UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from ____ to ____
Commission File Number 000-18799
-----------
HEALTH MANAGEMENT ASSOCIATES, INC.
-------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 61-0963645
- -------------------------------- ------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5811 Pelican Bay Boulevard, Suite 500, Naples, Florida 34108-2710
- --------------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(941)598-3131
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No ___
---
At May 5, 1998, the following shares of the Registrant were outstanding:
Class A Common Stock 167,216,998 shares
HEALTH MANAGEMENT ASSOCIATES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
-----
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income --
Three Months Ended March 31, 1998 and 1997.................. 3
Consolidated Statements of Income --
Six Months Ended March 31, 1998 and 1997.................... 4
Consolidated Balance Sheets--
March 31, 1998 and September 30, 1997....................... 5
Consolidated Statements of Cash Flows--
Six Months Ended March 31, 1998 and 1997.................... 6
Notes to Interim Condensed Consolidated Financial
Statements.................................................. 7-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..................... 9-13
PART II. OTHER INFORMATION....................................... 14-15
SIGNATURES.......................................................... 16
INDEX TO EXHIBITS................................................... 17-18
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
March 31,
--------------------------
1998 1997
------------ ------------
Net patient service revenue........................ $302,922,000 $237,792,000
Costs and expenses:
Salaries and benefits........................... 104,148,000 81,005,000
Supplies and expenses........................... 87,232,000 69,459,000
Provision for doubtful accounts................. 23,747,000 19,497,000
Depreciation and amortization................... 12,564,000 9,010,000
Rent expense.................................... 6,928,000 4,833,000
Interest, net................................... 1,640,000 1,411,000
------------ ------------
Total costs and expenses.................... 236,259,000 185,215,000
------------ ------------
Income before income taxes......................... 66,663,000 52,577,000
Provision for income taxes ........................ 26,165,000 20,635,000
------------ ------------
Net income ........................................ $ 40,498,000 $ 31,942,000
============ ============
Net income per share:
Basic............................................ $ .24 $ .20
Diluted.......................................... $ .24 $ .19
============ ============
Weighted average number of shares outstanding:
Basic............................................ 166,104,000 160,413,000
Diluted.......................................... 170,302,000 164,841,000
============ ============
See accompanying notes.
3
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six months ended
March 31,
1998 1997
------------ ------------
Net patient service revenue........................ $537,492,000 $436,954,000
Costs and expenses:
Salaries and benefits........................... 188,715,000 152,947,000
Supplies and expenses........................... 158,312,000 130,775,000
Provision for doubtful accounts................. 45,719,000 38,845,000
Depreciation and amortization................... 22,736,000 17,340,000
Rent expense.................................... 12,389,000 9,261,000
Interest, net................................... 2,073,000 2,486,000
------------ ------------
Total costs and expenses.................... 429,944,000 351,654,000
------------ ------------
Income before income taxes......................... 107,548,000 85,300,000
Provision for income taxes ........................ 42,213,000 33,480,000
------------ ------------
Net income ........................................ $ 65,335,000 $ 51,820,000
============ ============
Net income per share:
Basic........................................... $ .40 $ .32
Diluted......................................... $ .39 $ .31
============ ============
Weighted average number of shares outstanding:
Basic........................................... 164,646,000 159,705,000
Diluted......................................... 168,829,000 164,566,000
============ ============
See accompanying notes.
