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8-K - FORM 8-K - HEALTH MANAGEMENT ASSOCIATES, INCd627923d8k.htm
EX-99.2 - PRESS RELEASE DATED NOVEMBER 13, 2013 - HEALTH MANAGEMENT ASSOCIATES, INCd627923dex992.htm

Exhibit 99.1

 

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PRESS RELEASE

FOR IMMEDIATE RELEASE

HEALTH MANAGEMENT ASSOCIATES ANNOUNCES

THIRD QUARTER 2013 RESULTS

NAPLES, FLORIDA (November 13, 2013) Health Management Associates, Inc. (NYSE: HMA) (“HMA”) today announced its consolidated financial results for the third quarter ended September 30, 2013 and the completion of the previously announced restatements.

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

 

    Diluted earnings per share (“EPS”) from continuing operations was $(0.37). Excluding the impact of approximately $18.9 million, or $0.04 per diluted share, of interest rate swap accounting and mark-to-market adjustments on the swap and approximately $102.9 million, or $0.32 per diluted share, of change of control, severance and merger related costs, diluted earnings per share from continuing operations was a loss of $0.01 per diluted share, as compared to earnings of $0.22 per diluted share in the prior year;

 

    Net revenue was $1.421 billion;

 

    Adjusted EBITDA was $135.0 million compared to $234.8 million for the same quarter last year. Adjusted EBITDA for the 2013 third quarter includes approximately $2.0 million of Medicare and Medicaid Healthcare Information Technology (“HCIT”) incentives payments, while 2012 third quarter EBITDA includes approximately $24.2 million of HCIT payments. Excluding the HCIT impact in the third quarter of 2013 and 2012, Adjusted EBITDA for the third quarter 2013 was $133.0 million compared to $210.6 million for the same quarter a year ago;

 

    Same hospital net revenue was $1.354 billion;

 

    Same hospital net revenue per adjusted admission decreased by 3.1%;

 

    Same hospital Adjusted EBITDA was $200.8 million, representing an EBITDA margin of 14.8% and;

 

    Same hospital surgeries decreased by 2.1% and emergency room visits decreased by 2.2%.

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 HMA defines and uses Adjusted EBITDA.

 

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Health Management Associates, Inc. / Page 2

 

During the third quarter, the Company incurred approximately $102.9 million of expenses related to change of control, severance and merger related costs. On August 16, 2013, the Company disclosed that shareholders holding a majority of the outstanding shares of the Company’s common stock voted to replace the incumbent board members with the current board members, triggering a change in control pursuant to HMA’s incentive compensation plans. As a result, all of the outstanding and unvested equity and performance cash awards, stock options and stock awards became vested. This vesting resulted in the recognition of approximately $85.1 million of incremental compensation expense. These expenses are not expected to recur. In addition, the Company has incurred approximately $17.7 million of costs associated with retention and severance agreements with key personnel and the engagement of various advisors related to the merger agreement with Community Health Systems, Inc. (NYSE:CYH) (“CHS”) previously announced on July 30, 2013 and the consent solicitation process to replace the board.

Compared to the same period a year ago, same hospital admissions and adjusted admissions for the third quarter ended September 30, 2013 decreased by 6.8% and 2.9%, respectively.

For the third quarter, HMA’s provision for doubtful accounts was $255.4 million, or 15.2% of net revenue before the provision for doubtful accounts, compared to $224.1 million, or 13.5% of net revenue before the provision of doubtful accounts, for the same quarter a year ago.

Uninsured self-pay patient discounts for the third quarter were $387.7 million, compared to $334.7 million for the same quarter a year ago. Charity/indigent care write-offs were $26.8 million for the third quarter, compared to $28.1 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 HMA refers to as its Uncompensated Patient Care Percentage) was 32.0% for the third quarter, compared to 29.0% for the third quarter a year ago, and 30.3% for the quarter ended June 30, 2013. 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.

