: Delaware

Business Name: Diamond Grove Center

**District Hospital Partners Receivables, L.L.C** 

Incorporated State: Delaware

**District Hospital Partners, L.P.** 

Incorporated State: District of Columbia

Business Name: The George Washington University Hospital

------

**Doctors' Hospital of Shreveport, Inc.** 

Incorporated State: Louisiana

**Drummers Lane Investors, LP** 

Incorporated State: Pennsylvania

**Drummers Lane Sub, LP** 

Incorporated State: Pennsylvania

**DVH Hospital Alliance, LLC**

Incorporated State: Delaware

Business Name: Desert View Hospital

**Eastern Pennsylvania Physician Alliance, LLC**

Incorporated State: Pennsylvania

**Edinburg Ambulatory Surgical Center, Inc.** 

Incorporated State: Texas

**Edinburg Holdings, Inc.** 

Incorporated State: Delaware

**Edinburg MOB Properties, LLC** 

Incorporated State: Texas

**Edinburg Surgery Center, L.P.** 

Incorporated State: Delaware

**Emerald Coast Behavioral Hospital, LLC** 

Incorporated State: Delaware

Business Name: Emerald Coast Behavioral Hospital

Emotional Connect, LLC

Incorporated State: Puerto Rico

**Everglades Holdings, LLC**

Incorporated State: Delaware

**Everycorner Limited**

Incorporated State: United Kingdom

**Fannin Management Services, LLC**

Incorporated State: Texas

**FHCHS of Puerto Rico, Inc.** 

Incorporated State: Puerto Rico

**First Hospital Corporation of Nashville** 

Incorporated State: Virginia

**First Hospital Corporation of Virginia Beach** 

Incorporated State: Virginia

Business Name: Virginia Beach Psychiatric Center

**First Hospital Panamericano, Inc.** 

Incorporated State: Puerto Rico

Business Name: Hospital Panamericano Cidra, Panamericano Ponce and Panamericano San Juan

**Forest Hill Medical Properties, LLC**

Incorporated State: Delaware

**Forest View Psychiatric Hospital, Inc.** 

Incorporated State: Michigan

Business Name: Forest View Hospital

**Fort Duncan Medical Center Ladies Auxiliary** 

Incorporated State: Texas

**Fort Duncan Medical Center, Inc.** 

Incorporated State: Delaware

**Fort Duncan Medical Center, L.P.** 

Incorporated State: Delaware

Business Name: Fort Duncan Regional Medical Center

**Fort Duncan Medical Receivables, L.L.C** 

Incorporated State: Delaware

**Fort Lauderdale Hospital, Inc.** 

Incorporated State: Florida

Business Name: Fort Lauderdale Behavioral Health Center

**Foundations Atlanta, LLC**

Incorporated State: Delaware

Business Name: Foundations Atlanta at Midtown

------

**Foundations Chicago, LLC**

Incorporated State: Illinois

**Foundations Detroit, LLC** 

Incorporated State: Michigan

Business Name: Skywood Outpatient

**Foundations for Home and Community, Inc.** 

Incorporated State: Virginia

**Foundations Management, Inc.** 

Incorporated State: Delaware

**Foundations Recovery Network, LLC**

Incorporated State: Tennessee

**Foundations San Diego, LLC**

Incorporated State: Delaware

**Foundations Virginia, LLC**

Incorporated State: Delaware

**Friends Behavioral Health System, L.P.** 

Incorporated State: Pennsylvania

Business Name: Friends Hospital

**Friends GP, LLC** 

Incorporated State: Pennsylvania

**FRN Lake County, LLC**

Incorporated State: Florida

**FRN Nashville, LLC**

Incorporated State: Delaware

**FRN Outpatient, LLC**

Incorporated State: Delaware

**FRN San Francisco, LLC**

Incorporated State: Delaware

Business Name: Foundations San Francisco

**FRN Washington, LLC**

Incorporated State: Washington

**FRN, Inc.** 

Incorporated State: Delaware

**Frontline Behavioral Health, Inc.** 

Incorporated State: Delaware

**Frontline Children's Hospital, L.L.C.** 

Incorporated State: Delaware

**Frontline Hospital, LLC** 

Incorporated State: Delaware

Business Name: North Star Hospital, Chris Kyle Patriot's Hospital

**Frontline Residential Treatment Center, LLC** 

Incorporated State: Delaware

Business Name: DeBarr Residential Treatment Center, Palmer Residential Treatment Center

**Garfield Park Hospital, LLC** 

Incorporated State: Illinois

Business Name: Garfield Park Behavioral Hospital

**Gateway-Phase IV Commercial Property Owners Association, Inc.** 

Incorporated State: Texas

**Glen Oaks Hospital, Inc.** 

Incorporated State: Texas

Business Name: Glen Oaks Hospital

**Great Plains Hospital, Inc.** 

Incorporated State: Missouri

Business Name: Heartland Behavioral Health Services

**Gulf Coast Treatment Center, Inc.** 

Incorporated State: Florida

Business Name: Gulf Coast Treatment Center, Gulf Coast Youth Services and Okaloosa Youth Academy

**Gulph Mills Associates, LLC** 

Incorporated State: Pennsylvania

------

**H.C. Corporation** 

Incorporated State: Alabama

**H.C. Partnership** 

Incorporated State: Alabama

Business Name: Hill Crest Behavioral Health Services

**Harbor Point Behavioral Health Center, Inc.** 

Incorporated State: Virginia

Business Name: Harbor Point Behavioral Health Center and The Kempsville Center for Behavioral Health

**Havenwyck Hospital Inc.** 

Incorporated State: Michigan

Business Name: Havenwyck Hospital and Cedar Creek Hospital

**Health Alliance ACO, LLC**

Incorporated State: Florida

**Heart Clinic, P.L.L.C.** 

Incorporated State: Texas

**Heritage Oaks Patient Enrichment Center, Inc.**

Incorporated State: California

Business name: Heritage Oaks Patient Enrichment Center

**HHC Augusta, Inc.** 

Incorporated State: Georgia

Business Name: Lighthouse Care Center of Augusta

**HHC Berkeley, Inc.**

Incorporated State: South Carolina

**HHC Delaware, Inc.**

Incorporated State: Delaware

**HHC Indiana, Inc.** 

Incorporated State: Indiana

Business Name: Michiana Behavioral Health

**HHC Kingwood Investment, LLC** 

Incorporated State: Delaware

**HHC Oconee, Inc.** 

Incorporated State: South Carolina

**HHC Ohio, Inc.** 

Incorporated State: Ohio

Business Name: Windsor Laurelwood Center for Behavioral Medicine

**HHC Pennsylvania, LLC** 

Incorporated State: Delaware

**HHC Poplar Springs, LLC** 

Incorporated State: Virginia

Business Name: Poplar Springs Hospital

**HHC River Park, Inc.** 

Incorporated State: West Virginia

Business Name: River Park Hospital

**HHC South Carolina, Inc.** 

Incorporated State: South Carolina

Business Name: Lighthouse Behavioral Health Hospital

**HHC St. Simons, Inc.** 

Incorporated State: Georgia

Business Name: Saint Simons By-The-Sea

**Hickory Trail Hospital, L.P.** 

Incorporated State: Delaware

Business Name: Hickory Trail Hospital

**Hidalgo County Clinical Services, Inc.** 

Incorporated State: Texas

**High Plains Behavioral Health, L.P.** 

Incorporated State: Delaware

**Holly Hill Hospital, LLC** 

Incorporated State: Tennessee

Business Name: Holly Hill Hospital

------

**Holly Hill Real Estate, LLC** 

Incorporated State: North Carolina

**Horizon Health Austin, Inc.** 

Incorporated State: Texas

**Horizon Health Corporation** 

Incorporated State: Delaware

**Horizon Health Hospital Services, LLC** 

Incorporated State: Delaware

**Horizon Health Physical Rehabilitation Services, LLC** 

Incorporated State: Delaware

**Horizon Mental Health Management, LLC** 

Incorporated State: Texas

**HRI Clinics, Inc.** 

Incorporated State: Massachusetts

Business Name: Arbour Counseling Services

**HRI Hospital, Inc.**

Incorporated State: Massachusetts

Business Name: HRI Hospital

**HSA Hill Crest Corporation** 

Incorporated State: Alabama

**Hughes Center, LLC**

Incorporated State: Virginia

Business Name: The Hughes Center

**Independence Aiken, LLC** 

Incorporated State: Delaware

**Independence Amarillo, LLC** 

Incorporated State: Delaware

**Independence Denison, LLC** 

Incorporated State: Delaware

**Independence Enid, LLC** 

Incorporated State: Delaware

**Independence Laredo, LLC** 

Incorporated State: Delaware

**Independence Las Vegas, LLC** 

Incorporated State: Delaware

**Independence Manatee, LLC** 

Incorporated State: Delaware

**Independence McAllen, LLC** 

Incorporated State: Delaware

**Independence Physician Management, LLC** 

Incorporated State: Delaware

**Independence Shared Services, LLC**

Incorporated State: Delaware

**Independence Southern California, LLC** 

Incorporated State: Delaware

**Independence Sparks, LLC** 

Incorporated State: Delaware

**Independence Wellington, LLC** 

Incorporated State: Delaware

**Indiana Psychiatric Institutes, LLC** 

Incorporated State: Delaware

**InfoScriber Corporation** 

Incorporated State: Delaware

**IPM Holding Sub, LLC**

Incorporated State: Delaware

------

**IPM SoCal Management, LLC**

Incorporated State: Delaware

**Isand Limited**

Incorporated State: United Kingdom

Business Name: Beckly, Hawkstone, Langdale House, The Outwood, Oxley Woodhouse, Thornfield House

