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 September 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 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 November  9, 2015:  1,000

Universal Hospital Services, Inc.

Table of Contents

		Page
PART I -  FINANCIAL INFORMATION
ITEM 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets — September 30, 2015 and December 31, 2014	2
	Consolidated Statements of Operations—Three and ninemonths ended September 30, 2015 and 2014	3
	Consolidated Statements of Comprehensive Loss —Threeand ninemonths ended September 30, 2015 and 2014	4
	Consolidated Statements of Cash Flows — Three and ninemonths ended September 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	40
ITEM 4.	Controls and Procedures	41
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	41
ITEM 1A.	Risk Factors	41
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	42
Signatures		43

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)

	September 30,		December 31,
	2015		2014
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts of  $1,800 at September 30, 2015 and $2,035 at December 31, 2014	$	68,581	$	66,256
Inventories		8,097		7,991
Deferred income taxes, net		1,181		1,273
Other current assets		6,256		7,671
Total current assets		84,115		83,191
Property and equipment:
Medical equipment		587,730		591,100
Property and office equipment		84,627		84,454
Accumulated depreciation		(460,738)		(445,481)
Total property and equipment, net		211,619		230,073
Other long-term assets:
Goodwill		336,595		335,577
Other intangibles, net		165,282		172,905
Other, primarily deferred financing costs, net		10,286		12,166
Total assets	$	807,897	$	833,912
Liabilities and Deficit
Current liabilities:
Current portion of long-term debt	$	5,108	$	5,640
Book overdrafts		6,451		5,944
Accounts payable		28,685		30,114
Accrued compensation		18,206		15,108
Accrued interest		6,568		18,823
Dividend payable		28		39
Other accrued expenses		14,977		11,586
Total current liabilities		80,023		87,254
Long-term debt, less current portion		701,222		704,546
Pension and other long-term liabilities		11,626		12,428
Payable to Parent		26,785		24,911
Deferred income taxes, net		53,838		53,520
Commitments and contingencies (Note 10)
Deficit
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at September 30, 2015 and December 31, 2014		—		—
Additional paid-in capital		214,514		214,514
Accumulated deficit		(272,051)		(254,418)
Accumulated other comprehensive loss		(8,330)		(9,062)
Total Universal Hospital Services, Inc. deficit		(65,867)		(48,966)
Noncontrolling interest		270		219
Total deficit		(65,597)		(48,747)
Total liabilities and deficit	$	807,897	$	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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenue
Medical equipment solutions	$	68,985	$	67,861	$	214,154	$	216,771
Clinical engineering solutions		25,401		23,717		74,581		68,505
Surgical services		16,727		14,887		48,154		43,890
Total revenues		111,113		106,465		336,889		329,166
Cost of Revenue
Cost of medical equipment solutions		30,134		32,204		92,466		97,919
Cost of clinical engineering solutions		20,063		18,670		59,333		54,454
Cost of surgical services		8,780		7,982		25,681		24,418
Medical equipment depreciation		16,590		17,766		50,225		55,996
Total costs of revenues		75,567		76,622		227,705		232,787
Gross margin		35,546		29,843		109,184		96,379
Selling, general and administrative		30,633		26,539		91,825		85,416
(Gain) on settlement		—		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		—		—		1,820
Intangible asset impairment charge		—		—		—		34,900
Operating income (loss)		4,913		3,304		23,077		(25,757)
Interest expense		13,250		13,264		39,810		39,922
Loss before income taxes and noncontrolling interest		(8,337)		(9,960)		(16,733)		(65,679)
Provision (benefit) for income taxes		210		225		559		(13,232)
Consolidated net loss		(8,547)		(10,185)		(17,292)		(52,447)
Net income attributable to noncontrolling interest		121		103		341		364
Net loss attributable to Universal Hospital Services, Inc.	$	(8,668)	$	(10,288)	$	(17,633)	$	(52,811)

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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Consolidated net loss	$	(8,547)	$	(10,185)	$	(17,292)	$	(52,447)
Other comprehensive income:
Gain on minimum pension liability, net of tax of $0		244		—		732		—
Total other comprehensive income		244		—		732		—
Comprehensive loss		(8,303)		(10,185)		(16,560)		(52,447)
Comprehensive income attributable to noncontrolling interest		121		103		341		364
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(8,424)	$	(10,288)	$	(16,901)	$	(52,811)

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)

	Nine Months Ended
	September 30,
	2015		2014
Cash flows from operating activities:
Consolidated net loss	$	(17,292)	$	(52,447)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		57,413		64,120
Asset impairment charges		2,339		2,025
Intangible asset impairment charge		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		9,664		10,359
Provision for doubtful accounts		208		658
Provision for inventory obsolescence		299		(27)
Non-cash share-based compensation expense		1,902		801
Gain on sales and disposals of equipment		(3,547)		(1,791)
Deferred income taxes		697		(13,545)
Changes in operating assets and liabilities:
Accounts receivable		(2,533)		1,667
Inventories		(405)		(253)
Other operating assets		542		(2,137)
Accounts payable		595		221
Other operating liabilities		(6,636)		(9,274)
Net cash provided by operating activities		43,246		35,277
Cash flows from investing activities:
Medical equipment purchases		(38,771)		(44,563)
Property and office equipment purchases		(3,148)		(3,610)
Proceeds from disposition of property and equipment		10,799		6,996
Acquisition		(2,600)		—
Purchases of noncontrolling interests		—		(46)
Net cash used in investing activities		(33,720)		(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility		104,952		123,400
Payments under senior secured credit facility		(108,900)		(107,200)
Payments of principal under capital lease obligations		(5,756)		(5,199)
Distributions to noncontrolling interests		(360)		(436)
Contributions from new members to limited liability company		70		—
Dividend and equity distribution payments		(39)		(73)
Change in book overdrafts		507		(4,546)
Net cash (used in) provided by financing activities		(9,526)		5,946
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	$	51,432	$	51,528
Income taxes paid		728		318
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	$	10,906	$	10,973
Capital lease additions		7,108		1,038

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 September 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 September 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 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 companies 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.

In July 2015, the FASB issued ASU No. 2015-11 Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-03 changes the measurement principle for inventory from lower of cost or market to lower of cost and net realizable value for entities that do not measure inventory using the last in, first out or retail inventory method. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016. 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

7

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 September 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 September 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	$	—	$	—	$	622	$	622	$	—	$	—	$	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 agreements. During the three months ended September 30, 2015 and 2014, we paid $0 and $0.02 million, respectively, in earn-outs.  During the nine months ended September 30, 2015 and 2014, we paid $0.02 and $0.06 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		(21)
Balance at September 30, 2015	$	622

We recorded $0.6 and $0 million during the three months ended September 30, 2015 and 2014, respectively and $2.3 and $2.0 million during the nine months ended September 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

8

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 September 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:

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	395,250	$	425,000	$	359,125
Add-on notes - 7.625% (1)		229,853		204,600		231,113		185,900

(1) The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $9.9 and $11.1 million as of September 30, 2015 and December 31, 2014, respectively.

5.Goodwill and Other Intangible Assets

Our goodwill as of September 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 September 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

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

	September 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(87,499)	$	—	$	29,540	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(21,643)		—		4,357		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(663)		—		285		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(117,156)		—		34,182		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	$	(117,156)	$	(34,900)	$	165,282	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Total amortization expense related to intangible assets were $3.0 and $3.1 million for the three months ended September 30, 2015 and 2014, respectively and $9.1 and $9.7 million for the nine months ended September 30, 2015 and 2014, respectively.

9

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	$	2,928
2016		10,971
2017		7,679
2018		6,095
2019		3,529
2020		1,537

6.Equity (Deficit)

The following tables represent changes in equity (deficit) that are attributable to our shareholders and noncontrolling interests for the nine month periods ended September 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		—		(17,633)		—		341		(17,292)
Other comprehensive income		—		—		732		—		732
Cash distributions to noncontrolling interests		—		—		—		(360)		(360)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at September 30, 2015	$	214,514	$	(272,051)	$	(8,330)	$	270	$	(65,597)

					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		—		(52,811)		—		364		(52,447)
Cash distributions to noncontrolling interests		—		—		—		(436)		(436)
Purchases of noncontrolling interests		(11)		—		—		(35)		(46)
Balance at September 30, 2014	$	214,494	$	(240,712)	$	(3,884)	$	193	$	(29,909)

7.Share-Based Compensation

During the nine months ended September 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	19,565		0.71
Exercised	—		—	$	—
Forfeited or expired	(20,172)		0.95
Outstanding at September 30, 2015	36,733	$	0.71	$	—	9.1
Exercisable at September 30, 2015	8,808	$	0.71	$	—	9.1
Remaining authorized options available for issue	6,953

10

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

		Nine Months Ended
		September 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		27.0	%
Dividend yield		N/A
Expected option life (years)		5.23
Black-Scholes Value of options	$	0.20

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 September 30, 2015, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.1 years totals approximately $6.7 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 and $0.6 million for the three and nine months ended September 30, 2015, respectively.

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 September 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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9.Long-Term Debt

Long-term debt consists of the following:

	September 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		9,853		11,113
Senior secured credit facility		35,052		39,000
Capital lease obligations		16,425		15,073
		706,330		710,186
Less: Current portion of long-term debt		(5,108)		(5,640)
Total long-term debt	$	701,222	$	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 September 30, 2015, we had $129.7 million of availability under the senior secured credit facility based on a borrowing base of $168.7 million less borrowings of $35.1 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.

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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 September 30, 2015, we had$35.1 million of borrowings outstanding of which$23.0 million was accruing interest at a rate of 2.7090%,  $12.0 million was accruing interest at a rate of 2.7064% and $0.1 million was accruing interest at a rate of4.75%.

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

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

13

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

· incur additional indebtedness;

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

· issue redeemable stock or preferred stock;

· issue stock of subsidiaries;

· make certain investments;

· transfer or sell assets;

· create liens on our assets to secure debt;

· enter into transactions with affiliates; and

· merge or consolidate with another company.

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

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

10.Commitments and Contingencies

The Company, in the ordinary course of business, could be subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. 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 received $7.5 million in net cash during 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.  On March 4, 2015, the Defendants filed a motion to transfer the case to another venue.  On March 23, 2015, the Defendants filed a motion to dismiss the case.  On July 2, 2015, the Court denied the Defendants’ motion to transfer.  On October 15, 2015, the Court denied the Defendants motion to dismiss. 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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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 $0.2 and $0.3 million for the three month periods ended September 30, 2015 and 2014, respectively,  and $0.7 and $0.7 million for the nine month periods ended September 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 and $0.1 million for the three month periods ended September 30, 2015 and 2014, respectivelyand $0.2 and $0.3 million during the nine month periods ended September 30, 2015 and 2014, respectively.

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

12.Limited Liability Companies

We participate with others in the formation of LLCs in which Surgical Services becomes a partner and shares the financial interest with the other investors. Surgical Services is the primary beneficiary of these LLCs. These LLCs acquire certain medical equipment for use in their respective business activities, which generally focus on surgical procedures. The LLCs will acquire medical equipment for rental purposes under equipment financing leases. At September 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 September 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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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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	68,985	$	67,861	$	214,154	$	216,771
Cost of revenue		30,134		32,204		92,466		97,919
Medical equipment depreciation		15,043		16,340		45,712		51,843
Gross margin	$	23,808	$	19,317	$	75,976	$	67,009

Clinical Engineering Solutions

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	25,401	$	23,717	$	74,581	$	68,505
Cost of revenue		20,063		18,670		59,333		54,454
Gross margin	$	5,338	$	5,047	$	15,248	$	14,051

Surgical Services

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	16,727	$	14,887	$	48,154	$	43,890
Cost of revenue		8,780		7,982		25,681		24,418
Medical equipment depreciation		1,547		1,426		4,513		4,153
Gross margin	$	6,400	$	5,479	$	17,960	$	15,319

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

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Total gross margin	$	35,546	$	29,843	$	109,184	$	96,379
Selling, general and administrative		30,633		26,539		91,825		85,416
(Gain) on settlement		—		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		—		—		1,820
Intangible asset impairment charge		—		—		—		34,900
Interest expense		13,250		13,264		39,810		39,922
Loss before income taxes and noncontrolling interest	$	(8,337)	$	(9,960)	$	(16,733)	$	(65,679)

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Total Assets by Reporting Segment

(in thousands)

	September 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	597,426	$	624,444
Clinical Engineering Solutions		109,940		110,562
Surgical Services		100,531		98,906
Total Company Assets	$	807,897	$	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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	59.4	%	59.8	%	60.6	%	61.1	%
Equipment/disposable sales	2.7		3.9		3.0		4.8
	62.1		63.7		63.6		65.9
CES
Service solutions	22.9		22.3		22.1		20.8
SS
Equipment usage solutions	14.7		13.8		14.1		13.1
Equipment/disposable sales	0.3		0.2		0.2		0.2
	15.0		14.0		14.3		13.3
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%

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 ninemonths ended September 30, 2015 primarily relates to state minimum fees.The expected tax benefit from operating loss during the threeand ninemonths ended September 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 September 30, 2015, the Company had available unused federal net operating loss carryforwards of approximately $210.7 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)