4
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, September 30,
1998 1997
------------- ----------------
(Unaudited)
Current assets:
Cash and cash equivalents........................... $ 4,460,000 $ 67,381,000
Receivables--net.................................... 198,865,000 132,896,000
Supplies, prepaids and other assets................. 31,404,000 21,589,000
Funds held by trustee............................... 1,966,000 1,225,000
Income taxes - receivable and deferred.............. 13,039,000 13,039,000
------------ ------------
Total current assets........................... 249,734,000 236,130,000
Property, plant and equipment......................... 804,034,000 613,752,000
Less accumulated depreciation and
amortization....................................... 162,063,000 141,033,000
Net property, plant and equipment.............. 641,971,000 472,719,000
------------ ------------
Other assets:
Funds held by trustee............................... 3,950,000 944,000
Deferred charges and other assets................... 59,080,000 17,768,000
------------ ------------
Total.......................................... 63,030,000 18,712,000
------------ ------------
$954,735,000 $727,561,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable.................................... $ 40,689,000 $ 33,943,000
Accrued expenses and other liabilities.............. 37,117,000 37,453,000
Current maturities of long-term debt................ 12,453,000 8,263,000
Income taxes--currently payable and deferred........ 36,917,000 3,221,000
------------ ------------
Total current liabilities...................... 127,176,000 82,880,000
Deferred income taxes................................. 19,817,000 18,699,000
Other long-term liabilities........................... 16,290,000 16,112,000
Long-term debt........................................ 80,786,000 49,650,000
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized................................. - -
Common stock, Class A, $.01 par value, 300,000,000
shares authorized, 167,168,000 and 162,705,000
shares issued and outstanding at March 31,
1998 and September 30, 1997, respectively......... 1,672,000 1,627,000
Additional paid-in capital.......................... 267,846,000 182,780,000
Retained earnings................................... 441,148,000 375,813,000
------------ ------------
Total stockholders' equity..................... 710,666,000 560,220,000
------------ ------------
$954,735,000 $727,561,000
============ ============
See accompanying notes.
5
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended
March 31,
-----------------------------
1998 1997
-------------- -------------
Cash flows from operating activities:
Net income........................................... $ 65,335,000 $ 51,820,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization..................... 22,736,000 17,340,000
Gain on sale of fixed assets...................... (43,000) (112,000)
Changes in assets and liabilities:
Receivables--net................................ (35,376,000) (3,801,000)
Other current assets............................ (4,634,000) (4,220,000)
Deferred charges and other assets............... 111,000 (2,694,000)
Accounts payable................................ 1,777,000 6,308,000
Accrued expenses and other liabilities.......... (6,823,000) (1,563,000)
Income taxes--
currently payable and deferred................ 11,059,000 8,897,000
Other long term liabilities..................... 177,000 635,000
------------- ------------
Net cash provided by operating activities.... 54,319,000 72,610,000
------------- ------------
Cash flows from investing activities:
Acquisition of facilities, net of cash acquired...... (95,735,000) (51,117,000)
Additions to property, plant and equipment........... (21,677,000) (28,961,000)
Proceeds from sale of equipment...................... 167,000 293,000
------------- ------------
Net cash used in investing activities........ (117,245,000) (79,785,000)
------------- ------------
Cash flows from financing activities:
Proceeds from long-term borrowings................... 211,000 249,000
Principal payments on debt........................... (4,570,000) (4,935,000)
Increase in funds held by trustee.................... (747,000) (107,000)
Issuance of common stock, net of costs............... 5,111,000 8,472,000
------------- ------------
Net cash provided by
financing activities....................... 5,000 3,679,000
------------- ------------
Net decrease in cash................... 62,921,000 (3,496,000)
Cash and cash equivalents at beginning of period....... 67,381,000 31,172,000
------------- ------------
Cash and cash equivalents at end of period............. $ 4,460,000 $ 27,676,000
============= ============
See accompanying notes.
6
HEALTH MANAGEMENT ASSOCIATES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
- -------------------------
The consolidated balance sheet as of September 30, 1997 has been derived
from the audited consolidated financial statements included in Health Management
Associates, Inc.'s (the Company's) 1997 Annual Report. The interim consolidated
financial statements at March 31, 1998 and for the three and six month periods
ended March 31, 1998 and 1997 are unaudited; however, such interim statements
reflect all adjustments (consisting only of a normal recurring nature) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and results of operations for the interim periods presented.
The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year. The interim
financial statements should be read in conjunction with the audited consolidated
financial statements of the Company included in its 1997 Annual Report.
2. Earnings Per Share
- ----------------------
In 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary restated to
conform to the Statement 128 requirements.
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
Three months ended Six months ended
March 31, March 31,
-------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Numerator:
Net income $ 40,498 $ 31,942 $ 65,335 $ 51,820
======== ======== ======== ========
Denominator:
Denominator for basic earnings
Per share-weighted average shares 166,104 160,413 164,646 159,705
Effect of dilutive securities-
employee stock options 4,198 4,428 4,183 4,861
-------- -------- -------- --------
Denominator for diluted
earnings per share 170,302 164,841 168,829 164,566
======== ======== ======== ========
Basic earnings per share $ .24 $ .20 $ .40 $ .32
======== ======== ======== ========
Diluted earnings per share $ .24 $ .19 $ .39 $ .31
======== ======== ======== ========
During January 1998 the Company completed an acquisition through a merger
agreement and tax-free stock exchange transaction (see Note 3). As a result,
the Company issued approximately 3,300,000 shares of the Company's Class A
common stock.
