Health Management Associates
) reported a drastic fall in earnings to 7 cents per share in the
second quarter of 2013 from 21 cents in the year-ago quarter,
missing the Zacks Consensus Estimate by 6 cents. However,
earnings were above the company's guidance of 5 cents. Adjusted
earnings are calculated excluding the impact of approximately
$19.3 million, or 4 cents per share, of interest rate swap
accounting and mark-to-market adjustments on the swap.
Net revenues fell marginally by 0.5% to $1.5 billion and
almost met the Zacks Consensus Estimate. Same hospital net
revenues were $1.4 billion while same hospital net revenues per
adjusted admission dipped 2.7% in the quarter.
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HMA's provision for doubtful accounts was $240.9 million, or
14.1% of net revenue before the provision for doubtful accounts,
compared to $214.6 million, or 12.7% in the second quarter of
Uninsured self-pay patient discounts were $369.0 million versus
$311.9 million in the 2012-quarter. Charity/indigent care
write-offs were $28.2 million compared with $24.3 million in the
same quarter a year ago.
Health Management Associates had cash and cash equivalents of
$29.2 million as of Jun 30, 2013, down from $59.2 million as of
Dec 31, 2012. Long-term debt rose to $3.6 billion as of Jun 30,
2013 compared with $3.4 billion as of Dec 31, 2012.
In the first six months of 2013, cash flow from operating
activities more than halved to $127.7 million from $291.0 million
in the same period of 2012, mainly driven by lower earnings.
Capital expenditure decreased to $143.0 million compared with
$194.2 million a year ago.
Health Management Associates is a leading operator of general
acute care hospitals. The company is engaged in the ownership and
operation of general acute care hospitals in non-urban
communities across the U.S. The company is an active acquirer of
underperforming hospitals with a turnaround potential in
Recently, HMA and peer
Community Health Systems Inc.
) disclosed a definitive merger agreement. According to the
agreement, Community Health Systems will take over Health
Management for about $7.6 billion (including the latter's debt of
$3.7 billion) in cash and stock. The acquisition is expected to
complete in the first quarter of 2014.
Currently, HMA carries a Zacks Rank #3 (Hold). We are more
positive about other stocks such as
Acadia Healthcare Company, Inc.
HCA Holdings, Inc.
), which carries a Zacks Rank #2 (Buy).