UNIVERSAL HEALTH SERVICES, INC. ANNOUNCES PRICING OF SENIOR SECURED NOTES

Rhea-AI Summary

Universal Health Services (NYSE: UHS) has announced the pricing of its public offering of senior secured notes. The company is offering $500 million of 4.625% notes due 2029 and $500 million of 5.050% notes due 2034. These notes will pay interest semi-annually and be secured by first-priority liens on certain company assets. The offering is expected to close on September 26, 2024.

UHS intends to use the net proceeds to repay outstanding amounts on its current tranche A term loan facility. The offering is being made through an effective shelf registration statement with the SEC, and is only available through a prospectus supplement and accompanying prospectus.

Positive

• Successful pricing of $1 billion in senior secured notes
• Potential improvement in debt structure by repaying current term loan facility
• Strong investor interest indicated by the successful note offering

Negative

• Increase in long-term debt obligations
• Higher interest expenses due to new notes (4.625% and 5.050% rates)

Insights

Financial Analyst

Universal Health Services' $1 billion senior secured notes offering is a significant financial move. The company is issuing $500 million in 4.625% notes due 2029 and $500 million in 5.050% notes due 2034. This debt restructuring, aimed at repaying existing term loan facilities, could potentially improve UHS's debt profile and reduce interest expenses.

The first-priority liens on company assets securing these notes indicate a strong commitment to lenders, potentially lowering borrowing costs. However, investors should note that this also encumbers assets, potentially limiting future financing flexibility. The semi-annual interest payments and long maturity dates (2029 and 2034) suggest a confident long-term financial outlook for UHS.

Market Research Analyst

This debt offering by Universal Health Services reflects broader market trends in the healthcare sector. With interest rates potentially stabilizing, companies are locking in medium to long-term debt at relatively favorable rates. The 4.625% and 5.050% rates for 5-year and 10-year notes respectively are competitive in the current market environment.

The successful pricing of this sizeable offering suggests strong investor confidence in UHS's credit quality and business model. It's worth noting that this move comes amidst ongoing challenges in the healthcare sector, including labor shortages and inflationary pressures. UHS's ability to secure this financing on these terms indicates market perception of its resilience and long-term prospects.

KING OF PRUSSIA, Pa., Sept. 17, 2024 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) today announced the pricing of its previously announced public offering of senior secured notes. The Company priced the offering of $500 million aggregate principal amount of its 4.625% senior secured notes due 2029 (the "2029 Notes") and $500 million aggregate principal amount of its 5.050% senior secured notes due 2034 (the "2034 Notes", and together with the 2029 Notes, the "Notes"). The Notes will pay interest semi-annually in arrears, on April 15^th and October 15^th of each year, beginning on April 15, 2025. The 2029 Notes will mature on October 15, 2029 and the 2034 Notes will mature on October 15, 2034, unless earlier redeemed or repurchased. 

Each of the Company's existing and future subsidiaries that guarantee the Company's senior secured credit facility or certain of the Company's other indebtedness or indebtedness of subsidiary guarantors will guarantee the Notes. The Notes and the related guarantees will be secured by first-priority liens, subject to permitted liens, on the Company's assets and certain assets of subsidiary guarantors that have pledged assets to secure certain of the Company's other indebtedness or indebtedness of subsidiary guarantors now owned or acquired in the future by the Company and the secured guarantors (other than real property and certain other excluded assets). 

The Notes offering is expected to close on September 26, 2024, subject to customary closing conditions. The Company intends to use the net proceeds of the offering to repay certain amounts outstanding under the Company's current tranche A term loan facility.

The offering of the senior secured notes is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. The offering is being made only by means of a prospectus supplement and the accompanying prospectus, copies of which may be obtained by contacting J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attn: Investment Grade Syndicate Desk, by telephone: 1-212-834-4533, BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, North Carolina 28255, Attn: Prospectus Department, by telephone: 1-800-294-1322 or by email: dg.prospectus_requests@bofa.com, Truist Securities, Inc., 3333 Peachtree Road NE, 9^th Floor, Atlanta, GA 30326, Attn: Prospectus Department, by telephone: 800-685-4786 or by email: TruistSecurities.prospectus@Truist.com, U.S. Bancorp Investments, Inc. by telephone: 877-558-2607, or Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service, by telephone: 1-800-645-3751 or by email: wfscustomerservice@wellsfargo.com.

You may also visit www.sec.gov to obtain an electronic copy of the related preliminary prospectus supplement and the accompanying prospectus.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes described herein, nor shall there be any sale of these Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offering is being made under an automatic shelf registration statement on Form S-3 (333-282135) filed with the Securities and Exchange Commission on September 16, 2024. The Notes will be offered only by means of a prospectus, including the prospectus supplement relating to the Notes, and any free writing prospectus prepared by or on behalf of the Company, each of which meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Certain statements in this release may constitute forward-looking statements and are subject to various risks and uncertainties as discussed in the Company's filings with the Securities and Exchange Commission. The Company is not obligated to update these forward-looking statements even if the Company's assessment of these risks and uncertainties changes.

Universal Health Services, Inc. ("UHS") is one of the nation's largest providers of hospital and healthcare services. Through its subsidiaries, UHS operates acute care hospitals, behavioral health facilities, outpatient facilities and ambulatory care access points located throughout the United States, Puerto Rico and the United Kingdom.

View original content:https://www.prnewswire.com/news-releases/universal-health-services-inc-announces-pricing-of-senior-secured-notes-302251121.html

SOURCE Universal Health Services, Inc.

FAQ

What is the total value of senior secured notes offered by UHS?

Universal Health Services (UHS) is offering a total of $1 billion in senior secured notes, split equally between $500 million of 4.625% notes due 2029 and $500 million of 5.050% notes due 2034.

When will the UHS senior secured notes offering close?

The senior secured notes offering by Universal Health Services (UHS) is expected to close on September 26, 2024, subject to customary closing conditions.

How does UHS plan to use the proceeds from the senior secured notes offering?

Universal Health Services (UHS) intends to use the net proceeds from the senior secured notes offering to repay certain amounts outstanding under the company's current tranche A term loan facility.

What are the interest payment terms for the UHS senior secured notes?

The senior secured notes offered by Universal Health Services (UHS) will pay interest semi-annually in arrears, on April 15th and October 15th of each year, beginning on April 15, 2025.