EX-99.1 2 dex991.htm PRESS RELEASE Press release

Exhibit 99.1

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PRESS RELEASE

FOR IMMEDIATE RELEASE

 

    Contact:   John C. Merriwether
      Vice President of Financial Relations
      Health Management Associates, Inc.
      (239) 598-3131

Health Management 4th Quarter 2010 EPS from Continuing Operations Increases 23% to $0.16

and Net Revenue Increases 14% to $1.35 Billion

NAPLES, FLORIDA (February 16, 2011) Health Management Associates, Inc. (NYSE: HMA) today announced its consolidated financial results for the fourth quarter and year ended December 31, 2010.

Key metrics from continuing operations for the fourth quarter (all percentage changes compare the fourth quarter of 2010 to the fourth quarter of 2009 unless otherwise noted) include:

 

   

Diluted earnings per share (“EPS”) increased 23.1% to $0.16;

 

   

Revenue increased 14.1% to $1,352.1 million;

 

   

Income From Continuing Operations increased 26.0% to $46.4 million;

 

   

Adjusted EBITDA increased 9.6% to $186.5 million;

 

   

Admissions increased 8.3% while adjusted admissions increased 12.6%;

 

   

Same hospital net revenue increased 2.1% to $1,209.7 million;

 

   

Same hospital Adjusted EBITDA increased 5.0% to $209.6 million, resulting in a 40 basis point improvement in margin, to 17.3%;

 

   

Same hospital surgeries increased 5.2% percent; and

 

   

Same hospital admissions declined 3.1% while same hospital adjusted admissions increased 0.1%.

 

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Health Management Associates, Inc. / Page 2

 

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 at hospitals owned and operated by Health Management for one year or more, referred to as same hospital continuing operations, net revenue increased $25.1 million or 2.1% to $1,209.7 million compared to the prior year’s fourth quarter. Adjusted EBITDA from same hospital continuing operations grew 5.0% to $209.6 million, representing 17.3% of net revenue, as compared to $199.6 million and 16.9% of net revenue for the same quarter a year ago. A 5.2% increase in same hospital surgeries contributed to this net revenue and Adjusted EBITDA growth. Primarily due to declines in uninsured admissions and H1N1 flu cases, admissions from same hospital continuing operations were 3.1% lower than the same period a year ago and adjusted admissions were essentially flat compared to the prior year’s fourth quarter. This compares to increases of 1.6% in admissions and 4.0% in adjusted admissions from same hospital continuing operations for the fourth quarter ended December 31, 2009.

“We are very pleased to report another great quarter which exceeded our expectations and contributed to a record setting year for Health Management in 2010,” said Gary D. Newsome, Health Management’s President and Chief Executive Officer. “We strongly believe that our continued and relentless focus on cost discipline, emergency room operations, physician recruitment and market service development were the key factors that enabled us to achieve another year of outstanding results. Heading into 2011, we plan to continue our disciplined approach to hospital acquisitions and joint ventures, and remain what we believe to be the only pure player in the non-urban sector.”

Health Management’s provision for doubtful accounts, or bad debt expense, was $164.6 million, or 12.2% of net revenue, for the fourth quarter compared to $145.4 million, or 12.3% of net revenue, for the same quarter a year ago.

 

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Health Management Associates, Inc. / Page 3

 

Uninsured discounts for the fourth quarter were $210.2 million, compared to $160.8 million for the same quarter a year ago. Charity/indigent care write-offs for the quarter were $24.2 million, compared to $22.1 million for the same quarter 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 (which Health Management refers to as the Uncompensated Patient Care Percentage) was 25.1% for the fourth quarter compared to 24.0% for the fourth quarter a year ago. Health Management believes that its Uncompensated Patient Care Percentage provides key information regarding the aggregate level of patient care for which it does not receive remuneration.

Cash flow from continuing operating activities for the year ended December 31, 2010 was $437.1 million, after cash interest and cash tax payments aggregating $276.7 million. Health Management’s total leverage ratio and interest coverage ratio were 4.14 and 3.40, respectively, at December 31, 2010. These ratios are well within the requirements of Health Management’s credit facilities.

Effective December 31, 2010, Health Management sold the 140-bed Riley Hospital, located in Meridian, Mississippi and as a result, the hospital has been placed in discontinued operations and prior periods have been reclassified. The loss from discontinued operations of $0.05 per diluted share for the three and twelve months ended December 31, 2010 is primarily due to the loss on the sale of the hospital and an impairment charge related to assets held for sale.

