PR - Health Management Associates Sells Stake to Novant

Naples, Fla.-based Health Management Associates, Inc. (NYSE:HMA) announced it has sold a 27% minority interest in its seven hospitals located in North and South Carolina to Novant Health ("Novant") for $300 million. The parties completed the transaction on March 31, 2008.

"We are particularly pleased and honored to have Novant Health as our partner," said Burke W. Whitman, HMA’s President and Chief Executive Officer. "Novant has an unsurpassed reputation for delivering high quality, innovative health care to the residents and visitors of North Carolina.”

HMA and Novant will share governance of the joint venture through a partnership board. HMA will continue to manage the hospitals on behalf of the joint venture. The partnership will establish a Quality Advisory Committee, with equal representation from both organizations, whose objective will be to ensure that all seven hospitals exceed the hospital industry’s leading benchmarks for clinical and service quality. The partnership will also develop mutually beneficial revenue and operational synergies, including more seamless delivery of care. Over a four-month transition period, Novant will assume ownership and operation of the hospitals’ employed physician practices, which HMA will subsidize partially for the first three years if necessary.

HMA and Novant may also invite other providers to participate with them in the ownership of certain hospitals included in the joint venture. Separately, HMA is evaluating similar opportunities for joint venture transactions involving other HMA hospitals. These transactions are consistent with HMA’s intent to create collaborative relationships that reinforce quality and customer satisfaction, further the Company’s mission, improve its operating performance, strengthen its balance sheet, and enhance shareholder value.

HMA intends to use the net proceeds from the transaction for general corporate purposes. The Company expects the net after-tax proceeds to exceed 90% of the purchase price.

The Company expects to record a book gain from continuing operations of approximately $200 million before tax, or approximately $0.50 per share after tax, on the sale of the 27% minority interest. Separate from this transaction, the Company may record a non-cash write-down of the value of certain other HMA hospitals, based on ongoing evaluations of strategic alternatives for those other HMA hospitals; the potential non-cash write-down may offset a portion of the $200 million gain from this joint venture transaction.

The Company will continue to report the operating results of the hospitals in the joint venture on a consolidated basis. It will report Novant’s share of the results as minority interest expense. Because Novant is assuming ownership of the employed physician practices, the Company will begin reporting the physician practice results in discontinued operations.

The Company reiterated its 2008 earnings objective of $0.40-0.50 per diluted share from continuing operations on net revenues $4.5-4.7 billion, excluding the gain from this joint venture transaction and the potential separate non-cash write-down of certain other hospital assets.

Novant Health is a not-for-profit group of hospitals and physician clinics, ranked as our nation’s 4th most integrated healthcare system. Novant includes nine hospitals, an 830-physician medical group, two nursing homes and 130 outpatient facilities including diagnostic centers, rehabilitation programs, surgery centers and community health outreach programs.

HMA owns and operates 58 hospitals, with approximately 8,300 licensed beds, in non-urban communities located throughout the United States.