EX-99.1 2 d530953dex991.htm PRESS RELEASE Press release

Exhibit 99.1

 

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PRESS RELEASE

FOR IMMEDIATE RELEASE

 

   Contact:    Robert E. Farnham
      Senior Vice President, Finance
      Health Management Associates, Inc.
      (239) 598-3131

HEALTH MANAGEMENT ANNOUNCES

FIRST QUARTER 2013 RESULTS

NAPLES, FLORIDA (May 2, 2013) Health Management Associates, Inc. (NYSE: HMA) today announced its consolidated financial results for the first quarter ended March 31, 2013.

Key metrics from continuing operations for the first quarter (all percentage changes in the bullet points below compare the first quarter of 2013 to the first quarter of 2012) include:

 

   

As shown in the tables accompanying this press release, diluted earnings per share (“EPS”) from continuing operations was $0.09. Excluding the impact of approximately $17.7 million, or $0.04 per diluted share, of interest rate swap accounting and mark-to-market adjustments on the swap, diluted earnings per share from continuing operations was $0.13 per diluted share, as compared to $0.24 per diluted share in the prior year.

 

   

Net revenue was $1.483 billion;

 

   

Adjusted EBITDA was $198.9 million;

 

   

Same hospital net revenue was $1.470 billion;

 

   

Same hospital net revenue per adjusted admission increased 5.0%;

 

   

As shown in the accompanying table, same hospital Adjusted EBITDA was $278.4 million, or an EBITDA margin of 18.9%; and

 

   

Same hospital surgeries decreased 5.6% and emergency room visits increased 1.0%.

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.

 

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Health Management Associates, Inc. / Page 2

 

The continuing effects of declines in uninsured admissions and significant increases in observation stays contributed to 8.8% and 5.8% declines in first quarter same hospital admissions and same hospital adjusted admissions, respectively.

“Our first quarter results did not meet our expectations and reflect a difficult operating environment. I believe, however, that we have taken the necessary steps to adjust our cost structure going forward to achieve our previously updated 2013 annual guidance,” said Gary D. Newsome, Health Management’s President and Chief Executive Officer. “As we transition into this new era of health care reform, we intend to continue our patient-centered approach to health care delivery while increasing efficiency and ultimately quality as we enable America’s best local health care.”

For the first quarter, Health Management’s provision for doubtful accounts was $240.9 million, or 14.0% of net revenue before the provision for doubtful accounts, compared to $201.3 million, or 11.9% of net revenue before the provision of doubtful accounts, for the same quarter a year ago.

Uninsured self-pay patient discounts for the first quarter were $327.2 million, compared to $299.7 million for the same quarter a year ago. Charity/indigent care write-offs were $26.3 million for the first quarter, compared to $22.7 million for the same quarter a year ago.

The sum of uninsured discounts, charity/indigent write-offs and the provision for doubtful accounts, 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 28.6% for the first quarter, compared to 26.1% for the first quarter a year ago, and 28.7% for the quarter ended December 31, 2012. 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 $19.3 million, after cash interest and cash tax payments aggregating $81.2 million. Days sales outstanding, or DSO, saw a two day improvement to 50 days as of March 31, 2013 compared to 52 days as of March 31, 2012. At March 31, 2013, Health Management’s total leverage ratio was 3.71 and interest coverage ratio was 4.23, both ratios being well within its debt covenant requirements.

 

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Health Management Associates, Inc. / Page 3

 

Health Management hospitals recognized $3.8 million and $4.6 million of Medicare and Medicaid Healthcare Information Technology (“HCIT”) incentive payments in the three months ended March 31, 2013 and 2012, respectively. Health Management expects to recognize approximately $75.0 to $85.0 million of HCIT incentive payments during the year ending December 31, 2013.

As previously announced on April 1, 2013, a Health Management subsidiary launched a new joint venture to partner with the 480-bed Bayfront Health System, located in St. Petersburg, Florida. As part of the joint venture, Health Management acquired an 80% interest in Bayfront Health System, and introduced an affiliation with ShandsHealthCare, part of UF&Shands, the University of Florida Academic Health Center. The total purchase price for our 80% interest was approximately $162.0 million, plus a working capital adjustment.

On April 25, 2013, Health Management received a subpoena from the Securities and Exchange Commission (the “SEC”), issued pursuant to an investigation, requesting documents related to accounts receivable, billing write-downs, contractual adjustments, reserves for doubtful accounts, accounts receivable aging and revenue from Medicare, Medicaid and from privately insured or uninsured patients. Management is cooperating with the SEC’s investigation. Health Management is unable to determine the potential impact, if any, of this investigation.

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, 2013 on Friday, May 3, 2013 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 and webcast.

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 11,100 licensed beds in non-urban communities located throughout the United States.

