14.Consolidating Financial Statements

In accordance with the provisions of the 2012 Indenture, as 100%-owned subsidiaries of UHS, Surgical Services and RES have jointly and severally guaranteed all the Company’s Obligations (as defined in the 2012 Indenture) on a full and unconditional basis. Consolidating financial information of UHS and the guarantors is presented on the following pages.

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share information)

(unaudited)


	June 30, 2017
	Parent		Subsidiary
	Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	72,183	$	11,850	$	—	$	84,033
Due from affiliates		34,500		—		(34,500)		—
Inventories		4,750		5,768		—		10,518
Other current assets		6,718		554		—		7,272
Total current assets		118,151		18,172		(34,500)		101,823
Property and equipment:
Medical equipment		559,405		59,403		—		618,808
Property and office equipment		86,444		11,460		—		97,904
Accumulated depreciation		(477,830)		(46,224)		—		(524,054)
Total property and equipment, net		168,019		24,639		—		192,658
Other long-term assets:
Goodwill		283,141		62,983		—		346,124
Investment in subsidiary		74,010		—		(74,010)		—
Other intangibles, net		138,212		17,088		—		155,300
Other		2,356		816		—		3,172
Total assets	$	783,889	$	123,698	$	(108,510)	$	799,077
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	3,530	$	1,433	$	—	$	4,963
Book overdrafts		5,641		494		—		6,135
Due to affiliates		—		34,500		(34,500)		—
Accounts payable		20,608		3,575		—		24,183
Accrued compensation		13,412		2,329		—		15,741
Accrued interest		18,639		—		—		18,639
Other accrued expenses		15,964		1,385		—		17,349
Total current liabilities		77,794		43,716		(34,500)		87,010
Long-term debt, less current portion		702,428		3,391		—		705,819
Pension and other long-term liabilities		12,776		1		—		12,777
Deferred income taxes, net		51,044		2,377		—		53,421
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		248,481		76,013		(76,028)		248,466
Accumulated deficit		(299,161)		(2,018)		—		(301,179)
Accumulated loss in subsidiary		(2,018)		—		2,018		—
Accumulated other comprehensive loss		(7,455)		—		—		(7,455)
Total Universal Hospital Services, Inc. (deficit) equity		(60,153)		73,995		(74,010)		(60,168)
Noncontrolling interest		—		218		—		218
Total (deficit) equity		(60,153)		74,213		(74,010)		(59,950)
Total liabilities and (deficit) equity	$	783,889	$	123,698	$	(108,510)	$	799,077

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share information)

(unaudited)


	December 31, 2016
	Parent		Subsidiary
	Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	71,802	$	12,462	$	—	$	84,264
Due from affiliates		28,523		—		(28,523)		—
Inventories		4,754		6,331		—		11,085
Other current assets		10,501		597		—		11,098
Total current assets		115,580		19,390		(28,523)		106,447
Property and equipment:
Medical equipment		562,422		55,630		—		618,052
Property and office equipment		83,716		11,130		—		94,846
Accumulated depreciation		(462,167)		(42,082)		—		(504,249)
Total property and equipment, net		183,971		24,678		—		208,649
Other long-term assets:
Goodwill		283,141		60,625		—		343,766
Investment in subsidiary		72,624		—		(72,624)		—
Other intangibles, net		140,944		16,427		—		157,371
Other		1,397		493		—		1,890
Total assets	$	797,657	$	121,613	$	(101,147)	$	818,123
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	3,990	$	1,464	$	—	$	5,454
Book overdrafts		9,834		866		—		10,700
Due to affiliates		—		28,523		(28,523)		—
Accounts payable		31,586		7,233		—		38,819
Accrued compensation		17,196		2,710		—		19,906
Accrued interest		18,696		—		—		18,696
Other accrued expenses		15,426		1,250		—		16,676
Total current liabilities		96,728		42,046		(28,523)		110,251
Long-term debt, less current portion		698,050		3,813		—		701,863
Pension and other long-term liabilities		12,274		3		—		12,277
Deferred income taxes, net		50,256		2,961		—		53,217
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		245,001		75,799		(75,814)		244,986
Accumulated deficit		(293,636)		(3,190)		—		(296,826)
Accumulated loss in subsidiary		(3,190)		—		3,190		—
Accumulated other comprehensive loss		(7,826)		—		—		(7,826)
Total Universal Hospital Services, Inc. (deficit) equity		(59,651)		72,609		(72,624)		(59,666)
Noncontrolling interest		—		181		—		181
Total (deficit) equity		(59,651)		72,790		(72,624)		(59,485)
Total liabilities and (deficit) equity	$	797,657	$	121,613	$	(101,147)	$	818,123