	September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	58,797	$	9,784	$	—	$	68,581
Due from affiliates		28,434		—		(28,434)		—
Inventories		4,343		3,754		—		8,097
Deferred income taxes, net		—		1,181		—		1,181
Other current assets		6,021		235		—		6,256
Total current assets		97,595		14,954		(28,434)		84,115
Property and equipment:
Medical equipment		544,058		43,672		—		587,730
Property and office equipment		75,830		8,797		—		84,627
Accumulated depreciation		(425,627)		(35,111)		—		(460,738)
Total property and equipment, net		194,261		17,358		—		211,619
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,983		—		(53,983)		—
Other intangibles, net		150,594		14,688		—		165,282
Other, primarily deferred financing costs, net		10,209		77		—		10,286
Total assets	$	789,783	$	100,531	$	(82,417)	$	807,897
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,059	$	1,049	$	—	$	5,108
Book overdrafts		4,147		2,304		—		6,451
Due to affiliates		—		28,434		(28,434)		—
Accounts payable		25,638		3,047		—		28,685
Accrued compensation		15,541		2,665		—		18,206
Accrued interest		6,568		—		—		6,568
Dividend payable		28		—		—		28
Other accrued expenses		14,367		610		—		14,977
Total current liabilities		70,348		38,109		(28,434)		80,023
Long-term debt, less current portion		697,788		3,434		—		701,222
Pension and other long-term liabilities		11,626		—		—		11,626
Payable to Parent		26,785		—		—		26,785
Deferred income taxes, net		49,092		4,746		—		53,838
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(266,015)		(6,036)		—		(272,051)
Accumulated loss in subsidiary		(6,036)		—		6,036		—
Accumulated other comprehensive loss		(8,330)		—		—		(8,330)
Total Universal Hospital Services, Inc. (deficit) equity		(65,856)		53,972		(53,983)		(65,867)
Noncontrolling interest		—		270		—		270
Total (deficit) equity		(65,856)		54,242		(53,983)		(65,597)
Total liabilities and (deficit) equity	$	789,783	$	100,531	$	(82,417)	$	807,897

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 September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	68,985	$	—	$	—	$	68,985
Clinical engineering solutions		25,401		—		—		25,401
Surgical services		—		16,727		—		16,727
Total revenues		94,386		16,727		—		111,113
Cost of Revenue
Cost of medical equipment solutions		30,134		—		—		30,134
Cost of clinical engineering solutions		20,063		—		—		20,063
Cost of surgical services		—		8,780		—		8,780
Medical equipment depreciation		15,043		1,547		—		16,590
Total costs of revenues		65,240		10,327		—		75,567
Gross margin		29,146		6,400		—		35,546
Selling, general and administrative		25,956		4,677		—		30,633
Operating income		3,190		1,723		—		4,913
Equity in earnings of subsidiary		(442)		—		442		—
Interest expense		12,718		532		—		13,250
(Loss) income before income taxes and noncontrolling interest		(9,086)		1,191		(442)		(8,337)
(Benefit) provision for income taxes		(539)		749		—		210
Consolidated net (loss) income		(8,547)		442		(442)		(8,547)
Net income attributable to noncontrolling interest		—		121		—		121
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,547)	$	321	$	(442)	$	(8,668)

20

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	67,861	$	—	$	—	$	67,861
Clinical engineering solutions		23,717		—		—		23,717
Surgical services		—		14,887		—		14,887
Total revenues		91,578		14,887		—		106,465
Cost of Revenue
Cost of medical equipment solutions		32,204		—		—		32,204
Cost of clinical engineering solutions		18,670		—		—		18,670
Cost of surgical services		—		7,982		—		7,982
Medical equipment depreciation		16,340		1,426		—		17,766
Total costs of revenues		67,214		9,408		—		76,622
Gross margin		24,364		5,479		—		29,843
Selling, general and administrative		21,467		5,072		—		26,539
Operating income		2,897		407		—		3,304
Equity in loss of subsidiary		111		—		(111)		—
Interest expense		12,726		538		—		13,264
Loss before income taxes and noncontrolling interest		(9,940)		(131)		111		(9,960)
Provision (benefit) for income taxes		245		(20)		—		225
Consolidated net loss		(10,185)		(111)		111		(10,185)
Net income attributable to noncontrolling interest		—		103		—		103
Net loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)

21

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	214,154	$	—	$	—	$	214,154
Clinical engineering solutions		74,581		—		—		74,581
Surgical services		—		48,154		—		48,154
Total revenues		288,735		48,154		—		336,889
Cost of Revenue
Cost of medical equipment solutions		92,466		—		—		92,466
Cost of clinical engineering solutions		59,333		—		—		59,333
Cost of surgical services		—		25,681		—		25,681
Medical equipment depreciation		45,712		4,513		—		50,225
Total costs of revenues		197,511		30,194		—		227,705
Gross margin		91,224		17,960		—		109,184
Selling, general and administrative		77,975		13,850		—		91,825
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		18,967		4,110		—		23,077
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Interest expense		38,244		1,566		—		39,810
(Loss) income before income taxes and noncontrolling interest		(18,076)		2,544		(1,201)		(16,733)
(Benefit) provision for income taxes		(784)		1,343		—		559
Consolidated net (loss) income		(17,292)		1,201		(1,201)		(17,292)
Net income attributable to noncontrolling interest		—		341		—		341
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(17,292)	$	860	$	(1,201)	$	(17,633)

22

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	216,771	$	—	$	—	$	216,771
Clinical engineering solutions		68,505		—		—		68,505
Surgical services		—		43,890		—		43,890
Total revenues		285,276		43,890		—		329,166
Cost of Revenue
Cost of medical equipment solutions		97,919		—		—		97,919
Cost of clinical engineering solutions		54,454		—		—		54,454
Cost of surgical services		—		24,418		—		24,418
Medical equipment depreciation		51,843		4,153		—		55,996
Total costs of revenues		204,216		28,571		—		232,787
Gross margin		81,060		15,319		—		96,379
Selling, general and administrative		70,732		14,684		—		85,416
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(26,392)		635		—		(25,757)
Equity in loss of subsidiary		312		—		(312)		—
Interest expense		38,322		1,600		—		39,922
Loss before income taxes and noncontrolling interest		(65,026)		(965)		312		(65,679)
Benefit for income taxes		(12,579)		(653)		—		(13,232)
Consolidated net loss		(52,447)		(312)		312		(52,447)
Net income attributable to noncontrolling interest		—		364		—		364
Net loss attributable to Universal Hospital Services, Inc.	$	(52,447)	$	(676)	$	312	$	(52,811)

23

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended September 30, 2015								Nine Months Ended September 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	$	(8,547)	$	442	$	(442)	$	(8,547)	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Other comprehensive income:
Gain on minimum pension liability, net of tax		244		—		—		244		732		—		—		732
Total other comprehensive income		244		—		—		244		732		—		—		732
Comprehensive (loss) income		(8,303)		442		(442)		(8,303)		(16,560)		1,201		(1,201)		(16,560)
Comprehensive income attributable to noncontrolling interest		—		121		—		121		—		341		—		341
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(8,303)	$	321	$	(442)	$	(8,424)	$	(16,560)	$	860	$	(1,201)	$	(16,901)

	Three Months Ended September 30, 2014								Nine Months Ended September 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	$	(10,185)	$	(111)	$	111	$	(10,185)	$	(52,447)	$	(312)	$	312	$	(52,447)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive loss		(10,185)		(111)		111		(10,185)		(52,447)		(312)		312		(52,447)
Comprehensive income attributable to noncontrolling interest		—		103		—		103		—		364		—		364
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)	$	(52,447)	$	(676)	$	312	$	(52,811)

24

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		51,931		5,482		—		57,413
Asset impairment charges		2,339		—		—		2,339
Amortization of intangibles, deferred financing costs and bond premium		7,146		2,518		—		9,664
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Provision for doubtful accounts		145		63		—		208
Provision for inventory obsolescence		195		104		—		299
Non-cash share-based compensation expense		1,902		—		—		1,902
Gain on sales and disposals of equipment		(3,404)		(143)		—		(3,547)
Deferred income taxes		2,096		(1,399)		—		697
Changes in operating assets and liabilities:
Accounts receivable		(1,175)		(1,358)		—		(2,533)
Due from affiliates		267		—		(267)		—
Inventories		(269)		(136)		—		(405)
Other operating assets		471		71		—		542
Accounts payable		(238)		833		—		595
Other operating liabilities		(6,615)		(21)		—		(6,636)
Net cash provided by operating activities		36,298		7,215		(267)		43,246
Cash flows from investing activities:
Medical equipment purchases		(35,432)		(3,339)		—		(38,771)
Property and office equipment purchases		(3,132)		(16)		—		(3,148)
Proceeds from disposition of property and equipment		10,578		221		—		10,799
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(27,986)		(5,734)		—		(33,720)
Cash flows from financing activities:
Proceeds under senior secured credit facility		104,952		—		—		104,952
Payments under senior secured credit facility		(108,900)		—		—		(108,900)
Payments of principal under capital lease obligations		(4,946)		(810)		—		(5,756)
Distributions to noncontrolling interests		—		(360)		—		(360)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		(267)		267		—
Change in book overdrafts		621		(114)		—		507
Net cash used in financing activities		(8,312)		(1,481)		267		(9,526)
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)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(52,447)	$	(312)	$	312	$	(52,447)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		59,139		4,981		—		64,120
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		7,877		2,482		—		10,359
Equity in loss of subsidiary		312		—		(312)		—
Provision for doubtful accounts		661		(3)		—		658
Provision for inventory obsolescence		(16)		(11)		—		(27)
Non-cash share-based compensation expense		626		175		—		801
Gain on sales and disposals of equipment		(1,776)		(15)		—		(1,791)
Deferred income taxes		(11,345)		(2,200)		—		(13,545)
Changes in operating assets and liabilities:
Accounts receivable		1,788		(121)		—		1,667
Due from (to) affiliates		(2,529)		2,529		—		—
Inventories		593		(846)		—		(253)
Other operating assets		(2,090)		(47)		—		(2,137)
Accounts payable		498		(277)		—		221
Other operating liabilities		(9,757)		483		—		(9,274)
Net cash provided by operating activities		28,459		6,818		—		35,277
Cash flows from investing activities:
Medical equipment purchases		(40,270)		(4,293)		—		(44,563)
Property and office equipment purchases		(3,420)		(190)		—		(3,610)
Proceeds from disposition of property and equipment		6,919		77		—		6,996
Purchases of noncontrolling interests		—		(46)		—		(46)
Net cash used in investing activities		(36,771)		(4,452)		—		(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility		123,400		—		—		123,400
Payments under senior secured credit facility		(107,200)		—		—		(107,200)
Payments of principal under capital lease obligations		(4,198)		(1,001)		—		(5,199)
Distributions to noncontrolling interests		—		(436)		—		(436)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,617)		(929)		—		(4,546)
Net cash provided by (used in) financing activities		8,312		(2,366)		—		5,946
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$0and $1.8 million during the three months and nine months ended September 30, 2014, respectively, the majority of which related to severances and other related expenses. We incurred no restructuring expense during the three monthsand ninemonths ended September 30, 2015. As of December 31, 2014, we had $1.6 million of restructuring liability. For the nine months ended September 30, 2015,  $1.4 million in restructuring charges was paid. No additional restructuring was recorded in the first threequarters of 2015 for new severance arrangements and the remaining liability of $0.2 million as of September 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 nine months ended September 30, 2014, we incurred restructuring expense of $1.8 million and $1.5 million in restructuring charges was paid and the remaining $0.6 was a liability as of September 30, 2014.

17.Concentration

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

27

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 September 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 four 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 its 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 $7.5 million during 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 nine months was approximately $8.2 million and the total impact in 2015 is estimated at approximately $8.2 million.  The cash impact to gross margin in the first nine months was approximately $3.0 million and the total impact in 2015 is estimated at approximately $3.0 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 $7.7 million in the first nine months and the total impact in 2015 is estimated at $10 to $12 million. The gross margin impact, while difficult to estimate given the fixed nature of the expense base, was approximately $5.5 million in the first nine months and the total impact in 2015 is estimated at approximately $7 to $8.5 million.

Medical Equipment Solutions

Our MES segment accounted for $69.0 and $67.9 million, or approximately 62.1% and 63.7% of our revenues, for the three months ended September 30, 2015 and 2014, respectively and $214.2 and $216.8 million, or approximately 63.6% and 65.9% of our revenues, for the nine months ended September 30, 2015 and 2014, respectively. As of September 30,

28

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 $25.4 and $23.7 million, or approximately 22.9% and 22.3% of our revenues, for the three months ended September 30, 2015 and 2014, respectively and $74.6 and $68.5 million, or approximately 22.1% and 20.8% of our revenues, for the nine months ended September 30, 2015 and 2014, respectively. We offer a broad range of inspection, preventive maintenance, repair, logistic and consulting services through our team of over 400 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 September 30, 2015.  In addition, as of September 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 electronic medical records (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 $16.7 and $14.9 million, or approximately 15.0% and 14.0% of our revenues, for the three months ended September 30, 2015 and 2014,  respectively and $48.2 and $43.9 million, or approximately 14.3% and 13.3% of our revenues, for the nine months ended September 30, 2015 and 2014, respectively.As of September 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 surgery, orthopedic surgery, otolaryngology, urology, obstetrics, gynecology, podiatry, dermatology and plastic/cosmetics.

29

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 four 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 September 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 September 30, 2015 and

· the results of operations for the three-month and nine-month periods ended September 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 nine-month periods ended September 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 September 30,				Increase		Nine Months Ended September 30,				Increase
	2015		2014		(Decrease)		2015		2014		(Decrease)
Revenue
Medical equipment solutions	62.1	%	63.7	%	1.7	%	63.6	%	65.9	%	(1.2)	%
Clinical engineering solutions	22.9		22.3		7.1		22.1		20.8		8.9
Surgical services	15.0		14.0		12.4		14.3		13.3		9.7
Total revenues	100.0	%	100.0	%	4.4		100.0	%	100.0	%	2.3
Cost of Revenue
Cost of medical equipment solutions	27.1		30.2		(6.4)		27.4		29.7		(5.6)
Cost of clinical engineering solutions	18.1		17.5		7.5		17.6		16.5		9.0
Cost of surgical services	7.9		7.5		10.0		7.6		7.4		5.2
Medical equipment depreciation	14.9		16.7		(6.6)		14.9		17.0		(10.3)
Total costs of revenues	68.0		71.9		(1.4)		67.5		70.6		(2.2)
Gross margin	32.0		28.1		19.1		32.5		29.4		13.3
Selling, general and administrative	27.6		24.9		15.4		27.3		25.9		7.5
(Gain) on settlement	—		—		*		(1.7)		—		*
Restructuring, acquisition and integration expenses	—		—		*		—		0.6		*
Intangible asset impairment charge	—		—		*		—		10.6		*
Operating income (loss)	4.4		3.2		*		6.9		(7.7)		*
Interest expense	11.9		12.5		(0.1)		11.8		12.1		(0.3)
Loss before income taxes and noncontrolling interest	(7.5)		(9.3)		(16.3)		(4.9)		(19.8)		(74.5)
Provision (benefit) for income taxes	0.2		0.2		*		0.2		(4.0)		*
Consolidated net loss	(7.7)	%	(9.5)	%	(16.1)		(5.1)	%	(15.8)	%	(67.0)

*Not meaningful

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

Total Revenue

Total revenue for the three months ended September 30, 2015 was $111.1 million, compared to $106.5 million for the three months ended September 30, 2014, an increase of $4.6 million or 4.4%.  The net increase was primarily due to additional revenue within our MES segment related to growth in our 360 On-site Managed Solutions (“360 solutions”) of $3.2million, growth in our supplemental rental services of $2.4 million, growth in our CES segment of $1.7 million related to growth in our manufacturer services and growth in our SS segment of $1.8 million. These increases were partially offset by the $2.8 million decline in the MES segment due to customer transitions from the loss of the national GPO contract.

