HMA Earnings: Streak of Four Straight Quarters of Shrinking Margins Broken, Investors Not Happy

Rising costs hurt Health Management Associates Inc. (NYSE:HMA) in the third quarter as profit dropped from a year earlier. Health Management Associates and its subsidiaries provide health care services to patients in owned and leased facilities located mainly in non-urban communities in the southeastern and southwestern United States.

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Health Management Associates Inc. Earnings Cheat Sheet

Results: Net income for Health Management Associates Inc. fell to $41.3 million (16 cents per share) vs. $43.7 million (17 cents per share) a year earlier. This is a decline of 5.5% from the year-earlier quarter.

Revenue: Rose 18.1% to $1.44 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Health Management Associates Inc. reported adjusted net income of 18 cents per share. By that measure, the company fell short of mean estimate of 21 cents per share. It fell short of the average revenue estimate of $1.62 billion.

Quoting Management: “Through the efforts of our more than 45,000 associates and 10,000 physicians, we continued to deliver consistent quality performance and EBITDA growth in the third quarter, despite a very challenging and unpredictable economy,” said Gary D. Newsome, Health Management’s President and Chief Executive Officer. “We are pleased with these results and continue to see growth in outpatient services. By focusing on our patient-centered approach, managing our costs, and investing our resources where they can generate the most value, we are creating a culture and environment that is attractive to patients, physicians and associates. This culture and track record of solid operating performance is also attracting a significant number of hospitals and hospital systems that are seeking a strategic partner capable of investing the necessary capital to enhance and expand services, and provide the operating expertise to leverage future opportunities.”

Key Stats:

The company’s net income has now fallen for three straight quarters. In the second quarter, net income fell 24% from the year earlier, while the figure fell 32.1% in the first quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 2 cents, and in the first quarter, it was ahead by 6 cents.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 19 cents a share to 20 cents over the last seven days. For the fiscal year, the average estimate has been unchanged at 86 cents a share.

Competitors to Watch: Community Health Systems, Universal Health Services, Inc., Tenet Healthcare Corp., HCA Holdings Inc, MedCath Corporation, SunLink Health Systems, Inc., LifePoint Hospitals, Inc., Dynacq Healthcare, Inc., Select Medical Hldgs. Corp., and HEALTHSOUTH Corp.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)