Glenview Rips Into HMA's Performance, Executive Behavior

Naples, Fla.-based Health Management Associates and its largest shareholder, New York City-based hedge fund Glenview Capital Management, have entered into a new war of words, as both sides released slideshows defending their points of view.

Health Management and Glenview have been battling each other since May. Health Management executives approved a poison pill, which essentially prevents the hostile takeover of a publicly traded company by a large shareholder. Glenview has made a push to overhaul the entire board of Health Management and has blasted the for-profit hospital operator for poor financial performance, regulatory issues and a "substandard" management team.

Most recently, Glenview released a presentation to Health Management shareholders, which continued its criticism of the hospital company's performance and leadership. According to a filing with the Securities and Exchange Commission, Glenview's presentation said Health Management has had weak shareholder returns over the past decade. Glenview also said Health Management's board and executives have had an "inability to forecast" a productive business model, underperformed to the low end of initial guidance ranges, became involved in several compliance-related issues with the federal government and generally "misaligned" priorities to shareholders.

In particular, Glenview called out Health Management CFO Kelly Curry. The presentation said Mr. Curry has exhibited "inconsistent, inaccurate and unconstructive behavior." Glenview gave examples, such as Mr. Curry attributing this year's poor first quarter to bad debt and higher gas prices even though gas prices decreased year over year. "The CFO consistently shows a lack of seriousness in meetings and responds to questions with laughter and nonresponsive answers — even after major earnings misses and significant declines in the stock," Glenview's presentation said.

Glenview went on to blast Health Management's incentive compensation plan, which the hedge fund said was "misaligned," "misapplied" and didn't correlate to outlined metrics.

Health Management fired back with a presentation of its own to shareholders. The hospital operator said its adjusted EBITDA has gone up every year since 2008, has expanded to 71 hospitals in 15 states and is "continually improving quality of care."

The company also said it has had a "comprehensive and aggressive response" to its regulatory issues with government and that its executive pay was approved by shareholders. Health Management also defended its current board and executive leadership team, saying they "continue to drive attractive growth."

"The Health Management board is engaged in a review of strategic alternatives and opportunities that should be completed without distraction," Health Management's presentation concluded. "We urge you to reject the Glenview proposals."

The dispute between Health Management and Glenview has been noticed across the industry, most recently prompting Fitch Ratings to place Health Management's credit ratings on "rating watch negative."

More Articles on Glenview and HMA:
Fitch: HMA is in Troubled Waters
Report: CHS, HCA, LifePoint Interested in Buying HMA
Glenview Capital Continues Push to "Revitalize" HMA

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