NAPLES, Fla.--(BUSINESS WIRE)--Oct. 26, 2009-- Health Management Associates, Inc. (NYSE:HMA) today announced its consolidated financial results for the third quarter ended September 30, 2009. For the quarter, HMA reported net revenue of $1,121.9 million and earnings before interest, income taxes, depreciation and amortization, gains on sales of assets, gains and losses on the early extinguishment of debt, and write-offs of deferred financing costs ("EBITDA") of $158.0 million. During the third quarter, income from continuing operations was $31.3 million and net income attributable to HMA's common stockholders was $25.4 million, or $0.10 per diluted share. Excluding certain gains on sales of assets, and as shown in the tables accompanying this press release, diluted earnings per share increased 66.7% as compared to $0.06 per diluted share for the same quarter a year ago. The tables also include a reconciliation of income from continuing operations to all presentations of EBITDA (which is not a GAAP measure) contained in this press release, and the tables also contain other important information regarding how HMA defines and uses EBITDA. Further, certain tables have been included which reconcile the amounts previously reported for the three and nine months ended September 30, 2008 to those currently reported.
For continuing operations, compared to the prior year's third quarter, net revenue increased 5.8%, admissions increased 5.4%, adjusted admissions (reflecting total admissions adjusted for outpatient volume) increased 7.0%, emergency room visits increased 12.9% and surgeries declined 0.2%. Operating EBITDA for the third quarter was $180.1 million, or 16.1% of net revenue, compared to $158.6 million, or 15.0% of net revenue, for the same quarter in the prior year, marking a 13.6% increase.
"Our growth in patient volumes and operating earnings continued during the third quarter, as we benefited from the successful implementation of our proven operating strategies that focus on emergency room operations, physician recruitment and service development," said Gary D. Newsome, HMA's President and Chief Executive Officer. "We are in the relatively early stages of implementation of these three key operating initiatives, and we have additional opportunities going forward for the remainder of 2009 and throughout 2010."
HMA's provision for doubtful accounts, or bad debt expense, was $143.7 million, or 12.8% of net revenue, for the third quarter compared to $120.0 million, or 11.3% of net revenue, for the same quarter a year ago.
Uninsured discounts for the third quarter were $173.5 million, compared to $145.5 million for the same period a year ago. Charity/indigent care write-offs for the quarter were $20.3 million, compared to $25.4 million for the same quarter in the prior year. The sum of uninsured discounts, charity/indigent write-offs and bad debt expense, as a percent of the sum of net revenue, uninsured discounts and charity/indigent write-offs, was 25.7% for the third quarter, compared to 23.6% for the same quarter a year ago.
Effective as of October 1, 2009, HMA entered into a restructuring agreement with Novant Health Inc. and certain of its affiliates. As a result, HMA's hospitals in Gaffney, South Carolina and Louisburg, North Carolina have been placed in discontinued operations and prior periods have been reclassified for these two hospitals. HMA does not anticipate any material financial impact to its 2009 results from continuing operations resulting from this restructuring.
Cash flow from continuing operating activities for the nine months ended September 30, 2009 was $357.4 million, after cash interest and cash tax payments aggregating $164.0 million. During the third quarter, HMA repurchased an additional $10.0 million of face value of its 3.75% senior subordinated convertible notes due 2028. For the nine months ended September 30, 2009, HMA has reduced the principal amount of its debt by more than $184.0 million, which exceeds its full year 2009 debt repayment goal of $150.0 million. As a result, HMA's total debt to EBITDA ratio and interest coverage ratio were 4.43 and 3.06, respectively, at September 30, 2009. These ratios are within the requirements of HMA's credit facilities.
For the nine months ended September 30, 2009, HMA reported net revenue of $3,418.4 million and EBITDA of $508.6 million. During the nine month period, income from continuing operations was $122.7 million and net income attributable to HMA's common stockholders was $104.1 million, or $0.42 per diluted share.
During the third quarter, HMA signed a non-binding letter of intent to acquire the 492-bed Sparks Health System located in Fort Smith, Arkansas. "We are excited about the opportunities to continue Sparks Health System's tradition of delivering quality health care to the Fort Smith region," said Mr. Newsome. "The anticipated completion of this acquisition will mark HMA's return to acquiring hospitals in non-urban communities with proven demographic needs. The hospital acquisition pipeline continues to improve and we believe we will have additional opportunities for similar acquisitions in 2010."
HMA's management team will hold a conference call and webcast to discuss HMA's third quarter consolidated financial results and the contents of this press release on Tuesday, October 27, 2009 at 11:30 a.m. EDT. Investors are invited to access the webcast via HMA's website located at www.hma.com or via www.streetevents.com. Alternatively, investors may join the conference call by dialing 877-476-3476. HMA will archive a copy of the audio webcast, along with any related information that HMA 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.
HMA's mission is the delivery of compassionate and high quality health care services that improve the quality of life for its patients, physicians, and the communities it serves. HMA, by and through its subsidiaries operates 54 hospitals, with approximately 7,900 licensed beds, in non-urban communities located throughout the United States. All references to "HMA" or the "Company" used in this release refer to Health Management Associates, Inc. and its affiliates.
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," and other similar words. All statements addressing operating performance, events, or developments that Health Management Associates, Inc. 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 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 Associates, Inc.'s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Forms 10-Q under the heading entitled "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of Health Management Associates, Inc.'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 Associates, Inc. disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release.