Steve Filton - Chief Financial Officer, Senior Vice President, Secretary Alan Miller - Chairman of the Board, Chief Executive Officer.

Justin Lake - JPMorgan A.J. Rice - UBS Joshua Raskin - Barclays Capital Kevin Fishbeck - Bank of America Merrill Lynch Darren Lehrich - Deutsche Bank Frank Morgan- RBC Capital Markets Chris Rigg - Susquehanna Financial Group Ralph Giacobbe - Credit Suisse Brian Zimmerman - Goldman Sachs Gary Lieberman - Wells Fargo Securities Whit Mayo - Robert W.

Baird Gary Taylor - Citigroup.

Mr. Filton, you may begin your conference..

Thank you. Good morning. This is Steve Filton. Alan Miller, our CEO is also joining us this morning. Welcome to this review of Universal Health Services results for the second quarter ended June 30, 2014.

During this conference call, Alan, I will be using words such as believes, expects, anticipates, estimates, and similar words that represent forecast, projections and forward-looking statements.

For anyone not familiar with the risks and uncertainties inherent in these forward-looking statements, I recommend a careful reading of the section on risk factors and forward-looking statements and risk factors in our Form 10-K for the year ended December 31, 2013 and our Form 10-Q for the quarter ended March 31, 2014.

We would like to highlight just a couple of developments and business trends before opening the call up to questions. As discussed in our press release last night, the company recorded net income attributable to UHS per diluted share of $1.51 for the quarter.

After adjusting each quarter's reported results for the items disclosed on the supplemental schedule included with last night's earnings release, adjusted net income attributable to UHS, increased approximately 30% to $155.6 million of $1.55 per diluted share during the second quarter of 2014 as compared to $118.9 million or $1.20 per diluted share during the second quarter of last year.

On a same facility basis in our acute division, revenues during the second quarter of 2014 increased 11.5% over last year's comparable quarter. The increase resulted primarily from a 3.6% increase in adjusted admissions to our hospitals owned for more than a year and a 7.7% increase in revenue per adjusted admission.

On a same facility basis, operating margins for our acute hospitals increased to 19.2% during the second quarter of 2014 from 14.8% during the second quarter of 2013.

On a same facility basis, net revenues in our behavioral health division increased 5.9% during the second quarter of 2014 as compared to the second quarter of 2013, during this year's second quarter as compared to last year's adjusted admissions to our behavioral health facilities owned for more than a year increased 4.4% and adjusted patient days increased 1.8%.

Revenue per adjusted patient day rose 2.6% during the second quarter of 2014 over the comparable prior year quarter. Operating margins for our behavioral health hospitals owned for more than a year were 28.6% and 28.7% during the quarters ended June 30, 2014 and 2013, respectively.

Our cash from operating activities was approximately $264 million during the second quarter of 2014 as compared to $212 million in the second quarter of 2013.

For the six months ended June 30, 2014, our cash provided by operating activities increased approximately 17% to $458 million over the $391 million generated during the comparable six-month period of 2013.

Our accounts receivable days outstanding decreased to 53 days during the second quarter of 2014 as compared to 57 days during the second quarter of 2013. At June 30, 2014, our ratio of debt to total capitalization decreased to 47% as compared to 54.2% at June 30, 2013.

We spent $94 million on capital expenditures during the second quarter of 2014 and $187 million during the first six months.

Based upon the operating trends and financial results experienced during the first six months of 2014, we are increasing our estimated range of adjusted net income attributable to UHS for the year ended December 31, 2014 to $5.55 to $5.85 per diluted share.

This revised guidance, which excludes the expected electronic health records impact for the year as well as the impact of the other items reflected on the supplemental schedule for the six months ended June 30, 2014, represents an increase of approximately 15% to 16% from the previously provided range of $4.80 to $5.10 per diluted share.