7
HEALTH MANAGEMENT ASSOCIATES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
3. Acquisitions
- ----------------
In November 1997 the Company acquired a 125-bed acute care hospital for
consideration totalling approximately $20.9 million, including $20.2 million in
cash and the assumption of $700,000 in debt.
In January 1998 the Company acquired certain assets of a 180-bed general
acute care hospital pursuant to the terms on an asset purchase agreement. Also
in January the company acquired a two hospital, 221-bed general acute care
system via a merger agreement and a tax-free stock exchange transaction. The
consideration involved to complete these two transactions totalled approximately
$190.5 million, which included approximately $80 million in Company stock, $73.5
million in cash, and the assumption of $37 million in debt.
The operating results of the foregoing hospitals have been included in the
accompanying consolidated statements of income from the respective dates of
acquisition. The following unaudited pro forma combined summary of operations
of the Company for the six months ended March 31, 1998 and 1997 gives effect to
the operation of the hospitals purchased in November 1997 and January 1998 as if
the hospital acquisitions had occurred as of October 1, 1996 (in thousands,
except per share data):
Six months ended
March 31,
------------------
1998 1997
------- -------
Net patient service revenue $576,040 $525,948
Net income $ 65,773 $ 55,021
Net income per share:
Basic $ .40 $ .34
Diluted $ .39 $ .33
4. Subsequent event
- --------------------
In March 1998 the Company announced the execution of a Definitive Agreement
to acquire Regional Healthcare, Inc., a 166-bed health system, comprised of two
acute care hospitals and an ambulatory surgery center, located in Hernando
County, Florida. The total purchase price is approximately $78 million, which
will be financed from available cash on hand and the Company's line of credit.
The transaction is expected to be completed before the end of the current
quarter ending June 30, 1998.
8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Three months ended March 31, 1998 compared
------------------------------------------
to three months ended March 31, 1997
------------------------------------
Net patient service revenue for the three months ended March 31,
1998 ("1998 Period") was $302,922,000, as compared to $237,792,000 for
the three months ended March 31, 1997 ("1997 Period"). This
represented an increase in net patient service revenue of $65,130,000,
or 27.4%. Hospitals in operation for the entire 1998 Period and 1997
Period ("same store hospitals") provided $23,764,000 of the increase
in net patient service revenue, which resulted primarily from
inpatient and outpatient volume increases. The remaining increase of
$41,366,000 included $41,765,000 of net patient service revenue from
the acquisition of the 125-bed Southwest hospital effective November
1, 1997, the 221-bed River Oaks Health System effective January 1,
1998, and the 180-bed Riley Memorial Hospital effective January 2,
1998, offset by a decrease of $399,000 in Corporate and miscellaneous
revenue.
During the 1998 Period the Company's hospitals generated total
patient days of service and an occupancy rate of 176,197 and 53.9%,
respectively, versus 138,535 and 50.0%, respectively, for the 1997
Period. Same store patient days and occupancy for the 1998 Period were
151,246 and 54.1%, respectively, versus 138,535 and 50.0%,
respectively for the 1997 Period. Same store admissions for the
Company during the 1998 Period were 29,288, up 6.5. % from the 27,495
admissions during the 1997 Period.
The Company's operating expenses (salaries and benefits, supplies
and expenses, provision for doubtful accounts and rent expense) for
the 1998 Period were $222,055,000 or 73.3% of net patient service
revenue as compared to $174,794,000 or 73.5% of net patient service
revenue for the 1997 Period. Of the total $47,261,000 increase,
approximately $14,168,000 related to same store hospitals, which was
largely attributable to the increased patient volumes. Another
$32,563,000 of increased operating expense related to the acquisitions
mentioned previously, which was offset by a $530,000 decrease in
Corporate and miscellaneous other operating expenses.
The Company's earnings before depreciation and amortization,
interest and income taxes (EBITDA) were $80,867,000 for the 1998
Period as compared to $62,998,000 for the 1997 Period, an increase of
$17,869,000 or 28.4%. The EBITDA margin was 26.7% for the 1998 Period
compared to 26.5% for the 1997 Period.
