Hurricane Isaac causes Naples-based HMA to miss analysts quarterly forecasts

Health Management Associates Inc. took a hit from Hurricane Isaac in the third quarter.

The Naples-based hospital operator reported a 6.4 percent drop in admissions for the quarter at its same hospitals — or hospitals it has owned for at least a year. The company blamed those declines primarily on a falloff in uninsured patients, increases in observational stays of more than 24 hours, which aren't counted as admissions, and Hurricane Isaac.

Losses from Isaac contributed to its lower-than-expected earnings, which missed analyst forecasts by a penny or two.

The First Call analyst forecast for earnings was 19 cents a share, while analysts polled by FactSet expected 20 cents a share.

HMA earned $41.3 million, or 17 cents a share, on its continuing operations in the quarter, but said it would have earned 19 cents without the effects of Isaac and excluding one-time costs, including a $23.9 million accounting charge for interest rate swaps.

A year ago, the company earned $43.7 million, or 17 cents a share, a penny more.

Despite lower profits, the company reported a more than 18 percent jump in net revenue, which grew to $1.44 billion in the third quarter. That's in part due to its hospitals seeing sicker patients, needing more intensive services.

In late August, Isaac forced the rescheduling of appointments for surgeries and other procedures at HMA's hospitals in Florida and Mississippi.

"Although the hurricane's effects did not result in significant structural damage to any of our hospitals, the slow-moving storm deluged several of our communities for multiple days," said Kelly Curry, HMA's chief financial officer, in a conference call with investors Tuesday.

"The resulting power outages and travel restrictions closed school systems and many local businesses, forcing our hospitals to close certain departments, cancel procedures and tests."

Some of those canceled tests and procedures are still being rescheduled. The lost admissions from Isaac cost the company about $4 million in the third quarter, reducing earnings by 1 cent a share, Curry said in the call.

HMA has seen an uptick in outpatient activity in doctor's offices and surgery centers. Reflecting that trend, same-hospital adjusted admissions, which include both inpatient and outpatient admissions, declined 2.2 percent.

"We recognize the challenge to the inpatient volumes," said Gary D. Newsome, HMA's president and CEO, in the conference call.

Total admissions, which include newly acquired hospitals over the last year, increased 4 percent in the third quarter, while total adjusted admissions, including outpatient activity, rose 10.4 percent.

HMA operates 70 hospitals with about 10,500 licensed beds in 15 states. In Collier County, those hospitals include Physicians Regional — Pine Ridge and Physicians Regional — Collier.

HCA Holdings Inc., the largest U.S. hospital chain, gave a weak third-quarter forecast on Oct. 16. The company posted net income and revenue that fell short of Wall Street estimates.

Analyst John Ransom said he doesn't expect much improvement in hospital operator earnings for the rest of 2012. He said the stocks are trading more on the presidential election than on business trends. Stocks will rise 10 to 15 percent if President Barack Obama is re-elected because health care reform could lead to stronger growth starting in 2014. If former Massachusetts Gov. Mitt Romney is elected he thinks investors will be concerned about their business fundamentals and the potential fiscal cliff in 2013 and as a result shares will decline somewhat.

The Associated Press contributed to this story.

Connect with Laura Layden at www.naplesnews.com/staff/laura_layden

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