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Cost of Revenue

Total cost of revenue for the three months ended September 30, 2015 was $75.6 million compared to $76.6 million for the three months ended September 30, 2014, a decrease of $1.0 million or 1.4%. The decrease was primarily in our MES segment due to decreases in other rental costs of $1.4 million due to the loss of the GPO contract and medical equipment depreciation of $1.2 million. The decreases were partially offset by the increase in our CES 360 solutions cost of $1.4 million corresponding with the manufacturer services revenue growth.

Gross Margin

Total gross margin for the three months ended September 30, 2015 was $35.5 million, or 32.0% of total revenues, compared to $29.8 million, or 28.1% of total revenues, for the three months ended September 30, 2014, an increase of $5.7 million or 19.1%.  The increase in gross margin as a percent of revenue for the quarter was primarily impacted by the lower depreciation expense, positive operating leverage from volume growth along with a higher recovery on used equipment sales.

Medical Equipment Solutions

(in thousands)

	Three Months Ended
	September 30,
	2015			2014			Change		% Change
Total revenue	$	68,985		$	67,861		$	1,124	1.7	%
Cost of revenue		30,134			32,204			(2,070)	(6.4)
Medical equipment depreciation		15,043			16,340			(1,297)	(7.9)
Gross margin	$	23,808		$	19,317		$	4,491	23.2
Gross margin %		34.5	%		28.5	%

Total revenue in the MES segment increased $1.1 million, or 1.7%, to $69.0 million in the third quarter of 2015 as compared to the same period of 2014.  The increase was primarily due to the growth in our 360 solutions from both new programs and expansion of existing programs of $3.2million and growth in our supplemental rental services of $2.4 million. The increases were partially offset by the transition of certain customers related to the loss of the national GPO contract of $2.8 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 September 30, 2015,  we had 227 such active programs, up from 209 as of December 31, 2014.

Total cost of revenue in the segment decreased $2.1 million, or 6.4%, to $30.1 million in the third quarter of 2015 as compared to the same period of 2014.  This decrease was due to the decrease in rental costs of $1.4 million largely due to lower labor costs and vehicle expenses. The decreases were partially offset by an increase in costs to support growth in our 360 solutions of $0.4 million largely due to the increase in employee related expense.

Medical equipment depreciation decreased $1.3 million, or 7.9%, to $15.0 million in the third 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 28.5% in the third quarter of 2014 to 34.5% in the same period of 2015. Gross margin rate was impacted by the lower depreciation,positive operating leverage from volume growth along with a higher recovery on used equipment sales.

Future revenue will continue to be negatively impacted by the loss of revenues resulting from the loss of the agreement related to a national GPO contract.

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Clinical Engineering Solutions

(in thousands)

	Three Months Ended
	September 30,
	2015			2014			Change		% Change
Total revenue	$	25,401		$	23,717		$	1,684	7.1	%
Cost of revenue		20,063			18,670			1,393	7.5
Gross margin	$	5,338		$	5,047		$	291	5.8
Gross margin %		21.0	%		21.3	%

Total revenue in the CES segment increased $1.7 million, or 7.1%, to $25.4 million in the third quarter of 2015 as compared to the same period of 2014. The increase was primarily due to growth in our manufacturer services and managed 360 solutions.  As of September 30, 2015, we had 360 solutions implemented in 176 programs in our CES segment, up from 144 programs as of December 31, 2014.

Total cost of revenue in the segment increased $1.4 million, or 7.5%, to $20.1 million in the third quarter of 2015 as compared to the same period of 2014. The increase was primarily attributable to increases in repair parts 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 21.3% in the third quarter of 2014 to 21.0% 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
	September 30,
	2015			2014			Change		% Change
Total revenue	$	16,727		$	14,887		$	1,840	12.4	%
Cost of revenue		8,780			7,982			798	10.0
Medical equipment depreciation		1,547			1,426			121	8.5
Gross margin	$	6,400		$	5,479		$	921	16.8
Gross margin %		38.3	%		36.8	%

Total revenue in the SS segment increased $1.8 million, or 12.4%, to $16.7 million in the third quarter of 2015 as compared to the same period of 2014. The increase was primarily driven by organic growth in our surgical services business and from the May 2015 acquisition.

Total cost of revenue in the segment increased $0.8 million, or 10.0%, to $8.8 million in the third quarter of 2015 as compared to the same period of 2014. The increase was primarily attributable to an increase in cost of disposables and employee related costs to support growth in our surgical services business.

Medical equipment depreciation increased $0.1 million, or 8.5%, to $1.5 million in the third 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 36.8% in the third quarter of 2014 to 38.3% in the same period of 2015. The increase in gross margin percentage was primarily driven by both positive operating leverage from volume growth and lower operating expenses from lower vehicle and maintenance expenses.

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Selling, General and Administrativeand Interest Expense

(in thousands)

	Three Months Ended
	September 30,
	2015		2014		Change		% Change
Selling, general and administrative	$	30,633	$	26,539	$	4,094	15.4	%
Interest expense		13,250		13,264		(14)	(0.1)

Selling, General and Administrative

Selling, general and administrative expense increased $4.1 million, or 15.4%, to $30.6 million for the third quarter of 2015 as compared to the same period of 2014. The increase was primarily due to increases in incentives, timing of meetings and investments in the sales organization.

Selling, general and administrative expense as a percentage of total revenue was 27.6% and 24.9% for the quarters ended September 30, 2015 and 2014, respectively.

Interest Expense

Interest expense was$13.3 million for the third quarter of 2015and2014.

Income Taxes

Income taxes were an expense of $0.2 and$0.2 million for the three months ended September 30, 2015 and 2014, respectively. The tax expense for the three months ended September 30, 2015and 2014primarily related to state minimum fees. The expected tax benefit from operating loss during the three months ended September 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 $1.6 million to $8.5 million in the third 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 during the third quarter of 2015.

Consolidated Results of Operations for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014

Total Revenue

Total revenue for the nine months ended September 30, 2015 was $336.9 million, compared to $329.2 million for the nine months ended September 30, 2014, an increase of $7.7 million or 2.3%.  The net increase was primarily due to additional revenue within our MES segment related to growth in our 360 solutions of $8.6million and supplemental rental services of $6.0 million, growth in our CES segment of $6.1 million related to growth in our 360 solutions andmanufacturer services and growth in our SS segment of $4.3 million. These increases were partially offset by the decline in Negative Pressure Wound Therapy (“NPWT”) device rental and disposable sales of $8.2 million due to the interruption of the commercial distribution of a NPWT product line and a decrease of $7.7 million due to customer transitions from the loss of the national GPO contract.

Cost of Revenue

Total cost of revenue for the nine months ended September 30, 2015 was $227.7 million compared to $232.8 million for the nine months ended September 30, 2014, a decrease of $5.1 million or 2.2%. The decrease was primarily in our MES segment due to decreases in cost of disposable sales of $4.5 million and other rental costs of $5.0 million and a decrease in medical equipment depreciation of $5.8 million. The decreases were partially offset by the increase in our MES

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segment due to increases in 360 solutions cost of $4.0 million, an increase in our CES 360 solutions cost of $4.9 million corresponding with the 360 solutions revenue growth and the increase in SS costs of $1.3 million.

Gross Margin

Total gross margin for the nine months ended September 30, 2015 was $109.2 million, or 32.5% of total revenues, compared to $96.4 million, or 29.4% of total revenues, for the nine months ended September 30, 2014, an increase of $12.8 million or 13.3%.  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.

Medical Equipment Solutions

(in thousands)

	Nine Months Ended
	September 30,
	2015			2014			Change		% Change
Total revenue	$	214,154		$	216,771		$	(2,617)	(1.2)	%
Cost of revenue		92,466			97,919			(5,453)	(5.6)
Medical equipment depreciation		45,712			51,843			(6,131)	(11.8)
Gross margin	$	75,976		$	67,009		$	8,967	13.4
Gross margin %		35.5	%		30.9	%

Total revenue in the MES segment decreased $2.6 million, or 1.2%, to $214.2 million in the first nine 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 $8.2 million and the transition of certain customers related to the loss of the national GPO contract of $7.7 million. The decreases were partially offset by growth in our 360 solutions from both new programs and expansion of existing programs of $8.6 millionand growth in supplemental rental services of $6.0 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 September 30, 2015, we had 227 such active programs, up from 209 as of December 31, 2014.

Total cost of revenue in the segment decreased $5.5 million, or 5.6%, to $92.5 million in the first nine months of 2015 as compared to the same period of 2014.  This decrease was due to  adecrease in rental cost of $5.0 million largely due to lower labor costs and vehicle expenses and lower cost of disposable sales of $4.5 million. The decrease was partially offset by an increase in costs to support growth in our 360 solutions of $4.0 million largely due to increases in employee related expense of $2.3million and repair parts of $0.3 million.

Medical equipment depreciation decreased $6.1 million, or 11.8%, to $45.7 million in the first nine 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 30.9% in the first nine months of 2014 to 35.5% 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 and supplemental rental services.

Future revenue will continue to be negatively impacted by the loss of revenues resulting from the loss of the agreement related to a national GPO contract.

35

Clinical Engineering Solutions

(in thousands)

	Nine Months Ended
	September 30,
	2015			2014			Change		% Change
Total revenue	$	74,581		$	68,505		$	6,076	8.9	%
Cost of revenue		59,333			54,454			4,879	9.0
Gross margin	$	15,248		$	14,051		$	1,197	8.5
Gross margin %		20.4	%		20.5	%

Total revenue in the CES segment increased $6.1 million, or 8.9%, to $74.6 million in the first nine months of 2015 as compared to the same period of 2014. The increase was primarily due to growth in our managed 360 solutions and manufacturer services.  As of September 30, 2015, we had 360 solutions implemented in 176 programs in our CES segment, up from 144 programs as of December 31, 2014.

Total cost of revenue in the segment increased $4.9 million, or 9.0%, to $59.3 million in the first nine 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 in the first nine months of 2014and2015.

Surgical Services

(in thousands)

	Nine Months Ended
	September 30,
	2015			2014			Change		% Change
Total revenue	$	48,154		$	43,890		$	4,264	9.7	%
Cost of revenue		25,681			24,418			1,263	5.2
Medical equipment depreciation		4,513			4,153			360	8.7
Gross margin	$	17,960		$	15,319		$	2,641	17.2
Gross margin %		37.3	%		34.9	%

Total revenue in the SS segment increased $4.3 million, or 9.7%, to $48.2 million in the first nine months of 2015 as compared to the same period of 2014. The increase was driven primarily by organic growth in our surgical services businessand from the May 2015 acquisition.

Total cost of revenue in the segment increased $1.3 million, or 5.2%, to $25.7 million in the first nine months of 2015 as compared to the same period of 2014. The increase was primarily attributable to increases in cost of disposables and employee related costs to support growth in our surgical services business.

Medical equipment depreciation increased $0.4 million, or 8.7%, to $4.5 million in the first nine 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 34.9% in the first nine months of 2014 to 37.3% 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.

36

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

(in thousands)

	Nine Months Ended
	September 30,
	2015		2014		Change		% Change
Selling, general and administrative	$	91,825	$	85,416	$	6,409	7.5	%
(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		39,810		39,922		(112)	(0.3)

*Not meaningful

Selling, General and Administrative

Selling, general and administrative expense increased $6.4 million, or 7.5%, to $91.8 million for the first nine months of 2015 as compared to the same period of 2014. The increase was primarily due to increases in incentives, consulting and outside service fees and share-based compensation expense.

Selling, general and administrative expense as a percentage of total revenue was 27.3% and 25.9% for the nine months ended September 30, 2015 and 2014, respectively.

Gain on Settlement

Gain on settlement of $5.7 million for the first nine 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.

Restructuring, Acquisition and Integration Expenses

Restructuring, acquisition and integration expenses for the first ninemonths 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 contract.  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 nine months ended September 30, 2014.  

Interest Expense

Interest expense decreased $0.1 million to $39.8 million for the first nine months of 2015 as compared to the same period of 2014.

Income Taxes

Income taxes were an expense of $0.6 and a  benefit of $13.2 million for the nine months ended September 30, 2015 and 2014, respectively. The tax expense for the nine months ended September 30, 2015 primarily related to state minimum fees. The tax benefit for the nine months ended September 30, 2014 primarily related to intangible asset impairment

37

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 nine months ended September 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 $35.2 million to $17.3 million in the first nine 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 $91.6 and $49.7 million for the nine months ended September 30, 2015 and 2014, respectively.  EBITDA for the nine months ended September 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:

	Nine Months Ended
	September 30,
(in thousands)	2015		2014
Net loss attributable to Universal Hospital Services, Inc.	$	(17,633)	$	(52,811)
Interest expense		39,810		39,922
Provision (benefit) for income taxes		559		(13,232)
Depreciation and amortization of intangibles		68,850		75,860
EBITDA	$	91,586	$	49,739
Other Financial Data:
Net cash provided by operating activities	$	43,246	$	35,277
Net cash used in investing activities		(33,720)		(41,223)
Net cash (used in) provided by financing activities		(9,526)		5,946
Other Operating Data (as of end of period):
Medical equipment (approximate number of owned outsourcing units)		254,000		269,000
District service centers		83		84
SS stand-alone service centers		4		7
Centers of Excellence		5		5

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.