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)


	Three Months Ended June 30, 2017
	Parent		Subsidiary
	Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	74,396	$	—	$	—	$	74,396
Clinical engineering solutions		30,390		4,713		—		35,103
Surgical services		—		18,711		—		18,711
Total revenues		104,786		23,424		—		128,210
Cost of Revenue
Cost of medical equipment solutions		33,415		—		—		33,415
Cost of clinical engineering solutions		24,657		3,227		—		27,884
Cost of surgical services		—		9,966		—		9,966
Medical equipment depreciation		13,201		1,729		—		14,930
Total costs of revenues		71,273		14,922		—		86,195
Gross margin		33,513		8,502		—		42,015
Selling, general and administrative		24,606		6,208		—		30,814
Operating income		8,907		2,294		—		11,201
Equity in earnings of subsidiary		(929)		—		929		—
Interest expense		12,585		634		—		13,219
(Loss) income before income taxes and noncontrolling interest		(2,749)		1,660		(929)		(2,018)
(Benefit) provision for income taxes		(456)		731		—		275
Consolidated net (loss) income		(2,293)		929		(929)		(2,293)
Net income attributable to noncontrolling interest		—		98		—		98
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(2,293)	$	831	$	(929)	$	(2,391)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)


	Three Months Ended June 30, 2016
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	74,940	$	—	$	—	$	74,940
Clinical engineering solutions		25,464		—		—		25,464
Surgical services		—		17,214		—		17,214
Total revenues		100,404		17,214		—		117,618
Cost of Revenue
Cost of medical equipment solutions		33,213		—		—		33,213
Cost of clinical engineering solutions		20,644		—		—		20,644
Cost of surgical services		—		8,956		—		8,956
Medical equipment depreciation		14,628		1,449		—		16,077
Total costs of revenues		68,485		10,405		—		78,890
Gross margin		31,919		6,809		—		38,728
Selling, general and administrative		24,123		4,675		—		28,798
(Gain) on settlement		(2,750)		—		—		(2,750)
Operating income		10,546		2,134		—		12,680
Equity in earnings of subsidiary		(901)		—		901		—
Interest expense		12,528		533		—		13,061
(Loss) income before income taxes and noncontrolling interest		(1,081)		1,601		(901)		(381)
(Benefit) provision for income taxes		(472)		700		—		228
Consolidated net (loss) income		(609)		901		(901)		(609)
Net income attributable to noncontrolling interest		—		75		—		75
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(609)	$	826	$	(901)	$	(684)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)


	Six Months Ended June 30, 2017
	Parent		Subsidiary
	Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	153,056	$	—	$	—	$	153,056
Clinical engineering solutions		59,679		10,087		—		69,766
Surgical services		—		36,041		—		36,041
Total revenues		212,735		46,128		—		258,863
Cost of Revenue
Cost of medical equipment solutions		67,211		—		—		67,211
Cost of clinical engineering solutions		47,232		7,158		—		54,390
Cost of surgical services		—		19,422		—		19,422
Medical equipment depreciation		26,745		3,312		—		30,057
Total costs of revenues		141,188		29,892		—		171,080
Gross margin		71,547		16,236		—		87,783
Selling, general and administrative		52,327		12,628		—		64,955
Operating income		19,220		3,608		—		22,828
Equity in earnings of subsidiary		(1,342)		—		1,342		—
Interest expense		25,334		1,180		—		26,514
(Loss) income before income taxes and noncontrolling interest		(4,772)		2,428		(1,342)		(3,686)
(Benefit) provision for income taxes		(589)		1,086		—		497
Consolidated net (loss) income		(4,183)		1,342		(1,342)		(4,183)
Net income attributable to noncontrolling interest		—		170		—		170
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(4,183)	$	1,172	$	(1,342)	$	(4,353)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)