For continuing operations, Health Management reported net revenue of $5,115.0 million and Adjusted EBITDA of $734.9 million for the year ended December 31, 2010, a 12.2% and 8.3% increase, respectively, compared to the prior year. Income from continuing operations for the year grew 15.6% to $186.0 million and EPS from continuing operations grew 18.2% to $0.65 compared to the year ended December 31, 2009.

Health Management also reiterated its 2011 earnings objective of income from continuing operations attributable to Health Management Associates, Inc. of between $0.72 and $0.76 per diluted share. This objective range does not include any benefit from potential 2011 acquisitions.

 

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Health Management Associates, Inc. / Page 4

 

“We believe that our operational initiatives and cost controls will continue to help us improve our operating results in 2011. Moreover, we anticipate that another successful year of hospital acquisitions will complement our operational efforts,” added Newsome. “Since December 2009, when Health Management began to again diligently pursue the acquisition portion of our growth strategy, we have acquired six hospitals representing approximately $650 million of annual revenue, or nearly 14% of our 2010 base revenue. Our acquisition pipeline is currently very active, and we expect to complete additional acquisitions in 2011 as we continue to see attractive assets at attractive valuations. We believe the earnings potential is compelling, and we intend to remain disciplined in our approach, and continue to believe that these acquisition opportunities offer us a growth catalyst to add significant value to our company.”

Health Management’s executive team will hold a conference call and webcast to discuss the contents of this press release and Health Management’s consolidated financial results for the fourth quarter and year ended December 31, 2010 on Thursday, February 17, 2011 at 11:00 a.m. ET. 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 of the conference call, 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, owns and operates 59 hospitals, with approximately 8,900 licensed beds, in non-urban communities located throughout the United States. All references to “HMA”, “Health Management,” the “Company”, “we”, “us” or “our” used in this release refer to Health Management Associates, Inc. and its affiliates.

 

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Health Management Associates, Inc. / Page 5

 

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 (including but not limited to statements regarding the potential for future acquisitions and perceived benefits of acquisitions), 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.

(financial tables follow)

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2010     2009     2010     2009  

Net revenue

   $ 1,352,059      $ 1,184,502      $ 5,114,997      $ 4,556,809   

Operating expenses:

        

Salaries and benefits

     541,370        472,988        2,026,386        1,788,727   

Supplies

     179,038        165,414        705,499        639,728   

Provision for doubtful accounts

     164,553        145,350        627,702        556,359   

Depreciation and amortization

     61,982        61,034        244,754        237,534   

Rent expense

     33,894        27,674        123,723        101,751   

Other operating expenses

     246,679        202,886        896,786        791,820   
                                

Total operating expenses

     1,227,516        1,075,346        4,624,850        4,115,919   
                                

Income from operations

     124,543        109,156        490,147        440,890   

Other income (expense):

        

Gains (losses) on sales of assets, net

     (133     (692     711        1,244   

Interest and other income, net

     822        2,253        8,086        3,752   

Interest expense

     (52,742     (54,456     (211,673     (217,941

Gains on early extinguishment of debt, net

     —          —          —          16,202   

Write-offs of deferred financing costs

     —          —          —          (444
                                

Income from continuing operations before income taxes

     72,490        56,261        287,271        243,703   

Provision for income taxes

     (26,133     (19,468     (101,223     (82,721
                                

Income from continuing operations

     46,357        36,793        186,048        160,982   

Income (loss) from discontinued operations, net of income taxes

     (13,121     3,360        (13,800     2,959   
                                

Consolidated net income

     33,236        40,153        172,248        163,941   

Net income attributable to noncontrolling interests

     (5,057     (6,025     (22,179     (25,759
                                

Net income attributable to Health Management Associates, Inc.

   $ 28,179      $ 34,128      $ 150,069      $ 138,182   
                                

Earnings (loss) per share attributable to Heath Management Associates, Inc. common stockholders:

        

Basic:

        

Continuing operations

   $ 0.17      $ 0.13      $ 0.66      $ 0.55   

Discontinued operations

     (0.05     0.01        (0.05     0.01   
                                

Net income

   $ 0.12      $ 0.14      $ 0.61      $ 0.56   
                                

Diluted:

        

Continuing operations

   $ 0.16      $ 0.13      $ 0.65      $ 0.55   

Discontinued operations

     (0.05     0.01        (0.05     0.01   
                                

Net income

   $ 0.11      $ 0.14      $ 0.60      $ 0.56   
                                

Weighted average number of shares outstanding:

        

Basic

     248,600        246,648        248,272        245,381   
                                

Diluted

     252,372        249,171        251,106        246,965   
                                

Net income attributable to Health Management Associates, Inc.

