10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2015

or

☐ Transition 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, Suite300

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 Section13 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☐  No☒

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 Rule405 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☒  No☐

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 Rule12b-2 of the Exchange Act (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).Yes☐  No☒

Number of shares of common stock outstanding as of August 12, 2015:  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, 2015 and December 31, 2014	2
	Consolidated Statements of Operations—Three and six months ended June 30, 2015 and 2014	3
	Consolidated Statements of Comprehensive Loss —Threeand six months ended June 30, 2015 and 2014	4
	Consolidated Statements of Cash Flows — Three and six months ended June 30, 2015 and 2014	5
	Notes to Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	41
ITEM 4.	Controls and Procedures	41
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	42
ITEM 1A.	Risk Factors	42
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
ITEM 3.	Defaults Upon Senior Securities	42
ITEM 4.	Mine Safety Disclosures	42
ITEM 5.	Other Information	42
ITEM 6.	Exhibits	43
Signatures		44

1

PARTI - 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,
	2015		2014
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts of  $1,800 at June 30, 2015 and $2,035 at December 31, 2014	$	70,182	$	66,256
Inventories		8,159		7,991
Deferred income taxes, net		1,273		1,273
Other current assets		6,196		7,671
Total current assets		85,810		83,191
Property and equipment:
Medical equipment		589,441		591,100
Property and office equipment		84,230		84,454
Accumulated depreciation		(456,228)		(445,481)
Total property and equipment, net		217,443		230,073
Other long-term assets:
Goodwill		336,595		335,577
Other intangibles, net		168,232		172,905
Other, primarily deferred financing costs, net		10,828		12,166
Total assets	$	818,908	$	833,912
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	5,408	$	5,640
Book overdrafts		5,126		5,944
Accounts payable		28,223		30,114
Accrued compensation		16,201		15,108
Accrued interest		18,808		18,823
Dividend payable		28		39
Other accrued expenses		16,608		11,586
Total current liabilities		90,402		87,254
Long-term debt, less current portion		694,557		704,546
Pension and other long-term liabilities		11,759		12,428
Payable to Parent		26,023		24,911
Deferred income taxes, net		53,341		53,520
Commitments and contingencies (Note 10)
Deficit
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at June 30, 2015 and December 31, 2014		—		—
Additional paid-in capital		214,514		214,514
Accumulated deficit		(263,383)		(254,418)
Accumulated other comprehensive loss		(8,574)		(9,062)
Total Universal Hospital Services, Inc. deficit		(57,443)		(48,966)
Noncontrolling interest		269		219
Total deficit		(57,174)		(48,747)
Total liabilities and deficit	$	818,908	$	833,912

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

2

Universal Hospital Services,Inc.

Consolidated Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenue
Medical equipment solutions	$	71,084	$	72,188	$	145,169	$	148,910
Clinical engineering solutions		24,784		22,119		49,179		44,788
Surgical services		16,421		15,059		31,427		29,004
Total revenues		112,289		109,366		225,775		222,702
Cost of Revenue
Cost of medical equipment solutions		31,053		32,288		62,331		65,716
Cost of clinical engineering solutions		20,041		17,869		39,271		35,784
Cost of surgical services		8,722		8,236		16,902		16,436
Medical equipment depreciation		15,501		19,095		33,635		38,231
Total costs of revenues		75,317		77,488		152,139		156,167
Gross margin		36,972		31,878		73,636		66,535
Selling, general and administrative		31,038		29,587		61,189		58,877
(Gain) on settlement		(5,718)		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		512		—		1,820
Intangible asset impairment charge		—		34,900		—		34,900
Operating income (loss)		11,652		(33,121)		18,165		(29,062)
Interest expense		13,249		13,260		26,559		26,656
Loss before income taxes and noncontrolling interest		(1,597)		(46,381)		(8,394)		(55,718)
Provision (benefit) for income taxes		182		(13,671)		351		(13,456)
Consolidated net loss		(1,779)		(32,710)		(8,745)		(42,262)
Net income attributable to noncontrolling interest		95		131		220		261
Net loss attributable to Universal Hospital Services, Inc.	$	(1,874)	$	(32,841)	$	(8,965)	$	(42,523)

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

3

Universal Hospital Services,Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Consolidated net loss	$	(1,779)	$	(32,710)	$	(8,745)	$	(42,262)
Other comprehensive income:
Gain on minimum pension liability, net of tax of $0		488		—		488		—
Total other comprehensive income		488		—		488		—
Comprehensive loss		(1,291)		(32,710)		(8,257)		(42,262)
Comprehensive income attributable to noncontrolling interest		95		131		220		261
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(1,386)	$	(32,841)	$	(8,477)	$	(42,523)

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

4

Universal Hospital Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended
	June 30,
	2015		2014
Cash flows from operating activities:
Consolidated net loss	$	(8,745)	$	(42,262)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		38,315		42,853
Asset impairment charges		1,703		2,025
Intangible asset impairment charge		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		6,532		7,039
Provision for doubtful accounts		54		85
Provision for inventory obsolescence		225		38
Non-cash share-based compensation expense		1,140		538
Gain on sales and disposals of equipment		(2,522)		(1,234)
Deferred income taxes		108		(13,629)
Changes in operating assets and liabilities:
Accounts receivable		(3,980)		810
Inventories		(393)		(476)
Other operating assets		669		(1,394)
Accounts payable		2,000		674
Other operating liabilities		5,119		2,234
Net cash provided by operating activities		40,225		32,201
Cash flows from investing activities:
Medical equipment purchases		(27,437)		(34,766)
Property and office equipment purchases		(2,433)		(2,560)
Proceeds from disposition of property and equipment		9,426		5,970
Acquisition		(2,600)		—
Purchases of noncontrolling interests		—		(34)
Net cash used in investing activities		(23,044)		(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility		63,900		76,129
Payments under senior secured credit facility		(75,900)		(69,129)
Payments of principal under capital lease obligations		(4,154)		(3,429)
Distributions to noncontrolling interests		(240)		(295)
Contributions from new members to limited liability company		70		—
Dividend and equity distribution payments		(39)		(73)
Change in book overdrafts		(818)		(4,014)
Net cash used in financing activities		(17,181)		(811)
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	$	—	$	—
Supplemental cash flow information:
Interest paid	$	26,151	$	26,228
Income taxes paid		697		309
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	$	9,039	$	4,598
Capital lease additions		6,766		768

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

5

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 2014 Annual Report on Form 10-K filed with the SEC.

The interim consolidated financial statements presented herein as of June 30, 2015, 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 2014 Annual Report on Form 10-K. There have been no material changes to these policies for the quarter ended June 30, 2015.

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

Standards Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in the U.S. GAAP when it becomes effective. The new standard is effective beginning after December 15, 2016 and interim periods within those years. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.On July 9, 2015, the FASBapproved a one-year deferral of the effective date for ASU 2014-09, but would permit all entities to adopt the standard as of the original effective date.

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In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern  (“ASU 2014-15”), which requires management to evaluate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard is effective beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02 Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 changes the evaluation of whether limited partnerships (and similar legal entities) are variable interest entity (VIEs) and eliminates the presumption that a general partner should consolidate a limited partnership that is a voting interest entity. The new guidance also alters the analysis for determining when fees paid to a decision maker or service provider represent a variable interest in a VIE and how interests of related parties affect the primary beneficiary determination. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

3.Acquisition

On May 18, 2015, we completed the acquisition of certain assets of a mobile laser surgical services provider for total consideration of approximately $3.1 million. The results of the acquiree’s operations have been included in the consolidated financial statements since that date. The consideration consists of $2.6 million of cash paid at closing and $0.5 million holdback expected to be paid in the first quarter of 2016 based on achieving a  certain revenue target.  

The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet:

(in thousands)
Property and equipment	$	620
Goodwill		1,018
Intangible assets		1,475
Accrued compensation		(13)
Total purchase price	$	3,100

The acquisition was funded 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, 2015 and December 31, 2014 are summarized in the following table by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2015								Fair Value at December 31, 2014
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	624	$	624	$	—	$	—	$	143	$	143

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.

7

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. During 2015, we recorded a holdback liability related to our acquisition. The contingent consideration and holdback 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 months ended June 30, 2015 and 2014, we paid $0.01 and $0.02 million, respectively, in earn-outs.  During the six months ended June 30, 2015 and 2014, we paid $0.02 and $0.04 million, respectively, in earn-outs. 

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 are as follows:

(in thousands)
Balance at December 31, 2014	$	143
Addition		500
Payments		(19)
Balance at June 30, 2015	$	624

We recorded $0 and $0.8 million during the three months ended June 30, 2015 and 2014, respectively and $1.7 and $2.0 million during the six months ended June 30, 2015 and 2014, respectively, of impairment charges on certain long-lived assets for which the carrying value of those assets may not be recoverable based upon our estimated cash flows. The fair value of the assets 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 assessment of assets’ utilization level and estimated proceeds from sale of the assets.

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 and Add-on Notes (each as defined in Note 9, Long-Term Debt) as of

8

June 30, 2015 and December 31, 2014, 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, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	393,125	$	425,000	$	359,125
Add-on notes - 7.625% (1)		230,280		203,500		231,113		185,900

(1) The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $10.3 and $11.1 million as of June 30, 2015 and December 31, 2014, respectively.

5.Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2015 and December 31, 2014, by reporting segment, consists of the following:

	Medical		Clinical
	Equipment		Engineering		Surgical
(in thousands)	Solutions		Solutions		Services		Total
Balance at December 31, 2014	$	227,486	$	55,655	$	52,436	$	335,577
Acquisition		—		—		1,018		1,018
Balance at June 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

Our other intangible assets as of June 30, 2015 and December 31, 2014 consist of the following:

	June 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(85,324)	$	—	$	31,715	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(20,917)		—		5,083		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(614)		—		334		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(114,206)		—		37,132		149,862		(108,057)		—		41,805
Indefinite-life intangibles
Trade names		166,000		—		(34,900)		131,100		166,000		—		(34,900)		131,100
Total intangible assets	$	317,338	$	(114,206)	$	(34,900)	$	168,232	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Total amortization expense related to intangible assets were $3.0 and $3.3 million for the three months ended June 30, 2015 and 2014, respectively and $6.1 and $6.6 million for the six months ended June 30, 2015 and 2014, respectively.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2015 and the next five years is as follows:

(in thousands)
Remainder of 2015	$	5,878
2016		10,971
2017		7,679
2018		6,095
2019		3,529
2020		1,537

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6.Equity (Deficit)

The following tables represent changes in equity (deficit) that are attributable to our shareholders and noncontrolling interests for the six month periods ended June 30, 2015 and 2014.

					Accumulated
	Additional				Other
	Paid-in		Accumulated		Comprehensive		Noncontrolling		Total
(in thousands)	Capital		Deficit		Loss		Interests		Deficit
Balance at December 31, 2014	$	214,514	$	(254,418)	$	(9,062)	$	219	$	(48,747)
Net (loss) income		—		(8,965)		—		220		(8,745)
Other comprehensive income		—		—		488		—		488
Cash distributions to noncontrolling interests		—		—		—		(240)		(240)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at June 30, 2015	$	214,514	$	(263,383)	$	(8,574)	$	269	$	(57,174)

					Accumulated
	Additional				Other				Total
	Paid-in		Accumulated		Comprehensive		Noncontrolling		Equity
(in thousands)	Capital		Deficit		Loss		Interests		(Deficit)
Balance at December 31, 2013	$	214,505	$	(187,901)	$	(3,884)	$	300	$	23,020
Net (loss) income		—		(42,523)		—		261		(42,262)
Cash distributions to noncontrolling interests		—		—		—		(295)		(295)
Purchases of noncontrolling interests		(3)		—		—		(31)		(34)
Balance at June 30, 2014	$	214,502	$	(230,424)	$	(3,884)	$	235	$	(19,571)

7.Share-Based Compensation

During the six months ended June 30, 2015, activity under the 2007 Stock Option Plan (the “2007 Stock Option Plan”), of UHS Holdco, Inc., our parent company (“Parent”), was as follows:

						Weighted
						average
		Weighted		Aggregate		remaining
	Number of	average		intrinsic		contractual
(in thousands except exercise price and years)	options	exercise price		value		term (years)
Outstanding at December 31, 2014	37,340	$	0.84	$	—	9.9
Granted	16,665		0.71
Exercised	—		—	$	—
Forfeited or expired	(19,960)		0.96
Outstanding at June 30, 2015	34,045	$	0.71	$	—	9.4
Exercisable at June 30, 2015	8,954	$	0.71	$	—	9.4
Remaining authorized options available for issue	9,642

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

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during the six months ended June 30, 2015 under the Black-Scholes model. There were no stock options granted during the six months ended June 30, 2014.

		Six Months Ended
		June 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		26.9	%
Dividend yield		N/A
Expected option life (years)		5.10
Black-Scholes Value of options	$	0.19

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 is estimated based on foreseeable trends.

At June 30, 2015, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.3 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.

In April 2015, Parent granted the Company’s Chief Executive Officer 7.0 million restricted stock units which vest over four years. Total compensation expense related to this grant was $0.3 million for the three months and six months ended June 30, 2015.

Although Parent grants stock options and restricted stock units, the Company recognizes compensation expense related to these options and units 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.

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, 2012, 2013 and 2014 and are scheduled to vest on December 31, 2015.

Our consolidated balance sheets as of June 30, 2015 and December 31, 2014 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, 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)	2015		2014
Original notes - 7.625%	$	425,000	$	425,000
Add-on notes - 7.625%		220,000		220,000
Unamortized bond premium		10,280		11,113
Senior secured credit facility		27,000		39,000
Capital lease obligations		17,685		15,073
		699,965		710,186
Less: Current portion of long-term debt		(5,408)		(5,640)
Total long-term debt	$	694,557	$	704,546

11

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, beginning on February 15, 2013. 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”.

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, 2015, we had $140.7 million of availability under the senior secured credit facility based on a borrowing base of $171.6 million less borrowings of $27.0 million and after giving effect to $3.9 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

12

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, 2015, we had$27.0 million of borrowings outstanding which was accruing interest at a rate of2.6855%.

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.

13

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. Certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. 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 adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote.

In 2014, a supplier ceased distribution of one of their products in the United States following a request from the FDA. On May 7, 2015, the Company entered into an agreement with the former supplier resolving all matters related to the cessation of our commercial relationships with each other. The Company has received $6.6 million and expects to receive approximately $0.9 million in net cash in the third quarter of 2015 after settling all open receivables and payables between the two parties and return of relevant product. The Company recorded a net gain of $5.7 million related to this settlement.

The Company was notified in 2014 that a national group purchasing organization awarded a sole source agreement to a competitor under agreements that expired on December 31, 2014.

On January 13, 2015, the Company filed suit in the Western District of Texas against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc. and Hill-Rom Services, Inc. (the "Defendants") alleging that the Defendants violated federal and state antitrust laws by willfully and unlawfully engaging in a pattern of exclusionary and predatory conduct in order to foreclose market competition and seeking actual damages, trebled damages and punitive damages.  At this early stage in the litigation, the Company does not believe the expense of litigation will have a material impact on the Company's operating expenses or financial results.

11.Related Party Transactions

Management Agreement

On May 31, 2007, we and Irving Place Capital Partners III SPV, 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. 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, 2015 and 2014, respectively,  and $0.5 and $0.5 million for the six month periods ended June 30, 2015 and 2014, respectively.

In the ordinary course of business, we entered into engagement letters with CTPartners, LLC (“CTPartners”) to conduct searches for certain executive positions.  One member of our board of directors is also a director of CTPartners. Total fees incurred to CTPartners was $0.2 and $0.2 million for the three month periods ended June 30, 2015 and 2014, respectivelyand $0.2 and $0.2 million during the six month periods ended June 30, 2015 and 2014, respectively.

14

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 rental purposes under equipment financing leases. At June 30, 2015, the LLCs had approximately $1.0 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, 2015, we held interests in seven 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.

13.Segment Information

Our reporting segments consist of Medical Equipment Solutions (“MES”), Clinical Engineering Solutions (“CES”) and Surgical Services (“SS”). Certain operating information for our segments as well as a reconciliation of total Company gross margin to loss before income taxes and noncontrolling interest was as follows:

Medical Equipment Solutions

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	71,084	$	72,188	$	145,169	$	148,910
Cost of revenue		31,053		32,288		62,331		65,716
Medical equipment depreciation		14,009		17,698		30,669		35,504
Gross margin	$	26,022	$	22,202	$	52,169	$	47,690

Clinical Engineering Solutions

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	24,784	$	22,119	$	49,179	$	44,788
Cost of revenue		20,041		17,869		39,271		35,784
Gross margin	$	4,743	$	4,250	$	9,908	$	9,004

15

Surgical Services

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	16,421	$	15,059	$	31,427	$	29,004
Cost of revenue		8,722		8,236		16,902		16,436
Medical equipment depreciation		1,492		1,397		2,966		2,727
Gross margin	$	6,207	$	5,426	$	11,559	$	9,841

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

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Total gross margin	$	36,972	$	31,878	$	73,636	$	66,535
Selling, general and administrative		31,038		29,587		61,189		58,877
(Gain) on settlement		(5,718)		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		512		—		1,820
Intangible asset impairment charge		—		34,900		—		34,900
Interest expense		13,249		13,260		26,559		26,656
Loss before income taxes and noncontrolling interest	$	(1,597)	$	(46,381)	$	(8,394)	$	(55,718)

Total Assets by Reporting Segment

(in thousands)

	June 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	606,007	$	624,444
Clinical Engineering Solutions		111,118		110,562
Surgical Services		101,783		98,906
Total Company Assets	$	818,908	$	833,912

The following table provides additional detail on percentage of revenue for each group of similar products sold or services provided in the MES, CES and SS segments:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	60.1	%	60.9	%	61.2	%	61.6	%
Equipment/disposable sales	3.2		5.1		3.1		5.3
	63.3		66.0		64.3		66.9
CES
Service solutions	22.1		20.2		21.8		20.1
SS
Equipment usage solutions	14.4		13.6		13.7		12.8
Equipment/disposable sales	0.2		0.2		0.2		0.2
	14.6		13.8		13.9		13.0
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%

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14.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,  “Income Taxes”. The tax expense for the threeand six months ended June 30, 2015 primarily relates to state minimum fees.The expected tax benefit from operating loss during the threeand sixmonths ended June 30, 2015 was offset by the recording of additional valuation allowance. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

At June 30, 2015, the Company had available unused federal net operating loss carryforwards of approximately $215.8 million. The net operating loss carryforwards will expire at various dates from 2017 through 2035.

15.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.

