HMA responds to hostile request for board change

The Board of Directors of Health Management Associates (HMA) has said that a Board replacement attempt by Glenview Capital would “derail” a strategic review plan being conducted.

On June 25, New York City-based Glenview Capital Management essentially called for a leadership shift at HMA, the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren.

In its 50-page filing, Glenview expounded upon the following five reasons change is needed at HMA:

• Consistent track record of underperformance;

• Substandard financial management and focus;

• Elevated number of compliance related issues and concerns;

• Misalignment between Board direction and shareholder priorities; and,

• Sitting Board is insular and lacks a credible path to continuous improvement.


Glenview, which owns 14.6% of HMA shares, has also created a “Revitalize HMA” website to lay out its call for change to HMA shareholders. Glenview President Larry Robbins also was interviewed on CNBC about why the hedge fund wants a change of leadership at HMA.

HMA officials responded on June 28 with a statement urging shareholders to ignore the Glenview request.

“In our view, Glenview’s actions are an unnecessary distraction to the Company’s strategic review process and an attempt to advance its own agenda for the Company with its hand-picked nominees,” the company noted in the statement.

The HMA statement also notes that Glenview’s actions come late with respect to a board transition. HMA held it shareholders meeting on May 18, at which the board members were elected by shareholders.

HMA officials said their job is to review all “strategic alternatives,” and to look out for the interests of all shareholders, and not just appease one shareholder.

“In so doing, our focus is on serving the best interests of all stockholders over the narrow interests of one, as well as ensuring that we honor our commitment to provide our patients and communities with vital services of the highest quality,” noted the HMA statement. “As you would expect, we are considering all strategic alternatives and opportunities available to the Company, including those alternatives suggested by Glenview.”

HMA shares (NYSE: HMA) closed Friday at $15.72, up 13 cents. During the past 52 weeks the share price has ranged from a $16.41 high to a $6.27 low.

FULL STATEMENT FROM THE HMA BOARD OF DIRECTORS
Dear Fellow HMA Stockholder,

As you may be aware, Glenview Capital Partners, L.P. (“Glenview”)—an investment vehicle controlled and managed by Larry Robbins—has commenced a process seeking to remove all of the current members of the Board of Directors (the “Board”) of Health Management Associates, Inc. (the “Company”). Glenview’s plan is to replace the current Board—all of whom are independent except the CEO—with individuals selected solely by Glenview.

Glenview’s timing is not in the best interests of stockholders since it comes a) less than two weeks after the Company publicly announced that we have engaged financial and legal advisors in connection with our ongoing consideration of strategic alternatives and opportunities available to the Company, and b) about a month after the Company’s 2013 Annual Meeting of Stockholders at which all of the Company’s directors were elected by stockholders. In our view, Glenview’s actions are an unnecessary distraction to the Company’s strategic review process and an attempt to advance its own agenda for the Company with its hand-picked nominees.

Notwithstanding Glenview’s actions, we remain steadfastly committed to acting in the best interests of all of the stockholders of the Company. We will continue to discharge our duties in this regard by completing as quickly as possible our evaluation of the strategic alternatives and opportunities available to the Company. In so doing, our focus is on serving the best interests of all stockholders over the narrow interests of one, as well as ensuring that we honor our commitment to provide our patients and communities with vital services of the highest quality. As you would expect, we are considering all strategic alternatives and opportunities available to the Company, including those alternatives suggested by Glenview.

You should not permit Glenview to derail our strategic review process before you have had an opportunity to review the results. Because the written consent process would allow stockholders to act at any time, there is no need to take any action at this time in response to Glenview’s consent solicitation.

In addition to evaluating all opportunities available to the Company to maximize stockholder value, we also are actively engaged in addressing the numerous challenges facing the Company and the health care industry.

Accordingly, we strongly urge you to allow us to complete our work for the benefit of all stockholders, and to take no action in response to the Glenview materials until you hear from us about the results of our work so that you can make a fully informed decision. Please do not allow Glenview’s efforts to disrupt this process.

We look forward to updating you on our strategic review process over the course of the next few weeks.