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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2005

For the transition period from                     

Commission file number: 000-20086

UNIVERSAL HOSPITAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

7700 France Avenue South, Suite 275

Edina, Minnesota 55435-5228

(Address of principal executive offices)

(Zip Code)

952-893-3200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of shares of common stock outstanding as of May 6, 2005:  123,436,024.21

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements - Unaudited

Universal Hospital Services, Inc.

Statements of Operations

(dollars in thousands)

(unaudited)

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

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Universal Hospital Services, Inc.

Balance Sheets

(dollars in thousands, except share and per share information)

(unaudited)

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

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Universal Hospital Services, Inc.

Statements of Cash Flows

(dollars in thousands)

(unaudited)

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

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Universal Hospital Services, Inc.

NOTES TO UNAUDITED QUARTERLY FINANCIAL STATEMENTS

1. Basis of Presentation:

The interim financial statements included in this Form 10-Q have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed, or omitted, pursuant to such rules and regulations. These condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The interim financial statements presented herein as of March 31, 2005, and for the three months ended March 31, 2005, and 2004, reflect, in the opinion of management, all adjustments necessary for a fair presentation of 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.

The December 31, 2004, balance sheet amounts were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America.

2. Recent Accounting Pronouncements:

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 153, “Exchanges of Nonmonetary Assets – An Amendment of APB Opinion No. 29.” This statement amends APB Opinion No. 29 and is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement, effective July 1, 2005, will not have a material effect on the Company’s financial condition or results of operations.

On December 16, 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which is a revision of SFAS No.123 and supersedes APB Opinion No. 25. SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant, and to be expensed over the applicable vesting period. Pro forma disclosure of the income statement effects of share-based payments is no longer an alternative. SFAS No. 123(R) is effective for private entities as defined on or after January 1, 2006. In addition, companies must also

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recognize compensation expense related to any awards that are not fully vested as of the effective date. Compensation expense for the unvested awards will be measured based on the fair value of the awards previously calculated in developing the pro forma disclosures in accordance with the provisions of SFAS No. 123. The Company is currently assessing the impact of adopting SFAS No. 123(R) to its results of operations.

3. Stock Based Compensation

We measure compensation expense for our stock-based compensation plan using the intrinsic value method. Accordingly, compensation cost for stock options granted to employees is measured as the excess, if any, of the value of our stock at the date of the grant over the amount an employee must pay to acquire the stock. Had compensation cost for our stock option plans been determined based on the fair value at the grant date for awards, our net income would have changed to the pro forma amounts indicated below (dollars in thousands):

4. Long-Term Debt

Long-term debt consists of the following:

The 10.125% Senior Notes (“Senior Notes”) mature on November 1, 2011. Interest on the Senior Notes accrues at the rate of 10.125% per annum and is payable semiannually on each May 1 and November 1. The Senior Notes are redeemable, at the Company’s option, in whole or in part, on or after November 1, 2007, at specified redemption prices plus accrued interest to the date of redemption. At any time upon an equity offering, as defined in the agreement, the Company can redeem up to 35% of the Senior Notes,

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at a purchase price equal to 110.125% of the principal amount plus accrued interest to the dates of purchase. In addition, the Senior Notes have a change of control provision which gives each holder the right to require the Company to purchase all or a portion of such holders’ Senior Notes upon a change in control, as defined in the agreement, at a purchase price equal to 101% of the principal amount plus accrued interest to the date of purchase. The Senior Notes have covenants that restrict the incurrence of additional debt, the payment of dividends and the issuance of preferred stock. The Senior Notes are uncollateralized.

The Company has entered into a Revolving Credit Facility which consists of borrowings up to $100,000,000, as defined in the agreement, and terminates on October 17, 2008. Under terms of the agreement, $5,000,000 of the facility is available for letters of credit. Availability under our senior secured credit facility as of March 31, 2005, was approximately $52,227,000, representing our borrowing base of approximately $91,449,000 million less borrowings of $37,480,000 million and outstanding letters of credit of $1,742,000 at that date. Borrowings under the Revolving Credit Facility are collateralized by substantially all the assets of the Company.