 

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Health Management Associates, Inc. / Page 3

 

Cash flow from continuing operating activities for the third quarter was ($7.3) million, after cash interest and cash tax payments aggregating $79.6 million. During the third quarter, as a result of a change in control of the Company’s board, the Company paid approximately $40 million in cash related to the vesting of certain cash awards under the Company’s incentive compensation programs and approximately $35 million in cash for the corresponding payroll taxes associated with the vesting of stock awards. In addition, cash flow from operations for the quarter was impacted by an increase of approximately $50 million in accounts receivable related to the previously announced joint venture with Bayfront Health Systems. Medicare and Medicaid tie-in notices for Bayfront were received late in the third quarter, and the Company expects to bill and collect these accounts receivable in the fourth quarter. As of September 30, 2013, HMA’s total leverage ratio was 4.8 and interest coverage ratio was 3.6 both ratios within its debt covenant requirements.

For the nine months ended September 30, 2013, HMA reported net revenue of $4.371 billion, Adjusted EBITDA of $522.1 million, and consolidated diluted EPS from continuing operations of $(0.28). Excluding the impact of approximately $57.7 million, or $0.14 per diluted share, for interest rate swap accounting as well as mark-to-market adjustments on the swap due to interest rate conditions, and $112.0 million, or $0.35 per diluted share, for change of control, severance and merger related costs, diluted earnings per share from continuing operations was $0.21 for the nine months ended September 30, 2013.

The Company has completed its previously announced restatement to correct the accounting treatment of approximately $31.0 million of Medicare and Medicaid HCIT incentive payments which were recognized as income by the Company between July 1, 2011 and June 30, 2013 for 11 hospitals that did not meet “meaningful use” criteria. Earlier today the Company filed amendments to its Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2013 and June 30, 2013 containing restated financial statements. The restatements also reflect certain immaterial unrelated adjustments. The Company has corrected its accounting treatment and is in the process of implementing new controls to remediate a material weakness in internal control over financial reporting that existed at those dates and at September 30, 2013 related to the administration, oversight and accounting for the Company’s electronic health records enrollment process. As previously reported, the Company has repaid the majority of the $31.0 million, and is in the process of repaying the balance, to the governmental agencies responsible for the HCIT programs and expects to re-enroll the hospitals in the HCIT programs and may be able to recoup some portion of the amount repaid.

 

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Health Management Associates, Inc. / Page 4

 

As reflected in the tables accompanying this press release, the Company is updating its 2013 annual guidance. For the fiscal year ended December 31, 2013, the Company expects net revenue, before the provision for doubtful accounts, to be between $6.84 billion and $6.86 billion, Adjusted EBITDA to be between $790 million and $800 million, and diluted EPS to be between $0.48 and $0.50. This guidance reflects our third quarter results, and assumes continued admission softness and net revenue pressure for the balance of the year. In addition, these estimates include approximately $60 million to $65 million of expected HCIT incentive payments in the fourth quarter, and approximately $10 million to $15 million of anticipated fourth quarter negative impact related to Blue Cross/Blue Shield relations in Mississippi.

As previously announced, CHS and HMA have entered into a definitive merger agreement under which CHS will acquire each outstanding share of HMA common stock for $10.50 in cash, 0.06942 of a share of CHS common stock and a Contingent Value Right, which could yield additional cash consideration of up to $1.00 per share, depending on certain matters described in the Registration Statement on Form S-4 filed by CHS. On July 30, 2013, the cash and stock portion of the consideration was valued at $13.78 per HMA share and as of November 11, 2013, the consideration has a value of approximately $13.42, in each case, plus the Contingent Value Right. As previously disclosed, the parties expect to close the transaction during the first quarter of 2014. The merger is subject to satisfaction of customary closing conditions, including approval by HMA’s stockholders holding 70 percent of HMA’s outstanding shares, antitrust clearance, receipt of other regulatory approvals and the absence of certain adverse developments. HMA will host a listen-only conference call and webcast to discuss the contents of this press release and HMA’s consolidated financial results for the three and nine months ended September 30, 2013 later today, November 13, 2013 at 10:00 a.m. ET. Investors are invited to access the webcast via HMA’s website at www.HMA.com or via www.streetevents.com. Alternatively, investors may listen to the conference call by dialing US: (800) 585-8367 / International: (404) 537-3406, Conference ID: 99225973.