**Isand (Domiciliary Care) Limited**

Incorporated State: United Kingdom

Business Name: Ashfield House, Gledcliffe Road, Langdale Coach House and Edgar House

**Island 77, LLC** 

Incorporated State: Delaware

**KEYS Group Holdings LLC** 

Incorporated State: Delaware

**Keystone Charlotte LLC** 

Incorporated State: North Carolina

**Keystone Continuum, LLC** 

Incorporated State: Tennessee

Business Name: Cedar Grove Residential Treatment Center, Mountain Youth Academy and Natchez Trace Youth Academy

**Keystone Education and Youth Services, LLC** 

Incorporated State: Tennessee

**Keystone Marion, LLC** 

Incorporated State: Virginia

**Keystone Memphis, LLC** 

Incorporated State: Tennessee

Business Name: Compass Intervention Center and McDowell Center for Children

**Keystone Newport News, LLC** 

Incorporated State: Virginia

Business Name: Newport News Behavioral Health Center

**Keystone NPS LLC** 

Incorporated State: California

**Keystone Richland Center LLC** 

Incorporated State: Ohio

Business Name: Foundations for Living

**Keystone WSNC, L.L.C.** 

Incorporated State: North Carolina

Business Name: Old Vineyard Behavioral Health Services

**Keystone/CCS Partners LLC** 

Incorporated State: Delaware

**Kids Behavioral Health of Alaska, Inc.** 

Incorporated State: Alaska

**Kids Behavioral Health of Utah, Inc.** 

Incorporated State: Utah

Business Name: Copper Hills Youth Center

**Kingwood Pines Hospital, LLC** 

Incorporated State: Texas

**KMI Acquisition, LLC** 

Incorporated State: Delaware

Business Name: The Brook Hospital-KMI

**La Amistad Residential Treatment Center, LLC** 

Incorporated State: Florida

Business Name: Central Florida Behavioral Hospital, La Amistad Behavioral Health Services

**La Paloma Treatment Center, LLC**

Incorporated State: Tennessee

Business Name: The Oaks at La Paloma, and Foundations Memphis

**Lakewood Ranch Medical Center Auxiliary, Incorporated** 

Incorporated State: Florida

**Lakewood Ranch Medical Group, LLC** 

Incorporation State: Florida

**Lakewood Ranch Neurology, LLC** 

Incorporation State: Florida

**Lancaster Behavioral Health Hospital, LLC**

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Incorporated State: Pennsylvania

Business Name: Lancaster Behavioral Health Hospital

**Lancaster Hospital Corporation** 

Incorporated State: California

Business Name: Palmdale Regional Medical Center

**Lancaster Hospital Receivables, L.L.C.** 

Incorporated State: Delaware

**Laredo ASC, Inc.** 

Incorporated State: Texas

**Laredo FED JV1, LLC**

Incorporated State: Texas

**Laredo Holdings, Inc.** 

Incorporated State: Delaware

**Laredo MOB Partners, Ltd.** 

Incorporated State: Texas

**Laredo Physicians Group** 

Incorporated State: Texas

**Laredo Regional Medical Center, L.P.** 

Incorporated State: Delaware

Business Name: Doctors' Hospital of Laredo. Doctors' Hospital Emergency Room South and Doctors' Hospital Emergency Room Saunders

**Laredo Regional Receivables, L.L.C.** 

Incorporated State: Delaware

**Laredo Regional, Inc.** 

Incorporated State: Delaware

**Las Vegas Medical Group, LLC** 

Incorporated State: Nevada

**Laurel Oaks Behavioral Health Center, Inc.** 

Incorporated State: Delaware

Business Name: Laurel Oaks Behavioral Health Center

**Laurelwood Associates, Inc.** 

Incorporated State: Ohio

**Lebanon Hospital Partners, LLC** 

Incorporated State: Tennessee

**Liberty Point Behavioral Healthcare, LLC** 

Incorporated State: Delaware

Business Name: Liberty Point Behavioral Healthcare

**Manatee ACO Holdings, LLC**

Incorporated State: Delaware

**Manatee Cardiology Associates, LLC** 

Incorporated State: Delaware

**Manatee Memorial Foundation, Inc.** 

Incorporated State: Florida

**Manatee Memorial Hospital, L.P.** 

Incorporated State: Delaware

Business Name: Manatee Memorial Hospital, Lakewood Ranch Medical Center, Manatee Diagnostic Center Arcadia, Manatee Diagnostic Center Parrish, Manatee Diagnostic Center Pointe West and Manatee Diagnostic Center Riverside

**Manatee Memorial Receivables, L.L.C.** 

Incorporated State: Delaware

**Manatee Physician Alliance, LLC** 

Incorporated State: Florida

Manatee Specialty Physician Alliance, LLC

Incorporated State: Florida

**Mayhill Behavioral Health, LLC** 

Incorporated State: Texas

Business Name: Mayhill Hospital

**Mayhill Behavioral Properties, LLC** 

Incorporated State: Texas

**McAllen Holdings, Inc.** 

Incorporated State: Delaware

------

**McAllen Hospitalist Group, PLLC** 

Incorporated State: Texas

**McAllen Hospitals Receivables, L.L.C.** 

Incorporated State: Delaware

**McAllen Hospitals, L.P.** 

Incorporated State: Delaware

Business Name: South Texas Health System Behavioral, South Texas Health System Children's, South Texas Health System Edinburg, South Texas Health System McAllen, South Texas Health System Heart, South Texas Health System ER Alamo, South Texas Health System ER McColl, South Texas Health System ER Mission, South Texas Health System ER Monte Cristo, South Texas Health System ER Ware Road and South Texas Health System ER Weslaco

**McAllen Medical Center Foundation** 

Incorporated State: Texas

**McAllen Medical Center Physicians, Inc.** 

Incorporated State: Texas

**McAllen Medical Center, Inc.** 

Incorporated State: Delaware

**Mental Health Outcomes, LLC** 

Incorporated State: Delaware

**Meridell Achievement Center, Inc.** 

Incorporated State: Texas

Business Name: Meridell Achievement Center

**Merion Building Management, Inc.** 

Incorporated State: Delaware

**Mesilla Valley Hospital, Inc.** 

Incorporated State: New Mexico

**MHCCC, LLC** 

Incorporated State: Tennessee

**Michigan BH JV, LLC**

Incorporated State: Michigan

Business Name: Beaumont Behavioral Health

**Michigan Healthcare Staffing, LLC**

Incorporated State: Michigan

**Michigan Psychiatric Services, Inc.** 

Incorporated State: Michigan

**Mid Atlantic Medicine, LLC**

Incorporated State: Delaware

**Milwaukee Behavioral Health, LLC**

Incorporated State: Wisconsin

Business Name: Granite Hills Hospital

**Millwood Hospital, L.P.** 

Incorporated State: Texas

Business Name: Millwood Hospital

**Nashville Rehab, LLC** 

Incorporated State: Tennessee

**Neuro Institute of Austin, L.P.** 

Incorporated State: Texas

Business Name: Texas NeuroRehab Center

**Nevada Clinical Services, Inc.** 

Incorporated State: Nevada

**Nevada Preferred Healthcare Providers, LLC**

Incorporated State: Nevada

**NEWCO BH PA JV, LLC**

Incorporated State: Pennsylvania

**NEWCO Oregon, Inc.**

Incorporated State: Delaware

**North Spring Behavioral Healthcare, Inc.** 

Incorporated State: Tennessee

Business Name: North Spring Behavioral Healthcare

**Northern Indiana Partners, LLC** 

Incorporated State: Tennessee

------

**Northern Nevada ASC Management, LLC**

Incorporated State: Nevada

**Northern Nevada Cardiology PC** 

Incorporated State: California

**Northern Nevada Diagnostic Imaging-Spanish Springs, L.L.C.** 

Incorporated State: Nevada

**Northern Nevada Medical Group, LLC** 

Incorporation State: Nevada

**Northwest Texas Healthcare Receivables, L.L.C.** 

Incorporated State: Delaware

**Northwest Texas Healthcare System, Inc.** 

Incorporated State: Texas

Business Name: Northwest Texas Healthcare System, The Pavilion at Northwest Texas Healthcare System, Northwest Emergency at Town Square