Interest on amounts outstanding under the Revolving Credit Facility are payable at a rate per annum, selected at the Company’s option, equal to the Banks’ Base Rate plus a margin of 1.75% or the adjusted Eurodollar Rate plus a margin of 3.00%. The margins used to calculate such interest rates may be adjusted depending upon certain leverage ratios. At March 31, 2005, borrowings of approximately $3,480,000 were outstanding under the Base Rate method (7.25%) and borrowings of $34,000,000 were outstanding under the Eurodollar Rate method (5.75%). Interest on borrowings are paid quarterly or as defined in the agreement. In addition, the Credit Agreement also provides that a commitment fee of 0.75% per annum is payable on the unutilized amount of the Revolving Credit Facility.

The Revolving Credit Facility contains certain covenants including restrictions and limitations on dividends, capital expenditures, liens, leases, incurrence or guarantees of debt, transactions with affiliates, investments or loans, and on mergers, acquisitions, consolidations and asset sales. Furthermore, the Company is required to maintain compliance with certain financial covenants including a maximum total leverage ratio, a minimum interest coverage ratio and maximum capital expenditures. The Credit Agreement also prohibits the Company from prepaying the Senior Notes.

5. Acquisitions

On March 24, 2004, we completed the acquisition of Affiliated Clinical Engineering Services, Inc. (ACES), located in Boston, Massachusetts. The purchase price was approximately $4.2 million. We financed this purchase from borrowings under our revolving credit facility.

On April 15, 2004, we completed the acquisition of certain assets from Galaxy Medical Products, Inc., headquartered in Akron, Ohio. The purchase price was approximately $4.9 million. We financed this purchase from borrowings under our revolving credit facility.

On May 4, 2004, we completed the acquisition of substantially all of the assets of Advanced Therapeutics of Wisconsin, Inc., headquartered in Milwaukee, Wisconsin. The purchase price was approximately $5.1 million. We financed this purchase from borrowings under our revolving credit facility.

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On August 31, 2004, we completed the acquisition of certain assets of Cardinal Health 200, Inc., headquartered in Naperville, Illinois. The purchase price was approximately $0.9 million. We financed this purchase from borrowings under our revolving credit facility.

The operations of the above acquired companies have been included in the Company’s results of operations since the date of the respective acquisitions.

The following summarizes pro forma results of operations, assuming the acquisitions noted above occurred at January 1, 2004.

6. Segment Reporting

Our operating segments consist of Medical Equipment Outsourcing, Technical and Professional Services, and Medical Equipment Sales & Remarketing. Certain operating information on our segments is as follows:

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7. Pension Plan

The components of net periodic pension costs are as follows:

Future benefit accruals for all participants were frozen as of December 31, 2002.

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

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

BUSINESS OVERVIEW

Our Company

Universal Hospital Services, Inc. (“we”, “our” or “UHS”) is a leading, nationwide provider of medical equipment outsourcing and services to the health care industry. Our customers include national, regional and local acute care hospitals, alternate site providers (such as nursing homes and home care providers) and medical equipment manufacturers. Our diverse customer base includes more than 3,100 acute care hospitals and approximately 3,150 alternate site providers. We also have extensive and long-standing relationships with over 200 major medical equipment manufacturers and many of the nation’s largest group purchasing organizations (GPOs) and integrated delivery networks (IDNs). All of our services leverage our nationwide network of district offices and technical service locations (most of which are co-located with the district offices) and our more than 65 years of experience managing and servicing all aspects of movable medical equipment. These services are paid for by our customers and not directly through reimbursement from governmental or other third-party payors.

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

Medical Equipment Outsourcing Segment- Manage & Utilize

Our flagship business is our Medical Equipment Outsourcing Segment which accounted for $43.2 million, or approximately 78.1%, of our revenues for the three months ended March 31, 2005. We own approximately 151,000 pieces of movable medical equipment, primarily in the categories of respiratory therapy, newborn care, critical care, patient monitors, and bariatric and pressure area management. In our outsourcing programs we provide our customers with the use of movable medical equipment, and we maintain the equipment for our customers by performing preventative maintenance, repairs, cleaning and testing, and maintaining certain reporting records. We also provide prompt replacement of any defective equipment and the flexibility to upgrade their equipment as technology changes. We have three primary outsourcing programs: Supplemental (Peak Needs) Outsourcing; Long Term Outsourcing; and the Asset Management Partnership Program (“AMPP”).