HMA will archive a copy of the audio webcast of the conference call, along with any related information that HMA 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.

 

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Health Management Associates, Inc. / Page 5

 

About HMA

Health Management Associates, Inc., through its affiliates, owns and manages hospitals and ambulatory surgery centers in small cities and selected larger urban markets. HMA currently operates 71 hospitals in 15 states with approximately 11,000 licensed beds. Shares in Health Management Associates are traded on the New York Stock Exchange under the symbol “HMA.”

Important Information and Where to Find It

In connection with the proposed transaction, CHS has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that includes a preliminary proxy statement of HMA and a preliminary prospectus of CHS. CHS and HMA plan to file a definitive proxy statement/prospectus and other relevant documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND DEFINITIVE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CHS, HMA AND THE MERGER. When completed and available, the definitive proxy statement/prospectus and a form of proxy will be mailed to stockholders of HMA. These materials and other documents filed with the SEC will be available at no charge at the SEC’s website at www.sec.gov. In addition, stockholders will be able to obtain copies of the definitive proxy statement/prospectus (when they become available) and other documents filed with the SEC from CHS’s website at www.chs.net or and HMA’s website at www.hma.com or by directing such request to CHS at 4000 Meridian Boulevard, Franklin, Tennessee 37067, Attention: Investor Relations, or to HMA at 5811 Pelican Bay Boulevard, Naples, Florida 34108, Attention: Investor Relations.

CHS, HMA and certain of their respective directors, executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the merger. Information regarding CHS’s directors and executive officers is available in CHS’s proxy statement filed with the SEC on April 5, 2013 in connection with its 2013 annual meeting of stockholders, and information regarding HMA’s directors and executive officers is available in HMA’s preliminary proxy statement contained in the registration statement on Form S-4 filed by CHS with SEC on September 24, 2013, as may be amended.

 

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Health Management Associates, Inc. / Page 6

 

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Forward-Looking Statements

Certain statements contained in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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, remediation of the related material weakness in internal control over financial reporting, 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.” These statements also include, but are not limited to, statements regarding the expected timing of the completion of the merger with CHS, the benefits of the

 

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Health Management Associates, Inc. / Page 7

 

merger, including future financial and operating results, the combined company’s plans, objectives, expectations and other statements that are not historical facts. Such statements are based on the views and assumptions of the management of CHS and HMA and are subject to significant risks and uncertainties. Actual future events or results may differ materially from these statements. Such differences may result from the following factors: the ability to close the transaction on the proposed terms and within the anticipated time period, or at all, which is dependent on the parties’ ability to satisfy certain closing conditions, including the receipt of governmental approvals; the risk that the benefits of the transaction, including cost savings and other synergies may not be fully realized or may take longer to realize than expected; the impact of the transaction on third-party relationships; actions taken by either of the companies; changes in regulatory, social and political conditions, as well as general economic conditions. Additional risks and factors that may affect results are set forth in HMA’s and CHS’s filings with the Securities and Exchange Commission, including each company’s Annual Report on Form 10-K/A for the fiscal year ending December 31, 2012, as may be amended or supplemented.

The forward-looking statements speak only as of the date of this communication. Except as required by law, HMA does not undertake any obligation to update these statements.