The Company's depreciation and amortization costs increased by
$3,554,000 and interest expense increased by $229,000. The increase in
depreciation and amortization resulted primarily from the acquisitions
mentioned previously. The increase in interest expense was due largely
from acquired hospital debt, as well as lower investment income in the
1998 Period (as a result of cash used for the acquisitions previously
mentioned), which is netted against interest expense.
9
Item 2. Management's discussion and Analysis of Financial
Condition and Results of Operations (continued)
The Company's income before income taxes was $66,663,000 for the
1998 Period as compared to $52,577,000 for the 1997 Period, an
increase of $14,086,000 or 26.8%. The increase resulted primarily from
same-store volume increases and the acquisitions mentioned previously.
The Company's provision for income taxes was $26,165,000 for the 1998
Period as compared to $20,635,000 for the 1997 Period. These
provisions reflect effective income tax rates of 39.25% for both
periods. As a result of the foregoing, the Company's net income was $
40,498,000 for the 1998 Period as compared to $31,942,000 for the 1997
Period.
Results of Operations
---------------------
Six months ended March 31, 1998 compared
----------------------------------------
to six months ended March 31, 1997
----------------------------------
Net patient service revenue for the six months ended March 31,
1998 ("1998 Six Month Period") was $537,492,000, as compared to
$436,954,000 for the six months ended March 31, 1997 ("1997 Six Month
Period"). This represented an increase in net patient service revenue
of $100,538,000, or 23.0%. Same store hospitals provided $40,597,000
of the increase in net patient service revenue, which resulted
primarily from inpatient and outpatient volume increases. The
remaining increase of $59,941,000 included $60,705,000 of net patient
service revenue from acquisitions, offset by a decrease of $764,000 in
Corporate and miscellaneous revenue.
During the 1998 Six Month Period the Company's hospitals
generated 309,119 total patient days of service and an occupancy rate
of 49.8%, respectively, versus 253,033 and 47.0%, respectively, for
the 1997 Six Month Period. Same store patient days and occupancy for
the 1998 Six Month Period were 264,733 and 51.1%, respectively, versus
244,418 and 47.3%, respectively, for the 1997 Six Month Period. Same
store admissions for the Company during the 1998 Six Month Period were
52,051 up 5.3% from the 49,430 admissions during the 1997 Six Month
Period.
The Company's operating expenses for the 1998 Six Month Period
were $405,135,000 or 75.4% of net patient service revenue as compared
to $331,828,000 or 75.9% of net patient service revenue for the 1997
Six Month Period. Of the total $73,307,000 increase, approximately
$24,602,000 related to same store hospitals, which was largely
attributable to increased patient volumes. Another $47,674,000 of
increased operating expense related to the hospital acquisitions
mentioned previously. The remaining increase of $1,031,000 represented
an increase in Corporate and miscellaneous other operating expenses.
10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The Company's earnings before depreciation and amortization,
interest and income taxes were $132,357,000 for the 1998 Six Month
Period as compared to $105,126,000 for the 1997 Six Month Period, an
increase of $27,231,000 or 25.9%. The Company's EBITDA margin
increased to 24.6% for the 1998 Six Month Period, as compared to 24.1%
for the 1997 Six Month Period.
The Company's depreciation and amortization costs increased by
$5,396,000 and interest expense decreased by $413,000. The increase in
depreciation and amortization resulted primarily from the acquisitions
previously mentioned. The decrease in interest expense reflects lower
investment income in the 1998 Six Month Period, which is netted
against interest expense.
The Company's income before income taxes was $107,548,000 for the
1998 Six Month Period as compared to $85,300,000 for the 1997 Six
Month Period, an increase of $22,248,000, or 26.1%. The increase
resulted primarily from same-store volume increases and the
acquisitions mentioned previously. The Company's provision for income
taxes was $42,213,000 for the 1998 Six Month Period as compared to
$33,480,000 for the 1997 Six Month Period. These provisions reflect
effective income tax rates of 39.25% for both periods. As a result of
the foregoing, the Company's net income was $65,335,000 for the 1998
Six Month Period as compared to $51,820,000 for the 1997 Six Month
Period.
