HMA Profits Improve Despite Discount Program Costs

Bad debt, uninsured discounts and charity care expenses accounted for a larger share of Health Management Associates’ first quarter revenues.

The Naples, Fla.-based hospital operator said the sum of those expenses rose to 22.7 percent of net revenues, which totaled nearly $1.2 billion for quarter ended March 31, 2008, compared to 20.3 percent of net revenues during the year ago period.  The increased expenses however, didn’t impact profits.

HMA (NYSE: HMA) said profits during the quarter more than doubled on gains from the sale of a 27 percent stake in certain hospitals to Novant Health. The company said net income totaled $133.9 million or 55 cents a share, up from $65 million or 27 cents a year ago. Excluding the $124.5 million after tax gain on the sale of the hospitals to Novant, HMA earned 15 cents a share. Analysts were expecting profits, excluding the sale, of 13 cents.

The company said it set aside $129 million, or 11.2 percent of net revenues, for bad debt during the first quarter, compared to $118.8 million a year earlier.

HMA began offering 60 percent discounts to the uninsured for non-elective services in February 2007 and the policy has affected both uninsured discounts and charity care write offs.  HMA said uninsured discounts for the quarter were $153.4 million, compared to $112.1 million in the first quarter of 2007 and write off from charity care declined to $18.1 million, compared to $20.4 million for the same period a year ago.

HMA confirmed its 2008 forecast of 40 cents to 50 cents per share on revenues for $4.5 billion to $4.7 billion.