17

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,952	$	9,230	$	—	$	70,182
Due from affiliates		29,897		—		(29,897)		—
Inventories		4,469		3,690		—		8,159
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		5,972		224		—		6,196
Total current assets		101,290		14,417		(29,897)		85,810
Property and equipment:
Medical equipment		546,425		43,016		—		589,441
Property and office equipment		75,573		8,657		—		84,230
Accumulated depreciation		(422,803)		(33,425)		—		(456,228)
Total property and equipment, net		199,195		18,248		—		217,443
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,662		—		(53,662)		—
Other intangibles, net		152,668		15,564		—		168,232
Other, primarily deferred financing costs, net		10,728		100		—		10,828
Total assets	$	800,684	$	101,783	$	(83,559)	$	818,908
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,397	$	1,011	$	—	$	5,408
Book overdrafts		3,062		2,064		—		5,126
Due to affiliates		—		29,897		(29,897)		—
Accounts payable		24,779		3,444		—		28,223
Accrued compensation		14,237		1,964		—		16,201
Accrued interest		18,808		—		—		18,808
Dividend payable		28		—		—		28
Other accrued expenses		15,945		663		—		16,608
Total current liabilities		81,256		39,043		(29,897)		90,402
Long-term debt, less current portion		690,984		3,573		—		694,557
Pension and other long-term liabilities		11,759		—		—		11,759
Payable to Parent		26,023		—		—		26,023
Deferred income taxes, net		48,094		5,247		—		53,341
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(257,026)		(6,357)		—		(263,383)
Accumulated loss in subsidiary		(6,357)		—		6,357		—
Accumulated other comprehensive loss		(8,574)		—		—		(8,574)
Total Universal Hospital Services, Inc. (deficit) equity		(57,432)		53,651		(53,662)		(57,443)
Noncontrolling interest		—		269		—		269
Total (deficit) equity		(57,432)		53,920		(53,662)		(57,174)
Total liabilities and (deficit) equity	$	800,684	$	101,783	$	(83,559)	$	818,908

18

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	December 31, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	57,767	$	8,489	$	—	$	66,256
Due from affiliates		28,701		—		(28,701)		—
Inventories		4,269		3,722		—		7,991
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		7,434		237		—		7,671
Total current assets		98,171		13,721		(28,701)		83,191
Property and equipment:
Medical equipment		551,098		40,002		—		591,100
Property and office equipment		77,234		7,220		—		84,454
Accumulated depreciation		(415,131)		(30,350)		—		(445,481)
Total property and equipment, net		213,201		16,872		—		230,073
Other long-term assets:
Goodwill		283,141		52,436		—		335,577
Investment in subsidiary		53,123		—		(53,123)		—
Other intangibles, net		157,174		15,731		—		172,905
Other, primarily deferred financing costs, net		12,020		146		—		12,166
Total assets	$	816,830	$	98,906	$	(81,824)	$	833,912
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,935	$	705	$	—	$	5,640
Book overdrafts		3,526		2,418		—		5,944
Due to affiliates		—		28,701		(28,701)		—
Accounts payable		27,458		2,656		—		30,114
Accrued compensation		12,406		2,702		—		15,108
Accrued interest		18,823		—		—		18,823
Dividend payable		39		—		—		39
Other accrued expenses		11,505		81		—		11,586
Total current liabilities		78,692		37,263		(28,701)		87,254
Long-term debt, less current portion		702,471		2,075		—		704,546
Pension and other long-term liabilities		12,428		—		—		12,428
Payable to Parent		24,911		—		—		24,911
Deferred income taxes, net		47,283		6,237		—		53,520
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(247,522)		(6,896)		—		(254,418)
Accumulated loss in subsidiary		(6,896)		—		6,896		—
Accumulated other comprehensive loss		(9,062)		—		—		(9,062)
Total Universal Hospital Services, Inc. (deficit) equity		(48,955)		53,112		(53,123)		(48,966)
Noncontrolling interest		—		219		—		219
Total (deficit) equity		(48,955)		53,331		(53,123)		(48,747)
Total liabilities and (deficit) equity	$	816,830	$	98,906	$	(81,824)	$	833,912

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Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	71,084	$	—	$	—	$	71,084
Clinical engineering solutions		24,784		—		—		24,784
Surgical services		—		16,421		—		16,421
Total revenues		95,868		16,421		—		112,289
Cost of Revenue
Cost of medical equipment solutions		31,053		—		—		31,053
Cost of clinical engineering solutions		20,041		—		—		20,041
Cost of surgical services		—		8,722		—		8,722
Medical equipment depreciation		14,009		1,492		—		15,501
Total costs of revenues		65,103		10,214		—		75,317
Gross margin		30,765		6,207		—		36,972
Selling, general and administrative		26,436		4,602		—		31,038
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		10,047		1,605		—		11,652
Equity in earnings of subsidiary		(573)		—		573		—
Interest expense		12,734		515		—		13,249
(Loss) income before income taxes and noncontrolling interest		(2,114)		1,090		(573)		(1,597)
(Benefit) provision for income taxes		(335)		517		—		182
Consolidated net (loss) income		(1,779)		573		(573)		(1,779)
Net income attributable to noncontrolling interest		—		95		—		95
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(1,779)	$	478	$	(573)	$	(1,874)

20

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	72,188	$	—	$	—	$	72,188
Clinical engineering solutions		22,119		—		—		22,119
Surgical services		—		15,059		—		15,059
Total revenues		94,307		15,059		—		109,366
Cost of Revenue
Cost of medical equipment solutions		32,288		—		—		32,288
Cost of clinical engineering solutions		17,869		—		—		17,869
Cost of surgical services		—		8,236		—		8,236
Medical equipment depreciation		17,698		1,397		—		19,095
Total costs of revenues		67,855		9,633		—		77,488
Gross margin		26,452		5,426		—		31,878
Selling, general and administrative		24,741		4,846		—		29,587
Restructuring, acquisition and integration expenses		512		—		—		512
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(33,701)		580		—		(33,121)
Equity in earnings of subsidiary		(335)		—		335		—
Interest expense		12,734		526		—		13,260
(Loss) income before income taxes and noncontrolling interest		(46,100)		54		(335)		(46,381)
Benefit for income taxes		(13,390)		(281)		—		(13,671)
Consolidated net (loss) income		(32,710)		335		(335)		(32,710)
Net income attributable to noncontrolling interest		—		131		—		131
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)

21

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	145,169	$	—	$	—	$	145,169
Clinical engineering solutions		49,179		—		—		49,179
Surgical services		—		31,427		—		31,427
Total revenues		194,348		31,427		—		225,775
Cost of Revenue
Cost of medical equipment solutions		62,331		—		—		62,331
Cost of clinical engineering solutions		39,271		—		—		39,271
Cost of surgical services		—		16,902		—		16,902
Medical equipment depreciation		30,669		2,966		—		33,635
Total costs of revenues		132,271		19,868		—		152,139
Gross margin		62,077		11,559		—		73,636
Selling, general and administrative		52,018		9,171		—		61,189
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		15,777		2,388		—		18,165
Equity in earnings of subsidiary		(759)		—		759		—
Interest expense		25,525		1,034		—		26,559
(Loss) income before income taxes and noncontrolling interest		(8,989)		1,354		(759)		(8,394)
(Benefit) provision for income taxes		(244)		595		—		351
Consolidated net (loss) income		(8,745)		759		(759)		(8,745)
Net income attributable to noncontrolling interest		—		220		—		220
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,745)	$	539	$	(759)	$	(8,965)

22

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	148,910	$	—	$	—	$	148,910
Clinical engineering solutions		44,788		—		—		44,788
Surgical services		—		29,004		—		29,004
Total revenues		193,698		29,004		—		222,702
Cost of Revenue
Cost of medical equipment solutions		65,716		—		—		65,716
Cost of clinical engineering solutions		35,784		—		—		35,784
Cost of surgical services		—		16,436		—		16,436
Medical equipment depreciation		35,504		2,727		—		38,231
Total costs of revenues		137,004		19,163		—		156,167
Gross margin		56,694		9,841		—		66,535
Selling, general and administrative		49,264		9,613		—		58,877
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(29,290)		228		—		(29,062)
Equity in loss of subsidiary		201		—		(201)		—
Interest expense		25,595		1,061		—		26,656
Loss before income taxes and noncontrolling interest		(55,086)		(833)		201		(55,718)
Benefit for income taxes		(12,824)		(632)		—		(13,456)
Consolidated net loss		(42,262)		(201)		201		(42,262)
Net income attributable to noncontrolling interest		—		261		—		261
Net loss attributable to Universal Hospital Services, Inc.	$	(42,262)	$	(462)	$	201	$	(42,523)

23

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(1,779)	$	573	$	(573)	$	(1,779)	$	(8,745)	$	759	$	(759)	$	(8,745)
Other comprehensive income:
Gain on minimum pension liability, net of tax		488		—		—		488		488		—		—		488
Total other comprehensive income		488		—		—		488		488		—		—		488
Comprehensive (loss) income		(1,291)		573		(573)		(1,291)		(8,257)		759		(759)		(8,257)
Comprehensive income attributable to noncontrolling interest		—		95		—		95		—		220		—		220
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(1,291)	$	478	$	(573)	$	(1,386)	$	(8,257)	$	539	$	(759)	$	(8,477)

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(32,710)	$	335	$	(335)	$	(32,710)	$	(42,262)	$	(201)	$	201	$	(42,262)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive (loss) income		(32,710)		335		(335)		(32,710)		(42,262)		(201)		201		(42,262)
Comprehensive income attributable to noncontrolling interest		—		131		—		131		—		261		—		261
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)	$	(42,262)	$	(462)	$	201	$	(42,523)

24

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(8,745)	$	759	$	(759)	$	(8,745)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		34,717		3,598		—		38,315
Asset impairment charges		1,703		—		—		1,703
Amortization of intangibles, deferred financing costs and bond premium		4,890		1,642		—		6,532
Equity in earnings of subsidiary		(759)		—		759		—
Provision for doubtful accounts		28		26		—		54
Provision for inventory obsolescence		210		15		—		225
Non-cash share-based compensation expense		1,140		—		—		1,140
Gain on sales and disposals of equipment		(2,436)		(86)		—		(2,522)
Deferred income taxes		1,098		(990)		—		108
Changes in operating assets and liabilities:
Accounts receivable		(3,213)		(767)		—		(3,980)
Due from affiliates		(1,196)		—		1,196		—
Inventories		(410)		17		—		(393)
Other operating assets		610		59		—		669
Accounts payable		1,148		852		—		2,000
Other operating liabilities		5,788		(669)		—		5,119
Net cash provided by operating activities		34,573		4,456		1,196		40,225
Cash flows from investing activities:
Medical equipment purchases		(25,308)		(2,129)		—		(27,437)
Property and office equipment purchases		(2,417)		(16)		—		(2,433)
Proceeds from disposition of property and equipment		9,290		136		—		9,426
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(18,435)		(4,609)		—		(23,044)
Cash flows from financing activities:
Proceeds under senior secured credit facility		63,900		—		—		63,900
Payments under senior secured credit facility		(75,900)		—		—		(75,900)
Payments of principal under capital lease obligations		(3,635)		(519)		—		(4,154)
Distributions to noncontrolling interests		—		(240)		—		(240)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		1,196		(1,196)		—
Change in book overdrafts		(464)		(354)		—		(818)
Net cash used in financing activities		(16,138)		153		(1,196)		(17,181)
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	$	—	$	—	$	—	$	—

25

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(42,262)	$	(201)	$	201	$	(42,262)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		39,579		3,274		—		42,853
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		5,378		1,661		—		7,039
Equity in loss of subsidiary		201		—		(201)		—
Provision for doubtful accounts		96		(11)		—		85
Provision for inventory obsolescence		(2)		40		—		38
Non-cash share-based compensation expense		421		117		—		538
Gain on sales and disposals of equipment		(1,295)		61		—		(1,234)
Deferred income taxes		(12,451)		(1,178)		—		(13,629)
Changes in operating assets and liabilities:
Accounts receivable		1,514		(704)		—		810
Due from (to) affiliates		(2,053)		2,053		—		—
Inventories		624		(1,100)		—		(476)
Other operating assets		(1,384)		(10)		—		(1,394)
Accounts payable		257		417		—		674
Other operating liabilities		2,664		(430)		—		2,234
Net cash provided by operating activities		28,212		3,989		—		32,201
Cash flows from investing activities:
Medical equipment purchases		(31,959)		(2,807)		—		(34,766)
Property and office equipment purchases		(2,413)		(147)		—		(2,560)
Proceeds from disposition of property and equipment		5,970		—		—		5,970
Purchases of noncontrolling interests		—		(34)		—		(34)
Net cash used in investing activities		(28,402)		(2,988)		—		(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility		76,129		—		—		76,129
Payments under senior secured credit facility		(69,129)		—		—		(69,129)
Payments of principal under capital lease obligations		(2,750)		(679)		—		(3,429)
Distributions to noncontrolling interests		—		(295)		—		(295)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,987)		(27)		—		(4,014)
Net cash provided by (used in) financing activities		190		(1,001)		—		(811)
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	$	—	$	—	$	—	$	—

26

16.Restructuring

We incurred restructuring expense of $0.5 and $1.8 million during the three months and six months ended June 30, 2014, respectively, the majority of which related to severances and other related expenses. We incurred no restructuring expense during the three monthsand six months ended June 30, 2015. As of December 31, 2014, we had $1.6 million of restructuring liability. For the six months ended June 30, 2015,  $1.1 million in restructuring charges was paid. No additional restructuring was recorded in the first two quarters of 2015 for new severance arrangements and the remaining liability of $0.4 million as of June 30, 2015 is expected to be paid out by the end of the first quarter of 2016 and is included in the Other accrued expenses in the Consolidated Balance Sheets. As of December 31, 2013, we had $0.3 million of restructuring liability. For the six months ended June 30, 2014, we incurred restructuring expense of $1.8 million and $1.2 million in restructuring charges was paid and the remaining $0.9 was a liability as of June 30, 2014.

17.Concentration

One customer accounted for approximately 14% of total revenue for the six months ended June 30, 2015 and 2014.

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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 health care technology management and service solutions to the United States health care industry. We provide our customers comprehensive health care technology management, service and clinical solutions that we believe help reduce capital and operating expenses, increase medical equipment and staff productivity, and support improved patient safety and outcomes.

We commenced operations in 1939, originally incorporated in Minnesota in 1954 and reincorporated in Delaware in 2001. All of our outstanding capital stock is owned by UHS Holdco, Inc. (“Parent”), which acquired the Company in a recapitalization in May 2007.  Parent is owned by affiliates of Irving Place Capital Partners III SPV, L.P. (“IPC”) and certain current and former members of our management.

UHS delivers health care solutions through three segments: Medical Equipment Solutions (“MES”), Clinical Engineering Solutions (“CES”) and Surgical Services (“SS”). As of June 30, 2015, we owned or managed over 700,000 units of medical equipment consisting of approximately 400,000 owned or managed units in our MES segment, over 300,000 units of customer-owned equipment we managed in our CES segment and over 5,000 units of owned or managed mobile surgical equipment in our SS segment. Our diverse customer base includes more than 7,000 national, regional and local acute care hospitals and alternate site providers (such as long-term acute care hospitals, skilled nursing facilities, surgery centers, specialty hospitals, nursing homes and home care providers). We also have relationships with more than 200 medical device manufacturers, many of the nation’s largest group purchasing organizations (“GPOs”) and many health system integrated delivery networks (“IDNs”).  All of our solutions leverage our nationwide network of 83 district service centers, five CES Centers of Excellence and an additional five stand-alone SS service centers, together with our more than 75 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 report our financial results in three segments. Our reporting segments consist of MES, CES and SS. We evaluate the performance of our reportable segments based on gross margin. The accounting policies of the individual reportable segments are the same as those of the entire company.

In 2014, a supplier ceased distribution of one of their products in the United States following a request from the FDA. On May 7, 2015, the Company entered into an agreement with the former supplier resolving all matters related to the cessation of our commercial relationships with each other. The Company has received $6.6 million through June 30, 2015 and expects to receive approximately $0.9 million in net cash in the third quarter of 2015 after settling all open receivables and payables between the two parties and return of relevant product. Excluding the May 7, 2015 agreement with the former supplier, the net loss in revenue in the first six months was approximately $7.8 million and the total impact in 2015 is estimated at approximately $8 to $9 million.  The cash impact to gross margin in the first six months was approximately $2.8 million and the total impact in 2015 is estimated at approximately $3 to $3.5 million.

The Company was notified in 2014 that a national group purchasing organization awarded a sole source agreement to a competitor under agreements that expired on December 31, 2014.  The loss in revenue was approximately $4.8 million in the first six months and the total impact in 2015 is estimated at $10 to $15 million. The gross margin impact, while difficult to estimate given the fixed nature of the expense base, was approximately $3.5 million in the first six months and the total impact in 2015 is estimated at approximately $7 to $11 million.

Medical Equipment Solutions

Our MES segment accounted for $71.1 and $72.2 million, or approximately 63.3% and 66.0% of our revenues, for the three months ended June 30, 2015 and 2014, respectively and $145.2 and $148.9 million, or approximately 64.3% and

28

66.9% of our revenues, for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015,  the MES segment owned or managed approximately 400,000 units of medical equipment ranging across many clinical categories, manufacturers and models.  These solutions are provided primarily to hospitals and other acute care providers for use through their facilities, including the emergency room, operating room, critical care, intensive care, rehabilitation and general patient care areas.

Our MES segment started more than 75 years ago as our leading medical equipment peak needs usage business and has transformed into providing comprehensive outsourced and on-site solutions that manage all aspects of medical equipment in a health care facility. We currently provide MES solutions to more than 7,000 acute care hospitals and alternate site providers in the United States, including some of the nation’s premier health care institutions. 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, clinical education and support, customized agreements and 360 On-site Managed Solutions.

We have four primary solutions in our MES segment:

· Supplemental and Peak Needs Usage Solutions;

· Customized Equipment Agreements Solutions;

· 360 On-site Managed Solutions; and

· Specialty Medical Equipment Sales, Distribution and Disposal Solutions.

Clinical Engineering Solutions

Our CES segment accounted for $24.8 and $22.1 million, or approximately 22.1% and 20.2% of our revenues, for the three months ended June 30, 2015 and 2014, respectively and $49.2 and $44.8 million, or approximately 21.8% and 20.1% of our revenues, for the six months ended June 30, 2015 and 2014, respectively. We offer a broad range of inspection, preventive maintenance, repair, logistic and consulting services through our team of over 380 technicians and professionals located throughout the United States in our nationwide network of service centers.  We managed over 300,000 units of customer owned equipment as of June 30, 2015.  In addition, as of June 30, 2015, we serviced approximately 400,000 units that we own or directly manage in our MES segment.