Liquidity and Capital Resources
-------------------------------
The Company's operating cash flows totaled $54,319,000 for the
1998 Six Month Period as compared to $72,610,000 for the 1997 Six
Month Period. The positive cash flows resulted from the Company's
profitability and management of its working capital. The overall
decrease of $18,291,000 resulted primarily from a buildup of accounts
receivable in newly-acquired hospitals. This will reverse itself over
the next few months when the third party payors begin to pay
remittances that have been delayed pending the processing of the
respective hospital's new provider number. The Company's investing
activities used $117,245,000 and $79,785,000 for the 1998 Six Month
Period and 1997 Six Month Period, respectively. Acquisitions and
ongoing capital expenditure requirements accounted for substantially
all of the funds used in investing activities. Financing activities
provided net cash of $5,000 for the 1998 Six Month Period and
$3,679,000 during the 1997 Six Month Period. See the Condensed
Consolidated Statements of Cash Flows for the six months ended March
31, 1998 and 1997 at page 6 of this Report.
11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The Company had approximately $14,500,000 of available cash on
hand at April 30, 1998. In addition, the Company has a total of $310
million of credit available under its two unsecured lines of credit.
The Company's credit agreements contain certain covenants which,
without prior consent of the banks, limit certain activities of the
Company and its subsidiaries, including those relating to merger,
consolidation and the Company's ability to secure indebtedness, make
guarantees, and grant security interests. The Company must also
maintain minimum levels of consolidated tangible net worth, debt
service coverage, and debt to cash flow and net worth.
In January 1998 the Company acquired certain assets of a 180-bed
general acute care hospital pursuant to the terms of an asset purchase
agreement. Also in January the Company acquired a two hospital, 221-
bed general acute care system via a merger agreement and tax-free
stock exchange transaction. The consideration involved to complete
these two transactions totalled approximately $190.5 million, which
included approximately $80 million in Company common stock, $73.5
million in cash from available cash on hand, and the assumption of $37
million in debt.
In March 1998 the Company announced the execution of a Definitive
Agreement to acquire Regional Healthcare, Inc., a 166-bed health
system, comprised of two acute care hospitals and an ambulatory
surgery center, located in Hernando County, Florida. The total
purchase price is approximately $78 million, which will be financed
from available cash on hand and the Company's line of credit. The
transaction is expected to be completed before the end of the current
quarter ending June 30, 1998.
At the present time, the Company anticipates that cash on hand,
internally generated funds and funds available under its lines of
credit will be sufficient to satisfy the Company's requirements for
capital expenditures, future acquisitions and working capital.
Year 2000 Computer Issues
-------------------------
The Year 2000 Computer Issue is the result of most computer
programs using two digits rather than four to identify a year in a
data field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous
results.
The Company expects to be substantially complete with
modifications to its existing computer software by December 31, 1998,
and does not believe the Year 2000 Issue will propose material
12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
operational problems for its computers. Relating to certain computer
aided medical equipment, the Company has been contacting third-party
vendors regarding the compliance status of their products. However,
the Company has no assurance that the systems of the Federal and State
governments, other payors or other companies with which the Company's
systems interface on or which they rely, will be upgraded on a timely
basis.
The Company is utilizing both internal and external resources to
complete the Year 2000 modifications. The majority of the costs
relating to the Year 2000 Issue will be expensed as incurred.
Management of the Company does not believe such costs will have a
material adverse impact to the Company's future results of operations.
However, there can be no guarantee that actual results could differ
materially from those anticipated. Factors that might cause material
differences include, but are not limited to, the availability and cost
of trained personnel and the ability to locate and correct all
relevant computer coding and all medical equipment affected.
Forward-Looking Statements
--------------------------
Certain statements contained in this Report, including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects" and words of similar import, constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company
or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, both nationally
and in the regions in which the Company operates; industry capacity;
demographic changes; existing government regulations and changes in,
or the failure to comply with, governmental regulations; legislative
proposals for health care reform; the ability to enter into managed
care provider arrangements on acceptable terms; changes in Medicare
and Medicaid payment levels; liability and other claims asserted
against the Company; competition; the loss of any significant ability
to attract and retain qualified personnel, including physicians; the
availability and terms of capital to fund additional acquisitions or
replacement facilities. Given these uncertainties, prospective
investors are cautioned not to place undue reliance on such forward-
looking statements. The Company disclaims any obligation to update any
such factors or to publicly announce the result of any revision to any
of the forward-looking statements contained herein to reflect future
events or developments.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities.
---------------------
None.