We have contracts in place with many of the leading national Group Purchasing Organizations (GPOs) for both the acute care and alternate site markets. We also have agreements with national alternate site providers. We expect much of our future growth in this segment to be driven by our customers outsourcing more of their movable medical equipment needs and taking full advantage of our Long Term Outsourcing and resident-based AMPP programs.

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

The Technical and Professional Services segment accounted for $7.5 million, or approximately 13.6%, of our revenues for the three months ended March 31, 2005. We leverage our 65 plus years of experience and our extensive equipment database in repairing and maintaining medical equipment. We offer a broad range of inspection, preventative maintenance, repair, logistic and consulting services through our team of over 250 technicians and professionals located in our nationwide network of district offices and service centers. Our technical and professional service offerings are less capital intensive

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than our Medical Equipment Outsourcing segment, and provide a complementary alternative for customers that wish to own their medical equipment, or lack the expertise, funding or scale to perform maintenance, repair and analytical functions.

While our contracts with GPOs once were solely to provide medical equipment outsourcing services, we have expanded some of our agreements with these organizations to include Technical and Professional Services. We believe this trend will continue as GPOs look to provide their members with services covering the entire medical equipment lifecycle.

Medical Equipment Sales and Remarketing Segment- Redeploy & Remarket

This segment accounted for $4.6 million, or approximately 8.3%, of our revenues for the three months ended March 31, 2005. This segment includes three business activities:

Medical Equipment Remarketing and Disposal.We are one of the nation’s largest buyers and sellers of movable medical equipment, primarily for our own account. Our remarketing and asset disposal programs represent some of our best opportunities for growth in this segment, given our expertise, knowledge, and relationships in this area.

Specialty Medical Equipment Sales and Distribution.We use our national infrastructure to provide sales and distribution to manufacturers of specialty medical equipment. We currently sell product lines in the following areas: patient monitors, rehabilitation products, patient transfer systems, infant security systems and respiratory therapy.

Disposables Sales. We offer our customers single use disposable items. Most of these items are used in connection with our outsourced equipment. We have begun an initiative to limit the number of items we carry, and to more closely tie the items we do carry to our high volume moveable medical equipment provided in our Medical Equipment Outsourcing segment.

RESULTS OF OPERATIONS

The following discussion addresses our financial condition as of March 31, 2005, and the results of operations and cash flows for the three months ended March 31, 2005, and 2004. This discussion should be read in conjunction with the financial statements included elsewhere in this report and the Management’s Discussion and Analysis and Financial sections included in our 2004 Annual Report on Form 10-K filed with the Securities Exchange Commission.

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The following table provides a summary of selected financial data as a percentage of total revenues and also indicates the percentage increase or decrease of this information over the prior comparable period:

Medical Equipment Outsourcing Segment – Manage & Utilize

Medical equipment outsourcing revenues for the three months ended March 31, 2005, were $43.2 million, representing a $3.3 million, or 8.3%, increase from medical equipment outsourcing revenues of $39.9 million for the same period of 2004. The outsourcing revenue growth resulted from competitive take-aways, re-entry into the bariatrics market (patient handling equipment for obese patients) in the second quarter of 2004, growth in our acute care customer base, increased penetration of existing customers, new technology in our fleet attracting incremental business, and the effect of the acquisitions of substantially all assets of Advanced Therapeutics of Wisconsin, Inc., and certain assets of Galaxy Medical Products, Inc. in the second quarter of 2004.

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

Technical and professional service revenues for the three months ended March 31, 2005, were $7.5 million, representing a $2.8 million, or 58.7%, increase from technical and professional service revenues of $4.7 million for the same period of 2004. The increase in service revenue is due to strong growth in provider and manufacturer services, as well as the acquisitions of ACES late in the first quarter of 2004, and certain assets of Cardinal Health 200, Inc. in the third quarter of 2004.