 

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Health Management Associates, Inc. / Page 4

 

All references to “Health Management,” “HMA” or the “Company” used in this release refer to Health Management Associates, Inc. and its affiliates.

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,” “pending,” “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 projections of revenue, provisions for doubtful accounts, income or loss, capital expenditures, debt structure, principal payments on debt, capital structure, the amount and timing of funds under the meaningful use measurement standard of various Healthcare Information Technology incentive programs, other financial items and operating statistics, statements regarding our plans and objectives for future operations, the impact of changes in observation stays, our ability to achieve process efficiencies, factors we believe may have an impact on our deductibles and co-pays, acquisitions, acquisition financing, divestitures, joint ventures, market service development and other transactions, statements of future economic performance, statements regarding our legal proceedings and other loss contingencies (including, but not limited to, the timing and estimated costs of such matters), statements regarding market risk exposures, statements regarding our ability to achieve cost efficiencies and/or reductions, statements regarding the effects and/or interpretations of recently enacted or future health care laws and regulations, statements regarding the potential impact of health care exchanges, statements of the beliefs or assumptions underlying or relating to any of the foregoing statements, and statements that 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 beliefs or 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,  
     2013     2012  

Net revenue before the provision for doubtful accounts

   $ 1,723,841      $ 1,686,518   

Provision for doubtful accounts

     (240,879     (201,261
  

 

 

   

 

 

 

Net revenue

     1,482,962        1,485,257   
  

 

 

   

 

 

 

Salaries and benefits

     684,191        659,084   

Supplies

     235,768        234,443   

Rent expense

     42,156        45,025   

Other operating expenses

     325,775        311,780   

Medicare and Medicaid HCIT incentive payments

     (3,826     (4,590

Depreciation and amortization

     93,875        78,394   

Interest expense

     69,429        88,763   

Other

     (1,891     1,640   
  

 

 

   

 

 

 
     1,445,477        1,414,539   
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     37,485        70,718   

Provision for income taxes

     (9,718     (24,727
  

 

 

   

 

 

 

Income from continuing operations

     27,767        45,991   

Loss from discontinued operations, net of income taxes

     —          (1,395
  

 

 

   

 

 

 

Consolidated net income

     27,767        44,596   

Net income attributable to noncontrolling interests

     (4,665     (6,906
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

   $ 23,102      $ 37,690   
  

 

 

   

 

 

 

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

    

Basic and Diluted:

    

Continuing operations

   $ 0.09      $ 0.15   

Discontinued operations

     —          —     
  

 

 

   

 

 

 

Net income

   $ 0.09      $ 0.15   
  

 

 

   

 

 

 

Weighted average number of shares outstanding:

    

Basic

     256,152        253,316   
  

 

 

   

 

 

 

Diluted

     260,550        255,699   
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

    

Income from continuing operations, net of income taxes

   $ 23,102      $ 39,085   

Loss from discontinued operations, net of income taxes

     —          (1,395
  

 

 

   

 

 

 

Net income attributable to Health Management Associates, Inc.

   $ 23,102      $ 37,690   
  

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Cash flows from operating activities:

    

Consolidated net income

   $ 27,767      $ 44,596   

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

    

Depreciation and amortization

     97,172        81,156   

Amortization related to interest rate swap contract

     18,356        20,453   

Fair value adjustment related to interest rate swap contract

     (700     16,268   

Provision for doubtful accounts

     240,879        201,261   

Stock-based compensation expense

     6,989        6,887   

(Gains) losses on sales of assets, net

     (90     2,337   

Gains on sales of available-for-sale securities, net

     (2,145     (317

Write-offs of deferred debt issuance costs

     584        —     

Deferred income tax (benefit) expense

     12,148        (9,451

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

    

Accounts receivable

     (278,438     (297,782

Supplies, prepaid expenses and other current assets

     (621     (5,516

Prepaid and recoverable income taxes

     (3,102     31,380   

Deferred charges and other long-term assets

     (5,248     (6,425

Accounts payable, accrued expenses and other liabilities

     (89,820     (22,755

Equity compensation excess income tax benefits

     (4,388     (1,400

Loss from discontinued operations, net of income taxes

     —          1,395   
  

 

 

   

 

 

 

Net cash provided by continuing operating activities

     19,343        62,087   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Additions to property, plant and equipment

     (61,142     (80,817

Acquisitions of hospitals and other

     (1,525     (81,617

Proceeds from sales of assets and insurance recoveries

     572        808   

Purchases of available-for-sale securities

     (416,776     (439,701

Proceeds from sales of available-for-sale securities

     487,627        521,186   

Decrease in restricted funds

     3,253        782   
  

 

 

   

 

 

 

Net cash provided by (used in) continuing investing activities

     12,009        (79,359
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Principal payments on debt and capital lease obligations

