10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQuarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended June 30, 2013

or

oTransition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from               to

Commission File Number: 000-20086

UNIVERSAL HOSPITAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-0760940
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

6625 West 78th Street, Suite 300

Minneapolis, Minnesota 55439-2604

(Address of principal executive offices, including zip code)

(952) 893-3200

(Registrant’s telephone number, including area code)

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  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  o  No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

	Large accelerated filer	o	Accelerated filer	o
	Non-accelerated filer	x	Smaller reporting company	o
(Do not check if a smaller reporting company)

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

Number of shares of common stock outstanding as of August 12, 2013:  1,000

Universal Hospital Services, Inc.

Table of Contents

		Page
PART I -  FINANCIAL INFORMATION
ITEM 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets — June 30, 2013 and December 31, 2012	1
	Consolidated Statements of Operations—Three and Six months ended June 30, 2013 and 2012	2
	Consolidated Statements of Comprehensive Income (Loss) —Three and Six months ended June 30, 2013 and 2012	2
	Consolidated Statements of Cash Flows — Six months ended June 30, 2013 and 2012	3
	Notes to Consolidated Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	36
ITEM 4.	Controls and Procedures	37
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
ITEM 3.	Defaults Upon Senior Securities	37
ITEM 4.	Mine Safety Disclosures	37
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	38
Signatures		39

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements — Unaudited

Universal Hospital Services, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)

	June 30,			December 31,
	2013			2012
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts of $2,015 at June 30, 2013 and December 31, 2012	$	67,766		$	68,478
Inventories	9,694			8,868
Deferred income taxes, net	3,284			3,610
Other current assets	5,132			4,280
Total current assets	85,876			85,236
Property and equipment, net:
Medical equipment, net	231,034			236,905
Property and office equipment, net	33,251			30,094
Total property and equipment, net	264,285			266,999
Other long-term assets:
Goodwill	335,577			335,577
Other intangibles, net	227,335			234,391
Other, primarily deferred financing costs, net	15,676			15,210
Total assets	$	928,749		$	937,413
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	5,382		$	6,223
Book overdrafts	4,186			3,905
Accounts payable	25,926			26,036
Accrued compensation	14,056			16,956
Accrued interest	18,878			13,845
Dividend payable	88			88
Other accrued expenses	12,390			11,641
Total current liabilities	80,906			78,694
Long-term debt, less current portion	703,878			692,791
Pension and other long-term liabilities	15,134			14,377
Payable to Parent	21,835			21,640
Deferred income taxes, net	69,386			69,036
Commitments and contingencies (Note 10)
Equity
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at June 30, 2013 and December 31, 2012	—			—
Additional paid-in capital	214,481			214,481
Accumulated deficit	(168,065		)	(144,864		)
Accumulated other comprehensive loss	(9,086		)	(9,086		)
Total Universal Hospital Services, Inc. equity	37,330			60,531
Noncontrolling interest	280			344
Total equity	37,610			60,875
Total liabilities and equity	$	928,749		$	937,413

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Universal Hospital Services, Inc.

Consolidated Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Revenue
Medical equipment outsourcing	$	78,308		$	75,081	$	160,305		$	152,465
Technical and professional services	21,912			22,350		43,161			42,479
Medical equipment sales and remarketing	6,769			9,264		13,883			15,631
Total revenues	106,989			106,695		217,349			210,575
Cost of Revenue
Cost of medical equipment outsourcing	34,148			19,212		68,020			48,537
Cost of technical and professional services	16,778			16,885		33,809			32,654
Cost of medical equipment sales and remarketing	5,349			7,345		11,044			12,099
Medical equipment depreciation	18,459			17,321		36,356			34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	74,734			60,763		149,229			127,515
Gross margin	32,255			45,932		68,120			83,060
Selling, general and administrative	30,653			28,709		60,180			56,367
Restructuring, acquisition and integration expenses	183			190		236			294
Operating income	1,419			17,033		7,704			26,399
Loss on extinguishment of debt	—			—		1,853			—
Interest expense	13,944			14,504		27,822			30,003
Income (loss) before income taxes and noncontrolling interest	(12,525		)	2,529		(21,971		)	(3,604		)
Provision (benefit) for income taxes	183			197		915			(2,972		)
Consolidated net income (loss)	(12,708		)	2,332		(22,886		)	(632		)
Net income attributable to noncontrolling interest	135			184		315			366
Net income (loss) attributable to Universal Hospital Services, Inc.	$	(12,843	)	$	2,148	$	(23,201	)	$	(998	)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

Universal Hospital Services, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Consolidated net income (loss)	$	(12,708	)	$	2,332	$	(22,886	)	$	(632	)
Other comprehensive income:
Gain on cash flow hedge, net of tax of $755 and $1,868	—			1,167		—			2,887
Total other comprehensive income	—			1,167		—			2,887
Comprehensive income (loss)	(12,708		)	3,499		(22,886		)	2,255
Comprehensive income attributable to noncontrolling interest	135			184		315			366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$	(12,843	)	$	3,315	$	(23,201	)	$	1,889

The accompanying notes are an integral part of the unaudited consolidated financial statements.

2

Universal Hospital Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended
	June 30,
	2013			2012
Cash flows from operating activities:
Consolidated net loss	$	(22,886	)	$	(632	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	41,675			39,673
Amortization of intangibles, deferred financing costs and bond premium	8,227			9,312
Non-cash write off of deferred financing cost	1,853			—
Provision for doubtful accounts	1,033			392
Provision for inventory obsolescence	95			182
Non-cash share-based compensation expense - net	195			2,150
Non-cash gain on trade-in of recalled equipment	—			(14,122		)
Gain on sales and disposals of equipment	(801		)	(695		)
Deferred income taxes	676			(1,450		)
Changes in operating assets and liabilities:
Accounts receivable	(321		)	(9,372		)
Inventories	(921		)	(1,678		)
Other operating assets	(792		)	(2,001		)
Accounts payable	(1,465		)	(608		)
Other operating liabilities	3,639			(3,477		)
Net cash provided by operating activities	30,207			17,674
Cash flows from investing activities:
Medical equipment purchases	(28,478		)	(32,082		)
Property and office equipment purchases	(4,178		)	(3,637		)
Proceeds from disposition of property and equipment	1,929			3,935
Acquisitions, net of cash acquired	—			(11,445		)
Holdback payment related to acquisition	(1,655		)	—
Net cash used in investing activities	(32,382		)	(43,229		)
Cash flows from financing activities:
Proceeds under senior secured credit facility	43,300			72,000
Payments under senior secured credit facility	(36,800		)	(39,000		)
Payments of principal under capital lease obligations	(4,150		)	(3,398		)
Payments of floating rate notes	(230,000		)	—
Payments on acquired debt	—			(3,163		)
Proceeds from issuance of bonds	234,025			—
Accrued interest received from bondholders	8,620			—
Accrued interest paid to bondholders	(8,620		)	—
Distributions to noncontrolling interests	(379		)	(373		)
Proceeds from exercise of parent company stock options	—			150
Dividend and equity distribution payments	—			(763		)
Payment of deferred financing costs	(4,102		)	—
Change in book overdrafts	281			(727		)
Net cash provided by financing activities	2,175			24,726
Net change in cash and cash equivalents	—			(829		)
Cash and cash equivalents at the beginning of period	—			1,161
Cash and cash equivalents at the end of period	$	—		$	332
Supplemental cash flow information:
Interest paid	$	21,620		$	29,424
Income taxes paid	332			798
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	$	8,008		$	8,016
Capital lease additions	4,438			3,113

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3

Universal Hospital Services, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Basis of Presentation

The interim consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Universal Hospital Services, Inc. (“we”, “our”, “us”, the “Company”, or “UHS”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, pursuant to such rules and regulations.  These consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2012 Annual Report on Form 10-K filed with the SEC.

The interim consolidated financial statements presented herein as of June 30, 2013, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented.  These adjustments are all of a normal, recurring nature.  The results of operations for any interim period are not necessarily indicative of results for the full year.

We are required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP.  These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses at the date of the unaudited consolidated financial statements.  While we believe that our past estimates and assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made.  We evaluate our estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances.  We make adjustments to our assumptions and judgments when facts and circumstances dictate.  Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements.

A description of our significant accounting policies is included in our 2012 Annual Report on Form 10-K. There have been no material changes to these policies for the quarter ended June 30, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of UHS and its 100%-owned subsidiary, UHS Surgical Services, Inc. (“Surgical Services”). In addition, in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”), we have accounted for our equity investments in entities in which we are the primary beneficiary under the full consolidation method. All significant intercompany transactions and balances have been eliminated through consolidation. As the primary beneficiary, we consolidate the limited liability companies (“LLCs”) referred to in Note 12, Limited Liability Companies, as we effectively receive the majority of the benefits from such entities and we provide equipment lease guarantees for such entities.

2.Recent Accounting Pronouncements

Standard Adopted

In July 2012, the FASB issued an amendment to indefinite-lived intangible assets impairment. This amendment permits an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The results of the qualitative assessment would be used as a basis in determining whether it is necessary to perform the two-step quantitative impairment test. If the qualitative assessment supports the conclusion that it is more likely than not that the fair value of the asset exceeds its carrying amount, the entity would not need to perform the two-step quantitative impairment test. The objective of this update is to reduce the cost and complexity of performing impairment tests for indefinite-lived intangible assets other than goodwill, and to improve consistency in impairment testing among long-lived asset categories. The adoption of this amendment did not have a material effect on our consolidated financial statements.

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In February 2013, the FASB issued ASU No. 2013-02 Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”) which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. ASU 2013-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material effect on our consolidated financial statements.

3.Acquisitions

On July 9, 2012, we completed the acquisition of certain assets of a surgical laser equipment service provider for total consideration of approximately $5.3 million.  The consideration consists of $2.6 million of cash paid at closing, $1.0 million of debt assumed that was paid off upon closing, and approximately $1.7 million in contingent earn-out payment expected to be paid in the second half of 2013.

On March 31, 2012, we completed the acquisition of certain assets of the southern California equipment rental division of a medical equipment manufacturer. The total purchase price was approximately $0.8 million, including approximately $0.4 million in contingent consideration which may be paid over four years based on future revenues. Assets acquired consisted of medical equipment of $0.4 million and customer relationship intangibles of $0.3 million.

On January 3, 2012, we completed the acquisition of all of the outstanding stock of a Florida-based surgical laser equipment service provider for total consideration of approximately $16.1 million. The total consideration consists of $11.0 million of cash paid at closing, $3.2 million of debt assumed that was paid off upon closing, and $1.9 million of holdback amounts, of which $0.2 million was paid in 2012 and $1.7 million was paid in January 2013.

Acquisitions completed during the year ended 2012 are not material individually or in the aggregate.

All acquisitions were funded primarily from our existing senior secured credit facility.

4.Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 are summarized in the following table by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2013								Fair Value at December 31, 2012
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	2,048	$	2,048	$	—	$	—	$	2,033	$	2,033

A description of the inputs used in the valuation of assets and liabilities is summarized as follows:

Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

During 2012, we recorded a contingent consideration liability, in the form of an earn-out payment, related to our acquisitions in the total amount of $2.1 million. The contingent consideration payments are based on achieving certain revenue results. The fair value of the liability was estimated using a discounted cash flow approach with significant inputs that are not

5

observable in the market and thus represents a Level 3 fair value measurement. The significant inputs in the Level 3 measurement not supported by market activity included our assessments of expected future cash flows during the earn-out period, related to the assets acquired, appropriately discounted considering the uncertainties associated with the obligation, and calculated based on estimated revenues in accordance with the terms of the agreement. During the three and six months ended June 30, 2013, $0.02 and $0.05 million, respectively, in earn-out payments were paid.

The assumptions used in preparing the discounted cash flow analysis included estimates of interest rates and the timing and amount of incremental cash flows.

A reconciliation of the beginning and ending balance for the Level 3 measurement (in thousands) are as follows:

Balance at December 31, 2012	$	2,033
Interest	64
Payments	(49		)
Balance at June 30, 2013	$	2,048

Fair Value of Other Financial Instruments

The Company considers that the carrying amount of financial instruments, including accounts receivable, accounts payable, accrued liabilities and senior secured credit facility, approximates fair value due to their short maturities. The fair value of our outstanding Original Notes, Add-on Notes and Floating Rate Notes (each as defined in Note 9, Long-Term Debt) as of June 30, 2013 and December 31, 2012, based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Original notes - 7.625%	$	425.0	$	446.3	$	425.0	$	448.4
Add-on notes - 7.625% (1)	233.5		231.0		—		—
Floating rate notes	—		—		230.0		229.1

(1)  The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $13.5 million.

5.Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2013 and December 31, 2012, by reporting segment, consist of the following:

	Medical		Technical and		Sales		Corporate
	Equipment		Professional		and		and
(in thousands)	Outsourcing		Services		Remarketing		Unallocated		Total
Balance at December 31, 2011	$	251,653	$	55,655	$	18,603	$	—	$	325,911
Acquisitions	9,666		—		—		—		9,666
Balance at December 31, 2012	261,319		55,655		18,603		—		335,577
Acquisitions	—		—		—		—		—
Balance at June 30, 2013	$	261,319	$	55,655	$	18,603	$	—	$	335,577

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Our other intangible assets as of June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013							December 31, 2012
			Accumulated							Accumulated
(in thousands)	Cost		Amortization			Net		Cost		Amortization			Net
Finite-life intangibles
Customer relationship	$	115,731	$	(65,846	)	$	49,885	$	115,731	$	(60,368	)	$	55,363
Supply agreement	26,000		(15,107		)	10,893		26,000		(13,655		)	12,345
Technology databases	7,217		(7,163		)	54		7,217		(7,127		)	90
Non-compete agreements	780		(288		)	492		780		(203		)	577
Favorable lease agreements	134		(123		)	11		134		(118		)	16
Total finite-life intangibles	149,862		(88,527		)	61,335		149,862		(81,471		)	68,391
Indefinite-life intangibles
Trade names	166,000		—			166,000		166,000		—			166,000
Total intangible assets	$	315,862	$	(88,527	)	$	227,335	$	315,862	$	(81,471	)	$	234,391

Total amortization expense related to intangible assets was $3.5 and $3.9 million for the three months ended June 30, 2013 and 2012, respectively, and $7.1 and $7.9 million for the six months ended June 30, 2013 and 2012, respectively.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2013 and the next five years is as follows:

(in thousands)
Remainder of 2013	$	6,698
2014	12,835
2015	11,930
2016	10,805
2017	7,514
2018	5,931

6.Equity

The following tables represent changes in equity that are attributable to our shareholders and noncontrolling interests for the six month periods ended June 30, 2013 and 2012.

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2012	$	214,481	$	(144,864	)	$	(9,086	)	$	344		$	60,875
Net (loss) income	—		(23,201		)	—			315			(22,886		)
Cash distributions to noncontrolling interests	—		—			—			(379		)	(379		)
Balance at June 30, 2013	$	214,481	$	(168,065	)	$	(9,086	)	$	280		$	37,610

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2011	$	214,294	$	(109,666	)	$	(11,827	)	$	386		$	93,187
Net (loss) income	—		(998		)	—			366			(632		)
Other comprehensive income	—		—			2,887			—			2,887
Cash distributions to noncontrolling interests	—		—			—			(373		)	(373		)
Balance at June 30, 2012	$	214,294	$	(110,664	)	$	(8,940	)	$	379		$	95,069

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7.Share-Based Compensation

During the six months ended June 30, 2013, activity under the 2007 Stock Option Plan (the “2007 Stock Option Plan”), of UHS Holdco, Inc., our parent company (“Parent”), was as follows:

(in thousands except exercise price and years)	Number of Options		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual term (years)
Outstanding at December 31, 2012	36,668		$	1.12	$	11,253	5.6
Granted	6,150		1.40
Exercised	—		—
Forfeited or expired	(3,971	)	1.05
Outstanding at June 30, 2013	38,847		$	1.17	$	9,838	6.0
Exercisable at June 30, 2013	26,209		$	1.05	$	9,661	4.4
Remaining authorized options available for issue	4,839

The exercise price of the stock option award is equal to the market value of Parent’s common stock on the grant date as determined reasonably and in good faith by Parent’s Board of Directors and compensation committee and based on an analysis of a variety of factors including peer group multiples, merger and acquisition multiples, and discounted cash flow analyses.

The intrinsic value of a stock award is the amount by which the market value of the underlying stock exceeds the exercise price of the award.

We determine the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as expense on a straight-line basis over the options’ expected vesting periods. The following assumptions were used in determining the fair value of stock options granted during the six months ended June 30, 2013 under the Black-Scholes model. There were no stock options granted during the six months ended June 30, 2012.

	Six Month Ended
	June 30, 2013
Risk-free interest rate	1.25		%
Expected volatility	35.3		%
Dividend yield	N/A
Expected option life (years)	6.75
Black-Scholdes Value of options	$	0.53

Expected volatility is based on an independent valuation of the stock of companies within our peer group.  Given the lack of a true comparable company, the peer group consists of selected public health care companies representing our suppliers, customers and competitors within certain product lines.  The risk free-interest rate is based on the U.S. Treasury yield curve in effect at the grant date based on the expected option life.  The expected option life represents the result of the “simplified” method applied to “plain vanilla” options granted during the period, as provided within Accounting Standards Codification (“ASC”) Topic 718, “Compensation - Stock Compensation.”  Parent used the simplified method as Parent does not have sufficient historical exercise experience to provide a basis upon which to estimate the expected term.

Although Parent grants stock options, the Company recognizes compensation expense related to these options since the services are performed for its benefit.  Along with this expense, which is primarily included in Selling, General and

8

Administrative expense, the Company records an offsetting Payable to Parent liability which is not expected to be settled within the next twelve months.

At June 30, 2013, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.1 years totals approximately $6.5 million, net of our estimated forfeiture rate of 2.0%. The expense could be accelerated upon the sale of Parent or the Company.

8.Dividend and Equity Distribution

On June 8, 2011, the Board of Directors declared an equity distribution of $0.12 per option to holders of outstanding options on the Parent’s stock on June 10, 2011 that vested on December 31, 2011 and 2012 and are scheduled to vest on December 31, 2013, 2014 and 2015.

Our consolidated balance sheet as of June 30, 2013 and December 31, 2012 reflect the related current dividend payable and long-term dividend payable included in Payable to Parent for estimated amounts to be paid to holders of options expected to vest on December 31, 2013 through 2015 based on an estimated option forfeiture rate of 2% annually.

9.Long-Term Debt

Long-term debt consists of the following:

	June 30,			December 31,
(in thousands)	2013			2012
Original notes - 7.625%	$	425,000		$	425,000
Add-on notes - 7.625%	220,000			—
Floating rate notes	—			230,000
Unamortized bond premium	13,459			—
Senior secured credit facility	34,500			28,000
Capital lease obligations	16,301			16,014
	709,260			699,014
Less: Current portion of long-term debt	(5,382		)	(6,223		)
Total long-term debt	$	703,878		$	692,791

Original Notes and Add-on Notes — 7.625%. On August 7, 2012, we issued $425.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Original Notes”) under an indenture dated as of August 7, 2012 (the “2012 Indenture”). On February 12, 2013, we issued $220.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Add-on Notes”, and along with the Original Notes, the “2012 Notes”) as “additional notes” pursuant to the 2012 Indenture. The 2012 Notes mature on August 15, 2020.

The 2012 Indenture provides that the 2012 Notes are our second lien senior secured obligations and are fully and unconditionally guaranteed on a second lien senior secured basis by our existing and certain of our future 100%-owned domestic subsidiaries.

Interest on the 2012 Notes is payable, entirely in cash, semiannually, in arrears, on February 15 and August 15 of each year. We may redeem some or all of the 2012 Notes at the redemption prices set forth in the 2012 Indenture.  If we sell certain assets or undergo certain kinds of changes of control, we must offer to repurchase the 2012 Notes.

Our 2012 Notes are subject to certain debt covenants which are described below under the heading “2012 Indenture.”

In connection with the issuance of the Add-on Notes, we entered into a registration rights agreement with the initial purchasers of the Add-on Notes. On April 5, 2013, our Registration Statement on Form S-4, filed to register the exchange of the Add-on Notes for fully registered Add-on Notes, was declared effective by the SEC and we commenced our exchange offer. The exchange offer expired on May 6, 2013 and on May 10, 2013 we completed an offer to exchange all of the then outstanding Add-on Notes for an equivalent amount of Add-on Notes which have been registered under the Securities Act of 1933, as amended. We did not receive any additional proceeds from the exchange offer.

9

Floating Rate Notes.  On May 31, 2007, we issued $230.0 million aggregate principal amount of floating rate notes (the “Floating Rate Notes”) due 2015.  Interest on the Floating Rate Notes was reset for each semi-annual interest period and was calculated at the current LIBOR rate plus 3.375%.

On March 14, 2013, we redeemed all of our outstanding Floating Rate Notes. The proceeds of the Add-on Notes were used to fund the redemption.

Senior Secured Credit Facility.  On July 31, 2012, we entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as agent for the lenders, and the lenders party thereto (the “Second Amended Credit Agreement”), which amended our then-existing senior secured credit facility originally dated as of May 31, 2007 and amended and restated as of May 6, 2010. We refer to the second amended and restated senior secured credit facility as the “senior secured credit facility.” The senior secured credit facility is a first lien senior secured asset based revolving credit facility that is available for working capital and general corporate purposes, including permitted investments, capital expenditures and debt repayments, on a fully revolving basis, subject to the terms and conditions set forth in the credit documents in the form of revolving loans, swing line loans and letters of credit. The Second Amended Credit Agreement increased the aggregate amount we may obtain under revolving loans from $195.0 million to $235.0 million and extended the maturity date to July 31, 2017.  Our obligations under the Second Amended Credit Agreement are secured by a first priority security interest in substantially all of our assets, excluding a pledge of our and Parent’s stock, any joint ventures and certain other exceptions.  Our obligations under the Second Amended Credit Agreement are unconditionally guaranteed by Parent and our restricted subsidiaries.

As of June 30, 2013, we had $159.2 million of availability under the senior secured credit facility based on a borrowing base of $197.9 million less borrowings of $34.5 million and after giving effect to $4.2 million used for letters of credit.

The senior secured credit facility requires our compliance with various affirmative and negative covenants. Pursuant to the affirmative covenants, we and Parent agreed to, among other things, deliver financial and other information to the administrative agent, provide notice of certain events (including events of default), pay our obligations, maintain our properties, maintain the security interest in the collateral for the benefit of the administrative agent and the lenders and maintain insurance.

Among other restrictions, and subject to certain definitions and exceptions, the senior secured credit facility restricts our ability to:

·incur indebtedness;

·create or permit liens;

·declare or pay dividends and certain other restricted payments;

·consolidate, merge or recapitalize;

·acquire or sell assets;

·make certain investments, loans or other advances;

·enter into transactions with affiliates;

·change our line of business; and

·enter into hedging transactions.

The senior secured credit facility also contains a financial covenant that is triggered if our available borrowing capacity is less than $20.0 million for a certain period, which consists of a minimum ratio of trailing four-quarter Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) to cash interest expense, as such terms are defined in the senior secured credit facility.

The senior secured credit facility specifies certain events of default, including, among others, failure to pay principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, bankruptcy events, certain ERISA-related events, cross-defaults to other material agreements, change of control events and invalidity of guarantees or security documents.  Some events of default will be triggered only after certain cure periods have expired, or will provide for materiality thresholds.  If such a default occurs, the lenders under the senior secured credit facility would be entitled to take various actions, including all actions permitted to be taken by a secured creditor and the acceleration of amounts due under the senior secured credit facility.

Borrowings under the senior secured credit facility accrue interest (including a credit spread varying with facility usage):

10

·at a per annum rate equal to 1.00% - 1.50% above the rate equal to the greater of (i) the “federal funds rate” plus one-half of one percent (0.50%) per annum, (ii) the “prime rate” announced from time to time by the administrative agent for such day and (iii) the “Eurodollar rate” for a one month interest period as determined on such day, plus one percent (1.0%) payable quarterly in arrears; and

·at a per annum rate equal to 2.00% - 2.50% above the adjusted British Bankers Association Interest Settlement Rate for deposits in Dollars rate used by the administrative agent with a term equivalent to the selected interest rate period, for the respective interest rate period determined at our option, payable in arrears upon cessation of the interest rate period elected, provided that for an interest rate period longer than three months, payable in arrears on the respective dates that fall every three months from the beginning of such interest rate period.

