EX-99.1 2 d332558dex991.htm PRESS RELEASE ISSUED BY HEALTH MANAGEMENT ASSOCIATES, INC. ON APRIL 23, 2012 Press release issued by Health Management Associates, Inc. on April 23, 2012

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 ANNOUNCES 1st QUARTER 2012 RESULTS

Diluted earnings per share, excluding interest rate swap accounting and

mark-to-market adjustments, increases 9.1% to $0.24

Overall diluted earnings per share are $0.15

NAPLES, FLORIDA (April 23, 2012) Health Management Associates, Inc. (NYSE: HMA) today announced its consolidated financial results for the first quarter ended March 31, 2012.

Key metrics from continuing operations for the first quarter (all percentage changes compare the first quarter of 2012 to the first quarter of 2011) include:

 

   

As shown in the tables accompanying this press release, excluding the impact of approximately $36.7 million, or $0.09 per diluted share, for interest rate swap accounting as well as a significant mark-to-market adjustment on the swap due to interest rate conditions, diluted earnings per share from continuing operations increased 9.1% to $0.24 as compared to $0.22 per diluted share for the same quarter a year ago. Reported diluted earnings per share are $0.15 for the first quarter ended March 31, 2012 ;

 

   

Net revenue increased 18.4% to $1.485 billion;

 

   

Adjusted EBITDA increased 12.7% to $239.5 million;

 

   

Admissions increased 5.9% while adjusted admissions increased 11.8%;

 

   

Same hospital net revenue increased 5.7% to $1.326 billion;

 

   

Same hospital net revenue per adjusted admission increased 5.9%;

 

   

Same hospital Adjusted EBITDA increased 6.6% to $264.0 million, resulting in a 20 basis point improvement in margin to 19.9%. Excluding approximately $4.6 million of Medicare and Medicaid Healthcare Information Technology (“HCIT”) incentive payments for 2012, same hospital Adjusted EBITDA increased 4.7% to $259.4 million; and

 

   

Same hospital surgeries increased 3.8%.

 

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Health Management Associates, Inc. / Page 2

 

The tables accompanying this press release include reconciliations of consolidated net income to all presentations of Adjusted EBITDA (which is not a GAAP measure) contained in this press release. Those tables also reconcile earnings per share on a GAAP basis to those amounts presented in this press release and contain disclaimers and other important information regarding how Health Management defines and uses Adjusted EBITDA.

For continuing operations at hospitals operated by Health Management for one year or more, referred to as same hospital operations, net revenue in the first quarter increased $71.2 million or 5.7%, to $1.326 billion compared to the same quarter in the prior year. Adjusted EBITDA from same hospital operations grew 6.6% to $264.0 million, representing 19.9% of net revenue, as compared to $247.7 million and 19.7%, respectively, for the same quarter a year ago. Same hospital Adjusted EBITDA includes $4.6 million of Medicare and Medicaid HCIT incentive payments, offsetting government program payment reductions. Declines in both uninsured admissions and flu-related volume contributed to a 4.2% and 0.2% decline in first quarter same hospital admissions and adjusted admissions, respectively. Had uninsured and flu-related volumes been the same as last year, first quarter same hospital admissions would have declined 1.6% and same hospital adjusted admissions would have increased 2.4%.

“Health Management had another great quarter and a great start to 2012, with revenue up 18.4% year over year,” said Gary D. Newsome, Health Management’s President and Chief Executive Officer. “Our operating strategy continued to generate strong results in the first quarter as we managed our resources relative to the volume and acuity of our patients. We believe that there are further improvement opportunities in our hospitals as we continue to affect change in our processes and systems in emergency room operations, physician recruitment and market service development. In addition, our partnership development pipeline continues to be extremely active.”

Health Management’s provision for doubtful accounts, or bad debt expense, was $201.3 million, or 11.9% of net revenue before the provision for doubtful accounts, for the first quarter compared to $172.1 million, or 12.1% of net revenue before the provision of doubtful accounts, for the same quarter a year ago.