This guidance range, which is subject to certain conditions including those set forth in last night's earnings release also excludes the impact of future items, if applicable, that are nonrecurring or nonoperational in nature including items such as, but not limited to, gains on sales of assets and businesses, costs related to extinguishment of debt, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, impact of share repurchases and other material amounts that may be reflected in our financial statements that relate to prior periods.

Our Board of Directors has authorized a stock repurchase program whereby, from time to time as conditions allow, we may spend up to $400 million to purchase shares of our Class B common stock on the open market or in negotiated private transactions and they have also increase our third quarter dividend payable on September from $0.05 a share to $0.10 a share.

Alan and I would be pleased to answer your questions at this time. We would ask that you try and limit yourself to one question each. Thank you very much..

(Operator Instructions). Your first question is from the line of Justin Lake..

Thanks. Good morning. My question would be on the acute care side. Obviously, great quarter you guys had there.

Anything you could share with us in terms of breaking out the outperformance in terms, would you think that the ACA related in terms of coverage expansion benefits versus core improvements, whether economic driven or just business investments you have made, and then maybe even talk to specific markets, that would be really helpful. Thanks..

Sure. We will try to do that, Justin.

So I think as it was the case in the first quarter, I think we believe maybe a little bit more so than our peers that there is a fair amount of imprecision in trying to parse out or tease out the ACA impact and the impact of payor mix improvement coming from other sources particularly the improvement in our underlying economies.

I think our best effort would be that in the quarter, if you look at the acute care year-over-year improvement, we would attribute somewhere between the third and a half of that improvement to the favorable ACA impact and the remainder of that improvement to improving economies in our local markets as well as idiosyncratic factors in our markets.

And by that I mean the market share shifts, new service lines, et cetera.

As far as the geography of it, I think we had relatively strong performance across the acute care portfolio but as we said in Q1, I think that the pleasant surprise of 2014 has really been the performance of our Texas markets, Texas not being a Medicaid expansion state and not being one that had set up statewide commercial exchanges, we were not necessarily anticipating a big ACA impact in that state, but generally I think the economy in Texas has improved fairly markedly and that's being reflected in our results.

And our California markets as well have been very strong..

Thanks for all the color..

Your next question is from the line of A.J. Rice..

Thanks. Hi, everybody, and also congratulations on the beat there. Maybe just to flesh up further on reform benefits. I know the guidance, I think it said reform was $0.15 to $0.20 embedded in the original guidance. Have you updated that number? And then specific, seemed like quarter, most of the benefit was Medicaid related.

Can you comment it that's still the case? And are you seeing any benefit from exchanges start to kick in at this point?.

Sure, A.J. I think that in terms of the latter part of the question, you have described it accurately.

The ACA impact in Q1 was definitely more skewed to increases in Medicaid enrollment and clearly in Q2 we are seeing more of a commercial exchange impact, not surprisingly, since I think that the government's data showed that a lot of that exchange enrollment activity was taking place at the end of Q1.

And so I think it's starting to filter its way to our business in Q2.

As far as the ACA impact on our guidance, I would answer that in much the same way I answered Justin's question and that is, I think if you take a look at our revised guidance and you think about that as improved over the prior year, I think we would suggest that somewhere between a third and a half of that improvement is from the ACA and the rest is from other non-ACA factors..

Okay, all right. Thanks a lot..

Your next question is from the line of Joshua Raskin..

Hi, thanks. Good morning, Steve.

The first question just, and I don't want to beat the dead horse, but can you actually tell if its exchange lives relative to just general commercial improvement? Or are you seeing, its better in California, so that's why we think it's exchanges as opposed to economy or something like that? Is there a way for you guys to actually know that?.

So I think the way that we have approached it, Josh, is the way that we approached quantifying the ACA impact is to say that in Medicaid expansion states, we are going to attribute any benefit from increased Medicaid enrollment to the ACA and not really do that in the non-expansion states.