Our CES segment leverages our over 75 years of experience and our extensive equipment database in repairing and maintaining a broad range of health care technologies. Historically, we have been our own largest customer for CES services in order to repair and maintain approximately 400,000 units that we own or directly manage. However, we believe our CES segment has significant future growth potential by offering non-capital based comprehensive solutions as a stand-alone or complementary alternative for customers that own medical equipment but lack the infrastructure, expertise, or scale to perform routine maintenance, repair, record keeping, and lifecycle analysis and planning functions.  We also believe hospital and other facility-based clients will face increasing challenges in managing sophisticated medical equipment that requires connectivity and interoperability with information technology systems, compliance with the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD-10), regulatory requirements, integration with EMR, maintenance and management of software databases and management of other medical equipment patient information and safety features.

We have three primary solutions in our CES segment:

· Supplemental Maintenance and Repair Solutions;

· 360 On-site Managed Solutions; and

· Health Care Technology Advisory Solutions.

Surgical Services

Our SS segment accounted for $16.4 and $15.1 million, or approximately 14.6% and 13.8% of our revenues, for the three months ended June 30, 2015 and 2014,  respectively and $31.4 and $29.0 million, or approximately 13.9% and 13.0% of our revenues, for the six months ended June 30, 2015 and 2014, respectively.As of June 30, 2015, we owned or managed over 5,000 units of mobile surgical equipment in our SS segment, primarily used in the practice of general

29

surgery, orthopedic surgery, otolaryngology, urology, obstetrics, gynecology, podiatry, dermatology and plastic/cosmetics.

SS provides high end, state-of-the-art surgical equipment and associated products along with trained and certified Surgical Equipment Technologists (“technologists”) to assist in the procedural operation of the equipment. We provide these services to over 1,000 acute care hospitals and surgery centers through our nationwide network of 83 district service centers and an additional five stand-alone SS service centers. Our technologists work in the operating room (“O.R.”) and support physicians and O.R. personnel. The services are offered on a per-procedure basis. Our technologists deliver, set up, and create a safe environment for hospital and clinical personnel operating the equipment and provide all necessary disposable materials needed. Our technologists work closely with our customers to confirm that all certifications and credentials meet requirements to provide on-site services. Our technologists also assist customers in the operation of facility-owned assets and supplement the training and staffing of their personnel.  As of June 30, 2015, SS provided solutions in 41 states.

We have two primary solutions in our SS segment:

· On-Demand and Scheduled Usage Solutions; and

· 360 On-site Managed Solutions.

RESULTS OF OPERATIONS

The following discussion addresses:

· our financial condition as of June 30, 2015 and

· the results of operations for the three-month and six-month periods ended June 30, 2015 and 2014.

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 2014 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, 2015 and 2014.  The table below also indicates the percentage increase or decrease over the prior comparable period.

30

	Percent to Total Revenues				Percent		Percent to Total Revenues				Percent
	Three Months Ended June 30,				Increase		Six Months Ended June 30,				Increase
	2015		2014		(Decrease)		2015		2014		(Decrease)
Revenue
Medical equipment solutions	63.3	%	66.0	%	(1.5)	%	64.3	%	66.9	%	(2.5)	%
Clinical engineering solutions	22.1		20.2		12.0		21.8		20.1		9.8
Surgical services	14.6		13.8		9.0		13.9		13.0		8.4
Total revenues	100.0	%	100.0	%	2.7		100.0	%	100.0	%	1.4
Cost of Revenue
Cost of medical equipment solutions	27.7		29.5		(3.8)		27.6		29.5		(5.2)
Cost of clinical engineering solutions	17.8		16.3		12.2		17.4		16.1		9.7
Cost of surgical services	7.8		7.5		5.9		7.5		7.4		2.8
Medical equipment depreciation	13.8		17.5		(18.8)		14.9		17.2		(12.0)
Total costs of revenues	67.1		70.8		(2.8)		67.4		70.2		(2.6)
Gross margin	32.9		29.2		16.0		32.6		29.8		10.7
Selling, general and administrative	27.6		27.1		4.9		27.1		26.4		3.9
(Gain) on settlement	(5.1)		—		*		(2.5)		—		*
Restructuring, acquisition and integration expenses	—		0.5		*		—		0.8		*
Intangible asset impairment charge	—		31.9		*		—		15.7		*
Operating income	10.4		(30.3)		*		8.0		(13.1)		*
Interest expense	11.8		12.1		(0.1)		11.8		12.0		(0.4)
Loss before income taxes and noncontrolling interest	(1.4)		(42.4)		(96.6)		(3.8)		(25.1)		(84.9)
Provision for income taxes	0.2		(12.5)		*		0.2		(6.0)		*
Consolidated net loss	(1.6)	%	(29.9)	%	(94.6)		(4.0)	%	(19.1)	%	(79.3)

*Not meaningful

Consolidated Results of Operations for the three months ended June 30, 2015 compared to the three months ended June 30, 2014

Total Revenue

Total revenue for the three months ended June 30, 2015 was $112.3 million, compared to $109.4 million for the three months ended June 30, 2014, an increase of $2.9 million or 2.7%.  The net increase was primarily due to additional revenue within our MES segment related to growth in our supplemental rental services of $2.6 million, growth in our 360 On-site Managed Solutions (“360 solutions”) of $2.8 million, growth in our CES segment of $2.6 million related to growth in our 360 solutions and growth in our SS segment of $1.4 million. These increases were partially offset by the decline in NPWT device rental and disposable sales of $3.8 million due to the interruption of the commercial distribution of a NPWT product line and $2.8 million due to customer transitions from the loss of the national GPO contract.

Cost of Revenue

Total cost of revenue for the three months ended June 30, 2015 was $75.3 million compared to $77.5 million for the three months ended June 30, 2014, a decrease of $2.2 million or 2.8%. The decrease was primarily in our MES segment due to decreases in cost of disposable sales of $1.8 million and other rental costs of $1.4 million and a decrease in medical equipment depreciation of $3.6 million. The decreases were partially offset by the increase in our MES segment due to increases in 360 solutions cost of $1.4 million and an increase in our CES 360 solutions cost of $2.2 million corresponding with the 360 solutions revenue growth.

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Gross Margin

Total gross margin for the three months ended June 30, 2015 was $37.0 million, or 32.9% of total revenues, compared to $31.9 million, or 29.2% of total revenues, for the three months ended June 30, 2014, an increase of $5.1 million or 16.0%.  The increase in gross margin as a percent of revenue for the quarter was primarily impacted by a business mix shift from lower margin disposable sales to higher margin 360 solutions in the MES segment, coupled with positive operating leverage from volume growth and some shift to higher margin modalities in the SS portions of the business. In addition, the gross margin increase in the CES segment was primarily impacted by lower vendor expense. CES gross margin percentage will fluctuate based on the variability of third-party vendor expenses in our 360 solutions and supplemental service programs.

Medical Equipment Solutions

(in thousands)

	Three Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	71,084		$	72,188		$	(1,104)	(1.5)	%
Cost of revenue		31,053			32,288			(1,235)	(3.8)
Medical equipment depreciation		14,009			17,698			(3,689)	(20.8)
Gross margin	$	26,022		$	22,202		$	3,820	17.2
Gross margin %		36.6	%		30.8	%

Total revenue in the MES segment decreased $1.1 million, or 1.5%, to $71.1 million in the second quarter of 2015 as compared to the same period of 2014.  The decrease was primarily due to the decline in NPWT device rental and disposable sales due to the interruption of the commercial distribution of a NPWT product line of approximately $3.8 million and the transition of certain customers related to the loss of the national GPO contract of $2.8 million. The decrease was partially offset by growth in our 360 solutions from both new programs and expansion of existing programs of $2.8million and growth in our supplemental rental services of $2.6 million. Many of our 360 Solution 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, 2015, we had 226 such active programs, up from 209 as of December 31, 2014.

Total cost of revenue in the segment decreased $1.2 million, or 3.8%, to $31.1 million in the second quarter of 2015 as compared to the same period of 2014.  This decrease was due to lower cost of disposable sales of $1.8 million and decrease in rental cost of $1.4 million largely due to lower payroll, vehicle and freight expenses. The decrease was partially offset by an increase in costs to support growth in our 360 solutions of $1.4 million largely due to increases in employee related expense of $0.9 million.

Medical equipment depreciation decreased $3.7 million, or 20.8%, to $14.0 million in the second quarter of 2015 as compared to the same period of 2014. The decrease in medical equipment depreciation was primarily due to reduced depreciation resulting from disposals of certain medical equipment and lower capital expenditures.  

Gross margin percentage for the MES segment increased from 30.8% in the second quarter of 2014 to 36.6% in the same period of 2015. Gross margin rate was impacted by the lower depreciation, growth in our 360 solutions and a business mix shift from lower margin disposable sales to higher margin 360 solutions.

Future revenue will continue to be negatively impacted by the loss of revenues resulting from the interruption of the commercial distribution of a NPWT product line and the loss of the agreement related to a national GPO.

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Clinical Engineering Solutions

(in thousands)

	Three Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	24,784		$	22,119		$	2,665	12.0	%
Cost of revenue		20,041			17,869			2,172	12.2
Gross margin	$	4,743		$	4,250		$	493	11.6
Gross margin %		19.1	%		19.2	%

Total revenue in the CES segment increased $2.7 million, or 12.0%, to $24.8 million in the second quarter of 2015 as compared to the same period of 2014. The increase was primarily due to growth in our managed 360 solutions.  As of June 30, 2015, we had 360 solutions implemented in 172 programs in our CES segment, up from 144 programs as of December 31, 2014.

Total cost of revenue in the segment increased $2.2 million, or 12.2%, to $20.0 million in the second quarter of 2015 as compared to the same period of 2014. The increase is primarily attributable to increases in vendor expenses and employee related costs to support the revenue growth and mix shifts in type of service provided to customers.

Gross margin percentage for the CES segment decreased from 19.2% in the second quarter of 2014 to 19.1% in the same period of 2015. Gross margin percentage will fluctuate based on the variability of third-party vendor expenses in our 360 solutions and supplemental service programs.

Surgical Services

(in thousands)

	Three Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	16,421		$	15,059		$	1,362	9.0	%
Cost of revenue		8,722			8,236			486	5.9
Medical equipment depreciation		1,492			1,397			95	6.8
Gross margin	$	6,207		$	5,426		$	781	14.4
Gross margin %		37.8	%		36.0	%

Total revenue in the SS segment increased $1.4 million, or 9.0%, to $16.4 million in the second quarter of 2015 as compared to the same period of 2014. The increase was primarily driven by organic growth in our surgical services business of $1.1 million and from a May 2015 acquisition of $0.3 million.

Total cost of revenue in the segment increased $0.5 million, or 5.9%, to $8.7 million in the second quarter of 2015 as compared to the same period of 2014. The increase was primarily attributable to an increase in employee related costs to support growth in our surgical services business.

Medical equipment depreciation increased $0.1 million, or 6.8%, to $1.5 million in the second quarter of 2015 as compared to the same period of 2014. The increase was primarily due to additional medical equipment purchased.

Gross margin percentage for the SS segment increased from 36.0% in the second quarter of 2014 to 37.8% in the same period of 2015. The increase in gross margin percentage was primarily driven by both positive operating leverage from volume growth and some shift to higher margin modalities.

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Selling, General and Administrative, Gain on Settlement, Restructuring, Acquisition and Integration Expenses, Intangible Asset Impairment Charge and Interest Expense

(in thousands)

	Three Months Ended
	June 30,
	2015		2014		Change		% Change
Selling, general and administrative	$	31,038	$	29,587	$	1,451	4.9	%
(Gain) on settlement		(5,718)		—		(5,718)	*
Restructuring, acquisition and integration expenses		—		512		(512)	*
Intangible asset impairment charge		—		34,900		(34,900)	*
Interest expense		13,249		13,260		(11)	(0.1)

*Not meaningful

Selling, General and Administrative

Selling, general and administrative expense increased $1.5 million, or 4.9%, to $31.0 million for the second quarter of 2015 as compared to the same period of 2014. The increase was primarily due to increases in consulting fees, share-based compensation expense and legal fees.

Selling, general and administrative expense as a percentage of total revenue was 27.6% and 27.1% for the quarter ended June 30, 2015 and 2014, respectively.

Gain on Settlement

Gain on settlement of $5.7 million for the second quarter of 2015 was related to a settlement with our former supplier resolving all matters related to the cessation of our commercial relationships with each other.

Restructuring, Acquisition and Integration Expenses

Restructuring, acquisition and integration expenses for the second quarter of 2014 was primarily due to additional changes to realign the management team.

Intangible Asset Impairment Charge

During the second quarter of 2014, the Company became aware that future financial results of the Company will be negatively impacted by the loss of revenues resulted by pending FDA 510(k) clearances on a NPWT product line and the loss of the agreement related to a national GPO. The Company applied a fair value based impairment test to the net book value of goodwill and intangible assets with indefinite lives on an annual basis and on an interim basis if events or circumstances indicate that an impairment loss may have occurred. The review of indefinite-life intangibles for impairment during the second quarter of 2014 indicated that the carrying value of trade names in the MES segment exceeded its estimated fair values. As a result, the Company performed an interim impairment test and recorded a non-cash impairment charge of $34.9 million for the second quarter of 2014.

Interest Expense

Interest expense decreased $0.01 million to$13.2 million for the second quarter of 2015 as compared to the same period of 2014.

Income Taxes

Income taxes were an expense of $0.2 and a benefit of13.7 million for the three months ended June 30, 2015 and 2014, respectively. The tax expense for the three months ended June 30, 2015 primarily related to state minimum fees. The tax benefit for the three months ended June 30, 2014 primarily related to intangible asset impairment charge, partially offset by state minimum fees. The Company will continue to incur deferred tax expense in the future as tax amortization

34

occurs. The expected tax benefit from operating loss during the three months ended June 30, 2015 was offset by the recording of additional valuation allowance. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

Consolidated Net Loss

Consolidated net loss decreased $30.9 million to $1.8 million in the second quarter of2015 as compared to the same period of 2014.  Net loss was impacted by higher margin rates as well as the decrease in medical equipment depreciation, gain on settlement and no intangible asset impairment charge during the second quarter of 2015.

Consolidated Results of Operations for the six months ended June 30, 2015 compared to the six months ended June 30, 2014

Total Revenue

Total revenue for the six months ended June 30, 2015 was $225.8 million, compared to $222.7 million for the six months ended June 30, 2014, an increase of $3.1 million or 1.4%.  The net increase was primarily due to additional revenue within our MES segment related to growth in our 360 solutions of $5.4million and supplemental rental services of $3.5 million,  growth in our CES segment of $4.4 million related to growth in our 360 solutions andgrowth in our SS segment of $2.4 million. These increases were partially offset by the decline in NPWT device rental and disposable sales of $7.8 million due to the interruption of the commercial distribution of a NPWT product line and $4.8 million due to customer transitions from the loss of the national GPO contract.

Cost of Revenue

Total cost of revenue for the six months ended June 30, 2015 was $152.1 million compared to $156.2 million for the six months ended June 30, 2014, a decrease of $4.1 million or 2.6%. The decrease was primarily in our MES segment due to decreases in cost of disposable sales of $3.7 million and other rental costs of $3.5 million and a decrease in medical equipment depreciation of $4.6 million. The decreases were partially offset by the increase in our MES segment due to increases in 360 solutions cost of $3.6 million and an increase in our CES 360 solutions cost of $3.5 million corresponding with the 360 solutions revenue growth.

Gross Margin

Total gross margin for the six months ended June 30, 2015 was $73.6 million, or 32.6% of total revenues, compared to $66.5 million, or 29.8% of total revenues, for the six months ended June 30, 2014, an increase of $7.1 million or 10.7%.  The increase in gross margin as a percent of revenue was primarily impacted by a business mix shift from lower margin disposable sales to higher margin 360 solutions in the MES segment, coupled with positive operating leverage from volume growth and a partial shift to higher margin modalities in the SS portions of the business. In addition, the gross margin increase in the CES segment was primarily impacted by lower vendor expense. CES gross margin percentage will fluctuate based on the variability of third-party vendor expenses in our 360 solutions and supplemental service programs.

Medical Equipment Solutions

(in thousands)

	Six Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	145,169		$	148,910		$	(3,741)	(2.5)	%
Cost of revenue		62,331			65,716			(3,385)	(5.2)
Medical equipment depreciation		30,669			35,504			(4,835)	(13.6)
Gross margin	$	52,169		$	47,690		$	4,479	9.4
Gross margin %		35.9	%		32.0	%

35

Total revenue in the MES segment decreased $3.7 million, or 2.5%, to $145.2 million in the first six months of 2015 as compared to the same period of 2014.  The decrease was primarily due to the decline in NPWT device rental and disposable sales due to the interruption of the commercial distribution of a NPWT product line of approximately $7.8 million and the transition of certain customers related to the loss of the national GPO contract of $4.8 million. The decrease was partially offset by growth in our 360 solutions from both new programs and expansion of existing programs of $5.4 millionand growth in supplemental rental services of $3.5 million. Many of our 360 Solution 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, 2015, we had 226 such active programs, up from 209 as of December 31, 2014.

Total cost of revenue in the segment decreased $3.4 million, or 5.2%, to $62.3 million in the first six months of 2015 as compared to the same period of 2014.  This decrease was due to lower cost of disposable sales of $3.7 million and decrease in rental cost of $3.5 million largely due to lower payroll, vehicle and freight expenses. The decrease was partially offset by an increase in costs to support growth in our 360 solutions of $3.6 million largely due to increases in employee related expense of $1.7 million and repair parts of $0.5 million.

Medical equipment depreciation decreased $4.8 million, or 13.6%, to $30.7 million in the first six months of 2015 as compared to the same period of 2014. The decrease in medical equipment depreciation was primarily due to reduced depreciation resulting from disposals of certain medical equipment and lower capital expenditures.  

Gross margin percentage for the MES segment increased from 32.0% in the first six months of 2014 to 35.9% in the same period of 2015. Gross margin rate was impacted by the lower depreciation, growth in our 360 solutions and a business mix shift from lower margin disposable sales to higher margin 360 solutions.

Future revenue will continue to be negatively impacted by the loss of revenues resulting from the interruption of the commercial distribution of a NPWT product line and the loss of the agreement related to a national GPO.

Clinical Engineering Solutions

(in thousands)

	Six Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	49,179		$	44,788		$	4,391	9.8	%
Cost of revenue		39,271			35,784			3,487	9.7
Gross margin	$	9,908		$	9,004		$	904	10.0
Gross margin %		20.1	%		20.1	%

Total revenue in the CES segment increased $4.4 million, or 9.8%, to $49.2 million in the first six months of 2015 as compared to the same period of 2014. The increase was primarily due to growth in our managed 360 solutions.  As of June 30, 2015, we had 360 solutions implemented in 172 programs in our CES segment, up from 144 programs as of December 31, 2014.

