HMA quarterly income up 12.7%

Health Management Associates posted first quarter 2011 net income of $149.057 million and total revenue of $1.433 billion, up 10.4% and 12.7%, respectively, over the 2010 period.

Naples, Fla.-based HMA is the parent company of Sparks Health System in Fort Smith and Summit Medical in Van Buren.

The per share earnings of 22 cents also bested the 21 cents that was an average of analyst estimates.

"We are very pleased to report another great quarter," Gary Newsome, HMA president and CEO, said in the earnings report. "We will continue to focus on the initiatives we believe continue to significantly contribute to our outstanding results, including cost discipline, emergency room operations, physician recruitment and market service development.”

The company announced Mar. 30 a restructuring plan that eliminated 50 non-clinical jobs at Sparks. The move resulted in a 2.5% reduction in jobs, with the hospital now employing 1,900, including 90 physicians. Many of the job cuts are in engineering, information technology and other non-medical areas.

HMA purchased Sparks Health System in a $138-million deal that closed Nov. 30, 2009.

Newsome said overall company growth will come from “acquisition and partnership opportunities.” The company recently announced a partnership with the physician ownership at Tri-Lakes Medical Center in Batesville, Miss.

“We plan to continue our disciplined approach to hospital acquisitions and joint ventures,” Newsome said.

A recent investor note from Jefferies & Co. was bullish on the for-profit hospital sector, with HMA upgraded to a “Buy” rating.

Key points in the HMA earnings report included:
• Income from continuing operations increased 16.4% to $62.7 million;
• Admissions increased 4.2% while adjusted admissions increased 8.3%;
• Same hospital net revenue increased 4.8% to $1,333.0 million;
• Same hospital admissions declined 3.9%;
• The company’s provision for doubtful accounts, or bad debt expense, was $172.8 million, or 12.1% of net revenue, for the first quarter compared to $156.9 million, or 12.3% of net revenue, for the same quarter a year ago;
• Uninsured self-pay patient discounts for the first quarter were $226.8 million, compared to $179.6 million for the same quarter a year ago; and,
• Charity/indigent care write-offs for the quarter were $21.4 million, compared to $20.8 million for the same quarter a year ago.

The company also boosted the high end of its earnings per share range for 2011 from 76 cents to 78 cents.

“These objective ranges do not include any benefit from potential 2011 acquisition,” the company noted.

The company operates 59 hospitals — including Summit Medical in Van Buren — in 15 states and employs about 32,000. The publicly held (NYSE: HMA) hospital company is directly and indirectly affiliated with 10,000 physicians.

HMA shares (NYSE: HMA) closed Monday at $10.39, up 8 cents. The earnings were released after the markets closed. During the past 52 weeks, the share price has ranged from a $11.65 high to a $6.13 low.