As far as then the commercial exchange patients go, to the best of our ability, we are trying to identify those patients specifically, but I think that's really where we believe the imprecision comes in that in some cases we can clearly do that and we are very comfortable doing it. In other cases, it is not so clear.

Somebody comes in with a Blue Cross card or another card and it is not actually clear to us whether they are exchange patient or not. So that's why we have this sort of range, and feel that to some degree we are estimating that impact..

Got you, and then just specifically on the buybacks.

Do you guys have sort of a formulaic approach, debt to cap minimum that you hit and then you start buying back or are you just going to be more opportunistic, based on what the stock price does?.

I think the history of UHS is that we have been an active acquirer of our shares from time to time over the years and have generally been an opportunistic acquirer when we have been active. I think the message in the buyback authorization, from my perspective, is obviously just sort of a bullish message on the business.

We are just very pleased with how the business is going and its outlook for the near and intermediate term for sure, but also as we talked about in our Q1 call, we have been very diligently paying down debt and reducing our leverage, really ever since the PSI deal more than three years ago.

And I think we certainly feel that our leverage levels now are at a sufficiently low level that we are very comfortable with them and don't feel that they need to be a great deal lower, so that if we continue to generate cash at these levels and don't necessarily find other opportunities to deploy capital in the short-term, we will be more than happy to be acquirers of our own shares.

And again, we will do that on an opportunistic basis..

Okay, thank you..

Your next question is from the line of Kevin Fishbeck. Mr. Fishbeck, your line is open..

Hello.

Can you hear me?.

I can hear you. Go ahead..

Okay. So I guess last quarter you guys gave some specific information around the reduction in uninsured as far as, I think in the last quarter you saw extra admissions in the quarter, but length of stay and patient days.

Do you have the updated data for this quarter?.

Yes. So I think that the results in Q2 suggest this, and the underlying metrics having supported, the trends that we saw, I think, in Q1 probably accelerated some into Q2.

So the reduction in self pay or uncompensated patients grew to probably 10%, 11%, 12%, Medicaid utilization increased by 9% or 10% and commercial utilization increased probably 4% or 5%.

So I think all those numbers were a little more favorable than they were in the first quarter, again reflective of a trend that we didn't see a lot of new trends in Q2, but an acceleration of the ones that we did see in Q1..

Okay, that makes sense. Now jus the one last question on Vegas. The minority interest number actually was down year-over-year which is a bit surprising to me.

I wasn't sure there was anything in there around the liability accrual that maybe reduced the comp year-over-year or was Vegas actually a somewhat difficult quarter?.

Yes. Vegas was ahead of last year's quarter, but I will remind people that the second quarter of last year was the first quarter where we called out a really measurable improvement in the Vegas economy and in our results.

So the Vegas market rise was really the only difficult comparison in Q2 to last year and that's reflective in the fact that we certainly cosmetically, our Texas markets or our California markets were sort of outperforming.

It's also worth noting, depending on what numbers you are looking at, but on that minority interest line, we had a favorable malpractice adjustment in the second quarter of 2013 and to the degree that that was allocated to the Vegas facilities, it made their second quarter 2013 results look somewhat better and so that's making the comparison again on the face of the income statement a little more difficult..

Okay, great. Thanks..

Your next question is from the line of Darren Lehrich..

Thanks. Good morning, everybody. And Alan, congrats on 35 years..

Thank you. Thanks very much..

So I wanted to maybe ask about behavioral and I know I have been asking this question pretty consistently, Steve, about length of stay in behavioral. It was down, I guess, seems to around 2.5%.

I would be curious just to get any feedback here you are getting from the operators about whether you are sensing there is any bottoming at all there? And then on the other behavioral question I would like to sneak in here is just, are you getting any feedback at all about health plan design, now that July 1 has come around and the benefit years post July 1 has to, taking an account, the mental health parity? Thanks..