Total cost of revenue in the segment increased $3.5 million, or 9.7%, to $39.3 million in the first six months of 2015 as compared to the same period of 2014. The increase is primarily attributable to increases in vendor expenses and employee related costs to support the revenue growth and mix shifts in type of service provided to customers.

Gross margin percentage for the CES segment remained flat at20.1% in the first six months of 2014and2015.

36

Surgical Services

(in thousands)

	Six Months Ended
	June 30,
	2015			2014			Change		% Change
Total revenue	$	31,427		$	29,004		$	2,423	8.4	%
Cost of revenue		16,902			16,436			466	2.8
Medical equipment depreciation		2,966			2,727			239	8.8
Gross margin	$	11,559		$	9,841		$	1,718	17.5
Gross margin %		36.8	%		33.9	%

Total revenue in the SS segment increased $2.4 million, or 8.4%, to $31.4 million in the first six months of 2015 as compared to the same period of 2014. The increase was driven primarily by organic growth in our surgical services business.

Total cost of revenue in the segment increased $0.5 million, or 2.8%, to $16.9 million in the first six months of 2015 as compared to the same period of 2014. The increase was primarily attributable to an increase in employee related costs to support growth in our surgical services business.

Medical equipment depreciation increased $0.2 million, or 8.8%, to $3.0 million in the first six months of 2015 as compared to the same period of 2014. The increase was primarily due to additional medical equipment purchased.

Gross margin percentage for the SS segment increased from 33.9% in the first six months of 2014 to 36.8% in the same period of 2015. The increase in gross margin percentage was primarily driven by both positive operating leverage from volume growth and some shift to higher margin modalities.

Selling, General and Administrative, Gain on Settlement, Restructuring, Acquisition and Integration Expenses, Intangible Asset Impairment Charge and Interest Expense

(in thousands)

	Six Months Ended
	June 30,
	2015		2014		Change		% Change
Selling, general and administrative	$	61,189	$	58,877	$	2,312	3.9	%
(Gain) on settlement		(5,718)		—		(5,718)	*
Restructuring, acquisition and integration expenses		—		1,820		(1,820)	*
Intangible asset impairment charge		—		34,900		(34,900)	*
Interest expense		26,559		26,656		(97)	(0.4)

*Not meaningful

Selling, General and Administrative

Selling, general and administrative expense increased $2.3 million, or 3.9%, to $61.2 million for the first six months of 2015 as compared to the same period of 2014. The increase was primarily due to increases in consulting and legal fees and share-based compensation expense.

Selling, general and administrative expense as a percentage of total revenue was 27.1% and 26.4% for the six months ended June 30, 2015 and 2014, respectively.

Gain on Settlement

Gain on settlement of $5.7 million for the first six months of 2015 was related to a settlement with our former supplier resolving all matters related to the cessation of our commercial relationships with each other.

37

Restructuring, Acquisition and Integration Expenses

Restructuring, acquisition and integration expenses for the first sixmonths of 2014 was primarily due to additional changes to realign the management team.

Intangible Asset Impairment Charge

During the second quarter of 2014, the Company became aware that future financial results of the Company will be negatively impacted by the loss of revenues resulted by pending FDA 510(k) clearances on a NPWT product line and the loss of the agreement related to a national GPO. The Company applied a fair value based impairment test to the net book value of goodwill and intangible assets with indefinite lives on an annual basis and on an interim basis if events or circumstances indicate that an impairment loss may have occurred. The review of indefinite-life intangibles for impairment during the second quarter of 2014 indicated that the carrying value of trade names in the MES segment exceeded its estimated fair values. As a result, the Company performed an interim impairment test and recorded a non-cash impairment charge of $34.9 million for the six months ended June 30, 2014.  

Interest Expense

Interest expense decreased $0.1 million to $26.6 million for the first six months of 2015 as compared to the same period of 2014.

Income Taxes

Income taxes were an expense of $0.4 and a  benefit of $13.5 million for the six months ended June 30, 2015 and 2014, respectively. The tax expense for the six months ended June 30, 2015 primarily related to state minimum fees. The tax benefit for the six months ended June 30, 2014 primarily related to intangible asset impairment charge, partially offset by 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, 2015 was offset by the recording of additional valuation allowance. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

Consolidated Net Loss

Consolidated net loss decreased $33.5 million to $8.7 million in the first six months of 2015 as compared to the same period of 2014.  Net loss was impacted by higher margin rates as well as the decrease in medical equipment depreciation, gain on settlement and no intangible asset impairment charge during 2015.

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $64.1 and $22.2 million for the six months ended June 30, 2015 and 2014, respectively.  EBITDA for the six months ended June 30, 2015, was impacted by gain on settlement with a former supplier and no intangible asset impairment charge during 2015.

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 accounting principles generally accepted in the United States of America (“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:

38

	Six Months Ended
	June 30,
(in thousands)	2015		2014
Net loss attributable to Universal Hospital Services, Inc.	$	(8,965)	$	(42,523)
Interest expense		26,559		26,656
Provision (benefit) for income taxes		351		(13,456)
Depreciation and amortization of intangibles		46,166		51,482
EBITDA	$	64,111	$	22,159
Other Financial Data:
Net cash provided by operating activities	$	40,225	$	32,201
Net cash used in investing activities		(23,044)		(31,390)
Net cash used in financing activities		(17,181)		(811)
Other Operating Data (as of end of period):
Medical equipment (approximate number of owned outsourcing units)		254,000		269,000
District service centers		83		83
SS stand-alone service centers		5		7
Centers of Excellence		5		6

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

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.

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 health care technology solutions and service our debt.  Our health care technology solutions 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.

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.

39

Future cash flows from operations will continue to be negatively impacted by the loss of revenues resulting from the interruption of the commercial distribution of a NPWT product line and the loss of the agreement related to a national GPO.

Net cash provided by operating activities was $40.2 and $32.2 million for the six months ended June 30, 2015 and 2014, respectively. The increase in net cash provided by operating activities was primarily from the decrease in net loss in 2015.

Net cash used in investing activities was $23.0 and $31.4 million for the six months ended June 30, 2015 and 2014, respectively.  The decrease in net cash used in investing activities was primarily due to higher proceeds from sale of medical equipment and lower medical equipment purchases during 2015 compared to the same period of 2014.

Net cash used in financing activities was $17.2 and $0.8 million for the six months ended June 30, 2015 and 2014, respectively.  The increase in net cash used in financing activities was primarily due to lower net borrowings in 2015 compared to the same period of 2014.

Based on the level of operating performance expected in 2015, 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, 2015, we had $140.7 million of availability under the senior secured credit facility based on a borrowing base of $171.6 million less borrowings of $27.0 million and after giving effect to $3.9 million used for letters of credit.  As of June 30, 2014, we had $137.4 million of availability under the senior secured credit facility based on a borrowing base of $196.7 million less borrowings of $55.1 million and after giving effect to $4.2 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

See Item 1 of Part I, Note 2, Recent Accounting Pronouncements.

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:

· our competitors’ activities;

· our customers’ patient census or service needs;

· global economic conditions’ effect on our customers;

· our ability to maintain existing contracts or contract terms and enter new contracts with customers;

· uncertainties as to the effect of non-renewal of existing contracts;

· consolidation in the health care industry and its effect on prices;

· our relationships with key suppliers;

· our ability to change the manner in which health care providers procure medical equipment;

· the absence of long-term commitments and cancellations by or disputes with customers;

· our dependence on key personnel;

· our ability to identify and manage acquisitions;

· increases in expenses related to our pension plan;

· our cash flow fluctuation;

· the increased credit risks associated with doing business with home care providers and nursing homes;

40

· the risk of claims associated with medical equipment we outsource and service;

· increases costs we cannot pass through;

· the failure of any management information system;

· the inherent limitations on internal controls of our financial reporting;

· the uncertainty surrounding health care reform initiatives;

· the federal Privacy law risks;

· the federal Anti-Kickback law risks;

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

· potential other new healthcare laws or regulations;

· our customers operate in a highly regulated environment;

· our fleet’s risk of recalls or obsolescence;

· our substantial debt service obligations;

· our need for substantial cash to operate and expand our business as planned; and

· our history of net losses and substantial interest expense.

For further information on risk applicable to us, please see the disclosure regarding 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, 2015, we had approximately $700.0 million of total debt outstanding of which $27.0 million was bearing interest at variable rates. Based on variable debt levels at June 30, 2015, 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 first six months of 2015 average price of unleaded gasoline, assuming gasoline usage levels for the six months ended June 30, 2015, would lead to an annual increase in fuel costs of approximately $0.4 million.

Pension

Our pension plan assets, which were approximately $20.6 million at December 31, 2014, 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, 2014 would lead to a decrease in the funded status of the plan of approximately $2.1 million.

Other Market Risk

As of June 30, 2015, 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

41

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, 2015.

(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, 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 adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote. 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 2014 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.

Item 5.Other Information

None.

42

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, 2015, 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.

43

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, 2015

Universal Hospital Services, Inc.
By	/s/ Thomas J. Leonard
Thomas J. Leonard
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)

44

EX-31.1

Exhibit 31.1

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

I, Thomas J. Leonard, 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, 2015	/s/ Thomas J. Leonard
	Thomas J. Leonard
	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, 2015	/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

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Hospital Services,Inc. (the “Company”) on Form10-Q for the period ended June 30, 2015, as filed with the Securities and Exchange Commission (the “Report”),I,  Thomas J. Leonard, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section906 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, 2015	/s/ Thomas J. Leonard
	Thomas J. Leonard
	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, 2015, 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, 2015	/s/ James B. Pekarek
	James B. Pekarek
	Executive Vice President and
	Chief Financial Officer

XML

Equity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			$ (48,747)	$ 23,020
Net (loss) income	$ (1,779)	$ (32,710)	(8,745)	(42,262)
Other comprehensive income	488		488
Cash distributions to noncontrolling interests			(240)	(295)
Contributions from new members to limited liability companies			70
Purchases of noncontrolling interests				(34)
Balance	(57,174)	(19,571)	(57,174)	(19,571)
Additional Paid-in Capital
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			214,514	214,505
Purchases of noncontrolling interests				(3)
Balance	214,514	214,502	214,514	214,502
Accumulated Deficit
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			(254,418)	(187,901)
Net (loss) income			(8,965)	(42,523)
Balance	(263,383)	(230,424)	(263,383)	(230,424)
Accumulated Other Comprehensive Loss
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			(9,062)	(3,884)
Other comprehensive income			488
Balance	(8,574)	(3,884)	(8,574)	(3,884)
Non controlling Interests
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			219	300
Net (loss) income			220	261
Cash distributions to noncontrolling interests			(240)	(295)
Contributions from new members to limited liability companies			70
Purchases of noncontrolling interests				(31)
Balance	$ 269	$ 235	$ 269	$ 235

XML

Consolidating Financial Statements - Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Consolidated net loss	$ (1,779)	$ (32,710)	$ (8,745)	$ (42,262)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			38,315	42,853
Asset impairment charges	0	800	1,703	2,025
Intangible asset impairment charge		34,900		34,900
Amortization of intangibles, deferred financing costs and bond premium			6,532	7,039
Provision for doubtful accounts			54	85
Provision for inventory obsolescence			225	38
Non-cash share-based compensation expense			1,140	538
Gain on sales and disposals of equipment			(2,522)	(1,234)
Deferred income taxes			108	(13,629)
Changes in operating assets and liabilities:
Accounts receivable			(3,980)	810
Inventories			(393)	(476)
Other operating assets			669	(1,394)
Accounts payable			2,000	674
Other operating liabilities			5,119	2,234
Net cash provided by operating activities			40,225	32,201
Cash flows from investing activities:
Medical equipment purchases			(27,437)	(34,766)
Property and office equipment purchases			(2,433)	(2,560)
Proceeds from disposition of property and equipment			9,426	5,970
Acquisition			(2,600)
Purchases of noncontrolling interests				(34)
Net cash used in investing activities			(23,044)	(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility			63,900	76,129
Payments under senior secured credit facility			(75,900)	(69,129)
Payments of principal under capital lease obligations			(4,154)	(3,429)
Distributions to noncontrolling interests			(240)	(295)
Contributions from new members to limited liability companies			70
Dividend and equity distribution payments			(39)	(73)
Change in book overdrafts			(818)	(4,014)
Net cash used in financing activities			(17,181)	(811)
UHS Holdco, Inc., (Parent)
Cash flows from operating activities:
Consolidated net loss	(1,779)	(32,710)	(8,745)	(42,262)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			34,717	39,579
Asset impairment charges			1,703	2,025
Intangible asset impairment charge		34,900		34,900
Amortization of intangibles, deferred financing costs and bond premium			4,890	5,378
Equity in loss of subsidiary	(573)	(335)	(759)	201
Provision for doubtful accounts			28	96
Provision for inventory obsolescence			210	(2)
Non-cash share-based compensation expense			1,140	421
Gain on sales and disposals of equipment			(2,436)	(1,295)
Deferred income taxes			1,098	(12,451)
Changes in operating assets and liabilities:
Accounts receivable			(3,213)	1,514
Due from (to) affiliates			(1,196)	(2,053)
Inventories			(410)	624
Other operating assets			610	(1,384)
Accounts payable			1,148	257
Other operating liabilities			5,788	2,664
Net cash provided by operating activities			34,573	28,212
Cash flows from investing activities:
Medical equipment purchases			(25,308)	(31,959)
Property and office equipment purchases			(2,417)	(2,413)
Proceeds from disposition of property and equipment			9,290	5,970
Net cash used in investing activities			(18,435)	(28,402)
Cash flows from financing activities:
Proceeds under senior secured credit facility			63,900	76,129
Payments under senior secured credit facility			(75,900)	(69,129)
Payments of principal under capital lease obligations			(3,635)	(2,750)
Dividend and equity distribution payments			(39)	(73)
Change in book overdrafts			(464)	(3,987)
Net cash used in financing activities			(16,138)	190
Subsidiary Guarantor Surgical Services
Cash flows from operating activities:
Consolidated net loss	573	335	759	(201)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			3,598	3,274
Amortization of intangibles, deferred financing costs and bond premium			1,642	1,661
Provision for doubtful accounts			26	(11)
Provision for inventory obsolescence			15	40
Non-cash share-based compensation expense				117
Gain on sales and disposals of equipment			(86)	61
Deferred income taxes			(990)	(1,178)
Changes in operating assets and liabilities:
Accounts receivable			(767)	(704)
Due from (to) affiliates				2,053
Inventories			17	(1,100)
Other operating assets			59	(10)
Accounts payable			852	417
Other operating liabilities			(669)	(430)
Net cash provided by operating activities			4,456	3,989
Cash flows from investing activities:
Medical equipment purchases			(2,129)	(2,807)
Property and office equipment purchases			(16)	(147)
Proceeds from disposition of property and equipment			136
Acquisition			(2,600)
Purchases of noncontrolling interests				(34)
Net cash used in investing activities			(4,609)	(2,988)
Cash flows from financing activities:
Payments of principal under capital lease obligations			(519)	(679)
Distributions to noncontrolling interests			(240)	(295)
Contributions from new members to limited liability companies			70
Due to affiliates			1,196
Change in book overdrafts			(354)	(27)
Net cash used in financing activities			153	(1,001)
Consolidating Adjustments
Cash flows from operating activities:
Consolidated net loss	(573)	(335)	(759)	201
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in loss of subsidiary	$ 573	$ 335	759	$ (201)
Changes in operating assets and liabilities:
Due from (to) affiliates			1,196
Net cash provided by operating activities			1,196
Cash flows from financing activities:
Due to affiliates			(1,196)
Net cash used in financing activities			$ (1,196)

XML

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Segment Information
Revenues	$ 112,289	$ 109,366	$ 225,775	$ 222,702
Medical equipment depreciation	15,501	19,095	33,635	38,231
Gross margin	36,972	31,878	73,636	66,535
Selling, general and administrative	31,038	29,587	61,189	58,877
Gain on settlement	5,718		5,718
Restructuring, acquisition and integration expenses		512		1,820
Intangible asset impairment charge		34,900		34,900
Interest expense	13,249	13,260	26,559	26,656
Loss before income taxes and noncontrolling interest	(1,597)	(46,381)	(8,394)	(55,718)
Assets	818,908		818,908		$ 833,912
Amortization			6,532	7,039
Medical Equipment Solutions
Segment Information
Revenues	71,084	72,188	145,169	148,910
Cost of revenue	31,053	32,288	62,331	65,716
Medical equipment depreciation	14,009	17,698	30,669	35,504
Gross margin	26,022	22,202	52,169	47,690
Assets	606,007		606,007		624,444
Clinical Engineering Solutions
Segment Information
Revenues	24,784	22,119	49,179	44,788
Cost of revenue	20,041	17,869	39,271	35,784
Gross margin	4,743	4,250	9,908	9,004
Assets	111,118		111,118		110,562
Surgical Services
Segment Information
Revenues	16,421	15,059	31,427	29,004
Cost of revenue	8,722	8,236	16,902	16,436
Medical equipment depreciation	1,492	1,397	2,966	2,727
Gross margin	6,207	$ 5,426	11,559	$ 9,841
Assets	$ 101,783		$ 101,783		$ 98,906

XML

Restructuring (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Restructuring Reserve [Roll Forward]
Restructuring expense	$ 900		$ 900	$ 1,600	$ 300
Restructuring, acquisition and integration expenses	512		1,820
Payments for Restructuring		$ 1,100	1,200
Other Accrued Expenses
Restructuring Reserve [Roll Forward]
Restructuring expense		$ 400
UHS Holdco, Inc., (Parent)
Restructuring Reserve [Roll Forward]
Restructuring, acquisition and integration expenses	$ 512		$ 1,820

XML

Related Party Transactions (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)
IPC | General Advisory And Management Services
Related Party Transaction
Specified amount of annual fees for ongoing advisory and management services			$ 500
Annual fee for ongoing advisory and management services as a percentage of adjusted EBITDA			0.75%
Amount incurred	$ 300	$ 200	$ 500	$ 500
CT Partners | Executive Positions Search Services
Related Party Transaction
Number of members of the board of directors involved in the related party transaction | item	1		1
Amount incurred	$ 200	$ 200	$ 200	$ 200

XML

Basis of Presentation (Details)	Jun. 30, 2015
Basis of Presentation
Ownership interest in subsidiary (as a percent)	100.00%

XML

Acquisitions (Tables)

May. 18, 2015

Mobile laser surgical services provider

Acquisitions

Schedule of the fair values of the assets acquired and liabilities assumed at the Acquisition Date

(in thousands)
Property and equipment	$	620
Goodwill		1,018
Intangible assets		1,475
Accrued compensation		(13)
Total purchase price	$	3,100

