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Health Management Associates, Inc. Reports Second Quarter Earnings.

NAPLES, Fla. -- Health Management Associates, Inc. (NYSE:HMA) announced its consolidated financial results for the second quarter ended June 30, 2007. For the second quarter ended June 30, 2007, HMA reported net operating revenue of $1,099.2 million; earnings before interest, income taxes, depreciation, amortization, refinancing and debt modification costs and after minority interest ("EBITDA") of $137.0 million; net income of $11.9 million; income from continuing operations of $13.1 million; and both diluted earnings per share ("EPS") and diluted EPS from continuing operations of $0.05. Included in these results is approximately $39.0 million, or approximately $0.10 per diluted share, of bad debt expense recorded as an additional reserve to reflect a recent decline in collectibility of accounts receivable from uninsured patients, and a $2.9 million, or approximately $0.01 per diluted share, gain on the sale of certain home health assets.

HMA updated its fiscal 2007 diluted EPS from continuing operations objective range to be between $0.45 and $0.50 to reflect increased uninsured volumes, a deterioration in the collectibility of accounts receivable related to those uninsured volumes, and lower than anticipated overall paying volumes. This new EPS objective is based on a net operating revenue objective range of $4.3 to $4.5 billion, same hospital admissions from continuing operations experiencing no growth from 2006 and bad debt expense as a percentage of net operating revenue of approximately 12% for the remainder of fiscal year 2007.

Compared to the same quarter a year ago, net operating revenue and net operating revenue per adjusted admission from continuing operations at hospitals owned and operated by HMA for one year or more, referred to as same hospitals, increased 7.1% and 5.0%, respectively. Compared to the same quarter a year ago, same hospital admissions from continuing operations increased 0.4%, same hospital adjusted admissions from continuing operations increased 2.0%, same hospital surgeries from continuing operations decreased 1.6% and same hospital emergency room visits from continuing operations increased 2.0%.

HMA's same hospital EBITDA from continuing operations for the second quarter was $164.3 million and HMA's same hospital EBITDA margin from continuing operations was 16.0%. Consolidated EBITDA from continuing operations for the second quarter was $137.0 million, and cash flow from continuing operating activities was $146.9 million, which includes cash interest and cash tax payments aggregating $75.0 million. Excluding the additional bad debt reserve and the gain on sale of assets described previously, same hospital EBITDA from continuing operations for the second quarter would have been $198.3 million and same hospital EBITDA margin from continuing operations would have been 19.3%. Additional disclosure regarding EBITDA follows the financial statements included with this press release.

During the second quarter, the results of operations from four hospitals (Southwest Regional Medical Center, located in Little Rock, Arkansas; Summit Medical Center, located in Van Buren, Arkansas; Lee Regional Medical Center, located in Pennington Gap, Virginia and Mountain View Regional Medical Center, located in Norton, Virginia) were accounted for as assets held-for-sale and prior periods have been reclassified. After-tax losses from assets held-for-sale totaled $1.2 million during the second quarter of 2007. The results of operations from Williamson Memorial Hospital, located in Williamson, West Virginia had previously been accounted for as an asset held-for-sale. As of June 30, 2007, the results of operations from Williamson are included in continuing operations and its results in prior periods have been reclassified.

Net operating revenue from all continuing operations for the second quarter increased 10.3%, total admissions from continuing operations grew 2.8%, and total adjusted admissions from continuing operations grew 4.0%, in each case as compared to the same quarter a year ago, reflecting the admissions contribution from hospitals acquired by HMA during fiscal year 2006, as well as the commencement of operations at HMA's de novo general acute care hospital, which opened during the first quarter ended March 31, 2007.

For the six months ended June 30, 2007, HMA reported net operating revenue of $2,237.0 million; EBITDA of $328.8 million; net income of $76.9 million; income from continuing operations of $78.0 million; and both diluted EPS and diluted EPS from continuing operations of $0.31.

Commencing in February 2007, HMA began discounting its gross charges for non-elective services by 60% for uninsured patients. Uninsured discounts for the quarter ended June 30, 2007 approximated $153.3 million compared to $117.1 million for the quarter ended March 31, 2007.

HMA's charity/indigent care writeoffs for the second quarter ended June 30, 2007 were $18.5 million compared to $140.4 million for the same period a year ago, and $26.2 million for the first quarter ended March 31, 2007.

During January 2007, HMA continued its newly implemented bad debt reserve policy of reserving 75% of uninsured accounts. In February 2007, in conjunction with the adoption of its 60% discount program, HMA began reserving those discounted self-pay receivables at 60%. The combination of the 60% discount policy and the 60% bad debt reserve on the discounted self-pay receivables resulted in an overall discount/reserve of 84% of gross charges. Both policies were based on the current collection experience at the time.

HMA has performed a look-back analysis since the new discount policy went into effect in February 2007. The results of this look-back analysis now indicate that HMA is experiencing a deterioration in the collectibility of its accounts receivable from uninsured patients. The deterioration noted relates to the overall collectibility of receivables from uninsured patients, and to patients billed at discounted amounts who may have been written off as charity care under the Company's previous policy, based on their inability to pay the previously undiscounted gross charges.

Effective July 1, 2007, HMA has updated its existing bad debt reserve policy to reflect a change in estimate of the collectibility of its self-pay receivables. The Company will now record incremental reserves as the receivables age, until they are fully reserved or collected. HMA believes that updating its bad debt reserve policy and adding additional bad debt reserves is prudent given the results of its recent look-back review.

Bad debt expense for the second quarter was $150.6 million compared to $90.1 million for the same period a year ago, and $121.2 million for the first quarter ended March 31, 2007.

The sum of uninsured discounts, charity/indigent writeoffs and bad debt expense, as a percent of the sum of net operating revenue, uninsured discounts and charity/indigent writeoffs, totaled 25.4% for the second quarter ended June 30, 2007 compared to 20.3% for the same quarter a year ago and 20.6% for the first quarter ended March 31, 2007.

On June 4, 2007, HMA announced the signing of a definitive agreement to sell the 80-bed Lee Regional Medical Center, located in Pennington Gap, Virginia and the 133-bed Mountain View Regional Medical Center, located in Norton, Virginia, to Wellmont Health System. The transaction is expected to be completed on or about August 1, 2007 and net proceeds from the sale of these two hospitals will be used entirely to reduce debt.

HMA's senior management team will discuss HMA's 2007 second quarter performance in greater detail on a live conference call and audio webcast later this morning. All interested investors are invited to access the webcast at 11:00 a.m. ET, via HMA's website located at www.hma-corp.com or via www.streetevents.com or join the conference call by dialing 877-476-3476. A copy of the audio webcast, along with any related information that HMA may be required to provide pursuant to Securities and Exchange Commission rules, will be archived on HMA's website under the heading "Investor Relations."

HMA owns and operates general acute care hospitals in non-urban communities located throughout the United States. Upon completion of the sale of Mountain View Regional Medical Center and Lee Regional Medical Center, HMA will operate 59 hospitals in 15 states with approximately 8,500 licensed beds.

All references to "HMA" or the "Company" used in this release refer to Health Management Associates, Inc. or its affiliates.

Certain statements contained in this release, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "optimistic," and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include projections of revenue, income or loss, capital expenditures, debt structure, capital structure, or other financial items, statements regarding the plans and objectives of management for future operations, statements of future economic performance, statements of the assumptions underlying or relating to any of the foregoing statements, and other statements which are other than statements of historical fact.

Statements made throughout this release are based on current estimates of future events, and HMA has no obligation to update or correct these estimates. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially as a result of these various factors.

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