Health Management Associates Earnings Fall, Dividends Suspended

Health Management Associates, Inc. announced its consolidated financial results for the three months ended March 31, 2007. For the period, HMA reported net operating revenue of $1,143.5 million; earnings before interest, income taxes, depreciation, amortization, refinancing and debt modification costs and after minority interest ("EBITDA") of $193.9 million; net income of $65.0 million; income from continuing operations of $65.7 million; and both diluted earnings per share ("EPS") and diluted EPS from continuing operations of $0.27.

Net operating revenue from continuing operations increased 13.3%, total admissions from continuing operations grew 2.6%, and adjusted admissions from continuing operations grew 4.8% in the first quarter as compared to the same quarter a year ago, reflecting the admissions contribution from hospitals acquired by HMA during the year ended December 31, 2006, as well as HMA’s de novo acute care hospital, which opened during the first quarter.

Net operating revenue from continuing operations at hospitals owned and operated by HMA for one year or more, referred to as same hospitals, increased 6.8% during the first quarter compared to the same quarter a year ago. Compared to the same quarter a year ago, same hospital admissions from continuing operations decreased 1.0%, and same hospital adjusted admissions from continuing operations increased 0.6%. Compared to the same quarter a year ago, during the first quarter net operating revenue per adjusted admission at HMA’s continuing same hospitals increased 6.2%, surgeries from continuing same hospital operations decreased 2.0% and emergency room visits increased 3.6%.

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HMA’s same hospital EBITDA from continuing operations for the first quarter was $214.8 million, and same hospital EBITDA margins from continuing operations were 20.1%. Consolidated EBITDA from continuing operations for the first quarter was $193.9 million, and cash flow from continuing operating activities was $76.1 million, which includes cash interest and cash tax payments aggregating $71.2 million. For the year ending December 31, 2007, HMA expects cash flow from operations to be between $360 and $400 million. Additional disclosure regarding EBITDA follows the financial statements included with the press release.

Commencing in February 2007, HMA began discounting its gross charges for non-elective services by 60% for uninsured patients. Uninsured discounts for the quarter ended March 31, 2007 approximated $117.7 million.

During the first quarter of 2007 HMA also revised its charity/indigent care policy such that beginning in January 2007, only those uninsured accounts for which the patient meets poverty guidelines are being written off as charity/indigent. Charity/indigent care writeoffs for the first quarter ended March 31, 2007 were $26.2 million compared to $142.4 million for the same quarter a year ago.

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During January 2007 HMA continued its newly implemented bad debt reserve policy of reserving 75% of uninsured accounts. In February 2007, in conjunction with the adoption of its discount program, HMA began reserving discounted self-pay receivables at 60%. Bad debt expense for the first quarter was $121.5 million compared to $82.7 million for the same quarter a year ago.

The sum of uninsured discounts, charity/indigent writeoffs and bad debt expense, as a percent of the sum of net operating revenue, uninsured discounts and charity/indigent writeoffs, totaled 20.6% for the first quarter ended March 31, 2007 compared to 19.5% for the same quarter a year ago, and 20.7% for the quarter ended December 31, 2006, excluding a change in estimate related to a bad debt reserve adjustment.

HMA’s previously announced fiscal 2007 objectives included between $4.0 billion and $4.2 billion in net operating revenue and 5% to 6% for bad debt expense as a percent of net operating revenue. These objectives were based on an assumption of $250 million of reduced revenues and corresponding bad debt expense following HMA’s implementation of its new uninsured discount, indigent/charity and bad debt reserve policies described above. Instead of an anticipated $250 million reduction in operating net revenue and corresponding bad debt expense, HMA now expects that for the balance of fiscal 2007 the implementation of these policies will reduce net operating revenue and bad debt expense by only $100 to $150 million. Therefore, HMA is revising its fiscal 2007 objectives to include between $4.1 billion to $4.3 billion in net operating revenue and 7.5% to 8.5% in bad debt expense as a percent of net operating revenue, respectively. All remaining fiscal year 2007 objectives previously announced on February 22, 2007 remain unchanged.

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Days sales outstanding from continuing operations, or DSOs, were 52 days at March 31, 2007, compared to 53 days at December 31, 2006 and 66 days at March 31, 2006.

During the first quarter, the results of operations from three hospitals (Williamson Memorial Hospital, located in Williamson, West Virginia; Southwest Regional Medical Center, located in Little Rock, Arkansas; and Summit Medical Center, located in Van Buren, Arkansas) were accounted for as assets held-for- sale and prior periods have been reclassified. After-tax losses from assets held-for-sale totaled $0.6 million during the first quarter.

As previously announced on January 17, 2007, HMA recapitalized its balance sheet through the issuance of $3.25 billion of new senior secured credit facilities. As part of this recapitalization, HMA returned approximately $2.4 billion to shareholders through a $10.00 per share special cash dividend and refinanced all amounts outstanding under its previous revolving line of credit. As of March 31, 2007, $2.75 billion of the new $3.25 billion senior secured credit facilities was outstanding.

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The special dividend was paid on March 1, 2007 and HMA’s common stock started trading on an ex-dividend basis beginning on March 2, 2007, in accordance with NYSE rules. In light of the $10.00 per share dividend, HMA’s regular dividend has been suspended indefinitely, reflecting HMA’s strategic reallocation of cash flow to fund future operational objectives and to de- leverage its balance sheet.

On January 23, 2007, HMA completed a transaction giving local physicians and HMA joint ownership of Riverview Regional Medical Center, HMA’s 281-bed hospital located in Gadsden, Alabama. Fifty-eight physicians now own an interest in the hospital and participate in its governance. HMA continues to own a majority interest in the hospital and to manage its day-to-day operations. This transaction arose in furtherance of HMA’s core operating objective to enhance its relationships with physicians, which HMA is doing by collaborating operationally and in some select cases financially, to the mutual benefit of physicians, patients, communities, and its hospitals.

On February 5, 2007, HMA’s new 100-bed Physicians Regional Medical Center — Collier Boulevard, located in Naples, Florida, opened its doors and began treating patients. This state-of-the-art de novo hospital provides general acute care hospital services to the residents of East Naples and southern Collier County, and includes all private rooms, spacious surgical suites, a 64-slice CT scanner and a separate 14-bed women’s center. Combined with the existing Physicians Regional Medical Center — Pine Ridge, the two hospitals form the Physicians Regional Health System, and are delivering high quality health care to all of Collier County and the surrounding region.

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HMA’s senior management team will discuss HMA’s 2007 first quarter performance in greater detail on a live conference call and audio webcast later this morning. All interested investors are invited to access the webcast at 11:00 a.m. ET, via HMA’s website located at www.hma-corp.com or via www.streetevents.com or join the conference call by dialing 877-476-3476. A copy of the audio webcast, along with any related information that HMA may be required to provide pursuant to Securities and Exchange Commission rules, will be archived on HMA’s website under the heading "Investor Relations."

HMA owns and operates general acute care hospitals in non-urban communities located throughout the United States. HMA currently operates 61 hospitals in 16 states with approximately 8,700 licensed beds.