Health Management enters into new credit facilities and closes $875M Notes offering

Health Management Associates, Inc. (NYSE: HMA) announced today that it entered into new credit facilities, including a $500 million senior secured revolving credit facility, a $725 million senior secured term loan A with a five year term and a $1.4 billion senior secured term loan B with a seven year term (collectively the "New Credit Facilities"). Concurrently with the closing of the New Credit Facilities, Health Management completed its offering of $875 million aggregate principal amount of its 7.375% Senior Notes due 2020 (the "Notes") in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The New Credit Facilities are secured by substantially all of the assets of Health Management and is guaranteed on a senior secured basis by wholly owned subsidiaries representing approximately 50% of Health Management's consolidated net revenue, and the Notes are guaranteed on a senior unsecured basis by all wholly-owned material subsidiaries of Health Management that are borrowers or guarantors under Health Management's New Credit Facilities or guarantors of certain other material indebtedness of Health Management.

Health Management used the net proceeds of the offering of the Notes, together with the borrowings under its New Credit Facilities, to repay its outstanding indebtedness under its prior credit facilities. The remainder of such proceeds will be used by the Health Management for general corporate purposes.

The New Credit Facilities will mature on November 18, 2016, in the case of the term loan A and the revolving credit facility, and on November 18, 2018, in the case of the term loan B. The New Credit Facilities contain customary representations and warranties, covenants and events of default. The Notes are unsecured and will mature on January 15, 2020, and pay interest semi-annually at a rate of 7.375% per annum. The Notes may be redeemed by Health Management at any time on or after January 15, 2016. The Notes contain customary covenants, events of default and redemption provisions.

The Notes were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state law.

In 2007, as required by the terms of its prior $2.75 billion Term Loan B (the "Term Loan B") due February 2014, which was repaid with the proceeds from the New Credit Facilities and the Notes, Health Management entered into a receive variable/pay fixed interest rate swap contract (the "Swap Contract") that has a term concurrent with the term of its prior Term Loan B. As the Swap Contract was determined to be an effective cash flow hedge instrument, changes in the estimated fair value of the Swap Contract have been recognized as a component of other comprehensive income, which is included in equity. According to U.S. Generally Accepted Accounting Principles ("GAAP"), the swap-related balance previously classified in other comprehensive income must be amortized over the original life of the Swap Contract. In conjunction with the refinancing, Health Management anticipates:

• The amortization of the swap-related balance previously classified in other comprehensive income as of September 30, 2011, will impact diluted earnings per share by approximately $0.05 per quarter in 2012 and until the Swap Contract terminates in February 2014. This amount is subject to certain adjustments based on final valuations which are still to be determined.
• The amortization of the swap-related balance previously classified in other comprehensive income will not impact EBITDA or adjusted EBITDA. Adjusted EBITDA is defined as consolidated net income before discontinued operations, net gains (losses) on sales of assets, net interest and other income, interest expense, income taxes, costs for acquisitions and government investigations, and depreciation and amortization, including the amortization of the swap-related balance. Adjusted EBITDA is not a measure determined in accordance with GAAP. Nevertheless, Health Management believes that providing non-GAAP information such as Adjusted EBITDA is important for investors and other readers of Health Management's consolidated financial statements, as it is commonly used as an analytical indicator within the health care industry and Health Management's debt facilities contain covenants that use Adjusted EBITDA in their calculations.
• Approximately $0.09 per diluted share of impact in the fourth quarter ended December 31, 2011, related to the retirement of debt and the amortization of the swap-related balance previously classified in other comprehensive income.
• Excluding the retirement of debt impact, the impact of the amortization of the swap-related balance previously classified in other comprehensive income, certain restructuring charges as well as HCIT monies which are anticipated in the fourth quarter ending December 31, 2011, Health Management is affirming its diluted EPS from continuing operations objective range for fiscal year 2011 to be between $0.76 and $0.80.

Health Management expects to announce 2012 earnings objectives in January 2012.