XML

Income Taxes (Details) $ in Millions	Jun. 30, 2015 USD ($)
Federal
Operating loss carryforwards
Unused federal net operating loss carryforwards	$ 215.8

XML

Share-Based Compensation - Expense (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Jun. 30, 2015	Jun. 30, 2015
Unearned non-cash share-based compensation
Weighted average period for recognition of share-based compensation expense				2 years 3 months 18 days
Unearned non-cash share-based compensation expense expected to be recognized			$ 6.5	$ 6.5
Estimated forfeiture rate (as a percent)				2.00%
Compensation expense			$ 0.3	$ 0.3
Restricted Stock Units (RSUs)
Unearned non-cash share-based compensation
Granted (in shares)		7,000,000
Vesting period	4 years

XML

Goodwill and Other Intangible Assets - Amortization (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Future estimated amortization expense
Remainder of 2015	$ 5,878
2016	10,971
2017	7,679
2018	6,095
2019	3,529
2020	$ 1,537

XML

Consolidating Financial Statements - Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue
Medical equipment solutions	$ 71,084	$ 72,188	$ 145,169	$ 148,910
Clinical engineering solutions	24,784	22,119	49,179	44,788
Surgical services	16,421	15,059	31,427	29,004
Total revenues	112,289	109,366	225,775	222,702
Cost of Revenue
Cost of medical equipment solutions	31,053	32,288	62,331	65,716
Cost of clinical engineering solutions	20,041	17,869	39,271	35,784
Cost of surgical services	8,722	8,236	16,902	16,436
Medical equipment depreciation	15,501	19,095	33,635	38,231
Total costs of revenues	75,317	77,488	152,139	156,167
Gross margin	36,972	31,878	73,636	66,535
Selling, general and administrative	31,038	29,587	61,189	58,877
Gain on settlement	5,718		5,718
Restructuring, acquisition and integration expenses		512		1,820
Intangible asset impairment charge		34,900		34,900
Operating income (loss)	11,652	(33,121)	18,165	(29,062)
Interest expense	13,249	13,260	26,559	26,656
Loss before income taxes and noncontrolling interest	(1,597)	(46,381)	(8,394)	(55,718)
Provision (benefit) for income taxes	182	(13,671)	351	(13,456)
Consolidated net loss	(1,779)	(32,710)	(8,745)	(42,262)
Net income attributable to noncontrolling interest	95	131	220	261
Net loss attributable to Universal Hospital Services, Inc.	(1,874)	(32,841)	(8,965)	(42,523)
UHS Holdco, Inc., (Parent)
Revenue
Medical equipment solutions	71,084	72,188	145,169	148,910
Clinical engineering solutions	24,784	22,119	49,179	44,788
Total revenues	95,868	94,307	194,348	193,698
Cost of Revenue
Cost of medical equipment solutions	31,053	32,288	62,331	65,716
Cost of clinical engineering solutions	20,041	17,869	39,271	35,784
Medical equipment depreciation	14,009	17,698	30,669	35,504
Total costs of revenues	65,103	67,855	132,271	137,004
Gross margin	30,765	26,452	62,077	56,694
Selling, general and administrative	26,436	24,741	52,018	49,264
Gain on settlement	5,718		5,718
Restructuring, acquisition and integration expenses		512		1,820
Intangible asset impairment charge		34,900		34,900
Operating income (loss)	10,047	(33,701)	15,777	(29,290)
Equity in loss of subsidiary	(573)	(335)	(759)	201
Interest expense	12,734	12,734	25,525	25,595
Loss before income taxes and noncontrolling interest	(2,114)	(46,100)	(8,989)	(55,086)
Provision (benefit) for income taxes	(335)	(13,390)	(244)	(12,824)
Consolidated net loss	(1,779)	(32,710)	(8,745)	(42,262)
Net loss attributable to Universal Hospital Services, Inc.	(1,779)	(32,710)	(8,745)	(42,262)
Subsidiary Guarantor Surgical Services
Revenue
Surgical services	16,421	15,059	31,427	29,004
Total revenues	16,421	15,059	31,427	29,004
Cost of Revenue
Cost of surgical services	8,722	8,236	16,902	16,436
Medical equipment depreciation	1,492	1,397	2,966	2,727
Total costs of revenues	10,214	9,633	19,868	19,163
Gross margin	6,207	5,426	11,559	9,841
Selling, general and administrative	4,602	4,846	9,171	9,613
Operating income (loss)	1,605	580	2,388	228
Interest expense	515	526	1,034	1,061
Loss before income taxes and noncontrolling interest	1,090	54	1,354	(833)
Provision (benefit) for income taxes	517	(281)	595	(632)
Consolidated net loss	573	335	759	(201)
Net income attributable to noncontrolling interest	95	131	220	261
Net loss attributable to Universal Hospital Services, Inc.	478	204	539	(462)
Consolidating Adjustments
Cost of Revenue
Equity in loss of subsidiary	573	335	759	(201)
Loss before income taxes and noncontrolling interest	(573)	(335)	(759)	201
Consolidated net loss	(573)	(335)	(759)	201
Net loss attributable to Universal Hospital Services, Inc.	$ (573)	$ (335)	$ (759)	$ 201

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Limited Liability Companies (Details) - Jun. 30, 2015 - Limited Liability Companies $ in Millions	USD ($) item
Limited Liability Companies
Number of active LLCs in which the entity holds an interest	7
Surgical Services
Limited Liability Companies
Total assets of LLCs | $	$ 1.0

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2015

Recent Accounting Pronouncements

Recent Accounting Pronouncements

2.Recent Accounting Pronouncements

Standards Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in the U.S. GAAP when it becomes effective. The new standard is effective beginning after December 15, 2016 and interim periods within those years. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.On July 9, 2015, the FASB approved a one-year deferral of the effective date for ASU 2014-09, but would permit all entities to adopt the standard as of the original effective date.

In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern  (“ASU 2014-15”), which requires management to evaluate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. The new standard is effective beginning after December 15, 2016 and interim periods within those years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02 Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 changes the evaluation of whether limited partnerships (and similar legal entities) are variable interest entity (VIEs) and eliminates the presumption that a general partner should consolidate a limited partnership that is a voting interest entity. The new guidance also alters the analysis for determining when fees paid to a decision maker or service provider represent a variable interest in a VIE and how interests of related parties affect the primary beneficiary determination. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03 Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

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Dividend and Equity Distribution (Details) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 08, 2011
Dividend and Equity Distribution
Estimated option forfeiture rate (as a percent)	2.00%
Holders of options expected to vest in Parent's stock | Parent
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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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Stock-Based Compensation

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

						Weighted
						average
		Weighted		Aggregate		remaining
	Number of	average		intrinsic		contractual
(in thousands except exercise price and years)	options	exercise price		value		term (years)
Outstanding at December 31, 2014	37,340	$	0.84	$	—	9.9
Granted	16,665		0.71
Exercised	—		—	$	—
Forfeited or expired	(19,960)		0.96
Outstanding at June 30, 2015	34,045	$	0.71	$	—	9.4
Exercisable at June 30, 2015	8,954	$	0.71	$	—	9.4
Remaining authorized options available for issue	9,642

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

		Six Months Ended
		June 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		26.9	%
Dividend yield		N/A
Expected option life (years)		5.10
Black-Scholes Value of options	$	0.19

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Equity (Tables)

6 Months Ended

Jun. 30, 2015

Shareholder's 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		Deficit
Balance at December 31, 2014	$	214,514	$	(254,418)	$	(9,062)	$	219	$	(48,747)
Net (loss) income		—		(8,965)		—		220		(8,745)
Other comprehensive income		—		—		488		—		488
Cash distributions to noncontrolling interests		—		—		—		(240)		(240)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at June 30, 2015	$	214,514	$	(263,383)	$	(8,574)	$	269	$	(57,174)

					Accumulated
	Additional				Other				Total
	Paid-in		Accumulated		Comprehensive		Noncontrolling		Equity
(in thousands)	Capital		Deficit		Loss		Interests		(Deficit)
Balance at December 31, 2013	$	214,505	$	(187,901)	$	(3,884)	$	300	$	23,020
Net (loss) income		—		(42,523)		—		261		(42,262)
Cash distributions to noncontrolling interests		—		—		—		(295)		(295)
Purchases of noncontrolling interests		(3)		—		—		(31)		(34)
Balance at June 30, 2014	$	214,502	$	(230,424)	$	(3,884)	$	235	$	(19,571)

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Concentration (Details) - Customer concentration - item	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Concentration
Number of major customers	1	1
Total revenue
Concentration
Concentration risk (as a percent)	14.00%	14.00%

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Long-Term Debt (Details)	6 Months Ended
	Jun. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Feb. 12, 2013 USD ($)	Aug. 07, 2012 USD ($)	Jul. 31, 2012 USD ($)	May. 06, 2010 USD ($)
Long-Term Debt
Long-term debt current and noncurrent	$ 699,965,000	$ 710,186,000
Unamortized bond premium	10,280,000	11,113,000
Less: Current portion of long-term debt	(5,408,000)	(5,640,000)
Total long-term debt	$ 694,557,000	704,546,000
Ownership interest in existing and certain future owned domestic subsidiaries (as a percent)	100.00%
Original notes - 7.625%
Long-Term Debt
Long-term debt current and noncurrent	$ 425,000,000	$ 425,000,000
Interest rate (as a percent)	7.625%	7.625%		7.625%
Aggregate outstanding principal amount				$ 425,000,000
Add-on notes - 7.625%
Long-Term Debt
Long-term debt current and noncurrent	$ 220,000,000	$ 220,000,000
Unamortized bond premium	$ 10,300,000	$ 11,100,000
Interest rate (as a percent)	7.625%	7.625%	7.625%
Aggregate outstanding principal amount			$ 220,000,000
Senior secured credit facility
Long-Term Debt
Long-term debt current and noncurrent	$ 27,000,000	$ 39,000,000
Maximum borrowing capacity					$ 235,000,000	$ 195,000,000
Available amount	140,700,000
Borrowing base	171,600,000
Borrowing outstanding	27,000,000
Letters of credit	3,900,000
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 | item	4
Senior secured credit facility | Minimum
Long-Term Debt
Margin over base rate (as a percent)	1.00%
Senior secured credit facility | Maximum
Long-Term Debt
Margin over base rate (as a percent)	1.50%
Senior secured credit facility | Federal funds rate
Long-Term Debt
Base rate	federal funds rate
Margin over base rate (as a percent)	0.50%
Senior secured credit facility | One month Eurodollar rate
Long-Term Debt
Base rate	Eurodollar rate
Margin over base rate (as a percent)	1.00%
Senior secured credit facility | Adjusted British Bankers Association Interest Settlement Rate | Minimum
Long-Term Debt
Margin over base rate (as a percent)	2.00%
Senior secured credit facility | Adjusted British Bankers Association Interest Settlement Rate | Maximum
Long-Term Debt
Margin over base rate (as a percent)	2.50%
Senior secured credit facility | Interest Rate Scenario 1
Long-Term Debt
Debt Instrument, Interest Rate at Period End	2.6855%
Capital lease obligations
Long-Term Debt
Long-term debt current and noncurrent	$ 17,685,000	$ 15,073,000

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2015

Long-Term Debt

Schedule of long-term debt

	June 30,		December 31,
(in thousands)	2015		2014
Original notes - 7.625%	$	425,000	$	425,000
Add-on notes - 7.625%		220,000		220,000
Unamortized bond premium		10,280		11,113
Senior secured credit facility		27,000		39,000
Capital lease obligations		17,685		15,073
		699,965		710,186
Less: Current portion of long-term debt		(5,408)		(5,640)
Total long-term debt	$	694,557	$	704,546

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2015

Segment Information

Schedule of the total gross margin and reconciliation to loss before income taxes and noncontrolling interest (in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Total gross margin	$	36,972	$	31,878	$	73,636	$	66,535
Selling, general and administrative		31,038		29,587		61,189		58,877
(Gain) on settlement		(5,718)		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		512		—		1,820
Intangible asset impairment charge		—		34,900		—		34,900
Interest expense		13,249		13,260		26,559		26,656
Loss before income taxes and noncontrolling interest	$	(1,597)	$	(46,381)	$	(8,394)	$	(55,718)

Schedule of total assets by reporting segment (in thousands)

	June 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	606,007	$	624,444
Clinical Engineering Solutions		111,118		110,562
Surgical Services		101,783		98,906
Total Company Assets	$	818,908	$	833,912

Schedule of percentage of revenue for each group of similar products sold or services provided in segments

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	60.1	%	60.9	%	61.2	%	61.6	%
Equipment/disposable sales	3.2		5.1		3.1		5.3
	63.3		66.0		64.3		66.9
CES
Service solutions	22.1		20.2		21.8		20.1
SS
Equipment usage solutions	14.4		13.6		13.7		12.8
Equipment/disposable sales	0.2		0.2		0.2		0.2
	14.6		13.8		13.9		13.0
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%

Medical Equipment Solutions

Segment Information

Schedule of operating information of segments (in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	71,084	$	72,188	$	145,169	$	148,910
Cost of revenue		31,053		32,288		62,331		65,716
Medical equipment depreciation		14,009		17,698		30,669		35,504
Gross margin	$	26,022	$	22,202	$	52,169	$	47,690

Clinical Engineering Solutions

Segment Information

Schedule of operating information of segments (in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	24,784	$	22,119	$	49,179	$	44,788
Cost of revenue		20,041		17,869		39,271		35,784
Gross margin	$	4,743	$	4,250	$	9,908	$	9,004

Surgical Services

Segment Information

Schedule of operating information of segments (in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	16,421	$	15,059	$	31,427	$	29,004
Cost of revenue		8,722		8,236		16,902		16,436
Medical equipment depreciation		1,492		1,397		2,966		2,727
Gross margin	$	6,207	$	5,426	$	11,559	$	9,841

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

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 2014 Annual Report on Form 10-K filed with the SEC.

The interim consolidated financial statements presented herein as of June 30, 2015, 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 2014 Annual Report on Form 10-K. There have been no material changes to these policies for the quarter ended June 30, 2015.

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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Consolidating Financial Statements (Tables)

6 Months Ended

Jun. 30, 2015

Consolidating Financial Statements

Schedule of Consolidating Balance Sheets

	June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,952	$	9,230	$	—	$	70,182
Due from affiliates		29,897		—		(29,897)		—
Inventories		4,469		3,690		—		8,159
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		5,972		224		—		6,196
Total current assets		101,290		14,417		(29,897)		85,810
Property and equipment:
Medical equipment		546,425		43,016		—		589,441
Property and office equipment		75,573		8,657		—		84,230
Accumulated depreciation		(422,803)		(33,425)		—		(456,228)
Total property and equipment, net		199,195		18,248		—		217,443
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,662		—		(53,662)		—
Other intangibles, net		152,668		15,564		—		168,232
Other, primarily deferred financing costs, net		10,728		100		—		10,828
Total assets	$	800,684	$	101,783	$	(83,559)	$	818,908
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,397	$	1,011	$	—	$	5,408
Book overdrafts		3,062		2,064		—		5,126
Due to affiliates		—		29,897		(29,897)		—
Accounts payable		24,779		3,444		—		28,223
Accrued compensation		14,237		1,964		—		16,201
Accrued interest		18,808		—		—		18,808
Dividend payable		28		—		—		28
Other accrued expenses		15,945		663		—		16,608
Total current liabilities		81,256		39,043		(29,897)		90,402
Long-term debt, less current portion		690,984		3,573		—		694,557
Pension and other long-term liabilities		11,759		—		—		11,759
Payable to Parent		26,023		—		—		26,023
Deferred income taxes, net		48,094		5,247		—		53,341
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(257,026)		(6,357)		—		(263,383)
Accumulated loss in subsidiary		(6,357)		—		6,357		—
Accumulated other comprehensive loss		(8,574)		—		—		(8,574)
Total Universal Hospital Services, Inc. (deficit) equity		(57,432)		53,651		(53,662)		(57,443)
Noncontrolling interest		—		269		—		269
Total (deficit) equity		(57,432)		53,920		(53,662)		(57,174)
Total liabilities and (deficit) equity	$	800,684	$	101,783	$	(83,559)	$	818,908

	December 31, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	57,767	$	8,489	$	—	$	66,256
Due from affiliates		28,701		—		(28,701)		—
Inventories		4,269		3,722		—		7,991
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		7,434		237		—		7,671
Total current assets		98,171		13,721		(28,701)		83,191
Property and equipment:
Medical equipment		551,098		40,002		—		591,100
Property and office equipment		77,234		7,220		—		84,454
Accumulated depreciation		(415,131)		(30,350)		—		(445,481)
Total property and equipment, net		213,201		16,872		—		230,073
Other long-term assets:
Goodwill		283,141		52,436		—		335,577
Investment in subsidiary		53,123		—		(53,123)		—
Other intangibles, net		157,174		15,731		—		172,905
Other, primarily deferred financing costs, net		12,020		146		—		12,166
Total assets	$	816,830	$	98,906	$	(81,824)	$	833,912
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,935	$	705	$	—	$	5,640
Book overdrafts		3,526		2,418		—		5,944
Due to affiliates		—		28,701		(28,701)		—
Accounts payable		27,458		2,656		—		30,114
Accrued compensation		12,406		2,702		—		15,108
Accrued interest		18,823		—		—		18,823
Dividend payable		39		—		—		39
Other accrued expenses		11,505		81		—		11,586
Total current liabilities		78,692		37,263		(28,701)		87,254
Long-term debt, less current portion		702,471		2,075		—		704,546
Pension and other long-term liabilities		12,428		—		—		12,428
Payable to Parent		24,911		—		—		24,911
Deferred income taxes, net		47,283		6,237		—		53,520
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(247,522)		(6,896)		—		(254,418)
Accumulated loss in subsidiary		(6,896)		—		6,896		—
Accumulated other comprehensive loss		(9,062)		—		—		(9,062)
Total Universal Hospital Services, Inc. (deficit) equity		(48,955)		53,112		(53,123)		(48,966)
Noncontrolling interest		—		219		—		219
Total (deficit) equity		(48,955)		53,331		(53,123)		(48,747)
Total liabilities and (deficit) equity	$	816,830	$	98,906	$	(81,824)	$	833,912