**Northwest Texas Physician Group** 

Incorporated State: Texas

**Northwest Texas Wyatt Clinic, PLLC** 

Incorporated State: Texas

**Northwest Urgent Care, PLLC**

Incorporated State: Texas

**NWTHS Management, LLC**

Incorporated State: Texas

**NWTX Physician Network, PLLC** 

Incorporated State: Texas

**Oak Plains Academy of Tennessee, Inc.** 

Incorporation State: Tennessee

Business Name: Oak Plains Academy

**Oasis Health Systems, L.L.C.** 

Incorporated State: Nevada

**Ocala Behavioral Health, LLC** 

Incorporated State: Delaware

Business Name: The Vines Hospital

**Olympia Behavioral Health, LLC**

Incorporated State: Washington

**Orchard Portman Hospital Limited**

Incorporated State: United Kingdom

**Orchard Portman House Limited**

Incorporated State: United Kingdom

**Oregon Psychiatric Realty, LLC** 

Incorporated State: Delaware

**Palm Point Behavioral Health, LLC**

Incorporated State: Florida

Business Name: Palm Point Behavioral Health

**Palm Springs Treatment Centers, LLC**

Incorporated State: Tennessee

Business Name: Michael's House and Michael's House Outpatient

**Palmdale Regional Medical Foundation** 

Incorporated State: California

**Palmetto Behavioral Health Holdings, LLC** 

Incorporated State: Delaware

**Palmetto Behavioral Health Solutions, LLC** 

Incorporated State: South Carolina

**Palmetto Behavioral Health System, L.L.C.** 

Incorporated State: South Carolina

**Palmetto Lowcountry Behavioral Health, L.L.C.** 

Incorporated State: South Carolina

Business Name: Palmetto Lowcountry Behavioral Health

**Palmetto Pee Dee Behavioral Health, L.L.C.** 

Incorporated State: South Carolina

**Park HealthCare Company** 

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Incorporated State: Tennessee

**Pasteur Healthcare Properties, LLC**

Incorporated State: Delaware

**Peak Behavioral Health Services, LLC** 

Incorporated State: Delaware

**Pendleton Methodist Hospital, L.L.C.** 

Incorporated State: Delaware

**Pennsylvania Clinical Schools, Inc.** 

Incorporated State: Pennsylvania

**PR Holding II, LLC**

Incorporated State: Puerto Rico

**Premier Behavioral Solutions of Florida, Inc.** 

Incorporated State: Delaware

Business Name: Palm Shores Behavioral Health Center, Suncoast Behavioral Health Center

**Premier Behavioral Solutions, Inc.** 

Incorporated State: Delaware

**Preparatory School at the National Deaf Academy, Inc.** 

Incorporated State: Florida

**Pride Institute, Inc.** 

Incorporated State: Minnesota

Business Name: PRIDE Institute

Prominence Care Alliance, LLC

Incorporated State: Delaware

**Prominence Florida Holdings, LLC**

Incorporated State: Florida

**Prominence HealthFirst**

Incorporated State: Nevada

**Prominence HealthFirst of Florida, Inc.**

Incorporated State: Florida

**Prominence HealthFirst of Texas, Inc**.

Incorporated State: Texas

**Prominence Holdings, LLC**

Incorporated State: Nevada

**Prominence Management Services, LLC**

Incorporated State: Nevada

**Prominence Preferred Health Insurance Company, Inc.**

Incorporated State: Nevada

**Prominence Vera, LLC**

Incorporated State: Nevada

**Provo Canyon School, Inc.** 

Incorporated State: Utah

**PSJ Acquisition, LLC** 

Incorporated State: North Dakota

Business Name: Prairie St. John's

**Psychiatric Realty, LLC** 

Incorporated State: Delaware

**Psychiatric Solutions Hospitals, LLC** 

Incorporated State: Delaware

**Psychiatric Solutions of Virginia, Inc.** 

Incorporated State: Tennessee

**Psychiatric Solutions, Inc.** 

Incorporated State: Delaware

**PsychManagement Group, Inc.** 

Incorporated State: West Virginia

**Quail Surgical and Pain Management Center, LLC**

Incorporated State: Nevada

Business Name: Quail Surgical and Pain Management Center

**Radiation Oncology Center of Aiken, LLC** 

Incorporation State: South Carolina

Business Name: Cancer Care Institute of Carolina

------

**Ramsay Managed Care, LLC** 

Incorporated State: Delaware

**Ramsay Youth Services of Georgia, Inc.** 

Incorporated State: Delaware

**Rancho Springs Receivables, L.L.C.** 

Incorporated State: Delaware

**Recovery Physician Group of California, P.C.**

Incorporated State: California

**Recovery Physicians Group of Georgia, LLC** 

Incorporated State: Delaware

**Recovery Physicians Group of Tennessee, LLC** 

Incorporated State: Delaware

**Recovery Physicians Network of Michigan**

Incorporated State: Michigan

**Red Rock Solutions, LLC** 

Incorporated State: Delaware

**Relational Therapy Clinic, Inc.** 

Incorporated State: Louisiana

**Relativeto Limited**

Incorporated State: United Kingdom

Business Name: Dene Brook, Longfield House, Dove Valley Mews, Woodrow House and Lowry House

**Ridge Outpatient Counseling, L.L.C.** 

Incorporated State: Kentucky

**River Crest Hospital, Inc.** 

Incorporated State: Texas

Business Name: River Crest Hospital

**River Oaks, Inc.** 

Incorporated State: Louisiana

Business Name: River Oaks Hospital

**Riveredge Hospital Holdings, Inc.** 

Incorporated State: Delaware

**Riveredge Hospital, Inc.** 

Incorporated State: Illinois

Business Name: Riveredge Hospital

**Riveredge Real Estate, Inc.** 

Incorporated State: Illinois

**Rolling Hills Hospital, LLC** 

Incorporated State: Tennessee

Business Name: Rolling Hills Hospital

**RR Behavioral Realty LLC** 

Incorporated State: Delaware

**RR Recovery LLC** 

Incorporated State: Delaware

Business Name: The Recovery Center

**Safe Spaces Limited** 

Incorporated State: United Kingdom

**Salt Lake Behavioral Health, LLC** 

Incorporated State: Delaware

Business Name: Salt Lake Behavioral Health

**Salt Lake Psychiatric Realty, LLC** 

Incorporated State: Delaware

**Samson Properties, LLC** 

Incorporated State: Florida

**Schick Shadel of Florida, LLC**

Incorporated State: Florida

**Shadow Mountain Behavioral Health System, LLC** 

Incorporated State: Delaware

**SHC-KPH, LP** 

Incorporated State: Texas

Business Name: Kingwood Pines Hospital

------

**Short Ground Limited**

Incorporated State: United Kingdom

Business Name: Norcott House, Norcott Lodge

**Silver State ACO, LLC**

Incorporated State: Nevada

**SLBMI Alternative Programs, LLC**

Incorporated State: Missouri

**Somerset, Incorporated** 

Incorporated State: California

**South Texas ACO Clinical Partners, LLC**

Incorporated State: Texas

**Southeastern Hospital Corporation** 

Incorporated State: Tennessee

**Southern California Physician Network, Inc.** 

Incorporated State: California

**Southern California Urgent Care Network**

Incorporated State: California

**Southern Riverside County Physician Network, PC**

Incorporated State: California

**Southside Imaging Center, LLC** 

Incorporation State: South Carolina

**SP Behavioral, LLC**

Incorporated State: Florida

Business Name: SandyPines Residential Treatment Center

**Sparks Family Hospital Receivables, L.L.C** 

Incorporated State: Delaware

**Sparks Family Hospital, Inc.** 

Incorporated State: Nevada

Business Name: Northern Nevada Medical Center and Northern Nevada Sierra Medical Center