	Six Months Ended June 30, 2016
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	155,170	$	—	$	—	$	155,170
Clinical engineering solutions		51,042		—		—		51,042
Surgical services		—		33,532		—		33,532
Total revenues		206,212		33,532		—		239,744
Cost of Revenue
Cost of medical equipment solutions		71,494		—		—		71,494
Cost of clinical engineering solutions		40,668		—		—		40,668
Cost of surgical services		—		17,722		—		17,722
Medical equipment depreciation		28,381		2,866		—		31,247
Total costs of revenues		140,543		20,588		—		161,131
Gross margin		65,669		12,944		—		78,613
Selling, general and administrative		50,459		9,636		—		60,095
(Gain) on settlement		(2,750)		—		—		(2,750)
Operating income		17,960		3,308		—		21,268
Equity in earnings of subsidiary		(1,268)		—		1,268		—
Interest expense		25,053		1,077		—		26,130
(Loss) income before income taxes and noncontrolling interest		(5,825)		2,231		(1,268)		(4,862)
(Benefit) provision for income taxes		(576)		963		—		387
Consolidated net (loss) income		(5,249)		1,268		(1,268)		(5,249)
Net income attributable to noncontrolling interest		—		135		—		135
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(5,249)	$	1,133	$	(1,268)	$	(5,384)

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended June 30, 2017								Six Months Ended June 30, 2017
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantors		Consolidating				Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated		UHS		SS & RES		Adjustments		Consolidated
Consolidated net (loss) income	$	(2,293)	$	929	$	(929)	$	(2,293)	$	(4,183)	$	1,342	$	(1,342)	$	(4,183)
Other comprehensive income:
Gain on minimum pension liability, net of tax		192		—		—		192		371		—		—		371
Total other comprehensive income		192		—		—		192		371		—		—		371
Comprehensive (loss) income		(2,101)		929		(929)		(2,101)		(3,812)		1,342		(1,342)		(3,812)
Comprehensive income attributable to noncontrolling interest		—		98		—		98		—		170		—		170
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(2,101)	$	831	$	(929)	$	(2,199)	$	(3,812)	$	1,172	$	(1,342)	$	(3,982)


	Three Months Ended June 30, 2016								Six Months Ended June 30, 2016
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(609)	$	901	$	(901)	$	(609)	$	(5,249)	$	1,268	$	(1,268)	$	(5,249)
Other comprehensive income:
Gain on minimum pension liability, net of tax		184		—		—		184		370		—		—		370
Total other comprehensive income		184		—		—		184		370		—		—		370
Comprehensive (loss) income		(425)		901		(901)		(425)		(4,879)		1,268		(1,268)		(4,879)
Comprehensive income attributable to noncontrolling interest		—		75		—		75		—		135		—		135
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(425)	$	826	$	(901)	$	(500)	$	(4,879)	$	1,133	$	(1,268)	$	(5,014)