Medical Equipment Sales and Remarketing Segment – Redeploy & Remarket

Medical equipment sales and remarketing revenues for the three months ended March 31, 2005, were $4.6 million, representing a $0.2 million, or 4.8%, increase from medical equipment sales and remarketing revenues of $4.4 million for the same period of 2004. The increase is due to growth in sales

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of new and used equipment of $0.5 million partially offset by reduced disposable product sales of $0.3 million. We expect these trends to continue as we execute on our strategy to grow new and used equipment sales and continue to rationalize disposables activity.

Cost of Medical Equipment Outsourcing

Total cost of Medical Equipment Outsourcing for the three months ended March 31, 2005, were $13.2 million, representing a $1.6 million, or 13.7%, increase from total cost of medical equipment outsourcing of $11.6 million for the same period of 2004. This change was driven by higher expenses to support robust business activity including increases in payroll costs of $0.6 million, fleet expenses of $0.6 million, freight expense of $0.3 million, and occupancy costs of $0.2 million. These costs represented 30.7% and 29.2% of segment revenues for the three month periods ended March 31, 2005, and 2004, respectively.

Cost of Technical and Professional Services

Total cost of Technical and Professional Services for the three months ended March 31, 2005, were $5.4 million, representing a $2.2 million, or 69.3%, increase from total cost of technical and professional services of $3.2 million for the same period of 2004. The increase was the result of increased business activity across all product lines, including increased manufacturer, provider, and resident-based services as well as the effect of the acquisitions of Affiliated Clinical Engineering Services, Inc., late in the first quarter of 2004, and certain assets of Cardinal Health 200, Inc. in third quarter of 2004. These costs represented 72.7% and 68.1% of segment revenues for the three month periods ended March 31, 2005, and 2004, respectively.

Cost of Medical Equipment Sales and Remarketing

Total cost of Medical Equipment Sales and Remarketing for the three months ended March 31, 2005, were $3.6 million, representing a $0.3 million, or 8.5%, increase from total cost of medical equipment sales and remarketing of $3.4 million for the same period of 2004. This increase was driven by increased cost of sold equipment of $0.6 million, partially offset by lower cost of disposable sales of $0.3 million. These costs represented 79.1% and 76.4% of segment revenues for the three month periods ended March 31, 2005, and 2004, respectively.

Movable Medical Equipment Depreciation

Movable Medical Equipment Depreciation for the three months ended March 31, 2005, totaled $9.3 million, representing a $0.6 million, or 7.3%, increase from movable medical equipment depreciation of $8.6 million for the same period of 2004. Increased depreciation reflects net equipment additions of $2.0 million for the for the twelve month period of April 1, 2004 through March 31, 2005. Net equipment additions reflect acquisitions and equipment purchases, less depreciation expense and equipment disposals.

Gross Margin

Total gross margin for the three months ended March 31, 2005, was $23.7 million, representing a $1.5 million, or 6.9%, increase from total gross margin of $22.1 million for the same period of 2004. For the

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three months ended March 31, 2005, total gross margin as a percentage of revenue decreased to 42.8% from 45.2% for the same period of 2004. Gross margin percentage declined as a result of higher costs to support the growth in technical and professional services as well as the shift in our revenue mix toward lower margin, non-capital intensive revenue sources.

Gross margin on medical equipment outsourcing for the three months ended March 31, 2005, totaled $20.7 million, representing a $1.1 million, or 5.4%, increase from medical equipment outsourcing gross margin of $19.6 million for the same period of 2004. Gross margin as a percentage of segment revenue for the three months ended March 31, 2005, decreased to 47.9% from 49.2% for the same period of 2004. This percentage decrease is primarily due to increased customer service payroll costs associated with the separation of our customer service and sales organizations as well as higher freight expenses to support robust business activity.

Gross margin on technical and professional services for the three months ended March 31, 2005, totaled $2.0 million, representing a $0.5 million, or 36.1%, increase from technical and professional service gross margin of $1.5 million for the same period of 2004. Gross margin as a percentage of segment revenues decreased to 27.3% from 31.9% for the same period of 2004. This percentage decrease is primarily due to the effect of the acquisition of the lower margin ACES business late in the first quarter of 2004.