**Spokane Behavioral Health LLC**

Incorporated State: Washington

Business Name: Inland Northwest Behavioral Health

**Spokane Valley Behavioral Health, LLC**

Incorporated State: Delaware

**Spring Valley Hospital Medical Center Auxiliary**

Incorporated State: Nevada

**Springfield Hospital, Inc.** 

Incorporated State: Delaware

Business Name: Lincoln Prairie Behavioral Health Center

**St. Louis Behavioral Medicine Institute, Inc.** 

Incorporated State: Missouri

Business Name: Saint Louis Behavioral Medicine Institute

**St. Mary's Laboratory, LLC** 

Incorporated State: Oklahoma

**St. Mary's Physician Associates, L.L.C.** 

Incorporated State: Oklahoma

**Stac Healthcare Limited**

Incorporated State: United Kingdom

**Stonington Behavioral Health, Inc.** 

Incorporated State: Delaware

Business Name: Stonington Institute

**Summerlin Hospital Medical Center LLC** 

Incorporated State: Delaware

Business Name: Summerlin Hospital Medical Center

**Summerlin Hospital Medical Center, L.P.** 

Incorporated State: Delaware

**Summerlin Hospital Receivables, L.L.C.** 

Incorporated State: Delaware

**Summerlin Medical Center Auxiliary**

Incorporated State: Nevada

------

**Summit Oaks Hospital, Inc.** 

Incorporated State: New Jersey

Business Name: Summit Oaks Hospital

**Sunstone Behavioral Health, LLC** 

Incorporated State: Tennessee

**Surgery Center at Wellington, L.L.C.** 

Incorporated State: Florida

**Surgery Center of the Temecula Valley, L.L.C.** 

Incorporated State: Delaware

Business Name: Temecula Valley Day Surgery

**Taunton Hospital Limited** 

Incorporated State: United Kingdom

**TBD Acquisition, LLC** 

Incorporated State: Delaware

Business Name: The Brook Hospital-Dupont

**TBD Acquisition II, LLC**

Incorporated State: Delaware

Business Name: Gulfport Behavioral Health System

**TBJ Behavioral Center, LLC** 

Incorporated State: Delaware

Business Name: River Point Behavioral Health

**Temecula Valley Hospital Receivables, L.L.C.** 

Incorporated State: Delaware

**Temecula Valley Hospital, Inc.** 

Incorporated State: California

Business Name: Temecula Valley Hospital

**Temple Behavioral Healthcare Hospital, Inc.**

Incorporated State: Texas

Business Name: Canyon Creek Behavioral Health

**Tennessee Clinical Schools, LLC** 

Incorporated State: Tennessee

Business Name: Hermitage Hall

**Texas Cypress Creek Hospital, L.P.** 

Incorporated State: Texas

Business Name: Cypress Creek Hospital

**Texas Hospital Holdings, Inc.** 

Incorporated State: Delaware

**Texas Hospital Holdings, LLC** 

Incorporated State: Texas

**Texas Laurel Ridge Hospital, L.P.** 

Incorporated State: Texas

Business Name: Laurel Ridge Treatment Center

**Texas Oaks Psychiatric Hospital, L.P.** 

Incorporated State: Texas

Business Name: Austin Oaks Hospital

**Texas Panhandle Clinical Partners ACO, LLC**

Incorporated State: Texas

**Texas San Marcos Treatment Center, L.P.** 

Incorporated State: Texas

Business Name: San Marcos Treatment Center

**Texas West Oaks Hospital, L.P.** 

Incorporated State: Texas

Business Name: West Oaks Hospital

**Texoma Clinical Partners ACO, LLC**

Incorporated State: Texas

**Texoma Healthcare System Receivables, L.L.C.** 

Incorporated State: Delaware

**TexomaCare** 

Incorporated State: Texas

------

**TexomaCare Specialty Physicians** 

Incorporated State: Texas

**The Arbour, Inc.** 

Incorporated State: Massachusetts

Business Name: Arbour Hospital

**The Bridgeway, LLC.** 

Incorporated State: Arkansas

Business Name: The Bridgeway

**The Canyon at Peace Park, LLC**

Incorporated State: California

**The Canyon at Santa Monica, LLC**

Incorporated State: Delaware

Business Name: The Canyon at Santa Monica

**The Charter School at the National Deaf Academy, Inc.** 

Incorporated State: Florida

**The Friends of Wellington Regional Medical Center, Inc.** 

Incorporated State: Florida

**The National Deaf Academy, LLC** 

Incorporated State: Florida

**The Pavilion Foundation** 

Incorporated State: Illinois

Business Name: Pavilion Behavioral Health System

**The Shores Behavioral Hospital, LLC** 

Incorporated State: Florida

**Three Rivers Behavioral Health, LLC** 

Incorporated State: South Carolina

Business Name: Three Rivers Behavioral Health

**Three Rivers Healthcare Group, LLC** 

Incorporated State: South Carolina

**Three Rivers Residential Treatment/Midlands Campus, Inc.** 

Incorporated State: South Carolina

Business Name: Three Rivers Midlands

**Three Rivers SPE Holding, LLC** 

Incorporated State: South Carolina

**Three Rivers SPE, LLC** 

Incorporated State: South Carolina

**Toledo Holding Co., LLC** 

Incorporated State: Delaware

**Turning Point Care Center, LLC** 

Incorporated State: Georgia

Business Name: Turning Point Care Center

**Two Rivers Psychiatric Hospital, Inc.** 

Incorporated State: Delaware

TXOK Urgent Cares

Incorporated State: Texas

UB of West FL HoldCo, LLC

Incorporated State: Delaware

**UB of West FL, LLC**

Incorporated State: Delaware

**UBH of Oregon, LLC**

Incorporated State: Delaware

Business Name: Cedar Hills Hospital

**UBH of Phoenix Realty, LLC** 

Incorporated State: Delaware

**UBH of Phoenix, LLC** 

Incorporated State: Delaware

Business Name: Valley Hospital

**UBMAA, LLC**

Incorporated State: Delaware

**UHP, LP** 

------

Incorporated State: Delaware

Business Name: University Behavioral Health of Denton

**UHS Advisory, Inc.**

Incorporated State: Delaware

**UHS Ambulatory Network LLC**

Incorporated State: Delaware

**UHS ASC LLC**

Incorporated State: Delaware

**UHS ASC Master, LLC**

Incorporated State: Delaware

**UHS BH PA JV, LLC**

Incorporated State: Pennsylvania

**UHS BH Telepsych FL, PLLC**

Incorporated State: Florida

**UHS BH Telepsych, LLC**

Incorporated State: Delaware

**UHS Building Solutions, Inc.** 

Incorporation State: Delaware

UHS Capitol Acquisition, LLC

Incorporated State: Delaware

**UHS Children Services, Inc.** 

Incorporated State: Delaware

**UHS East End Corporation**

Incorporated State: District of Columbia

**UHS East End Sub, LLC**

Incorporated State: District of Columbia

**UHS Florida MA JV Holdings, LLC**

Incorporated State: Florida

**UHS FLPG Florida, LLC**

Incorporated State: Delaware

**UHS Funding, LLC**

Incorporated State: Delaware

**UHS Good Samaritan, L.L.C.** 

Incorporated State: Delaware

**UHS Holding Company, Inc.** 

Incorporated State: Nevada

**UHS Home Health LLC**

Incorporated State: Delaware

**UHS Imaging LLC**

Incorporated State: Delaware

**UHS Integrated Management, LLC**

Incorporated State: Delaware

**UHS International, Inc.** 

Incorporated State: Delaware

**UHS Kentucky Holdings, L.L.C.** 

Incorporated State: Delaware

**UHS Midwest Behavioral Health, LLC**

Incorporated State: Delaware

**UHS Midwest Center for Youth and Families, LLC** 

Incorporated State: Indiana

Business Name: Midwest Center for Youth and Families

**UHS of Anchor, L.P.** 

Incorporated State: Delaware

Business Name: Anchor Hospital

**UHS of Benton Day School and Treatment Program, Inc.** 

Incorporated State: Delaware

**UHS of Benton, LLC**

Incorporated State: Delaware

Business Name: Rivendell Behavioral Health Services of Arkansas

------

**UHS of Bowling Green, LLC** 

Incorporated State: Delaware

Business Name: Rivendell Behavioral Health Hospital

**UHS of Centennial Peaks, LLC** 

Incorporation State: Delaware

Business Name: Centennial Peaks Hospital

**UHS of Cornerstone Holdings, Inc.** 

Incorporated State: Delaware

**UHS of Cornerstone, Inc.** 

Incorporated State: Delaware

**UHS of D.C., Inc.** 

Incorporated State: Delaware

**UHS of Delaware, Inc.** 

Incorporated State: Delaware

**UHS of Denver, Inc.** 

Incorporated State: Delaware

Business Name: Highlands Behavioral Health System

**UHS of Dover, L.L.C.** 

Incorporated State: Delaware

Business Name: Dover Behavioral Health System

**UHS of Doylestown, L.L.C.** 

Incorporated State: Delaware

Business Name: Foundations Behavioral Health

**UHS of Fairmount, Inc.** 

Incorporated State: Delaware

Business Name: Fairmount Behavioral Health System

**UHS of Fuller, Inc.** 

Incorporated State: Massachusetts

Business Name: Fuller Hospital

**UHS of GB, Inc.**

Incorporated State: Delaware

**UHS of Georgia Holdings, Inc.** 

Incorporated State: Delaware

**UHS of Georgia, Inc.** 

Incorporated State: Delaware

**UHS of Greenville, LLC.** 

Incorporated State: Delaware

Business Name: Carolina Center for Behavioral Health

**UHS of Hampton Learning Center, Inc.** 

Incorporated State: New Jersey

**UHS of Hampton, Inc.** 

Incorporated State: New Jersey

Business Name: Hampton Behavioral Health Center

**UHS of Hartgrove, Inc.** 

Incorporated State: Illinois

Business Name: Hartgrove Behavioral Health System

**UHS of Indiana, Inc.** 

Incorporated State: Indiana

**UHS of Kootenai River, Inc.** 

Incorporated State: Delaware

Business Name: Boulder Creek Academy

**UHS of Lakeside, LLC** 

Incorporated State: Delaware

Business Name: Lakeside Behavioral Health System

**UHS of Lancaster, LLC**

Incorporated State: Pennsylvania

**UHS of Laurel Heights, L.P.** 

Incorporated State: Delaware

Business Name: Laurel Heights Hospital

**UHS of Madera, Inc.**

------

Incorporated State: Delaware

Business Name: Valley Children's Hospital

**UHS of New Orleans, LLC** 

Incorporated State: Louisiana

**UHS of No. Nevada, LLC** 

Incorporated State: Nevada

**UHS of Oklahoma Receivables, L.L.C** 

Incorporated State: Delaware

**UHS of Oklahoma, LLC**

Incorporated State: Oklahoma

Business Name: St. Mary's Regional Medical Center

**UHS of Parkwood, Inc.** 

Incorporated State: Delaware

Business Name: Parkwood Behavioral Health System

**UHS of Peachford, L.P.** 

Incorporated State: Delaware

Business Name: Peachford Hospital

**UHS of Pennsylvania, Inc.** 

Incorporated State: Pennsylvania

Business Name: Clarion Psychiatric Center, Horsham Clinic, Meadows Psychiatric Center and Roxbury Treatment Center