38

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.

Future cash flows from operations will continue to be negatively impacted by the loss of revenues resulting from the loss of the agreement related to a national GPO contract.  

Net cash provided by operating activities was $43.2 and $35.3 million for the nine months ended September 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 $33.7 and $41.2 million for the nine months ended September 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) provided by financing activities was $(9.5) and $5.9 million for the nine months ended September 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 September 30, 2015, we had $129.7 million of availability under the senior secured credit facility based on a borrowing base of $168.7 million less borrowings of $35.1 million and after giving effect to $3.9 million used for letters of credit.  As of September 30, 2014, we had $129.4 million of availability under the senior secured credit facility based on a borrowing base of $182.2 million less borrowings of $49.2 million and after giving effect to $3.6 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.

39

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 into 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;

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

· increased 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 risks 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 September 30, 2015, we had approximately $706.3 million of total debt outstanding of which $35.1 million was bearing interest at variable rates. Based on variable debt

40

levels at September 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 $0.4 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 nine months of 2015 average price of unleaded gasoline, assuming gasoline usage levels for the nine months ended September 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 September 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) or Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 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.

41

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

On November 6, 2015, David Illingworth resigned from his position as Director of the Company. Mr. Illingworth’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

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 September 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.

* Furnished, not filed

42

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:  November 9, 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)

43

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: November  9, 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: November  9, 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 September 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: November  9, 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 September 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: November  9, 2015	/s/ James B. Pekarek
	James B. Pekarek
	Executive Vice President and
	Chief Financial Officer

XML

Equity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			$ (48,747)	$ 23,020
Net (loss) income	$ (8,547)	$ (10,185)	(17,292)	(52,447)
Other comprehensive income	244		732
Cash distributions to noncontrolling interests			(360)	(436)
Contributions from new members to limited liability companies			70
Purchases of noncontrolling interests				(46)
Balance	(65,597)	(29,909)	(65,597)	(29,909)
Additional Paid-in Capital
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			$ 214,514	214,505
Net (loss) income
Purchases of noncontrolling interests				(11)
Balance	214,514	214,494	$ 214,514	214,494
Accumulated Deficit
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			(254,418)	(187,901)
Net (loss) income			(17,633)	(52,811)
Balance	(272,051)	(240,712)	(272,051)	(240,712)
Accumulated Other Comprehensive Loss
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			(9,062)	$ (3,884)
Net (loss) income
Other comprehensive income			732
Balance	(8,330)	(3,884)	(8,330)	$ (3,884)
Non controlling Interests
Changes in shareholders equity that are attributable to shareholders and noncontrolling interests
Balance			219	300
Net (loss) income			341	364
Cash distributions to noncontrolling interests			(360)	(436)
Contributions from new members to limited liability companies			70
Purchases of noncontrolling interests				(35)
Balance	$ 270	$ 193	$ 270	$ 193

XML

Consolidating Financial Statements - Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Consolidated net loss	$ (8,547)	$ (10,185)	$ (17,292)	$ (52,447)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			57,413	64,120
Asset impairment charges	600	0	2,339	2,025
Intangible asset impairment charge				34,900
Amortization of intangibles, deferred financing costs and bond premium			9,664	10,359
Provision for doubtful accounts			208	658
Provision for inventory obsolescence			299	(27)
Non-cash share-based compensation expense			1,902	801
Gain on sales and disposals of equipment			(3,547)	(1,791)
Deferred income taxes			697	(13,545)
Changes in operating assets and liabilities:
Accounts receivable			(2,533)	1,667
Inventories			(405)	(253)
Other operating assets			542	(2,137)
Accounts payable			595	221
Other operating liabilities			(6,636)	(9,274)
Net cash provided by operating activities			43,246	35,277
Cash flows from investing activities:
Medical equipment purchases			(38,771)	(44,563)
Property and office equipment purchases			(3,148)	(3,610)
Proceeds from disposition of property and equipment			10,799	6,996
Acquisition			(2,600)
Purchases of noncontrolling interests				(46)
Net cash used in investing activities			(33,720)	(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility			104,952	123,400
Payments under senior secured credit facility			(108,900)	(107,200)
Payments of principal under capital lease obligations			(5,756)	(5,199)
Distributions to noncontrolling interests			(360)	(436)
Contributions from new members to limited liability companies			70
Dividend and equity distribution payments			(39)	(73)
Change in book overdrafts			507	(4,546)
Net cash (used in) provided by financing activities			(9,526)	5,946
Consolidating Adjustments
Cash flows from operating activities:
Consolidated net loss	(442)	111	(1,201)	312
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in loss of subsidiary	442	(111)	1,201	(312)
Changes in operating assets and liabilities:
Due from (to) affiliates			(267)
Net cash provided by operating activities			(267)
Cash flows from financing activities:
Due to affiliates			267
Net cash (used in) provided by financing activities			267
UHS Holdco, Inc., (Parent)
Cash flows from operating activities:
Consolidated net loss	(8,547)	(10,185)	(17,292)	(52,447)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			51,931	59,139
Asset impairment charges			2,339	2,025
Intangible asset impairment charge				34,900
Amortization of intangibles, deferred financing costs and bond premium			7,146	7,877
Equity in loss of subsidiary	(442)	111	(1,201)	312
Provision for doubtful accounts			145	661
Provision for inventory obsolescence			195	(16)
Non-cash share-based compensation expense			1,902	626
Gain on sales and disposals of equipment			(3,404)	(1,776)
Deferred income taxes			2,096	(11,345)
Changes in operating assets and liabilities:
Accounts receivable			(1,175)	1,788
Due from (to) affiliates			267	(2,529)
Inventories			(269)	593
Other operating assets			471	(2,090)
Accounts payable			(238)	498
Other operating liabilities			(6,615)	(9,757)
Net cash provided by operating activities			36,298	28,459
Cash flows from investing activities:
Medical equipment purchases			(35,432)	(40,270)
Property and office equipment purchases			(3,132)	(3,420)
Proceeds from disposition of property and equipment			10,578	6,919
Net cash used in investing activities			(27,986)	(36,771)
Cash flows from financing activities:
Proceeds under senior secured credit facility			104,952	123,400
Payments under senior secured credit facility			(108,900)	(107,200)
Payments of principal under capital lease obligations			(4,946)	(4,198)
Dividend and equity distribution payments			(39)	(73)
Change in book overdrafts			621	(3,617)
Net cash (used in) provided by financing activities			(8,312)	8,312
Subsidiary Guarantor Surgical Services
Cash flows from operating activities:
Consolidated net loss	$ 442	$ (111)	1,201	(312)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation			5,482	4,981
Amortization of intangibles, deferred financing costs and bond premium			2,518	2,482
Provision for doubtful accounts			63	(3)
Provision for inventory obsolescence			104	(11)
Non-cash share-based compensation expense				175
Gain on sales and disposals of equipment			(143)	(15)
Deferred income taxes			(1,399)	(2,200)
Changes in operating assets and liabilities:
Accounts receivable			(1,358)	(121)
Due from (to) affiliates				2,529
Inventories			(136)	(846)
Other operating assets			71	(47)
Accounts payable			833	(277)
Other operating liabilities			(21)	483
Net cash provided by operating activities			7,215	6,818
Cash flows from investing activities:
Medical equipment purchases			(3,339)	(4,293)
Property and office equipment purchases			(16)	(190)
Proceeds from disposition of property and equipment			221	77
Acquisition			(2,600)
Purchases of noncontrolling interests				(46)
Net cash used in investing activities			(5,734)	(4,452)
Cash flows from financing activities:
Payments of principal under capital lease obligations			(810)	(1,001)
Distributions to noncontrolling interests			(360)	(436)
Contributions from new members to limited liability companies			70
Due to affiliates			(267)
Change in book overdrafts			(114)	(929)
Net cash (used in) provided by financing activities			$ (1,481)	$ (2,366)

XML

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Segment Information
Revenues	$ 111,113	$ 106,465	$ 336,889	$ 329,166
Medical equipment depreciation	16,590	17,766	50,225	55,996
Gross margin	35,546	29,843	109,184	96,379
Selling, general and administrative	30,633	26,539	91,825	85,416
(Gain) on settlement			(5,718)
Restructuring, acquisition and integration expenses				1,820
Intangible asset impairment charge				34,900
Interest expense	13,250	13,264	39,810	39,922
Loss before income taxes and noncontrolling interest	(8,337)	(9,960)	(16,733)	(65,679)
Assets	807,897		807,897		$ 833,912
Amortization			9,664	10,359
Medical Equipment Solutions
Segment Information
Revenues	68,985	67,861	214,154	216,771
Cost of revenue	30,134	32,204	92,466	97,919
Medical equipment depreciation	15,043	16,340	45,712	51,843
Gross margin	23,808	19,317	75,976	67,009
Assets	597,426		597,426		624,444
Clinical Engineering Solutions
Segment Information
Revenues	25,401	23,717	74,581	68,505
Cost of revenue	20,063	18,670	59,333	54,454
Gross margin	5,338	5,047	15,248	14,051
Assets	109,940		109,940		110,562
Surgical Services
Segment Information
Revenues	16,727	14,887	48,154	43,890
Cost of revenue	8,780	7,982	25,681	24,418
Medical equipment depreciation	1,547	1,426	4,513	4,153
Gross margin	6,400	$ 5,479	17,960	$ 15,319
Assets	$ 100,531		$ 100,531		$ 98,906

XML

Restructuring (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Restructuring Reserve [Roll Forward]
Restructuring liability		$ 600	$ 1,600	$ 300
Restructuring, acquisition and integration expenses		1,820
Payments for Restructuring	$ 1,400	1,500
Other Accrued Expenses
Restructuring Reserve [Roll Forward]
Restructuring liability	$ 200
UHS Holdco, Inc., (Parent)
Restructuring Reserve [Roll Forward]
Restructuring, acquisition and integration expenses		$ 1,820

XML

Related Party Transactions (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)
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	$ 200	$ 300	$ 700	$ 700
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	$ 0	$ 100	$ 200	$ 300

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

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 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	Sep. 30, 2015 USD ($)
Federal
Operating loss carryforwards
Unused federal net operating loss carryforwards	$ 210.7

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Share-Based Compensation - Expense (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended	9 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Sep. 30, 2015	Sep. 30, 2015
Unearned non-cash share-based compensation
Weighted average period for recognition of share-based compensation expense				2 years 1 month 6 days
Unearned non-cash share-based compensation expense expected to be recognized			$ 6.7	$ 6.7
Estimated forfeiture rate (as a percent)				2.00%
Compensation expense			$ 0.3	$ 0.6
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	Sep. 30, 2015 USD ($)
Future estimated amortization expense
Remainder of 2015	$ 2,928
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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue
Medical equipment solutions	$ 68,985	$ 67,861	$ 214,154	$ 216,771
Clinical engineering solutions	25,401	23,717	74,581	68,505
Surgical services	16,727	14,887	48,154	43,890
Total revenues	111,113	106,465	336,889	329,166
Cost of Revenue
Cost of medical equipment solutions	30,134	32,204	92,466	97,919
Cost of clinical engineering solutions	20,063	18,670	59,333	54,454
Cost of surgical services	8,780	7,982	25,681	24,418
Medical equipment depreciation	16,590	17,766	50,225	55,996
Total costs of revenues	75,567	76,622	227,705	232,787
Gross margin	35,546	29,843	109,184	96,379
Selling, general and administrative	30,633	26,539	91,825	85,416
(Gain) on settlement			(5,718)
Restructuring, acquisition and integration expenses				1,820
Intangible asset impairment charge				34,900
Operating income (loss)	4,913	3,304	23,077	(25,757)
Interest expense	13,250	13,264	39,810	39,922
Loss before income taxes and noncontrolling interest	(8,337)	(9,960)	(16,733)	(65,679)
Provision (benefit) for income taxes	210	225	559	(13,232)
Consolidated net loss	(8,547)	(10,185)	(17,292)	(52,447)
Net income attributable to noncontrolling interest	121	103	341	364
Net loss attributable to Universal Hospital Services, Inc.	(8,668)	(10,288)	(17,633)	(52,811)
Consolidating Adjustments
Cost of Revenue
Equity in loss of subsidiary	442	(111)	1,201	(312)
Loss before income taxes and noncontrolling interest	(442)	111	(1,201)	312
Consolidated net loss	(442)	111	(1,201)	312
Net loss attributable to Universal Hospital Services, Inc.	(442)	111	(1,201)	312
UHS Holdco, Inc., (Parent)
Revenue
Medical equipment solutions	68,985	67,861	214,154	216,771
Clinical engineering solutions	25,401	23,717	74,581	68,505
Total revenues	94,386	91,578	288,735	285,276
Cost of Revenue
Cost of medical equipment solutions	30,134	32,204	92,466	97,919
Cost of clinical engineering solutions	20,063	18,670	59,333	54,454
Medical equipment depreciation	15,043	16,340	45,712	51,843
Total costs of revenues	65,240	67,214	197,511	204,216
Gross margin	29,146	24,364	91,224	81,060
Selling, general and administrative	25,956	21,467	77,975	70,732
(Gain) on settlement			(5,718)
Restructuring, acquisition and integration expenses				1,820
Intangible asset impairment charge				34,900
Operating income (loss)	3,190	2,897	18,967	(26,392)
Equity in loss of subsidiary	(442)	111	(1,201)	312
Interest expense	12,718	12,726	38,244	38,322
Loss before income taxes and noncontrolling interest	(9,086)	(9,940)	(18,076)	(65,026)
Provision (benefit) for income taxes	(539)	245	(784)	(12,579)
Consolidated net loss	(8,547)	(10,185)	(17,292)	(52,447)
Net loss attributable to Universal Hospital Services, Inc.	(8,547)	(10,185)	(17,292)	(52,447)
Subsidiary Guarantor Surgical Services
Revenue
Surgical services	16,727	14,887	48,154	43,890
Total revenues	16,727	14,887	48,154	43,890
Cost of Revenue
Cost of surgical services	8,780	7,982	25,681	24,418
Medical equipment depreciation	1,547	1,426	4,513	4,153
Total costs of revenues	10,327	9,408	30,194	28,571
Gross margin	6,400	5,479	17,960	15,319
Selling, general and administrative	4,677	5,072	13,850	14,684
Operating income (loss)	1,723	407	4,110	635
Interest expense	532	538	1,566	1,600
Loss before income taxes and noncontrolling interest	1,191	(131)	2,544	(965)
Provision (benefit) for income taxes	749	(20)	1,343	(653)
Consolidated net loss	442	(111)	1,201	(312)
Net income attributable to noncontrolling interest	121	103	341	364
Net loss attributable to Universal Hospital Services, Inc.	$ 321	$ (214)	$ 860	$ (676)

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Limited Liability Companies (Details) - Limited Liability Companies $ in Millions	Sep. 30, 2015 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

9 Months Ended

Sep. 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 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 companies 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.