Sure. So answering your second question first, Darren. As far as benefit plan design and then I think your question is, are we getting a sense that benefit plan design is changing in July to comply with the final mental health parity regulations which become effective in July, I would make two comments about that.

One is from a practical perspective, I think all our sense is that the majority of those changes will likely take place in January 2015 when benefit plan design routinely changes.

Anyway, for the most part, we will certainly press to the degree that we can for earlier changes, but again I think from a practical perspective, and I think it's part of the reason why we have always sort of tried to create the expectation that the ACA/mental health parity impact for the behavioral business would be more either backend loaded in 2014 or probably even skewed to 2015.

As far as the length of stay issue -- and one other comment I will make just about benefit plan design is, I think the managed care companies are always going to be ahead of the curve from us in terms of understanding how that's changing.

We will see those changes as those patients really start coming to our hospitals, and we get a quarter or two experience under our belts. So we will see. So I think it's probably too early for us to really answer that question in a meaningful way.

As far as the length of stay goes, you suggest you have been asking this question for a long time, obviously, we have been answering it for a while as well.

This trend has existed now and been in place for several years, really, I think since the height of the recession when Medicaid programs really started cutting back length of stay, I think as a means of controlling expenditures. We saw I think a little bit of improvement in Q1. Q2 took sort of another step down, although not a real significant one.

I think very much consistent with our expectations. I would just say that in general the behavioral division, I think was right on our expectations for Q2 and just as a financial person impresses me quarter-after-quarter, with just their very strong consistent performance..

And Steve, just so we are clear that the behavioral margins year-over-year, would they have been positive if the (inaudible) you reserved wasn't in the numbers?.

There is a few small plusses and minuses, Darren, and I think you know I could certainly make an argument that we were a tenth of point or two-tenths of a point ahead, but again I think what you are seeing in behavioral, from my perspective, is again is just very consistent margin performance in the high 20s.

And to me, the real upside to that is really getting back to your original question, if the length of stay does not even improve, but just level off at some point and/or we do get some of the impact from either the ACA or the mental health parity final regulations, I think that's when you might see note that the next step-up in those behavioral margins..

Great. Okay, thank you..

Your next question is from the line of Frank Morgan..

Good morning.

I was hoping you could comment a little bit or detail around the surgical volume, both inpatient and outpatient? And I am curious if you are starting to see any kind of change in the mix of the payor mix of that business suggesting that maybe you are starting to see some of this newly insured business that in that area?.

Yes, Frank, so the metrics are easy to talk about. I think we had a 4% increase in our outpatient surgeries and a 2% increase in our inpatient surgeries. And I think in both cases, those numbers are really the best surgical volumes that we have posted probably since the recession began. So that's encouraging.

Again, so looping back to the conversation I was having with Josh Raskin earlier, it's a little difficult for us to sort of parse that out between how much of that increase is reform related or ACA related and how much is not.

I think our general sense is that most of that surgical strength comes from the improving economies, people going back to work, people feeling more comfortable about being out at work, those kinds of things than it does from necessarily ACA patients, new ACA patients are having those procedures.

But to be fair, we can't tell that with great precision..

Okay and then changing gears, just on cash collection.

Are you actually starting to see cash collections on those newly insured Medicaid patients that were coming in the door last quarter? Has that process been fairly seamless? And have you noticed any change there? And then finally I am going to hop, what is action -- this is a mechanical question, what is the run or the EPS for the first half of the year that you are using to update your annual guidance? What is the number you are actually using to build off to get to your new full year guidance? Thanks..

So I would refer people to the supplemental schedule in our press release, where we adjust for the electronic health record number and the nonrecurring gain we had in the first quarter and that will show you effectively the adjusted earnings that we are using to then say, you know, this is what we are basing our revised guidance on..

So that cash collections on the newly insured Medicaid patients?.

So the cash collection and I think our DSOs reflect this, Frank. I think there was a little slowdown in Q1 in some of the states like Nevada, where I think they were frankly overwhelmed with new Medicaid enrollees.