(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
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  
           (Restated)           (Restated)  

Net revenue before the provision for doubtful accounts

   $ 1,676,679      $ 1,662,937      $ 5,100,474      $ 5,033,496   

Provision for doubtful accounts

     (255,436     (224,078     (729,695     (639,902
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     1,421,243        1,438,859        4,370,779        4,393,594   
  

 

 

   

 

 

   

 

 

   

 

 

 

Salaries and benefits

     655,839        637,305        2,013,515        1,941,475   

Supplies

     220,522        216,819        689,034        677,416   

Rent expense

     40,493        41,807        125,706        130,521   

Other operating expenses

     371,392        332,356        1,043,982        970,613   

Medicare and Medicaid HCIT incentive payments

     (2,015     (24,224     (23,607     (29,875

Change in control and other related expense

     102,886        —          112,026        —     

Depreciation and amortization

     99,351        91,563        289,595        255,575   

Interest expense

     70,747        76,916        212,352        241,049   

Other

     884        (2,363     (2,848     (1,745
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,560,099        1,370,179        4,459,755        4,185,029   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (138,856     68,680        (88,976     208,565   

Income tax benefit (provision)

     65,509        (19,663     48,796        (66,806
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (73,347     49,017        (40,180     141,759   

Loss from discontinued operations, net of income taxes

     —          (1,389     —          (5,805
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

     (73,347     47,628        (40,180     135,954   

Net income attributable to noncontrolling interests

     (3,485     (6,685     (12,804     (21,757

Accretion of redeemable equity securities

     (19,813     —          (19,813     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Health Management Associates, Inc. common stockholders

   $ (96,645   $ 40,943      $ (72,797   $ 114,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic:

        

Continuing operations

   $ (0.37   $ 0.16      $ (0.28   $ 0.47   

Discontinued operations

     —          —          —          (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (0.37   $ 0.16      $ (0.28   $ 0.45   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

Continuing operations

   $ (0.37   $ 0.16      $ (0.28   $ 0.47   

Discontinued operations

     —          —          —          (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (0.37   $ 0.16      $ (0.28   $ 0.45   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding:

        

Basic

     261,927        254,416        258,911        254,111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     261,927        256,784        258,911        256,172   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Health Management Associates, Inc.

        

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

   $ (76,832   $ 42,332      $ (52,984   $ 120,002   

Loss from discontinued operations, net of income taxes

     —          (1,389     —          (5,805
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Health Management Associates, Inc.

   $ (76,832   $ 40,943      $ (52,984   $ 114,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

     Nine Months Ended
September 30,
 
     2013     2012  
           (Restated)  

Cash flows from operating activities:

    

Consolidated net income (loss)

   $ (40,180   $ 135,954   

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

    

Depreciation and amortization

     298,537        263,819   

Amortization related to interest rate swap contract

     53,515        59,937   

Fair value adjustment related to interest rate swap contract

     2,312        22,965   

Provision for doubtful accounts

     729,695        639,902   

Stock-based compensation expense

     58,850        19,492   

(Gains) losses on sales of assets, net

     (1,141     2,114   

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

     (1,478     (2,350

Write-offs of deferred debt issuance costs

     584        —     

Deferred income tax (benefit) expense

     45,105        (22,068

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

    

Accounts receivable

     (784,618     (716,046

Supplies, prepaid expenses and other current assets

     1,771        (1,962

Prepaid and recoverable income taxes

     (102,173     51,690   

Deferred charges and other long-term assets

     (5,186     (1,839

Accounts payable, accrued expenses and other liabilities

     (116,329     2,096   

Equity compensation excess income tax benefits

     (19,056     (1,444

Loss from discontinued operations, net of income taxes

     —          5,805   
  

 

 

   

 

 

 

Net cash provided by continuing operating activities

     120,208        458,065   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Additions to property, plant and equipment

     (207,652     (282,343

Acquisitions of hospitals and other

     (173,653     (71,475

Proceeds from sales of assets and insurance recoveries

     5,992        1,932   

Proceeds from sales of discontinued operations

     —          1,392   

Purchases of available-for-sale securities

     (471,915     (1,431,548

Proceeds from sales of available-for-sale securities

     530,199        1,412,580   

Increase in restricted funds

     (692     (18,723
  

 