        

Income from continuing operations, net of income taxes

   $ 41,300      $ 30,768      $ 163,869      $ 136,001   

Income (loss) from discontinued operations, net of income taxes

     (13,121     3,360        (13,800     2,181   
                                

Net income attributable to Health Management Associates, Inc.

   $ 28,179      $ 34,128      $ 150,069      $ 138,182   
                                

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

     Twelve Months Ended December 31,  
     2010     2009  

Cash flows from operating activities:

    

Consolidated net income

   $ 172,248      $ 163,941   

Adjustments to reconcile consolidated net income to net cash provided by continuing operating activities:

    

Depreciation and amortization

     251,464        244,334   

Provision for doubtful accounts

     627,702        556,359   

Stock-based compensation expense

     18,366        10,867   

Gains on sales of assets, net

     (711     (1,244

Gains on sales of available-for-sale securities

     (4,328     (1,384

Write-offs of deferred financing costs

     —          444   

Gains on early extinguishment of debt, net

     —          (16,202

Deferred income tax expense

     20,311        90,467   

Changes in assets and liabilities of continuing operations:

    

Accounts receivable

     (735,334     (598,286

Supplies, prepaid expenses and other current assets

     (20,586     (4,244

Prepaid and recoverable income taxes

     31,194        665   

Deferred charges and other long-term assets

     5,621        (12,005

Accounts payable, accrued expenses and other liabilities

     58,656        6,604   

Equity compensation excess income tax benefits

     (1,278     (218

(Income) loss from discontinued operations, net of income taxes

     13,800        (2,959
                

Net cash provided by continuing operating activities

     437,125        437,139   
                

Cash flows from investing activities:

    

Acquisitions and other

     (191,454     (138,764

Additions to property, plant and equipment

     (209,439     (199,474

Proceeds from sales of assets and insurance recoveries

     3,150        5,448   

Purchases of available-for-sale securities

     (921,724     (86,527

Proceeds from the sale of discontinued operations

     26,360        —     

Proceeds from sales of available-for-sale securities

     904,881        50,000   

(Increase) decrease in restricted funds, net

     (5,758     11,590   
                

Net cash used in continuing investing activities

     (393,984     (357,727
                

Cash flows from financing activities:

    

Net proceeds from long-term borrowings

     —          38,000   

Principal payments on debt and capital lease obligations

     (40,147     (127,218

Repurchases of convertible debt securities in the open market

     —          (67,714

Proceeds from exercises of stock options

     7,469        9,699   

Cash received from noncontrolling shareholders

     2,547        54,796   

Cash payments to noncontrolling shareholders

     (20,630     (35,377

Equity compensation excess income tax benefits

     1,278        218   
                

Net cash used in continuing financing activities

     (49,483     (127,596
                

Net decrease in cash and cash equivalents before discontinued operations

     (6,342     (48,184

Net increases (decreases) in cash and cash equivalents from discontinued operations:

    

Operating activities

     3,238        12,030   

Investing activities

     (1,102     (1,029

Financing activities

     —          (413
                

Net decrease in cash and cash equivalents

     (4,206     (37,596

Cash and cash equivalents at beginning of the period

     106,018        143,614   
                

Cash and cash equivalents at end of the period

   $ 101,812      $ 106,018   
                

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATISTICS

 

(unaudited, in thousands)    December 31,
2010
     December 31,
2009
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 101,812       $ 106,018   

Available-for-sale securities

     57,327         36,585   

Accounts receivable, net

     759,131         656,171   

Other current assets

     269,808         259,051   

Assets of discontinued operations

     4,994         54,138   

Property, plant and equipment, net

     2,664,641         2,465,748   

Restricted funds

     51,067         38,848   

Other assets

     1,001,305         987,540   
                 

Total assets

   $ 4,910,085       $ 4,604,099   
                 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 555,630       $ 525,897   

Deferred income taxes

     157,177         133,451   

Other long-term liabilities

     680,073         578,459   

Long-term debt

     2,983,719         3,004,672   

Stockholders’ equity

     533,486         361,620   
                 

Total liabilities and stockholders’ equity

   $ 4,910,085       $ 4,604,099   
                 

 

