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Last Update: 10-Apr-13 07:56 ET
Health Management shares plunge 12% following downside guidance
Health Management (HMA $11.00 -1.49) issued downside guidance for the first quarter with EPS of $0.12-0.13, excluding non-recurring items, versus the $0.23 consensus and revenues of approximately $1.48 billion versus $1.79 billion consensus. The company lowered guidance for fiscal year 2013 with lowered top end of EPS guidance to $0.86-0.95 from prior guidance of $0.86-1.01 versus the $0.88 consensus and lowered revenues to $6.8-7.0 bln from prior guidance of $7.0-7.2 billion versus the $7.04 billion consensus Estimate. For continuing same hospital operations, compared to the prior year's first quarter, Health Management expects adjusted admissions to decline approximately 5.7%, and admissions to decline 8.8%. The Company believes a significant portion of the inpatient admission decrease in the first quarter is attributable principally to a decrease in uninsured inpatient volumes and a substantial increase in observation stays, in each case compared to the prior year's first quarter.
Observation stays for the quarter increased approximately 14.1%, and observation stays greater than 48 hours increased by more than 40.0%, compared to the first quarter last year. A leading contributor to the increase in observation stays was an increase in Medicare/Medicaid advantage business as compared to traditional Medicare business, particularly in Florida, during the first quarter ended March 31, 2013. "In the past, we have prepared our Florida hospitals for the first quarter of the year, our seasonally busiest quarter, by adding additional staffing. However, in this year's first quarter, our historical volume levels did not materialize as increases in observation stays impacted our results. We did reduce expenses during the quarter, but contracts for seasonal nursing labor were already in place. In response, we have reduced our costs accordingly going forward, seasonal nursing labor contracts are expiring, and we will continue to closely manage our expenses relative to the volume and acuity of our patients."
Observation stays for the quarter increased approximately 14.1%, and observation stays greater than 48 hours increased by more than 40.0%, compared to the first quarter last year. A leading contributor to the increase in observation stays was an increase in Medicare/Medicaid advantage business as compared to traditional Medicare business, particularly in Florida, during the first quarter ended March 31, 2013. "In the past, we have prepared our Florida hospitals for the first quarter of the year, our seasonally busiest quarter, by adding additional staffing. However, in this year's first quarter, our historical volume levels did not materialize as increases in observation stays impacted our results. We did reduce expenses during the quarter, but contracts for seasonal nursing labor were already in place. In response, we have reduced our costs accordingly going forward, seasonal nursing labor contracts are expiring, and we will continue to closely manage our expenses relative to the volume and acuity of our patients."