At June 30, 2013, we had $34.5 million of borrowings outstanding of which $30.0 million was accruing interest at a rate of 2.693% and $4.5 million was accruing interest at the prime rate of 4.75%.

We were in compliance with all financial debt covenants for all periods presented.

2012 Indenture. Our 2012 Notes are guaranteed, jointly and severally, on a second priority senior secured basis, by Surgical Services, and are also similarly guaranteed by certain of our future 100%-owned domestic subsidiaries. The 2012 Notes are our second priority senior secured obligations and rank (i) equal in right of payment with all of our existing and future unsubordinated indebtedness, and effectively senior to any such unsecured indebtedness to the extent of the value of collateral; (ii) senior in right of payment to all of our and our guarantors’ existing and future subordinated indebtedness; (iii) effectively junior to our senior secured credit facility; and (iv) structurally subordinated to any indebtedness and other liabilities (including trade payables) of any of our future subsidiaries that are not guarantors.

The 2012 Indenture governing the 2012 Notes contains covenants that limit our and our guarantors’ ability, subject to certain definitions and exceptions, and certain of our future subsidiaries’ ability to:

·incur additional indebtedness;

·pay cash dividends or distributions on our capital stock or repurchase our capital stock or subordinated debt;

·issue redeemable stock or preferred stock;

·issue stock of subsidiaries;

·make certain investments;

·transfer or sell assets;

·create liens on our assets to secure debt;

·enter into transactions with affiliates; and

·merge or consolidate with another company.

The 2012 Indenture specifies certain events of default, including among others, failure to pay principal, interest or premium, violation of covenants and agreements, cross-defaults to other material agreements, bankruptcy events, invalidity of guarantees, and a default in the performance by us of the security documents relating to the 2012 Indenture. Some events of default will be triggered only after certain grace or cure periods have expired, or provide for materiality thresholds. In the event certain bankruptcy-related defaults occur, the 2012 Notes will become due and payable immediately. If any other default occurs, the Trustee (and in some cases the noteholders) would be entitled to take various actions, including acceleration of amounts due under the 2012 Indenture.

We were in compliance with all financial debt covenants for all periods presented.

10.Commitments and Contingencies

The Company, in the ordinary course of business, could be subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material effect on the financial position, results of operations or cash flows of the Company.

As of June 30, 2013, we were not a party to any pending legal proceedings the adverse outcome of which could reasonably be expected to have a material effect on our operating results, financial position or cash flows.

11

11.Related Party Transactions

Management Agreement

On May 31, 2007, we and Irving Place Capital Merchant Manager III, L.P. (“IPC”) entered into a professional services agreement pursuant to which IPC provides general advisory and management services to us with respect to financial and operating matters.  IPC is a principal owner of Parent, and the following members of our board of directors are associated with IPC:  Michael Feiner, Robert Juneja, and Bret Bowerman. In addition, David Crane, a director, provides consulting services to IPC. The professional services agreement requires us to pay an annual fee for ongoing advisory and management services equal to the greater of $0.5 million or 0.75% of our Adjusted EBITDA (as defined in the professional services agreement) for the immediately preceding fiscal year, payable in quarterly installments. The professional services agreement provides that IPC will be reimbursed for its reasonable out-of-pocket expenses in connection with certain activities undertaken pursuant to the professional services agreement and will be indemnified for liabilities incurred in connection with its role under the professional services agreement, other than for liabilities resulting from its gross negligence or willful misconduct. The term of the professional services agreement commenced on May 31, 2007 and will remain in effect unless and until either party notifies the other of its desire to terminate, we are sold to a third-party purchaser or we consummate a qualified initial public offering, as defined in the professional services agreement. Total professional services fees incurred to IPC were $0.3 and $0.2 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.6 and $0.5 million for the six month periods ended June 30, 2013 and 2012, respectively.

Business Relationship

In the ordinary course of business, we entered into an operating lease for our Minneapolis, Minnesota district office with Ryan Fund V, LLC (“Ryan”), which began on May 1, 2007.  One member of our board of directors is also a limited partner in Ryan which has ownership interest in an LLC that owns the property. Total rent expense to Ryan were $0.1 and $0.1 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.2 and $0.2 million for the six month periods ended June 30, 2013 and 2012, respectively.

In the ordinary course of business, we entered into engagement letters with CTPartners, LLC (“CTPartners”) in September of 2012 and January of 2013 to conduct searches for certain executive positions.  One member of our board of directors, Michael Feiner, is also a director of CTPartners. Total fees incurred to CTPartners were $0.1 and $0 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.2 and $0.1 million for the six month periods ended June 30, 2013 and 2012, respectively.

The Company believes that the aforementioned arrangements and relationships were provided in the ordinary course of business.

12.Limited Liability Companies

We participate with others in the formation of LLCs in which Surgical Services becomes a partner and shares the financial interest with the other investors. Surgical Services is the primary beneficiary of these LLCs. These LLCs acquire certain medical equipment for use in their respective business activities, which generally focus on surgical procedures. The LLCs will acquire medical equipment for providing Surgical Services under equipment financing leases. At June 30, 2013, the LLCs had approximately $0.6 million of total assets. The third party investors in each respective LLC generally provide the lease financing company with individual proportionate lease guarantees based on their respective ownership percentages in the LLCs. In addition, Surgical Services will provide such financing companies with its corporate guarantee based on its respective ownership interest in each LLC. In certain instances, Surgical Services has provided such financing companies with an overall corporate guarantee in connection with equipment financing transactions. In such instances, the individual investors in each respective LLC will generally indemnify us against losses, if any, incurred in connection with its corporate guarantee. Additionally, we provide operational and administrative support to the LLCs in which it is a partner. As of June 30, 2013, we held interests in six active LLCs.

In accordance with guidance issued by the FASB, we account for equity investments in LLCs (in which we are the primary beneficiary) under the full consolidation method whereby transactions between Surgical Services and the LLCs have been eliminated through consolidation.

12

13.Segment Information

Our reporting segments consist of Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales and Remarketing. Certain operating information for our segments as well as a reconciliation of total Company gross margin to income (loss) before income tax and noncontrolling interest was as follows:

Medical Equipment Outsourcing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	78,308	$	75,081	$	160,305	$	152,465
Cost of revenue	34,148		19,212		68,020		48,537
Medical equipment depreciation	18,459		17,321		36,356		34,225
Gross margin	$	25,701	$	38,548	$	55,929	$	69,703

Technical and Professional Services

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	21,912	$	22,350	$	43,161	$	42,479
Cost of revenue	16,778		16,885		33,809		32,654
Gross margin	$	5,134	$	5,465	$	9,352	$	9,825

Medical Equipment Sales and Remarketing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	6,769	$	9,264	$	13,883	$	15,631
Cost of revenue	5,349		7,345		11,044		12,099
Gross margin	$	1,420	$	1,919	$	2,839	$	3,532

Total Gross Margin and Reconciliation to Income (Loss) Before Income Taxes and Noncontrolling Interest

(in thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Total gross margin	$	32,255		$	45,932	$	68,120		$	83,060
Selling, general and administrative	30,653			28,709		60,180			56,367
Restructuring, acquisition and integration expenses	183			190		236			294
Loss on extinguishment of debt	—			—		1,853			—
Interest expense	13,944			14,504		27,822			30,003
Income (loss) before income taxes and noncontrolling interest	$	(12,525	)	$	2,529	$	(21,971	)	$	(3,604	)

13

Total Assets By Reporting Segment

(in thousands)

	June 30,		December 31
	2013		2012
Medical Equipment Outsourcing	$	458,487	$	465,192
Technical and Professional Services	83,443		83,791
Medical Equipment Sales and Remarketing	18,603		18,603
Corporate and Unallocated	368,216		369,827
Total Company Assets	$	928,749	$	937,413

14.Pension Plan

The components of net periodic pension costs are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2013			2012			2013			2012
Interest cost	$	260		$	265		$	520		$	538
Expected return on plan assets	(291		)	(320		)	(582		)	(639		)
Recognized net actuarial loss	222			166			458			343
Net periodic cost	$	191		$	111		$	396		$	242

Future benefit accruals for all participants were frozen as of December 31, 2002.  We made required contributions of $0.2 and $0.4 million during the three months ended June 30, 2013 and 2012, respectively and $0.2 and $0.6 million during the six months ended June 30, 2013 and 2012, respectively.

15.Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We evaluate the recoverability of our deferred tax assets by scheduling the expected reversals of deferred tax assets and liabilities in order to determine whether net operating loss carry forwards are recoverable prior to expiration and have established a valuation allowance in accordance with ASC Topic 740. The tax expense for the six months ended June 30, 2013 primarily relates to a discrete item to record a deferred tax liability for adjustments in connection with the tax amortization of indefinite-life goodwill and state minimum fees. The Company will continue to incur deferred tax expense in the future as tax amortization occurs. The expected tax benefit from operating loss during the six months ended June 30, 2013 was offset by the recording of additional valuation allowance. Our January 3, 2012 acquisition resulted in the recording of deferred tax liabilities on the opening balance sheet due to higher book than tax bases for fixed assets and amortizable intangible assets.   This discrete event had the one-time effect of reducing our valuation allowance by approximately $3.4 million on that date, though this amount was offset by approximately $2.5 million of additional valuation allowance resulting from year-to-date losses. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

At June 30, 2013, the Company had available unused federal net operating loss carryforwards of approximately $190.6 million. The net operating loss carryforwards will expire at various dates from 2019 through 2034.

16.Consolidating Financial Statements

In accordance with the provisions of the 2012 Indenture, as a 100%-owned subsidiary of UHS, Surgical Services has 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 guarantor is presented on the following pages.

14

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,371		$	7,395		$	—		$	67,766
Due from affiliates	28,800			—			(28,800		)	—
Inventories	6,151			3,543			—			9,694
Deferred income taxes, net	2,255			1,029			—			3,284
Other current assets	4,918			214			—			5,132
Total current assets	102,495			12,181			(28,800		)	85,876
Property and equipment, net:
Medical equipment, net	216,899			14,135			—			231,034
Property and office equipment, net	30,582			2,669			—			33,251
Total property and equipment, net	247,481			16,804			—			264,285
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	53,442			—			(53,442		)	—
Other intangibles, net	206,622			20,713			—			227,335
Other, primarily deferred financing costs, net	15,352			324			—			15,676
Total assets	$	908,533		$	102,458		$	(82,242	)	$	928,749
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	4,183		$	1,199		$	—		$	5,382
Book overdrafts	3,503			683			—			4,186
Due to affiliates	—			28,800			(28,800		)	—
Accounts payable	23,296			2,630			—			25,926
Accrued compensation	12,131			1,925			—			14,056
Accrued interest	18,878			—			—			18,878
Dividend payable	88			—			—			88
Other accrued expenses	10,403			1,987			—			12,390
Total current liabilities	72,482			37,224			(28,800		)	80,906
Long-term debt, less current portion	702,282			1,596			—			703,878
Pension and other long-term liabilities	13,414			1,720			—			15,134
Payable to Parent	21,835			—			—			21,835
Deferred income taxes, net	61,190			8,196			—			69,386
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(161,488		)	(6,577		)	—			(168,065		)
Accumulated loss in subsidiary	(6,577		)	—			6,577			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	37,330			53,442			(53,442		)	37,330
Noncontrolling interest	—			280			—			280
Total equity	37,330			53,722			(53,442		)	37,610
Total liabilities and equity	$	908,533		$	102,458		$	(82,242	)	$	928,749

15

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

	December 31, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,805		$	7,673		$	—		$	68,478
Due from affiliates	25,138			—			(25,138		)	—
Inventories	5,771			3,097			—			8,868
Deferred income taxes, net	2,581			1,029			—			3,610
Other current assets	4,015			265			—			4,280
Total current assets	98,310			12,064			(25,138		)	85,236
Property and equipment, net:
Medical equipment, net	222,045			14,860			—			236,905
Property and office equipment, net	28,250			1,844			—			30,094
Total property and equipment, net	250,295			16,704			—			266,999
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	54,906			—			(54,906		)	—
Other intangibles, net	211,999			22,392			—			234,391
Other, primarily deferred financing costs, net	14,876			334			—			15,210
Total assets	$	913,527		$	103,930		$	(80,044	)	$	937,413
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	5,038		$	1,185		$	—		$	6,223
Book overdrafts	3,644			261			—			3,905
Due to affiliates	—			25,138			(25,138		)	—
Accounts payable	20,083			5,953			—			26,036
Accrued compensation	15,005			1,951			—			16,956
Accrued interest	13,845			—			—			13,845
Dividend payable	88			—			—			88
Other accrued expenses	9,782			1,859			—			11,641
Total current liabilities	67,485			36,347			(25,138		)	78,694
Long-term debt, less current portion	691,565			1,226			—			692,791
Pension and other long-term liabilities	12,679			1,698			—			14,377
Payable to Parent	21,640			—			—			21,640
Deferred income taxes, net	59,627			9,409			—			69,036
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(139,751		)	(5,113		)	—			(144,864		)
Accumulated loss in subsidiary	(5,113		)	—			5,113			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	60,531			54,906			(54,906		)	60,531
Noncontrolling interest	—			344			—			344
Total equity	60,531			55,250			(54,906		)	60,875
Total liabilities and equity	$	913,527		$	103,930		$	(80,044	)	$	937,413

16

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	64,217		$	14,091		$	—		$	78,308
Technical and professional services	21,912			—			—			21,912
Medical equipment sales and remarketing	6,769			—			—			6,769
Total revenues	92,898			14,091			—			106,989
Cost of Revenue
Cost of medical equipment outsourcing	26,262			7,886			—			34,148
Cost of technical and professional services	16,778			—			—			16,778
Cost of medical equipment sales and remarketing	5,349			—			—			5,349
Medical equipment depreciation	16,944			1,515			—			18,459
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	65,333			9,401			—			74,734
Gross margin	27,565			4,690			—			32,255
Selling, general and administrative	25,795			4,858			—			30,653
Restructuring, acquisition and integration expenses	108			75			—			183
Operating income (loss)	1,662			(243		)	—			1,419
Equity in loss of subsidiary	553			—			(553		)	—
Interest expense	13,375			569			—			13,944
Loss before income taxes and noncontrolling interest	(12,266		)	(812		)	553			(12,525		)
Provision (benefit) for income taxes	442			(259		)	—			183
Consolidated net loss	(12,708		)	(553		)	553			(12,708		)
Net income attributable to noncontrolling interest	—			135			—			135
Net loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553		$	(12,843	)

17

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2012
	Parent		Subsidiary
	Issuer		Guarantor			Consolidating
	UHS		Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	62,793	$	12,288		$	—		$	75,081
Technical and professional services	22,350		—			—			22,350
Medical equipment sales and remarketing	9,264		—			—			9,264
Total revenues	94,407		12,288			—			106,695
Cost of Revenue
Cost of medical equipment outsourcing	12,456		6,756			—			19,212
Cost of technical and professional services	16,885		—			—			16,885
Cost of medical equipment sales and remarketing	7,345		—			—			7,345
Medical equipment depreciation	16,152		1,169			—			17,321
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	52,838		7,925			—			60,763
Gross margin	41,569		4,363			—			45,932
Selling, general and administrative	23,472		5,237			—			28,709
Restructuring, acquisition and integration expenses	126		64			—			190
Operating income (loss)	17,971		(938		)	—			17,033
Equity in loss of subsidiary	1,299		—			(1,299		)	—
Interest expense	14,150		354			—			14,504
Income (loss) before income taxes and noncontrolling interest	2,522		(1,292		)	1,299			2,529
Provision for income taxes	190		7			—			197
Consolidated net income (loss)	2,332		(1,299		)	1,299			2,332
Net income attributable to noncontrolling interest	184		184			(184		)	184
Net income (loss) attributable to Universal Hospital Services, Inc.	$	2,148	$	(1,483	)	$	1,483		$	2,148

18

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	132,903		$	27,402		$	—		$	160,305
Technical and professional services	43,161			—			—			43,161
Medical equipment sales and remarketing	13,883			—			—			13,883
Total revenues	189,947			27,402			—			217,349
Cost of Revenue
Cost of medical equipment outsourcing	52,766			15,254			—			68,020
Cost of technical and professional services	33,809			—			—			33,809
Cost of medical equipment sales and remarketing	11,044			—			—			11,044
Medical equipment depreciation	33,431			2,925			—			36,356
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	131,050			18,179			—			149,229
Gross margin	58,897			9,223			—			68,120
Selling, general and administrative	50,685			9,495			—			60,180
Restructuring, acquisition and integration expenses	(129		)	365			—			236
Operating income (loss)	8,341			(637		)	—			7,704
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Loss on extinguishment of debt	1,853			—			—			1,853
Interest expense	26,750			1,072			—			27,822
Loss before income taxes and noncontrolling interest	(21,411		)	(1,709		)	1,149			(21,971		)
Provision (benefit) for income taxes	1,475			(560		)	—			915
Consolidated net loss	(22,886		)	(1,149		)	1,149			(22,886		)
Net income attributable to noncontrolling interest	—			315			—			315
Net loss attributable to Universal Hospital Services, Inc.	$	(22,886	)	$	(1,464	)	$	1,149		$	(23,201	)

19

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	128,336		$	24,129		$	—		$	152,465
Technical and professional services	42,479			—			—			42,479
Medical equipment sales and remarketing	15,631			—			—			15,631
Total revenues	186,446			24,129			—			210,575
Cost of Revenue
Cost of medical equipment outsourcing	35,231			13,306			—			48,537
Cost of technical and professional services	32,654			—			—			32,654
Cost of medical equipment sales and remarketing	12,099			—			—			12,099
Medical equipment depreciation	31,915			2,310			—			34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	111,899			15,616			—			127,515
Gross margin	74,547			8,513			—			83,060
Selling, general and administrative	47,514			8,853			—			56,367
Restructuring, acquisition and integration expenses	230			64			—			294
Operating income (loss)	26,803			(404		)	—			26,399
Equity in loss of subsidiary	1,208			—			(1,208		)	—
Interest expense	29,302			701			—			30,003
Loss before income taxes and noncontrolling interest	(3,707		)	(1,105		)	1,208			(3,604		)
(Benefit) provision for income taxes	(3,075		)	103			—			(2,972		)
Consolidated net loss	(632		)	(1,208		)	1,208			(632		)
Net income attributable to noncontrolling interest	366			366			(366		)	366
Net loss attributable to Universal Hospital Services, Inc.	$	(998	)	$	(1,574	)	$	1,574		$	(998	)

20

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013											Six Months Ended June 30, 2013
	Parent			Subsidiary								Parent			Subsidiary
	Issuer			Guarantor			Consolidating					Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated			UHS			Surgical Services			Adjustments		Consolidated
Consolidated net loss	$	(12,708	)	$	(553	)	$	553	$	(12,708	)	$	(22,886	)	$	(1,149	)	$	1,149	$	(22,886	)
Total other comprehensive income	—			—			—		—			—			—			—		—
Comprehensive loss	(12,708		)	(553		)	553		(12,708		)	(22,886		)	(1,149		)	1,149		(22,886		)
Comprehensive income attributable to noncontrolling interest	—			135			—		135			—			315			—		315
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553	$	(12,843	)	$	(22,886	)	$	(1,464	)	$	1,149	$	(23,201	)

	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Parent		Subsidiary							Parent			Subsidiary
	Issuer		Guarantor			Consolidating				Issuer			Guarantor			Consolidating
	UHS		Surgical Services			Adjustments		Consolidated		UHS			Surgical Services			Adjustments		Consolidated
Consolidated net income (loss)	$	2,332	$	(1,299	)	$	1,299	$	2,332	$	(632	)	$	(1,208	)	$	1,208	$	(632	)
Other comprehensive income:
Gain on cash flow hedge, net of tax	1,167		—			—		1,167		2,887			—			—		2,887
Total other comprehensive income	1,167		—			—		1,167		2,887			—			—		2,887
Comprehensive income (loss)	3,499		(1,299		)	1,299		3,499		2,255			(1,208		)	1,208		2,255
Comprehensive income attributable to noncontrolling interest	184		—			—		184		366			—					366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$	3,315	$	(1,299	)	$	1,299	$	3,315	$	1,889		$	(1,208	)	$	1,208	$	1,889

21

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(22,886	)	$	(1,149	)	$	1,149		(22,886		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	38,393			3,282			—			41,675
Amortization of intangibles, deferred financing costs and bond premium	6,548			1,679			—			8,227
Non-cash write off of deferred financing cost	1,853			—			—			1,853
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Provision for doubtful accounts	1,128			(95		)	—			1,033
Provision for inventory obsolescence	112			(17		)	—			95
Non-cash share-based compensation expense - net	120			75			—			195
Gain on sales and disposals of equipment	(783		)	(18		)	—			(801		)
Deferred income taxes	1,889			(1,213		)	—			676
Changes in operating assets and liabilities:
Accounts receivable	(694		)	373			—			(321		)
Inventories	(492		)	(429		)	—			(921		)
Other operating assets	(853		)	61			—			(792		)
Accounts payable	(588		)	(877		)	—			(1,465		)
Other operating liabilities	3,515			124			—			3,639
Net cash provided by operating activities	28,411			1,796			—			30,207
Cash flows from investing activities:
Medical equipment purchases	(25,487		)	(2,991		)	—			(28,478		)
Property and office equipment purchases	(4,042		)	(136		)	—			(4,178		)
Proceeds from disposition of property and equipment	1,909			20			—			1,929
Holdback payment related to acquisition	—			(1,655		)	—			(1,655		)
Net cash used in investing activities	(27,620		)	(4,762		)	—			(32,382		)
Cash flows from financing activities:
Due from (to) affiliates	(3,587		)	3,587			—			—
Proceeds under senior secured credit facility	43,300			—			—			43,300
Payments under senior secured credit facility	(36,800		)	—			—			(36,800		)
Payments of principal under capital lease obligations	(3,486		)	(664		)	—			(4,150		)
Payments of floating rate notes	(230,000		)	—			—			(230,000		)
Proceeds from issuance of bonds	234,025			—			—			234,025
Accrued interest received from bondholders	8,620			—			—			8,620
Accrued interest paid to bondholders	(8,620		)	—			—			(8,620		)
Distributions to noncontrolling interests	—			(379		)	—			(379		)
Payment of deferred financing costs	(4,102		)	—			—			(4,102		)
Change in book overdrafts	(141		)	422			—			281
Net cash provided by financing activities	(791		)	2,966			—			2,175
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	$	—		$	—		$	—		$	—

22

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net income (loss)	$	576		$	(1,208	)	$	—	$	(632	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	37,140			2,533			—		39,673
Amortization of intangibles, deferred financing costs and bond premium	7,764			1,548			—		9,312
Provision for doubtful accounts	323			69			—		392
Provision for inventory obsolescence	182			—			—		182
Non-cash share-based compensation expense	2,150			—			—		2,150
Non-cash gain on trade-in of recalled equipment	(14,122		)	—			—		(14,122		)
Loss (gain) on sales and disposals of equipment	(700		)	5			—		(695		)
Deferred income taxes	(666		)	(784		)	—		(1,450		)
Changes in operating assets and liabilities:
Accounts receivable	(7,276		)	(2,096		)	—		(9,372		)
Inventories	(1,145		)	(533		)	—		(1,678		)
Other operating assets	(1,745		)	(256		)	—		(2,001		)
Accounts payable	471			(1,079		)	—		(608		)
Other operating liabilities	(1,992		)	(1,485		)	—		(3,477		)
Net cash provided by operating activities	20,960			(3,286		)	—		17,674
Cash flows from investing activities:
Medical equipment purchases	(30,007		)	(2,075		)	—		(32,082		)
Property and office equipment purchases	(3,450		)	(187		)	—		(3,637		)
Proceeds from disposition of property and equipment	3,935			—			—		3,935
Acquisitions, net of cash acquired	(436		)	(11,009		)	—		(11,445		)
Net cash used in investing activities	(29,958		)	(13,271		)	—		(43,229		)
Cash flows from financing activities:
Due from (to) affiliates	(20,060		)	20,060			—		—
Proceeds under senior secured credit facility	72,000			—			—		72,000
Payments under senior secured credit facility	(39,000		)	—			—		(39,000		)
Payments of principal under capital lease obligations	(2,602		)	(796		)	—		(3,398		)
Payoff of acquired debt	—			(3,163		)	—		(3,163		)
Distributions to noncontrolling interests	—			(373		)	—		(373		)
Proceeds from exercise of parent company stock options	150			—			—		150
Dividend and equity distribution payments	(763		)	—			—		(763		)
Change in book overdrafts	(727		)	—			—		(727		)
Net cash provided by (used in) financing activities	8,998			15,728			—		24,726
Net change in cash and cash equivalents	—			(829		)	—		(829		)
Cash and cash equivalents at the beginning of period	—			1,161			—		1,161
Cash and cash equivalents at the end of period	$	—		$	332		$	—	$	332

23

17.Restructuring

The Company has completed a management reorganization in order to streamline our management ranks and refocus our approach to delivering solutions to customers.  This resulted in severances, relocations, retirements and changed responsibilities across our management ranks resulting in approximately $7.4 million of one-time charges during 2012 and the first two quarters of 2013.