     Three Months Ended December 31,     Twelve Months Ended December 31,  
     2010     2009     % Change     2010     2009     % Change  

Continuing Operations

            

Occupancy

     42.6     44.3       43.5     45.0  

Patient days

     343,374        320,560        7.1     1,353,040        1,283,188        5.4

Admissions

     82,884        76,515        8.3     324,575        306,770        5.8

Adjusted admissions

     152,024        134,977        12.6     587,987        534,917        9.9

Average length of stay

     4.1        4.2          4.2        4.2     

Surgeries

     81,622        70,824        15.2     316,474        282,680        12.0

Emergency room visits

     372,344        337,909        10.2     1,421,461        1,360,595        4.5

Net revenue (in 000’s)

   $ 1,352,059      $ 1,184,502        14.1   $ 5,114,997      $ 4,556,809        12.2

Net revenue per adjusted admission

   $ 8,894      $ 8,776        1.3   $ 8,699      $ 8,519        2.1

Total inpatient revenue percentage

     49.6     49.7       49.6     51.4  

Total outpatient revenue percentage

     50.4     50.3       50.4     48.6  

Same Hospitals

            

Occupancy

     41.9     44.3       43.5     45.0  

Patient days

     304,329        320,560        -5.1     1,245,618        1,283,188        -2.9

Admissions

     74,168        76,515        -3.1     301,785        306,770        -1.6

Adjusted admissions

     135,074        134,977        0.1     544,534        534,917        1.8

Average length of stay

     4.1        4.2          4.1        4.2     

Surgeries

     74,477        70,824        5.2     296,517        282,680        4.9

Emergency room visits

     331,076        337,909        -2.0     1,320,661        1,360,595        -2.9

Net revenue (in 000’s)

   $ 1,209,650      $ 1,184,502        2.1   $ 4,741,642      $ 4,556,809        4.1

Net revenue per adjusted admission

   $ 8,955      $ 8,776        2.0   $ 8,708      $ 8,519        2.2

Total inpatient revenue percentage

     50.1     49.7       49.8     51.4  

Total outpatient revenue percentage

     49.9     50.3       50.2     48.6  

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, in thousands)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2010     2009     2010     2009  

Net revenue

   $ 1,352,059      $ 1,184,502      $ 5,114,997      $ 4,556,809   

Less acquisitions

     142,409        —          373,355        —     
                                

Same hospital net revenue

   $ 1,209,650      $ 1,184,502      $ 4,741,642      $ 4,556,809   
                                

Consolidated net income

   $ 33,236      $ 40,153      $ 172,248      $ 163,941   

Adjustments:

        

Loss (income) from discontinued operations, net of income taxes

     13,121        (3,360     13,800        (2,959

Provision for income taxes

     26,133        19,468        101,223        82,721   

Losses (gains) on sales of assets, net

     133        692        (711     (1,244

Interest and other income, net

     (822     (2,253     (8,086     (3,752

Interest expense

     52,742        54,456        211,673        217,941   

Gains on early extinguishment of debt, net

     —          —          —          (16,202

Write-offs of deferred financing costs

     —          —          —          444   

Depreciation and amortization

     61,982        61,034        244,754        237,534   
                                

Adjusted EBITDA (a)

     186,525        170,190        734,901        678,424   

Adjustment for acquisitions, corporate and other

     23,083        29,419        107,670        110,169   
                                

Same hospital operating Adjusted EBITDA (a)

   $ 209,608      $ 199,609      $ 842,571      $ 788,593   
                                

Same hospital operating Adjusted EBITDA margins =

        

Same hospital operating Adjusted EBITDA / Same hospital net revenue (a)

     17.3     16.9     17.8     17.3
                                

 

(a) Adjusted EBITDA is defined as consolidated net income before discontinued operations, net gains (losses) on sales of assets, net interest and other income, interest expense, net gains (losses) on early extinguishment of debt, write-offs of deferred financing costs, income taxes, and depreciation and amortization. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net revenue. Adjusted EBITDA is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Health Management believes that providing non-GAAP information such as Adjusted EBITDA is important for investors and other readers of Health Management’s financial statements, as it is commonly used as an analytical indicator within the health care industry and Health Management’s debt facilities contain covenants that use Adjusted EBITDA in their calculations. Because Adjusted EBITDA is a non-GAAP measure and is thus susceptible to varying calculations, Adjusted EBITDA, as presented, may not be directly comparable to other similarly titled measures used by other companies.

 

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