In July 2015, the FASB issued ASU No. 2015-11 Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-03 changes the measurement principle for inventory from lower of cost or market to lower of cost and net realizable value for entities that do not measure inventory using the last in, first out or retail inventory method. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016. 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	9 Months Ended
	Sep. 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)

9 Months Ended

Sep. 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	19,565		0.71
Exercised	—		—	$	—
Forfeited or expired	(20,172)		0.95
Outstanding at September 30, 2015	36,733	$	0.71	$	—	9.1
Exercisable at September 30, 2015	8,808	$	0.71	$	—	9.1
Remaining authorized options available for issue	6,953

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

		Nine Months Ended
		September 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		27.0	%
Dividend yield		N/A
Expected option life (years)		5.23
Black-Scholes Value of options	$	0.20

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Equity (Tables)

9 Months Ended

Sep. 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		—		(17,633)		—		341		(17,292)
Other comprehensive income		—		—		732		—		732
Cash distributions to noncontrolling interests		—		—		—		(360)		(360)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at September 30, 2015	$	214,514	$	(272,051)	$	(8,330)	$	270	$	(65,597)

					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		—		(52,811)		—		364		(52,447)
Cash distributions to noncontrolling interests		—		—		—		(436)		(436)
Purchases of noncontrolling interests		(11)		—		—		(35)		(46)
Balance at September 30, 2014	$	214,494	$	(240,712)	$	(3,884)	$	193	$	(29,909)

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Concentration (Details) - Customer concentration - item	9 Months Ended
	Sep. 30, 2015	Sep. 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)	9 Months Ended
	Sep. 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	$ 706,330,000	$ 710,186,000
Unamortized bond premium	9,853,000	11,113,000
Less: Current portion of long-term debt	(5,108,000)	(5,640,000)
Total long-term debt	$ 701,222,000	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	$ 9,900,000	$ 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	$ 35,052,000	$ 39,000,000
Maximum borrowing capacity					$ 235,000,000	$ 195,000,000
Available amount	129,700,000
Borrowing base	168,700,000
Borrowing outstanding	35,100,000
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
Borrowing outstanding	$ 23,000,000
Debt Instrument, Interest Rate at Period End	2.709%
Senior secured credit facility | Interest Rate Scenario 2
Long-Term Debt
Borrowing outstanding	$ 12,000,000
Debt Instrument, Interest Rate at Period End	2.7064%
Senior secured credit facility | Interest Rate Scenario 3
Long-Term Debt
Borrowing outstanding	$ 100,000
Debt Instrument, Interest Rate at Period End	4.75%
Capital lease obligations
Long-Term Debt
Long-term debt current and noncurrent	$ 16,425,000	$ 15,073,000

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2015

Long-Term Debt

Schedule of long-term debt

	September 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		9,853		11,113
Senior secured credit facility		35,052		39,000
Capital lease obligations		16,425		15,073
		706,330		710,186
Less: Current portion of long-term debt		(5,108)		(5,640)
Total long-term debt	$	701,222	$	704,546

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Segment Information (Tables)

9 Months Ended

Sep. 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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Total gross margin	$	35,546	$	29,843	$	109,184	$	96,379
Selling, general and administrative		30,633		26,539		91,825		85,416
(Gain) on settlement		—		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		—		—		1,820
Intangible asset impairment charge		—		—		—		34,900
Interest expense		13,250		13,264		39,810		39,922
Loss before income taxes and noncontrolling interest	$	(8,337)	$	(9,960)	$	(16,733)	$	(65,679)

Schedule of total assets by reporting segment (in thousands)

	September 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	597,426	$	624,444
Clinical Engineering Solutions		109,940		110,562
Surgical Services		100,531		98,906
Total Company Assets	$	807,897	$	833,912

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	59.4	%	59.8	%	60.6	%	61.1	%
Equipment/disposable sales	2.7		3.9		3.0		4.8
	62.1		63.7		63.6		65.9
CES
Service solutions	22.9		22.3		22.1		20.8
SS
Equipment usage solutions	14.7		13.8		14.1		13.1
Equipment/disposable sales	0.3		0.2		0.2		0.2
	15.0		14.0		14.3		13.3
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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	68,985	$	67,861	$	214,154	$	216,771
Cost of revenue		30,134		32,204		92,466		97,919
Medical equipment depreciation		15,043		16,340		45,712		51,843
Gross margin	$	23,808	$	19,317	$	75,976	$	67,009

Clinical Engineering Solutions

Segment Information

Schedule of operating information of segments (in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	25,401	$	23,717	$	74,581	$	68,505
Cost of revenue		20,063		18,670		59,333		54,454
Gross margin	$	5,338	$	5,047	$	15,248	$	14,051

Surgical Services

Segment Information

Schedule of operating information of segments (in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	16,727	$	14,887	$	48,154	$	43,890
Cost of revenue		8,780		7,982		25,681		24,418
Medical equipment depreciation		1,547		1,426		4,513		4,153
Gross margin	$	6,400	$	5,479	$	17,960	$	15,319

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Basis of Presentation

9 Months Ended

Sep. 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 September 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 September 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)

9 Months Ended

Sep. 30, 2015

Consolidating Financial Statements

Schedule of Consolidating Balance Sheets

	September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	58,797	$	9,784	$	—	$	68,581
Due from affiliates		28,434		—		(28,434)		—
Inventories		4,343		3,754		—		8,097
Deferred income taxes, net		—		1,181		—		1,181
Other current assets		6,021		235		—		6,256
Total current assets		97,595		14,954		(28,434)		84,115
Property and equipment:
Medical equipment		544,058		43,672		—		587,730
Property and office equipment		75,830		8,797		—		84,627
Accumulated depreciation		(425,627)		(35,111)		—		(460,738)
Total property and equipment, net		194,261		17,358		—		211,619
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,983		—		(53,983)		—
Other intangibles, net		150,594		14,688		—		165,282
Other, primarily deferred financing costs, net		10,209		77		—		10,286
Total assets	$	789,783	$	100,531	$	(82,417)	$	807,897
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,059	$	1,049	$	—	$	5,108
Book overdrafts		4,147		2,304		—		6,451
Due to affiliates		—		28,434		(28,434)		—
Accounts payable		25,638		3,047		—		28,685
Accrued compensation		15,541		2,665		—		18,206
Accrued interest		6,568		—		—		6,568
Dividend payable		28		—		—		28
Other accrued expenses		14,367		610		—		14,977
Total current liabilities		70,348		38,109		(28,434)		80,023
Long-term debt, less current portion		697,788		3,434		—		701,222
Pension and other long-term liabilities		11,626		—		—		11,626
Payable to Parent		26,785		—		—		26,785
Deferred income taxes, net		49,092		4,746		—		53,838
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(266,015)		(6,036)		—		(272,051)
Accumulated loss in subsidiary		(6,036)		—		6,036		—
Accumulated other comprehensive loss		(8,330)		—		—		(8,330)
Total Universal Hospital Services, Inc. (deficit) equity		(65,856)		53,972		(53,983)		(65,867)
Noncontrolling interest		—		270		—		270
Total (deficit) equity		(65,856)		54,242		(53,983)		(65,597)
Total liabilities and (deficit) equity	$	789,783	$	100,531	$	(82,417)	$	807,897

	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 September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	68,985	$	—	$	—	$	68,985
Clinical engineering solutions		25,401		—		—		25,401
Surgical services		—		16,727		—		16,727
Total revenues		94,386		16,727		—		111,113
Cost of Revenue
Cost of medical equipment solutions		30,134		—		—		30,134
Cost of clinical engineering solutions		20,063		—		—		20,063
Cost of surgical services		—		8,780		—		8,780
Medical equipment depreciation		15,043		1,547		—		16,590
Total costs of revenues		65,240		10,327		—		75,567
Gross margin		29,146		6,400		—		35,546
Selling, general and administrative		25,956		4,677		—		30,633
Operating income		3,190		1,723		—		4,913
Equity in earnings of subsidiary		(442)		—		442		—
Interest expense		12,718		532		—		13,250
(Loss) income before income taxes and noncontrolling interest		(9,086)		1,191		(442)		(8,337)
(Benefit) provision for income taxes		(539)		749		—		210
Consolidated net (loss) income		(8,547)		442		(442)		(8,547)
Net income attributable to noncontrolling interest		—		121		—		121
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,547)	$	321	$	(442)	$	(8,668)

	Three Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	67,861	$	—	$	—	$	67,861
Clinical engineering solutions		23,717		—		—		23,717
Surgical services		—		14,887		—		14,887
Total revenues		91,578		14,887		—		106,465
Cost of Revenue
Cost of medical equipment solutions		32,204		—		—		32,204
Cost of clinical engineering solutions		18,670		—		—		18,670
Cost of surgical services		—		7,982		—		7,982
Medical equipment depreciation		16,340		1,426		—		17,766
Total costs of revenues		67,214		9,408		—		76,622
Gross margin		24,364		5,479		—		29,843
Selling, general and administrative		21,467		5,072		—		26,539
Operating income		2,897		407		—		3,304
Equity in loss of subsidiary		111		—		(111)		—
Interest expense		12,726		538		—		13,264
Loss before income taxes and noncontrolling interest		(9,940)		(131)		111		(9,960)
Provision (benefit) for income taxes		245		(20)		—		225
Consolidated net loss		(10,185)		(111)		111		(10,185)
Net income attributable to noncontrolling interest		—		103		—		103
Net loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	214,154	$	—	$	—	$	214,154
Clinical engineering solutions		74,581		—		—		74,581
Surgical services		—		48,154		—		48,154
Total revenues		288,735		48,154		—		336,889
Cost of Revenue
Cost of medical equipment solutions		92,466		—		—		92,466
Cost of clinical engineering solutions		59,333		—		—		59,333
Cost of surgical services		—		25,681		—		25,681
Medical equipment depreciation		45,712		4,513		—		50,225
Total costs of revenues		197,511		30,194		—		227,705
Gross margin		91,224		17,960		—		109,184
Selling, general and administrative		77,975		13,850		—		91,825
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		18,967		4,110		—		23,077
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Interest expense		38,244		1,566		—		39,810
(Loss) income before income taxes and noncontrolling interest		(18,076)		2,544		(1,201)		(16,733)
(Benefit) provision for income taxes		(784)		1,343		—		559
Consolidated net (loss) income		(17,292)		1,201		(1,201)		(17,292)
Net income attributable to noncontrolling interest		—		341		—		341
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(17,292)	$	860	$	(1,201)	$	(17,633)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	216,771	$	—	$	—	$	216,771
Clinical engineering solutions		68,505		—		—		68,505
Surgical services		—		43,890		—		43,890
Total revenues		285,276		43,890		—		329,166
Cost of Revenue
Cost of medical equipment solutions		97,919		—		—		97,919
Cost of clinical engineering solutions		54,454		—		—		54,454
Cost of surgical services		—		24,418		—		24,418
Medical equipment depreciation		51,843		4,153		—		55,996
Total costs of revenues		204,216		28,571		—		232,787
Gross margin		81,060		15,319		—		96,379
Selling, general and administrative		70,732		14,684		—		85,416
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(26,392)		635		—		(25,757)
Equity in loss of subsidiary		312		—		(312)		—
Interest expense		38,322		1,600		—		39,922
Loss before income taxes and noncontrolling interest		(65,026)		(965)		312		(65,679)
Benefit for income taxes		(12,579)		(653)		—		(13,232)
Consolidated net loss		(52,447)		(312)		312		(52,447)
Net income attributable to noncontrolling interest		—		364		—		364
Net loss attributable to Universal Hospital Services, Inc.	$	(52,447)	$	(676)	$	312	$	(52,811)

Schedule of Consolidating Statements of Comprehensive Income (Loss)

	Three Months Ended September 30, 2015								Nine Months Ended September 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	$	(8,547)	$	442	$	(442)	$	(8,547)	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Other comprehensive income:
Gain on minimum pension liability, net of tax		244		—		—		244		732		—		—		732
Total other comprehensive income		244		—		—		244		732		—		—		732
Comprehensive (loss) income		(8,303)		442		(442)		(8,303)		(16,560)		1,201		(1,201)		(16,560)
Comprehensive income attributable to noncontrolling interest		—		121		—		121		—		341		—		341
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(8,303)	$	321	$	(442)	$	(8,424)	$	(16,560)	$	860	$	(1,201)	$	(16,901)

	Three Months Ended September 30, 2014								Nine Months Ended September 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	$	(10,185)	$	(111)	$	111	$	(10,185)	$	(52,447)	$	(312)	$	312	$	(52,447)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive loss		(10,185)		(111)		111		(10,185)		(52,447)		(312)		312		(52,447)
Comprehensive income attributable to noncontrolling interest		—		103		—		103		—		364		—		364
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)	$	(52,447)	$	(676)	$	312	$	(52,811)