We incurred restructuring expense of $0.2 and $0.3 million during the three and six months ended June 30, 2013, respectively, the majority of which related to severances, recruiting and other related expenses. In addition, we recorded $0.4 million for the cancellation of outstanding stock options for certain terminated employees, which was recorded as reduction to Payable to Parent in the Consolidated Balance Sheets. The restructuring expense impact was recorded under the Corporate and Unallocated segment. As of December 31, 2012, we had $4.8 million of restructuring liability. For the six months ended June 30, 2013, $2.9 million in restructuring charges was paid and the remaining $2.1 million is a liability which is expected to be paid out by the end of the fourth quarter of 2013 and is included in the Other accrued expenses in the Consolidated Balance Sheets.

18.Concentration

One customer accounted for approximately 13% of total revenue for the six months ended June 30, 2013 and 2012.

24

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following should be read in conjunction with the accompanying consolidated financial statements and notes.

BUSINESS OVERVIEW

Our Company

Universal Hospital Services, Inc. (“we”, “our”, “us”, the “Company”, or “UHS”) is a leading nationwide provider of medical equipment management and service solutions to the United States health care industry. Our customers include national, regional and local acute and long-term acute care hospitals, alternate site providers (such as long-term acute care hospitals, skilled nursing facilities, specialty hospitals, nursing homes, and home care providers) and medical equipment manufacturers.  We provide our customers solutions across the spectrum of the equipment life cycle as a result of our position as one of the industry’s largest purchasers and outsourcers of medical equipment. As of June 30, 2013, we owned or managed over 680,000 pieces of medical equipment consisting of over 430,000 owned or managed pieces in our Medical Equipment Outsourcing segment and over 250,000 pieces of customer owned equipment we managed in our Technical and Professional Services segment. Our diverse medical equipment outsourcing customer base includes approximately 4,300 acute care hospitals and approximately 4,300 alternate site providers.  We also have relationships with more than 200 medical equipment manufacturers and most of the nation’s largest group purchasing organizations (“GPOs”) and many of the integrated delivery networks (“IDNs”).  All of our solutions leverage our nationwide network of 83 offices and our more than 70 years of experience managing and servicing all aspects of medical equipment. Our fees are paid directly by our customers rather than by direct reimbursement from third-party payors, such as private insurers, Medicare, or Medicaid.

We commenced operations in 1939, originally incorporated in Minnesota in 1954 and reincorporated in Delaware in 2001.  Historically, we have experienced significant and sustained growth. Our overall growth strategy is to continue to grow organically, through strategic acquisitions, and potential international growth opportunities.

As one of the nation’s leading medical equipment management and service solutions companies, we focus on offering our customers comprehensive solutions that help reduce capital and operating expenses, increase equipment and staff productivity and support improved patient safety and outcomes.

We report our financial results in three segments. Our reporting segments consist of Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales and Remarketing. We evaluate the performance of our reporting segments based on gross margin. The accounting policies of the individual reporting segments are the same as those of the entire company.

Medical Equipment Outsourcing Segment - Manage & Utilize

Our flagship business is our Medical Equipment Outsourcing segment, which accounted for $78.3 million, or approximately 73.2% of our revenues for the quarter ended June 30, 2013 and $160.3 million, or approximately 73.8% of our revenues for the six months ended June 30, 2013. As of June 30, 2013, we owned or managed over 430,000 pieces in our Medical Equipment Outsourcing segment, primarily in the categories of respiratory therapy, newborn care, critical care, patient monitors, patient handling (which includes fall management, bariatrics, beds, stretchers and wheelchairs), pressure area management (such as therapy surfaces), wound therapy, laser and mobile surgical services. Historically, we have purchased and owned directly the equipment used in our medical equipment outsourcing programs.

We have four primary outsourcing programs:

·Supplemental and Peak Needs Usage;

·Customized Outsourcing Agreements;

·Asset360® Equipment Management Program (“Asset360 Program”); and

·Laser and Mobile Surgical Services.

Our primary customer relationships are with local healthcare providers such as hospitals, surgery centers, long-term care providers, and nursing homes.  These organizations may belong to regional or national groups of facilities, and often participate in GPOs. We contract at the local, regional and national level, as requested by our customers. We expect much of our future growth in this segment to be driven by our customers outsourcing more of their medical equipment needs and taking full advantage of our diversified product offering, customized outsourcing agreements and Asset360 Programs.

25

Technical and Professional Services Segment - Plan & Acquire; Maintain & Repair

Our Technical and Professional Services segment accounted for $21.9 million, or approximately 20.5% of our revenues for the quarter ended June 30, 2013 and $43.2 million, or approximately 19.9% of our revenues for the six months ended June 30, 2013. We leverage our over 70 years of experience and our extensive equipment database in repairing and maintaining medical equipment.  We offer a broad range of inspection, preventive maintenance, repair, logistic, equipment demonstration and consulting services through our team of over 350 technicians and professionals located throughout the United States in our nationwide network of offices and managed over 250,000 units of customer owned equipment as of June 30, 2013. In addition, as of June 30, 2013, we serviced over 430,000 units that we own or directly manage. Our Technical and Professional Service offerings provide a complementary alternative for customers that wish to own their medical equipment, but lack the infrastructure, expertise or scale to perform routine maintenance, repair, record-keeping and lifecycle analysis and planning functions.

Medical Equipment Sales and Remarketing Segment - Redeploy & Remarket

Our Medical Equipment Sales and Remarketing segment accounted for $6.8 million, or approximately 6.3% of our revenues for the quarter ended June 30, 2013 and $13.9 million, or approximately 6.3% of our revenues for the six months ended June 30, 2013. This segment includes three distinct business activities:

Medical Equipment Remarketing and Disposal. We believe we are one of the nation’s largest buyers and sellers of pre-owned medical equipment.  We buy, source, remarket and dispose of pre-owned medical equipment for our customers and for our own behalf. We provide our customers with the ability to sell their unneeded medical equipment for immediate cash or credit. We provide fair market value assessments and buy-out proposals on equipment the customer intends to trade in for equipment upgrades so that the customer can evaluate the manufacturers’ or alternative offers.  Additionally, we can assist customers in obtaining lease financing. Customers can also take advantage of our disposal services, where we dispose of equipment that has no remaining economic value in a safe and environmentally appropriate manner.

We remarket pre-owned medical equipment to hospitals, alternate site providers, veterinarians and equipment brokers.  This segment of our business focuses on providing solutions to customers that have capital budget dollars available to purchase equipment. We offer a wide range of equipment including equipment we use in our outsourcing programs and diagnostic, ultrasound and x-ray equipment.

Specialty Medical Equipment Sales and Distribution. We use our national infrastructure to provide sales and distribution services to manufacturers of specialty medical equipment on a limited basis.  Our distribution services include providing demonstration services and product maintenance services.  We act as a distributor for only a limited number of products that are particularly suited to our national distribution network or that fit with our ability to provide technical support.  We currently sell equipment in selected product lines including, but not limited to, respiratory percussion vests, continuous passive motion machines, patient monitors, patient handling equipment and infant security systems.

Sales of Disposables. We offer our customers single use disposable items.  Most of these items are used in connection with our outsourced equipment.  We offer these products as a convenience to customers and to complement our full medical equipment management and service solutions.

RESULTS OF OPERATIONS

The following discussion addresses:

·our financial condition as of June 30, 2013 and

·the results of operations for the three-month and six-month periods ended June 30, 2013 and 2012.

This discussion should be read in conjunction with the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and the Management’s Discussion and Analysis of Financial Condition and Results of Operations section included in our 2012 Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

The following table provides information on the percentages of certain items of selected financial data compared to total revenues for the three-month and six-month periods ended June 30, 2013 and 2012.  The table below also indicates the percentage increase or decrease over the prior comparable period.

26

	Percent to Total Revenues				Percent		Percent to Total Revenues				Percent
	Three Months Ended June 30,				Increase		Six Months Ended June 30,				Increase
	2013		2012		(Decrease)		2013		2012		(Decrease)
Revenue
Medical equipment outsourcing	73.2	%	70.4	%	4.3	%	73.8	%	72.4	%	5.1	%
Technical and professional services	20.5		20.9		(2.0	)	19.9		20.2		1.6
Medical equipment sales and remarketing	6.3		8.7		(26.9	)	6.3		7.4		(11.2	)
Total revenues	100.0	%	100.0	%	0.3		100.0	%	100.0	%	3.2
Cost of Revenue
Cost of medical equipment outsourcing	31.9		18.0		77.7		31.3		23.1		40.1
Cost of technical and professional services	15.7		15.8		(0.6	)	15.6		15.5		3.5
Cost of medical equipment sales and remarketing	5.0		6.9		(27.2	)	5.1		5.7		(8.7	)
Medical equipment depreciation	17.3		16.2		6.6		16.7		16.3		6.2
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	69.9		56.9		23.0		68.7		60.6		17.0
Gross margin	30.1		43.1		(29.8	)	31.3		39.4		(18.0	)
Selling, general and administrative	28.7		26.9		6.8		27.7		26.8		6.8
Restructuring, acquisition and intergration expenses	0.2		0.2		*		0.1		0.1		*
Operating income	1.2		16.0		(91.7	)	3.5		12.5		(70.8	)
Loss on extinguishment of debt	—		—		*		0.9		—		*
Interest expense	13.0		13.6		(3.9	)	12.8		14.2		(7.3	)
Loss before income taxes and noncontrolling interest	(11.8	)	2.4		*		(10.2	)	(1.7	)	*
Provision (benefit) for income taxes	0.2		0.2		*		0.4		(1.4	)	(130.8	)
Consolidated net income (loss)	(12.0	)%	2.2	%	*		(10.6	)%	(0.3	)%	*

*Not meaningful

Consolidated Results of Operations for the three months ended June 30, 2013 compared to the three months ended June 30, 2012

Total Revenue

Total revenue for the three months ended June 30, 2013 was $107.0 million compared to $106.7 million for the three months ended June 30, 2012. The increase was primarily due to our medical equipment outsourcing segment driven by growth in our Asset360 Program of $3.1 million, growth in our laser surgical services business of $1.8 million primarily related to a July 2012 acquisition, offset by a decrease in brokerage and used sales of $2.1 million, a decrease in our peak need rental business primarily due to patient census of $1.1 million and a decrease in other outsourcing revenue of $0.7 million.

Cost of Revenue

Total cost of revenue for the three months ended June 30, 2013 was $74.7 million compared to $60.8 million for the three months ended June 30, 2012, an increase of $13.9 million or 23.0%. The increase was primarily in our medical equipment outsourcing segment due to recall gains in 2012 of $12.8 million, an increase in Asset360 Program costs of $1.2 million, growth in our laser surgical services business, which resulted in additional costs of $1.1 million, offset by a decrease in cost of brokerage and used equipment sales of $1.9 million.

Gross Margin

Total gross margin for the three months ended June 30, 2013 was $32.3 million, or 30.1% of total revenues compared to $45.9 million, or 43.1% of total revenues, for the three months ended June 30, 2012, a decrease of $13.6 million or 29.8%.  The decrease in gross margin as a percent of revenue for the quarter was primarily impacted by recall equipment gains recognized in the prior year.

27

Medical Equipment Outsourcing Segment — Manage & Utilize

(in thousands)

	Three Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	78,308		$	75,081		$	3,227		4.3	%
Cost of revenue	34,148			19,212			14,936			77.7
Medical equipment depreciation	18,459			17,321			1,138			6.6
Gross margin	$	25,701		$	38,548		$	(12,847	)	(33.3	)
Gross margin %	32.8		%	51.3		%

Total revenue in the Medical Equipment Outsourcing segment increased $3.2 million, or 4.3%, to $78.3 million in the second quarter of 2013 as compared to the same period of 2012.  The increase was primarily due to organic growth and the net additions of Asset360 Program of $3.1 million, increased revenues related to our laser surgical services business primarily from a July 2012 acquisition of $1.8 million, partially offset by a decrease in revenue from peak need rental of $1.1 million and other outsourcing revenue of $0.7 million. Many of our Asset360 Program customers utilize more than one of our equipment management program offerings in areas such as infusion, patient handling, and negative pressure wound therapy. As of June 30, 2013, we had 150 such active programs, up from 118 as of December 31, 2012.

Total cost of revenue in the segment increased $14.9 million, or 77.7%, to $34.1 million in the second quarter of 2013 as compared to the same period of 2012.  This increase is attributable to a decrease in recalled equipment gains of $12.8 million due to the completion of the recall program in 2012, an increase in employee-related costs to support growth in revenue in our Asset360 Program of $1.2 million and an increase in employee-related expenses associated with our laser surgical services business of $1.1 million.

Medical equipment depreciation increased $1.1 million, or 6.6%, to $18.5 million in the second quarter of 2013 as compared to the same period of 2012. The increase in medical equipment depreciation was primarily due to the additional depreciation expense related to acquisitions in our laser surgical services business during 2012 along with increased depreciation expense related to infusion pumps and other medical equipment purchased.

Gross margin percentage for the Medical Equipment Outsourcing segment decreased from 51.3% in the second quarter of 2012 to 32.8% in the second quarter of 2013. This decrease was attributable to the recall equipment gains recognized in the prior year of $12.8 million and an increase in depreciation. Gross margin percentage for the second quarter of 2012 excluding recall equipment gains was 34.2%.

Technical and Professional Services Segment — Plan & Acquire; Maintain & Repair

(in thousands)

	Three Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	21,912		$	22,350		$	(438	)	(2.0	)%
Cost of revenue	16,778			16,885			(107		)	(0.6	)
Gross margin	$	5,134		$	5,465		$	(331	)	(6.1	)
Gross margin %	23.4		%	24.5		%

Total revenue in the Technical and Professional Services segment decreased $0.4 million, or 2.0%, to $21.9 million in the second quarter of 2013 as compared to the same period of 2012. The decrease was primarily due to a decrease in our BioMed360® Equipment Management Programs (“BioMed360 Programs”) of $0.7 million, partially offset by an increase in manufacturing services revenue of $0.3 million.

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Total cost of revenue in the segment decreased $0.1 million, or 0.6%, to $16.8 million in the second quarter of 2013 as compared to the same period of 2012.

Gross margin percentage for the Technical and Professional Services segment decreased from 24.5% for the second quarter of 2012 to 23.4% for the same period of 2013. Gross margin percentage will fluctuate based on the variability of third-party vendor expenses in our BioMed360 Program and supplemental service programs.

Medical Equipment Sales and Remarketing Segment — Redeploy & Remarket

(in thousands)

	Three Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	6,769		$	9,264		$	(2,495	)	(26.9	)%
Cost of revenue	5,349			7,345			(1,996		)	(27.2	)
Gross margin	$	1,420		$	1,919		$	(499	)	(26.0	)
Gross margin %	21.0		%	20.7		%

Total revenue in the Medical Equipment Sales and Remarketing segment decreased $2.5 million, or 26.9%, to $6.8 million in the second quarter of 2013 as compared to the same period of 2012. The decrease was primarily driven by a decrease in brokerage and used sales of $2.1 million.

Total cost of revenue in the segment decreased $2.0 million, or 27.2%, to $5.3 million in the second quarter of 2013 as compared to the same period of 2012. The decrease was primarily due to a decrease in costs related to brokerage and used sales of $1.9 million.

Gross margin percentage for the Medical Equipment Sales and Remarketing segment increased from 20.7% in the second quarter of 2012 to 21.0% for the same period of 2013. We expect margins and activity in this segment to fluctuate based on the transactional nature and product mix of the business, where new equipment sales generally yield a lower margin than used equipment.

Selling, General and Administrative, Restructuring, Acqusition and Integration Expenses and Interest Expense

(in thousands)

	Three Months Ended
	June 30,
	2013		2012		Change			% Change
Selling, general and administrative	$	30,653	$	28,709	$	1,944		6.8	%
Restructuring, acquisition and integration expenses	183		190		(7		)	*
Interest expense	13,944		14,504		(560		)	(3.9	)

*Not meaningful

Selling, General and Administrative

Selling, general and administrative expense increased $1.9 million, or 6.8%, to $30.7 million for the second quarter of 2013 as compared to the same period of 2012.  The increase was primarily due to an increase in outside consulting services of $1.6 million primarily due to an external review of our operations and business opportunities and an increase in employee-related salary, benefit and incentives of $1.0 million primarily to support growth in the Asset360 Program. The increase was partially offset by a decrease in stock option expense of $0.7 million due to the majority of shares becoming fully vested by the end of 2012. Selling, general and administrative expense as a percentage of total revenue was 28.7% and 26.9% for the quarter ended June 30, 2013 and 2012, respectively.

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Interest Expense

Interest expense decreased $0.6 million to $13.9 million for the second quarter of 2013 as compared to the same period of 2012. This decrease was mainly attributable to lower interest rates in the second quarter of 2013 compared to the same period of 2012.

Income Taxes

Income taxes were an expense of $0.2 and $0.2 million for the three months ended June 30, 2013 and 2012, respectively. The tax expense for the three months ended June 30, 2013 primarily relates to state minimum fees and amortization of indefinite-life intangibles. The Company will continue to incur deferred tax expense in the future as tax amortization occurs. The expected tax benefit from operating loss during the three months ended June 30, 2013 was offset by the recording of additional valuation allowance. Our January 3, 2012 acquisition resulted in the recording of deferred tax liabilities on the opening balance sheet due to higher book than tax basis for fixed assets and amortizable intangible assets. This discrete event had the one-time effect of reducing our valuation allowance by approximately $3.4 million on that date, though this amount was offset by approximately $2.5 million of additional valuation allowance resulting from year-to-date losses. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

Consolidated Net Loss

Consolidated net loss increased $15.0 million to $12.7 million in the second quarter of 2013 as compared to the same period of 2012.  Net loss was impacted primarily by the recall equipment gains in 2012 of $12.8 million, higher selling, general and administrative expenses of $1.9 million and a loss on extinguishment of debt in 2013 of $1.9 million.

Consolidated Results of Operations for the six months ended June 30, 2013 compared to the six months ended June 30, 2012

Total Revenue

Total revenue for the six months ended June 30, 2013 was $217.3 million compared with $210.6 million for the six months ended June 30, 2012, an increase of $6.7 million or 3.2%.  The increase was primarily due to additional revenue in our medical equipment outsourcing segment related to growth in our Asset360 Programs of $5.5 million and growth in our laser surgical services business of $3.3 million primarily from a July 2012 acquisition. The increase was partially offset by a decrease in brokerage and used sales of $2.1 million.

Cost of Revenue

Total cost of revenue for the six months ended June 30, 2013 was $149.2 million compared to $127.5 million for the six months ended June 30, 2012, an increase of $21.7 million or 17.0%. The increase was primarily in our medical equipment outsourcing segment due to recall gains in 2012 of $15.4 million, an increase in medical equipment depreciation of $2.1 million, an increase in Asset360 Program costs of $2.0 million and growth in our laser surgical services business, which resulted in additional costs of $1.9 million. The increase was partially offset by a decrease in cost of brokerage and used equipment sales of $1.5 million.

Gross Margin

Total gross margin for the six months ended June 30, 2013 was $68.1 million, or 31.3% of total revenues compared to $83.1 million, or 39.4% of total revenues, for the six months ended June 30, 2012, a decrease of $15.0 million or 18.0%.  The decrease in gross margin as a percent of revenue for the quarter was primarily impacted by recall equipment gains recognized in the prior year.

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Medical Equipment Outsourcing Segment — Manage & Utilize

(in thousands)

	Six Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	160,305		$	152,465		$	7,840		5.1	%
Cost of revenue	68,020			48,537			19,483			40.1
Medical equipment depreciation	36,356			34,225			2,131			6.2
Gross margin	$	55,929		$	69,703		$	(13,774	)	(19.8	)
Gross margin %	34.9		%	45.7		%

Total revenue in the Medical Equipment Outsourcing segment increased $7.8 million, or 5.1%, to $160.3 million in the first six months of 2013 as compared to the same period of 2012.  The increase was primarily due to organic growth and the net additions of Asset360 Program of $5.5 million and increased revenue of $3.3 million related to our laser surgical services business, partially offset by a decrease in other outsourcing revenue of $1.1 million. Many of our Asset360 Program customers utilize more than one of our equipment management program offerings in areas such as infusion, patient handling, and negative pressure wound therapy. As of June 30, 2013, we had 150 such active programs, up from 118 as of December 31, 2012.

Total cost of revenue in the segment increased $19.5 million, or 40.1%, to $68.0 million in the first six months of 2013 as compared to the same period of 2012.  This increase is attributable to the decrease in recalled equipment gains of $15.4 million due to the completion of the recall program in 2012, an increase in employee-related costs to support growth in our Asset360 Programs of $2.0 million and an increase in employee-related expenses associated with our laser surgical services business of $1.9 million.

Medical equipment depreciation increased $2.1 million, or 6.2%, to $36.4 million in the first six months of 2013 as compared to the same period of 2012. The increase in medical equipment depreciation was primarily due to the additional depreciation expense related to acquisitions in our laser surgical services business during 2012 along with increased depreciation expense related to infusion pumps and other medical equipment purchased.

Gross margin percentage for the Medical Equipment Outsourcing segment decreased from 45.7% in the first six months of 2012 to 34.9% for the same period of 2013. This decrease was attributable to the recall equipment gains recognized in the prior year of $15.4 million and an increase in depreciation expense. Gross margin percentage for the first six months of 2012 excluding recall equipment gains was 35.6%.

Technical and Professional Services Segment — Plan & Acquire; Maintain & Repair

(in thousands)

	Six Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	43,161		$	42,479		$	682		1.6	%
Cost of revenue	33,809			32,654			1,155			3.5
Gross margin	$	9,352		$	9,825		$	(473	)	(4.8	)
Gross margin %	21.7		%	23.1		%

Total revenue in the Technical and Professional Services segment increased $0.7 million, or 1.6%, to $43.2 million in the first six months of 2013 as compared to the same period of 2012. The increase was primarily due to growth in our BioMed360 Programs of $0.7 million.

Total cost of revenue in the segment increased $1.2 million, or 3.5%, to $33.8 million in the first six months of 2013 as compared to the same period of 2012. The increase is primarily attributable to the increased activity in our other provider services cost of $0.9 million.

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Gross margin percentage for the Technical and Professional Services segment decreased from 23.1% for the first six months of 2012 to 21.7% for the same period of 2013. Gross margin percentage will fluctuate based on the variability of third-party vendor expenses in our BioMed360 Program and supplemental service programs.

Medical Equipment Sales and Remarketing Segment — Redeploy & Remarket

(in thousands)

	Six Months Ended
	June 30,
	2013			2012			Change			% Change
Total revenue	$	13,883		$	15,631		$	(1,748	)	(11.2	)%
Cost of revenue	11,044			12,099			(1,055		)	(8.7	)
Gross margin	$	2,839		$	3,532		$	(693	)	(19.6	)
Gross margin %	20.4		%	22.6		%

Total revenue in the Medical Equipment Sales and Remarketing segment decreased $1.7 million, or 11.2%, to $13.9 million in the first six months of 2013 as compared to the same period of 2012. The decrease was primarily driven by a decrease in brokerage and used sales of $2.1 million, partially offset by an increase in infant security system installation revenue of $0.9 million.

Total cost of revenue in the segment decreased $1.1 million, or 8.7%, to $11.0 million in the first six months of 2013 as compared to the same period of 2012. The decrease was the result of a decrease in cost of brokerage and used sales of $1.5 million, partially offset by an increase in infant security systems installation cost of $0.7 million.