 

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Health Management Associates, Inc. / Page 3

 

Uninsured self-pay patient discounts for the first quarter were $299.7 million, compared to $225.7 million for the same quarter a year ago. Charity/indigent care write-offs were $22.7 million for the first quarter, compared to $21.4 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 before the provision for doubtful accounts, uninsured discounts and charity/indigent write-offs (which Health Management refers to as its Uncompensated Patient Care Percentage) was 26.1% for the first quarter, compared to 25.0% for the first quarter a year ago, and 25.4% for the quarter ended December 31, 2011. 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 payment.

Cash flow from continuing operating activities for the first quarter was $62.1 million, after cash interest and cash tax payments aggregating $52.8 million. Our cash flows in the first quarter do not reflect the benefit of our Tennova acquisition as we had not received our Medicare tie-in notices as of March 31, 2012. Health Management received the tie-in notices in early April 2012, and we expect to bill and collect the backlog of Tennova Health accounts receivable by the end of the second quarter. Health Management’s total leverage ratio was 4.1 and interest coverage ratio was 4.0 at March 31, 2012, well within its debt requirements.

Health Management hospitals recognized approximately $4.6 million of Medicare and Medicaid HCIT incentive payments in the first quarter ended March 31, 2012. As previously announced, Health Management expects to recognize approximately $90 to $120 million of Medicare and Medicaid HCIT incentive payments during the year ending December 31, 2012. The bulk of these payments are expected to be recorded in the third and fourth quarters of 2012.

Health Management is also affirming its diluted EPS from continuing operations objective range for the year ending December 31, 2012 to be between $0.80 and $0.90. This diluted EPS range for 2012 does not include approximately $96 million, or $0.24 per diluted share, of impact expected from interest rate swap accounting and mark-to-market adjustments nor does it include approximately $90 to $120 million of anticipated Medicare and Medicaid HCIT incentive payments.

 

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Health Management Associates, Inc. / Page 4

 

As previously announced on April 2, 2012, subsidiaries of Health Management completed a joint venture transaction with respect to five INTEGRIS Health Oklahoma hospitals. Under the joint venture, which was effective April 1, 2012, Health Management now owns an 80% controlling interest in the five hospitals and manages their day-to-day operations. The INTEGRIS Health hospital partners include: 53-bed Integris Blackwell Regional Hospital, located in Blackwell; 64-bed Integris Clinton Regional Hospital, located in Clinton; 25-bed Integris Marshall County Medical Center, located in Madill; 52-bed Integris Mayes County Medical Center, located in Pryor; and 32-bed Integris Seminole Medical Center, located in Seminole. Combined, these five hospitals have an aggregate of 226 licensed beds and generated approximately $95 million of net revenue, before the provision for doubtful accounts, over the last twelve months.

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 three months ended March 31, 2012 on Tuesday, April 24, 2012 at 11:00 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 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 operates 71 hospitals, with approximately 10,600 licensed beds, in non-urban communities located throughout the United States.

All references to “Health Management,” “HMA” or the “Company” 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,” “intends,” “plans,” “may,” “continues,” “should,” “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 incurrence of indebtedness, projections of revenue, income or loss, capital expenditures, earnings per share, debt structure, bad debt expense, capital structure, repayment of indebtedness, the amount and timing of funds under the meaningful use measurement standard of various Healthcare Information Technology (“HCIT”) incentive programs, other financial items and operating statistics, statements regarding the plans and objectives of management for future operations, innovations, or market service development, statements regarding acquisitions, joint ventures, 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 regarding legal proceedings and other loss contingencies, statements regarding market risk exposures, statements regarding the effects and/or interpretations of recently enacted or future health care laws and regulations, 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, including 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 its risk factors or to publicly announce updates to the forward-looking statements contained in this press release to reflect new information, future events or other developments.

