NAPLES, Fla., Jul 26, 2010 (BUSINESS WIRE) --
Health Management Associates, Inc. (NYSE:HMA) today announced its consolidated financial results for its second quarter ended June 30, 2010. For the quarter, Health Management reported net revenue of $1,247.8 million and earnings before interest, income taxes, depreciation and amortization, and certain other items ("Adjusted EBITDA") of $182.5 million. During the second quarter, income from continuing operations was $45.7 million and net income attributable to Health Management's common stockholders was $39.7 million, or $0.16 per diluted share, a 23.1% increase as compared to $0.13 for the same quarter a year ago. The tables accompanying this press release also 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.
On a consolidated basis, net revenue from continuing operations increased 10.3%, admissions from continuing operations grew 5.0%, and adjusted admissions from continuing operations grew 9.6% in the second quarter as compared to the same quarter a year ago. In addition, consolidated Adjusted EBITDA for the second quarter increased 7.5% to $182.5 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 second quarter, Adjusted EBITDA increased 6.5% to $210.0 million, representing 17.8% of net revenue. This compares to $197.2 million, or 17.4% of net revenue, for the same quarter in the prior year.
"We are pleased with the continued successful execution of our operating strategy which has generated another quarter of outstanding financial results," said Gary D. Newsome, Health Management's President and Chief Executive Officer. "We have maintained our disciplined cost controls while continuing to see progress with our emergency room operational improvements, physician recruitment and market service development. While we continue to expand same hospital margins, our acquisition pipeline remains active, and we believe our growth opportunities will continue. Last quarter we raised our annual diluted EPS objective for 2010 to be between $0.56 and $0.61, and we are now reiterating that annual objective."
Health Management's provision for doubtful accounts, or bad debt expense, was $149.7 million, or 12.0% of net revenue, for the second quarter compared to $136.7 million, or 12.1% of net revenue, for the same quarter a year ago, and $158.8 million, or 12.4% of net revenue, sequentially, for the quarter ended March 31, 2010.
Uninsured discounts for the second quarter were $191.4 million, compared to $165.2 million for the same period a year ago. Charity/indigent care write-offs for the quarter were $20.2 million, compared to $19.3 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 24.8% for the second quarter, compared to 24.4% for the same quarter a year ago. We believe that this fiscal measure, which we refer to as our Uncompensated Patient Care Percentage, is important because it provides us with key information regarding the aggregate level of patient care for which we do not receive remuneration.
Cash flow from continuing operating activities for the second quarter ended June 30, 2010 was $157.7 million, after cash interest and cash tax payments aggregating $106.6 million. Health Management's total leverage ratio and interest coverage ratio were 4.29 and 3.24, respectively, at June 30, 2010. These ratios are well within the requirements of Health Management's credit facilities.
For the six months ended June 30, 2010, Health Management reported net revenue of $2,532.8 million and Adjusted EBITDA of $378.8 million. Likewise, during the six month period, income from continuing operations was $99.1 million and net income attributable to Health Management's common stockholders was $86.6 million, or $0.35 per diluted share, a 25.0% increase compared to $0.28 per diluted share for the six months ended June 30, 2009, excluding certain items and gains on early extinguishment of debt.
Effective July 1, 2010, through its subsidiaries, Health Management acquired a 60% controlling interest in three Shands HealthCare hospitals: (i) Shands Lake Shore located in Lake City, Florida; (ii) Shands Live Oak, located in Live Oak, Florida; and (iii) Shands Starke, located in Starke, Florida. Shands HealthCare will retain a 40% ownership interest in each hospital. "We are developing unique partnerships with not-for-profit health systems like Shands HealthCare to leverage both our strengths and the strengths of our partners. We believe that these partnerships will improve patients' access to and level of quality health care," added Mr. Newsome. "The partnership integration with these three Shands HealthCare hospitals is in the very early stages and is exceeding our expectations. Encouragingly, this partnership has generated additional interest from other highly respected health systems that are seeking similar benefits."
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 second quarter ended June 30, 2010 on Tuesday, July 27, 2010 at 10:30 a.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. Health Management, through its subsidiaries, operates 58 hospitals, with approximately 8,600 licensed beds, in non-urban communities located throughout the United States. All references to "HMA," "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 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 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 Associates, Inc.'s most recent Annual Report on Form 10-K and 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.