Health Management Associates Beats Estimates With A Solid Q3

Health Management Associates HMA reported Q3:10 adjusted EPS from continuing operations of $0.14, compared to Oppenheimer's estimate and the Street consensus of $0.12. Overall this was a solid quarter across the board as the company was able to overcome a tough comp and beat expectations. More importantly, bad debt expense of 12.6% fell 20 bps YoY and was in line with our estimate. As a result of the strong quarter, the company raised its 2010 EPS guidance to $0.64-0.66 from the previous $0.56-0.61. HMA generated strong FCF ($67.3M), which was used to acquire the 413-bed Wuesthoff Health System for ~$152M, effective October 1. The company's acquisition pipeline remains robust and HMA is currently reviewing several opportunities similar to the Wuesthoff transaction in terms of scope and size. Oppenheimer has a Perform rating on HMA HMA is trading higher at $7.76