**UHS of Phoenix, LLC** 

Incorporated State: Delaware

Business Name: Quail Run Behavioral Health

**UHS of Provo Canyon, Inc.** 

Incorporated State: Delaware

Business Name: Provo Canyon School and Provo Canyon Behavioral Hospital

**UHS of Puerto Rico, Inc.** 

Incorporated State: Delaware

**UHS of Ridge, LLC** 

Incorporated State: Delaware

Business Name: The Ridge Behavioral Health System

**UHS of River Parishes, Inc.** 

Incorporated State: Louisiana

**UHS of Rockford, LLC** 

Incorporated State: Delaware

Business Name: Rockford Center

**UHS of Salt Lake City, L.L.C.** 

Incorporated State: Delaware

**UHS of Savannah, L.L.C.** 

Incorporated State: Delaware

Business Name: Coastal Harbor Treatment Center and Coastal Behavioral Health

**UHS of Spring Mountain, Inc.** 

Incorporated State: Delaware

Business Name: Spring Mountain Treatment Center

**UHS of Springwoods, L.L.C.** 

Incorporated State: Delaware

Business Name: Springwoods Behavioral Health

**UHS of SummitRidge, L.L.C.** 

Incorporation State: Delaware

Business Name: SummitRidge Hospital

**UHS of Sutton, Inc.** 

Incorporated State: Delaware

**UHS of Talbot, L.P.** 

Incorporated State: Delaware

Business Name: Talbott Recovery and Talbott Recovery Dunwoody

**UHS of Texoma, Inc.** 

Incorporated State: Delaware

Business Name: Texoma Medical Center, TMC Behavioral Health Center, Texoma ER at Sherman, an Extension of Texoma Medical Center and Texoma ER at Anna, an Extension of Texoma Medical Center

------

**UHS of Timberlawn, Inc.** 

Incorporated State: Texas

Business Name: Garland Behavioral Hospital

**UHS of Timpanogos, Inc.** 

Incorporated State: Delaware

Business Name: Center for Change

**UHS of Tucson, LLC**

Incorporated State: Delaware

Business Name: Palo Verde Behavioral Health

**UHS of Westwood Pembroke, Inc.** 

Incorporated State: Massachusetts

Business Name: Pembroke Hospital

**UHS of Wyoming, Inc.** 

Incorporated State: Delaware

Business Name: Wyoming Behavioral Institute

UHS OUD Specialty Hold Co., LLC

Incorporated State: Delaware

UHS Outpatient GA, LLC

Incorporated State: Delaware

**UHS-Corona Receivables, L.L.C** 

Incorporated State: Delaware

**UHS-Corona, Inc.** 

Incorporated State: Delaware

Business Name: Corona Regional Medical Center

**UHS-Evolution Homecare, LLC**

Incorporated State: Delaware

**UHS-Lakeland Medical Center, L.L.C.** 

Incorporated State: Delaware

**UHSB International SRL**

Incorporated State: Barbados

**UHSD, L.L.C.** 

Incorporated State: Nevada

**UHSF, L.L.C.** 

Incorporated State: Delaware

**UHSL, L.L.C.** 

Incorporated State: Nevada

**UHS Oklahoma City LLC** 

Incorporated State: Oklahoma

Business Name: Cedar Ridge Hospital, Cedar Ridge Residential Treatment Center and Cedar Ridge Behavioral Health at Bethany

**UHS Receivables Corporation** 

Incorporated State: Delaware

**UHS Recovery Foundation, Inc.** 

Incorporated State: Pennsylvania

Business Name: Keystone Center

**UHS Retail Pharmacy LLC**

Incorporated State: Delaware

**UHS S TX Investco, LLC**

Incorporated State: Delaware

**UHS Sahara, Inc.** 

Incorporated State: Delaware

Business Name: Spring Mountain Sahara

**UHS Southern California Medical Education Consortium, LLC**

Incorporated State: Delaware

**UHS Sub III, LLC**

Incorporated State: Delaware

**UHS Surgical Hospital of Texoma, LLC** 

Incorporated State: Texas

**UHS TeleHealth LLC**

Incorporated State: Delaware

**UHS Telehealth Product, LLC**

------

Incorporated State: Delaware

**UHS THP Holdings, LLC**

Incorporated State: Texas

**UK Acquisitions No.6 Limited**

Incorporated State: United Kingdom

**United HealthCare of Hardin, Inc.** 

Incorporated State: Tennessee

Business Name: Lincoln Trail Behavioral Health System

**Universal Community Behavioral Health, Inc.** 

Incorporated State: Pennsylvania

**Universal HMO, Inc.** 

Incorporated State: Nevada

**Universal Health Finance, L.L.C.** 

Incorporated State: Delaware

**Universal Health Network, Inc.** 

Incorporated State: Nevada

**Universal Health Recovery Centers, Inc.** 

Incorporated State: Pennsylvania

**Universal Health Services Foundation** 

Incorporated State: Pennsylvania

**Universal Health Services of Cedar Hill, Inc.** 

Incorporated State: Texas

**Universal Health Services of Palmdale, Inc.** 

Incorporated State: Delaware

**Universal Health Services of Rancho Springs, Inc.** 

Incorporated State: California

Business Name: Southwest Healthcare System- Inland Valley Medical Center Campus and Southwest Healthcare System- Rancho Springs Medical Center Campus

**Universal Treatment Centers, Inc.** 

Incorporated State: Delaware

**University Behavioral Health of El Paso, LLC** 

Incorporated State: Delaware

Business Name: El Paso Behavioral Health System

**University Behavioral, LLC** 

Incorporated State: Florida

Business Name: University Behavioral Center

**Valle Vista Hospital Partners, LLC** 

Incorporated State: Tennessee

**Valle Vista, LLC** 

Incorporated State: Delaware

Business Name: Valle Vista Health System

**Valley Health System LLC** 

Incorporated State: Delaware

Business Names: Centennial Hills Hospital Medical Center, Desert Springs Hospital Medical Center, Henderson Hospital, Spring Valley Hospital Medical Center and Valley Hospital Medical Center, ER at Green Valley Ranch and ER at Blue Diamond

**Valley Health System Receivables, L.L.C.** 

Incorporated State: Delaware

**Valley Hospital Medical Center, Inc.** 

Incorporated State: Nevada

**Valley Surgery Center, L.P.** 

Incorporated State: Delaware

**VHS ACO Holdings, LLC**

Incorporated State: Delaware

**VHS Primary Care Network, LLC**

Incorporated State: Delaware

**Virgin Islands Behavioral Services, Inc.** 

Incorporated State: Virginia

**Vista Diagnostic Center, L.L.C.** 

Incorporated State: Nevada

------

**Wekiva Springs Center, LLC** 

Incorporated State: Delaware

Business Name: Wekiva Springs Center

**Wellington Physician Alliances, Inc.** 

Incorporation State: Florida

**Wellington Regional Health & Education Foundation, Inc.** 

Incorporated State: Florida

**Wellington Regional Medical Center, LLC**

Incorporated State: Florida

Business Name: Wellington Regional Medical Center and ER at Westlake

**Wellington Regional Receivables, L.L.C.** 

Incorporated State: Delaware

**Wellstone Holdings, Inc.** 

Incorporated State: Delaware

**Wellstone Regional Hospital Acquisition, LLC** 

Incorporated State: Indiana

Business Name: Wellstone Regional Hospital

**West Church Partnership** 

Incorporated State: Illinois

**West Oaks Real Estate, L.P.** 

Incorporated State: Texas

**West Patrick Real Estate, LLC**

Incorporated State: Delaware

**Wildomar Medical Properties, LLC**

Incorporated State: Delaware

**Willow Springs, LLC** 

Incorporated State: Delaware

Business Name: Willow Springs Center

**Windmoor Healthcare Inc.** 

Incorporated State: Florida

Business Name: Windmoor Healthcare of Clearwater

**Windmoor Healthcare of Pinellas Park, Inc.** 

Incorporated State: Delaware

**Wisconsin Avenue Psychiatric Center, Inc**.,

Incorporated State: Delaware

Business Name: Psychiatric Institute of Washington

**WRMCABNS, LLC**

Incorporated State: Florida

**Yarrow Lodge, LLC**

Incorporated State: Delaware

Business Name: Skywood Recovery

**Zeus Endeavors, LLC** 

Incorporated State: Florida

------

## Ex-22

Exhibit 22.1

**Subsidiary Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant**

<u>Guaranteed Securities</u>

The following securities (collectively, the "UHS Senior Secured Notes") issued by Universal Health Services, Inc., a Delaware corporation (the "Company"), were outstanding as of November 8, 2022.