Schedule of Consolidating Statements of Operations

	Three Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	71,084	$	—	$	—	$	71,084
Clinical engineering solutions		24,784		—		—		24,784
Surgical services		—		16,421		—		16,421
Total revenues		95,868		16,421		—		112,289
Cost of Revenue
Cost of medical equipment solutions		31,053		—		—		31,053
Cost of clinical engineering solutions		20,041		—		—		20,041
Cost of surgical services		—		8,722		—		8,722
Medical equipment depreciation		14,009		1,492		—		15,501
Total costs of revenues		65,103		10,214		—		75,317
Gross margin		30,765		6,207		—		36,972
Selling, general and administrative		26,436		4,602		—		31,038
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		10,047		1,605		—		11,652
Equity in earnings of subsidiary		(573)		—		573		—
Interest expense		12,734		515		—		13,249
(Loss) income before income taxes and noncontrolling interest		(2,114)		1,090		(573)		(1,597)
(Benefit) provision for income taxes		(335)		517		—		182
Consolidated net (loss) income		(1,779)		573		(573)		(1,779)
Net income attributable to noncontrolling interest		—		95		—		95
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(1,779)	$	478	$	(573)	$	(1,874)

	Three Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	72,188	$	—	$	—	$	72,188
Clinical engineering solutions		22,119		—		—		22,119
Surgical services		—		15,059		—		15,059
Total revenues		94,307		15,059		—		109,366
Cost of Revenue
Cost of medical equipment solutions		32,288		—		—		32,288
Cost of clinical engineering solutions		17,869		—		—		17,869
Cost of surgical services		—		8,236		—		8,236
Medical equipment depreciation		17,698		1,397		—		19,095
Total costs of revenues		67,855		9,633		—		77,488
Gross margin		26,452		5,426		—		31,878
Selling, general and administrative		24,741		4,846		—		29,587
Restructuring, acquisition and integration expenses		512		—		—		512
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(33,701)		580		—		(33,121)
Equity in earnings of subsidiary		(335)		—		335		—
Interest expense		12,734		526		—		13,260
(Loss) income before income taxes and noncontrolling interest		(46,100)		54		(335)		(46,381)
Benefit for income taxes		(13,390)		(281)		—		(13,671)
Consolidated net (loss) income		(32,710)		335		(335)		(32,710)
Net income attributable to noncontrolling interest		—		131		—		131
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	145,169	$	—	$	—	$	145,169
Clinical engineering solutions		49,179		—		—		49,179
Surgical services		—		31,427		—		31,427
Total revenues		194,348		31,427		—		225,775
Cost of Revenue
Cost of medical equipment solutions		62,331		—		—		62,331
Cost of clinical engineering solutions		39,271		—		—		39,271
Cost of surgical services		—		16,902		—		16,902
Medical equipment depreciation		30,669		2,966		—		33,635
Total costs of revenues		132,271		19,868		—		152,139
Gross margin		62,077		11,559		—		73,636
Selling, general and administrative		52,018		9,171		—		61,189
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		15,777		2,388		—		18,165
Equity in earnings of subsidiary		(759)		—		759		—
Interest expense		25,525		1,034		—		26,559
(Loss) income before income taxes and noncontrolling interest		(8,989)		1,354		(759)		(8,394)
(Benefit) provision for income taxes		(244)		595		—		351
Consolidated net (loss) income		(8,745)		759		(759)		(8,745)
Net income attributable to noncontrolling interest		—		220		—		220
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,745)	$	539	$	(759)	$	(8,965)

	Six Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	148,910	$	—	$	—	$	148,910
Clinical engineering solutions		44,788		—		—		44,788
Surgical services		—		29,004		—		29,004
Total revenues		193,698		29,004		—		222,702
Cost of Revenue
Cost of medical equipment solutions		65,716		—		—		65,716
Cost of clinical engineering solutions		35,784		—		—		35,784
Cost of surgical services		—		16,436		—		16,436
Medical equipment depreciation		35,504		2,727		—		38,231
Total costs of revenues		137,004		19,163		—		156,167
Gross margin		56,694		9,841		—		66,535
Selling, general and administrative		49,264		9,613		—		58,877
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(29,290)		228		—		(29,062)
Equity in loss of subsidiary		201		—		(201)		—
Interest expense		25,595		1,061		—		26,656
Loss before income taxes and noncontrolling interest		(55,086)		(833)		201		(55,718)
Benefit for income taxes		(12,824)		(632)		—		(13,456)
Consolidated net loss		(42,262)		(201)		201		(42,262)
Net income attributable to noncontrolling interest		—		261		—		261
Net loss attributable to Universal Hospital Services, Inc.	$	(42,262)	$	(462)	$	201	$	(42,523)

Schedule of Consolidating Statements of Comprehensive Income (Loss)

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(1,779)	$	573	$	(573)	$	(1,779)	$	(8,745)	$	759	$	(759)	$	(8,745)
Other comprehensive income:
Gain on minimum pension liability, net of tax		488		—		—		488		488		—		—		488
Total other comprehensive income		488		—		—		488		488		—		—		488
Comprehensive (loss) income		(1,291)		573		(573)		(1,291)		(8,257)		759		(759)		(8,257)
Comprehensive income attributable to noncontrolling interest		—		95		—		95		—		220		—		220
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(1,291)	$	478	$	(573)	$	(1,386)	$	(8,257)	$	539	$	(759)	$	(8,477)

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(32,710)	$	335	$	(335)	$	(32,710)	$	(42,262)	$	(201)	$	201	$	(42,262)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive (loss) income		(32,710)		335		(335)		(32,710)		(42,262)		(201)		201		(42,262)
Comprehensive income attributable to noncontrolling interest		—		131		—		131		—		261		—		261
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)	$	(42,262)	$	(462)	$	201	$	(42,523)

Schedule of Consolidating Statements of Cash Flows

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(8,745)	$	759	$	(759)	$	(8,745)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		34,717		3,598		—		38,315
Asset impairment charges		1,703		—		—		1,703
Amortization of intangibles, deferred financing costs and bond premium		4,890		1,642		—		6,532
Equity in earnings of subsidiary		(759)		—		759		—
Provision for doubtful accounts		28		26		—		54
Provision for inventory obsolescence		210		15		—		225
Non-cash share-based compensation expense		1,140		—		—		1,140
Gain on sales and disposals of equipment		(2,436)		(86)		—		(2,522)
Deferred income taxes		1,098		(990)		—		108
Changes in operating assets and liabilities:
Accounts receivable		(3,213)		(767)		—		(3,980)
Due from affiliates		(1,196)		—		1,196		—
Inventories		(410)		17		—		(393)
Other operating assets		610		59		—		669
Accounts payable		1,148		852		—		2,000
Other operating liabilities		5,788		(669)		—		5,119
Net cash provided by operating activities		34,573		4,456		1,196		40,225
Cash flows from investing activities:
Medical equipment purchases		(25,308)		(2,129)		—		(27,437)
Property and office equipment purchases		(2,417)		(16)		—		(2,433)
Proceeds from disposition of property and equipment		9,290		136		—		9,426
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(18,435)		(4,609)		—		(23,044)
Cash flows from financing activities:
Proceeds under senior secured credit facility		63,900		—		—		63,900
Payments under senior secured credit facility		(75,900)		—		—		(75,900)
Payments of principal under capital lease obligations		(3,635)		(519)		—		(4,154)
Distributions to noncontrolling interests		—		(240)		—		(240)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		1,196		(1,196)		—
Change in book overdrafts		(464)		(354)		—		(818)
Net cash used in financing activities		(16,138)		153		(1,196)		(17,181)
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, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(42,262)	$	(201)	$	201	$	(42,262)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		39,579		3,274		—		42,853
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		5,378		1,661		—		7,039
Equity in loss of subsidiary		201		—		(201)		—
Provision for doubtful accounts		96		(11)		—		85
Provision for inventory obsolescence		(2)		40		—		38
Non-cash share-based compensation expense		421		117		—		538
Gain on sales and disposals of equipment		(1,295)		61		—		(1,234)
Deferred income taxes		(12,451)		(1,178)		—		(13,629)
Changes in operating assets and liabilities:
Accounts receivable		1,514		(704)		—		810
Due from (to) affiliates		(2,053)		2,053		—		—
Inventories		624		(1,100)		—		(476)
Other operating assets		(1,384)		(10)		—		(1,394)
Accounts payable		257		417		—		674
Other operating liabilities		2,664		(430)		—		2,234
Net cash provided by operating activities		28,212		3,989		—		32,201
Cash flows from investing activities:
Medical equipment purchases		(31,959)		(2,807)		—		(34,766)
Property and office equipment purchases		(2,413)		(147)		—		(2,560)
Proceeds from disposition of property and equipment		5,970		—		—		5,970
Purchases of noncontrolling interests		—		(34)		—		(34)
Net cash used in investing activities		(28,402)		(2,988)		—		(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility		76,129		—		—		76,129
Payments under senior secured credit facility		(69,129)		—		—		(69,129)
Payments of principal under capital lease obligations		(2,750)		(679)		—		(3,429)
Distributions to noncontrolling interests		—		(295)		—		(295)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,987)		(27)		—		(4,014)
Net cash provided by (used in) financing activities		190		(1,001)		—		(811)
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	$	—	$	—	$	—	$	—

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Share-Based Compensation (Details) - $ / shares	1 Months Ended	6 Months Ended		12 Months Ended
	Apr. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Restricted Stock Units (RSUs)
Number of Options
Granted (in shares)	7,000,000
UHS Holdco, Inc., (Parent) | Options
Number of Options
Outstanding at the beginning of the period (in shares)		37,340,000
Granted (in shares)		16,665,000	0
Forfeited or expired (in shares)		(19,960,000)
Outstanding at the end of the period (in shares)		34,045,000		37,340,000
Exercisable at the end of the period (in shares)		8,954,000
Remaining authorized options available for issue		9,642,000
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)		$ 0.84
Granted (in dollars per share)		0.71
Forfeited or expired (in dollars per share)		0.96
Outstanding at the end of the period (in dollars per share)		0.71		$ 0.84
Exercisable at the end of the period (in dollars per share)		$ 0.71
Weighted average remaining contractual term
Outstanding		9 years 4 months 24 days		9 years 10 months 24 days
Exercisable		9 years 4 months 24 days

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Consolidating Financial Statements - Comp Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidating Financial Statements
Consolidated net loss	$ (1,779)	$ (32,710)	$ (8,745)	$ (42,262)
Other comprehensive income (loss):
Gain (loss) on minimum pension liability, net of tax	488		488
Total other comprehensive income	488		488
Comprehensive loss	(1,291)	(32,710)	(8,257)	(42,262)
Comprehensive income attributable to noncontrolling interest	95	131	220	261
Comprehensive loss attributable to Universal Hospital Services, Inc.	(1,386)	(32,841)	(8,477)	(42,523)
UHS Holdco, Inc., (Parent)
Consolidating Financial Statements
Consolidated net loss	(1,779)	(32,710)	(8,745)	(42,262)
Other comprehensive income (loss):
Gain (loss) on minimum pension liability, net of tax	488		488
Total other comprehensive income	488		488
Comprehensive loss	(1,291)	(32,710)	(8,257)	(42,262)
Comprehensive loss attributable to Universal Hospital Services, Inc.	(1,291)	(32,710)	(8,257)	(42,262)
Subsidiary Guarantor Surgical Services
Consolidating Financial Statements
Consolidated net loss	573	335	759	(201)
Other comprehensive income (loss):
Comprehensive loss	573	335	759	(201)
Comprehensive income attributable to noncontrolling interest	95	131	220	261
Comprehensive loss attributable to Universal Hospital Services, Inc.	478	204	539	(462)
Consolidating Adjustments
Consolidating Financial Statements
Consolidated net loss	(573)	(335)	(759)	201
Other comprehensive income (loss):
Comprehensive loss	(573)	(335)	(759)	201
Comprehensive loss attributable to Universal Hospital Services, Inc.	$ (573)	$ (335)	$ (759)	$ 201

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Accounts receivable, less allowance for doubtful accounts of $1,800 at June 30, 2015 and $2,035 at December 31, 2014	$ 70,182	$ 66,256
Inventories	8,159	7,991
Deferred income taxes, net	1,273	1,273
Other current assets	6,196	7,671
Total current assets	85,810	83,191
Property and equipment:
Medical equipment	589,441	591,100
Property and office equipment	84,230	84,454
Accumulated depreciation	(456,228)	(445,481)
Total property and equipment, net	217,443	230,073
Other long-term assets:
Goodwill	336,595	335,577
Other intangibles, net	168,232	172,905
Other, primarily deferred financing costs, net	10,828	12,166
Total assets	818,908	833,912
Current liabilities:
Current portion of long-term debt	5,408	5,640
Book overdrafts	5,126	5,944
Accounts payable	28,223	30,114
Accrued compensation	16,201	15,108
Accrued interest	18,808	18,823
Dividend payable	28	39
Other accrued expenses	16,608	11,586
Total current liabilities	90,402	87,254
Long-term debt, less current portion	694,557	704,546
Pension and other long-term liabilities	11,759	12,428
Payable to Parent	26,023	24,911
Deferred income taxes, net	$ 53,341	$ 53,520
Commitments and contingencies (Note 10)
Deficit Equity
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at June 30, 2015 and December 31, 2014
Additional paid-in capital	$ 214,514	$ 214,514
Accumulated deficit	(263,383)	(254,418)
Accumulated other comprehensive loss	(8,574)	(9,062)
Total Universal Hospital Services, Inc. deficit	(57,443)	(48,966)
Noncontrolling interest	269	219
Total deficit	(57,174)	(48,747)	$ (19,571)	$ 23,020
Total liabilities and deficit	$ 818,908	$ 833,912

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Commitments and Contingencies (Details) $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 item
Gain on settlement		$ 5,718	$ 5,718
Settlement amount			$ 6,600
Scenario, Forecast
Settlement amount	$ 900
FDA Action Regarding a Product
Number of products | item				1

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Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements of Comprehensive Loss
Loss on minimum pension liability, tax	$ 0	$ 0

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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Fair value measurements
Earn-out payments paid	$ 10	$ 20	$ 20	$ 40
Impairment charge on long-lived assets	0	$ 800	1,703	$ 2,025
Recurring basis
Fair value measurements
Contingent Consideration	624		624		$ 143
Recurring basis | Level 3
Fair value measurements
Contingent Consideration	624		624		$ 143
Reconciliation of the beginning and ending balance for the Level 3 measurement
Balance at the beginning of the period			143
Additions			500
Payments			(19)
Balance at the end of the period	$ 624		$ 624

XML

Consolidating Financial Statements

6 Months Ended

Jun. 30, 2015

Consolidating Financial Statements

Consolidating Financial Statements

15.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, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	60,952	$	9,230	$	—	$	70,182
Due from affiliates		29,897		—		(29,897)		—
Inventories		4,469		3,690		—		8,159
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		5,972		224		—		6,196
Total current assets		101,290		14,417		(29,897)		85,810
Property and equipment:
Medical equipment		546,425		43,016		—		589,441
Property and office equipment		75,573		8,657		—		84,230
Accumulated depreciation		(422,803)		(33,425)		—		(456,228)
Total property and equipment, net		199,195		18,248		—		217,443
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,662		—		(53,662)		—
Other intangibles, net		152,668		15,564		—		168,232
Other, primarily deferred financing costs, net		10,728		100		—		10,828
Total assets	$	800,684	$	101,783	$	(83,559)	$	818,908
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,397	$	1,011	$	—	$	5,408
Book overdrafts		3,062		2,064		—		5,126
Due to affiliates		—		29,897		(29,897)		—
Accounts payable		24,779		3,444		—		28,223
Accrued compensation		14,237		1,964		—		16,201
Accrued interest		18,808		—		—		18,808
Dividend payable		28		—		—		28
Other accrued expenses		15,945		663		—		16,608
Total current liabilities		81,256		39,043		(29,897)		90,402
Long-term debt, less current portion		690,984		3,573		—		694,557
Pension and other long-term liabilities		11,759		—		—		11,759
Payable to Parent		26,023		—		—		26,023
Deferred income taxes, net		48,094		5,247		—		53,341
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(257,026)		(6,357)		—		(263,383)
Accumulated loss in subsidiary		(6,357)		—		6,357		—
Accumulated other comprehensive loss		(8,574)		—		—		(8,574)
Total Universal Hospital Services, Inc. (deficit) equity		(57,432)		53,651		(53,662)		(57,443)
Noncontrolling interest		—		269		—		269
Total (deficit) equity		(57,432)		53,920		(53,662)		(57,174)
Total liabilities and (deficit) equity	$	800,684	$	101,783	$	(83,559)	$	818,908

Universal Hospital Services, Inc.