Gross margin percentage for the Medical Equipment Sales and Remarketing segment decreased from 22.6% in the first six months of 2012 to 20.4% for the same period of 2013. We expect margins and activity in this segment to fluctuate based on the transactional nature and product mix of the business, where new equipment sales generally yield a lower margin than used equipment.

Selling, General and Administrative, Restructuring, Acqusition and Integration Expenses, Loss on Entinguishment of Debt and Interest Expense

(in thousands)

	Six Months Ended
	June 30,
	2013		2012		Change			% Change
Selling, general and administrative	$	60,180	$	56,367	$	3,813		6.8	%
Restructuring, acquisition and integration expenses	236		294		(58		)	*
Loss on extinguishment of debt	1,853		—		1,853			*
Interest expense	27,822		30,003		(2,181		)	(7.3	)

*Not meaningful

Selling, General and Administrative

Selling, general and administrative expense increased $3.8 million, or 6.8%, to $60.2 million for the first six months of 2013 as compared to the same period of 2012.  The increase was primarily due to an increase in outside consulting services of $2.4 million primarily due to an external review of our operations and business opportunities, an increase in employee-related salary, benefit and incentives of $2.5 million primarily to support growth in the Asset360 Program, an increase in bad debt expense of $0.7 million, and a gain on sale of vehicles of $0.5 million in 2012. The increase was partially offset by a decrease in stock option expense of $1.5 million due to an increase in forfeited shares and the majority of shares became fully vested by the end of 2012, as well as a decrease in amortization expense of $0.9 million due to certain intangible assets that were fully amortized during 2012. Selling, general and administrative expense as a percentage of total revenue was 27.7% and 26.8% for the six month periods ended June 30, 2013 and 2012, respectively.

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Loss on Extinguishment of Debt

For the six months ended 2013, we wrote off $1.9 million of unamortized deferred financing costs related to the redemption of our floating rate notes due 2015.

Interest Expense

Interest expense decreased $2.2 million to $27.8 million for the first six months of 2013 as compared to the same period of 2012. This decrease was mainly attributable to lower interest rates in the first six months of 2013 compared to the same period of 2012.

Income Taxes

Income taxes were an expense of $0.9 million and a benefit of $3.0 million for the six months ended June 30, 2013 and 2012, respectively. The tax expense for the six months ended June 30, 2013 primarily relates to a discrete item to record a deferred tax liability for cumulative adjustments in connection with the tax amortization of indefinite-life goodwill and state minimum fees. The Company will continue to incur deferred tax expense in the future as tax amortization occurs. The expected tax benefit from operating loss during the six months ended June 30, 2013 was offset by the recording of additional valuation allowance. Our January 3, 2012 acquisition resulted in the recording of deferred tax liabilities on the opening balance sheet due to higher book than tax basis for fixed assets and amortizable intangible assets. This discrete event had the one-time effect of reducing our valuation allowance by approximately $3.4 million on that date, though this amount was offset by approximately $2.5 million of additional valuation allowance resulting from year-to-date losses. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

Consolidated Net Loss

Consolidated net loss increased $22.3 million to $22.9 million in the first six months of 2013 as compared to the same period of 2012.  Net loss was impacted primarily by the recalled equipment gains in 2012 of $15.4 million, higher selling, general and administrative expense of $3.8 million and loss on extinguishment of debt in 2013 of $1.9 million.

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $54.3 and $73.6 million for the six months ended June 30, 2013 and 2012, respectively.  EBITDA for the six months ended June 30, 2013, was impacted by a decrease of $15.4 million in recalled equipment gains as a result of the completion of the recall program and an increase in selling, general and administrative expense.

In addition to using EBITDA internally as a measure of operational performance, we disclose it externally to assist analysts, investors and lenders in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. EBITDA, however, is not a measure of financial performance under GAAP and should not be considered as an alternative to, or more meaningful than, net income as a measure of operating performance or to cash flows from operating, investing or financing activities or as a measure of liquidity.  Since EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying interpretations and calculations, EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA does not represent an amount of funds that is available for management’s discretionary use. A reconciliation of net loss attributable to UHS to EBITDA is included below:

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	Six Months Ended
	June 30,
(in thousands)	2013			2012
Net loss attributable to Universal Hospital Services, Inc.	$	(23,201	)	$	(998	)
Interest expense	27,822			30,003
Provision (benefit) for income taxes	915			(2,972		)
Depreciation and amortization	48,731			47,607
EBITDA	$	54,267		$	73,640
Other Financial Data:
Net cash provided by operating activities	$	30,207		$	17,674
Net cash used in investing activities	(32,382		)	(43,229		)
Net cash provided by financing activities	2,175			24,726
Other Operating Data (as of end of period):
Medical equipment (approximate number of owned outsourcing units)	274,000			265,000
District offices	83			83
Number of outsourcing hospital customers	4,300			4,300
Number of total outsourcing customers	8,700			8,725

SEASONALITY

Quarterly operating results are typically affected by seasonal factors.  Historically, our first and fourth quarters are the strongest, reflecting increased customer utilization during the fall and winter months.

LIQUIDITY AND CAPITAL RESOURCES

2012 Notes — 7.625%. On August 7, 2012, we issued $425.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Original Notes”) under an indenture dated as of August 7, 2012 (the “2012 Indenture”). On February 12, 2013, we issued $220.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Add-on Notes”, and along with the Original Notes, the “2012 Notes”), as “additional notes” pursuant to the 2012 Indenture. The 2012 Notes mature on August 15, 2020.

The 2012 Indenture provides that the 2012 Notes are our second lien senior secured obligations and are fully and unconditionally guaranteed on a second lien senior secured basis by our existing and certain of our future 100%-owned domestic subsidiaries.

Floating Rate Notes.  On May 31, 2007, we issued $230.0 million aggregate principal amount of floating rate notes (the “Floating Rate Notes”) due 2015.  Interest on the Floating Rate Notes was reset for each semi-annual interest period and was calculated at the current LIBOR rate plus 3.375%.

On March 14, 2013, we redeemed all of our outstanding Floating Rate Notes. The proceeds of the Add-on Notes were used to fund the redemption.

Our principal sources of liquidity are expected to be cash flows from operating activities and borrowings under our senior secured credit facility, which provides for loans in an amount of up to $235.0 million, subject to our borrowing base. See Note 9, Long-Term Debt for details related to our senior secured credit facility. It is anticipated that our principal uses of liquidity will be to fund capital expenditures related to purchases of medical equipment, provide working capital, meet debt service requirements and finance our strategic plans.

We require substantial cash to operate our medical equipment outsourcing programs and service our debt.  Our outsourcing programs require us to invest a significant amount of cash in medical equipment purchases.  To the extent that such expenditures cannot be funded from our operating cash flow, borrowing under our senior secured credit facility or other financing sources, we may not be able to conduct our business or grow as currently planned.

34

If we are unable to generate sufficient cash flow from operations in order to service our debt, we will be forced to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital.  This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.  If we are unable to repay our debt at maturity, we may have to obtain alternative financing, which may not be available to us.

Net cash provided by operating activities was $30.2 and $17.7 million for the six months ended June 30, 2013 and 2012, respectively. Net cash provided by operating activities increased during the six months ended June 30, 2013 compared to the same period of 2012 due to increased collections on accounts receivable, debt refinancing shifting the interest cycle from June to August resulting in lower interest payments during the first six months of 2013 and a decrease in accrued interest due to lower interest rates.

Net cash used in investing activities was $32.4 and $43.2 million for the six months ended June 30, 2013 and 2012, respectively.  The change in net cash used in investing activities was primarily the result of our January 3, 2012 acquisition of a surgical laser equipment service provider.

Net cash provided by financing activities was $2.2 and $24.7 million for the six months ended June 30, 2013 and 2012, respectively.  During the six months ended June 30, 2013, the decrease in net cash provided by financing activities was primarily due to less borrowing needs due to the increase in cash provided by operations and the decrease in cash used in investing activities.

Our cash balances were $0 million as of June 30, 2013 compared to $0.3 million as of June 30, 2012.

Based on the level of operating performance expected in 2013, we believe our cash from operations and additional borrowings under our senior secured credit facility, will meet our liquidity needs for the foreseeable future, exclusive of any borrowings that we may make to finance potential acquisitions.  However, if during that period or thereafter we are not successful in generating sufficient cash flows from operations or in raising additional capital when required in sufficient amounts and on terms acceptable to us, our business could be adversely affected.  As of June 30, 2013, we had $159.2 million of availability under the senior secured credit facility based on a borrowing base of $197.9 million less borrowings of $34.5 million and after giving effect to $4.2 million used for letters of credit.  As of June 30, 2012, we had $142.5 million of availability under the senior secured credit facility based on a borrowing base of $195.0 million less borrowings of $47.5 million and after giving effect to $5.0 million used for letters of credit.

Our levels of borrowing are further restricted by the financial covenants set forth in our senior secured credit facility agreement and the 2012 Indenture governing our 2012 Notes, as described in Note 9, Long-Term Debt.

The Company was in compliance with all financial covenants for all periods presented.

RECENT ACCOUNTING PRONOUNCEMENT

Standard Adopted

In July 2012, the FASB issued an amendment to indefinite-lived intangible assets impairment. This amendment permits an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The results of the qualitative assessment would be used as a basis in determining whether it is necessary to perform the two-step quantitative impairment test. If the qualitative assessment supports the conclusion that it is more likely than not that the fair value of the asset exceeds its carrying amount, the entity would not need to perform the two-step quantitative impairment test. The objective of this update is to reduce the cost and complexity of performing impairment tests for indefinite-lived intangible assets other than goodwill, and to improve consistency in impairment testing among long-lived asset categories. The adoption of this amendment did not have a material effect on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02 Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”) which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. ASU 2013-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material effect on our consolidated financial statements.

35

SAFE HARBOR STATEMENT

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: We believe statements in this Quarterly Report on Form 10-Q looking forward in time involve risks and uncertainties.  The following factors, among others, could adversely affect our business, operations and financial condition, causing our actual results to differ materially from those expressed in any forward-looking statements:

·risk associated with increased expenses related to our pension plan;

·our substantial indebtedness could adversely affect our financial health;

·risks associated with our ability to fund our significant cash needs;

·our ability to obtain funding on acceptable terms;

·revenue generation related to decreases in patient census or services;

·risks associated with another economic downturn, including potential effects on the credit markets;

·the effect of another global economic downturn on our customers and suppliers;

·risks associated with supplier concentration;

·health care providers willingness to alter their procurement of medical equipment;

·risks associated with competition;

·risk associated with bundling of products and services by competitors;

·risks associated with our lack of long-term commitments from some customers;

·consolidation in the health care industry;

·our ability to successfully identify and manage our acquisitions;

·uncertainties regarding the impact of U.S. healthcare reform on our business;

·changes in third-party payor reimbursement for health care items and services;

·our inability to attract or retain skilled employees and the loss of any of our key personnel;

·our ability to maintain contracts with existing customers and enter into new contracts with our customers;

·risks associated with cash flow fluctuations;

·risks associated with credit risks posed by our home care provider and nursing home customers;

·our customers being subject to extensive government regulation and our exposure to potential costs and fines associated with such regulations;

·risks associated with new healthcare laws and regulation on our business;

·the effect of expenditures related to equipment recalls or obsolescence;

·liabilities for legal claims associated with medical equipment that we outsource and service;

·risks related to increased costs that cannot be passed on to our customers;

·risks associated with the failure of our management information systems;

·inherent limitations in our internal control systems over financial reporting;

·conflicts of interest between our principal equity holder and our other security holders; and

·the risk factors as set forth in Item 1A of Part II of this Quarterly Report on Form 10-Q.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk arising from adverse changes in interest rates, fuel costs, and pension valuation.  We do not enter into derivatives or other financial instruments for speculative purposes.

Interest Rates

We use both fixed and variable rate debt as sources of financing.  At June 30, 2013, we had approximately $709.3 million of total debt outstanding of which $34.5 million was bearing interest at variable rates. Based on variable debt levels at June 30, 2013, a 1.0 percentage point change in interest rates on variable rate debt would have resulted in annual interest expense fluctuating by approximately $0.3 million.

Fuel Costs

We are also exposed to market risks related to changes in the price of gasoline used to fuel our fleet of delivery and sales vehicles.  A hypothetical 10% increase in the second quarter of 2013 average price of unleaded gasoline, assuming gasoline

36

usage levels for the quarter ended June 30, 2013, would lead to an annual increase in fuel costs of approximately $0.6 million.

Pension

Our pension plan assets, which were approximately $17.0 million at December 31, 2012, are subject to volatility that can be caused by fluctuations in general economic conditions. Continued market volatility and disruption could cause further declines in asset values, and if this occurs, we may need to make additional pension plan contributions and our pension expense in future years may increase. A hypothetical 10% decrease in the fair value of plan assets at December 31, 2012 would lead to a decrease in the funded status of the plan of approximately $1.7 million.

Other Market Risk

As of June 30, 2013, we have no other material exposure to market risk.

Item 4.  Controls and Procedures

(a)           Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2013.

(b)           Changes in internal control over financial reporting

There were no changes that occurred during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

The Company, from time to time, may become involved in litigation arising out of operations in the normal course of business. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. As of June 30, 2013, we were not a party to any pending legal proceedings the adverse outcome of which could reasonably be expected to have a material adverse effect on our operating results, financial position or cash flows. See the additional information in Item 1 of Part I, Note 10, Commitments and Contingencies.

Item 1A.  Risk Factors

Our business is subject to various risks and uncertainties.  Any of the risks discussed elsewhere in this Quarterly Report on Form 10-Q or our other filings with the Securities and Exchange Commission, including the risk factors set forth in our 2012 Annual Report on Form 10-K, could materially adversely affect our business, financial condition or results of operations.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.   Defaults upon Senior Securities

None.

Item 4.   Mine Safety Disclosures

Not applicable.

37

Item 5.   Other Information

None

Item 6.   Exhibits

Number	Description
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial Statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2013, formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

38

SIGNATURES

Pursuant to the requirements 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.

Date: August 12, 2013
	Universal Hospital Services, Inc.
	By	/s/ Gary D. Blackford
	Gary D. Blackford,
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer and Duly Authorized Officer)
	By	/s/ James B. Pekarek
	James B. Pekarek,
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

39

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gary D. Blackford, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Universal Hospital Services, Inc. (the “registrant”);

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;

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;

4.The registrant’s other certifying officer(s) 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:

(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;

(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;

(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

(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

5.The registrant’s other certifying officer(s) 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 functions):

(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

(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: August 12, 2013	/s/ Gary D. Blackford
	Gary D. Blackford
	Chairman of the Board and
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James B. Pekarek, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Universal Hospital Services, Inc. (the “registrant”);

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;

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;

4.The registrant’s other certifying officer(s) 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:

(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;

(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;

(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

(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

5.The registrant’s other certifying officer(s) 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 functions):

(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

(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: August 12, 2013	/s/ James B. Pekarek
	James B. Pekarek
	Executive Vice President and
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Hospital Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), I, Gary D. Blackford, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 12, 2013

/s/ Gary D. Blackford

Gary D. Blackford

Chairman of the Board and

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Hospital Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), I, James B. Pekarek, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 12, 2013

/s/ James B. Pekarek

James B. Pekarek

Executive Vice President and

Chief Financial Officer

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies

Commitments and Contingencies

10. Commitments and Contingencies

The Company, in the ordinary course of business, could be subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material effect on the financial position, results of operations or cash flows of the Company.

As of June 30, 2013, we were not a party to any pending legal proceedings the adverse outcome of which could reasonably be expected to have a material effect on our operating results, financial position or cash flows.

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Consolidating Financial Statements (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidating Financial Statements
Consolidated net income (loss)	$ (12,708)	$ 2,332	$ (22,886)	$ (632)
Other comprehensive income:
Gain on cash flow hedge, net of tax		1,167		2,887
Total other comprehensive income		1,167		2,887
Comprehensive income (loss)	(12,708)	3,499	(22,886)	2,255
Comprehensive income attributable to noncontrolling interest	135	184	315	366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	(12,843)	3,315	(23,201)	1,889
Parent Issuer UHS
Consolidating Financial Statements
Consolidated net income (loss)	(12,708)	2,332	(22,886)	(632)
Other comprehensive income:
Gain on cash flow hedge, net of tax		1,167		2,887
Total other comprehensive income		1,167		2,887
Comprehensive income (loss)	(12,708)	3,499	(22,886)	2,255
Comprehensive income attributable to noncontrolling interest		184		366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	(12,708)	3,315	(22,886)	1,889
Subsidiary Guarantor Surgical Services
Consolidating Financial Statements
Consolidated net income (loss)	(553)	(1,299)	(1,149)	(1,208)
Other comprehensive income:
Comprehensive income (loss)	(553)	(1,299)	(1,149)	(1,208)
Comprehensive income attributable to noncontrolling interest	135		315
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	(688)	(1,299)	(1,464)	(1,208)
Consolidating Adjustments
Consolidating Financial Statements
Consolidated net income (loss)	553	1,299	1,149	1,208
Other comprehensive income:
Comprehensive income (loss)	553	1,299	1,149	1,208
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$ 553	$ 1,299	$ 1,149	$ 1,208

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Consolidated Statements of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue
Medical equipment outsourcing	$ 78,308	$ 75,081	$ 160,305	$ 152,465
Technical and professional services	21,912	22,350	43,161	42,479
Medical equipment sales and remarketing	6,769	9,264	13,883	15,631
Total revenues	106,989	106,695	217,349	210,575
Cost of Revenue
Cost of medical equipment outsourcing	34,148	19,212	68,020	48,537
Cost of technical and professional services	16,778	16,885	33,809	32,654
Cost of medical equipment sales and remarketing	5,349	7,345	11,044	12,099
Medical equipment depreciation	18,459	17,321	36,356	34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	74,734	60,763	149,229	127,515
Gross margin	32,255	45,932	68,120	83,060
Selling, general and administrative	30,653	28,709	60,180	56,367
Restructuring, acquisition and integration expenses	183	190	236	294
Operating income	1,419	17,033	7,704	26,399
Loss on extinguishment of debt			1,853
Interest expense	13,944	14,504	27,822	30,003
Income (loss) before income taxes and noncontrolling interest	(12,525)	2,529	(21,971)	(3,604)
Provision (benefit) for income taxes	183	197	915	(2,972)
Consolidated net income (loss)	(12,708)	2,332	(22,886)	(632)
Net income attributable to noncontrolling interest	135	184	315	366
Net income (loss) attributable to Universal Hospital Services, Inc.	$ (12,843)	$ 2,148	$ (23,201)	$ (998)

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Acquisitions

6 Months Ended

Jun. 30, 2013

Acquisitions

Acquisitions

3. Acquisitions

On July 9, 2012, we completed the acquisition of certain assets of a surgical laser equipment service provider for total consideration of approximately $5.3 million.  The consideration consists of $2.6 million of cash paid at closing, $1.0 million of debt assumed that was paid off upon closing, and approximately $1.7 million in contingent earn-out payment expected to be paid in the second half of 2013.

On March 31, 2012, we completed the acquisition of certain assets of the southern California equipment rental division of a medical equipment manufacturer. The total purchase price was approximately $0.8 million, including approximately $0.4 million in contingent consideration which may be paid over four years based on future revenues. Assets acquired consisted of medical equipment of $0.4 million and customer relationship intangibles of $0.3 million.

On January 3, 2012, we completed the acquisition of all of the outstanding stock of a Florida-based surgical laser equipment service provider for total consideration of approximately $16.1 million. The total consideration consists of $11.0 million of cash paid at closing, $3.2 million of debt assumed that was paid off upon closing, and $1.9 million of holdback amounts, of which $0.2 million was paid in 2012 and $1.7 million was paid in January 2013.

Acquisitions completed during the year ended 2012 are not material individually or in the aggregate.

All acquisitions were funded primarily from our existing senior secured credit facility.

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Restructuring

6 Months Ended

Jun. 30, 2013

Restructuring

Restructuring

17. Restructuring

The Company has completed a management reorganization in order to streamline our management ranks and refocus our approach to delivering solutions to customers.  This resulted in severances, relocations, retirements and changed responsibilities across our management ranks resulting in approximately $7.4 million of one-time charges during 2012 and the first two quarters of 2013.

We incurred restructuring expense of $0.2 and $0.3 million during the three and six months ended June 30, 2013, respectively, the majority of which related to severances, recruiting and other related expenses. In addition, we recorded $0.4 million for the cancellation of outstanding stock options for certain terminated employees, which was recorded as reduction to Payable to Parent in the Consolidated Balance Sheets. The restructuring expense impact was recorded under the Corporate and Unallocated segment. As of December 31, 2012, we had $4.8 million of restructuring liability. For the six months ended June 30, 2013, $2.9 million in restructuring charges was paid and the remaining $2.1 million is a liability which is expected to be paid out by the end of the fourth quarter of 2013 and is included in the Other accrued expenses in the Consolidated Balance Sheets.

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Concentration (Details) (Customer concentration)	6 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012 item
Concentration
Number of major customers	1	1
Total revenue
Concentration
Concentration risk (as a percent)	13.00%	13.00%

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Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions

Related Party Transactions

11. Related Party Transactions

Management Agreement

On May 31, 2007, we and Irving Place Capital Merchant Manager III, L.P. (“IPC”) entered into a professional services agreement pursuant to which IPC provides general advisory and management services to us with respect to financial and operating matters.  IPC is a principal owner of Parent, and the following members of our board of directors are associated with IPC:  Michael Feiner, Robert Juneja, and Bret Bowerman. In addition, David Crane, a director, provides consulting services to IPC. The professional services agreement requires us to pay an annual fee for ongoing advisory and management services equal to the greater of $0.5 million or 0.75% of our Adjusted EBITDA (as defined in the professional services agreement) for the immediately preceding fiscal year, payable in quarterly installments. The professional services agreement provides that IPC will be reimbursed for its reasonable out-of-pocket expenses in connection with certain activities undertaken pursuant to the professional services agreement and will be indemnified for liabilities incurred in connection with its role under the professional services agreement, other than for liabilities resulting from its gross negligence or willful misconduct. The term of the professional services agreement commenced on May 31, 2007 and will remain in effect unless and until either party notifies the other of its desire to terminate, we are sold to a third-party purchaser or we consummate a qualified initial public offering, as defined in the professional services agreement. Total professional services fees incurred to IPC were $0.3 and $0.2 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.6 and $0.5 million for the six month periods ended June 30, 2013 and 2012, respectively.

Business Relationship

In the ordinary course of business, we entered into an operating lease for our Minneapolis, Minnesota district office with Ryan Fund V, LLC (“Ryan”), which began on May 1, 2007.  One member of our board of directors is also a limited partner in Ryan which has ownership interest in an LLC that owns the property. Total rent expense to Ryan were $0.1 and $0.1 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.2 and $0.2 million for the six month periods ended June 30, 2013 and 2012, respectively.

In the ordinary course of business, we entered into engagement letters with CTPartners, LLC (“CTPartners”) in September of 2012 and January of 2013 to conduct searches for certain executive positions.  One member of our board of directors, Michael Feiner, is also a director of CTPartners. Total fees incurred to CTPartners were $0.1 and $0 million for the three month periods ended June 30, 2013 and 2012, respectively and $0.2 and $0.1 million for the six month periods ended June 30, 2013 and 2012, respectively.

The Company believes that the aforementioned arrangements and relationships were provided in the ordinary course of business.

