Back to top

Analyst Blog

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.

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 2012.

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 high-growth markets.

Recently, HMA and peer Community Health Systems Inc. (CYH - Snapshot Report) 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. (ACHC - Snapshot Report) and HCA Holdings, Inc. (HCA - Snapshot Report), which carries a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%