Health Management Associates Inc (NYSE:HMA), one of the nation’s largest hospital operators, is advising shareholders to reject the hedge fund Glenview Capital Management’s proposal to completely replace the existing board with its own slate of nominees, Reuters reports.
Health Management Associates’ CEO to retire soon
The attempted shuffling comes at an important moment in Health Management Associates Inc (NYSE:HMA)’s history as current CEO Gary Newsome is set to retire at the end of the month and the $4 billion company has attracted interest from other major health care providers such as Community Health Systems while it looks for a new CEO. HCA Holdings Inc (NYSE:HCA) and LifePoint Hospitals, Inc. (NASDAQ:LPNT) have also been rumored to be exploring possible deals, although no one involved was willing to go on record. Speculation surrounding Health Management Associates’s future have sent its stock prices up 8.6 percent.
Glenview, which is Health Management Associates Inc (NYSE:HMA)’s largest single shareholder owning 14.6 percent of stocks, has accused Health Management Associates’ management of under-performing for more than a decade.
“For over a decade, despite the best efforts of well-intentioned individuals at the Company, Health Management Associates has fallen short in their financial returns delivered to shareholders, their financial management and focus, our shared aspirational goals on regulatory compliance and the pursuit of a stable and effective leadership team. Culturally, we believe that an overemphasis on aggregate growth at the expense of per share value creation and optimal return on capital has led to a substandard strategic and financial approach,” Glenview wrote in an SEC filing published on PR Newswire.
HMA responds to Glenview
Health Management Associates Inc (NYSE:HMA)’s directors responded with their own letter, also included in the SEC filing, saying “Glenview’s actions are an unnecessary distraction during this critical time when your board believes its efforts are best spent focused on exploring the best opportunities available to maximize value for all the company’s stockholders.”
Glenview says that all eight nominees have experience in the healthcare industry, most have served as CEO, CFO or COO at a large corporation, and four of the nominees have strong financial backgrounds. Additionally, two of the nominees have a successful track record in turnaround situations, and none of the nominees are current or former Glenview employees. Glenview has put up full bios on each of the nominees at its website, Revitalize Health Management Associates Inc (NYSE:HMA).