Consolidating Balance Sheets

(in thousands, except share and per share  information)

(unaudited)

	December 31, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	57,767	$	8,489	$	—	$	66,256
Due from affiliates		28,701		—		(28,701)		—
Inventories		4,269		3,722		—		7,991
Deferred income taxes, net		—		1,273		—		1,273
Other current assets		7,434		237		—		7,671
Total current assets		98,171		13,721		(28,701)		83,191
Property and equipment:
Medical equipment		551,098		40,002		—		591,100
Property and office equipment		77,234		7,220		—		84,454
Accumulated depreciation		(415,131)		(30,350)		—		(445,481)
Total property and equipment, net		213,201		16,872		—		230,073
Other long-term assets:
Goodwill		283,141		52,436		—		335,577
Investment in subsidiary		53,123		—		(53,123)		—
Other intangibles, net		157,174		15,731		—		172,905
Other, primarily deferred financing costs, net		12,020		146		—		12,166
Total assets	$	816,830	$	98,906	$	(81,824)	$	833,912
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,935	$	705	$	—	$	5,640
Book overdrafts		3,526		2,418		—		5,944
Due to affiliates		—		28,701		(28,701)		—
Accounts payable		27,458		2,656		—		30,114
Accrued compensation		12,406		2,702		—		15,108
Accrued interest		18,823		—		—		18,823
Dividend payable		39		—		—		39
Other accrued expenses		11,505		81		—		11,586
Total current liabilities		78,692		37,263		(28,701)		87,254
Long-term debt, less current portion		702,471		2,075		—		704,546
Pension and other long-term liabilities		12,428		—		—		12,428
Payable to Parent		24,911		—		—		24,911
Deferred income taxes, net		47,283		6,237		—		53,520
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(247,522)		(6,896)		—		(254,418)
Accumulated loss in subsidiary		(6,896)		—		6,896		—
Accumulated other comprehensive loss		(9,062)		—		—		(9,062)
Total Universal Hospital Services, Inc. (deficit) equity		(48,955)		53,112		(53,123)		(48,966)
Noncontrolling interest		—		219		—		219
Total (deficit) equity		(48,955)		53,331		(53,123)		(48,747)
Total liabilities and (deficit) equity	$	816,830	$	98,906	$	(81,824)	$	833,912

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	71,084	$	—	$	—	$	71,084
Clinical engineering solutions		24,784		—		—		24,784
Surgical services		—		16,421		—		16,421
Total revenues		95,868		16,421		—		112,289
Cost of Revenue
Cost of medical equipment solutions		31,053		—		—		31,053
Cost of clinical engineering solutions		20,041		—		—		20,041
Cost of surgical services		—		8,722		—		8,722
Medical equipment depreciation		14,009		1,492		—		15,501
Total costs of revenues		65,103		10,214		—		75,317
Gross margin		30,765		6,207		—		36,972
Selling, general and administrative		26,436		4,602		—		31,038
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		10,047		1,605		—		11,652
Equity in earnings of subsidiary		(573)		—		573		—
Interest expense		12,734		515		—		13,249
(Loss) income before income taxes and noncontrolling interest		(2,114)		1,090		(573)		(1,597)
(Benefit) provision for income taxes		(335)		517		—		182
Consolidated net (loss) income		(1,779)		573		(573)		(1,779)
Net income attributable to noncontrolling interest		—		95		—		95
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(1,779)	$	478	$	(573)	$	(1,874)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	72,188	$	—	$	—	$	72,188
Clinical engineering solutions		22,119		—		—		22,119
Surgical services		—		15,059		—		15,059
Total revenues		94,307		15,059		—		109,366
Cost of Revenue
Cost of medical equipment solutions		32,288		—		—		32,288
Cost of clinical engineering solutions		17,869		—		—		17,869
Cost of surgical services		—		8,236		—		8,236
Medical equipment depreciation		17,698		1,397		—		19,095
Total costs of revenues		67,855		9,633		—		77,488
Gross margin		26,452		5,426		—		31,878
Selling, general and administrative		24,741		4,846		—		29,587
Restructuring, acquisition and integration expenses		512		—		—		512
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(33,701)		580		—		(33,121)
Equity in earnings of subsidiary		(335)		—		335		—
Interest expense		12,734		526		—		13,260
(Loss) income before income taxes and noncontrolling interest		(46,100)		54		(335)		(46,381)
Benefit for income taxes		(13,390)		(281)		—		(13,671)
Consolidated net (loss) income		(32,710)		335		(335)		(32,710)
Net income attributable to noncontrolling interest		—		131		—		131
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	145,169	$	—	$	—	$	145,169
Clinical engineering solutions		49,179		—		—		49,179
Surgical services		—		31,427		—		31,427
Total revenues		194,348		31,427		—		225,775
Cost of Revenue
Cost of medical equipment solutions		62,331		—		—		62,331
Cost of clinical engineering solutions		39,271		—		—		39,271
Cost of surgical services		—		16,902		—		16,902
Medical equipment depreciation		30,669		2,966		—		33,635
Total costs of revenues		132,271		19,868		—		152,139
Gross margin		62,077		11,559		—		73,636
Selling, general and administrative		52,018		9,171		—		61,189
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		15,777		2,388		—		18,165
Equity in earnings of subsidiary		(759)		—		759		—
Interest expense		25,525		1,034		—		26,559
(Loss) income before income taxes and noncontrolling interest		(8,989)		1,354		(759)		(8,394)
(Benefit) provision for income taxes		(244)		595		—		351
Consolidated net (loss) income		(8,745)		759		(759)		(8,745)
Net income attributable to noncontrolling interest		—		220		—		220
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,745)	$	539	$	(759)	$	(8,965)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Six Months Ended June 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	148,910	$	—	$	—	$	148,910
Clinical engineering solutions		44,788		—		—		44,788
Surgical services		—		29,004		—		29,004
Total revenues		193,698		29,004		—		222,702
Cost of Revenue
Cost of medical equipment solutions		65,716		—		—		65,716
Cost of clinical engineering solutions		35,784		—		—		35,784
Cost of surgical services		—		16,436		—		16,436
Medical equipment depreciation		35,504		2,727		—		38,231
Total costs of revenues		137,004		19,163		—		156,167
Gross margin		56,694		9,841		—		66,535
Selling, general and administrative		49,264		9,613		—		58,877
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(29,290)		228		—		(29,062)
Equity in loss of subsidiary		201		—		(201)		—
Interest expense		25,595		1,061		—		26,656
Loss before income taxes and noncontrolling interest		(55,086)		(833)		201		(55,718)
Benefit for income taxes		(12,824)		(632)		—		(13,456)
Consolidated net loss		(42,262)		(201)		201		(42,262)
Net income attributable to noncontrolling interest		—		261		—		261
Net loss attributable to Universal Hospital Services, Inc.	$	(42,262)	$	(462)	$	201	$	(42,523)

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30, 2015								Six Months Ended June 30, 2015
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(1,779)	$	573	$	(573)	$	(1,779)	$	(8,745)	$	759	$	(759)	$	(8,745)
Other comprehensive income:
Gain on minimum pension liability, net of tax		488		—		—		488		488		—		—		488
Total other comprehensive income		488		—		—		488		488		—		—		488
Comprehensive (loss) income		(1,291)		573		(573)		(1,291)		(8,257)		759		(759)		(8,257)
Comprehensive income attributable to noncontrolling interest		—		95		—		95		—		220		—		220
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(1,291)	$	478	$	(573)	$	(1,386)	$	(8,257)	$	539	$	(759)	$	(8,477)

	Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
	Parent		Subsidiary						Parent		Subsidiary
	Issuer		Guarantor		Consolidating				Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated		UHS		Surgical Services		Adjustments		Consolidated
Consolidated net (loss) income	$	(32,710)	$	335	$	(335)	$	(32,710)	$	(42,262)	$	(201)	$	201	$	(42,262)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive (loss) income		(32,710)		335		(335)		(32,710)		(42,262)		(201)		201		(42,262)
Comprehensive income attributable to noncontrolling interest		—		131		—		131		—		261		—		261
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(32,710)	$	204	$	(335)	$	(32,841)	$	(42,262)	$	(462)	$	201	$	(42,523)

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(8,745)	$	759	$	(759)	$	(8,745)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		34,717		3,598		—		38,315
Asset impairment charges		1,703		—		—		1,703
Amortization of intangibles, deferred financing costs and bond premium		4,890		1,642		—		6,532
Equity in earnings of subsidiary		(759)		—		759		—
Provision for doubtful accounts		28		26		—		54
Provision for inventory obsolescence		210		15		—		225
Non-cash share-based compensation expense		1,140		—		—		1,140
Gain on sales and disposals of equipment		(2,436)		(86)		—		(2,522)
Deferred income taxes		1,098		(990)		—		108
Changes in operating assets and liabilities:
Accounts receivable		(3,213)		(767)		—		(3,980)
Due from affiliates		(1,196)		—		1,196		—
Inventories		(410)		17		—		(393)
Other operating assets		610		59		—		669
Accounts payable		1,148		852		—		2,000
Other operating liabilities		5,788		(669)		—		5,119
Net cash provided by operating activities		34,573		4,456		1,196		40,225
Cash flows from investing activities:
Medical equipment purchases		(25,308)		(2,129)		—		(27,437)
Property and office equipment purchases		(2,417)		(16)		—		(2,433)
Proceeds from disposition of property and equipment		9,290		136		—		9,426
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(18,435)		(4,609)		—		(23,044)
Cash flows from financing activities:
Proceeds under senior secured credit facility		63,900		—		—		63,900
Payments under senior secured credit facility		(75,900)		—		—		(75,900)
Payments of principal under capital lease obligations		(3,635)		(519)		—		(4,154)
Distributions to noncontrolling interests		—		(240)		—		(240)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		1,196		(1,196)		—
Change in book overdrafts		(464)		(354)		—		(818)
Net cash used in financing activities		(16,138)		153		(1,196)		(17,181)
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, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(42,262)	$	(201)	$	201	$	(42,262)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		39,579		3,274		—		42,853
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		5,378		1,661		—		7,039
Equity in loss of subsidiary		201		—		(201)		—
Provision for doubtful accounts		96		(11)		—		85
Provision for inventory obsolescence		(2)		40		—		38
Non-cash share-based compensation expense		421		117		—		538
Gain on sales and disposals of equipment		(1,295)		61		—		(1,234)
Deferred income taxes		(12,451)		(1,178)		—		(13,629)
Changes in operating assets and liabilities:
Accounts receivable		1,514		(704)		—		810
Due from (to) affiliates		(2,053)		2,053		—		—
Inventories		624		(1,100)		—		(476)
Other operating assets		(1,384)		(10)		—		(1,394)
Accounts payable		257		417		—		674
Other operating liabilities		2,664		(430)		—		2,234
Net cash provided by operating activities		28,212		3,989		—		32,201
Cash flows from investing activities:
Medical equipment purchases		(31,959)		(2,807)		—		(34,766)
Property and office equipment purchases		(2,413)		(147)		—		(2,560)
Proceeds from disposition of property and equipment		5,970		—		—		5,970
Purchases of noncontrolling interests		—		(34)		—		(34)
Net cash used in investing activities		(28,402)		(2,988)		—		(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility		76,129		—		—		76,129
Payments under senior secured credit facility		(69,129)		—		—		(69,129)
Payments of principal under capital lease obligations		(2,750)		(679)		—		(3,429)
Distributions to noncontrolling interests		—		(295)		—		(295)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,987)		(27)		—		(4,014)
Net cash provided by (used in) financing activities		190		(1,001)		—		(811)
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	$	—	$	—	$	—	$	—

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Fair Value Measurements - Other Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Feb. 12, 2013	Aug. 07, 2012
Fair Value of Other Financial Instruments
Unamortized bond premium	$ 10,280	$ 11,113
Original notes - 7.625%
Fair Value of Other Financial Instruments
Carrying Value	425,000	425,000
Fair Value	$ 393,125	$ 359,125
Interest rate (as a percent)	7.625%	7.625%		7.625%
Add-on notes - 7.625%
Fair Value of Other Financial Instruments
Carrying Value	$ 230,280	$ 231,113
Fair Value	$ 203,500	$ 185,900
Interest rate (as a percent)	7.625%	7.625%	7.625%
Unamortized bond premium	$ 10,300	$ 11,100

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Concentration

6 Months Ended

Jun. 30, 2015

Concentration

Concentration

17.Concentration

One customer accounted for approximately 14% of total revenue for the six months ended June 30, 2015 and 2014.

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Consolidated net loss	$ (8,745)	$ (42,262)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	38,315	42,853
Asset impairment charges	1,703	2,025
Intangible asset impairment charge		34,900
Amortization of intangibles, deferred financing costs and bond premium	6,532	7,039
Provision for doubtful accounts	54	85
Provision for inventory obsolescence	225	38
Non-cash share-based compensation expense	1,140	538
Gain on sales and disposals of equipment	(2,522)	(1,234)
Deferred income taxes	108	(13,629)
Changes in operating assets and liabilities:
Accounts receivable	(3,980)	810
Inventories	(393)	(476)
Other operating assets	669	(1,394)
Accounts payable	2,000	674
Other operating liabilities	5,119	2,234
Net cash provided by operating activities	40,225	32,201
Cash flows from investing activities:
Medical equipment purchases	(27,437)	(34,766)
Property and office equipment purchases	(2,433)	(2,560)
Proceeds from disposition of property and equipment	9,426	5,970
Acquisition	(2,600)
Purchases of noncontrolling interests		(34)
Net cash used in investing activities	(23,044)	(31,390)
Cash flows from financing activities:
Proceeds under senior secured credit facility	63,900	76,129
Payments under senior secured credit facility	(75,900)	(69,129)
Payments of principal under capital lease obligations	(4,154)	(3,429)
Distributions to noncontrolling interests	(240)	(295)
Contributions from new members to limited liability companies	70
Dividend and equity distribution payments	(39)	(73)
Change in book overdrafts	(818)	(4,014)
Net cash used in financing activities	(17,181)	(811)
Supplemental cash flow information:
Interest paid	26,151	26,228
Income taxes paid	697	309
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	9,039	4,598
Capital lease additions	$ 6,766	$ 768

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1,800	$ 2,035
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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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

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. Certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. 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 adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote.

In 2014, a supplier ceased distribution of one of their products in the United States following a request from the FDA. On May 7, 2015, the Company entered into an agreement with the former supplier resolving all matters related to the cessation of our commercial relationships with each other. The Company has received $6.6 million and expects to receive approximately $0.9 million in net cash in the third quarter of 2015 after settling all open receivables and payables between the two parties and return of relevant product. The Company recorded a net gain of $5.7 million related to this settlement.

The Company was notified in 2014 that a national group purchasing organization awarded a sole source agreement to a competitor under agreements that expired on December 31, 2014.

On January 13, 2015, the Company filed suit in the Western District of Texas against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc. and Hill-Rom Services, Inc. (the "Defendants") alleging that the Defendants violated federal and state antitrust laws by willfully and unlawfully engaging in a pattern of exclusionary and predatory conduct in order to foreclose market competition and seeking actual damages, trebled damages and punitive damages.  At this early stage in the litigation, the Company does not believe the expense of litigation will have a material impact on the Company's operating expenses or financial results.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 12, 2015
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, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions

Related Party Transactions

11.Related Party Transactions

Management Agreement

On May 31, 2007, we and Irving Place Capital Partners III SPV, 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. 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, 2015 and 2014, respectively, and $0.5 and $0.5 million for the six month periods ended June 30, 2015 and 2014, respectively  .

In the ordinary course of business, we entered into engagement letters with CTPartners, LLC (“CTPartners”) to conduct searches for certain executive positions.  One member of our board of directors is also a director of CTPartners. Total fees incurred to CTPartners was $0.2 and $0.2 million for the three month periods ended June 30, 2015 and 2014, respectively and $0.2 and $0.2 million during the six month periods ended June 30, 2015 and 2014, respectively.

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

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Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue
Medical equipment solutions	$ 71,084	$ 72,188	$ 145,169	$ 148,910
Clinical engineering solutions	24,784	22,119	49,179	44,788
Surgical services	16,421	15,059	31,427	29,004
Total revenues	112,289	109,366	225,775	222,702
Cost of Revenue
Cost of medical equipment solutions	31,053	32,288	62,331	65,716
Cost of clinical engineering solutions	20,041	17,869	39,271	35,784
Cost of surgical services	8,722	8,236	16,902	16,436
Medical equipment depreciation	15,501	19,095	33,635	38,231
Total costs of revenues	75,317	77,488	152,139	156,167
Gross margin	36,972	31,878	73,636	66,535
Selling, general and administrative	31,038	29,587	61,189	58,877
(Gain) on settlement	(5,718)		(5,718)
Restructuring, acquisition and integration expenses		512		1,820
Intangible asset impairment charge		34,900		34,900
Operating income (loss)	11,652	(33,121)	18,165	(29,062)
Interest expense	13,249	13,260	26,559	26,656
Loss before income taxes and noncontrolling interest	(1,597)	(46,381)	(8,394)	(55,718)
Provision (benefit) for income taxes	182	(13,671)	351	(13,456)
Consolidated net loss	(1,779)	(32,710)	(8,745)	(42,262)
Net income attributable to noncontrolling interest	95	131	220	261
Net loss attributable to Universal Hospital Services, Inc.	$ (1,874)	$ (32,841)	$ (8,965)	$ (42,523)

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

5.Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2015 and December 31, 2014, by reporting segment, consists of the following:

	Medical		Clinical
	Equipment		Engineering		Surgical
(in thousands)	Solutions		Solutions		Services		Total
Balance at December 31, 2014	$	227,486	$	55,655	$	52,436	$	335,577
Acquisition		—		—		1,018		1,018
Balance at June 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

Our other intangible assets as of June 30, 2015 and December 31, 2014 consist of the following:

	June 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(85,324)	$	—	$	31,715	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(20,917)		—		5,083		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(614)		—		334		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(114,206)		—		37,132		149,862		(108,057)		—		41,805
Indefinite-life intangibles
Trade names		166,000		—		(34,900)		131,100		166,000		—		(34,900)		131,100
Total intangible assets	$	317,338	$	(114,206)	$	(34,900)	$	168,232	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Total amortization expense related to intangible assets were $3.0 and $3.3 million for the three months ended June 30, 2015 and 2014, respectively and $6.1 and $6.6 million for the six months ended June 30, 2015 and 2014, respectively.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2015 and the next five years is as follows:

(in thousands)
Remainder of 2015	$	5,878
2016		10,971
2017		7,679
2018		6,095
2019		3,529
2020		1,537

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Fair Value Measurements

6 Months Ended

Jun. 30, 2015

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, 2015 and December 31, 2014 are summarized in the following table by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2015								Fair Value at December 31, 2014
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	624	$	624	$	—	$	—	$	143	$	143

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. During 2015, we recorded a holdback liability related to our acquisition. The contingent consideration and holdback 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 months ended June 30, 2015 and 2014, we paid $0.01 and $0.02 million, respectively, in earn-outs.  During the six months ended June 30, 2015 and 2014, we paid $0.02 and $0.04 million, respectively, in earn-outs. 

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 are as follows:

(in thousands)
Balance at December 31, 2014	$	143
Addition		500
Payments		(19)
Balance at June 30, 2015	$	624

We recorded $0 and $0.8 million during the three months ended June 30, 2015 and 2014, respectively and $1.7 and $2.0 million during the six months ended June 30, 2015 and 2014, respectively, of impairment charges on certain long-lived assets for which the carrying value of those assets may not be recoverable based upon our estimated cash flows. The fair value of the assets 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 assessment of assets’ utilization level and estimated proceeds from sale of the assets.

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 and Add-on Notes (each as defined in Note 9, Long-Term Debt) as of June 30, 2015 and December 31, 2014, 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, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	393,125	$	425,000	$	359,125
Add-on notes - 7.625% (1)		230,280		203,500		231,113		185,900

(1) The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $10.3 and $11.1 million as of June 30, 2015 and December 31, 2014, respectively.

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Restructuring

6 Months Ended

Jun. 30, 2015

Restructuring

Restructuring

16.Restructuring

We incurred restructuring expense of $0.5 and $1.8 million during the three months and six months ended June 30, 2014, respectively, the majority of which related to severances and other related expenses. We incurred no restructuring expense during the three months and six months ended June 30, 2015. As of December 31, 2014, we had $1.6 million of restructuring liability. For the six months ended June 30, 2015,  $1.1 million in restructuring charges was paid. Noadditional restructuring was recorded in the first two quarters of 2015 for new severance arrangements and the remaining liability of $0.4 million as of June 30, 2015 is expected to be paid out by the end of the first quarter of 2016 and is included in the Other accrued expenses in the Consolidated Balance Sheets. As of December 31, 2013, we had $0.3 million of restructuring liability. For the six months ended June 30, 2014, we incurred restructuring expense of $1.8million and $1.2 million in restructuring charges was paid and the remaining $0.9 was a liability as of June 30, 2014.

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Limited Liability Companies

6 Months Ended

Jun. 30, 2015

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 rental purposes under equipment financing leases. At June 30, 2015, the LLCs had approximately $1.0 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, 2015, we held interests in seven 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, 2015

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, 2012, 2013 and 2014 and are scheduled to vest on December 31, 2015.