(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  
     March 31,  
     2012     2011  

Net revenue before the provision for doubtful accounts

   $ 1,686,518      $ 1,426,829   

Provision for doubtful accounts

     (201,261     (172,069
  

 

 

   

 

 

 

Net revenue

     1,485,257        1,254,760   

Salaries and benefits

     659,084        569,038   

Supplies

     234,443        194,466   

Rent expense

     45,025        35,847   

Other operating expenses

     311,780        242,938   

Medicare and Medicaid HCIT incentive payments

     (4,590     —     

Depreciation and amortization

     78,394        64,628   

Interest expense

     88,763        51,037   

Other

     1,640        (194
  

 

 

   

 

 

 
     1,414,539        1,157,760   

Income from continuing operations before income taxes

     70,718        97,000   

Provision for income taxes

     (24,727     (35,034
  

 

 

   

 

 

 

Income from continuing operations

     45,991        61,966   

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

     (1,395     146   
  

 

 

   

 

 

 

Consolidated net income

     44,596        62,112   

Net income attributable to noncontrolling interests

     (6,906     (6,588
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

   $ 37,690      $ 55,524   
  

 

 

   

 

 

 

Earnings per share attributable to Heath Management

    

Associates, Inc. common stockholders:

    

Basic and Diluted:

    

Continuing operations

   $ 0.15      $ 0.22   

Discontinued operations

     —          —     
  

 

 

   

 

 

 

Net income

   $ 0.15      $ 0.22   
  

 

 

   

 

 

 

Weighted average number of shares outstanding:

    

Basic

     253,316        250,038   
  

 

 

   

 

 

 

Diluted

     255,699        253,727   
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

    

Income from continuing operations, net of income taxes

   $ 39,085      $ 55,378   

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

     (1,395     146   
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

   $ 37,690      $ 55,524   
  

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

     Three Months Ended
March  31,
 
     2012     2011  

Cash flows from operating activities:

    

Consolidated net income

   $ 44,596      $ 62,112   

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

    

Depreciation and amortization

     81,156        66,296   

Amortization related to interest rate swap contract

     20,453        —     

Fair value adjustment related to interest rate swap contract

     16,268        —     

Provision for doubtful accounts

     201,261        172,069   

Stock-based compensation expense

     6,887        6,483   

Losses (gains) on sales of assets, net

     2,337        (60

(Gains) losses on sales of available-for-sale securities, net

     (317     203   

Deferred income tax (benefit) expense

     (9,451     11,695   

Changes in assets and liabilities of continuing operations, net of the effects of acquisitions:

    

Accounts receivable

     (297,782     (235,069

Supplies, prepaid expenses and other current assets

     (5,516     (5,612

Prepaid and recoverable income taxes

     31,380        22,009   

Deferred charges and other long-term assets

     (6,425     (4,454

Accounts payable, accrued expenses and other liabilities

     (22,755     22,752   

Equity compensation excess income tax benefits

     (1,400     (2,897

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

     1,395        (146
  

 

 

   

 

 

 

Net cash provided by continuing operating activities

     62,087        115,381   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions of hospitals and other

     (81,617     (3,696

Additions to property, plant and equipment

     (80,817     (47,422

Proceeds from sales of assets and insurance recoveries

     808        137   

Purchases of available-for-sale securities

     (439,701     (240,538

Proceeds from sales of available-for-sale securities

     521,186        165,952   

Decrease in restricted funds

     782        5,696   
  

 

 

   

 

 

 

Net cash used in continuing investing activities

     (79,359     (119,871
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Principal payments on debt and capital lease obligations

     (20,799     (9,018

Proceeds from exercises of stock options

     —          5,557   

Cash received from noncontrolling shareholders

     1,786        —     

Cash payments to noncontrolling shareholders

     (17,886     (4,546

Equity compensation excess income tax benefits

     1,400        2,897   
  

 

 

   

 

 

 

Net cash used in continuing financing activities

     (35,499     (5,110
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents before discontinued operations

     (52,771     (9,600

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

    

Operating activities

     (2,960     3,625   

Investing activities

     (16     (41
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (55,747     (6,016

Cash and cash equivalents at the beginning of the period

     64,143        101,812   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 8,396      $ 95,796   
  

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATISTICS

 

(unaudited, in thousands)    March 31,
2012
     December 31,
2011
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 8,396       $ 64,143   

Available-for-sale securities

     43,041         122,277   

Accounts receivable, net

     994,719         903,517   

Other current assets

     281,998         305,640   

Assets of discontinued operations

     12,950         14,561   

Property, plant and equipment, net

     3,286,029         3,263,172   

Restricted funds

     99,954         96,244   

Other assets

     1,334,286         1,234,635   
  

 

