JP Morgan Comments On Health Management Associates Following Recent Earnings

After the close, Health Management Associates HMA reported 1Q at $0.22/share, $0.01 ahead of JP Morgan's/consensus outlook, while EBITDA was about 2% ahead of its view, this as better mix and margins offset the lower volumes. The volume metrics trailed JPM's outlook, while rev/adj admit at +5.1% compared to JPM's outlook for 2.2%, providing offset. On the lower volumes, HMA cited fewer uninsured admits and weather impact. In addition, the EBITDA margin came in 50bps ahead, lower bad debt the most significant factor, at 12.1% vs JPM's 12.5%. It is edging up its full year '11 EPS by $0.01, to $0.76/share, while '12 is unchanged. Offsetting still challenged volumes, rev/adj admit looks good, this having been light last quarter, and providing the offset to the lower admits this quarter, a better mix assisting. While volumes get much of the focus often, mix can swing the earnings more significantly, especially when that takes the form of swapping much better paying commercial business over self-pay and/or government-programs. Average length-of-stay also edged up sequentially, to 4.3 from 4.2. JP Morgan has an $11 PT and Neutral Rating on HMA HMA closed Monday at $10.39