Our consolidated balance sheets as of June 30, 2015 and December 31, 2014 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, 2015 based on an estimated option forfeiture rate of 2% annually.

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Equity (Deficit)

6 Months Ended

Jun. 30, 2015

Shareholder's Equity

Shareholder's Equity

6.Equity (Deficit)

The following tables represent changes in equity (deficit) that are attributable to our shareholders and noncontrolling interests for the six month periods ended June 30, 2015 and 2014.

					Accumulated
	Additional				Other
	Paid-in		Accumulated		Comprehensive		Noncontrolling		Total
(in thousands)	Capital		Deficit		Loss		Interests		Deficit
Balance at December 31, 2014	$	214,514	$	(254,418)	$	(9,062)	$	219	$	(48,747)
Net (loss) income		—		(8,965)		—		220		(8,745)
Other comprehensive income		—		—		488		—		488
Cash distributions to noncontrolling interests		—		—		—		(240)		(240)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at June 30, 2015	$	214,514	$	(263,383)	$	(8,574)	$	269	$	(57,174)

					Accumulated
	Additional				Other				Total
	Paid-in		Accumulated		Comprehensive		Noncontrolling		Equity
(in thousands)	Capital		Deficit		Loss		Interests		(Deficit)
Balance at December 31, 2013	$	214,505	$	(187,901)	$	(3,884)	$	300	$	23,020
Net (loss) income		—		(42,523)		—		261		(42,262)
Cash distributions to noncontrolling interests		—		—		—		(295)		(295)
Purchases of noncontrolling interests		(3)		—		—		(31)		(34)
Balance at June 30, 2014	$	214,502	$	(230,424)	$	(3,884)	$	235	$	(19,571)

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Share-Based Compensation

6 Months Ended

Jun. 30, 2015

Stock-Based Compensation

Share-Based Compensation

7.Share-Based Compensation

During the six months ended June 30, 2015, activity under the 2007 Stock Option Plan (the “2007 Stock Option Plan”), of UHS Holdco, Inc., our parent company (“Parent”), was as follows:

						Weighted
						average
		Weighted		Aggregate		remaining
	Number of	average		intrinsic		contractual
(in thousands except exercise price and years)	options	exercise price		value		term (years)
Outstanding at December 31, 2014	37,340	$	0.84	$	—	9.9
Granted	16,665		0.71
Exercised	—		—	$	—
Forfeited or expired	(19,960)		0.96
Outstanding at June 30, 2015	34,045	$	0.71	$	—	9.4
Exercisable at June 30, 2015	8,954	$	0.71	$	—	9.4
Remaining authorized options available for issue	9,642

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, 2015 under the Black-Scholes model. There were no stock options granted during the six months ended June 30, 2014.

		Six Months Ended
		June 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		26.9	%
Dividend yield		N/A
Expected option life (years)		5.10
Black-Scholes Value of options	$	0.19

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 is estimated based on foreseeable trends.

At June 30, 2015, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.3 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.

In April 2015, Parent granted the Company’s Chief Executive Officer 7.0 million restricted stock units which vest over four years. Total compensation expense related to this grant was $0.3 million for the three months and six months ended June 30, 2015.

Although Parent grants stock options and restricted stock units, the Company recognizes compensation expense related to these options and units 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.

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Long-Term Debt

6 Months Ended

Jun. 30, 2015

Long-Term Debt

Long-Term Debt

9.Long-Term Debt

Long-term debt consists of the following:

	June 30,		December 31,
(in thousands)	2015		2014
Original notes - 7.625%	$	425,000	$	425,000
Add-on notes - 7.625%		220,000		220,000
Unamortized bond premium		10,280		11,113
Senior secured credit facility		27,000		39,000
Capital lease obligations		17,685		15,073
		699,965		710,186
Less: Current portion of long-term debt		(5,408)		(5,640)
Total long-term debt	$	694,557	$	704,546

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, beginning on February 15, 2013. 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”.

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, 2015, we had $140.7 million of availability under the senior secured credit facility based on a borrowing base of $171.6 million less borrowings of $27.0 million and after giving effect to $3.9 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, 2015, we had $27.0 million of borrowings outstanding which was accruing interest at a rate of 2.6855%.

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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Acquisitions (Details) - USD ($) $ in Thousands	May. 18, 2015	Jun. 30, 2015	Dec. 31, 2014
Cost of acquired entity
Goodwill		$ 336,595	$ 335,577
Accrued compensation		(16,201)	(15,108)
UHS Holdco, Inc., (Parent)
Cost of acquired entity
Goodwill		283,141	283,141
Accrued compensation		$ (14,237)	$ (12,406)
Mobile laser surgical services provider
Cost of acquired entity
Total purchase price	$ 3,100
Cash paid	2,600
Holdback payment related to acquisition	500
Property and equipment	620
Goodwill	1,018
Accrued compensation	(13)
Intangible assets	1,475
Total purchase price	$ 3,100

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Consolidating Financial Statements (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Consolidating Financial Statements
Ownership interest in subsidiary (as a percent)	100.00%
Current assets:
Accounts receivable, less allowance for doubtful accounts	$ 70,182	$ 66,256
Inventories	8,159	7,991
Deferred income taxes, net	1,273	1,273
Other current assets	6,196	7,671
Total current assets	85,810	83,191
Property and equipment:
Medical equipment	589,441	591,100
Property and office equipment	84,230	84,454
Accumulated depreciation	(456,228)	(445,481)
Total property and equipment, net	217,443	230,073
Other long-term assets:
Goodwill	336,595	335,577
Other intangibles, net	168,232	172,905
Other, primarily deferred financing costs, net	10,828	12,166
Total assets	818,908	833,912
Current liabilities:
Current portion of long-term debt	5,408	5,640
Book overdrafts	5,126	5,944
Accounts payable	28,223	30,114
Accrued compensation	16,201	15,108
Accrued interest	18,808	18,823
Dividend payable	28	39
Other accrued expenses	16,608	11,586
Total current liabilities	90,402	87,254
Long-term debt, less current portion	694,557	704,546
Pension and other long-term liabilities	11,759	12,428
Payable to Parent	26,023	24,911
Deferred income taxes, net	$ 53,341	$ 53,520
Commitments and contingencies
(Deficit) Equity
Common stock
Additional paid-in capital	$ 214,514	$ 214,514
Accumulated deficit	(263,383)	(254,418)
Accumulated other comprehensive loss	(8,574)	(9,062)
Total Universal Hospital Services, Inc. deficit	(57,443)	(48,966)
Noncontrolling interest	269	219
Total deficit	(57,174)	(48,747)	$ (19,571)	$ 23,020
Total liabilities and deficit	818,908	833,912
UHS Holdco, Inc., (Parent)
Current assets:
Accounts receivable, less allowance for doubtful accounts	60,952	57,767
Due from affiliates	29,897	28,701
Inventories	4,469	4,269
Other current assets	5,972	7,434
Total current assets	101,290	98,171
Property and equipment:
Medical equipment	546,425	551,098
Property and office equipment	75,573	77,234
Accumulated depreciation	(422,803)	(415,131)
Total property and equipment, net	199,195	213,201
Other long-term assets:
Goodwill	283,141	283,141
Investment in subsidiary	53,662	53,123
Other intangibles, net	152,668	157,174
Other, primarily deferred financing costs, net	10,728	12,020
Total assets	800,684	816,830
Current liabilities:
Current portion of long-term debt	4,397	4,935
Book overdrafts	3,062	3,526
Accounts payable	24,779	27,458
Accrued compensation	14,237	12,406
Accrued interest	18,808	18,823
Dividend payable	28	39
Other accrued expenses	15,945	11,505
Total current liabilities	81,256	78,692
Long-term debt, less current portion	690,984	702,471
Pension and other long-term liabilities	11,759	12,428
Payable to Parent	26,023	24,911
Deferred income taxes, net	48,094	47,283
(Deficit) Equity
Additional paid-in capital	214,525	214,525
Accumulated deficit	(257,026)	(247,522)
Accumulated loss in subsidiary	(6,357)	(6,896)
Accumulated other comprehensive loss	(8,574)	(9,062)
Total Universal Hospital Services, Inc. deficit	(57,432)	(48,955)
Total deficit	(57,432)	(48,955)
Total liabilities and deficit	800,684	816,830
Subsidiary Guarantor Surgical Services
Current assets:
Accounts receivable, less allowance for doubtful accounts	9,230	8,489
Inventories	3,690	3,722
Deferred income taxes, net	1,273	1,273
Other current assets	224	237
Total current assets	14,417	13,721
Property and equipment:
Medical equipment	43,016	40,002
Property and office equipment	8,657	7,220
Accumulated depreciation	(33,425)	(30,350)
Total property and equipment, net	18,248	16,872
Other long-term assets:
Goodwill	53,454	52,436
Other intangibles, net	15,564	15,731
Other, primarily deferred financing costs, net	100	146
Total assets	101,783	98,906
Current liabilities:
Current portion of long-term debt	1,011	705
Book overdrafts	2,064	2,418
Due to affiliates	29,897	28,701
Accounts payable	3,444	2,656
Accrued compensation	1,964	2,702
Other accrued expenses	663	81
Total current liabilities	39,043	37,263
Long-term debt, less current portion	3,573	2,075
Deferred income taxes, net	5,247	6,237
(Deficit) Equity
Additional paid-in capital	60,008	60,008
Accumulated deficit	(6,357)	(6,896)
Total Universal Hospital Services, Inc. deficit	53,651	53,112
Noncontrolling interest	269	219
Total deficit	53,920	53,331
Total liabilities and deficit	101,783	98,906
Consolidating Adjustments
Current assets:
Due from affiliates	(29,897)	(28,701)
Total current assets	(29,897)	(28,701)
Other long-term assets:
Investment in subsidiary	(53,662)	(53,123)
Total assets	(83,559)	(81,824)
Current liabilities:
Due to affiliates	(29,897)	(28,701)
Total current liabilities	(29,897)	(28,701)
(Deficit) Equity
Additional paid-in capital	(60,019)	(60,019)
Accumulated loss in subsidiary	6,357	6,896
Total Universal Hospital Services, Inc. deficit	(53,662)	(53,123)
Total deficit	(53,662)	(53,123)
Total liabilities and deficit	$ (83,559)	$ (81,824)

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Taxes

Income Taxes

14.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, “Income Taxes”. The tax expense for the three and six months ended June 30, 2015 primarily relates to state minimum fees. The expected tax benefit from operating loss during the three and six months ended June 30, 2015 was offset by the recording of additional valuation allowance. In future reporting periods, we will continue to assess the likelihood that deferred tax assets will be realizable.

At June 30, 2015, the Company had available unused federal net operating loss carryforwards of approximately $215.8 million. The net operating loss carryforwards will expire at various dates from 2017 through 2035.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Measurements

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

	Fair Value at June 30, 2015								Fair Value at December 31, 2014
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Contingent Consideration	$	—	$	—	$	624	$	624	$	—	$	—	$	143	$	143

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

(in thousands)
Balance at December 31, 2014	$	143
Addition		500
Payments		(19)
Balance at June 30, 2015	$	624

Schedule of fair value of debt instruments

	June 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	393,125	$	425,000	$	359,125
Add-on notes - 7.625% (1)		230,280		203,500		231,113		185,900

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Segment Information - Concentration (Details) - Revenue - Product concentration risk	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	100.00%	100.00%	100.00%	100.00%
Medical Equipment Solutions
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	63.30%	66.00%	64.30%	66.90%
Medical Equipment Solutions | Equipment usage solutions
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	60.10%	60.90%	61.20%	61.60%
Medical Equipment Solutions | Equipment/disposable sales
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	3.20%	5.10%	3.10%	5.30%
Clinical Engineering Solutions | Service solutions
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	22.10%	20.20%	21.80%	20.10%
Surgical Services
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	14.60%	13.80%	13.90%	13.00%
Surgical Services | Equipment usage solutions
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	14.40%	13.60%	13.70%	12.80%
Surgical Services | Equipment/disposable sales
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	0.20%	0.20%	0.20%	0.20%

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Stock-Based Compensation - Assumption (Details) - 6 months ended Jun. 30, 2015 - UHS Holdco, Inc., (Parent) - Options - $ / shares	Total
Assumptions used in determining the fair value of stock options granted under the Black-Scholes model
Risk-free interest rate (as a percent)	1.70%
Expected volatility (as a percent)	26.90%
Expected option life	5 years 1 month 6 days
Black-Scholes Value of options (in dollars per share)	$ 0.19

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Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Consolidated Statements of Comprehensive Loss
Consolidated net loss	$ (1,779)	$ (8,745)
Other comprehensive income:
Gain on minimum pension liability, net of tax of $0	488	488
Total other comprehensive income	488	488
Comprehensive loss	(1,291)	(8,257)
Comprehensive income attributable to noncontrolling interest	95	220
Comprehensive loss attributable to Universal Hospital Services, Inc.	$ (1,386)	$ (8,477)

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Acquisitions

6 Months Ended

Jun. 30, 2015

Acquisitions

Acquisitions

3.Acquisition

On May 18, 2015, we completed the acquisition of certain assets of a mobile laser surgical services provider for total consideration of approximately $3.1 million. The results of the acquiree’s operations have been included in the consolidated financial statements since that date. The consideration consists of $2.6 million of cash paid at closing and $0.5 million holdback expected to be paid in the first quarter of 2016 based on achieving a certain revenue target.

The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet:

(in thousands)
Property and equipment	$	620
Goodwill		1,018
Intangible assets		1,475
Accrued compensation		(13)
Total purchase price	$	3,100

The acquisition was funded from our existing senior secured credit facility.

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Other Intangible Assets

Schedule of goodwill by reporting segment

	Medical		Clinical
	Equipment		Engineering		Surgical
(in thousands)	Solutions		Solutions		Services		Total
Balance at December 31, 2014	$	227,486	$	55,655	$	52,436	$	335,577
Acquisition		—		—		1,018		1,018
Balance at June 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

Schedule of other intangible assets

	June 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(85,324)	$	—	$	31,715	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(20,917)		—		5,083		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(614)		—		334		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(114,206)		—		37,132		149,862		(108,057)		—		41,805
Indefinite-life intangibles
Trade names		166,000		—		(34,900)		131,100		166,000		—		(34,900)		131,100
Total intangible assets	$	317,338	$	(114,206)	$	(34,900)	$	168,232	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Schedule of estimated future amortization expense for identifiable intangible assets

(in thousands)
Remainder of 2015	$	5,878
2016		10,971
2017		7,679
2018		6,095
2019		3,529
2020		1,537

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Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Goodwill
Balance at the beginning of the period			$ 335,577
Acquisitions			1,018
Balance at the end of the period	$ 336,595		336,595
Other intangible assets
Cost	151,338		151,338		$ 149,862
Accumulated Amortization	(114,206)		(114,206)		(108,057)
Total	37,132		37,132		41,805
Accumulated Impairment	(34,900)		(34,900)		(34,900)
Impairment		$ (34,900)		$ (34,900)
Cost	317,338		317,338		315,862
Net	168,232		168,232		172,905
Total amortization expense	3,000	$ 3,300	6,100	$ 6,600
Trade names
Other intangible assets
Cost	166,000		166,000		166,000
Accumulated Impairment	(34,900)		(34,900)		(34,900)
Net	131,100		131,100		131,100
Customer relationship
Other intangible assets
Cost	117,039		117,039		115,731
Accumulated Amortization	(85,324)		(85,324)		(80,704)
Total	31,715		31,715		35,027
Supply agreement
Other intangible assets
Cost	26,000		26,000		26,000
Accumulated Amortization	(20,917)		(20,917)		(19,464)
Total	5,083		5,083		6,536
Technology databases
Other intangible assets
Cost	7,217		7,217		7,217
Accumulated Amortization	(7,217)		(7,217)		(7,217)
Non-compete agreements
Other intangible assets
Cost	948		948		780
Accumulated Amortization	(614)		(614)		(538)
Total	334		334		242
Favorable lease agreements
Other intangible assets
Cost	134		134		134
Accumulated Amortization	(134)		(134)		$ (134)
Medical Equipment Solutions
Goodwill
Balance at the beginning of the period			227,486
Balance at the end of the period	227,486		227,486
Clinical Engineering Solutions
Goodwill
Balance at the beginning of the period			55,655
Balance at the end of the period	55,655		55,655
Surgical Services
Goodwill
Balance at the beginning of the period			52,436
Acquisitions			1,018
Balance at the end of the period	$ 53,454		$ 53,454

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Segment Information

6 Months Ended

Jun. 30, 2015

Segment Information

Segment Information

13.Segment Information

Our reporting segments consist of Medical Equipment Solutions (“MES”), Clinical Engineering Solutions (“CES”) and Surgical Services (“SS”). Certain operating information for our segments as well as a reconciliation of total Company gross margin to loss before income taxes and noncontrolling interest was as follows:

Medical Equipment Solutions

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	71,084	$	72,188	$	145,169	$	148,910
Cost of revenue		31,053		32,288		62,331		65,716
Medical equipment depreciation		14,009		17,698		30,669		35,504
Gross margin	$	26,022	$	22,202	$	52,169	$	47,690

Clinical Engineering Solutions

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	24,784	$	22,119	$	49,179	$	44,788
Cost of revenue		20,041		17,869		39,271		35,784
Gross margin	$	4,743	$	4,250	$	9,908	$	9,004

Surgical Services

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	16,421	$	15,059	$	31,427	$	29,004
Cost of revenue		8,722		8,236		16,902		16,436
Medical equipment depreciation		1,492		1,397		2,966		2,727
Gross margin	$	6,207	$	5,426	$	11,559	$	9,841

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

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Total gross margin	$	36,972	$	31,878	$	73,636	$	66,535
Selling, general and administrative		31,038		29,587		61,189		58,877
(Gain) on settlement		(5,718)		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		512		—		1,820
Intangible asset impairment charge		—		34,900		—		34,900
Interest expense		13,249		13,260		26,559		26,656
Loss before income taxes and noncontrolling interest	$	(1,597)	$	(46,381)	$	(8,394)	$	(55,718)

Total Assets by Reporting Segment

(in thousands)

	June 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	606,007	$	624,444
Clinical Engineering Solutions		111,118		110,562
Surgical Services		101,783		98,906
Total Company Assets	$	818,908	$	833,912

The following table provides additional detail on percentage of revenue for each group of similar products sold or services provided in the MES, CES and SS segments:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	60.1	%	60.9	%	61.2	%	61.6	%
Equipment/disposable sales	3.2		5.1		3.1		5.3
	63.3		66.0		64.3		66.9
CES
Service solutions	22.1		20.2		21.8		20.1
SS
Equipment usage solutions	14.4		13.6		13.7		12.8
Equipment/disposable sales	0.2		0.2		0.2		0.2
	14.6		13.8		13.9		13.0
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%