HMA Downgraded to Underperform - Analyst Blog
May 14 2013 - 10:40AM
Zacks
On May 13, we downgraded
Health Management Associates Inc. (HMA) to
Underperform based on its first quarter 2013 results.
On May 2, Health Management
announced results for the reported quarter. Earnings per share of
13 cents matched the Zacks Consensus Estimate. However, net income
at Health Management decreased 38.7% year over year to $23.1
million (or 9 cents per share).
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 from same hospital decreased 1% to $1,470 million.
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.
A rise in observation stay was a
factor in the drop of same hospital admissions. Many hospitals in
Florida are seeing heightened pressure from payers to put patients
under observation. Overall observation stays moved up 14.1% year
over year in the first quarter 2013.
Total uncompensated care (the sum
of uninsured discounts, charity/indigent write-offs, and bad debt
expense as a percentage of adjusted revenue) was on the higher side
at 28.6% in first-quarter 2013, up from 26.1% in the prior-year
quarter. Bad debt expense was 14% of revenues in the first quarter
2013, higher than 11.9% in the year-ago quarter.
Health Management tightened its
guidance range for earnings per share from 86 cents to $1.01 to 86
cents to 95 cents for 2013.
The Zacks Consensus Estimate for
2013 has dropped 4.3% to 88 cents over the last 30 days. It has
declined 6.4% to $1.03 for 2014 over the same timeframe.
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). Intuitive Surgical,
Inc. (ISRG) and HeartWare International
Inc. (HTWR) are two other Zacks Rank #2 (Buy) stocks,
which are expected to do well.
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
HEALTH MGT ASSC (HMA): Free Stock Analysis Report
HEARTWARE INTL (HTWR): Free Stock Analysis Report
INTUITIVE SURG (ISRG): Free Stock Analysis Report
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