<u>Description of Notes</u>

1.650% Senior Secured Notes due 2026

2.650% Senior Secured Notes due 2030

2.650% Senior Secured Notes due 2032

<u>Obligors</u>

The obligors under the UHS Senior Secured Notes consisted of the Company, as issuer, and its subsidiaries listed in the following table, as Guarantors.

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;ABS LINCS KY, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;ABS LINCS SC, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;ABS LINCS VA, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Aiken Regional Medical Centers, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Alliance Health Center, Inc. | &nbsp;&nbsp;Mississippi | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Alternative Behavioral Services, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Ascend Health Corporation | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Atlantic Shores Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;AZ Holding 4, LLC | &nbsp;&nbsp;Arizona | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Beach 77, LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Behavioral Health Management, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Behavioral Health Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Behavioral Healthcare LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Benchmark Behavioral Health System, Inc. | &nbsp;&nbsp;Utah | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Alhambra Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Belmont Pines Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;BHC Fairfax Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Fox Run Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Fremont Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Health Services of Nevada, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Heritage Oaks Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Intermountain Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Mesilla Valley Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Montevista Hospital, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Northwest Psychiatric Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Of Indiana, General Partnership | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Pinnacle Pointe Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Properties, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Sierra Vista Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;BHC Streamwood Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Bloomington Meadows, General Partnership | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Brentwood Acquisition - Shreveport, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Brentwood Acquisition, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Brynn Marr Hospital, Inc. | &nbsp;&nbsp;North Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Calvary Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Canyon Ridge Hospital, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;CAT Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;CAT Seattle, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;CCS/Lansing, Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Cedar Springs Hospital, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Children's Comprehensive Services, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Columbus Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Coral Shores Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Cumberland Hospital Partners, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Cumberland Hospital, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Del Amo Hospital, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;DHP 2131 K St, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Diamond Grove Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;District Hospital Partners, L.P. | &nbsp;&nbsp;District of Columbia | &nbsp;&nbsp;Guarantor |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;DVH Hospital Alliance LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Emerald Coast Behavioral Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Fannin Management Services, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;First Hospital Corporation of Virginia Beach | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Forest View Psychiatric Hospital, Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Fort Duncan Medical Center, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Fort Lauderdale Hospital, Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;FRN, INC. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Frontline Behavioral Health, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Frontline Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Frontline Residential Treatment Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Garfield Park Hospital, LLC | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Great Plains Hospital, Inc. | &nbsp;&nbsp;Missouri | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Gulf Coast Treatment Center, Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Gulph Mills Associates, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;H. C. Corporation | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;H.C. Partnership | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Harbor Point Behavioral Health Center, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Havenwyck Hospital, Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Augusta, Inc. | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Delaware, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Indiana, Inc. | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Ohio, Inc. | &nbsp;&nbsp;Ohio | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Pennsylvania, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC Poplar Springs, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC River Park, Inc. | &nbsp;&nbsp;West Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC South Carolina, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;HHC St. Simons, Inc. | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Hickory Trail Hospital, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Holly Hill Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Horizon Health Austin, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Horizon Health Corporation | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Horizon Health Hospital Services, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Horizon Mental Health Management, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;HSA Hill Crest Corporation | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Hughes Center, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Independence Physician Management, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keys Group Holdings LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Continuum, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Education And Youth Services, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Marion, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Memphis, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Newport News, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone NPS LLC | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone Richland Center LLC | &nbsp;&nbsp;Ohio | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone WSNC, L.L.C. | &nbsp;&nbsp;North Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Keystone/CCS Partners LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Kids Behavioral Health of Utah, Inc. | &nbsp;&nbsp;Utah | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Kingwood Pines Hospital, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;KMI Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;La Amistad Residential Treatment Center, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Lancaster Hospital Corporation | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Laurel Oaks Behavioral Health Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Lebanon Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Liberty Point Behavioral Healthcare, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Manatee Memorial Hospital, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Mayhill Behavioral Health, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;McAllen Hospitals, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;McAllen Medical Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Meridell Achievement Center, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Merion Building Management, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Michigan Psychiatric Services, Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Millwood Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Milwaukee Behavioral Health, LLC | &nbsp;&nbsp;Wisconsin | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Neuro Institute of Austin, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;North Spring Behavioral Healthcare, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Northern Indiana Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;Northwest Texas Healthcare System, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Oak Plains Academy Of Tennessee, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Ocala Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Palm Point Behavioral Health, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Palmetto Behavioral Health Holdings, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Palmetto Behavioral Health System, L.L.C. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Palmetto Lowcountry Behavioral Health, L.L.C. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Park Healthcare Company | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Pasteur Healthcare Properties, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Pendleton Methodist Hospital, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Pennsylvania Clinical Schools, Inc. | &nbsp;&nbsp;Pennsylvania  | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Premier Behavioral Solutions Of Florida, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Premier Behavioral Solutions, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;PSJ Acquisition, LLC | &nbsp;&nbsp;North Dakota | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Psychiatric Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Psychiatric Solutions Hospitals, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Psychiatric Solutions Of Virginia, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Psychiatric Solutions, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Ramsay Managed Care, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Ramsay Youth Services of Georgia, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Ridge Outpatient Counseling, L.L.C. | &nbsp;&nbsp;Kentucky | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;River Oaks, Inc. | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Riveredge Hospital Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Riverside Medical Clinic Patient Services, L.L.C. | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Rolling Hills Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;RR Recovery, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Salt Lake Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Salt Lake Psychiatric Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Samson Properties, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Schick Shadel Of Florida, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Shadow Mountain Behavioral Health System, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |

---

------

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;SHC-KPH, LP | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Southeastern Hospital Corporation | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;SP Behavioral, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Sparks Family Hospital, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Springfield Hospital, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Stonington Behavioral Health, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Summit Oaks Hospital, Inc. | &nbsp;&nbsp;New Jersey | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Sunstone Behavioral Health, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;TBD Acquisition II, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;TBD Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;TBJ Behavioral Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Temecula Valley Hospital, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Temple Behavioral Healthcare Hospital, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Tennessee Clinical Schools, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas Cypress Creek Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas Hospital Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas Laurel Ridge Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas Oaks Psychiatric Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas San Marcos Treatment Center, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Texas West Oaks Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;The Arbour, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;The Bridgeway, LLC | &nbsp;&nbsp;Arkansas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;The National Deaf Academy, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Three Rivers Behavioral Health, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Three Rivers Healthcare Group, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Toledo Holding Co., LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Turning Point Care Center, LLC | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Two Rivers Psychiatric Hospital, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UBH of Oregon, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UBH of Phoenix Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UBH of Phoenix, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHP, LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Capitol Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Children Services, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |

---

------

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;UHS Funding, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Holding Company, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Kentucky Holdings, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Midwest Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Anchor, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Benton, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Bowling Green, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Centennial Peaks, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Cornerstone Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Cornerstone, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of D.C., Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Delaware, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Denver, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Dover, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Doylestown, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Fairmount, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Fuller, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Georgia Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Georgia, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Greenville, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Hampton, Inc | &nbsp;&nbsp;New Jersey | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Hartgrove, Inc. | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Lakeside, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Lancaster, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Laurel Heights, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Madera, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of New Orleans, LLC | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Oklahoma, LLC | &nbsp;&nbsp;Oklahoma | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Parkwood, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Peachford, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Pennsylvania, Inc. | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Phoenix, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Provo Canyon, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Puerto Rico, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |

---

------

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;UHS of Ridge, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of River Parishes, Inc. | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Rockford, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Salt Lake City, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Savannah, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Spring Mountain, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Springwoods, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Summitridge, L.L.C. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Texoma, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Timberlawn, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Timpanogos, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Tucson, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Westwood Pembroke, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS of Wyoming, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Oklahoma City LLC | &nbsp;&nbsp;Oklahoma | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Sahara, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS Sub III, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHS-Corona, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHSD, L.L.C. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;UHSL, L.L.C. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;United Healthcare of Hardin, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Universal Health Services Of Palmdale, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Universal Health Services Of Rancho Springs, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;University Behavioral Health of El Paso, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;University Behavioral, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Valle Vista Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Valle Vista, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Valley Health System LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Valley Hospital Medical Center, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Wekiva Springs Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Wellington Regional Medical Center, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Wellstone Regional Hospital Acquisition, LLC | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;Guarantor |

---

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Subsidiary**  | &nbsp;&nbsp;**Jurisdiction of Organization**  | &nbsp;&nbsp;**<br>Obligor Type** |
| &nbsp;&nbsp;Willow Springs, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Windmoor Healthcare Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Windmoor Healthcare Of Pinellas Park, Inc. | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Wisconsin Avenue Psychiatric Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;Guarantor |
| &nbsp;&nbsp;Zeus Endeavors, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;Guarantor |

---

<u>Pledged Security Collateral</u>

As of November 8, 2022, the obligations under the UHS Senior Secured Notes were secured by pledges of the equity of the following affiliates of the Company.