Schedule of Consolidating Statements of Cash Flows

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		51,931		5,482		—		57,413
Asset impairment charges		2,339		—		—		2,339
Amortization of intangibles, deferred financing costs and bond premium		7,146		2,518		—		9,664
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Provision for doubtful accounts		145		63		—		208
Provision for inventory obsolescence		195		104		—		299
Non-cash share-based compensation expense		1,902		—		—		1,902
Gain on sales and disposals of equipment		(3,404)		(143)		—		(3,547)
Deferred income taxes		2,096		(1,399)		—		697
Changes in operating assets and liabilities:
Accounts receivable		(1,175)		(1,358)		—		(2,533)
Due from affiliates		267		—		(267)		—
Inventories		(269)		(136)		—		(405)
Other operating assets		471		71		—		542
Accounts payable		(238)		833		—		595
Other operating liabilities		(6,615)		(21)		—		(6,636)
Net cash provided by operating activities		36,298		7,215		(267)		43,246
Cash flows from investing activities:
Medical equipment purchases		(35,432)		(3,339)		—		(38,771)
Property and office equipment purchases		(3,132)		(16)		—		(3,148)
Proceeds from disposition of property and equipment		10,578		221		—		10,799
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(27,986)		(5,734)		—		(33,720)
Cash flows from financing activities:
Proceeds under senior secured credit facility		104,952		—		—		104,952
Payments under senior secured credit facility		(108,900)		—		—		(108,900)
Payments of principal under capital lease obligations		(4,946)		(810)		—		(5,756)
Distributions to noncontrolling interests		—		(360)		—		(360)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		(267)		267		—
Change in book overdrafts		621		(114)		—		507
Net cash used in financing activities		(8,312)		(1,481)		267		(9,526)
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	$	—	$	—	$	—	$	—

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(52,447)	$	(312)	$	312	$	(52,447)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		59,139		4,981		—		64,120
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		7,877		2,482		—		10,359
Equity in loss of subsidiary		312		—		(312)		—
Provision for doubtful accounts		661		(3)		—		658
Provision for inventory obsolescence		(16)		(11)		—		(27)
Non-cash share-based compensation expense		626		175		—		801
Gain on sales and disposals of equipment		(1,776)		(15)		—		(1,791)
Deferred income taxes		(11,345)		(2,200)		—		(13,545)
Changes in operating assets and liabilities:
Accounts receivable		1,788		(121)		—		1,667
Due from (to) affiliates		(2,529)		2,529		—		—
Inventories		593		(846)		—		(253)
Other operating assets		(2,090)		(47)		—		(2,137)
Accounts payable		498		(277)		—		221
Other operating liabilities		(9,757)		483		—		(9,274)
Net cash provided by operating activities		28,459		6,818		—		35,277
Cash flows from investing activities:
Medical equipment purchases		(40,270)		(4,293)		—		(44,563)
Property and office equipment purchases		(3,420)		(190)		—		(3,610)
Proceeds from disposition of property and equipment		6,919		77		—		6,996
Purchases of noncontrolling interests		—		(46)		—		(46)
Net cash used in investing activities		(36,771)		(4,452)		—		(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility		123,400		—		—		123,400
Payments under senior secured credit facility		(107,200)		—		—		(107,200)
Payments of principal under capital lease obligations		(4,198)		(1,001)		—		(5,199)
Distributions to noncontrolling interests		—		(436)		—		(436)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,617)		(929)		—		(4,546)
Net cash provided by (used in) financing activities		8,312		(2,366)		—		5,946
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	9 Months Ended		12 Months Ended
	Apr. 30, 2014	Sep. 30, 2015	Sep. 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)		19,565,000	0
Forfeited or expired (in shares)		(20,172,000)
Outstanding at the end of the period (in shares)		36,733,000		37,340,000
Exercisable at the end of the period (in shares)		8,808,000
Remaining authorized options available for issue		6,953,000
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)		0.95
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 1 month 6 days		9 years 10 months 24 days
Exercisable		9 years 1 month 6 days

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Consolidating Financial Statements - Comp Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Consolidating Financial Statements
Consolidated net loss	$ (8,547)	$ (10,185)	$ (17,292)	$ (52,447)
Other comprehensive income (loss):
Gain (loss) on minimum pension liability, net of tax	244		732
Total other comprehensive income	244		732
Comprehensive loss	(8,303)	(10,185)	(16,560)	(52,447)
Comprehensive income attributable to noncontrolling interest	121	103	341	364
Comprehensive loss attributable to Universal Hospital Services, Inc.	(8,424)	(10,288)	(16,901)	(52,811)
Consolidating Adjustments
Consolidating Financial Statements
Consolidated net loss	(442)	111	(1,201)	312
Other comprehensive income (loss):
Comprehensive loss	(442)	111	(1,201)	312
Comprehensive loss attributable to Universal Hospital Services, Inc.	(442)	111	(1,201)	312
UHS Holdco, Inc., (Parent)
Consolidating Financial Statements
Consolidated net loss	(8,547)	(10,185)	(17,292)	(52,447)
Other comprehensive income (loss):
Gain (loss) on minimum pension liability, net of tax	244		732
Total other comprehensive income	244		732
Comprehensive loss	(8,303)	(10,185)	(16,560)	(52,447)
Comprehensive loss attributable to Universal Hospital Services, Inc.	(8,303)	(10,185)	(16,560)	(52,447)
Subsidiary Guarantor Surgical Services
Consolidating Financial Statements
Consolidated net loss	442	(111)	1,201	(312)
Other comprehensive income (loss):
Comprehensive loss	442	(111)	1,201	(312)
Comprehensive income attributable to noncontrolling interest	121	103	341	364
Comprehensive loss attributable to Universal Hospital Services, Inc.	$ 321	$ (214)	$ 860	$ (676)

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Accounts receivable, less allowance for doubtful accounts of $1,800 at September 30, 2015 and $2,035 at December 31, 2014	$ 68,581	$ 66,256
Inventories	8,097	7,991
Deferred income taxes, net	1,181	1,273
Other current assets	6,256	7,671
Total current assets	84,115	83,191
Property and equipment:
Medical equipment	587,730	591,100
Property and office equipment	84,627	84,454
Accumulated depreciation	(460,738)	(445,481)
Total property and equipment, net	211,619	230,073
Other long-term assets:
Goodwill	336,595	335,577
Other intangibles, net	165,282	172,905
Other, primarily deferred financing costs, net	10,286	12,166
Total assets	807,897	833,912
Current liabilities:
Current portion of long-term debt	5,108	5,640
Book overdrafts	6,451	5,944
Accounts payable	28,685	30,114
Accrued compensation	18,206	15,108
Accrued interest	6,568	18,823
Dividend payable	28	39
Other accrued expenses	14,977	11,586
Total current liabilities	80,023	87,254
Long-term debt, less current portion	701,222	704,546
Pension and other long-term liabilities	11,626	12,428
Payable to Parent	26,785	24,911
Deferred income taxes, net	$ 53,838	$ 53,520
Commitments and contingencies (Note 10)
Deficit Equity
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at September 30, 2015 and December 31, 2014
Additional paid-in capital	$ 214,514	$ 214,514
Accumulated deficit	(272,051)	(254,418)
Accumulated other comprehensive loss	(8,330)	(9,062)
Total Universal Hospital Services, Inc. deficit	(65,867)	(48,966)
Noncontrolling interest	270	219
Total deficit	(65,597)	(48,747)	$ (29,909)	$ 23,020
Total liabilities and deficit	$ 807,897	$ 833,912

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Commitments and Contingencies (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Dec. 31, 2014 item
(Gain) on settlement	$ 5,718
Settlement amount	$ 7,500
FDA Action Regarding a Product
Number of products | item		1

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Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Comprehensive Loss
Loss on minimum pension liability, tax	$ 0	$ 0	$ 0	$ 0

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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Fair value measurements
Earn-out payments paid	$ 0	$ 20	$ 20	$ 60
Impairment charge on long-lived assets	600	$ 0	2,339	$ 2,025
Recurring basis
Fair value measurements
Contingent Consideration	622		622		$ 143
Recurring basis | Level 3
Fair value measurements
Contingent Consideration	622		622		$ 143
Reconciliation of the beginning and ending balance for the Level 3 measurement
Balance at the beginning of the period			143
Additions			500
Payments			(21)
Balance at the end of the period	$ 622		$ 622

XML

Consolidating Financial Statements

9 Months Ended

Sep. 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)

	September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Assets
Current assets:
Accounts receivable, less allowance for doubtful accounts	$	58,797	$	9,784	$	—	$	68,581
Due from affiliates		28,434		—		(28,434)		—
Inventories		4,343		3,754		—		8,097
Deferred income taxes, net		—		1,181		—		1,181
Other current assets		6,021		235		—		6,256
Total current assets		97,595		14,954		(28,434)		84,115
Property and equipment:
Medical equipment		544,058		43,672		—		587,730
Property and office equipment		75,830		8,797		—		84,627
Accumulated depreciation		(425,627)		(35,111)		—		(460,738)
Total property and equipment, net		194,261		17,358		—		211,619
Other long-term assets:
Goodwill		283,141		53,454		—		336,595
Investment in subsidiary		53,983		—		(53,983)		—
Other intangibles, net		150,594		14,688		—		165,282
Other, primarily deferred financing costs, net		10,209		77		—		10,286
Total assets	$	789,783	$	100,531	$	(82,417)	$	807,897
Liabilities and (Deficit) Equity
Current liabilities:
Current portion of long-term debt	$	4,059	$	1,049	$	—	$	5,108
Book overdrafts		4,147		2,304		—		6,451
Due to affiliates		—		28,434		(28,434)		—
Accounts payable		25,638		3,047		—		28,685
Accrued compensation		15,541		2,665		—		18,206
Accrued interest		6,568		—		—		6,568
Dividend payable		28		—		—		28
Other accrued expenses		14,367		610		—		14,977
Total current liabilities		70,348		38,109		(28,434)		80,023
Long-term debt, less current portion		697,788		3,434		—		701,222
Pension and other long-term liabilities		11,626		—		—		11,626
Payable to Parent		26,785		—		—		26,785
Deferred income taxes, net		49,092		4,746		—		53,838
Commitments and contingencies
(Deficit) Equity
Common stock		—		—		—		—
Additional paid-in capital		214,525		60,008		(60,019)		214,514
Accumulated deficit		(266,015)		(6,036)		—		(272,051)
Accumulated loss in subsidiary		(6,036)		—		6,036		—
Accumulated other comprehensive loss		(8,330)		—		—		(8,330)
Total Universal Hospital Services, Inc. (deficit) equity		(65,856)		53,972		(53,983)		(65,867)
Noncontrolling interest		—		270		—		270
Total (deficit) equity		(65,856)		54,242		(53,983)		(65,597)
Total liabilities and (deficit) equity	$	789,783	$	100,531	$	(82,417)	$	807,897

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 September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	68,985	$	—	$	—	$	68,985
Clinical engineering solutions		25,401		—		—		25,401
Surgical services		—		16,727		—		16,727
Total revenues		94,386		16,727		—		111,113
Cost of Revenue
Cost of medical equipment solutions		30,134		—		—		30,134
Cost of clinical engineering solutions		20,063		—		—		20,063
Cost of surgical services		—		8,780		—		8,780
Medical equipment depreciation		15,043		1,547		—		16,590
Total costs of revenues		65,240		10,327		—		75,567
Gross margin		29,146		6,400		—		35,546
Selling, general and administrative		25,956		4,677		—		30,633
Operating income		3,190		1,723		—		4,913
Equity in earnings of subsidiary		(442)		—		442		—
Interest expense		12,718		532		—		13,250
(Loss) income before income taxes and noncontrolling interest		(9,086)		1,191		(442)		(8,337)
(Benefit) provision for income taxes		(539)		749		—		210
Consolidated net (loss) income		(8,547)		442		(442)		(8,547)
Net income attributable to noncontrolling interest		—		121		—		121
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(8,547)	$	321	$	(442)	$	(8,668)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Three Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	67,861	$	—	$	—	$	67,861
Clinical engineering solutions		23,717		—		—		23,717
Surgical services		—		14,887		—		14,887
Total revenues		91,578		14,887		—		106,465
Cost of Revenue
Cost of medical equipment solutions		32,204		—		—		32,204
Cost of clinical engineering solutions		18,670		—		—		18,670
Cost of surgical services		—		7,982		—		7,982
Medical equipment depreciation		16,340		1,426		—		17,766
Total costs of revenues		67,214		9,408		—		76,622
Gross margin		24,364		5,479		—		29,843
Selling, general and administrative		21,467		5,072		—		26,539
Operating income		2,897		407		—		3,304
Equity in loss of subsidiary		111		—		(111)		—
Interest expense		12,726		538		—		13,264
Loss before income taxes and noncontrolling interest		(9,940)		(131)		111		(9,960)
Provision (benefit) for income taxes		245		(20)		—		225
Consolidated net loss		(10,185)		(111)		111		(10,185)
Net income attributable to noncontrolling interest		—		103		—		103
Net loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	214,154	$	—	$	—	$	214,154
Clinical engineering solutions		74,581		—		—		74,581
Surgical services		—		48,154		—		48,154
Total revenues		288,735		48,154		—		336,889
Cost of Revenue
Cost of medical equipment solutions		92,466		—		—		92,466
Cost of clinical engineering solutions		59,333		—		—		59,333
Cost of surgical services		—		25,681		—		25,681
Medical equipment depreciation		45,712		4,513		—		50,225
Total costs of revenues		197,511		30,194		—		227,705
Gross margin		91,224		17,960		—		109,184
Selling, general and administrative		77,975		13,850		—		91,825
(Gain) on settlement		(5,718)		—		—		(5,718)
Operating income		18,967		4,110		—		23,077
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Interest expense		38,244		1,566		—		39,810
(Loss) income before income taxes and noncontrolling interest		(18,076)		2,544		(1,201)		(16,733)
(Benefit) provision for income taxes		(784)		1,343		—		559
Consolidated net (loss) income		(17,292)		1,201		(1,201)		(17,292)
Net income attributable to noncontrolling interest		—		341		—		341
Net (loss) income attributable to Universal Hospital Services, Inc.	$	(17,292)	$	860	$	(1,201)	$	(17,633)

Universal Hospital Services, Inc.

