UPMC reports jump in earnings

The University of Pittsburgh Medical Center today reported $130 million in operating income for the first six months of the 2010 fiscal year ending Dec. 31, a 13 percent increase from the same period a year earlier.

Chief Financial Officer Robert DeMichiei described the showing as "very solid and strong" in a press briefing Thursday at UPMC offices in the U.S. Steel Tower.

At the current rate, the region's largest employer remains on track to achieve $600 million for the year in cash flow income, or earnings before interest, depreciation and amortization.

Operating revenue exceeded $4 billion, an increase of $216 million from year-ago results.

The number of patients admitted or brought in for observation has been stable at about 110,000 for the six-month period. Both outpatient revenue and physician service revenue grew slightly, but declining reimbursements remain a concern, Mr. DeMichiei said.

Treasurer Talbot Heppenstall said UPMC's investment reserve portfolio, which is not used for day-to-day operations, had an 11.8 percent return the first six months of the fiscal year and is now valued at $3 billion. He added that UPMC's pension fund remains fully funded.

If a proposal to demolish UPMC Braddock comes to fruition, Mr. DeMichiei said the health system is prepared to honor a pledge to cover the estimated $5 million for the demolition, plus another $3 million as well as reimburse the county for consultants' work. Closing UPMC Braddock, he said, is a long-term decision by the health system looking out 10 or even 20 years from now.

"When you look at it in that context, you're literally looking at hundreds of millions of dollars" in savings, he said. "These are tough decisions but that's what we have to do to maintain a viable system."

An estimated 80 percent of UPMC Braddock's 537 full- and part-time employees have been moved to other positions within UPMC, according to spokesman Paul Wood.

Meanwhile, he said UPMC McKeesport's financial picture has improved, in part to increased patient traffic as UPMC Braddock was shutting down. But he said there is still a need for the planned new facility in Monroeville because of overcrowding at UPMC Shadyside, where 40 percent of its patients reside in eastern suburbs. "The strategy for Monroeville is that it decongests Shadyside."

-- Steve Twedt

Shares of the Pittsburgh titanium producer fell 19 percent Thursday after RTI reported a $57.3 million fourth-quarter loss and warned that problems with Airbus and possible delays with Boeing's 787 Dreamliner will continue to plague its performance this year. The quarterly loss of $1.91 per diluted share came on sales of $97.3 million, down 35 percent from the year-ago quarter. For all of 2009, RTI lost $67.2 million, or $2.67 per diluted share, vs. 2008 earnings of $55.7 million, or $2.41 per diluted share. Sales fell 33 percent to $408 million. RTI closed at $21.36, down $4.88.

The metals company reported a fourth quarter profit of $3.9 million, or 38 cents per diluted share, as sales fell 25 percent to $66.5 million. That compares with a loss of $21.2 million, or $2.08 per diluted share, in the year-ago quarter, when the company took an aftertax asbestos-related charge of $31 million. For all of last year, the company earned $27.7 million or $2.71 per diluted share vs. 2008 profits of $12.6 million, or $1.24 per diluted share.

The drugmaker reported higher fourth-quarter net income, helped by strong flu vaccine sales. The company also said it would cut jobs and halt research into drugs for depression and pain and begin making treatments for rare diseases in an effort to squeeze more products out of its laboratories. In the three months ended Dec. 31, Glaxo posted a net profit of $2.6 billion, a 66 percent increase over the results from the same quarter a year earlier. The strong finish pushed full-year profits up 20 percent over 2008 totals.

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