But again, as you just see from the general cash flow in Q2 and just that the DSOs, I think for the most part, those initial bumps are working themselves out and we are collecting on both the newly enrolled Medicaid patients as well as the new commercial exchange patients that had a pretty normal, I would say..

Thank you..

Your next question is from the line of Paula Kurt [ph]..

Good morning. Congratulations on a great quarter.

I was wondering if you could talk a little bit more broadly about the urban acute hospital landscape? And are you seeing some better opportunities for any M&A activity there? Are there any assets you have identified or any particular markets that you are really focused in on? And when might we start to see some activity there at all and what might some of the challenges be in getting anything done in the next couple of years? Thank you..

Sure, Paula. So UHS has generally been situated in the middle of that continuum that you are sort of suggesting of the rural and urban and however sweet spot, particularly in our acute care division has been kind of the midsize urban, large suburban markets we have tended to try and locate.

I think we have a sense that not-for-profit hospitals around the country in those kinds of markets are having all sorts of conversations and evaluating their future, and thinking about how they want to position themselves in the healthcare landscape over the next three years and five years, et cetera.

But I will also say that those conversations, historically, I think take a long time to evolve and mature. We are trying to stay on top of them as much as we can and as those hospitals decide that they want to look in a different direction or want to consider other alternatives.

We certainly have, as we were alluding to before, the capital flexibility and the desire to respond to those opportunities as they arise..

Okay, great, and I just have one follow-up as we think about guidance. I guess in terms of the same facility revenue, let's take it on the acute care side, you had guided to 3% to 4%, with EBITDA flat to slightly up. But obviously, we are much better than not.

So where should we be thinking about taking that number in terms of how we are modeling the second half?.

I will answer the question just a little differently, Paula, in a sense.

And I think what we try to do in revising our guidance was to take our first half of the year performance and for the most part just assume that that kind of improvement over the prior year and over our original expectations continues at about the same rate as it did for the first six months.

We obviously then adjusted for a couple of the known plusses and minuses like the Texas Medicaid reimbursement that we disclosed, et cetera. But other than that, it was really pretty much as straightforward as that, and if you go through that same exercise you will land very much within the confines of our range..

Okay, great. Thanks and good luck..

Thank you..

Your next question is from the line of Chris Rigg..

Thanks for taking my question. Just wanted to try to parse out the economic versus ACA improvement a little bit more. I know you about Texas being very strong.

But when you think about sort of the relative benchmarks, the inpatient, outpatient surgeries, are there other major regional differences, say in Texas versus California and Florida, et cetera that that might be worth highlighting? Thanks.

Sure, Chris. Generally look, I think that obviously you talk about a 4% increase in outpatient surgery, you are going to see some hospitals doing a little better there and others a little worse.

But in general, the trends that we have discussed, the improved payor mix trends, the stronger surgical mix trends, really have been pretty much spread fairly evenly through the portfolio, as I said.

As I think about 2014 in terms of how we originally envisioned and how it's played out, I think that our original thought was this would be year in which we would feel, as we described, a significant ACA impact in places like California and Nevada, which were Medicaid expansion states and California which had a robust commercial exchange program, et cetera.

But what surprised us, I think, was the really strong performance in Texas that I think for the most part is not ACA related. And even the really strong performance in California that is beyond the ACA impact. So that's the sort of geographic trends or differences that I would point out.

But I will say that, for the most part, the trends that we describe are trends that we are really seeing across all of our markets and my sense is obviously, given the couple of other acute care companies that have reported so far this quarter, at least give an indication of where they are going to report, those trends seem to be fairly widespread..

Okay, and then just one quick follow-up. Are you still excluding the California provider tax from the guidance ? I will leave it at that. Thanks..

And the answer is yes, we are still excluding the California provider tax..

Great. Thank you..