Consolidating Statements of Operations

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Revenue
Medical equipment solutions	$	216,771	$	—	$	—	$	216,771
Clinical engineering solutions		68,505		—		—		68,505
Surgical services		—		43,890		—		43,890
Total revenues		285,276		43,890		—		329,166
Cost of Revenue
Cost of medical equipment solutions		97,919		—		—		97,919
Cost of clinical engineering solutions		54,454		—		—		54,454
Cost of surgical services		—		24,418		—		24,418
Medical equipment depreciation		51,843		4,153		—		55,996
Total costs of revenues		204,216		28,571		—		232,787
Gross margin		81,060		15,319		—		96,379
Selling, general and administrative		70,732		14,684		—		85,416
Restructuring, acquisition and integration expenses		1,820		—		—		1,820
Intangible asset impairment charge		34,900		—		—		34,900
Operating (loss) income		(26,392)		635		—		(25,757)
Equity in loss of subsidiary		312		—		(312)		—
Interest expense		38,322		1,600		—		39,922
Loss before income taxes and noncontrolling interest		(65,026)		(965)		312		(65,679)
Benefit for income taxes		(12,579)		(653)		—		(13,232)
Consolidated net loss		(52,447)		(312)		312		(52,447)
Net income attributable to noncontrolling interest		—		364		—		364
Net loss attributable to Universal Hospital Services, Inc.	$	(52,447)	$	(676)	$	312	$	(52,811)

Universal Hospital Services, Inc.

Consolidating Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended September 30, 2015								Nine Months Ended September 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	$	(8,547)	$	442	$	(442)	$	(8,547)	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Other comprehensive income:
Gain on minimum pension liability, net of tax		244		—		—		244		732		—		—		732
Total other comprehensive income		244		—		—		244		732		—		—		732
Comprehensive (loss) income		(8,303)		442		(442)		(8,303)		(16,560)		1,201		(1,201)		(16,560)
Comprehensive income attributable to noncontrolling interest		—		121		—		121		—		341		—		341
Comprehensive (loss) income attributable to Universal Hospital Services, Inc.	$	(8,303)	$	321	$	(442)	$	(8,424)	$	(16,560)	$	860	$	(1,201)	$	(16,901)

	Three Months Ended September 30, 2014								Nine Months Ended September 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	$	(10,185)	$	(111)	$	111	$	(10,185)	$	(52,447)	$	(312)	$	312	$	(52,447)
Total other comprehensive income		—		—		—		—		—		—		—		—
Comprehensive loss		(10,185)		(111)		111		(10,185)		(52,447)		(312)		312		(52,447)
Comprehensive income attributable to noncontrolling interest		—		103		—		103		—		364		—		364
Comprehensive loss attributable to Universal Hospital Services, Inc.	$	(10,185)	$	(214)	$	111	$	(10,288)	$	(52,447)	$	(676)	$	312	$	(52,811)

Universal Hospital Services, Inc.

Consolidating Statements of Cash Flows

(in thousands)

(unaudited)

	Nine Months Ended September 30, 2015
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net (loss) income	$	(17,292)	$	1,201	$	(1,201)	$	(17,292)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		51,931		5,482		—		57,413
Asset impairment charges		2,339		—		—		2,339
Amortization of intangibles, deferred financing costs and bond premium		7,146		2,518		—		9,664
Equity in earnings of subsidiary		(1,201)		—		1,201		—
Provision for doubtful accounts		145		63		—		208
Provision for inventory obsolescence		195		104		—		299
Non-cash share-based compensation expense		1,902		—		—		1,902
Gain on sales and disposals of equipment		(3,404)		(143)		—		(3,547)
Deferred income taxes		2,096		(1,399)		—		697
Changes in operating assets and liabilities:
Accounts receivable		(1,175)		(1,358)		—		(2,533)
Due from affiliates		267		—		(267)		—
Inventories		(269)		(136)		—		(405)
Other operating assets		471		71		—		542
Accounts payable		(238)		833		—		595
Other operating liabilities		(6,615)		(21)		—		(6,636)
Net cash provided by operating activities		36,298		7,215		(267)		43,246
Cash flows from investing activities:
Medical equipment purchases		(35,432)		(3,339)		—		(38,771)
Property and office equipment purchases		(3,132)		(16)		—		(3,148)
Proceeds from disposition of property and equipment		10,578		221		—		10,799
Acquisition		—		(2,600)		—		(2,600)
Net cash used in investing activities		(27,986)		(5,734)		—		(33,720)
Cash flows from financing activities:
Proceeds under senior secured credit facility		104,952		—		—		104,952
Payments under senior secured credit facility		(108,900)		—		—		(108,900)
Payments of principal under capital lease obligations		(4,946)		(810)		—		(5,756)
Distributions to noncontrolling interests		—		(360)		—		(360)
Contributions from new members to limited liability company		—		70		—		70
Dividend and equity distribution payments		(39)		—		—		(39)
Due to affiliates		—		(267)		267		—
Change in book overdrafts		621		(114)		—		507
Net cash used in financing activities		(8,312)		(1,481)		267		(9,526)
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)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary
	Issuer		Guarantor		Consolidating
	UHS		Surgical Services		Adjustments		Consolidated
Cash flows from operating activities:
Consolidated net loss	$	(52,447)	$	(312)	$	312	$	(52,447)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		59,139		4,981		—		64,120
Asset impairment charges		2,025		—		—		2,025
Intangible asset impairment charge		34,900		—		—		34,900
Amortization of intangibles, deferred financing costs and bond premium		7,877		2,482		—		10,359
Equity in loss of subsidiary		312		—		(312)		—
Provision for doubtful accounts		661		(3)		—		658
Provision for inventory obsolescence		(16)		(11)		—		(27)
Non-cash share-based compensation expense		626		175		—		801
Gain on sales and disposals of equipment		(1,776)		(15)		—		(1,791)
Deferred income taxes		(11,345)		(2,200)		—		(13,545)
Changes in operating assets and liabilities:
Accounts receivable		1,788		(121)		—		1,667
Due from (to) affiliates		(2,529)		2,529		—		—
Inventories		593		(846)		—		(253)
Other operating assets		(2,090)		(47)		—		(2,137)
Accounts payable		498		(277)		—		221
Other operating liabilities		(9,757)		483		—		(9,274)
Net cash provided by operating activities		28,459		6,818		—		35,277
Cash flows from investing activities:
Medical equipment purchases		(40,270)		(4,293)		—		(44,563)
Property and office equipment purchases		(3,420)		(190)		—		(3,610)
Proceeds from disposition of property and equipment		6,919		77		—		6,996
Purchases of noncontrolling interests		—		(46)		—		(46)
Net cash used in investing activities		(36,771)		(4,452)		—		(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility		123,400		—		—		123,400
Payments under senior secured credit facility		(107,200)		—		—		(107,200)
Payments of principal under capital lease obligations		(4,198)		(1,001)		—		(5,199)
Distributions to noncontrolling interests		—		(436)		—		(436)
Dividend and equity distribution payments		(73)		—		—		(73)
Change in book overdrafts		(3,617)		(929)		—		(4,546)
Net cash provided by (used in) financing activities		8,312		(2,366)		—		5,946
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	Sep. 30, 2015	Dec. 31, 2014	Feb. 12, 2013	Aug. 07, 2012
Fair Value of Other Financial Instruments
Unamortized bond premium	$ 9,853	$ 11,113
Original notes - 7.625%
Fair Value of Other Financial Instruments
Carrying Value	425,000	425,000
Fair Value	$ 395,250	$ 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	$ 229,853	$ 231,113
Fair Value	$ 204,600	$ 185,900
Interest rate (as a percent)	7.625%	7.625%	7.625%
Unamortized bond premium	$ 9,900	$ 11,100

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Concentration

9 Months Ended

Sep. 30, 2015

Concentration

Concentration

17.Concentration

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

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Consolidated net loss	$ (17,292)	$ (52,447)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	57,413	64,120
Asset impairment charges	2,339	2,025
Intangible asset impairment charge		34,900
Amortization of intangibles, deferred financing costs and bond premium	9,664	10,359
Provision for doubtful accounts	208	658
Provision for inventory obsolescence	299	(27)
Non-cash share-based compensation expense	1,902	801
Gain on sales and disposals of equipment	(3,547)	(1,791)
Deferred income taxes	697	(13,545)
Changes in operating assets and liabilities:
Accounts receivable	(2,533)	1,667
Inventories	(405)	(253)
Other operating assets	542	(2,137)
Accounts payable	595	221
Other operating liabilities	(6,636)	(9,274)
Net cash provided by operating activities	43,246	35,277
Cash flows from investing activities:
Medical equipment purchases	(38,771)	(44,563)
Property and office equipment purchases	(3,148)	(3,610)
Proceeds from disposition of property and equipment	10,799	6,996
Acquisition	(2,600)
Purchases of noncontrolling interests		(46)
Net cash used in investing activities	(33,720)	(41,223)
Cash flows from financing activities:
Proceeds under senior secured credit facility	104,952	123,400
Payments under senior secured credit facility	(108,900)	(107,200)
Payments of principal under capital lease obligations	(5,756)	(5,199)
Distributions to noncontrolling interests	(360)	(436)
Contributions from new members to limited liability companies	70
Dividend and equity distribution payments	(39)	(73)
Change in book overdrafts	507	(4,546)
Net cash (used in) provided by financing activities	(9,526)	5,946
Supplemental cash flow information:
Interest paid	51,432	51,528
Income taxes paid	728	318
Non-cash activities:
Medical equipment purchases included in accounts payable (at end of period)	10,906	10,973
Capital lease additions	$ 7,108	$ 1,038

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 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

9 Months Ended

Sep. 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 received $7.5 million in net cash during 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.  On March 4, 2015, the Defendants filed a motion to transfer the case to another venue.  On March 23, 2015, the Defendants filed a motion to dismiss the case.  On July 2, 2015, the Court denied the Defendants’ motion to transfer.  On October 15, 2015, the Court denied the Defendants motion to dismiss. 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	9 Months Ended
	Sep. 30, 2015	Nov. 09, 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	Sep. 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	Q3

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Related Party Transactions

9 Months Ended

Sep. 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 $0.2 and $0.3 million for the three month periods ended September 30, 2015 and 2014, respectively, and $0.7 and $0.7 million for the nine month periods ended September 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 and $0.1 million for the three month periods ended September 30, 2015 and 2014, respectively and $0.2 and $0.3 million during the nine month periods ended September 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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue
Medical equipment solutions	$ 68,985	$ 67,861	$ 214,154	$ 216,771
Clinical engineering solutions	25,401	23,717	74,581	68,505
Surgical services	16,727	14,887	48,154	43,890
Total revenues	111,113	106,465	336,889	329,166
Cost of Revenue
Cost of medical equipment solutions	30,134	32,204	92,466	97,919
Cost of clinical engineering solutions	20,063	18,670	59,333	54,454
Cost of surgical services	8,780	7,982	25,681	24,418
Medical equipment depreciation	16,590	17,766	50,225	55,996
Total costs of revenues	75,567	76,622	227,705	232,787
Gross margin	35,546	29,843	109,184	96,379
Selling, general and administrative	30,633	26,539	91,825	85,416
(Gain) on settlement			(5,718)
Restructuring, acquisition and integration expenses				1,820
Intangible asset impairment charge				34,900
Operating income (loss)	4,913	3,304	23,077	(25,757)
Interest expense	13,250	13,264	39,810	39,922
Loss before income taxes and noncontrolling interest	(8,337)	(9,960)	(16,733)	(65,679)
Provision (benefit) for income taxes	210	225	559	(13,232)
Consolidated net loss	(8,547)	(10,185)	(17,292)	(52,447)
Net income attributable to noncontrolling interest	121	103	341	364
Net loss attributable to Universal Hospital Services, Inc.	$ (8,668)	$ (10,288)	$ (17,633)	$ (52,811)

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2015

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

5.Goodwill and Other Intangible Assets

Our goodwill as of September 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 September 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

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

	September 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(87,499)	$	—	$	29,540	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(21,643)		—		4,357		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(663)		—		285		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(117,156)		—		34,182		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	$	(117,156)	$	(34,900)	$	165,282	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Total amortization expense related to intangible assets were $3.0 and $3.1 million for the three months ended September 30, 2015 and 2014, respectively and $9.1 and $9.7 million for the nine months ended September 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	$	2,928
2016		10,971
2017		7,679
2018		6,095
2019		3,529
2020		1,537

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Fair Value Measurements

9 Months Ended

Sep. 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 September 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 September 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	$	—	$	—	$	622	$	622	$	—	$	—	$	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 agreements. During the three months ended September 30, 2015 and 2014, we paid $0 and $0.02 million, respectively, in earn-outs.  During the nine months ended September 30, 2015 and 2014, we paid $0.02 and $0.06 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		(21)
Balance at September 30, 2015	$	622

We recorded $0.6 and $0 million during the three months ended September 30, 2015 and 2014, respectively and $2.3 and $2.0 million during the nine months ended September 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 September 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:

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	395,250	$	425,000	$	359,125
Add-on notes - 7.625% (1)		229,853		204,600		231,113		185,900

(1) The carrying value of the Add-on notes - 7.625% includes unamortized bond premium of $9.9 and $11.1 million as of September 30, 2015 and December 31, 2014, respectively.

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Restructuring

9 Months Ended

Sep. 30, 2015

Restructuring

Restructuring

16.Restructuring

We incurred restructuring expense of $0 and $1.8 million during the three months and nine months ended September 30, 2014, respectively, the majority of which related to severances and other related expenses. We incurred no restructuring expense during the three months and nine months ended September 30, 2015. As of December 31, 2014, we had $1.6 million of restructuring liability. For the nine months ended September 30, 2015,  $1.4 million in restructuring charges was paid. Noadditional restructuring was recorded in the first three quarters of 2015 for new severance arrangements and the remaining liability of $0.2 million as of September 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 nine months ended September 30, 2014, we incurred restructuring expense of $1.8million and $1.5 million in restructuring charges was paid and the remaining $0.6 was a liability as of September 30, 2014.