 

   

 

 

 

Net cash used in continuing investing activities

     (317,721     (388,185
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Principal payments on debt and capital lease obligations

     (358,511     (87,927

Proceeds from long-term borrowings

     476,900        17,000   

Proceeds from exercise of stock options

     27,949        —     

Cash payments to noncontrolling shareholders

     (24,175     (30,815

Payments for debt issuance costs

     (1,588     (636

Cash received from noncontrolling shareholders

     —          3,591   

Equity compensation excess income tax benefits

     19,056        1,444   
  

 

 

   

 

 

 

Net cash provided by (used in) continuing financing activities

     139,631        (97,343
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents before discontinued operations

     (57,882     (27,463

Net decreases in cash and cash equivalents from discontinued operations:

    

Operating activities

     —          (1,327

Investing activities

     —          (135
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (57,882     (28,925

Cash and cash equivalents at the beginning of the period

     59,173        64,143   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 1,291      $ 35,218   
  

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS AND STATISTICS

 

(unaudited, dollars in thousands)    September 30,
2013
     December 31,
2012
 
            (Restated)  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 1,291       $ 59,173   

Available-for-sale securities

     62,961         121,106   

Accounts receivable, net

     970,132         957,918   

Other current assets

     422,022         307,847   

Assets of discontinued operations

     6,250         6,250   

Property, plant and equipment, net

     3,590,832         3,465,890   

Restricted funds

     125,042         125,532   

Other assets

     1,446,373         1,342,638   
  

 

 

    

 

 

 

Total assets

   $ 6,624,903       $ 6,386,354   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 852,294       $ 976,407   

Deferred income taxes

     386,543         301,237   

Other long-term liabilities

     741,525         673,344   

Long-term debt

     3,636,948         3,440,353   

Stockholders’ equity

     1,007,593         995,013   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 6,624,903       $ 6,386,354   
  

 

 

    

 

 

 

 

    Three Months Ended September 30,     Nine Months Ended September 30,  
    2013     2012     % Change     2013     2012     % Change  
    (Restated)     (Restated)  

Continuing Operations

           

Occupancy

    35.6     38.9       38.1     40.5  

Patient days

    348,812        357,094        –2.3     1,089,642        1,120,123        –2.7

Admissions

    82,936        84,704        –2.1     253,677        264,548        –4.1

Adjusted admissions

    171,215        171,206        0.0     514,397        521,459        –1.4

Average length of stay

    4.2        4.2          4.3        4.2     

Surgeries

    97,603        97,253        0.4     293,598        297,177        –1.2

Emergency room visits

    444,105        441,805        0.5     1,352,418        1,338,884        1.0

Net revenue (in thousands)

  $ 1,421,243      $ 1,438,859        –1.2   $ 4,370,779      $ 4,393,594        –0.5

Net revenue per adjusted admission

  $ 8,301      $ 8,404        –1.2   $ 8,497      $ 8,426        0.8

Total inpatient revenue percentage

    43.7     44.6       43.6     45.6  

Total outpatient revenue percentage

    56.3     55.4       56.4     54.4  

Same Hospitals

           

Occupancy

    35.1     38.9       38.0     40.5  

Patient days

    328,484        357,094        –8.0     1,046,486        1,120,123        –6.6

Admissions

    78,951        84,704        –6.8     244,791        264,548        –7.5

Adjusted admissions

    166,284        171,206        –2.9     501,789        521,459        –3.8

Average length of stay

    4.2        4.2          4.3        4.2     

Surgeries

    95,169        97,253        –2.1     287,748        297,177        –3.2

Emergency room visits

    432,204        441,805        –2.2     1,315,411        1,338,884        –1.8

Net revenue (in thousands)