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended June 30, 2017
	Parent		Subsidiary
	Issuer		Guarantors		Consolidating
	UHS		SS & RES		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(4,183)	$	1,342	$	(1,342)	$	(4,183)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		31,538		4,126		—		35,664
Amortization of intangibles, deferred financing costs and bond premium		2,929		2,531		—		5,460
Equity in earnings of subsidiary		(1,342)		—		1,342		—
Provision for doubtful accounts		85		(12)		—		73
Provision for inventory obsolescence		(10)		132		—		122
Non-cash share-based compensation expense		1,305		246		—		1,551
Gain on sales and disposals of equipment		(992)		(54)		—		(1,046)
Deferred income taxes		788		(584)		—		204
Interest on note receivable		(11)		—		—		(11)
Changes in operating assets and liabilities:
Accounts receivable		(466)		624		—		158
Due from affiliates		(5,731)		—		5,731		—
Inventories		14		481		—		495
Other operating assets		(134)		(280)		—		(414)
Accounts payable		(2,435)		(1,204)		—		(3,639)
Other operating liabilities		(2,430)		(951)		—		(3,381)
Net cash provided by operating activities		18,925		6,397		5,731		31,053
Cash flows from investing activities:
Medical equipment purchases		(19,105)		(5,191)		—		(24,296)
Property and office equipment purchases		(3,206)		(103)		—		(3,309)
Proceeds from disposition of property and equipment		2,010		81		—		2,091
Issuance of note receivable from officer		(936)		—		—		(936)
Acquisition and refund of escrow		3,691		(5,614)		—		(1,923)
Net cash used in investing activities		(17,546)		(10,827)		—		(28,373)
Cash flows from financing activities:
Proceeds under senior secured credit facility		83,200		—		—		83,200
Payments under senior secured credit facility		(79,692)		—		—		(79,692)
Payments of principal under capital lease obligations		(2,623)		(796)		—		(3,419)
Distributions to noncontrolling interests		—		(133)		—		(133)
Proceeds from exercise of parent company stock options		29		—		—		29
Contribution from Parent		1,900		—		—		1,900
Due to affiliates		—		5,731		(5,731)		—
Change in book overdrafts		(4,193)		(372)		—		(4,565)
Net cash (used in) provided by financing activities		(1,379)		4,430		(5,731)		(2,680)
Net change in cash and cash equivalents		—		—		—		—
Cash and cash equivalents at the beginning of period		—		—		—		—
Cash and cash equivalents at the end of period	$	—	$	—	$	—	$	—

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended June 30, 2016
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(5,249)	$	1,268	$	(1,268)	$	(5,249)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		33,059		3,555		—		36,614
Amortization of intangibles, deferred financing costs and bond premium		4,304		1,707		—		6,011
Equity in earnings of subsidiary		(1,268)		—		1,268		—
Provision for doubtful accounts		72		58		—		130
Provision for inventory obsolescence		126		(40)		—		86
Non-cash share-based compensation expense		1,514		—		—		1,514
Gain on sales and disposals of equipment		(1,903)		40		—		(1,863)
Deferred income taxes		799		(679)		—		120
Interest on note receivable		(3)		—		—		(3)
Changes in operating assets and liabilities:
Accounts receivable		(5,110)		(191)		—		(5,301)
Due from affiliates		(1,380)		—		1,380		—
Inventories		(859)		779		—		(80)
Other operating assets		(722)		(378)		—		(1,100)
Accounts payable		(522)		(816)		—		(1,338)
Other operating liabilities		(6,254)		(283)		—		(6,537)
Net cash provided by operating activities		16,604		5,020		1,380		23,004
Cash flows from investing activities:
Medical equipment purchases		(22,647)		(4,765)		—		(27,412)
Property and office equipment purchases		(2,070)		(13)		—		(2,083)
Proceeds from disposition of property and equipment		6,940		4		—		6,944
Issuance of note receivable from officer		(983)		—		—		(983)
Net cash used in investing activities		(18,760)		(4,774)		—		(23,534)
Cash flows from financing activities:
Proceeds under senior secured credit facility		75,700		—		—		75,700
Payments under senior secured credit facility		(74,500)		—		—		(74,500)
Payments of principal under capital lease obligations		(2,341)		(603)		—		(2,944)
Payments of deferred financing costs		(97)		—		—		(97)
Holdback payment related to acquisition		—		(500)		—		(500)
Distributions to noncontrolling interests		—		(196)		—		(196)
Dividend and equity distribution payments		(24)		—		—		(24)
Proceeds from exercise of parent company stock options		66		—		—		66
Due to affiliates		—		1,380		(1,380)		—
Change in book overdrafts		3,352		(327)		—		3,025
Net cash provided by (used in) financing activities		2,156		(246)		(1,380)		530
Net change in cash and cash equivalents		—		—		—		—
Cash and cash equivalents at the beginning of period		—		—		—		—
Cash and cash equivalents at the end of period	$	—	$	—	$	—	$	—