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Pension Plan (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Components of net periodic pension costs
Interest cost	$ 260,000	$ 265,000	$ 520,000	$ 538,000
Expected return on plan assets	(291,000)	(320,000)	(582,000)	(639,000)
Recognized net actuarial loss	222,000	166,000	458,000	343,000
Net periodic cost	191,000	111,000	396,000	242,000
Required Contributions made	$ 200,000	$ 400,000	$ 200,000	$ 600,000

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Goodwill and Other Intangible Assets (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended													12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Customer Relationships	Dec. 31, 2012 Customer Relationships	Jun. 30, 2013 Supply agreement	Dec. 31, 2012 Supply agreement	Jun. 30, 2013 Technology databases	Dec. 31, 2012 Technology databases	Jun. 30, 2013 Non-compete agreements	Dec. 31, 2012 Non-compete agreements	Jun. 30, 2013 Favorable lease agreements	Dec. 31, 2012 Favorable lease agreements	Jun. 30, 2013 Trade Names	Dec. 31, 2012 Trade Names	Dec. 31, 2012 Medical Equipment Outsourcing	Jun. 30, 2013 Medical Equipment Outsourcing	Jun. 30, 2013 Technical and Professional Services	Dec. 31, 2012 Technical and Professional Services	Dec. 31, 2011 Technical and Professional Services	Jun. 30, 2013 Sales and Remarketing	Dec. 31, 2012 Sales and Remarketing	Dec. 31, 2011 Sales and Remarketing
Goodwill
Balance at the beginning of the period			$ 335,577,000	$ 325,911,000	$ 325,911,000													$ 251,653,000	$ 261,319,000	$ 55,655,000	$ 55,655,000	$ 55,655,000	$ 18,603,000	$ 18,603,000	$ 18,603,000
Acquisitions					9,666,000													9,666,000
Balance at the end of the period	335,577,000		335,577,000		335,577,000													261,319,000	261,319,000	55,655,000	55,655,000	55,655,000	18,603,000	18,603,000	18,603,000
Other intangible assets
Cost	149,862,000		149,862,000		149,862,000	115,731,000	115,731,000	26,000,000	26,000,000	7,217,000	7,217,000	780,000	780,000	134,000	134,000
Accumulated Amortization	(88,527,000)		(88,527,000)		(81,471,000)	(65,846,000)	(60,368,000)	(15,107,000)	(13,655,000)	(7,163,000)	(7,127,000)	(288,000)	(203,000)	(123,000)	(118,000)
Total	61,335,000		61,335,000		68,391,000	49,885,000	55,363,000	10,893,000	12,345,000	54,000	90,000	492,000	577,000	11,000	16,000
Cost	315,862,000		315,862,000		315,862,000
Net	227,335,000		227,335,000		234,391,000
Cost and net																166,000,000	166,000,000
Amortization	$ 3,500,000	$ 3,900,000	$ 7,100,000	$ 7,900,000

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets

Schedule of goodwill by reporting segment

	Medical		Technical and		Sales		Corporate
	Equipment		Professional		and		and
(in thousands)	Outsourcing		Services		Remarketing		Unallocated		Total
Balance at December 31, 2011	$	251,653	$	55,655	$	18,603	$	—	$	325,911
Acquisitions	9,666		—		—		—		9,666
Balance at December 31, 2012	261,319		55,655		18,603		—		335,577
Acquisitions	—		—		—		—		—
Balance at June 30, 2013	$	261,319	$	55,655	$	18,603	$	—	$	335,577

Schedule of other intangible assets

	June 30, 2013							December 31, 2012
			Accumulated							Accumulated
(in thousands)	Cost		Amortization			Net		Cost		Amortization			Net
Finite-life intangibles
Customer relationship	$	115,731	$	(65,846	)	$	49,885	$	115,731	$	(60,368	)	$	55,363
Supply agreement	26,000		(15,107		)	10,893		26,000		(13,655		)	12,345
Technology databases	7,217		(7,163		)	54		7,217		(7,127		)	90
Non-compete agreements	780		(288		)	492		780		(203		)	577
Favorable lease agreements	134		(123		)	11		134		(118		)	16
Total finite-life intangibles	149,862		(88,527		)	61,335		149,862		(81,471		)	68,391
Indefinite-life intangibles
Trade names	166,000		—			166,000		166,000		—			166,000
Total intangible assets	$	315,862	$	(88,527	)	$	227,335	$	315,862	$	(81,471	)	$	234,391

Schedule of estimated future amortization expense for identifiable intangible assets

(in thousands)
Remainder of 2013	$	6,698
2014	12,835
2015	11,930
2016	10,805
2017	7,514
2018	5,931

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Measurements

Schedule of fair value of assets and liabilities measured on a recurring basis

	Fair Value at June 30, 2013								Fair Value at December 31, 2012
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	2,048	$	2,048	$	—	$	—	$	2,033	$	2,033

Schedule of reconciliation of the beginning and ending balance for the Level 3 measurement

A reconciliation of the beginning and ending balance for the Level 3 measurement (in thousands) are as follows:

Balance at December 31, 2012	$	2,033
Interest	64
Payments	(49		)
Balance at June 30, 2013	$	2,048

Schedule of fair value of debt instruments

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Original notes - 7.625%	$	425.0	$	446.3	$	425.0	$	448.4
Add-on notes - 7.625% (1)	233.5		231.0		—		—
Floating rate notes	—		—		230.0		229.1

(1)  The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $13.5 million.

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Limited Liability Companies (Details) (Limited Liability Companies, Surgical Services, USD $) In Millions, unless otherwise specified	Jun. 30, 2013 item
Limited Liability Companies | Surgical Services
Limited Liability Companies
Total assets of LLCs	$ 0.6
Number of active LLCs in which the entity holds an interest	6

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Basis of Presentation (Details)	Jun. 30, 2013
Basis of Presentation
Ownership interest in subsidiary (as a percent)	100.00%

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Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended						6 Months Ended					6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Additional Paid-in Capital	Dec. 31, 2012 Additional Paid-in Capital	Jun. 30, 2012 Additional Paid-in Capital	Dec. 31, 2011 Additional Paid-in Capital	Jun. 30, 2013 Accumulated Deficit	Jun. 30, 2012 Accumulated Deficit	Jun. 30, 2012 Accumulated Other Comprehensive Loss	Jun. 30, 2013 Accumulated Other Comprehensive Loss	Dec. 31, 2012 Accumulated Other Comprehensive Loss	Jun. 30, 2013 Noncontrolling Interests	Jun. 30, 2012 Noncontrolling Interests
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			$ 60,875	$ 93,187	$ 214,481	$ 214,481	$ 214,294	$ 214,294	$ (144,864)	$ (109,666)	$ (11,827)	$ (9,086)	$ (9,086)	$ 344	$ 386
Consolidated net loss	(12,708)	2,332	(22,886)	(632)					(23,201)	(998)				315	366
Other comprehensive income		1,167		2,887							2,887
Cash distributions to noncontrolling interests			(379)	(373)										(379)	(373)
Balance	$ 37,610	$ 95,069	$ 37,610	$ 95,069	$ 214,481	$ 214,481	$ 214,294	$ 214,294	$ (168,065)	$ (110,664)	$ (8,940)	$ (9,086)	$ (9,086)	$ 280	$ 379

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	6 Months Ended
	Jan. 03, 2012 Deferred tax liabilities recorded for intangibles and fixed assets Surgical Services (previously, Emergent Group)	Jun. 30, 2013 Year-to-date losses
Valuation allowance
Change in valuation allowance	$ 3.4	$ 2.5

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Information

Schedule of the reconciliation of total Company gross margin to income (loss) before income tax and noncontrolling interest

Total Gross Margin and Reconciliation to Income (Loss) Before Income Taxes and Noncontrolling Interest

(in thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Total gross margin	$	32,255		$	45,932	$	68,120		$	83,060
Selling, general and administrative	30,653			28,709		60,180			56,367
Restructuring, acquisition and integration expenses	183			190		236			294
Loss on extinguishment of debt	—			—		1,853			—
Interest expense	13,944			14,504		27,822			30,003
Income (loss) before income taxes and noncontrolling interest	$	(12,525	)	$	2,529	$	(21,971	)	$	(3,604	)

Schedule of Total Assets by Reporting Segment

Total Assets By Reporting Segment

(in thousands)

	June 30,		December 31
	2013		2012
Medical Equipment Outsourcing	$	458,487	$	465,192
Technical and Professional Services	83,443		83,791
Medical Equipment Sales and Remarketing	18,603		18,603
Corporate and Unallocated	368,216		369,827
Total Company Assets	$	928,749	$	937,413

Medical Equipment Outsourcing

Segment Information

Schedule of operating information of segments

Medical Equipment Outsourcing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	78,308	$	75,081	$	160,305	$	152,465
Cost of revenue	34,148		19,212		68,020		48,537
Medical equipment depreciation	18,459		17,321		36,356		34,225
Gross margin	$	25,701	$	38,548	$	55,929	$	69,703

Technical and Professional Services

Segment Information

Schedule of operating information of segments

Technical and Professional Services

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	21,912	$	22,350	$	43,161	$	42,479
Cost of revenue	16,778		16,885		33,809		32,654
Gross margin	$	5,134	$	5,465	$	9,352	$	9,825

Medical Equipment Sales And Remarketing

Segment Information

Schedule of operating information of segments

Medical Equipment Sales and Remarketing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	6,769	$	9,264	$	13,883	$	15,631
Cost of revenue	5,349		7,345		11,044		12,099
Gross margin	$	1,420	$	1,919	$	2,839	$	3,532

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Dividend and Equity Distribution (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 08, 2011
Dividend and Equity Distribution
Estimated option forfeiture rate (as a percent)	2.00%
Parent | Holders of options expected to vest in Parent's stock
Dividend and Equity Distribution
Dividend declared (in dollars per share)		$ 0.12
Estimated option forfeiture rate (as a percent)	2.00%

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Concentration

6 Months Ended

Jun. 30, 2013

Concentration

Concentration

18. Concentration

One customer accounted for approximately 13% of total revenue for the six months ended June 30, 2013 and 2012.

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Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Consolidated Statements of Comprehensive Income (Loss)
Gain on cash flow hedge, tax	$ 755	$ 1,868

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

The interim consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by Universal Hospital Services, Inc. (“we”, “our”, “us”, the “Company”, or “UHS”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, pursuant to such rules and regulations.  These consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2012 Annual Report on Form 10-K filed with the SEC.

The interim consolidated financial statements presented herein as of June 30, 2013, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented.  These adjustments are all of a normal, recurring nature.  The results of operations for any interim period are not necessarily indicative of results for the full year.

We are required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP.  These estimates and assumptions affect the amounts of assets, liabilities, revenues and expenses at the date of the unaudited consolidated financial statements.  While we believe that our past estimates and assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made.  We evaluate our estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances.  We make adjustments to our assumptions and judgments when facts and circumstances dictate.  Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements.

A description of our significant accounting policies is included in our 2012 Annual Report on Form 10-K. There have been no material changes to these policies for the quarter ended June 30, 2013.

Principles of Consolidation

The consolidated financial statements include the accounts of UHS and its 100%-owned subsidiary, UHS Surgical Services, Inc. (“Surgical Services”). In addition, in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”), we have accounted for our equity investments in entities in which we are the primary beneficiary under the full consolidation method. All significant intercompany transactions and balances have been eliminated through consolidation. As the primary beneficiary, we consolidate the limited liability companies (“LLCs”) referred to in Note 12, Limited Liability Companies, as we effectively receive the majority of the benefits from such entities and we provide equipment lease guarantees for such entities.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 are summarized in the following table by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2013								Fair Value at December 31, 2012
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	2,048	$	2,048	$	—	$	—	$	2,033	$	2,033

A description of the inputs used in the valuation of assets and liabilities is summarized as follows:

Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

During 2012, we recorded a contingent consideration liability, in the form of an earn-out payment, related to our acquisitions in the total amount of $2.1 million. The contingent consideration payments are based on achieving certain revenue results. The fair value of the liability was estimated using a discounted cash flow approach with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement. The significant inputs in the Level 3 measurement not supported by market activity included our assessments of expected future cash flows during the earn-out period, related to the assets acquired, appropriately discounted considering the uncertainties associated with the obligation, and calculated based on estimated revenues in accordance with the terms of the agreement. During the three and six months ended June 30, 2013, $0.02 and $0.05 million, respectively, in earn-out payments were paid.

The assumptions used in preparing the discounted cash flow analysis included estimates of interest rates and the timing and amount of incremental cash flows.

A reconciliation of the beginning and ending balance for the Level 3 measurement (in thousands) are as follows:

Balance at December 31, 2012	$	2,033
Interest	64
Payments	(49		)
Balance at June 30, 2013	$	2,048

Fair Value of Other Financial Instruments

The Company considers that the carrying amount of financial instruments, including accounts receivable, accounts payable, accrued liabilities and senior secured credit facility, approximates fair value due to their short maturities. The fair value of our outstanding Original Notes, Add-on Notes and Floating Rate Notes (each as defined in Note 9, Long-Term Debt) as of June 30, 2013 and December 31, 2012, based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Original notes - 7.625%	$	425.0	$	446.3	$	425.0	$	448.4
Add-on notes - 7.625% (1)	233.5		231.0		—		—
Floating rate notes	—		—		230.0		229.1

(1)  The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $13.5 million.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Recent Accounting Pronouncements

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

Standard Adopted

In July 2012, the FASB issued an amendment to indefinite-lived intangible assets impairment. This amendment permits an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The results of the qualitative assessment would be used as a basis in determining whether it is necessary to perform the two-step quantitative impairment test. If the qualitative assessment supports the conclusion that it is more likely than not that the fair value of the asset exceeds its carrying amount, the entity would not need to perform the two-step quantitative impairment test. The objective of this update is to reduce the cost and complexity of performing impairment tests for indefinite-lived intangible assets other than goodwill, and to improve consistency in impairment testing among long-lived asset categories. The adoption of this amendment did not have a material effect on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02 Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”) which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. ASU 2013-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material effect on our consolidated financial statements.

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Share-Based Compensation (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Unearned non-cash share-based compensation
Weighted average period for recognition of share-based compensation expense	2 years 1 month 6 days
Unearned non-cash share-based compensation expense expected to be recognized	$ 6,500,000
Estimated forfeiture rate (as a percent)	2.00%
Options | UHS Holdco, Inc., (Parent)
Number of Options
Outstanding at the beginning of the period (in shares)	36,668
Granted (in shares)	6,150	0
Forfeited or expired (in shares)	(3,971)
Outstanding at the end of the period (in shares)	38,847		36,668
Exercisable at the end of the period (in shares)	26,209
Remaining authorized options available for issue	4,839
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 1.12
Granted (in dollars per share)	$ 1.40
Forfeited or expired (in dollars per share)	$ 1.05
Outstanding at the end of the period (in dollars per share)	$ 1.17		$ 1.12
Exercisable at the end of the period (in dollars per share)	$ 1.05
Aggregate intrinsic value
Outstanding	9,838,000		11,253,000
Exercisable	$ 9,661,000
Weighted average remaining contractual term
Outstanding	6 years		5 years 7 months 6 days
Exercisable	4 years 4 months 24 days

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Equity (Tables)

6 Months Ended

Jun. 30, 2013

Equity

Schedule of changes in equity that are attributable to shareholders and noncontrolling interests

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2012	$	214,481	$	(144,864	)	$	(9,086	)	$	344		$	60,875
Net (loss) income	—		(23,201		)	—			315			(22,886		)
Cash distributions to noncontrolling interests	—		—			—			(379		)	(379		)
Balance at June 30, 2013	$	214,481	$	(168,065	)	$	(9,086	)	$	280		$	37,610

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2011	$	214,294	$	(109,666	)	$	(11,827	)	$	386		$	93,187
Net (loss) income	—		(998		)	—			366			(632		)
Other comprehensive income	—		—			2,887			—			2,887
Cash distributions to noncontrolling interests	—		—			—			(373		)	(373		)
Balance at June 30, 2012	$	214,294	$	(110,664	)	$	(8,940	)	$	379		$	95,069

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Pension Plan (Tables)

6 Months Ended

Jun. 30, 2013

Pension Plan

Schedule of components of net periodic pension costs

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2013			2012			2013			2012
Interest cost	$	260		$	265		$	520		$	538
Expected return on plan assets	(291		)	(320		)	(582		)	(639		)
Recognized net actuarial loss	222			166			458			343
Net periodic cost	$	191		$	111		$	396		$	242

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Fair Value Measurements (Details 2) (USD $)	Jun. 30, 2013	Jun. 30, 2013 Original notes - 7.625%	Dec. 31, 2012 Original notes - 7.625%	Aug. 07, 2012 Original notes - 7.625%	Jun. 30, 2013 Add-on notes - 7.625%	Feb. 12, 2013 Add-on notes - 7.625%	Dec. 31, 2012 Floating Rate Notes
Fair Value of Other Financial Instruments
Carrying Value		$ 425,000,000	$ 425,000,000		$ 233,500,000		$ 230,000,000
Fair Value		446,300,000	448,400,000		231,000,000		229,100,000
Interest rate (as a percent)		7.625%	7.625%	7.625%	7.625%	7.625%
Unamortized bond premium	$ 13,459,000				$ 13,500,000

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Restructuring (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended	18 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Restructuring
One time charges of restructuring cost			$ 7.4
Restructuring costs incurred	0.2	0.3
Additional cost recorded for cancellation of outstanding stock options for certain terminated employees		0.4
Restructuring cost paid		2.9
Restructuring liability	$ 2.1	$ 2.1	$ 2.1	$ 4.8

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Income Taxes (Details 2) (Federal, USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Federal
Operating loss carryforwards
Unused federal net operating loss carryforwards	$ 190.6

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2007	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
IPC | General Advisory And Management Services
Related Party Transaction
Specified amount of annual fees for ongoing advisory and management services	$ 0.5
Annual fee for ongoing advisory and management services as a percentage of adjusted EBITDA	0.75%
Amount incurred		0.3	0.2	0.6	0.5
Ryan | Operating Lease Services
Related Party Transaction
Number of members of the board of directors also serving as directors of a related party		1		1
Amount incurred		0.1	0.1	0.2	0.2
CT Partners | Executive Positions Search Services
Related Party Transaction
Number of members of the board of directors also serving as directors of a related party		1		1
Amount incurred		$ 0.1	$ 0	$ 0.2	$ 0.1

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 2,015	$ 2,015
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	1,000	1,000
Common stock, shares outstanding	1,000	1,000

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Share-Based Compensation

6 Months Ended

Jun. 30, 2013

Share-Based Compensation

Share-Based Compensation

7. Share-Based Compensation

During the six months ended June 30, 2013, activity under the 2007 Stock Option Plan (the “2007 Stock Option Plan”), of UHS Holdco, Inc., our parent company (“Parent”), was as follows:

(in thousands except exercise price and years)	Number of Options		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual term (years)
Outstanding at December 31, 2012	36,668		$	1.12	$	11,253	5.6
Granted	6,150		1.40
Exercised	—		—
Forfeited or expired	(3,971	)	1.05
Outstanding at June 30, 2013	38,847		$	1.17	$	9,838	6.0
Exercisable at June 30, 2013	26,209		$	1.05	$	9,661	4.4
Remaining authorized options available for issue	4,839

The exercise price of the stock option award is equal to the market value of Parent’s common stock on the grant date as determined reasonably and in good faith by Parent’s Board of Directors and compensation committee and based on an analysis of a variety of factors including peer group multiples, merger and acquisition multiples, and discounted cash flow analyses.

The intrinsic value of a stock award is the amount by which the market value of the underlying stock exceeds the exercise price of the award.

We determine the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as expense on a straight-line basis over the options’ expected vesting periods. The following assumptions were used in determining the fair value of stock options granted during the six months ended June 30, 2013 under the Black-Scholes model. There were no stock options granted during the six months ended June 30, 2012.

	Six Month Ended
	June 30, 2013
Risk-free interest rate	1.25		%
Expected volatility	35.3		%
Dividend yield	N/A
Expected option life (years)	6.75
Black-Scholdes Value of options	$	0.53

Expected volatility is based on an independent valuation of the stock of companies within our peer group.  Given the lack of a true comparable company, the peer group consists of selected public health care companies representing our suppliers, customers and competitors within certain product lines.  The risk free-interest rate is based on the U.S. Treasury yield curve in effect at the grant date based on the expected option life.  The expected option life represents the result of the “simplified” method applied to “plain vanilla” options granted during the period, as provided within Accounting Standards Codification (“ASC”) Topic 718, “Compensation - Stock Compensation.”  Parent used the simplified method as Parent does not have sufficient historical exercise experience to provide a basis upon which to estimate the expected term.

Although Parent grants stock options, the Company recognizes compensation expense related to these options since the services are performed for its benefit.  Along with this expense, which is primarily included in Selling, General and Administrative expense, the Company records an offsetting Payable to Parent liability which is not expected to be settled within the next twelve months.

At June 30, 2013, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.1 years totals approximately $6.5 million, net of our estimated forfeiture rate of 2.0%. The expense could be accelerated upon the sale of Parent or the Company.

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Consolidated Statements of Comprehensive Income (Loss)
Consolidated net income (loss)	$ 2,332	$ (632)
Other comprehensive income:
Gain on cash flow hedge, net of tax of $755 and $1,868	1,167	2,887
Total other comprehensive income	1,167	2,887
Comprehensive income (loss)	3,499	2,255
Comprehensive income attributable to noncontrolling interest	184	366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$ 3,315	$ 1,889

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Accounts receivable, less allowance for doubtful accounts of $2,015 at June 30, 2013 and December 31, 2012	$ 67,766	$ 68,478
Inventories	9,694	8,868
Deferred income taxes, net	3,284	3,610
Other current assets	5,132	4,280
Total current assets	85,876	85,236
Property and equipment, net:
Medical equipment, net	231,034	236,905
Property and office equipment, net	33,251	30,094
Total property and equipment, net	264,285	266,999
Other long-term assets:
Goodwill	335,577	335,577		325,911
Other intangibles, net	227,335	234,391
Other, primarily deferred financing costs, net	15,676	15,210
Total assets	928,749	937,413
Current liabilities:
Current portion of long-term debt	5,382	6,223
Book overdrafts	4,186	3,905
Accounts payable	25,926	26,036
Accrued compensation	14,056	16,956
Accrued interest	18,878	13,845
Dividend payable	88	88
Other accrued expenses	12,390	11,641
Total current liabilities	80,906	78,694
Long-term debt, less current portion	703,878	692,791
Pension and other long-term liabilities	15,134	14,377
Payable to Parent	21,835	21,640
Deferred income taxes, net	69,386	69,036
Commitments and contingencies (Note 10)
Equity
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at June 30, 2013 and December 31, 2012
Additional paid-in capital	214,481	214,481
Accumulated deficit	(168,065)	(144,864)
Accumulated other comprehensive loss	(9,086)	(9,086)
Total Universal Hospital Services, Inc. equity	37,330	60,531
Noncontrolling interest	280	344
Total equity	37,610	60,875	95,069	93,187
Total liabilities and equity	$ 928,749	$ 937,413