Your next question is from the line of Ralph Giacobbe..

Thanks. Good morning. Steve, I was hoping you can maybe just talk about the progression through the quarter.

Was it sort of evenly spread? Did it improve month-to-month? And I know it's only few weeks in, but any initial views on July trends?.

So I think as some of the sell side surveys have indicated, I think the quarterly, both payor mix and volumes tended to improve as the quarter progressed.

I think it's difficult to really give much of an indication of any early signs of the third quarter only because so much of this improvement is really payor mix based and that's much harder for us to measure on an interim basis before the month closes.

So I don't think there is really anything we can say that's terribly meaningful about the about the third quarter just yet..

Okay, fair enough. And if I could sneak one more in. Are you guys seeing any greater mix of out-of-network revenue coming in? Is that helped at all? And within your markets, maybe just remind us of what your position of being in versus being out? Thanks..

I think in the vast majority of our markets, we are in almost all the networks, except for some sort of long-standing historical exclusions. I don't think that there has been any developments in recent, you know, in the last year or two where we have really been excluded from a noteworthy contract.

And again, occasionally, you will see a significant amount of out-of-network activity or sort of outlier activity but I would say, in general, that's not something that has really come to our attention in this year, at least..

Okay, thanks..

Your next question is from the line of Brian Zimmerman..

Hi, thanks and good morning.

I appreciate the color on surgical trends, but I was hoping you could also give us an idea of what acuity looked like in the quarter? And then maybe some of your other service lines in terms of like ER visits in particular?.

I think, Brian, the revenue strength, meaning that revenue per admission number, which quite frankly, I didn't go back and try and find the last time we were that high but I know it's certainly been multiple years. But I think that's reflective of obviously the improved payor mix that we have been talking about, but also increased acuity.

I think the increased acuity occurs for a couple of reasons. I mean, one, it's a function of the improving surgical volumes that we have talked about already.

Two is this whole, what I call the two midnight phenomenon that as payors, most notably Medicare, but other payors drive out the shortest length of stay and by definition therefore I think the least acute patients, the inpatient component that you re left with tends to be a more acute mix of patients, et cetera.

So I think that also drives the acuity up, but in general I think acuity has been strong this year and we would expected it to remain so..

And on the ER visits?.

The ER visits have been up, I think, 5% or 6% for the year, although again going back to sort of what I call the two midnight phenomenon, the conversion of those to actual inpatient admissions is going at a lower rate than has been the historical case, I think because of the emphasis on making sure that patients meet admitting criteria that will pass muster with Medicare and other payors..

All right, thanks a lot..

Your next question is from the line of Gary Lieberman..

Thanks for taking the question. Maybe just a follow-up on last point.

Steve, do you happen to have the statistic for the percentage of admissions that came in through the ER and how that would compare year-over-year?.

I don't have it in front of me, Gary. I will tell you that historically, we run in the mid-to upper teens, those 16%, 70%. But I know that again over the last two or three quarters that percentage has declined some, although again I do not have the data right in front of me..

Okay, and then could you comment on any impact if at all that you are seeing that you are aware of in South Texas from some of the immigration issues that have been in the news?.

Yes, I think we have seen very little. As I watch the news along with everybody else, I think that these folks, particularly the children who were coming across the border are generally being treated in these separate facilities.

I have not really heard other than some of the anecdotal story here or there that we are really seeing any of those patients..

Okay, and then maybe just to wrap up, on the behavioral side, are you still on track to add, I think you said it was 600 beds, for the year or are you considering changing that based on some of the volumes that you are seeing there?.

No, I think that those bed additions that we have undertaken are generally decided upon based on a fairly long-term view and I don't think our long-term view of this business or the demand has really changed.

So we are sticking with our expansion program, not only for this year, quite frankly, but I think we hope to continue the bed expansions at about that same annual rate for at least 2015 and hopefully into 2016 as well..

