Health Management Associates ( HMA ), a leading operator of general acute care hospitals, recently previewed earnings results for the first quarter of 2013.
Health Management expects net revenues of about $1.48 billion from continuing operations for the first quarter. The company expects adjusted EBITDA in the range of $192 million to $196 million. Earnings per share from continuing operations (attributable to the company and excluding costs associated with debt) are expected to be 8 cents or 9 cents. Upon exclusion of about 4 cents of expense for interest rate swap, diluted earnings per share should be 12 cents or 13 cents.
Adjusted admissions are expected to drop about 5.7% in the first quarter and admissions should be down 8.8% (both for continuing same hospital operations). Provision for doubtful debts for the reported quarter should be between 14% and 14.2%, higher than 11.9% in the prior-year quarter.
For 2013, the company guided to net revenues (before bad debts) of $6.8 billion to $7.0 billion and same hospital adjusted admissions growth in the range of (3%) to 0.0%. The company expects adjusted EBITDA of $978 million to $1,010 million for 2013 and provision for doubtful debts, as a proportion of revenues, is pegged in the range of 14% to 15%. Earnings from continuing operations (attributable to Health Management) are expected to be between 86 cents and 95 cents.
Health Management 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 high-growth markets. The company runs 71 hospitals with about 11,000 beds in rural and semi-urban areas across the country. Health Management's competitors in niche markets include Community Health Systems ( CYH ).
Health Management should benefit from a gradual growth in admissions largely due to improvements in Emergency Room, sustained physician recruitment and service development. Moreover, it is well placed to expand margins from continuing operations and drive above-industry average earnings growth. However, the debt burden for the company remains sizeable.
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