NEW YORK, July 31, 2007 (PRIME NEWSWIRE) -- Roy Jacobs & Associates announces that it is issuing a correction to an earlier press release concerning its investigation of 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. This correction concerns certain inadvertent errors in the previous release.
The Company announced on July 31, 2007 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 was announced in January 2007 along with unrealistic bad debt projections. Following the announcement of the recapitalization, some insiders also sold shares.
In fact in January 2007, management announced a huge recapitalization, which involved borrowing billions of dollars and paying out $2.4 billion as a special dividend. As a result, the borrowing was undertaken and the recapitalization was effectuated in March 2007. Board Chairman William J. Schoen appears to have received substantial dividend payments, and the former CEO Joseph Vumbacco may have also received substantial dividend payments. Shortly after the recapitalization plan was announced, and before its effectuation, the former CEO, Mr. Vumbacco, sold over 800,000 shares for proceeds of $17 million on Feb. 5, 2007. The previous press release's mention of Burke Whitman, the current CEO, was inadvertent and is withdrawn.
HMA shares were down over 24 percent today on July 31, 2007 on vastly increased volume of 31 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.