Health Management shares fall following 3Q report

Health Management Associates shares fall, 3rd-quarter reports shows pricing dip

• On 10:59 am EDT, Tuesday October 27, 2009

NEW YORK (AP) -- Shares of hospital operator Health Management Associates Inc. fell Tuesday after the company said its third-quarter profit surged on an admissions boost but reported a dip in pricing.

The stock fell 69 cents, or 9.2 percent, to $6.79 in morning trading. Shares have traded between 79 cents and $8.58 over the last 52 weeks.

The company, headquartered in Naples, Fla., said its third-quarter profit more than doubled to $25.4 million, or 10 cents per share, topping Wall Street expectations. Admissions, adjusted for outpatient volume, rose 7 percent, pushing revenue up 6 percent to $1.12 billion.

But, revenue per adjusted admission fell 1.1 percent.

Stifel Nicolaus & Co. analyst Robert Hawkins reaffirmed his "Hold" rating on the stock, saying it seems that flu and emergency room volume helped push up overall volume. Still, he said, pricing and profitability were weak, pointing to the revenue per adjusted admission.

Meanwhile, a reduction in some costs helped offset a boost in bad debt.

Deutsche Bank-North America analyst Darren Lehrich also said the pricing seemed to be mixed, but volume were still very strong.

"We are encouraged by Health Management's turnaround on the volume front, and we believe these operating metrics suggest real traction is being sustained with regard to recapturing market share and physician support," Lehrich said, in a note to investors.

Buzz up!