Hospitals

Health Management Associates, Inc.

Health Management Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMA)") else Response.Write("(NYSE: HMA)") end if %> is one of the smaller pure-play hospital operators in an industry that is not only consolidating hospital facilities, but also the operators themselves. As a stand-alone operator, this one would probably be gone if the market weren't giving this company the premium multiple in the group. Health Management's strategy of acquiring non-urban hospitals where there is little competition has paid off nicely, as its operating margins, growth, return on invested capital, and asset management are all stellar. Besides Columbia/HCA, this is the most attractive of the group. We would probably favor this company if it weren't carrying the fair valuation that it already does.

Latest Financials

Net earnings for the third quarter were $31million compared to the $24.2 million in the same quarter a year ago. Net earnings per share increased to $0.28 shares as compared with $0.22 a year ago. The company continued to experience strong same-hospital net revenue growth of 9%. This growth was related to a 5.7% gain in admissions and a 7% increase in outpatient surgeries. In addition, outpatient net revenue increased by 13%. These are hospitals operated for a period of one year or more. It was an excellent quarter with solid growth in both revenue and earnings.

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