Health Management Associates, Inc. Reports First Quarter Earnings

Business Wire,  April 23, 2008  

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NAPLES, Fla. -- Health Management Associates, Inc. (NYSE:HMA) announced its consolidated financial results for the first quarter ended March 31, 2008. HMA reported net revenue of $1,152.6 million; earnings before interest, income taxes, depreciation, amortization, gain on sale of assets, write-offs of deferred financing costs and after minority interests ("EBITDA") of $180.8 million; income from continuing operations of $161.6 million; net income of $133.9 million; diluted earnings per share ("EPS") from continuing operations of $0.66; and diluted EPS of $0.55. Excluding a $124.5 million after-tax gain on the sale of a 27% minority interest in certain hospitals to Novant Health, HMA reported diluted EPS from continuing operations of $0.15, as shown on the table accompanying this release.

For continuing operations at hospitals owned and operated by HMA for one year or more, referred to as same hospital continuing operations, net revenue increased 3.1%, admissions increased 0.4%, adjusted admissions increased 1.2%, emergency room visits increased 6.3%, and surgeries decreased 0.8%, all compared to the prior year's first quarter. Net revenue per adjusted admission from same hospital continuing operations increased 1.8%, or 5.1% on a pro forma basis after adjusting for the impact of the Company's transition to new discount and charity care policies in 2007 and lower uninsured patient volume in 2008. Same hospital EBITDA from continuing operations for the quarter was $202.1 million, which represented a margin of 17.8%.

Provision for doubtful accounts, or bad debt expense, was $129.0 million, or 11.2% of net revenue, for the quarter compared to $118.8 million, or 10.7% of net revenue for the same quarter a year ago and $132.7 million, or 12.3% of net revenue, for the fourth quarter ended December 31, 2007.

Since February 2007, HMA has given a 60% discount to uninsured patients for non-elective services. Uninsured discounts for the quarter were $153.4 million compared to $112.1 million for the same quarter a year ago, and charity/indigent care write-offs for the quarter were $18.1 million, compared to $20.4 million for the same period a year ago. 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 22.7% for the first quarter, compared to 20.3% for the same quarter a year ago and 23.9% for the fourth quarter ended December 31, 2007.

Results for the quarter included a pre-tax loss from discontinued operations of approximately $45.3 million. The majority of the loss relates to the Company's decision to dispose of the Women's Center campus of its Dallas Regional Medical Center and includes both the hospital's operating loss for the period and a write-down of the hospital's assets to their estimated net realizable disposal value. The loss from discontinued operations also includes HMA's employed physician practices in North and South Carolina, the ownership of which will be assumed by Novant Health as part of the Company's recently announced joint venture with Novant. The Company continues to account for its Little Rock, Arkansas hospital and one campus of its Biloxi, Mississippi hospital as discontinued operations. Prior periods have been reclassified for these discontinued operations, as well as for two Virginia-based hospitals that the Company sold during the third quarter of 2007.

Total net revenue from continuing operations for the quarter increased 4.1%, total admissions from continuing operations increased 1.2%, and total adjusted admissions from continuing operations increased 2.0%, in each case as compared to the same quarter a year ago. Cash flow from continuing operating activities for the three month period was $145.1 million, after cash interest and cash tax payments aggregating $19.7 million.

The Company reiterated its 2008 earnings objective of between $0.40 and $0.50 per diluted share from continuing operations on net revenue of between $4.5 and $4.7 billion, excluding the gain from the Novant Health joint venture transaction.

HMA's management team will discuss HMA's 2008 first quarter performance in greater detail on a live conference call and audio webcast later this morning. Interested investors are invited to access the webcast at 11:00 a.m. ET, via HMA's website located at www.hma.com or via www.streetevents.com or join the conference call by dialing 877-476-3476. 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, will be archived on HMA's website under the heading "Investor Relations."

HMA owns and operates 57 hospitals, with approximately 8,100 licensed beds, in non-urban communities located throughout the United States. 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. All references to "HMA" or the "Company" used in this release refer to Health Management Associates, Inc. or its affiliates.