     (126,328     (20,799

Payments for debt issuance costs

     (1,588     —     

Proceeds from long-term borrowings

     71,400        —     

Proceeds from exercise of stock options

     13,197        —     

Cash payments to noncontrolling shareholders

     (14,236     (17,886

Cash received from noncontrolling shareholders

     —          1,786   

Equity compensation excess income tax benefits

     4,388        1,400   
  

 

 

   

 

 

 

Net cash used in continuing financing activities

     (53,167     (35,499
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents before discontinued operations

     (21,815     (52,771

Net decreases in cash and cash equivalents from discontinued operations:

    

Operating activities

     —          (2,960

Investing activities

     —          (16
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (21,815     (55,747

Cash and cash equivalents at the beginning of the period

     59,173        64,143   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 37,358      $ 8,396   
  

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATISTICS

 

     March 31,      December 31,  
(unaudited, dollars in thousands)    2013      2012  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 37,358       $ 59,173   

Available-for-sale securities

     52,207         121,106   

Accounts receivable, net

     1,003,128         976,872   

Other current assets

     311,363         307,847   

Assets of discontinued operations

     6,250         6,250   

Property, plant and equipment, net

     3,454,132         3,463,052   

Restricted funds

     126,581         125,532   

Other assets

     1,326,365         1,340,957   
  

 

 

    

 

 

 

Total assets

   $ 6,317,384       $ 6,400,789   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 842,858       $ 972,423   

Deferred income taxes

     324,015         301,237   

Other long-term liabilities

     680,066         673,344   

Long-term debt

     3,411,004         3,433,260   

Stockholders’ equity

     1,059,441         1,020,525   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 6,317,384       $ 6,400,789   
  

 

 

    

 

 

 

 

     Three Months Ended March 31,  
     2013     2012     % Change  

Continuing Operations

      

Occupancy

     41.5     44.7  

Patient days

     379,366        401,105        –5.4

Admissions

     86,279        93,378        –7.6

Adjusted admissions

     170,209        177,815        –4.3

Average length of stay

     4.4        4.3     

Surgeries

     95,596        100,206        –4.6

Emergency room visits

     444,873        428,184        3.9

Net revenue (in thousands)

   $ 1,482,962      $ 1,485,257        –0.2

Net revenue per adjusted admission

   $ 8,713      $ 8,353        4.3

Total inpatient revenue percentage

     44.3     46.9  

Total outpatient revenue percentage

     55.7     53.1  

Same Hospitals

      

Occupancy

     42.1     44.7  

Patient days

     375,917        401,105        –6.3

Admissions

     85,182        93,378        –8.8

Adjusted admissions

     167,575        177,815        –5.8

Average length of stay

     4.4        4.3     

Surgeries

     94,571        100,206        –5.6

Emergency room visits

     432,264        428,184        1.0

Net revenue (in thousands)

   $ 1,470,032      $ 1,485,257        –1.0

Net revenue per adjusted admission

   $ 8,772      $ 8,353        5.0

Total inpatient revenue percentage

     44.4     46.9  

Total outpatient revenue percentage

     55.6     53.1  

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, dollars in thousands)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Net revenue

   $ 1,482,962      $ 1,485,257   

Less acquisitions

     12,930        —     
  

 

 

   

 

 

 

Same hospital net revenue

   $ 1,470,032      $ 1,485,257   
  

 

 

   

 

 

 

Consolidated net income

   $ 27,767      $ 44,596   

Adjustments:

    

Loss from discontinued operations, net of income taxes

     —          1,395   

Provision for income taxes

     9,718        24,727   

(Gains) losses on sales of assets, net

     (90     2,337   

Interest and other income, net

     (1,801     (697

Interest expense

     69,429        88,763   

Depreciation and amortization

     93,875        78,394   
  

 

 

   

 

 

 

Adjusted EBITDA (a)

     198,898        239,515   

Adjustment for acquisitions, corporate and other

     79,495        55,162   
  

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA (a)

   $ 278,393      $ 294,677   
  

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA margins =

    

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

     18.9     19.8
  

 

 

   

 

 

 

 

(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, 2013

 

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

Income from continuing operations before income taxes

   $ 55,141      $ (17,656   $ 37,485   

Net income from continuing operations attributable to noncontrolling interests

     (4,665     —          (4,665
  

 

 

   

 

 

   

 

 

 

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

     50,476        (17,656     32,820   

Provision for income taxes

     (16,560     6,842        (9,718
  

 

 

   

 

 

   

 

 

 

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

   $ 33,916      $ (10,814   $ 23,102   
  

 

 

   

 

 

   

 

 

 

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

      

Basic and Diluted

   $ 0.13      $ (0.04   $ 0.09   
  

 

 

   

 

 

   

 

 

 

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 and Diluted

   $ 0.24      $ (0.09   $ 0.15   
  

 

 

   

 

 

   

 

 

 

 

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