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Consolidating Financial Statements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Consolidating Financial Statements
Ownership interest in subsidiary (as a percent)	100.00%
Current assets:
Accounts receivable, less allowance for doubtful accounts	$ 67,766	$ 68,478
Inventories	9,694	8,868
Deferred income taxes, net	3,284	3,610
Other current assets	5,132	4,280
Total current assets	85,876	85,236
Property and equipment, net:
Medical equipment, net	231,034	236,905
Property and office equipment, net	33,251	30,094
Total property and equipment, net	264,285	266,999
Other long-term assets:
Goodwill	335,577	335,577		325,911
Other intangibles, net	227,335	234,391
Other, primarily deferred financing costs, net	15,676	15,210
Total assets	928,749	937,413
Current liabilities:
Current portion of long-term debt	5,382	6,223
Book overdrafts	4,186	3,905
Accounts payable	25,926	26,036
Accrued compensation	14,056	16,956
Accrued interest	18,878	13,845
Dividend payable	88	88
Other accrued expenses	12,390	11,641
Total current liabilities	80,906	78,694
Long-term debt, less current portion	703,878	692,791
Pension and other long-term liabilities	15,134	14,377
Payable to Parent	21,835	21,640
Deferred income taxes, net	69,386	69,036
Commitments and contingencies
Equity
Common stock
Additional paid-in capital	214,481	214,481
Accumulated deficit	(168,065)	(144,864)
Accumulated other comprehensive loss	(9,086)	(9,086)
Total Universal Hospital Services, Inc. equity	37,330	60,531
Noncontrolling interest	280	344
Total equity	37,610	60,875	95,069	93,187
Total liabilities and equity	928,749	937,413
Parent Issuer UHS
Current assets:
Accounts receivable, less allowance for doubtful accounts	60,371	60,805
Due from affiliates	28,800	25,138
Inventories	6,151	5,771
Deferred income taxes, net	2,255	2,581
Other current assets	4,918	4,015
Total current assets	102,495	98,310
Property and equipment, net:
Medical equipment, net	216,899	222,045
Property and office equipment, net	30,582	28,250
Total property and equipment, net	247,481	250,295
Other long-term assets:
Goodwill	283,141	283,141
Investment in subsidiary	53,442	54,906
Other intangibles, net	206,622	211,999
Other, primarily deferred financing costs, net	15,352	14,876
Total assets	908,533	913,527
Current liabilities:
Current portion of long-term debt	4,183	5,038
Book overdrafts	3,503	3,644
Accounts payable	23,296	20,083
Accrued compensation	12,131	15,005
Accrued interest	18,878	13,845
Dividend payable	88	88
Other accrued expenses	10,403	9,782
Total current liabilities	72,482	67,485
Long-term debt, less current portion	702,282	691,565
Pension and other long-term liabilities	13,414	12,679
Payable to Parent	21,835	21,640
Deferred income taxes, net	61,190	59,627
Equity
Additional paid-in capital	214,481	214,481
Accumulated deficit	(161,488)	(139,751)
Accumulated loss in subsidiary	(6,577)	(5,113)
Accumulated other comprehensive loss	(9,086)	(9,086)
Total Universal Hospital Services, Inc. equity	37,330	60,531
Total equity	37,330	60,531
Total liabilities and equity	908,533	913,527
Subsidiary Guarantor Surgical Services
Current assets:
Accounts receivable, less allowance for doubtful accounts	7,395	7,673
Inventories	3,543	3,097
Deferred income taxes, net	1,029	1,029
Other current assets	214	265
Total current assets	12,181	12,064
Property and equipment, net:
Medical equipment, net	14,135	14,860
Property and office equipment, net	2,669	1,844
Total property and equipment, net	16,804	16,704
Other long-term assets:
Goodwill	52,436	52,436
Other intangibles, net	20,713	22,392
Other, primarily deferred financing costs, net	324	334
Total assets	102,458	103,930
Current liabilities:
Current portion of long-term debt	1,199	1,185
Book overdrafts	683	261
Due to affiliates	28,800	25,138
Accounts payable	2,630	5,953
Accrued compensation	1,925	1,951
Other accrued expenses	1,987	1,859
Total current liabilities	37,224	36,347
Long-term debt, less current portion	1,596	1,226
Pension and other long-term liabilities	1,720	1,698
Deferred income taxes, net	8,196	9,409
Equity
Additional paid-in capital	60,019	60,019
Accumulated deficit	(6,577)	(5,113)
Total Universal Hospital Services, Inc. equity	53,442	54,906
Noncontrolling interest	280	344
Total equity	53,722	55,250
Total liabilities and equity	102,458	103,930
Consolidating Adjustments
Current assets:
Due from affiliates	(28,800)	(25,138)
Total current assets	(28,800)	(25,138)
Other long-term assets:
Investment in subsidiary	(53,442)	(54,906)
Total assets	(82,242)	(80,044)
Current liabilities:
Due to affiliates	(28,800)	(25,138)
Total current liabilities	(28,800)	(25,138)
Equity
Additional paid-in capital	(60,019)	(60,019)
Accumulated loss in subsidiary	6,577	5,113
Total Universal Hospital Services, Inc. equity	(53,442)	(54,906)
Total equity	(53,442)	(54,906)
Total liabilities and equity	$ (82,242)	$ (80,044)

XML

Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Share-Based Compensation

Schedule of activity of parent company under the 2007 Stock Option Plan

(in thousands except exercise price and years)	Number of Options		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual term (years)
Outstanding at December 31, 2012	36,668		$	1.12	$	11,253	5.6
Granted	6,150		1.40
Exercised	—		—
Forfeited or expired	(3,971	)	1.05
Outstanding at June 30, 2013	38,847		$	1.17	$	9,838	6.0
Exercisable at June 30, 2013	26,209		$	1.05	$	9,661	4.4
Remaining authorized options available for issue	4,839

Schedule of assumptions used in determining the fair value of stock options granted under the Black-Scholes model

	Six Month Ended
	June 30, 2013
Risk-free interest rate	1.25		%
Expected volatility	35.3		%
Dividend yield	N/A
Expected option life (years)	6.75
Black-Scholdes Value of options	$	0.53

XML

Consolidating Financial Statements

6 Months Ended

Jun. 30, 2013

Consolidating Financial Statements

Consolidating Financial Statements

16. Consolidating Financial Statements

In accordance with the provisions of the 2012 Indenture, as a 100%-owned subsidiary of UHS, Surgical Services has 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 guarantor is presented on the following pages.

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,371		$	7,395		$	—		$	67,766
Due from affiliates	28,800			—			(28,800		)	—
Inventories	6,151			3,543			—			9,694
Deferred income taxes, net	2,255			1,029			—			3,284
Other current assets	4,918			214			—			5,132
Total current assets	102,495			12,181			(28,800		)	85,876
Property and equipment, net:
Medical equipment, net	216,899			14,135			—			231,034
Property and office equipment, net	30,582			2,669			—			33,251
Total property and equipment, net	247,481			16,804			—			264,285
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	53,442			—			(53,442		)	—
Other intangibles, net	206,622			20,713			—			227,335
Other, primarily deferred financing costs, net	15,352			324			—			15,676
Total assets	$	908,533		$	102,458		$	(82,242	)	$	928,749
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	4,183		$	1,199		$	—		$	5,382
Book overdrafts	3,503			683			—			4,186
Due to affiliates	—			28,800			(28,800		)	—
Accounts payable	23,296			2,630			—			25,926
Accrued compensation	12,131			1,925			—			14,056
Accrued interest	18,878			—			—			18,878
Dividend payable	88			—			—			88
Other accrued expenses	10,403			1,987			—			12,390
Total current liabilities	72,482			37,224			(28,800		)	80,906
Long-term debt, less current portion	702,282			1,596			—			703,878
Pension and other long-term liabilities	13,414			1,720			—			15,134
Payable to Parent	21,835			—			—			21,835
Deferred income taxes, net	61,190			8,196			—			69,386
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(161,488		)	(6,577		)	—			(168,065		)
Accumulated loss in subsidiary	(6,577		)	—			6,577			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	37,330			53,442			(53,442		)	37,330
Noncontrolling interest	—			280			—			280
Total equity	37,330			53,722			(53,442		)	37,610
Total liabilities and equity	$	908,533		$	102,458		$	(82,242	)	$	928,749

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

	December 31, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,805		$	7,673		$	—		$	68,478
Due from affiliates	25,138			—			(25,138		)	—
Inventories	5,771			3,097			—			8,868
Deferred income taxes, net	2,581			1,029			—			3,610
Other current assets	4,015			265			—			4,280
Total current assets	98,310			12,064			(25,138		)	85,236
Property and equipment, net:
Medical equipment, net	222,045			14,860			—			236,905
Property and office equipment, net	28,250			1,844			—			30,094
Total property and equipment, net	250,295			16,704			—			266,999
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	54,906			—			(54,906		)	—
Other intangibles, net	211,999			22,392			—			234,391
Other, primarily deferred financing costs, net	14,876			334			—			15,210
Total assets	$	913,527		$	103,930		$	(80,044	)	$	937,413
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	5,038		$	1,185		$	—		$	6,223
Book overdrafts	3,644			261			—			3,905
Due to affiliates	—			25,138			(25,138		)	—
Accounts payable	20,083			5,953			—			26,036
Accrued compensation	15,005			1,951			—			16,956
Accrued interest	13,845			—			—			13,845
Dividend payable	88			—			—			88
Other accrued expenses	9,782			1,859			—			11,641
Total current liabilities	67,485			36,347			(25,138		)	78,694
Long-term debt, less current portion	691,565			1,226			—			692,791
Pension and other long-term liabilities	12,679			1,698			—			14,377
Payable to Parent	21,640			—			—			21,640
Deferred income taxes, net	59,627			9,409			—			69,036
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(139,751		)	(5,113		)	—			(144,864		)
Accumulated loss in subsidiary	(5,113		)	—			5,113			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	60,531			54,906			(54,906		)	60,531
Noncontrolling interest	—			344			—			344
Total equity	60,531			55,250			(54,906		)	60,875
Total liabilities and equity	$	913,527		$	103,930		$	(80,044	)	$	937,413

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	64,217		$	14,091		$	—		$	78,308
Technical and professional services	21,912			—			—			21,912
Medical equipment sales and remarketing	6,769			—			—			6,769
Total revenues	92,898			14,091			—			106,989
Cost of Revenue
Cost of medical equipment outsourcing	26,262			7,886			—			34,148
Cost of technical and professional services	16,778			—			—			16,778
Cost of medical equipment sales and remarketing	5,349			—			—			5,349
Medical equipment depreciation	16,944			1,515			—			18,459
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	65,333			9,401			—			74,734
Gross margin	27,565			4,690			—			32,255
Selling, general and administrative	25,795			4,858			—			30,653
Restructuring, acquisition and integration expenses	108			75			—			183
Operating income (loss)	1,662			(243		)	—			1,419
Equity in loss of subsidiary	553			—			(553		)	—
Interest expense	13,375			569			—			13,944
Loss before income taxes and noncontrolling interest	(12,266		)	(812		)	553			(12,525		)
Provision (benefit) for income taxes	442			(259		)	—			183
Consolidated net loss	(12,708		)	(553		)	553			(12,708		)
Net income attributable to noncontrolling interest	—			135			—			135
Net loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553		$	(12,843	)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2012
	Parent		Subsidiary
	Issuer		Guarantor			Consolidating
	UHS		Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	62,793	$	12,288		$	—		$	75,081
Technical and professional services	22,350		—			—			22,350
Medical equipment sales and remarketing	9,264		—			—			9,264
Total revenues	94,407		12,288			—			106,695
Cost of Revenue
Cost of medical equipment outsourcing	12,456		6,756			—			19,212
Cost of technical and professional services	16,885		—			—			16,885
Cost of medical equipment sales and remarketing	7,345		—			—			7,345
Medical equipment depreciation	16,152		1,169			—			17,321
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	52,838		7,925			—			60,763
Gross margin	41,569		4,363			—			45,932
Selling, general and administrative	23,472		5,237			—			28,709
Restructuring, acquisition and integration expenses	126		64			—			190
Operating income (loss)	17,971		(938		)	—			17,033
Equity in loss of subsidiary	1,299		—			(1,299		)	—
Interest expense	14,150		354			—			14,504
Income (loss) before income taxes and noncontrolling interest	2,522		(1,292		)	1,299			2,529
Provision for income taxes	190		7			—			197
Consolidated net income (loss)	2,332		(1,299		)	1,299			2,332
Net income attributable to noncontrolling interest	184		184			(184		)	184
Net income (loss) attributable to Universal Hospital Services, Inc.	$	2,148	$	(1,483	)	$	1,483		$	2,148

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	132,903		$	27,402		$	—		$	160,305
Technical and professional services	43,161			—			—			43,161
Medical equipment sales and remarketing	13,883			—			—			13,883
Total revenues	189,947			27,402			—			217,349
Cost of Revenue
Cost of medical equipment outsourcing	52,766			15,254			—			68,020
Cost of technical and professional services	33,809			—			—			33,809
Cost of medical equipment sales and remarketing	11,044			—			—			11,044
Medical equipment depreciation	33,431			2,925			—			36,356
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	131,050			18,179			—			149,229
Gross margin	58,897			9,223			—			68,120
Selling, general and administrative	50,685			9,495			—			60,180
Restructuring, acquisition and integration expenses	(129		)	365			—			236
Operating income (loss)	8,341			(637		)	—			7,704
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Loss on extinguishment of debt	1,853			—			—			1,853
Interest expense	26,750			1,072			—			27,822
Loss before income taxes and noncontrolling interest	(21,411		)	(1,709		)	1,149			(21,971		)
Provision (benefit) for income taxes	1,475			(560		)	—			915
Consolidated net loss	(22,886		)	(1,149		)	1,149			(22,886		)
Net income attributable to noncontrolling interest	—			315			—			315
Net loss attributable to Universal Hospital Services, Inc.	$	(22,886	)	$	(1,464	)	$	1,149		$	(23,201	)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	128,336		$	24,129		$	—		$	152,465
Technical and professional services	42,479			—			—			42,479
Medical equipment sales and remarketing	15,631			—			—			15,631
Total revenues	186,446			24,129			—			210,575
Cost of Revenue
Cost of medical equipment outsourcing	35,231			13,306			—			48,537
Cost of technical and professional services	32,654			—			—			32,654
Cost of medical equipment sales and remarketing	12,099			—			—			12,099
Medical equipment depreciation	31,915			2,310			—			34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	111,899			15,616			—			127,515
Gross margin	74,547			8,513			—			83,060
Selling, general and administrative	47,514			8,853			—			56,367
Restructuring, acquisition and integration expenses	230			64			—			294
Operating income (loss)	26,803			(404		)	—			26,399
Equity in loss of subsidiary	1,208			—			(1,208		)	—
Interest expense	29,302			701			—			30,003
Loss before income taxes and noncontrolling interest	(3,707		)	(1,105		)	1,208			(3,604		)
(Benefit) provision for income taxes	(3,075		)	103			—			(2,972		)
Consolidated net loss	(632		)	(1,208		)	1,208			(632		)
Net income attributable to noncontrolling interest	366			366			(366		)	366
Net loss attributable to Universal Hospital Services, Inc.	$	(998	)	$	(1,574	)	$	1,574		$	(998	)

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013											Six Months Ended June 30, 2013
	Parent			Subsidiary								Parent			Subsidiary
	Issuer			Guarantor			Consolidating					Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated			UHS			Surgical Services			Adjustments		Consolidated
Consolidated net loss	$	(12,708	)	$	(553	)	$	553	$	(12,708	)	$	(22,886	)	$	(1,149	)	$	1,149	$	(22,886	)
Total other comprehensive income	—			—			—		—			—			—			—		—
Comprehensive loss	(12,708		)	(553		)	553		(12,708		)	(22,886		)	(1,149		)	1,149		(22,886		)
Comprehensive income attributable to noncontrolling interest	—			135			—		135			—			315			—		315
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553	$	(12,843	)	$	(22,886	)	$	(1,464	)	$	1,149	$	(23,201	)

	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Parent		Subsidiary							Parent			Subsidiary
	Issuer		Guarantor			Consolidating				Issuer			Guarantor			Consolidating
	UHS		Surgical Services			Adjustments		Consolidated		UHS			Surgical Services			Adjustments		Consolidated
Consolidated net income (loss)	$	2,332	$	(1,299	)	$	1,299	$	2,332	$	(632	)	$	(1,208	)	$	1,208	$	(632	)
Other comprehensive income:
Gain on cash flow hedge, net of tax	1,167		—			—		1,167		2,887			—			—		2,887
Total other comprehensive income	1,167		—			—		1,167		2,887			—			—		2,887
Comprehensive income (loss)	3,499		(1,299		)	1,299		3,499		2,255			(1,208		)	1,208		2,255
Comprehensive income attributable to noncontrolling interest	184		—			—		184		366			—					366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$	3,315	$	(1,299	)	$	1,299	$	3,315	$	1,889		$	(1,208	)	$	1,208	$	1,889

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(22,886	)	$	(1,149	)	$	1,149		(22,886		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	38,393			3,282			—			41,675
Amortization of intangibles, deferred financing costs and bond premium	6,548			1,679			—			8,227
Non-cash write off of deferred financing cost	1,853			—			—			1,853
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Provision for doubtful accounts	1,128			(95		)	—			1,033
Provision for inventory obsolescence	112			(17		)	—			95
Non-cash share-based compensation expense - net	120			75			—			195
Gain on sales and disposals of equipment	(783		)	(18		)	—			(801		)
Deferred income taxes	1,889			(1,213		)	—			676
Changes in operating assets and liabilities:
Accounts receivable	(694		)	373			—			(321		)
Inventories	(492		)	(429		)	—			(921		)
Other operating assets	(853		)	61			—			(792		)
Accounts payable	(588		)	(877		)	—			(1,465		)
Other operating liabilities	3,515			124			—			3,639
Net cash provided by operating activities	28,411			1,796			—			30,207
Cash flows from investing activities:
Medical equipment purchases	(25,487		)	(2,991		)	—			(28,478		)
Property and office equipment purchases	(4,042		)	(136		)	—			(4,178		)
Proceeds from disposition of property and equipment	1,909			20			—			1,929
Holdback payment related to acquisition	—			(1,655		)	—			(1,655		)
Net cash used in investing activities	(27,620		)	(4,762		)	—			(32,382		)
Cash flows from financing activities:
Due from (to) affiliates	(3,587		)	3,587			—			—
Proceeds under senior secured credit facility	43,300			—			—			43,300
Payments under senior secured credit facility	(36,800		)	—			—			(36,800		)
Payments of principal under capital lease obligations	(3,486		)	(664		)	—			(4,150		)
Payments of floating rate notes	(230,000		)	—			—			(230,000		)
Proceeds from issuance of bonds	234,025			—			—			234,025
Accrued interest received from bondholders	8,620			—			—			8,620
Accrued interest paid to bondholders	(8,620		)	—			—			(8,620		)
Distributions to noncontrolling interests	—			(379		)	—			(379		)
Payment of deferred financing costs	(4,102		)	—			—			(4,102		)
Change in book overdrafts	(141		)	422			—			281
Net cash provided by financing activities	(791		)	2,966			—			2,175
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, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net income (loss)	$	576		$	(1,208	)	$	—	$	(632	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	37,140			2,533			—		39,673
Amortization of intangibles, deferred financing costs and bond premium	7,764			1,548			—		9,312
Provision for doubtful accounts	323			69			—		392
Provision for inventory obsolescence	182			—			—		182
Non-cash share-based compensation expense	2,150			—			—		2,150
Non-cash gain on trade-in of recalled equipment	(14,122		)	—			—		(14,122		)
Loss (gain) on sales and disposals of equipment	(700		)	5			—		(695		)
Deferred income taxes	(666		)	(784		)	—		(1,450		)
Changes in operating assets and liabilities:
Accounts receivable	(7,276		)	(2,096		)	—		(9,372		)
Inventories	(1,145		)	(533		)	—		(1,678		)
Other operating assets	(1,745		)	(256		)	—		(2,001		)
Accounts payable	471			(1,079		)	—		(608		)
Other operating liabilities	(1,992		)	(1,485		)	—		(3,477		)
Net cash provided by operating activities	20,960			(3,286		)	—		17,674
Cash flows from investing activities:
Medical equipment purchases	(30,007		)	(2,075		)	—		(32,082		)
Property and office equipment purchases	(3,450		)	(187		)	—		(3,637		)
Proceeds from disposition of property and equipment	3,935			—			—		3,935
Acquisitions, net of cash acquired	(436		)	(11,009		)	—		(11,445		)
Net cash used in investing activities	(29,958		)	(13,271		)	—		(43,229		)
Cash flows from financing activities:
Due from (to) affiliates	(20,060		)	20,060			—		—
Proceeds under senior secured credit facility	72,000			—			—		72,000
Payments under senior secured credit facility	(39,000		)	—			—		(39,000		)
Payments of principal under capital lease obligations	(2,602		)	(796		)	—		(3,398		)
Payoff of acquired debt	—			(3,163		)	—		(3,163		)
Distributions to noncontrolling interests	—			(373		)	—		(373		)
Proceeds from exercise of parent company stock options	150			—			—		150
Dividend and equity distribution payments	(763		)	—			—		(763		)
Change in book overdrafts	(727		)	—			—		(727		)
Net cash provided by (used in) financing activities	8,998			15,728			—		24,726
Net change in cash and cash equivalents	—			(829		)	—		(829		)
Cash and cash equivalents at the beginning of period	—			1,161			—		1,161
Cash and cash equivalents at the end of period	$	—		$	332		$	—	$	332

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Long-Term Debt (Details) (USD $)								6 Months Ended			6 Months Ended					6 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Original notes - 7.625%	Dec. 31, 2012 Original notes - 7.625%	Aug. 07, 2012 Original notes - 7.625%	Jun. 30, 2013 Add-on notes - 7.625%	Feb. 12, 2013 Add-on notes - 7.625%	Jun. 30, 2013 Floating Rate Notes	Dec. 31, 2012 Floating Rate Notes	May 31, 2007 Floating Rate Notes	Jun. 30, 2013 Senior secured credit facility item	Dec. 31, 2012 Senior secured credit facility	May 06, 2010 Senior secured credit facility	Jun. 30, 2013 Senior secured credit facility Maximum	Jun. 30, 2013 Senior secured credit facility Minimum	Jun. 30, 2013 Senior secured credit facility Prime rate	Jun. 30, 2013 Senior secured credit facility Adjusted LIBOR	Jun. 30, 2013 Senior secured credit facility Federal funds rate	Jun. 30, 2013 Senior secured credit facility One month Eurodollar rate	Jun. 30, 2013 Senior secured credit facility Adjusted British Bankers Association Interest Settlement Rate Maximum	Jun. 30, 2013 Senior secured credit facility Adjusted British Bankers Association Interest Settlement Rate Minimum	Jun. 30, 2013 Capital lease obligations	Dec. 31, 2012 Capital lease obligations	Jul. 31, 2012 Second Amended and Restated Credit Agreement
Long-Term Debt
Unamortized bond premium	$ 13,459,000					$ 13,500,000
Long-term debt current and noncurrent	709,260,000	699,014,000	425,000,000	425,000,000		220,000,000			230,000,000		34,500,000	28,000,000										16,301,000	16,014,000
Less: Current portion of long-term debt	(5,382,000)	(6,223,000)
Total long-term debt	703,878,000	692,791,000
Interest rate (as a percent)			7.625%	7.625%	7.625%	7.625%	7.625%
Aggregate outstanding principal amount					425,000,000		220,000,000			230,000,000
Ownership interest in existing and certain future owned domestic subsidiaries (as a percent)	100.00%
Base rate								LIBOR								prime rate		federal funds rate	Eurodollar rate
Margin over base rate (as a percent)								3.375%						1.50%	1.00%	4.75%	2.693%	0.50%	1.00%	2.50%	2.00%
Maximum borrowing capacity													195,000,000											235,000,000
Minimum available borrowing capacity required to be maintained for a certain period under financial covenants											20,000,000
Minimum ratio of EBITDA to cash expense, number of quarters											4
Borrowing outstanding											34,500,000					4,500,000	30,000,000
Available amount											159,200,000
Borrowing base											197,900,000
Letters of credit											$ 4,200,000

