HEALTH MANAGEMENT ASSOCIATES INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-11141

HEALTH MANAGEMENT ASSOCIATES, INC.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation or organization)

61-0963645
(I.R.S. Employer
Identification No.)

5811 Pelican Bay Boulevard,
Suite 500, Naples, Florida
(Address of principal executive offices)

34108-2710
(Zip Code)

(239) 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 (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

At May 5, 2003, 238,680,867 shares of the Registrant’s Class A Common Stock were outstanding.

HEALTH MANAGEMENT ASSOCIATES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

INDEX

			Page

PART I	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Statements of Income - Three Months Ended March 31, 2003 and 2002	3

		Consolidated Statements of Income - Six Months Ended March 31, 2003 and 2002	4

		Condensed Consolidated Balance Sheets - March 31, 2003 and September 30, 2002	5

		Condensed Consolidated Statements of Cash Flows - Six Months Ended March 31, 2003 and 2002	6

		Notes to Interim Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

	Item 4.	Controls and Procedures	18

PART II	OTHER INFORMATION		20

SIGNATURES	22

INDEX TO EXHIBITS	25

EXHIBITS	27

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

	Three Months Ended March 31,

	2003		2002


Net patient service revenue	$	646,472	$	579,948

Costs and expenses:
Salaries and benefits		245,946		219,044
Supplies and other		183,526		163,678
Provision for doubtful accounts		45,017		43,713
Depreciation and amortization		27,113		23,893
Rent expense		12,106		11,569
Interest, net		3,712		4,086


Total costs and expenses		517,420		465,983


Income before minority interests and income taxes		129,052		113,965
Minority interests in earnings of consolidated entities		1,063		—

Income before income taxes		127,989		113,965

Provision for income taxes		49,924		44,729


Net income	$	78,065	$	69,236


Net income per share:
Basic	$	.33	$	.29

Diluted	$	.31	$	.27


Dividends per share	$	.02	$	—


Weighted average number of shares outstanding:
Basic		238,673		241,259

Diluted		256,993		260,661

See accompanying notes.

HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

	Six Months Ended March 31,

	2003		2002


Net patient service revenue	$	1,255,891	$	1,075,769

Costs and expenses:
Salaries and benefits		488,457		414,792
Supplies and other		363,468		307,111
Provision for doubtful accounts		91,324		80,591
Depreciation and amortization		53,200		45,541
Rent expense		24,211		22,495
Interest, net		7,473		8,202

Total costs and expenses		1,028,133		878,732


Income before minority interests and income taxes		227,758		197,037
Minority interests in earnings of consolidated entities		1,985		—

Income before income taxes		225,773		197,037
Provision for income taxes		88,052		77,335


Net income	$	137,721	$	119,702


Net income per share:
Basic	$	.58	$	.49

Diluted	$	.55	$	.47


Dividends per share	$	.04	$	—


Weighted average number of shares outstanding:
Basic		238,631		242,467

Diluted		257,066		262,035

See accompanying notes.

HEALTH MANAGEMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	March 31, 2003			September 30, 2002

	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	160,660		$	123,736
Receivables-net		495,307			454,427
Supplies, prepaids and other assets		88,596			79,034
Funds held by trustee		4,228			2,628
Deferred income taxes		48,185			35,961

Total current assets		796,976			695,786
Property, plant and equipment		1,822,313			1,723,343
Less: accumulated depreciation and amortization		(503,648	)		(441,561	)

Net property, plant and equipment		1,318,665			1,281,782
Other assets:
Funds held by trustee		1,038			1,450
Excess of cost over acquired net assets, net		352,439			335,313
Deferred charges and other assets		40,943			49,986

Total other assets		394,420			386,749

Total assets	$	2,510,061		$	2,364,317


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	146,635		$	132,228
Accrued expenses and other liabilities		128,852			122,678

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