Gross margin on medical equipment sales and remarketing for the three months ended March 31, 2005, totaled $1.0 million, representing a slight decrease from medical equipment sales and remarketing gross margin of $1.0 million for the same period of 2004. Gross margin as a percentage of segment revenues decreased to 20.9% from 23.2% for the same period of 2004. This decrease was driven by a significant, lower margin sales transaction that occurred in the first quarter of 2005.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2005, were $14.9 million, representing a $1.8 million, or 13.5% increase from selling, general and administrative expenses of $13.1 million for the same period of 2004. The increase was primarily due to increased costs to enhance our corporate and technology infrastructure of $0.6 million, additional amortization of intangible assets of $0.4 million, increased sales and support function costs of $0.4 million, and $0.3 million of expenses related to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Selling, general and administrative expenses as a percentage of total revenue for the three months ended March 31, 2005, increased slightly to 26.9% from 26.7% for the same period of 2004.

During the remaining part of 2005, we anticipate that we will incur additional expenses related to the requirements under Section 404 of the Sarbanes-Oxley Act of 2002. We also expect to continue to spend to build appropriate infrastructure to complete our transition to a lifecycle services company.

Interest Expense

Interest expense for the three months ended March 31, 2005, was $7.6 million, representing a $0.2 million, or 2.7%, increase from interest expense of $7.4 million for the same period of 2004. This increase primarily reflects an increase in borrowings under our senior secured credit facility. Average

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borrowings increased for the three months ended March 31, 2005 to $296.5 million from $275.2 million for the same period of 2004. Borrowings increased to fund acquisitions and other working capital needs primarily in the last nine months of 2004.

Income Taxes

Tax expense for the three months ended March 31, 2005, was $0.2 million representing a slight decrease from income tax expense of $0.2 million for the same period of 2004. Income tax expense relates primarily to valuation allowances established for net operating losses not recognized as well as minimum state taxes.

Net Income

Net income for the three months ended March 31, 2005, of $1.0 million, representing a $0.4 million, or 28.5%, decrease from net income of $1.4 million for the same period of 2004. The decrease is primarily due to increased selling, general and administrative expenses of $1.7 million and slightly higher interest expense of $0.2 million, partially offset by increased gross margin of $1.5 million.

Quarterly Financial Information: Seasonality

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

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are expected to be cash flows from operating activities and borrowings under our five year senior secured credit facility that we entered into on October 17, 2003. It is anticipated that our principal uses of liquidity will be to fund capital expenditures related to purchases of movable medical equipment, provide working capital, meet debt service requirements and finance our strategic plans.

We require substantial cash to operate our Medical Equipment Outsourcing programs and service our debt. Our outsourcing programs require us to invest a significant amount of cash in movable 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.

Net cash provided by operating activities during the three months ended March 31, 2005, was $17.3 million, compared to $18.0 million in the same period of 2004. This decrease is primarily attributable to

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lower net income and an increase in accounts receivable, partially offset by higher depreciation and amortization as well as reduced inventory and other operating assets and increased accounts payable and other accrued expenses. Net cash used in investing activities during the three months ended March 31, 2005, was $10.0 million, compared to $22.8 million in the same period of 2004. This decrease was primarily attributable to a timing difference related to capital expenditures placed in service in 2003 and paid for in 2004 as well as the acquisition of ACES, in the same period of 2004. Net cash (used in) provided by financing activities during the three months ended March 31, 2005, was ($4.3) million, compared to $4.8 million in the same period in 2004. This change was primarily attributable to higher payments under our senior secured credit facility and a decrease in book overdraft.

