Health Management Associates, Inc. Reports Second Quarter Results

Health Management Associates, Inc. (NYSE: HMA) today announced its consolidated financial results for the second quarter ended June 30, 2009. For the quarter, HMA reported net revenue of $1,155.5 million and earnings before interest, income taxes, depreciation and amortization, gains on sales of assets, gains and losses on the early extinguishment of debt, and write-offs of deferred financing costs ("EBITDA”) of $172.7 million. During the second quarter, income from continuing operations was $39.3 million and net income attributable to HMA’s common stockholders was $32.6 million, or $0.13 per diluted share. Excluding certain gains on sales of assets, diluted earnings per share increased 44.4% as compared to $0.09 per diluted share for the same quarter a year ago as shown in the tables accompanying this press release. The tables also include a reconciliation of income from continuing operations to all presentations of EBITDA (which is not a GAAP measure) contained in this press release. Such tables also contain other important information regarding how HMA defines and uses EBITDA.

For continuing operations, compared to the prior year’s second quarter, net revenue increased 4.5%, admissions increased 5.1%, adjusted admissions (reflecting total admissions adjusted for outpatient volume) increased 4.7%, emergency room visits increased 5.6% and surgeries declined 1.0%. Operating EBITDA for the second quarter was $200.1 million, or 17.3% of net revenue, compared to $185.6 million, or 16.8% of net revenue, for the same quarter in the prior year, marking a 7.8% increase. Hospital net revenue per adjusted admission increased 1.1% compared to the same quarter a year ago.

"We are very pleased with our strong results for the second quarter of 2009 which we believe reflect our diligence in implementing initiatives to improve emergency room operations, physician recruitment and service development,” said Gary D. Newsome, HMA’s President and Chief Executive Officer. "We believe the patient volume growth that HMA experienced in the second quarter is a direct result of our focus on improving quality and providing the best hospital experiences we can for our patients and physicians. We remain encouraged about the prospects for additional improvement during the remainder of 2009.”

HMA’s provision for doubtful accounts, or bad debt expense, was $141.5 million, or 12.2% of net revenue, for the second quarter compared to $124.8 million, or 11.3% of net revenue, for the same quarter a year ago.

Uninsured discounts for the second quarter were $170.4 million, compared to $149.7 million for the same period a year ago. Charity/indigent care write-offs for the quarter were $19.7 million, compared to $20.3 million for the same quarter in the prior year. The sum of uninsured discounts, charity/indigent write-offs and bad debt expense, as a percent of the sum of net revenue, uninsured discounts and charity/indigent write-offs, was 24.6% for the second quarter, compared to 23.1% for the same quarter a year ago.

Cash flow from continuing operating activities for the six months ended June 30, 2009 was $255.2 million, after cash interest and cash tax payments aggregating $123.4 million. During the second quarter, HMA repaid an additional $38.9 million of debt and capital lease obligations. For the six months ended June 30, 2009, HMA has reduced its debt by more than $160 million, which exceeds its full year 2009 debt repayment goal of $150 million. As a result, HMA’s total debt to EBITDA ratio and interest coverage ratio were 4.67x and 2.88x, respectively, at June 30, 2009. Such ratios are well within the requirements of HMA’s credit facilities. Moreover, since June 30, 2009 HMA has repurchased in the open market an additional $10.0 million of its 3.75% Convertible Senior Subordinated Notes due 2028.

For the six months ended June 30, 2009, HMA reported net revenue of $2,343.5 million and EBITDA of $356.1 million. During the six month period, income from continuing operations was $93.4 million and net income attributable to HMA’s common stockholders was $78.6 million, or $0.32 per diluted share.

HMA also reported that it has increased its full fiscal year 2009 diluted EPS from continuing operations objective range from between $0.37 and $0.45 to be between $0.45 and $0.49. HMA’s updated EPS objective is based on a net revenue objective range of $4.55 to $4.65 billion, and an admissions increase for the full year of between 2% and 3%.

"By improving our hospital operations, we have been able to generate stronger EBITDA and solid cash flow, and we continue to deleverage HMA’s balance sheet,” added Mr. Newsome. "As a result of HMA’s financial results through the first six months of 2009, and our belief that we can continue to improve operations for the remainder of the year, we have increased our annual EPS objective to better reflect our expectations.”

HMA’s management team will hold a conference call and webcast to discuss HMA’s second quarter consolidated financial results and the contents of this press release on Tuesday, July 28, 2009 at 11:00 a.m. EDT. Investors are invited to access the webcast via HMA’s website located at www.hma.com or via www.streetevents.com. Alternatively, investors may join the conference call by dialing 877-476-3476. HMA will archive a copy of the audio webcast, 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.

HMA’s mission is the delivery of compassionate and high quality health care services that improve the quality of life for its patients, physicians, and the communities it serves. HMA owns and operates 56 hospitals, with approximately 8,100 licensed beds, in non-urban communities located throughout the United States. All references to "HMA” or the "Company” used in this release refer to Health Management Associates, Inc. and its affiliates.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as "expects,” "estimates,” "projects,” "anticipates,” "believes,” "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, income or loss, capital expenditures, earnings per share, debt structure, bad debt expense, capital structure, repayment of indebtedness, other financial items, statements regarding the plans and objectives of management for future operations, statements of future economic performance, statements of the assumptions underlying or relating to any of the foregoing statements, and other statements which are other than statements of historical fact, are considered to be "forward-looking statements.”

Because they are forward-looking, such statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Health Management Associates, Inc.’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Forms 10-Q under the heading entitled "Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of Health Management Associates, Inc.'s underlying assumptions prove incorrect, actual results could vary materially from those currently anticipated. In addition, undue reliance should not be placed on Health Management Associates, Inc.'s forward-looking statements. Except as required by law, Health Management Associates, Inc. disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release.