HMA posts lower earnings on accounting charges

First quarter 2012 net income of $37.69 million for Health Management Systems fell below the $55.524 million earned in the 2011 period.

Naples, Fla.-based HMA, the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren, saw net revenue during the quarter reach $1.485 billion, ahead of the $1.254 billion during the same period of 2011.

Earnings per share of 15 cents fell below the consensus estimate of 23 cents. However, HMA posted several accounting charges during the quarter that dropped the earnings figure. Without the charges, per share earnings would have reached 24 cents, the company advised.

"Health Management had another great quarter and a great start to 2012, with revenue up 18.4% year over year," Gary Newsome, Health Management's president and CEO, said in the earnings report. "Our operating strategy continued to generate strong results in the first quarter as we managed our resources relative to the volume and acuity of our patients. We believe that there are further improvement opportunities in our hospitals as we continue to affect change in our processes and systems in emergency room operations, physician recruitment and market service development.”

The company also reported that first quarter admissions increased 5.9%, and hospital net revenue increased 5.7% to $1.326 billion. Surgeries during the quarter totaled 85,943, up 3.8% compared to the 2011 period.

Newsome said HMA, which has aggressively expanded through acquisition, is not finished with its effort to acquire hospital operations.

“In addition, our partnership development pipeline continues to be extremely active,” Newsome said.

HMA purchased Sparks Health System in a $138-million deal that closed Nov. 30, 2009. The company operates 66 hospitals — including Summit Medical in Van Buren — in 15 states and employs more than 40,500. The publicly held hospital company is directly and indirectly affiliated with about 10,000 physicians.

More recently, the company completed on April 2 an agreement with Integris Health to buy five Oklahoma hospitals — 53-bed Integris Blackwell Regional Hospital, located in Blackwell; 64-bed Integris Clinton Regional Hospital, located in Clinton; 25-bed Integris Marshall County Medical Center, located in Madill; 52-bed Integris Mayes County Medical Center, located in Pryor; and 32-bed Integris Seminole Medical Center, located in Seminole.

The Oklahoma deal came on the heels of a major acquisition of a Mercy hospital network in the Knoxville, Tenn., area.

The acquisitions have added some weight to the company debt. Long-term debt as of March 31 was $3.476 billion, down from the $3.489 billion as of Dec. 31, 2012, but still considerably higher than the $2.983 billion as of Dec. 31, 2010.

HMA shares (NYSE: HMA) closed Monday (Apr. 23) at $7.15, down 10 cents. The earnings report was issued after markets closed. During the past 52 weeks the share price has ranged from a $11.74 high to a $4.81 low.