NEW YORK, July 31, 2007 (PRIME NEWSWIRE) -- Roy Jacobs & Associates announces that it is investigating possible securities fraud regarding disclosures and omissions by Health Management Associates Inc. ("Health Management" or the "Company") (NYSE:HMA) and its top officers regarding its accounts receivable and reserves for uncollectable accounts.
The Company announced today that second quarter net income dropped 85 percent and the Company cut expected earnings for the full year by nearly half. The Company blamed uncollectable receivables from uninsured patients. However it appears that this is not a new issue, and that the Company was under-accruing for these bad receivables in connection with a plan by management to effect a huge special dividend that benefited senior management members, and create unrealistic projections. During this period, some insiders also sold shares.
In fact in January 2007, management effected a huge recapitalization, borrowing $3 billion and paying out $2.4 billion as a special dividend. As a result the current Chief Executive Officer Burke Whitman received approximately $60 million in payments, and the former CEO Joseph Vumbacco received $7.5 million in payments. Shortly thereafter, the former CEO sold over 800,000 shares for proceeds of $17 million.
HMA shares are down over 22 percent today on vastly increased volume of 17 million shares.
If you purchased HMA shares during the period from January 17, 2007 through July 30, 2007 and you wish to discuss this matter or have any questions concerning this notice or your rights or interests with respect to this matter, please contact Roy L. Jacobs. Mr. Jacobs will personally speak with you at no cost or obligation.