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Rating Action:

Moody's places Baa3 sr. unsecured rating of UHS under review for possible downgrade; Psychiatric Solutions ratings currently unaffected

Global Credit Research - 17 May 2010

Approximately $600 million of UHS rated debt affected

New York, May 17, 2010 -- Moody's Investors Service placed the Baa3 senior unsecured debt rating of Universal Health Services, Inc. (UHS) under review for possible downgrade following the announcement that the company had signed a definitive agreement to acquire Psychiatric Solutions, Inc. (PSI). Moody's is not taking any action currently on the ratings of PSI and expects to withdraw these ratings if the transaction is completed and PSI's debt is refinanced as contemplated. Total consideration for the purchase, inclusive of approximately $1.1 billion of PSI debt, is expected to approximate $3.1 billion. Moody's understands that the transaction is expected to be closed in the fourth quarter of 2010 and is subject to regulatory approval, clearance under the Hart-Scott Rodino Act and approval by PSI's shareholders.

The review for possible downgrade incorporates our expectation that the company's credit metrics immediately following the transaction will no longer be reflective of an investment grade issuer. Therefore, Moody's review will focus on the extent of downward rating pressure by focusing on the terms of the financing of the transaction, the resulting changes to UHS credit metrics and the expected timing of improvements in metrics. The review will also consider the impact of potential synergies in integrating the PSI operations with UHS' already considerable behavioral healthcare operations as well as the potential for disruption in completing a significant, transformational acquisition.

Following is a summary of Moody's rating actions.

Ratings placed under review for possible downgrade:

Universal Health Services, Inc.:

Senior unsecured notes, Baa3

Ratings unchanged (expected to be withdrawn at the close of the transaction):

Psychiatric Solutions, Inc:

Senior secured revolving credit facility, Ba2 (LGD2, 25%)

Senior secured term loan due 2012, to Ba2 (LGD2, 25%)

Senior subordinated notes due 2015, to B3 (LGD5, 81%)

Corporate Family Rating, B1

Probability of Default Rating, B1

Speculative Grade Liquidity Rating, SGL-3

Moody's last rating action on UHS was on June 12, 2009, when Moody's changed the rating outlook to stable from negative and affirmed the Baa3 senior unsecured rating.

Moody's last rating action on PSI was on May 4, 2009, when Moody's assigned a B3 (LGD5, 81%) rating to PSI's issuance of senior subordinated notes, upgraded the rating on PSI's senior secured credit facility to Ba2 (LGD2, 25%) , assigned a Speculative Grade Liquidity Rating of SGL-3 and affirmed the company's B1 Corporate Family and Probability of Default Ratings.

The principal methodology used in rating UHS and PSI was Moody's Global For-Profit Hospital Industry Methodology published in September 2008 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

UHS, headquartered in King of Prussia, Pennsylvania, owns and operates acute care hospitals, behavioral health centers, surgical hospitals and ambulatory surgery and radiation oncology centers. Services provided at the company's facilities include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and behavioral health services. UHS recognized approximately $5.2 billion of revenue for the year ended December 31, 2009.

PSI, headquartered in Franklin, TN, provides a continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of owned or leased psychiatric inpatient facilities. PSI also manages free-standing psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical and surgical hospitals owned by others. The company recognized approximately $1.8 billion in revenue for the year ended December 31, 2009.

New York
John Diaz
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Dean Diaz
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's places Baa3 sr. unsecured rating of UHS under review for possible downgrade; Psychiatric Solutions ratings currently unaffected
No Related Data.
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