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Consolidating Financial Statements (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Consolidated net income (loss)			$ (22,886)	$ (632)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			41,675	39,673
Amortization of intangibles, deferred financing costs and bond premium			8,227	9,312
Non-cash write off of deferred financing cost			1,853
Provision for doubtful accounts			1,033	392
Provision for inventory obsolescence			95	182
Non-cash share-based compensation expense - net			195	2,150
Non-cash gain on trade-in of recalled equipment				(14,122)
Loss (gain) on sales and disposals of equipment			(801)	(695)
Deferred income taxes			676	(1,450)
Changes in operating assets and liabilities:
Accounts receivable			(321)	(9,372)
Inventories			(921)	(1,678)
Other operating assets			(792)	(2,001)
Accounts payable			(1,465)	(608)
Other operating liabilities			3,639	(3,477)
Net cash provided by operating activities			30,207	17,674
Cash flows from investing activities:
Medical equipment purchases			(28,478)	(32,082)
Property and office equipment purchases			(4,178)	(3,637)
Proceeds from disposition of property and equipment			1,929	3,935
Holdback payment related to acquisition			(1,655)
Acquisitions, net of cash acquired				(11,445)
Net cash used in investing activities			(32,382)	(43,229)
Cash flows from financing activities:
Proceeds under senior secured credit facility			43,300	72,000
Payments under senior secured credit facility			(36,800)	(39,000)
Payments of principal under capital lease obligations			(4,150)	(3,398)
Payments of floating rate notes			(230,000)
Payoff of acquired debt				(3,163)
Proceeds from issuance of bonds			234,025
Accrued interest received from bondholders			8,620
Accrued interest paid to bondholders			(8,620)
Distributions to noncontrolling interests			(379)	(373)
Proceeds from exercise of parent company stock options				150
Dividend and equity distribution payments				(763)
Payment of deferred financing costs			(4,102)
Change in book overdrafts			281	(727)
Net cash provided by financing activities			2,175	24,726
Net change in cash and cash equivalents				(829)
Cash and cash equivalents at the beginning of period				1,161
Cash and cash equivalents at the end of period		332		332
Parent Issuer UHS
Cash flows from operating activities:
Consolidated net income (loss)			(22,886)	576
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			38,393	37,140
Amortization of intangibles, deferred financing costs and bond premium			6,548	7,764
Non-cash write off of deferred financing cost			1,853
Equity in loss of subsidiary	553	1,299	1,149	1,208
Provision for doubtful accounts			1,128	323
Provision for inventory obsolescence			112	182
Non-cash share-based compensation expense - net			120	2,150
Non-cash gain on trade-in of recalled equipment				(14,122)
Loss (gain) on sales and disposals of equipment			(783)	(700)
Deferred income taxes			1,889	(666)
Changes in operating assets and liabilities:
Accounts receivable			(694)	(7,276)
Inventories			(492)	(1,145)
Other operating assets			(853)	(1,745)
Accounts payable			(588)	471
Other operating liabilities			3,515	(1,992)
Net cash provided by operating activities			28,411	20,960
Cash flows from investing activities:
Medical equipment purchases			(25,487)	(30,007)
Property and office equipment purchases			(4,042)	(3,450)
Proceeds from disposition of property and equipment			1,909	3,935
Acquisitions, net of cash acquired				(436)
Net cash used in investing activities			(27,620)	(29,958)
Cash flows from financing activities:
Due from (to) affiliates			(3,587)	(20,060)
Proceeds under senior secured credit facility			43,300	72,000
Payments under senior secured credit facility			(36,800)	(39,000)
Payments of principal under capital lease obligations			(3,486)	(2,602)
Payments of floating rate notes			(230,000)
Proceeds from issuance of bonds			234,025
Accrued interest received from bondholders			8,620
Accrued interest paid to bondholders			(8,620)
Proceeds from exercise of parent company stock options				150
Dividend and equity distribution payments				(763)
Payment of deferred financing costs			(4,102)
Change in book overdrafts			(141)	(727)
Net cash provided by financing activities			(791)	8,998
Subsidiary Guarantor Surgical Services
Cash flows from operating activities:
Consolidated net income (loss)			(1,149)	(1,208)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			3,282	2,533
Amortization of intangibles, deferred financing costs and bond premium			1,679	1,548
Provision for doubtful accounts			(95)	69
Provision for inventory obsolescence			(17)
Non-cash share-based compensation expense - net			75
Loss (gain) on sales and disposals of equipment			(18)	5
Deferred income taxes			(1,213)	(784)
Changes in operating assets and liabilities:
Accounts receivable			373	(2,096)
Inventories			(429)	(533)
Other operating assets			61	(256)
Accounts payable			(877)	(1,079)
Other operating liabilities			124	(1,485)
Net cash provided by operating activities			1,796	(3,286)
Cash flows from investing activities:
Medical equipment purchases			(2,991)	(2,075)
Property and office equipment purchases			(136)	(187)
Proceeds from disposition of property and equipment			20
Holdback payment related to acquisition			(1,655)
Acquisitions, net of cash acquired				(11,009)
Net cash used in investing activities			(4,762)	(13,271)
Cash flows from financing activities:
Due from (to) affiliates			3,587	20,060
Payments of principal under capital lease obligations			(664)	(796)
Payoff of acquired debt				(3,163)
Distributions to noncontrolling interests			(379)	(373)
Change in book overdrafts			422
Net cash provided by financing activities			2,966	15,728
Net change in cash and cash equivalents				(829)
Cash and cash equivalents at the beginning of period				1,161
Cash and cash equivalents at the end of period		332		332
Consolidating Adjustments
Cash flows from operating activities:
Consolidated net income (loss)			1,149
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in loss of subsidiary	$ (553)	$ (1,299)	$ (1,149)	$ (1,208)

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Goodwill and Other Intangible Assets (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Future estimated amortization expense
Remainder of 2013	$ 6,698
2014	12,835
2015	11,930
2016	10,805
2017	7,514
2018	$ 5,931

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Acquisitions (Details) (USD $)	6 Months Ended					0 Months Ended				1 Months Ended	12 Months Ended
	Jun. 30, 2013	Jul. 09, 2012 Surgical laser equipment service provider	Jul. 09, 2012 Surgical laser equipment service provider Debt assumed	Jul. 09, 2012 Surgical laser equipment service provider Contingent consideration	Mar. 31, 2012 Southern California equipment rental division of a medical equipment manufacturer	Mar. 31, 2012 Southern California equipment rental division of a medical equipment manufacturer Contingent consideration	Mar. 31, 2012 Southern California equipment rental division of a medical equipment manufacturer Customer relationships	Jan. 03, 2012 Florida-based laser surgical laser equipment service provider	Jan. 03, 2012 Florida-based laser surgical laser equipment service provider Debt assumed	Jan. 31, 2013 Florida-based laser surgical laser equipment service provider Holdback amounts	Dec. 31, 2012 Florida-based laser surgical laser equipment service provider Holdback amounts	Jan. 03, 2012 Florida-based laser surgical laser equipment service provider Holdback amounts
Cost of acquired entity
Total purchase price		$ 5,300,000			$ 800,000			$ 16,100,000
Cash paid		2,600,000						11,000,000
Liabilities incurred			1,000,000	1,700,000		400,000			3,200,000			1,900,000
Period for payment of contingent consideration						4 years
Medical equipment					400,000
Intangible assets							300,000
Holdback payment related to acquisition	$ 1,655,000									$ 1,700,000	$ 200,000

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Fair Value Measurements (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Fair value measurements
Contingent Consideration			$ 2,100,000
Earn-out payments paid	20,000	50,000
Reconciliation of the beginning and ending balance for the Level 3 measurement
Balance at the beginning of the period		2,033,000
Interest		64,000
Payments		(49,000)
Balance at the end of the period	2,048,000	2,048,000
Recurring basis | Level 3
Fair value measurements
Contingent Consideration	2,048,000	2,048,000	2,033,000
Recurring basis | Total
Fair value measurements
Contingent Consideration	$ 2,048,000	$ 2,048,000	$ 2,033,000

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Equity

6 Months Ended

Jun. 30, 2013

Equity

Equity

6. Equity

The following tables represent changes in equity that are attributable to our shareholders and noncontrolling interests for the six month periods ended June 30, 2013 and 2012.

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2012	$	214,481	$	(144,864	)	$	(9,086	)	$	344		$	60,875
Net (loss) income	—		(23,201		)	—			315			(22,886		)
Cash distributions to noncontrolling interests	—		—			—			(379		)	(379		)
Balance at June 30, 2013	$	214,481	$	(168,065	)	$	(9,086	)	$	280		$	37,610

						Accumulated
	Additional					Other
	Paid-in		Accumulated			Comprehensive			Noncontrolling			Total
(in thousands)	Capital		Deficit			Loss			Interests			Equity
Balance at December 31, 2011	$	214,294	$	(109,666	)	$	(11,827	)	$	386		$	93,187
Net (loss) income	—		(998		)	—			366			(632		)
Other comprehensive income	—		—			2,887			—			2,887
Cash distributions to noncontrolling interests	—		—			—			(373		)	(373		)
Balance at June 30, 2012	$	214,294	$	(110,664	)	$	(8,940	)	$	379		$	95,069

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2013

Long-Term Debt

Schedule of long-term debt

	June 30,			December 31,
(in thousands)	2013			2012
Original notes - 7.625%	$	425,000		$	425,000
Add-on notes - 7.625%	220,000			—
Floating rate notes	—			230,000
Unamortized bond premium	13,459			—
Senior secured credit facility	34,500			28,000
Capital lease obligations	16,301			16,014
	709,260			699,014
Less: Current portion of long-term debt	(5,382		)	(6,223		)
Total long-term debt	$	703,878		$	692,791

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Share-Based Compensation (Details 2) (Options, UHS Holdco, Inc., (Parent), USD $)	6 Months Ended
	Jun. 30, 2013
Options | UHS Holdco, Inc., (Parent)
Assumptions used in determining the fair value of stock options granted under the Black-Scholes model
Risk-free interest rate (as a percent)	1.25%
Expected volatility (as a percent)	35.30%
Expected option life	6 years 9 months
Black-Scholes Value of options (in dollars per share)	$ 0.53

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Long-Term Debt

6 Months Ended

Jun. 30, 2013

Long-Term Debt

Long-Term Debt

9. Long-Term Debt

Long-term debt consists of the following:

	June 30,			December 31,
(in thousands)	2013			2012
Original notes - 7.625%	$	425,000		$	425,000
Add-on notes - 7.625%	220,000			—
Floating rate notes	—			230,000
Unamortized bond premium	13,459			—
Senior secured credit facility	34,500			28,000
Capital lease obligations	16,301			16,014
	709,260			699,014
Less: Current portion of long-term debt	(5,382		)	(6,223		)
Total long-term debt	$	703,878		$	692,791

Original Notes and Add-on Notes — 7.625%. On August 7, 2012, we issued $425.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Original Notes”) under an indenture dated as of August 7, 2012 (the “2012 Indenture”). On February 12, 2013, we issued $220.0 million in aggregate principal amount of 7.625% Second Lien Senior Secured Notes due 2020 (the “Add-on Notes”, and along with the Original Notes, the “2012 Notes”) as “additional notes” pursuant to the 2012 Indenture. The 2012 Notes mature on August 15, 2020.

The 2012 Indenture provides that the 2012 Notes are our second lien senior secured obligations and are fully and unconditionally guaranteed on a second lien senior secured basis by our existing and certain of our future 100%-owned domestic subsidiaries.

Interest on the 2012 Notes is payable, entirely in cash, semiannually, in arrears, on February 15 and August 15 of each year. We may redeem some or all of the 2012 Notes at the redemption prices set forth in the 2012 Indenture.  If we sell certain assets or undergo certain kinds of changes of control, we must offer to repurchase the 2012 Notes.

Our 2012 Notes are subject to certain debt covenants which are described below under the heading “2012 Indenture.”

In connection with the issuance of the Add-on Notes, we entered into a registration rights agreement with the initial purchasers of the Add-on Notes. On April 5, 2013, our Registration Statement on Form S-4, filed to register the exchange of the Add-on Notes for fully registered Add-on Notes, was declared effective by the SEC and we commenced our exchange offer. The exchange offer expired on May 6, 2013 and on May 10, 2013 we completed an offer to exchange all of the then outstanding Add-on Notes for an equivalent amount of Add-on Notes which have been registered under the Securities Act of 1933, as amended. We did not receive any additional proceeds from the exchange offer.

Floating Rate Notes.  On May 31, 2007, we issued $230.0 million aggregate principal amount of floating rate notes (the “Floating Rate Notes”) due 2015.  Interest on the Floating Rate Notes was reset for each semi-annual interest period and was calculated at the current LIBOR rate plus 3.375%.

On March 14, 2013, we redeemed all of our outstanding Floating Rate Notes. The proceeds of the Add-on Notes were used to fund the redemption.

Senior Secured Credit Facility.  On July 31, 2012, we entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as agent for the lenders, and the lenders party thereto (the “Second Amended Credit Agreement”), which amended our then-existing senior secured credit facility originally dated as of May 31, 2007 and amended and restated as of May 6, 2010. We refer to the second amended and restated senior secured credit facility as the “senior secured credit facility.” The senior secured credit facility is a first lien senior secured asset based revolving credit facility that is available for working capital and general corporate purposes, including permitted investments, capital expenditures and debt repayments, on a fully revolving basis, subject to the terms and conditions set forth in the credit documents in the form of revolving loans, swing line loans and letters of credit. The Second Amended Credit Agreement increased the aggregate amount we may obtain under revolving loans from $195.0 million to $235.0 million and extended the maturity date to July 31, 2017.  Our obligations under the Second Amended Credit Agreement are secured by a first priority security interest in substantially all of our assets, excluding a pledge of our and Parent’s stock, any joint ventures and certain other exceptions.  Our obligations under the Second Amended Credit Agreement are unconditionally guaranteed by Parent and our restricted subsidiaries.

As of June 30, 2013, we had $159.2 million of availability under the senior secured credit facility based on a borrowing base of $197.9 million less borrowings of $34.5 million and after giving effect to $4.2 million used for letters of credit.

The senior secured credit facility requires our compliance with various affirmative and negative covenants. Pursuant to the affirmative covenants, we and Parent agreed to, among other things, deliver financial and other information to the administrative agent, provide notice of certain events (including events of default), pay our obligations, maintain our properties, maintain the security interest in the collateral for the benefit of the administrative agent and the lenders and maintain insurance.

Among other restrictions, and subject to certain definitions and exceptions, the senior secured credit facility restricts our ability to:

· incur indebtedness;

· create or permit liens;

· declare or pay dividends and certain other restricted payments;

· consolidate, merge or recapitalize;

· acquire or sell assets;

· make certain investments, loans or other advances;

· enter into transactions with affiliates;

· change our line of business; and

· enter into hedging transactions.

The senior secured credit facility also contains a financial covenant that is triggered if our available borrowing capacity is less than $20.0 million for a certain period, which consists of a minimum ratio of trailing four-quarter Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) to cash interest expense, as such terms are defined in the senior secured credit facility.

The senior secured credit facility specifies certain events of default, including, among others, failure to pay principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, bankruptcy events, certain ERISA-related events, cross-defaults to other material agreements, change of control events and invalidity of guarantees or security documents.  Some events of default will be triggered only after certain cure periods have expired, or will provide for materiality thresholds.  If such a default occurs, the lenders under the senior secured credit facility would be entitled to take various actions, including all actions permitted to be taken by a secured creditor and the acceleration of amounts due under the senior secured credit facility.

Borrowings under the senior secured credit facility accrue interest (including a credit spread varying with facility usage):

· at a per annum rate equal to 1.00% - 1.50% above the rate equal to the greater of (i) the “federal funds rate” plus one-half of one percent (0.50%) per annum, (ii) the “prime rate” announced from time to time by the administrative agent for such day and (iii) the “Eurodollar rate” for a one month interest period as determined on such day, plus one percent (1.0%) payable quarterly in arrears; and

· at a per annum rate equal to 2.00% - 2.50% above the adjusted British Bankers Association Interest Settlement Rate for deposits in Dollars rate used by the administrative agent with a term equivalent to the selected interest rate period, for the respective interest rate period determined at our option, payable in arrears upon cessation of the interest rate period elected, provided that for an interest rate period longer than three months, payable in arrears on the respective dates that fall every three months from the beginning of such interest rate period.

At June 30, 2013, we had $34.5 million of borrowings outstanding of which $30.0 million was accruing interest at a rate of 2.693% and $4.5 million was accruing interest at the prime rate of 4.75%.

We were in compliance with all financial debt covenants for all periods presented.

2012 Indenture. Our 2012 Notes are guaranteed, jointly and severally, on a second priority senior secured basis, by Surgical Services, and are also similarly guaranteed by certain of our future 100%-owned domestic subsidiaries. The 2012 Notes are our second priority senior secured obligations and rank (i) equal in right of payment with all of our existing and future unsubordinated indebtedness, and effectively senior to any such unsecured indebtedness to the extent of the value of collateral; (ii) senior in right of payment to all of our and our guarantors’ existing and future subordinated indebtedness; (iii) effectively junior to our senior secured credit facility; and (iv) structurally subordinated to any indebtedness and other liabilities (including trade payables) of any of our future subsidiaries that are not guarantors.

The 2012 Indenture governing the 2012 Notes contains covenants that limit our and our guarantors’ ability, subject to certain definitions and exceptions, and certain of our future subsidiaries’ ability to:

· incur additional indebtedness;

· pay cash dividends or distributions on our capital stock or repurchase our capital stock or subordinated debt;

· issue redeemable stock or preferred stock;

· issue stock of subsidiaries;

· make certain investments;

· transfer or sell assets;

· create liens on our assets to secure debt;

· enter into transactions with affiliates; and

· merge or consolidate with another company.

The 2012 Indenture specifies certain events of default, including among others, failure to pay principal, interest or premium, violation of covenants and agreements, cross-defaults to other material agreements, bankruptcy events, invalidity of guarantees, and a default in the performance by us of the security documents relating to the 2012 Indenture. Some events of default will be triggered only after certain grace or cure periods have expired, or provide for materiality thresholds. In the event certain bankruptcy-related defaults occur, the 2012 Notes will become due and payable immediately. If any other default occurs, the Trustee (and in some cases the noteholders) would be entitled to take various actions, including acceleration of amounts due under the 2012 Indenture.

We were in compliance with all financial debt covenants for all periods presented.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

5. Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2013 and December 31, 2012, by reporting segment, consist of the following:

	Medical		Technical and		Sales		Corporate
	Equipment		Professional		and		and
(in thousands)	Outsourcing		Services		Remarketing		Unallocated		Total
Balance at December 31, 2011	$	251,653	$	55,655	$	18,603	$	—	$	325,911
Acquisitions	9,666		—		—		—		9,666
Balance at December 31, 2012	261,319		55,655		18,603		—		335,577
Acquisitions	—		—		—		—		—
Balance at June 30, 2013	$	261,319	$	55,655	$	18,603	$	—	$	335,577

Our other intangible assets as of June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013							December 31, 2012
			Accumulated							Accumulated
(in thousands)	Cost		Amortization			Net		Cost		Amortization			Net
Finite-life intangibles
Customer relationship	$	115,731	$	(65,846	)	$	49,885	$	115,731	$	(60,368	)	$	55,363
Supply agreement	26,000		(15,107		)	10,893		26,000		(13,655		)	12,345
Technology databases	7,217		(7,163		)	54		7,217		(7,127		)	90
Non-compete agreements	780		(288		)	492		780		(203		)	577
Favorable lease agreements	134		(123		)	11		134		(118		)	16
Total finite-life intangibles	149,862		(88,527		)	61,335		149,862		(81,471		)	68,391
Indefinite-life intangibles
Trade names	166,000		—			166,000		166,000		—			166,000
Total intangible assets	$	315,862	$	(88,527	)	$	227,335	$	315,862	$	(81,471	)	$	234,391

Total amortization expense related to intangible assets was $3.5 and $3.9 million for the three months ended June 30, 2013 and 2012, respectively, and $7.1 and $7.9 million for the six months ended June 30, 2013 and 2012, respectively.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2013 and the next five years is as follows:

(in thousands)
Remainder of 2013	$	6,698
2014	12,835
2015	11,930
2016	10,805
2017	7,514
2018	5,931

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Consolidated net loss	$ (22,886)	$ (632)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	41,675	39,673
Amortization of intangibles, deferred financing costs and bond premium	8,227	9,312
Non-cash write off of deferred financing cost	1,853
Provision for doubtful accounts	1,033	392
Provision for inventory obsolescence	95	182
Non-cash share-based compensation expense - net	195	2,150
Non-cash gain on trade-in of recalled equipment		(14,122)
Gain on sales and disposals of equipment	(801)	(695)
Deferred income taxes	676	(1,450)
Changes in operating assets and liabilities:
Accounts receivable	(321)	(9,372)
Inventories	(921)	(1,678)
Other operating assets	(792)	(2,001)
Accounts payable	(1,465)	(608)
Other operating liabilities	3,639	(3,477)
Net cash provided by operating activities	30,207	17,674
Cash flows from investing activities:
Medical equipment purchases	(28,478)	(32,082)
Property and office equipment purchases	(4,178)	(3,637)
Proceeds from disposition of property and equipment	1,929	3,935
Acquisitions, net of cash acquired		(11,445)
Holdback payment related to acquisition	(1,655)
Net cash used in investing activities	(32,382)	(43,229)
Cash flows from financing activities:
Proceeds under senior secured credit facility	43,300	72,000
Payments under senior secured credit facility	(36,800)	(39,000)
Payments of principal under capital lease obligations	(4,150)	(3,398)
Payments of floating rate notes	(230,000)
Payments on acquired debt		(3,163)
Proceeds from issuance of bonds	234,025
Accrued interest received from bondholders	8,620
Accrued interest paid to bondholders	(8,620)
Distributions to noncontrolling interests	(379)	(373)
Proceeds from exercise of parent company stock options		150
Dividend and equity distribution payments		(763)
Payment of deferred financing costs	(4,102)
Change in book overdrafts	281	(727)
Net cash provided by financing activities	2,175	24,726
Net change in cash and cash equivalents		(829)
Cash and cash equivalents at the beginning of period		1,161
Cash and cash equivalents at the end of period		332
Supplemental cash flow information:
Interest paid	21,620	29,424
Income taxes paid	332	798
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	8,008	8,016
Capital lease additions	$ 4,438	$ 3,113

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Consolidating Financial Statements (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue
Medical equipment outsourcing	$ 78,308	$ 75,081	$ 160,305	$ 152,465
Technical and professional services	21,912	22,350	43,161	42,479
Medical equipment sales and remarketing	6,769	9,264	13,883	15,631
Total revenues	106,989	106,695	217,349	210,575
Cost of Sales
Cost of medical equipment outsourcing	34,148	19,212	68,020	48,537
Cost of technical and professional services	16,778	16,885	33,809	32,654
Cost of medical equipment sales and remarketing	5,349	7,345	11,044	12,099
Medical equipment depreciation	18,459	17,321	36,356	34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	74,734	60,763	149,229	127,515
Gross margin	32,255	45,932	68,120	83,060
Selling, general and administrative	30,653	28,709	60,180	56,367
Restructuring, acquisition and integration expenses	183	190	236	294
Operating income	1,419	17,033	7,704	26,399
Loss on extinguishment of debt			1,853
Interest expense	13,944	14,504	27,822	30,003
Income (loss) before income taxes and noncontrolling interest	(12,525)	2,529	(21,971)	(3,604)
Provision (benefit) for income taxes	183	197	915	(2,972)
Consolidated net income (loss)	(12,708)	2,332	(22,886)	(632)
Net income attributable to noncontrolling interest	135	184	315	366
Net income (loss) attributable to Universal Hospital Services, Inc.	(12,843)	2,148	(23,201)	(998)
Parent Issuer UHS
Revenue
Medical equipment outsourcing	64,217	62,793	132,903	128,336
Technical and professional services	21,912	22,350	43,161	42,479
Medical equipment sales and remarketing	6,769	9,264	13,883	15,631
Total revenues	92,898	94,407	189,947	186,446
Cost of Sales
Cost of medical equipment outsourcing	26,262	12,456	52,766	35,231
Cost of technical and professional services	16,778	16,885	33,809	32,654
Cost of medical equipment sales and remarketing	5,349	7,345	11,044	12,099
Medical equipment depreciation	16,944	16,152	33,431	31,915
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	65,333	52,838	131,050	111,899
Gross margin	27,565	41,569	58,897	74,547
Selling, general and administrative	25,795	23,472	50,685	47,514
Restructuring, acquisition and integration expenses	108	126	(129)	230
Operating income	1,662	17,971	8,341	26,803
Equity in earnings (loss) of subsidiary	553	1,299	1,149	1,208
Loss on extinguishment of debt			1,853
Interest expense	13,375	14,150	26,750	29,302
Income (loss) before income taxes and noncontrolling interest	(12,266)	2,522	(21,411)	(3,707)
Provision (benefit) for income taxes	442	190	1,475	(3,075)
Consolidated net income (loss)	(12,708)	2,332	(22,886)	(632)
Net income attributable to noncontrolling interest		184		366
Net income (loss) attributable to Universal Hospital Services, Inc.	(12,708)	2,148	(22,886)	(998)
Subsidiary Guarantor Surgical Services
Revenue
Medical equipment outsourcing	14,091	12,288	27,402	24,129
Total revenues	14,091	12,288	27,402	24,129
Cost of Sales
Cost of medical equipment outsourcing	7,886	6,756	15,254	13,306
Medical equipment depreciation	1,515	1,169	2,925	2,310
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	9,401	7,925	18,179	15,616
Gross margin	4,690	4,363	9,223	8,513
Selling, general and administrative	4,858	5,237	9,495	8,853
Restructuring, acquisition and integration expenses	75	64	365	64
Operating income	(243)	(938)	(637)	(404)
Interest expense	569	354	1,072	701
Income (loss) before income taxes and noncontrolling interest	(812)	(1,292)	(1,709)	(1,105)
Provision (benefit) for income taxes	(259)	7	(560)	103
Consolidated net income (loss)	(553)	(1,299)	(1,149)	(1,208)
Net income attributable to noncontrolling interest	135	184	315	366
Net income (loss) attributable to Universal Hospital Services, Inc.	(688)	(1,483)	(1,464)	(1,574)
Consolidating Adjustments
Cost of Sales
Equity in earnings (loss) of subsidiary	(553)	(1,299)	(1,149)	(1,208)
Income (loss) before income taxes and noncontrolling interest	553	1,299	1,149	1,208
Consolidated net income (loss)	553	1,299	1,149	1,208
Net income attributable to noncontrolling interest		(184)		(366)
Net income (loss) attributable to Universal Hospital Services, Inc.	$ 553	$ 1,483	$ 1,149	$ 1,574