  $ 1,354,030      $ 1,438,859        –5.9   $ 4,224,379      $ 4,393,594        –3.9

Net revenue per adjusted admission

  $ 8,143      $ 8,404        –3.1   $ 8,419      $ 8,426        –0.1

Total inpatient revenue percentage

    42.9     44.6       43.2     45.6  

Total outpatient revenue percentage

    57.1     55.4       56.8     54.4  

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, dollars in thousands)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  
           (Restated)           (Restated)  

Net revenue

   $ 1,421,243      $ 1,438,859      $ 4,370,779      $ 4,393,594   

Less acquisitions

     67,213        —          146,400        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Same hospital net revenue

   $ 1,354,030      $ 1,438,859      $ 4,224,379      $ 4,393,594   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

   $ (73,347   $ 47,628      $ (40,180   $ 135,954   

Adjustments:

        

Loss from discontinued operations, net of income taxes

     —          1,389        —          5,805   

Income tax provision (benefit)

     (65,509     19,663        (48,796     66,806   

Losses (gains) on sales of assets, net

     118        (77     (1,141     2,114   

Change in control and other related expense

     102,886        —          112,026        —     

Interest and other income, net

     766        (2,286     (1,707     (3,859

Interest expense

     70,747        76,916        212,352        241,049   

Depreciation and amortization

     99,351        91,563        289,595        255,575   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (a)

     135,012        234,796        522,149        703,444   

Adjustment for acquisitions, corporate and other

     65,793        55,129        202,701        170,718   
  

 

 

   

 

 

   

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA (a)

   $ 200,805      $ 289,925      $ 724,850      $ 874,162   
  

 

 

   

 

 

   

 

 

   

 

 

 

Same hospital operating Adjusted EBITDA margins =

        

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

     14.8     20.1     17.2     19.9
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Adjusted EBITDA is defined as consolidated net (loss) income before discontinued operations, net (gains) losses on sales of assets, change in control and other related expenses, 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 HMA’s consolidated financial statements, as it is commonly used as an analytical indicator within the health care industry and HMA’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 tables provide information regarding income from continuing operations attributable to HMA, excluding the impact of the interest rate swap amortization and mark-to-market adjustments and change in control and other related costs. This table is a non-GAAP presentation; nonetheless, HMA believes that providing this detail is beneficial to investors and other readers of HMA’s financial statements due to the significant impact these items had on income from continuing operations attributable to HMA.

Three Months Ended September 30, 2013

 

     Continuing
Operations
    Interest Rate Swap
Amortization and
Mark-To-Market
Adjustments
    Change in Control
and Other
Related Costs
    Total, As
Reported
 

Loss from continuing operations before income taxes

   $ (17,115   $ (18,855   $ (102,886   $ (138,856

Net income from continuing operations attributable to noncontrolling interests

     (3,485     —          —          (3,485
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     (20,600     (18,855     (102,886     (142,341

Income tax benefit

     18,335        7,306        39,868        65,509   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     (2,265     (11,549     (63,018     (76,832

Accretion of redeemable equity securities

     —          —          (19,813     (19,813
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Health Management Associates, Inc. common stockholders

   $ (2,265   $ (11,549   $ (82,831   $ (96,645
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ (0.01   $ (0.04   $ (0.32   $ (0.37
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.01   $ (0.04   $ (0.32   $ (0.37
  

 

 

   

 

 

   

 

 

   

 

 

 

Three Months Ended September 30, 2012

(Restated)

 

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

Income from continuing operations before income taxes

   $ 92,601      $ (23,921   $ 68,680   

Net income from continuing operations attributable to noncontrolling interests

     (6,685     —          (6,685
  

 

 

   

 

 

   

 

 

 

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

     85,916        (23,921     61,995   

Income tax provision

     (27,523     7,860        (19,663
  

 

 

   

 

 

   

 

 

 

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

   $ 58,393      $ (16,061   $ 42,332   
  

 