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Limited Liability Companies

9 Months Ended

Sep. 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 September 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 September 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

9 Months Ended

Sep. 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 September 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)

9 Months Ended

Sep. 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 nine month periods ended September 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		—		(17,633)		—		341		(17,292)
Other comprehensive income		—		—		732		—		732
Cash distributions to noncontrolling interests		—		—		—		(360)		(360)
Contributions from new members to limited liability company		—		—		—		70		70
Balance at September 30, 2015	$	214,514	$	(272,051)	$	(8,330)	$	270	$	(65,597)

					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		—		(52,811)		—		364		(52,447)
Cash distributions to noncontrolling interests		—		—		—		(436)		(436)
Purchases of noncontrolling interests		(11)		—		—		(35)		(46)
Balance at September 30, 2014	$	214,494	$	(240,712)	$	(3,884)	$	193	$	(29,909)

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Share-Based Compensation

9 Months Ended

Sep. 30, 2015

Stock-Based Compensation

Share-Based Compensation

7.Share-Based Compensation

During the nine months ended September 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	19,565		0.71
Exercised	—		—	$	—
Forfeited or expired	(20,172)		0.95
Outstanding at September 30, 2015	36,733	$	0.71	$	—	9.1
Exercisable at September 30, 2015	8,808	$	0.71	$	—	9.1
Remaining authorized options available for issue	6,953

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

		Nine Months Ended
		September 30, 2015
Risk-free interest rate		1.70	%
Expected volatility		27.0	%
Dividend yield		N/A
Expected option life (years)		5.23
Black-Scholes Value of options	$	0.20

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 September 30, 2015, unearned non-cash share-based compensation that we expect to recognize as expense over a weighted average period of 2.1 years totals approximately $6.7 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 and $0.6 million for the three and nine months ended September 30, 2015, respectively.

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

9 Months Ended

Sep. 30, 2015

Long-Term Debt

Long-Term Debt

9.Long-Term Debt

Long-term debt consists of the following:

	September 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		9,853		11,113
Senior secured credit facility		35,052		39,000
Capital lease obligations		16,425		15,073
		706,330		710,186
Less: Current portion of long-term debt		(5,108)		(5,640)
Total long-term debt	$	701,222	$	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 September 30, 2015, we had $129.7 million of availability under the senior secured credit facility based on a borrowing base of $168.7 million less borrowings of $35.1 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 September 30, 2015, we had $35.1 million of borrowings outstanding of which $23.0 million was accruing interest at a rate of 2.7090%,  $12.0 million was accruing interest at a rate of 2.7064% and $0.1 million was accruing interest at a rate of 4.75%.  

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

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

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

· incur additional indebtedness;

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

· issue redeemable stock or preferred stock;

· issue stock of subsidiaries;

· make certain investments;

· transfer or sell assets;

· create liens on our assets to secure debt;

· enter into transactions with affiliates; and

· merge or consolidate with another company.

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

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

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Acquisitions (Details) - USD ($) $ in Thousands	May. 18, 2015	Sep. 30, 2015	Dec. 31, 2014
Cost of acquired entity
Goodwill		$ 336,595	$ 335,577
Accrued compensation		(18,206)	(15,108)
UHS Holdco, Inc., (Parent)
Cost of acquired entity
Goodwill		283,141	283,141
Accrued compensation		$ (15,541)	$ (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	Sep. 30, 2015	Dec. 31, 2014	Sep. 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	$ 68,581	$ 66,256
Inventories	8,097	7,991
Deferred income taxes, net	1,181	1,273
Other current assets	6,256	7,671
Total current assets	84,115	83,191
Property and equipment:
Medical equipment	587,730	591,100
Property and office equipment	84,627	84,454
Accumulated depreciation	(460,738)	(445,481)
Total property and equipment, net	211,619	230,073
Other long-term assets:
Goodwill	336,595	335,577
Other intangibles, net	165,282	172,905
Other, primarily deferred financing costs, net	10,286	12,166
Total assets	807,897	833,912
Current liabilities:
Current portion of long-term debt	5,108	5,640
Book overdrafts	6,451	5,944
Accounts payable	28,685	30,114
Accrued compensation	18,206	15,108
Accrued interest	6,568	18,823
Dividend payable	28	39
Other accrued expenses	14,977	11,586
Total current liabilities	80,023	87,254
Long-term debt, less current portion	701,222	704,546
Pension and other long-term liabilities	11,626	12,428
Payable to Parent	26,785	24,911
Deferred income taxes, net	$ 53,838	$ 53,520
Commitments and contingencies
(Deficit) Equity
Common stock
Additional paid-in capital	$ 214,514	$ 214,514
Accumulated deficit	(272,051)	(254,418)
Accumulated other comprehensive loss	(8,330)	(9,062)
Total Universal Hospital Services, Inc. deficit	(65,867)	(48,966)
Noncontrolling interest	270	219
Total deficit	(65,597)	(48,747)	$ (29,909)	$ 23,020
Total liabilities and deficit	807,897	833,912
Consolidating Adjustments
Current assets:
Due from affiliates	(28,434)	(28,701)
Total current assets	(28,434)	(28,701)
Other long-term assets:
Investment in subsidiary	(53,983)	(53,123)
Total assets	(82,417)	(81,824)
Current liabilities:
Due to affiliates	(28,434)	(28,701)
Total current liabilities	(28,434)	(28,701)
(Deficit) Equity
Additional paid-in capital	(60,019)	(60,019)
Accumulated loss in subsidiary	6,036	6,896
Total Universal Hospital Services, Inc. deficit	(53,983)	(53,123)
Total deficit	(53,983)	(53,123)
Total liabilities and deficit	(82,417)	(81,824)
UHS Holdco, Inc., (Parent)
Current assets:
Accounts receivable, less allowance for doubtful accounts	58,797	57,767
Due from affiliates	28,434	28,701
Inventories	4,343	4,269
Other current assets	6,021	7,434
Total current assets	97,595	98,171
Property and equipment:
Medical equipment	544,058	551,098
Property and office equipment	75,830	77,234
Accumulated depreciation	(425,627)	(415,131)
Total property and equipment, net	194,261	213,201
Other long-term assets:
Goodwill	283,141	283,141
Investment in subsidiary	53,983	53,123
Other intangibles, net	150,594	157,174
Other, primarily deferred financing costs, net	10,209	12,020
Total assets	789,783	816,830
Current liabilities:
Current portion of long-term debt	4,059	4,935
Book overdrafts	4,147	3,526
Accounts payable	25,638	27,458
Accrued compensation	15,541	12,406
Accrued interest	6,568	18,823
Dividend payable	28	39
Other accrued expenses	14,367	11,505
Total current liabilities	70,348	78,692
Long-term debt, less current portion	697,788	702,471
Pension and other long-term liabilities	11,626	12,428
Payable to Parent	26,785	24,911
Deferred income taxes, net	49,092	47,283
(Deficit) Equity
Additional paid-in capital	214,525	214,525
Accumulated deficit	(266,015)	(247,522)
Accumulated loss in subsidiary	(6,036)	(6,896)
Accumulated other comprehensive loss	(8,330)	(9,062)
Total Universal Hospital Services, Inc. deficit	(65,856)	(48,955)
Total deficit	(65,856)	(48,955)
Total liabilities and deficit	789,783	816,830
Subsidiary Guarantor Surgical Services
Current assets:
Accounts receivable, less allowance for doubtful accounts	9,784	8,489
Inventories	3,754	3,722
Deferred income taxes, net	1,181	1,273
Other current assets	235	237
Total current assets	14,954	13,721
Property and equipment:
Medical equipment	43,672	40,002
Property and office equipment	8,797	7,220
Accumulated depreciation	(35,111)	(30,350)
Total property and equipment, net	17,358	16,872
Other long-term assets:
Goodwill	53,454	52,436
Other intangibles, net	14,688	15,731
Other, primarily deferred financing costs, net	77	146
Total assets	100,531	98,906
Current liabilities:
Current portion of long-term debt	1,049	705
Book overdrafts	2,304	2,418
Due to affiliates	28,434	28,701
Accounts payable	3,047	2,656
Accrued compensation	2,665	2,702
Other accrued expenses	610	81
Total current liabilities	38,109	37,263
Long-term debt, less current portion	3,434	2,075
Deferred income taxes, net	4,746	6,237
(Deficit) Equity
Additional paid-in capital	60,008	60,008
Accumulated deficit	(6,036)	(6,896)
Total Universal Hospital Services, Inc. deficit	53,972	53,112
Noncontrolling interest	270	219
Total deficit	54,242	53,331
Total liabilities and deficit	$ 100,531	$ 98,906

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Income Taxes

9 Months Ended

Sep. 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 nine months ended September 30, 2015 primarily relates to state minimum fees. The expected tax benefit from operating loss during the three and nine months ended September 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 September 30, 2015, the Company had available unused federal net operating loss carryforwards of approximately $210.7 million. The net operating loss carryforwards will expire at various dates from 2017 through 2035.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Measurements

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

	Fair Value at September 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	$	—	$	—	$	622	$	622	$	—	$	—	$	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		(21)
Balance at September 30, 2015	$	622

Schedule of fair value of debt instruments

	September 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Original notes - 7.625%	$	425,000	$	395,250	$	425,000	$	359,125
Add-on notes - 7.625% (1)		229,853		204,600		231,113		185,900

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Segment Information - Concentration (Details) - Revenue - Product concentration risk	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 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	62.10%	63.70%	63.60%	65.90%
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	59.40%	59.80%	60.60%	61.10%
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	2.70%	3.90%	3.00%	4.80%
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	22.90%	22.30%	22.10%	20.80%
Surgical Services
Details on the percentage of revenue for each group of similar products sold or services provided in segments
Percentage of revenue	15.00%	14.00%	14.30%	13.30%
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	14.70%	13.80%	14.10%	13.10%
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	0.30%	0.20%	0.20%	0.20%

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Stock-Based Compensation - Assumption (Details) - UHS Holdco, Inc., (Parent) - Options	9 Months Ended
	Sep. 30, 2015 $ / shares
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)	27.00%
Expected option life	5 years 2 months 23 days
Black-Scholes Value of options (in dollars per share)	$ 0.20

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Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Consolidated Statements of Comprehensive Loss
Consolidated net loss	$ (8,547)	$ (17,292)
Other comprehensive income:
Gain on minimum pension liability, net of tax of $0	244	732
Total other comprehensive income	244	732
Comprehensive loss	(8,303)	(16,560)
Comprehensive income attributable to noncontrolling interest	121	341
Comprehensive loss attributable to Universal Hospital Services, Inc.	$ (8,424)	$ (16,901)

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Acquisitions

9 Months Ended

Sep. 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)

9 Months Ended

Sep. 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 September 30, 2015	$	227,486	$	55,655	$	53,454	$	336,595

Schedule of other intangible assets

	September 30, 2015								December 31, 2014
			Accumulated								Accumulated
(in thousands)	Cost		Amortization		Impairment		Net		Cost		Amortization		Impairment		Net
Finite-life intangibles
Customer relationship	$	117,039	$	(87,499)	$	—	$	29,540	$	115,731	$	(80,704)	$	—	$	35,027
Supply agreement		26,000		(21,643)		—		4,357		26,000		(19,464)		—		6,536
Technology databases		7,217		(7,217)		—		—		7,217		(7,217)		—		—
Non-compete agreements		948		(663)		—		285		780		(538)		—		242
Favorable lease agreements		134		(134)		—		—		134		(134)		—		—
Total finite-life intangibles		151,338		(117,156)		—		34,182		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	$	(117,156)	$	(34,900)	$	165,282	$	315,862	$	(108,057)	$	(34,900)	$	172,905

Schedule of estimated future amortization expense for identifiable intangible assets

(in thousands)
Remainder of 2015	$	2,928
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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 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	(117,156)		(117,156)		(108,057)
Total	34,182		34,182		41,805
Accumulated Impairment	(34,900)		(34,900)		(34,900)
Cost	317,338		317,338		315,862
Net	165,282		165,282		172,905
Total amortization expense	3,000	$ 3,100	9,100	$ 9,700
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	(87,499)		(87,499)		(80,704)
Total	29,540		29,540		35,027
Supply agreement
Other intangible assets
Cost	26,000		26,000		26,000
Accumulated Amortization	(21,643)		(21,643)		(19,464)
Total	4,357		4,357		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	(663)		(663)		(538)
Total	285		285		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
Acquisitions
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

9 Months Ended

Sep. 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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	68,985	$	67,861	$	214,154	$	216,771
Cost of revenue		30,134		32,204		92,466		97,919
Medical equipment depreciation		15,043		16,340		45,712		51,843
Gross margin	$	23,808	$	19,317	$	75,976	$	67,009

Clinical Engineering Solutions

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	25,401	$	23,717	$	74,581	$	68,505
Cost of revenue		20,063		18,670		59,333		54,454
Gross margin	$	5,338	$	5,047	$	15,248	$	14,051

Surgical Services

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues	$	16,727	$	14,887	$	48,154	$	43,890
Cost of revenue		8,780		7,982		25,681		24,418
Medical equipment depreciation		1,547		1,426		4,513		4,153
Gross margin	$	6,400	$	5,479	$	17,960	$	15,319

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

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Total gross margin	$	35,546	$	29,843	$	109,184	$	96,379
Selling, general and administrative		30,633		26,539		91,825		85,416
(Gain) on settlement		—		—		(5,718)		—
Restructuring, acquisition and integration expenses		—		—		—		1,820
Intangible asset impairment charge		—		—		—		34,900
Interest expense		13,250		13,264		39,810		39,922
Loss before income taxes and noncontrolling interest	$	(8,337)	$	(9,960)	$	(16,733)	$	(65,679)

Total Assets by Reporting Segment

(in thousands)

	September 30,		December 31,
	2015		2014
Medical Equipment Solutions	$	597,426	$	624,444
Clinical Engineering Solutions		109,940		110,562
Surgical Services		100,531		98,906
Total Company Assets	$	807,897	$	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				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
MES
Equipment usage solutions	59.4	%	59.8	%	60.6	%	61.1	%
Equipment/disposable sales	2.7		3.9		3.0		4.8
	62.1		63.7		63.6		65.9
CES
Service solutions	22.9		22.3		22.1		20.8
SS
Equipment usage solutions	14.7		13.8		14.1		13.1
Equipment/disposable sales	0.3		0.2		0.2		0.2
	15.0		14.0		14.3		13.3
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%