Based on the level of operating performance expected in 2005, we believe our cash from operations, together with expected additional borrowings under our senior secured credit facility in 2005, will meet our liquidity needs during 2005, exclusive of any borrowings that we may make to finance potential acquisitions. Availability under our senior secured credit facility as of March 31, 2005, was approximately $52.2 million, representing our borrowing base of $91.4 million, net of outstanding letters of credit of $1.7 million and borrowings of $37.5 million at that date. At our expected level of borrowing for 2005, the current availability under our senior secured credit facility would be sufficient to meet our liquidity needs for the next four years, exclusive of any expenditures made for acquisitions. Our levels of borrowing are further restricted by the financial covenants set forth in our senior secured credit facility and the indenture governing the notes, which covenants are described in our Annual Report on Form 10-K/A for the year ended December 31, 2003. These covenants would restrict our additional borrowings to approximately $35 million (assuming no incremental EBITDA generation), which we believe meets our liquidity needs in 2005.

EBITDA

EBITDA (earnings before interest, taxes, depreciation, and amortization) for the three months ended March 31, 2005, was $19.5 million, representing a $1.1 million, or 5.9% increase from $18.4 million for the same period of 2004. This increase is primarily driven by revenue growth, generating increased gross margin of $0.8 million.

EBITDA is not intended to represent an alternative to operating income or cash flows from operating, financing or investing activities (as determined in accordance with generally accepted accounting principles (GAAP)) as a measure of performance, and is not representative of funds available for discretionary use due to UHS’ financing obligations. EBITDA, as defined by UHS, may not be calculated consistently among other companies applying similar reporting measures. EBITDA is included because it is a widely accepted financial indicator used by certain investors and financial analysts to assess and compare companies and a version of EBITDA is an integral part of the UHS’ debt covenant calculations. Management believes that EBITDA provides an important perspective on UHS’ ability to service its long-term obligations, UHS’ ability to fund continuing growth, and UHS’ ability to continue as a going concern. A reconciliation of net cash provided by operating activities to EBITDA is included below.

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The following is a reconciliation of net cash provided by operating activities to EBITDA (dollars in thousands):

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: We believe statements in this quarterly report 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: UHS’ history of net losses and substantial interest expense; UHS’ need for substantial cash to operate and expand its business as planned; UHS’ substantial outstanding debt and debt service obligations; restrictions imposed by the terms of UHS’ debt; a decrease in the number of patients our customers are serving; UHS’ability to effect change in the manner in which healthcare providers traditionally procure medical equipment; the absence of long-term commitments with customers; UHS’ ability to renew contracts with group purchasing organizations and integrated delivery networks; changes in reimbursement rates and policies by third-party payors; the impact of health care reform initiatives; the impact of significant regulation of the health care industry and the need to comply with those regulations; difficulties or delays in our continued expansion into certain of our businesses/geographic

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markets and developments of new businesses/geographic markets; and additional credit risks in increasing business with home care providers and nursing homes. These and other risk factors are detailed in UHS’ Annual Report on Form 10-K for the year ended December 31, 2004, filed with Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary exposure to market risk is interest rate risk associated with our debt instruments. We use both fixed and variable rate debt as sources of financing. At March 31, 2005, we had approximately $297,733,000 of total debt outstanding, net of unamortized discount, of which $37,480,000 was bearing interest at variable rates approximating 5.7%. A 1 percentage point change in interest rates on variable rate debt would have resulted in interest expense fluctuating approximately $91,400 and $82,900 for the first three months of 2005 and 2004, respectively. We have not entered into, and do not plan to enter into, any derivative financial instruments for trading or speculative purposes. Historically, we have not engaged in hedging activities. As of March 31, 2005, we had no other significant 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 the design and operation of our disclosure controls and procedures (as defined in Rule 15(d)-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

(b). Changes in internal control over financial reporting.

During the first quarter of 2005, there has been no change in our internal control over financial reporting (as defined in Rule 15(d)-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

Not applicable.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

In the three months ended March 31, 2005, pursuant to the exercise of outstanding options, on the following dates we sold common stock to three departing employees for the aggregate purchase price of $5,411.25:

All such sales were completed pursuant to the exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended. The proceeds from the sales of such shares were added to our general funds and used for general corporate purposes.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibits:

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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: May 13, 2005

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Universal Hospital Services, Inc.

EXHIBIT INDEX TO REPORT ON FORM 10-Q

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