Health Management Associates, Inc. Announces 40% Increase in Third Quarter 2010 Diluted Earnings Per Share to $0.14 and Increases 2010 Annual Diluted EPS Objective
NAPLES, Fla., Oct 27, 2010 (BUSINESS WIRE) -- Health Management Associates, Inc. (NYSE: HMA) today announced its consolidated financial results for its third quarter and nine months ended September 30, 2010. For the quarter, Health Management reported net revenue of $1,270.7 million and earnings before interest, income taxes, depreciation and amortization, and certain other items ("Adjusted EBITDA") of $171.2 million. During the third quarter, income from continuing operations was $39.9 million and net income attributable to Health Management's common stockholders was $35.3 million, or $0.14 per diluted share, a 40.0% increase as compared to $0.10 for the same quarter a year ago. The tables accompanying this press release include a reconciliation of consolidated net income to all presentations of Adjusted EBITDA (which is not a GAAP measure) contained in this press release. Those tables also contain disclaimers and other important information regarding how Health Management defines and uses Adjusted EBITDA. For continuing operations, revenue increased 13.3%, admissions grew 4.9%, and adjusted admissions grew 8.4% in the third quarter as compared to the same quarter a year ago. In addition, Adjusted EBITDA for the third quarter increased 8.4% to $171.2 million compared to the same quarter a year ago. For continuing operations at hospitals owned and operated by Health Management for one year or more, referred to as same hospital continuing operations, compared to the prior year's third quarter, Adjusted EBITDA increased 9.6% to $197.5 million, representing 16.7% of net revenue. This compares to $180.1 million, or 16.1% of net revenue, for the same quarter in the prior year. Due to declines in uninsured admissions, H1N1 cases, and births, admissions from same hospital continuing operations for the third quarter were 3.0% lower than the same period a year ago, and adjusted admissions were 0.3% behind the prior year's third quarter. This compares to increases in 2009 of 5.4% in admissions and 7.0% in adjusted admissions for the same period a year ago. In addition, third quarter same hospital net revenue increased $57.6 million, or 5.1%, to $1,179.5 million from $1,121.9 million. This increase is supported by a 5.5% increase in same hospital surgeries for the quarter. "This was another outstanding quarter for Health Management as we continue to sharpen our operational focus and execute our cost discipline strategy," said Gary D. Newsome, Health Management's President and Chief Executive Officer. "We are focused on continuing to expand same hospital and acquisition operating margins by appropriately controlling our expenses relative to our volumes and acuity and by remaining committed to our emergency room operational improvements, physician recruitment progress and market service development projects." Health Management's provision for doubtful accounts, or bad debt expense, was $159.9 million, or 12.6% of net revenue, for the third quarter compared to $143.7 million, or 12.8% of net revenue, for the same quarter a year ago. Uninsured discounts for the third quarter were $215.6 million, compared to $173.5 million for the same period a year ago. Charity/indigent care write-offs for the quarter were $24.3 million, compared to $20.3 million for the same quarter in the prior year. The sum of uninsured discounts, charity/indigent care write-offs and bad debt expense, as a percent of the sum of net revenue, uninsured discounts and charity/indigent care write-offs, was 26.5% for the third quarter, compared to 25.7% for the same quarter a year ago. Health Management believes that this fiscal measure, referred to as the Uncompensated Patient Care Percentage, is important because it provides Health Management with key information regarding the aggregate level of patient care for which it does not receive remuneration. Cash flow from continuing operating activities for the third quarter ended September 30, 2010 was $122.7 million, after cash interest and cash tax payments aggregating $57.4 million. Health Management's total leverage ratio and interest coverage ratio were 4.18 and 3.35, respectively, at September 30, 2010. These ratios are well within the requirements of Health Management's credit facilities. For the nine months ended September 30, 2010, Health Management reported net revenue of $3,803.5 million and Adjusted EBITDA of $550.0 million. Likewise, excluding certain gains, including gains on early extinguishment of debt, during the nine month period, income from continuing operations was $135.7 million and net income attributable to Health Management's common stockholders was $118.6 million, or $0.48 per diluted share, a 26.3% increase compared to $0.38 per diluted share for the nine months ended September 30, 2009. Health Management is also increasing its diluted EPS objective range for fiscal year 2010 to be between $0.64 and $0.66 from between $0.56 and $0.61. Effective October 1, 2010, subsidiaries of Health Management acquired the 413-bed Wuesthoff Health System for approximately $152 million, which includes amounts paid for certain working capital adjustments. The Wuesthoff Health System is comprised of two hospitals, the 298-bed Wuesthoff Medical Center-Rockledge, located in Rockledge, Florida, and the 115-bed Wuesthoff Medical Center-Melbourne, located in Melbourne, Florida, as well as other related facilities providing a continuum of care. "The Wuesthoff Health System integration has begun, and although we are very early on in the process, we are pleased with the progress we have already made. The initial feedback we have received from the Rockledge and Melbourne communities has been very good and very supportive," added Mr. Newsome. "Our acquisition pipeline remains very active. We are currently reviewing several excellent acquisition opportunities that are similar to the Wuesthoff Health System in terms of scope of services, size, and potential, and we believe that we will continue to see attractive growth opportunities for the foreseeable future." Health Management's executive leadership team will hold a conference call and webcast to discuss the contents of this press release and the consolidated financial results for the third quarter and nine months ended September 30, 2010 on Thursday, October 28, 2010 at 1:00 p.m. EDT. Investors are invited to access the webcast via Health Management's website at www.HMA.com or via www.streetevents.com. Alternatively, investors may join the conference call by dialing 877-476-3476. Health Management will archive a copy of the audio webcast, along with any related information that Health Management may be required to provide pursuant to Securities and Exchange Commission rules, on its website under the heading "Investor Relations" for a period of 60 days following the conference call. Health Management enables America's best local health care by providing the people, processes, capital and expertise necessary for its hospital and physician partners to fulfill their local missions of delivering superior health care services. Through its subsidiaries, Health Management operates 60 general acute care hospitals, with approximately 9,000 licensed beds, in non-urban communities located throughout the United States. All references to "Health Management," the "Company," "we," "us," and "our" used in this press release refer to Health Management Associates, Inc. and its subsidiaries. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as "expects," "estimates," "projects," "anticipates," "believes," "could," "prospects," "promising" and other similar words. All statements addressing operating performance, events or developments that Health Management expects or anticipates will occur in the future, including but not limited to projections of revenue, income or loss, capital expenditures, earnings per share, debt structure, bad debt expense, capital structure, repayment of indebtedness, other financial items, statements regarding the plans and objectives of management for future operations, statements regarding acquisitions, divestitures and other proposed or contemplated transactions, statements of future economic performance, statements regarding the state of the economy, statements of the assumptions underlying or relating to any of the foregoing statements, and other statements which are other than statements of historical fact, are considered to be "forward-looking statements." Because they are forward-looking, such statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Health Management's most recent Annual Report on Form 10-K and Quarterly Reports on Forms 10-Q included under the heading entitled "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of Health Management's underlying assumptions prove incorrect, actual results could vary materially from those currently anticipated. In addition, undue reliance should not be placed on Health Management Associates, Inc.'s forward-looking statements. Except as required by law, Health Management disclaims any obligation to update or publicly announce revisions to any of the forward-looking statements contained in this press release. SOURCE: Health Management Associates, Inc.
John C. Merriwether, Vice President of Financial Relations
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