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;2012 W. University Properties, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;2026 W. University Properties, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ABS LINCS KY, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ABS LINCS SC, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ABS LINCS TN, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ABS LINCS VA, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Aiken Regional Medical Centers, LLC  | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Alabama Clinical Schools, Inc.  | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Alliance Health Center, Inc. | &nbsp;&nbsp;Mississippi | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Alternative Behavioral Services, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Ambulatory Surgery Center of Temecula Valley, Inc.  | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of Aiken, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of East New Orleans, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of Las Vegas, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of Midwest City, Inc.  | &nbsp;&nbsp;Oklahoma | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of Puerto Rico, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;ASC of Wellington, Inc.  | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Ascend Health Corporation | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Atlantic Shores Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Auburn Regional Medical Center, Inc.  | &nbsp;&nbsp;Washington | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;AZ Holding 4, LLC | &nbsp;&nbsp;Arizona | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Beach 77 LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Behavioral Educational Services, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Behavioral Health Connections, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Behavioral Health Management, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Behavioral Health Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Behavioral Healthcare LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Benchmark Behavioral Health System, Inc. | &nbsp;&nbsp;Utah | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Alhambra Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BH AZ Master, LLC | &nbsp;&nbsp;Arizona | &nbsp;&nbsp;51 | &nbsp;&nbsp;51 |
| &nbsp;&nbsp;BHC Fairfax Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Fox Run Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;BHC Fremont Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Health Services of Nevada, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Heritage Oaks Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Intermountain Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Management Services of Streamwood, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Mesilla Valley Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Montevista Hospital, Inc. | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Northwest Psychiatric Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC of Indiana, General Partnership | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Pinnacle Pointe Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Properties, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Sierra Vista Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;BHC Streamwood Hospital, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Bloomington Meadows, General Partnership | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Brentwood Acquisition, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Brentwood Acquisition-Shreveport, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Brynn Marr Hospital, Inc. | &nbsp;&nbsp;North Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Calvary Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Canyon Ridge Hospital, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Canyon Ridge Real Estate, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;CAT Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cape Girardeau Behavioral Health, LLC | &nbsp;&nbsp;Missouri | &nbsp;&nbsp;75 | &nbsp;&nbsp;75 |
| &nbsp;&nbsp;CAT Seattle, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;CCS/Lansing, Inc.  | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cedar Springs Hospital, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Central Montgomery Medical Center, L.L.C.  | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Chalmette Medical Center, Inc.  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Children's Comprehensive Services, Inc.  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Clive Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;52 | &nbsp;&nbsp;52 |
| &nbsp;&nbsp;Columbus Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Columbus Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Coral Shores Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cornerstone Hospital Management, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;58.3 | &nbsp;&nbsp;58.3 |
| &nbsp;&nbsp;Cornerstone Regional Hospital, LP | &nbsp;&nbsp;Texas | &nbsp;&nbsp;50.2 | &nbsp;&nbsp;50.2 |
| &nbsp;&nbsp;Crossings Healthcare Solutions, Inc. |  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cumberland Hospital Partners, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cumberland Hospital, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Cypress Creek Real Estate, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Del Amo Hospital, Inc.  | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;DHP 2131 K St, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Diamond Grove Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;District Hospital Partners, L.P. | &nbsp;&nbsp;District of Columbia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Doctors' Hospital of Shreveport, Inc.  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;DVH Hospital Alliance LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Edinburg Ambulatory Surgical Center, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Edinburg Holdings, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;Edinburg MOB Properties, LLC  | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Emerald Coast Behavioral Hospital, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Everglades Holdings, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Fannin Management Services, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;First Hospital Corporation of Virginia Beach | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Forest View Psychiatric Hospital, Inc.  | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Fort Duncan Medical Center, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Fort Duncan Medical Center, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Fort Lauderdale Hospital, Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Foundations Recovery Network, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Friends Behavioral Health System, LP | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;79.92 | &nbsp;&nbsp;79.92 |
| &nbsp;&nbsp;Friends GP, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;80 | &nbsp;&nbsp;80 |
| &nbsp;&nbsp;FRN, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Frontline Behavioral Health, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Frontline Children's Hospital, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Frontline Hospital, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Frontline Residential Treatment Center, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Garfield Park Hospital, LLC | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Glen Oaks Hospital, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Great Plains Hospital, Inc. | &nbsp;&nbsp;Missouri | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Gulf Coast Treatment Center, Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Gulph Mills Associates, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;H. C. Corporation | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;H. C. Partnership | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Harbor Point Behavioral Health Center, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Havenwyck Hospital Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Augusta, Inc. | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Berkeley, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Delaware, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Indiana, Inc. | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Kingwood Investment, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Oconee, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Ohio, Inc. | &nbsp;&nbsp;Ohio | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Pennsylvania, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC Poplar Springs, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC River Park, Inc. | &nbsp;&nbsp;West Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC South Carolina, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HHC St. Simons, Inc. | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Hickory Trail Hospital, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;High Plains Behavioral Health, L.P. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Holly Hill Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Holly Hill Real Estate, LLC | &nbsp;&nbsp;North Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Horizon Health Austin, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Horizon Health Corporation | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Horizon Health Hospital Services, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Horizon Health Physical Rehabilitation Services, LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Horizon Mental Health Management, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HRI Clinics, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;HRI Hospital, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;HSA Hill Crest Corporation | &nbsp;&nbsp;Alabama | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Hughes Center, LLC | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence Amarillo, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence Denison, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence Laredo, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence McAllen, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence Wellington, LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Independence Physician Management, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Indiana Psychiatric Institutes, LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;InfoScriber Corporation | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Island 77 LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;KEYS Group Holdings LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Charlotte LLC  | &nbsp;&nbsp;North Carolina  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Continuum, LLC  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Education and Youth Services, LLC  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Marion, LLC  | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Memphis, LLC  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone NPS LLC  | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Newport News, LLC  | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone Richland Center LLC  | &nbsp;&nbsp;Ohio | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone WSNC, L.L.C.  | &nbsp;&nbsp;North Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Keystone/CCS Partners LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Kids Behavioral Health of Utah, Inc. | &nbsp;&nbsp;Utah | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Kingwood Pines Hospital, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;KMI Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;KOP Limited | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;La Amistad Residential Treatment Center, LLC  | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Lancaster Behavioral Health Hospital, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;50 | &nbsp;&nbsp;50 |
| &nbsp;&nbsp;Lancaster Hospital Corporation  | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Laredo ASC, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Laredo Holdings, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Laredo Regional, Inc.  | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Laredo Regional Medical Center, LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;80.14 | &nbsp;&nbsp;80.14 |
| &nbsp;&nbsp;Laurel Oaks Behavioral Health Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Lebanon Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Liberty Point Behavioral Healthcare, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Manatee Memorial Hospital, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Mayhill Behavioral Health, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Mayhill Behavioral Properties, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;McAllen Holdings, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;McAllen Hospitals, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;McAllen Medical Center, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Mental Health Outcomes, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Meridell Achievement Center, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Merion Building Management, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Mesilla Valley Hospital, Inc. | &nbsp;&nbsp;New Mexico | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Michigan BH JV, LLC | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;74 | &nbsp;&nbsp;74 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;Michigan Healthcare Staffing, LLC | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Michigan Psychiatric Services, Inc. | &nbsp;&nbsp;Michigan | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Millwood Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Milwaukee Behavioral Health, LLC | &nbsp;&nbsp;Wisconsin | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Nashville Rehab, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Neuro Institute of Austin, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;NEWCO Oregon, Inc. | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;North Spring Behavioral Healthcare, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Northern Indiana Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Northern Nevada Diagnostic Imaging-Spanish Springs, L.L.C  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Northwest Texas Healthcare System, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;NWTHS Management, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Oak Plains Academy of Tennessee, Inc.  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Ocala Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Oregon Psychiatric Realty, LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palm Point Behavioral Health, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palmetto Behavioral Health Holdings, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palmetto Behavioral Health Solutions, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palmetto Behavioral Health System, L.L.C. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palmetto Lowcountry Behavioral Health, L.L.C. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Palmetto Pee Dee Behavioral Health, L.L.C. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Park Healthcare Company  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Pasteur Healthcare Properties, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Peak Behavioral Health Services, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Pendleton Methodist Hospital, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Pennsylvania Clinical Schools, Inc.  | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;PR Holding II, Inc. | &nbsp;&nbsp;Puerto Rico | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Premier Behavioral Solutions of Florida, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Premier Behavioral Solutions, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Pride Institute, Inc. | &nbsp;&nbsp;Minnesota | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;PSJ Acquisition, LLC | &nbsp;&nbsp;North Dakota | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Psychiatric Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Psychiatric Solutions, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Psychiatric Solutions Hospitals, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Psychiatric Solutions of Virginia, Inc. | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;PsychManagement Group, Inc. | &nbsp;&nbsp;West Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Radiation Oncology Center of Aiken, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;95 | &nbsp;&nbsp;95 |
| &nbsp;&nbsp;Ramsay Managed Care, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Ramsay Youth Services of Georgia, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Red Rock Solutions, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Relational Therapy Clinic, Inc.  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Ridge Outpatient Counseling, L.L.C.  | &nbsp;&nbsp;Kentucky | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;River Crest Hospital, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;River Oaks, Inc.  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Riveredge Hospital Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Riveredge Hospital, Inc. | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Riveredge Real Estate, Inc. | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;Riverside Medical Clinic Patient Services, L.L.C. | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Rolling Hills Hospital, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;RR Behavioral Realty LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;RR Recovery, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Salt Lake Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Salt Lake Psychiatric Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Samson Properties, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Schick Shadel of Florida, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Shadow Mountain Behavioral Health System, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;SHC-KPH, LP | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99.1 | &nbsp;&nbsp;99.1 |
| &nbsp;&nbsp;Somerset, Incorporated | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Southeastern Hospital Corporation  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Southside Imaging Center, LLC  | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;SP Behavioral, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Sparks Family Hospital, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Spokane Behavioral Health, LLC | &nbsp;&nbsp;Washington | &nbsp;&nbsp;80 | &nbsp;&nbsp;80 |
| &nbsp;&nbsp;Spokane Valley Behavioral Health, LLC | &nbsp;&nbsp;Delaware  | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Springfield Hospital, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;St. Louis Behavioral Medicine Institute, Inc.  | &nbsp;&nbsp;Missouri | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Stonington Behavioral Health, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Summerlin Hospital Medical Center, LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;93.2 | &nbsp;&nbsp;93.2 |
| &nbsp;&nbsp;Summit Oaks Hospital, Inc. | &nbsp;&nbsp;New Jersey | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Sunstone Behavioral Health, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;TBD Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;TBD Acquisition II, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;TBJ Behavioral Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Temecula Valley Hospital, Inc. | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Temple Behavioral Healthcare Hospital, Inc. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Tennessee Clinical Schools, LLC  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Texas Cypress Creek Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Texas Hospital Holdings, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Texas Hospital Holdings, LLC | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Texas Laurel Ridge Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Texas Oaks Psychiatric Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Texas San Marcos Treatment Center, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Texas West Oaks Hospital, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;The Arbour, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;The Bridgeway, LLC  | &nbsp;&nbsp;Arkansas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;The National Deaf Academy, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Three Rivers Behavioral Health, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Three Rivers Healthcare Group, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Three Rivers Residential Treatment/Midlands Campus, Inc. | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Three Rivers SPE Holding, LLC | &nbsp;&nbsp;South Carolina | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Toledo Holding Co., LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Turning Point Care Center, LLC  | &nbsp;&nbsp;Georgia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Two Rivers Psychiatric Hospital, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;UBH of Phoenix, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UBH of Phoenix Realty, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UBH of Oregon, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHP LP | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Advisory, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS BH Telepsych, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Building Solutions, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Capitol Acquisition, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Children Services, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Funding, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Good Samaritan, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Holding Company, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS International, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Kentucky Holdings, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Midwest Behavioral Health, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Midwest Center for Youth and Families, LLC  | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Oklahoma City LLC  | &nbsp;&nbsp;Oklahoma | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Receivables Corp.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Sahara, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Surgical Hospital of Texoma, LLC  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Anchor, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Benton Day School and Treatment Program, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Benton, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Bowling Green, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Centennial Peaks, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Cornerstone Holdings, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Cornerstone, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of D.C., Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Delaware, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Denver, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Dover, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Doylestown, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Fairmount, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Fuller, Inc.  | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of GB, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Georgia Holdings, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Georgia, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Greenville, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Hampton Learning Center, Inc.  | &nbsp;&nbsp;New Jersey | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Hampton, Inc.  | &nbsp;&nbsp;New Jersey | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Hartgrove, Inc.  | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Indiana, Inc.  | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Kootenai River, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Lakeside, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Lancaster, LLC | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Laurel Heights, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Madera, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;UHS of New Orleans, LLC  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of No. Nevada, LLC  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Oklahoma Receivables, L.L.C  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Oklahoma, LLC | &nbsp;&nbsp;Oklahoma | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Parkwood, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Peachford, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Pennsylvania, Inc.  | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Phoenix, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Provo Canyon, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Puerto Rico, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Ridge, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of River Parishes, Inc.  | &nbsp;&nbsp;Louisiana | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Rockford, LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Salt Lake City, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Savannah, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Spring Mountain, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Springwoods, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of SummitRidge, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Sutton, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Talbot, L.P.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Texoma, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Timberlawn, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Timpanogos, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Tuscon, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Westwood Pembroke, Inc. | &nbsp;&nbsp;Massachusetts | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS of Wyoming, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS-Corona, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS-Lakeland Medical Center, L.L.C.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHS Sub III, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHSD, L.L.C  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHSF, L.L.C  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UHSL, L.L.C  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;UK Acquisition No. 6, Ltd | &nbsp;&nbsp;United Kingdom | &nbsp;&nbsp;100 | &nbsp;&nbsp;65 |
| &nbsp;&nbsp;United Healthcare of Hardin, Inc.  | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Community Behavioral Health, Inc.  | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal HMO, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Health Network, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Health Recovery Centers, Inc.  | &nbsp;&nbsp;Pennsylvania | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Health Services of Cedar Hill, Inc.  | &nbsp;&nbsp;Texas | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Health Services of Palmdale, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Health Services of Rancho Springs, Inc.  | &nbsp;&nbsp;California | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Universal Treatment Centers, Inc.  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;University Behavioral, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;University Behavioral Health of El Paso, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Valle Vista Hospital Partners, LLC | &nbsp;&nbsp;Tennessee | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Valle Vista, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Valley Health System LLC  | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Valley Hospital Medical Center, Inc.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**<br>Name of Issuer** | &nbsp;&nbsp;**Issuer Jurisdiction of Organization** | &nbsp;&nbsp;**Percent of Interest Owned** | &nbsp;&nbsp;**Percent of Interest Pledged** |
| &nbsp;&nbsp;Virgin Islands Behavioral Services, Inc. | &nbsp;&nbsp;Virginia | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Vista Diagnostic Center, L.L.C.  | &nbsp;&nbsp;Nevada | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wekiva Springs Center, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wellington Physician Alliances, Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wellington Regional Medical Center, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wellstone Holdings, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wellstone Regional Hospital Acquisition, LLC | &nbsp;&nbsp;Indiana | &nbsp;&nbsp;98 | &nbsp;&nbsp;98 |
| &nbsp;&nbsp;West Church Partnership | &nbsp;&nbsp;Illinois | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;West Oaks Real Estate, L.P. | &nbsp;&nbsp;Texas | &nbsp;&nbsp;99 | &nbsp;&nbsp;99 |
| &nbsp;&nbsp;Westside Outpatient Center, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;50 | &nbsp;&nbsp;50 |
| &nbsp;&nbsp;Willow Springs, LLC | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Windmoor Healthcare Inc. | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Windmoor Healthcare of Pinellas Park, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Wisconsin Avenue Psychiatric Center, Inc. | &nbsp;&nbsp;Delaware | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |
| &nbsp;&nbsp;Zeus Endeavors, LLC | &nbsp;&nbsp;Florida | &nbsp;&nbsp;100 | &nbsp;&nbsp;100 |