Great. Thanks a lot..

Your next question is from the line of Whit Mayo..

Hi, thanks. Steve, you have excluded HITECH income and the cost from your guidance for some time now and clearly that's had the impact of understating your earnings in prior quarters.

But how do you think about that over the long-term and presumably the cost will continue into perpetuity and the reimbursement doesn't? So I am just kind of curious on your thoughts there..

Well, I think our rationale for excluding them was just the opposite, that the actual implementation of the electronic health record and those are really the cost that we have excluded, really doesn't continue into perpetuity. That was a finite sort of process that began in 2009 or so and will continue for four or five years.

I think from a cash perspective, we will largely be through a lot of that impact at the end of 2014, certainly from a cost perspective.

And I think again, our rationale for excluding both the HITECH revenue and those cost was, they weren't being recorded on a very ratable basis in many cases and therefore in our minds were a distorting the current earnings power of the company. So again, as you know, we have been very transparent about what those numbers are.

We have tended to exclude them from our ongoing earnings in that supplemental schedule we do but the cost are out there so that any analysts can treat them exactly the way they want..

That's fair. I was just curious.

And maybe just on cost for a second, is anything new on either side of the business? I think you and others within the sector have really worked down your cost structure for years now and that presumably helps on any new incremental dollar revenue that flows through, but anything new or worse on supplies, registry cost, anything that we should be aware of? Thanks..

I don't think so. Look, I think what you have actually described it pretty accurately. I think UHS and the industry in general really tightened their belt as the recession began several years ago and I am not sure we or they have loosened that at all or much at all.

And I will say that because so much of this revenue strength is coming from improved payor mix, there is not necessarily cost that are directly associated with improved payor mix and that's why I think you are seeing such a powerful leverage mechanic on that acute care margin line.

To the degree that we are seeing volumes pick up as we did in Q2, obviously there is some increase in costs associated with that and obviously also to the degree that we are seeing surgical volumes pick up, I think our supply expense does tickup commensurate with that.

But other than that I don't think we really feel like there is any significant pressure points on cost at the moment..

Thanks..

(Operator Instructions). This question is from the line of Gary Taylor..

Hi, good morning. Actually I just had one clarification and one question. So it feels like I can get away with that.

Steve, you might have said that, I stepped out just a second, but on the Medicaid supplemental payments and the portion those that are out of period, are those included in the same-store metrics that you report or excluded?.

Yes. So I think you know it's only the in-period revenues that are included in the same-store metrics..

So it's all been scrubbed already for that..

Right..

Okay, perfect, and then my question.

it is kind of interesting, obviously really strong fundamental performances has overshadowed everything else but just a few days ago the biggest thing going on in the space was some of the legal decisions coming out of the court cases and consuming a lot of people's thoughts and you guys are fairly well-positioned in Nevada, California.

My question would be, and maybe Alan might want to weigh in on this as well. You do have significant exposure to Texas. There is some ACA benefit there presumably with 700,000 or 800,000 exchange enrollees in that state.

I guess the question is, any sense out of the hospital association or yourselves, the willingness of the state of Texas to actually establish their own exchange if it ever actually got to that after some additional legal decisions? Or it still look like, your still best guess would be that Texas would be a standout and probably wouldn't want to move along those lines? Interested in your comments.

Thanks..

We haven't heard anything with regard to Texas changing its position at the moment. I think the Governor is positioning himself to run for President with the border business and his position. So we will say. But I think that is a plus what we have been able to accomplish without Texas and exchanges. I think that's a plus.

I would expect at some point that this whole thing will be resolved and it will be favorable to us..

Okay, thank you..

And there are no further questions at this time.

Are there any closing remarks?.

A.J., still with us?.

Well, he can't answer..

He can't answer..

(Operator Instructions)..

It's okay. Thank you. We just want to thank everybody for their time..

And this concludes today's conference call. You can how disconnect..