 

   

 

 

   

 

 

 

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

      

Basic

   $ 0.22      $ (0.06   $ 0.16   
  

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.22      $ (0.06   $ 0.16   
  

 

 

   

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(unaudited, in thousands, except per share amounts)

 

Nine Months Ended September 30, 2013

 

           Interest Rate Swap              
           Amortization and     Change in Control        
     Continuing     Mark-To-Market     and Other     Total, As  
     Operations     Adjustments     Related Costs     Reported  

Income (loss) from continuing operations before income taxes

   $ 80,761      $ (57,711   $ (112,026   $ (88,976

Net income from continuing operations attributable to noncontrolling interests

     (12,804     —          —          (12,804
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     67,957        (57,711     (112,026     (101,780

Income tax benefit (provision)

     (16,977     22,363        43,410        48,796   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     50,980        (35,348     (68,616     (52,984

Accretion of redeemable equity securities

     —          —          (19,813     (19,813
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Health Management Associates, Inc. common stockholders

   $ 50,980      $ (35,348   $ (88,429   $ (72,797
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ 0.21      $ (0.14   $ (0.35   $ (0.28
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.21      $ (0.14   $ (0.35   $ (0.28
  

 

 

   

 

 

   

 

 

   

 

 

 

Nine Months Ended September 30, 2012

(Restated)

 

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

Income from continuing operations before income taxes

   $ 291,467      $ (82,902   $ 208,565   

Net income from continuing operations attributable to noncontrolling interests

     (21,757     —          (21,757
  

 

 

   

 

 

   

 

 

 

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

     269,710        (82,902     186,808   

Income tax provision

     (97,314     30,508        (66,806
  

 

 

   

 

 

   

 

 

 

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

   $ 172,396      $ (52,394   $ 120,002   
  

 

 

   

 

 

   

 

 

 

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

      

Basic

   $ 0.68      $ (0.21   $ 0.47   
  

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.67      $ (0.20   $ 0.47   
  

 

 

   

 

 

   

 

 

 

 

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HEALTH MANAGEMENT ASSOCIATES, INC.

SUPPLEMENTAL CONSOLIDATED INFORMATION

The following table updates selected information concerning HMA’s previously announced objectives for the year ending December 31, 2013. These objectives are based on HMA’s historical operating performance, current trends and other assumptions that management believes are reasonable at this time. These objectives exclude any potential future hospital partnerships and acquisitions that may be completed during the rest of 2013.

 

     2013 Objective Range

Adjusted Admissions growth (same hospital)

   (4.5%) to (3.0%)

Net revenue, including Bayfront (in millions, before bad debt expense)

   $6,840 to $6,860

Provision for doubtful accounts as a percentage of net revenue

   14.0% to 15.0%

Adjusted EBITDA (in millions) (a)

   $790 to $800

Interest expense, net (in millions)

   $195 to $205

Income from continuing operations attributable to Health Management Associates, Inc. per share - diluted (b)

   $0.48 to $0.50

Net income attributable to noncontrolling interests (in millions)

   $17 to $19

Capital expenditures as a percentage of net revenue, after bad debt expense

   5.0% to 5.5%

Included in above:

  

HCIT meaningful use reimbursement, net, in adjusted EBITDA (in millions)

   $85 to $90

Not included in above:

  

Interest rate swap interest expense (in millions)

   $75 to $85

 

(a) Adjusted EBITDA is defined as consolidated net income before discontinued operations, net (gains) losses on sales of assets, change in control and other related expenses, 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, HMA believes that providing non-GAAP information such as Adjusted EBITDA is important for investors and other readers of HMA’s consolidated financial statements, as it is commonly used as an analytical indicator within the health care industry and HMA’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.

 

(b) Excludes change of control and other related expenses

Contact:

Health Management Associates, Inc.

Investor Contact:

John Merriwether, 239-598-3131

Vice President of Investor Relations

 

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