Health Management Associates Posts 3Q Results

Oct 29, 2009 (Close-Up Media via COMTEX) -- HMA | Quote | Chart | News | PowerRating -- Health Management Associates, Inc. has announced its consolidated financial results for the third quarter ended September 30.

In a release on October 26, the Company noted that 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.

For continuing operations, compared to the prior year's third quarter, net revenue increased 5.8 percent, admissions increased 5.4 percent, adjusted admissions (reflecting total admissions adjusted for outpatient volume) increased 7.0 percent, emergency room visits increased 12.9 percent and surgeries declined 0.2 percent. Operating EBITDA for the third quarter was $180.1 million, or 16.1 percent of net revenue, compared to $158.6 million, or 15.0 percent of net revenue, for the same quarter in the prior year, marking a 13.6 percent 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 percent of net revenue, for the third quarter compared to $120.0 million, or 11.3 percent 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 percent for the third quarter, compared to 23.6 percent for the same quarter a year ago.

Effective as of October 1, 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, 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 percent senior subordinated convertible notes due 2028. For the nine months ended September 30, 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. These ratios are within the requirements of HMA's credit facilities.

For the nine months ended September 30, 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 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."

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