Health Management Associates, Inc.
Health Management Associates — Merger or Acquisition (July 2013)
22 slides from Health Management Associates's merger presentation, Jul 31, 2013
Slide 1: Creating Shareholder Value
Filed by Health Management Associates, Inc. (Commission File No. 001-11141) Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Health Management Associates, Inc. (Commission File No. 001-11141) Creati
Slide 2: Important Information and Where to Find It
Important Information and Where to Find It Community Health Systems, Inc. (“CHS”) intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a proxy statement of Health Management Associates, Inc. (“HMA”) and a prospectus of CHS rel
Slide 3: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected timing of the comp
Slide 4: Overview
Overview Health Management has achieved consistent growth and solid business results despite a challenging and evolving healthcare environment » Health Management has long-term record of consistent growth, solid business results, and value creation for shareholders » Management has put in place seve
Slide 5: Board of Directors with History of Value Creation
Board of Directors with History of Value Creation Health Management’s Board is comprised of individuals who combine relevant business and healthcare experience, with exceptional judgment, to create long-term value Kent P. Dauten – Managing Director, Keystone Capital Investor with transactional, capi
Slide 6: Board of Directors with History of Value Creation
Board of Directors with History of Value Creation Since 1999 • Dividends of $2.6 billion, including $2.4 billion in 2007 • Share repurchases of ~$500 million • Accretive acquisitions • Strategic Partnerships Board has consistently evaluated Health Management’s strategy and positioning in an effort t
Slide 7: December 2012 Strategic Review
December 2012 Strategic Review • Scale is critical to compete effectively in evolving healthcare delivery marketplace: » Realize maximum efficiencies in operations to operate at low cost of service » Increased capital, sophistication and capabilities to provide better quality patient care Macro Tren
Slide 8: Quarterly Income Summary
Quarterly Income Summary $MM 6-30-2013 6-30-2012 Net Revenue $1,464 $1,472 Adjusted EBITDA $192 $233 Adjusted EBITDA Margin 13.1% 15.8% Same Hospital Adjusted EBITDA $248 $287 Same Hospital Adjusted EBITDA Margin 17.7% 19.5% Earnings Per Share (EPS): • Continued Operations $0.05 $0.16 Number SharesO
Slide 9: Summary Deal Terms
Summary Deal Terms • Per Share Consideration » $10.50 cash » 0.06942 CHS shares » Contingent Value Right (CVR) nominal value of $1.00 1 • Total per share consideration of $13.78 plus CVR 2 • ~76% cash / 24% stock consideration • HMA shareholders own ~16% of pro forma CHS • Requires 70% approval by H
Slide 10: CVR Overview
CVR Overview • Nominal value of $1.00 Illustrative Example ($MM) Nominal Value (per share) $1.00 $1.00 • Nominal value adjusted based on cost of resolution of certain existing Shares Outstanding 268 268 litigation (Litigation Losses) Aggregate Nominal Value $268 $268 • Adjustments: Illustrative Liti
Slide 11: HMA Board of Directors Unanimously Supports the CHS Transaction
HMA Board of Directors Unanimously Supports the CHS Transaction • Consistent with Board’s objective to maximize stockholder value and achieve scale in an uncertain operating environment • Decision based on a thorough review of all available options • From a timing perspective, transaction supported
Slide 12: Strategic Review Process
Strategic Review Process • Commenced in December 2012 • Reviewed all available options, including remaining independent and potential transactions with other strategic parties • Executed Non-Disclosure Agreements and shared non-public information with 3 strategic parties, including CHS • Publicly an
Slide 13: HMA Shares Up ~65% in Last Year
HMA Shares Up ~65% in Last Year HMA Stock Price Performance May 24, 2012 – May 24, 2013 ($) Volume (MM) Implied Premia 1 $ % $13.78 ¹ May 24, 2013 11.04 25 2 1-Year VWAP 8.85 56 2 5-Year VWAP 7.45 85 2 $11.04 In the last five 5-Year High 13.24 4 +67% years, HMA shares 5-Year Low 2 0.95 1,351 have ne
Slide 14: Sector Multiples Have Recovered to Peak Levels
Sector Multiples Have Recovered to Peak Levels 3-Year Historical Valuations ¹ AV / NTM EBITDA 9.0x Summary Statistics 2013E Transaction Multiple 3 3-Year Average 6.3x 8.3x 8.0x 3-Year High 7.4x 3-Year Low 5.5x 7.3x 7.0x 6.0x 5.0x 4.0x Jul-10 Dec-10 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 2 Peers 2
Slide 15: Attractive Valuation Metrics
Attractive Valuation Metrics 1 • 25% premium to unaffected price • ~65% premium to estimated unaffected price reflecting revised 2013 guidance2 3 • ~60% - 125% credit for capitalized value of publicly announced synergies • Premium to most recent hospital industry transaction 8.3x last twelve months
Slide 16: Pro Forma CHS
Pro Forma CHS HMA Shareholders will Hold ~16% of Pro Forma CHS • Increased scale • Complementary geographic fit • Strong market presence and diversification • Network opportunities • Synergies • Attractive financial profile • History of successfully integrating acquisitions 16 © 2013 Health Manageme
Slide 17: The Health Management Board has a Forward-looking Plan for Success
The Health Management Board has a Forward- looking Plan for Success • Health Management continues to be led by dynamic, experienced and accomplished executives at all levels of the organization » The Board announced the appointment of John M. Starcher Jr. as Interim President and Chief Executive Off
Slide 18: Appendix
Appendix 18 © 2013 Health Management Associates, Inc. Confidential.
Slide 19: Health Management's Corporate Governance Reflects Best Practices that Promote Shareholder Interests
Health Management’s Corporate Governance Reflects Best Practices that Promote Shareholder Interests “A vote FOR this proposal is • Health Management given a QuickScore warranted, as no significant concerns were found in reviewing the GovernanceRating of 1 by ISS, reflecting company’s executive compe
Slide 20: The Health Management Board
The Health Management Board William J. Schoen, Chairman Mr. Schoen has more than 25 years of experience as Health Management’s President, Chief Executive Officer and Chairman. This experience provides Mr. Schoena deep and unique understanding of Health Management and the health care industry. Additi
Slide 21: The Health Management Board, Continued
The Health Management Board, Continued Donald E. Kiernan, Corporate Governance and Nominating Committee Chair Mr. Kiernan has 20 years of experience as a Certified Public Accountant in private practice, including management positions with an international public accounting firm, and served in senior
Slide 22: The Health Management Board, Continued
The Health Management Board, Continued William C. Steere, Jr. As former Chairman and Chief Executive Officer of Pfizer Inc., a Fortune 50 company, Mr. Steere is widely regarded as one of the most distinguished leaders of the pharmaceutical industry, bringing substantial expertise leading a large pub
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