---

------

## Ex-23

**EXHIBIT 23.1**

**<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

We hereby consent to the incorporation by reference in the Registration Statements on Form S-4 (No. 333-268276) and Form S-8 (Nos. 333-167356, 333-156425, 333-119143, 333-112332, 333-126025, 333-122188, 333-206298, 333-218359, 333-238880, 333-265495) of Universal Health Services, Inc. of our report dated February 27, 2023 relating to the financial statements and financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP<br>Philadelphia, Pennsylvania

February 27, 2023

------

## Ex-31

**Exhibit 31.1**

**CERTIFICATION—Chief Executive Officer**

I, Marc D. Miller, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Universal Health Services, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 27, 2023

---

| |
|:---|
| /S/ MARC D. MILLER |
| **Marc D. Miller** |
| **Chief Executive Officer** |

---

------

## Ex-31

**Exhibit 31.2**

**CERTIFICATION—Chief Financial Officer**

I, Steve Filton, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Universal Health Services, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 27, 2023

---

| |
|:---|
| /S/ STEVE FILTON |
| **Steve Filton** |
| **Executive Vice President and** |
| **Chief Financial Officer** |

---

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## Ex-32

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Universal Health Services, Inc. (the "Company") on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marc D. Miller, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of, and for the period covered by, the Report.

---

| |
|:---|
| /S/ MARC D. MILLER |
| **Marc D. Miller** |
| **Chief Executive Officer** |
| **February 27, 2023** |

---

A signed original of this written statement required by Section 906 has been provided to Universal Health Services, Inc. and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

------

## Ex-32

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Universal Health Services, Inc. (the "Company") on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steve Filton, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and to the best of my knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of, and for the period covered by, the Report.

---

| |
|:---|
| /S/ STEVE FILTON |
| **Steve Filton** |
| **Executive Vice President and**  |
| **Chief Financial Officer** |
| **February 27, 2023** |

---

A signed original of this written statement required by Section 906 has been provided to Universal Health Services, Inc. and will be retained and furnished to the Securities and Exchange Commission or its staff upon request.

------