HMA Matches Earnings, Misses Rev Est. - Analyst Blog
May 06 2013 - 9:20AM
Zacks
Health Management
Associates (HMA), a leading operator of general acute care
hospitals, reported first quarter 2013 adjusted (excluding one-time
expenses other than stock-based compensation expense) earnings per
share of 13 cents matching the Zacks Consensus Estimate. Adjusted
earnings in the first quarter exclude interest rate swap
calculation and mark-to-market modification.
Net income at Health Management
decreased 38.7% year over year to $23.1 million (or 9 cents per
share).
Revenues
Revenues (prior to provisioning for
doubtful clients) increased about 2.2% year over year to $1,723.8
million, missing the Zacks Consensus Estimate of $1,744 million.
Net revenues dropped marginally 0.2% year over year to $1,483
million. Net revenues from same hospital decreased 1% to $1,470
million.
Operational
Statistics
From a continuing operations
perspective, occupancy declined to 41.5% in the reported quarter
from 44.7% in the year-ago quarter. Admissions were down 7.6% while
adjusted admissions dropped 4.3% in the first quarter. Average
length of stay stood at 4.4 days compared with 4.3 days in the
year-ago quarter. Surgeries declined 4.6%, patient days dropped
5.4%, while emergency room visits rose 3.9%.
On a same hospital basis, occupancy
declined to 42.1% in the first quarter from 44.7% in the prior year
quarter. Same hospital admissions and adjusted admissions dipped
8.8% and 5.8%, respectively, while surgeries and emergency room
visits decreased 5.6% and increased 1%, respectively.
Margins
Same hospital adjusted EBITDA
margin dropped 90 basis points to 18.9% in the first quarter. Bad
debt expense, as a percentage of revenues, moved up to 14% compared
to 11.9% in the year-ago period.
The total of uninsured discounts, indigent/charity write-offs and
bad debt expense as a percentage of the sum of net sales before
provisioning, uninsured discounts and indigent/charity write-offs
rose to 28.6% in the quarter from 26.1% a year ago. This metric
indicates the aggregate extent of patient care for which Health
Management is not reimbursed.
Balance Sheet and Cash
Flow
Health Management exited the first
quarter with cash, cash equivalents and available-for-sale
securities of $37.4 million, down 36.9% year over year, with a
considerable long-term debt of about $3,411 million, marginally
down 0.6% year over year. The company generated cash flow (from
continuing operations) of $19.3 million in the reported
quarter.
Other
Information
A subsidiary of Health Management
undertook a joint venture to team with the Bayfront Health System
of St. Petersburg, Florida. As per the deal, Health Management took
an 80% stake in Bayfront Health System besides an affiliation with
ShandsHealthCare (belonging to UF&Shands, the Univ. of Florida,
Academic Health Care). The total consideration for the 80% stake
was about $162 million.
Outlook
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.
Health Management benefits 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. The debt burden for the company remains sizeable.
We currently have a Zacks Rank #5
(Strong Sell) on Health Management. We are more positive
about Acadia Healthcare Company, Inc. (ACHC),
which carries a Zacks Rank #2 (Buy). We are also positive about
Abiomed, Inc. (ABMD) and Accuray
Incorporated (ARAY) which carry a Zacks Rank #1 (Strong
Buy) and Zacks Rank #2 (Buy), respectively.
ABIOMED INC (ABMD): Free Stock Analysis Report
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
ACCURAY INC (ARAY): Free Stock Analysis Report
HEALTH MGT ASSC (HMA): Free Stock Analysis Report
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