Item 3. Defaults upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the Annual Meeting of Stockholders of the Company on February 17,
1998, the stockholders of the Company adopted proposals to:
a) elect six directors of the Company
Votes For Abstained
----------- ----------
William J. Schoen 143,941,131 173,337
Kent P. Dauten 143,925,475 188,993
Robert A. Knox 143,939,481 174,987
Charles R. Lees 143,879,924 234,544
Kenneth D. Lewis 125,732,216 18,382,257
William E. Mayberry M.D. 143,923,567 190,901
b) approve and ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September
30, 1998 (143,965,058 votes for; 20,911 votes against; 128,499 votes
abstained)
Item 5. Other Information.
-----------------
In March 1998 the Company announced the execution of a Definitive
Agreement to acquire Regional Healthcare, Inc., a 166-bed health
system, comprised of two acute care hospitals and an ambulatory
surgery center, located in Hernando County, Florida. The total
purchase price is approximately $78 million, which will be financed
from available cash on hand and the Company's line of credit. The
transaction is expected to be completed before the end of the current
quarter ending June 30, 1998.
14
PART II - OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
a. Exhibits:
--------
See Index to Exhibits located on page 17.
b. Reports on Form 8-K:
-------------------
Form 8-K Reporting Date--February 20, 1998
Item Reported--Item 5. Other Events. The Financial
Accounting Standards Board issued Financial Accounting
Standard No. 128, "Earnings per Share" ("Statement 128")
which is effective for financial accounting periods ended
after December 15, 1997. Statement 128 requires the
restatement of prior period earnings per share and
requires additional supplemental information detailing
the calculation of earnings per share. The Registrant
filed this Form 8-K to restate earnings per share for the
Registrant's Annual Report on Form 10-K for the year
ended September 30, 1997.
15
SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HEALTH MANAGEMENT ASSOCIATES, INC.
DATE: May 7, 1998 BY: /s/ Stephen M. Ray
--------------------------------
Stephen M. Ray
Senior Vice President-Finance
(Duly authorized officer and
Principal Financial Officer)
16
INDEX TO EXHIBITS
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession.
Not applicable.
(3) (i) Articles of Incorporation
3.1 The Fifth Restated Certificate of Incorporation, previously filed and
included as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995, is incorporated herein by
reference.
(ii) By-laws
The By-laws, as amended, previously filed and included as Exhibit 3.2
to the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995, is incorporated herein by reference.
(4) Instruments defining the rights of security holders, including indentures.
The Exhibits referenced under (3) of this Index to Exhibits are
incorporated herein by reference.
Fourth Amended and Restated Credit and Reimbursement Agreement among the
Company and NationsBank of Florida National Association and the Banks named
therein, dated December 1, 1994, previously filed and included as Exhibit
4.12 to the Company's Annual Report on Form 10-K for the year ended
September 30, 1994, is incorporated herein by reference.
Credit Agreement dated May 6, 1996 between First Union National Bank of
Florida and the Company, pertaining to a $10 million working capital and
cash management line of credit, previously filed and included as Exhibit
4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, is incorporated herein by reference.
Amendment Agreement No. 1 to Fourth Amended and Restated Revolving Credit
and Reimbursement Agreement, made as of September 30, 1996, previously
filed and included as Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, is incorporated herein by
reference.
(10) Material contracts
Agreement of Merger and Plan of Reorganization among Health Management
Associates, Inc., HMA-RO Acquisition Corp. and River Oaks Hospital, Inc.,
dated as of October 27, 1997, is included herein as Exhibit 10.1 at page 19
of this Report.
Asset Purchase Agreement among Riley Development Systems, Inc. and Meridian
HMA, Inc. and Meridian HMA Nursing Home, Inc., made as of January 7, 1998,
is included herein as Exhibit 10.2 at page 77 of this Report.
INDEX TO EXHIBITS (Continued)
(11) Statement re computation of per share earnings.
Not applicable.
(15) Letter re unaudited interim financial information.
Not applicable.
(18) Letter re change in accounting principles.
Not applicable.
(19) Report furnished to security holders.
Not applicable.
(22) Published report regarding matters submitted to vote of security holders.
Not applicable
(23) Consents of experts and counsel.
Not applicable.
(24) Power of attorney.
Not applicable.
(27) Financial Data Schedule.
Financial Data Schedule is included herein as Exhibit 27.1 at page 129 of
this report.
(99) Additional exhibits.
Not applicable.