 

    

 

 

 

Total assets

   $ 6,061,373       $ 6,004,189   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 800,447       $ 803,824   

Deferred income taxes

     253,566         234,080   

Other long-term liabilities

     697,234         691,680   

Long-term debt

     3,476,536         3,489,489   

Stockholders’ equity

     833,590         785,116   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 6,061,373       $ 6,004,189   
  

 

 

    

 

 

 

 

     Three Months Ended
March 31,
 
     2012     2011     % Change  

Continuing Operations

      

Occupancy

     45.2     48.2  

Patient days

     401,105        380,543        5.4

Admissions

     93,378        88,143        5.9

Adjusted admissions

     177,815        159,044        11.8

Average length of stay

     4.9        5.0     

Surgeries

     99,915        82,824        20.6

Emergency room visits

     443,115        390,737        13.4

Net revenue (in thousands)

   $ 1,485,257      $ 1,254,760        18.4

Net revenue per adjusted admission

   $ 8,353      $ 7,889        5.9

Total inpatient revenue percentage

     46.9     50.4  

Total outpatient revenue percentage

     53.1     49.6  

Same Hospitals

      

Occupancy

     45.3     48.2  

Patient days

     361,573        380,543        -5.0

Admissions

     84,455        88,143        -4.2

Adjusted admissions

     158,659        159,044        -0.2

Average length of stay

     4.9        5.0     

Surgeries

     85,943        82,824        3.8

Emergency room visits

     393,133        390,737        0.6

Net revenue (in thousands)

   $ 1,325,992      $ 1,254,760        5.7

Net revenue per adjusted admission

   $ 8,357      $ 7,889        5.9

Total inpatient revenue percentage

     47.1     50.4  

Total outpatient revenue percentage

     52.9     49.6  

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, in thousands)

 

     Three Months Ended  
     March 31,  
     2012     2011  

Net revenue

   $ 1,485,257      $ 1,254,760   

Less acquisitions

     159,265        —     
  

 

 

   

 

 

 

Same hospital net revenue

   $ 1,325,992      $ 1,254,760   
  

 

 

   

 

 

 

Consolidated net income

   $ 44,596      $ 62,112   

Adjustments:

    

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

     1,395        (146

Provision for income taxes

     24,727        35,034   

(Gains) losses on sales of assets, net

     2,337        (60

Interest and other income, net

     (697     (134

Interest expense

     88,763        51,037   

Depreciation and amortization

     78,394        64,628   
  

 

 

   

 

 

 

Adjusted EBITDA (a)

     239,515        212,471   

Adjustment for acquisitions, corporate and other

     24,478        35,246   
  

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA (a)

   $ 263,993      $ 247,717   
  

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA margins =

    

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

     19.9     19.7
  

 

 

   

 

 

 

 

(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, 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 consolidated 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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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, in thousands, except per share amounts)

The following table provides information regarding income from continuing operations attributable to Health Management, excluding the impact of the interest rate swap amortization and mark-to-market adjustments. This table is a non-GAAP presentation; nonetheless, Health Management believes that providing this detail is beneficial to investors and other readers of Health Management’s financial statements due to the significant impact these items had on income from continuing operations attributable to Health Management.

Three Months Ended March 31, 2012

 

     Continuing
Operations
    Interest Rate Swap
Amortization and
Mark-To-Market
Adjustments
    Total, As
Reported
 

Income from continuing operations before income taxes

   $ 107,439      $ (36,721   $ 70,718   

Net income from continuing operations attributable to noncontrolling interests

     (6,906     —          (6,906
  

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes attributable to Health Management Associates, Inc.

     100,533        (36,721     63,812   

Provision for income taxes

     (38,956     14,229        (24,727
  

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Health Management Associates, Inc. common stockholders

   $ 61,577      $ (22,492   $ 39,085   
  

 

 

   

 

 

   

 

 

 

Earnings per share from continuing operations attributable to Health Management Associates, Inc. common stockholders:

      

Basic

   $ 0.24      $ (0.09   $ 0.15   
  

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.24      $ (0.09   $ 0.15   
  

 

 

   

 

 

   

 

 

 

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