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Information
Revenues	$ 106,989	$ 106,695	$ 217,349	$ 210,575
Medical equipment depreciation	18,459	17,321	36,356	34,225
Gross margin	32,255	45,932	68,120	83,060
Selling, general and administrative	30,653	28,709	60,180	56,367
Restructuring, acquisition and integration expenses	183	190	236	294
Loss on extinguishment of debt			1,853
Interest expense	13,944	14,504	27,822	30,003
Income (loss) before income taxes and noncontrolling interest	(12,525)	2,529	(21,971)	(3,604)
Total Company Assets	928,749		928,749		937,413
Medical Equipment Outsourcing
Segment Information
Revenues	78,308	75,081	160,305	152,465
Cost of revenue	34,148	19,212	68,020	48,537
Medical equipment depreciation	18,459	17,321	36,356	34,225
Gross margin	25,701	38,548	55,929	69,703
Total Company Assets	458,487		458,487		465,192
Technical and Professional Services
Segment Information
Revenues	21,912	22,350	43,161	42,479
Cost of revenue	16,778	16,885	33,809	32,654
Gross margin	5,134	5,465	9,352	9,825
Total Company Assets	83,443		83,443		83,791
Medical Equipment Sales And Remarketing
Segment Information
Revenues	6,769	9,264	13,883	15,631
Cost of revenue	5,349	7,345	11,044	12,099
Gross margin	1,420	1,919	2,839	3,532
Total Company Assets	18,603		18,603		18,603
Corporate and Unallocated
Segment Information
Total Company Assets	$ 368,216		$ 368,216		$ 369,827

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Consolidating Financial Statements (Tables)

6 Months Ended

Jun. 30, 2013

Consolidating Financial Statements

Schedule of Consolidating Balance Sheets

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,371		$	7,395		$	—		$	67,766
Due from affiliates	28,800			—			(28,800		)	—
Inventories	6,151			3,543			—			9,694
Deferred income taxes, net	2,255			1,029			—			3,284
Other current assets	4,918			214			—			5,132
Total current assets	102,495			12,181			(28,800		)	85,876
Property and equipment, net:
Medical equipment, net	216,899			14,135			—			231,034
Property and office equipment, net	30,582			2,669			—			33,251
Total property and equipment, net	247,481			16,804			—			264,285
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	53,442			—			(53,442		)	—
Other intangibles, net	206,622			20,713			—			227,335
Other, primarily deferred financing costs, net	15,352			324			—			15,676
Total assets	$	908,533		$	102,458		$	(82,242	)	$	928,749
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	4,183		$	1,199		$	—		$	5,382
Book overdrafts	3,503			683			—			4,186
Due to affiliates	—			28,800			(28,800		)	—
Accounts payable	23,296			2,630			—			25,926
Accrued compensation	12,131			1,925			—			14,056
Accrued interest	18,878			—			—			18,878
Dividend payable	88			—			—			88
Other accrued expenses	10,403			1,987			—			12,390
Total current liabilities	72,482			37,224			(28,800		)	80,906
Long-term debt, less current portion	702,282			1,596			—			703,878
Pension and other long-term liabilities	13,414			1,720			—			15,134
Payable to Parent	21,835			—			—			21,835
Deferred income taxes, net	61,190			8,196			—			69,386
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(161,488		)	(6,577		)	—			(168,065		)
Accumulated loss in subsidiary	(6,577		)	—			6,577			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	37,330			53,442			(53,442		)	37,330
Noncontrolling interest	—			280			—			280
Total equity	37,330			53,722			(53,442		)	37,610
Total liabilities and equity	$	908,533		$	102,458		$	(82,242	)	$	928,749

	December 31, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,805		$	7,673		$	—		$	68,478
Due from affiliates	25,138			—			(25,138		)	—
Inventories	5,771			3,097			—			8,868
Deferred income taxes, net	2,581			1,029			—			3,610
Other current assets	4,015			265			—			4,280
Total current assets	98,310			12,064			(25,138		)	85,236
Property and equipment, net:
Medical equipment, net	222,045			14,860			—			236,905
Property and office equipment, net	28,250			1,844			—			30,094
Total property and equipment, net	250,295			16,704			—			266,999
Other long-term assets:
Goodwill	283,141			52,436			—			335,577
Investment in subsidiary	54,906			—			(54,906		)	—
Other intangibles, net	211,999			22,392			—			234,391
Other, primarily deferred financing costs, net	14,876			334			—			15,210
Total assets	$	913,527		$	103,930		$	(80,044	)	$	937,413
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	5,038		$	1,185		$	—		$	6,223
Book overdrafts	3,644			261			—			3,905
Due to affiliates	—			25,138			(25,138		)	—
Accounts payable	20,083			5,953			—			26,036
Accrued compensation	15,005			1,951			—			16,956
Accrued interest	13,845			—			—			13,845
Dividend payable	88			—			—			88
Other accrued expenses	9,782			1,859			—			11,641
Total current liabilities	67,485			36,347			(25,138		)	78,694
Long-term debt, less current portion	691,565			1,226			—			692,791
Pension and other long-term liabilities	12,679			1,698			—			14,377
Payable to Parent	21,640			—			—			21,640
Deferred income taxes, net	59,627			9,409			—			69,036
Commitments and contingencies
Equity
Common stock	—			—			—			—
Additional paid-in capital	214,481			60,019			(60,019		)	214,481
Accumulated deficit	(139,751		)	(5,113		)	—			(144,864		)
Accumulated loss in subsidiary	(5,113		)	—			5,113			—
Accumulated other comprehensive loss	(9,086		)	—			—			(9,086		)
Total Universal Hospital Services, Inc. equity	60,531			54,906			(54,906		)	60,531
Noncontrolling interest	—			344			—			344
Total equity	60,531			55,250			(54,906		)	60,875
Total liabilities and equity	$	913,527		$	103,930		$	(80,044	)	$	937,413

Schedule of Consolidating Statements of Operations

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	64,217		$	14,091		$	—		$	78,308
Technical and professional services	21,912			—			—			21,912
Medical equipment sales and remarketing	6,769			—			—			6,769
Total revenues	92,898			14,091			—			106,989
Cost of Revenue
Cost of medical equipment outsourcing	26,262			7,886			—			34,148
Cost of technical and professional services	16,778			—			—			16,778
Cost of medical equipment sales and remarketing	5,349			—			—			5,349
Medical equipment depreciation	16,944			1,515			—			18,459
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	65,333			9,401			—			74,734
Gross margin	27,565			4,690			—			32,255
Selling, general and administrative	25,795			4,858			—			30,653
Restructuring, acquisition and integration expenses	108			75			—			183
Operating income (loss)	1,662			(243		)	—			1,419
Equity in loss of subsidiary	553			—			(553		)	—
Interest expense	13,375			569			—			13,944
Loss before income taxes and noncontrolling interest	(12,266		)	(812		)	553			(12,525		)
Provision (benefit) for income taxes	442			(259		)	—			183
Consolidated net loss	(12,708		)	(553		)	553			(12,708		)
Net income attributable to noncontrolling interest	—			135			—			135
Net loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553		$	(12,843	)

	Three Months Ended June 30, 2012
	Parent		Subsidiary
	Issuer		Guarantor			Consolidating
	UHS		Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	62,793	$	12,288		$	—		$	75,081
Technical and professional services	22,350		—			—			22,350
Medical equipment sales and remarketing	9,264		—			—			9,264
Total revenues	94,407		12,288			—			106,695
Cost of Revenue
Cost of medical equipment outsourcing	12,456		6,756			—			19,212
Cost of technical and professional services	16,885		—			—			16,885
Cost of medical equipment sales and remarketing	7,345		—			—			7,345
Medical equipment depreciation	16,152		1,169			—			17,321
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	52,838		7,925			—			60,763
Gross margin	41,569		4,363			—			45,932
Selling, general and administrative	23,472		5,237			—			28,709
Restructuring, acquisition and integration expenses	126		64			—			190
Operating income (loss)	17,971		(938		)	—			17,033
Equity in loss of subsidiary	1,299		—			(1,299		)	—
Interest expense	14,150		354			—			14,504
Income (loss) before income taxes and noncontrolling interest	2,522		(1,292		)	1,299			2,529
Provision for income taxes	190		7			—			197
Consolidated net income (loss)	2,332		(1,299		)	1,299			2,332
Net income attributable to noncontrolling interest	184		184			(184		)	184
Net income (loss) attributable to Universal Hospital Services, Inc.	$	2,148	$	(1,483	)	$	1,483		$	2,148

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	132,903		$	27,402		$	—		$	160,305
Technical and professional services	43,161			—			—			43,161
Medical equipment sales and remarketing	13,883			—			—			13,883
Total revenues	189,947			27,402			—			217,349
Cost of Revenue
Cost of medical equipment outsourcing	52,766			15,254			—			68,020
Cost of technical and professional services	33,809			—			—			33,809
Cost of medical equipment sales and remarketing	11,044			—			—			11,044
Medical equipment depreciation	33,431			2,925			—			36,356
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	131,050			18,179			—			149,229
Gross margin	58,897			9,223			—			68,120
Selling, general and administrative	50,685			9,495			—			60,180
Restructuring, acquisition and integration expenses	(129		)	365			—			236
Operating income (loss)	8,341			(637		)	—			7,704
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Loss on extinguishment of debt	1,853			—			—			1,853
Interest expense	26,750			1,072			—			27,822
Loss before income taxes and noncontrolling interest	(21,411		)	(1,709		)	1,149			(21,971		)
Provision (benefit) for income taxes	1,475			(560		)	—			915
Consolidated net loss	(22,886		)	(1,149		)	1,149			(22,886		)
Net income attributable to noncontrolling interest	—			315			—			315
Net loss attributable to Universal Hospital Services, Inc.	$	(22,886	)	$	(1,464	)	$	1,149		$	(23,201	)

	Six Months Ended June 30, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Revenue
Medical equipment outsourcing	$	128,336		$	24,129		$	—		$	152,465
Technical and professional services	42,479			—			—			42,479
Medical equipment sales and remarketing	15,631			—			—			15,631
Total revenues	186,446			24,129			—			210,575
Cost of Revenue
Cost of medical equipment outsourcing	35,231			13,306			—			48,537
Cost of technical and professional services	32,654			—			—			32,654
Cost of medical equipment sales and remarketing	12,099			—			—			12,099
Medical equipment depreciation	31,915			2,310			—			34,225
Total costs of medical equipment outsourcing, technical and professional services and medical equipment sales and remarketing	111,899			15,616			—			127,515
Gross margin	74,547			8,513			—			83,060
Selling, general and administrative	47,514			8,853			—			56,367
Restructuring, acquisition and integration expenses	230			64			—			294
Operating income (loss)	26,803			(404		)	—			26,399
Equity in loss of subsidiary	1,208			—			(1,208		)	—
Interest expense	29,302			701			—			30,003
Loss before income taxes and noncontrolling interest	(3,707		)	(1,105		)	1,208			(3,604		)
(Benefit) provision for income taxes	(3,075		)	103			—			(2,972		)
Consolidated net loss	(632		)	(1,208		)	1,208			(632		)
Net income attributable to noncontrolling interest	366			366			(366		)	366
Net loss attributable to Universal Hospital Services, Inc.	$	(998	)	$	(1,574	)	$	1,574		$	(998	)

Schedule of Consolidating Statements of Comprehensive Income (Loss)

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30, 2013											Six Months Ended June 30, 2013
	Parent			Subsidiary								Parent			Subsidiary
	Issuer			Guarantor			Consolidating					Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated			UHS			Surgical Services			Adjustments		Consolidated
Consolidated net loss	$	(12,708	)	$	(553	)	$	553	$	(12,708	)	$	(22,886	)	$	(1,149	)	$	1,149	$	(22,886	)
Total other comprehensive income	—			—			—		—			—			—			—		—
Comprehensive loss	(12,708		)	(553		)	553		(12,708		)	(22,886		)	(1,149		)	1,149		(22,886		)
Comprehensive income attributable to noncontrolling interest	—			135			—		135			—			315			—		315
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(12,708	)	$	(688	)	$	553	$	(12,843	)	$	(22,886	)	$	(1,464	)	$	1,149	$	(23,201	)

	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Parent		Subsidiary							Parent			Subsidiary
	Issuer		Guarantor			Consolidating				Issuer			Guarantor			Consolidating
	UHS		Surgical Services			Adjustments		Consolidated		UHS			Surgical Services			Adjustments		Consolidated
Consolidated net income (loss)	$	2,332	$	(1,299	)	$	1,299	$	2,332	$	(632	)	$	(1,208	)	$	1,208	$	(632	)
Other comprehensive income:
Gain on cash flow hedge, net of tax	1,167		—			—		1,167		2,887			—			—		2,887
Total other comprehensive income	1,167		—			—		1,167		2,887			—			—		2,887
Comprehensive income (loss)	3,499		(1,299		)	1,299		3,499		2,255			(1,208		)	1,208		2,255
Comprehensive income attributable to noncontrolling interest	184		—			—		184		366			—					366
Comprehensive income (loss) attributable to Universal Hospital Services, Inc.	$	3,315	$	(1,299	)	$	1,299	$	3,315	$	1,889		$	(1,208	)	$	1,208	$	1,889

Schedule of Consolidating Statements of Cash Flows

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2013
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments			Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(22,886	)	$	(1,149	)	$	1,149		(22,886		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	38,393			3,282			—			41,675
Amortization of intangibles, deferred financing costs and bond premium	6,548			1,679			—			8,227
Non-cash write off of deferred financing cost	1,853			—			—			1,853
Equity in loss of subsidiary	1,149			—			(1,149		)	—
Provision for doubtful accounts	1,128			(95		)	—			1,033
Provision for inventory obsolescence	112			(17		)	—			95
Non-cash share-based compensation expense - net	120			75			—			195
Gain on sales and disposals of equipment	(783		)	(18		)	—			(801		)
Deferred income taxes	1,889			(1,213		)	—			676
Changes in operating assets and liabilities:
Accounts receivable	(694		)	373			—			(321		)
Inventories	(492		)	(429		)	—			(921		)
Other operating assets	(853		)	61			—			(792		)
Accounts payable	(588		)	(877		)	—			(1,465		)
Other operating liabilities	3,515			124			—			3,639
Net cash provided by operating activities	28,411			1,796			—			30,207
Cash flows from investing activities:
Medical equipment purchases	(25,487		)	(2,991		)	—			(28,478		)
Property and office equipment purchases	(4,042		)	(136		)	—			(4,178		)
Proceeds from disposition of property and equipment	1,909			20			—			1,929
Holdback payment related to acquisition	—			(1,655		)	—			(1,655		)
Net cash used in investing activities	(27,620		)	(4,762		)	—			(32,382		)
Cash flows from financing activities:
Due from (to) affiliates	(3,587		)	3,587			—			—
Proceeds under senior secured credit facility	43,300			—			—			43,300
Payments under senior secured credit facility	(36,800		)	—			—			(36,800		)
Payments of principal under capital lease obligations	(3,486		)	(664		)	—			(4,150		)
Payments of floating rate notes	(230,000		)	—			—			(230,000		)
Proceeds from issuance of bonds	234,025			—			—			234,025
Accrued interest received from bondholders	8,620			—			—			8,620
Accrued interest paid to bondholders	(8,620		)	—			—			(8,620		)
Distributions to noncontrolling interests	—			(379		)	—			(379		)
Payment of deferred financing costs	(4,102		)	—			—			(4,102		)
Change in book overdrafts	(141		)	422			—			281
Net cash provided by financing activities	(791		)	2,966			—			2,175
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	$	—		$	—		$	—		$	—

	Six Months Ended June 30, 2012
	Parent			Subsidiary
	Issuer			Guarantor			Consolidating
	UHS			Surgical Services			Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net income (loss)	$	576		$	(1,208	)	$	—	$	(632	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	37,140			2,533			—		39,673
Amortization of intangibles, deferred financing costs and bond premium	7,764			1,548			—		9,312
Provision for doubtful accounts	323			69			—		392
Provision for inventory obsolescence	182			—			—		182
Non-cash share-based compensation expense	2,150			—			—		2,150
Non-cash gain on trade-in of recalled equipment	(14,122		)	—			—		(14,122		)
Loss (gain) on sales and disposals of equipment	(700		)	5			—		(695		)
Deferred income taxes	(666		)	(784		)	—		(1,450		)
Changes in operating assets and liabilities:
Accounts receivable	(7,276		)	(2,096		)	—		(9,372		)
Inventories	(1,145		)	(533		)	—		(1,678		)
Other operating assets	(1,745		)	(256		)	—		(2,001		)
Accounts payable	471			(1,079		)	—		(608		)
Other operating liabilities	(1,992		)	(1,485		)	—		(3,477		)
Net cash provided by operating activities	20,960			(3,286		)	—		17,674
Cash flows from investing activities:
Medical equipment purchases	(30,007		)	(2,075		)	—		(32,082		)
Property and office equipment purchases	(3,450		)	(187		)	—		(3,637		)
Proceeds from disposition of property and equipment	3,935			—			—		3,935
Acquisitions, net of cash acquired	(436		)	(11,009		)	—		(11,445		)
Net cash used in investing activities	(29,958		)	(13,271		)	—		(43,229		)
Cash flows from financing activities:
Due from (to) affiliates	(20,060		)	20,060			—		—
Proceeds under senior secured credit facility	72,000			—			—		72,000
Payments under senior secured credit facility	(39,000		)	—			—		(39,000		)
Payments of principal under capital lease obligations	(2,602		)	(796		)	—		(3,398		)
Payoff of acquired debt	—			(3,163		)	—		(3,163		)
Distributions to noncontrolling interests	—			(373		)	—		(373		)
Proceeds from exercise of parent company stock options	150			—			—		150
Dividend and equity distribution payments	(763		)	—			—		(763		)
Change in book overdrafts	(727		)	—			—		(727		)
Net cash provided by (used in) financing activities	8,998			15,728			—		24,726
Net change in cash and cash equivalents	—			(829		)	—		(829		)
Cash and cash equivalents at the beginning of period	—			1,161			—		1,161
Cash and cash equivalents at the end of period	$	—		$	332		$	—	$	332

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Limited Liability Companies

6 Months Ended

Jun. 30, 2013

Limited Liability Companies

Limited Liability Companies

12. Limited Liability Companies

We participate with others in the formation of LLCs in which Surgical Services becomes a partner and shares the financial interest with the other investors. Surgical Services is the primary beneficiary of these LLCs. These LLCs acquire certain medical equipment for use in their respective business activities, which generally focus on surgical procedures. The LLCs will acquire medical equipment for providing Surgical Services under equipment financing leases. At June 30, 2013, the LLCs had approximately $0.6 million of total assets. The third party investors in each respective LLC generally provide the lease financing company with individual proportionate lease guarantees based on their respective ownership percentages in the LLCs. In addition, Surgical Services will provide such financing companies with its corporate guarantee based on its respective ownership interest in each LLC. In certain instances, Surgical Services has provided such financing companies with an overall corporate guarantee in connection with equipment financing transactions. In such instances, the individual investors in each respective LLC will generally indemnify us against losses, if any, incurred in connection with its corporate guarantee. Additionally, we provide operational and administrative support to the LLCs in which it is a partner. As of June 30, 2013, we held interests in six active LLCs.

In accordance with guidance issued by the FASB, we account for equity investments in LLCs (in which we are the primary beneficiary) under the full consolidation method whereby transactions between Surgical Services and the LLCs have been eliminated through consolidation.

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Dividend and Equity Distribution

6 Months Ended

Jun. 30, 2013

Dividend and Equity Distribution

Dividend and Equity Distribution

8. Dividend and Equity Distribution

On June 8, 2011, the Board of Directors declared an equity distribution of $0.12 per option to holders of outstanding options on the Parent’s stock on June 10, 2011 that vested on December 31, 2011 and 2012 and are scheduled to vest on December 31, 2013, 2014 and 2015.

Our consolidated balance sheet as of June 30, 2013 and December 31, 2012 reflect the related current dividend payable and long-term dividend payable included in Payable to Parent for estimated amounts to be paid to holders of options expected to vest on December 31, 2013 through 2015 based on an estimated option forfeiture rate of 2% annually.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes

Income Taxes

15. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We evaluate the recoverability of our deferred tax assets by scheduling the expected reversals of deferred tax assets and liabilities in order to determine whether net operating loss carry forwards are recoverable prior to expiration and have established a valuation allowance in accordance with ASC Topic 740. The tax expense for the six months ended June 30, 2013 primarily relates to a discrete item to record a deferred tax liability for adjustments in connection with the tax amortization of indefinite-life goodwill and state minimum fees. The Company will continue to incur deferred tax expense in the future as tax amortization occurs. The expected tax benefit from operating loss during the six months ended June 30, 2013 was offset by the recording of additional valuation allowance. Our January 3, 2012 acquisition resulted in the recording of deferred tax liabilities on the opening balance sheet due to higher book than tax bases for fixed assets and amortizable intangible assets.   This discrete event had the one-time effect of reducing our valuation allowance by approximately $3.4 million on that date, though this amount was offset by approximately $2.5 million of additional valuation allowance resulting from year-to-date losses. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

At June 30, 2013, the Company had available unused federal net operating loss carryforwards of approximately $190.6 million. The net operating loss carryforwards will expire at various dates from 2019 through 2034.

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

Segment Information

13. Segment Information

Our reporting segments consist of Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales and Remarketing. Certain operating information for our segments as well as a reconciliation of total Company gross margin to income (loss) before income tax and noncontrolling interest was as follows:

Medical Equipment Outsourcing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	78,308	$	75,081	$	160,305	$	152,465
Cost of revenue	34,148		19,212		68,020		48,537
Medical equipment depreciation	18,459		17,321		36,356		34,225
Gross margin	$	25,701	$	38,548	$	55,929	$	69,703

Technical and Professional Services

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	21,912	$	22,350	$	43,161	$	42,479
Cost of revenue	16,778		16,885		33,809		32,654
Gross margin	$	5,134	$	5,465	$	9,352	$	9,825

Medical Equipment Sales and Remarketing

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Revenues	$	6,769	$	9,264	$	13,883	$	15,631
Cost of revenue	5,349		7,345		11,044		12,099
Gross margin	$	1,420	$	1,919	$	2,839	$	3,532

Total Gross Margin and Reconciliation to Income (Loss) Before Income Taxes and Noncontrolling Interest

(in thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013			2012		2013			2012
Total gross margin	$	32,255		$	45,932	$	68,120		$	83,060
Selling, general and administrative	30,653			28,709		60,180			56,367
Restructuring, acquisition and integration expenses	183			190		236			294
Loss on extinguishment of debt	—			—		1,853			—
Interest expense	13,944			14,504		27,822			30,003
Income (loss) before income taxes and noncontrolling interest	$	(12,525	)	$	2,529	$	(21,971	)	$	(3,604	)

Total Assets By Reporting Segment

(in thousands)

	June 30,		December 31
	2013		2012
Medical Equipment Outsourcing	$	458,487	$	465,192
Technical and Professional Services	83,443		83,791
Medical Equipment Sales and Remarketing	18,603		18,603
Corporate and Unallocated	368,216		369,827
Total Company Assets	$	928,749	$	937,413

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 12, 2013
Document and Entity Information
Entity Registrant Name	UNIVERSAL HOSPITAL SERVICES INC
Entity Central Index Key	0000886171
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Pension Plan

6 Months Ended

Jun. 30, 2013

Pension Plan

Pension Plan

14. Pension Plan

The components of net periodic pension costs are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2013			2012			2013			2012
Interest cost	$	260		$	265		$	520		$	538
Expected return on plan assets	(291		)	(320		)	(582		)	(639		)
Recognized net actuarial loss	222			166			458			343
Net periodic cost	$	191		$	111		$	396		$	242

Future benefit accruals for all participants were frozen as of December 31, 2002.  We made required contributions of $0.2 and $0.4 million during the three months ended June 30, 2013 and 2012, respectively and $0.2 and $0.6 million during the six months ended June 30, 2013 and 2012, respectively.