Yup, but you already know there are different owners. Correct?
Just in case you didn't here ya go. Any problems with KKR & Co or Bain Capital LLC in the hospital business? Doubt it.
HCA Files for $4.6 Billion Share Sale After Buyout May 7 (Bloomberg) -- HCA Inc., the hospital chain bought four years ago in a $33 billion leveraged buyout led by KKR & Co. and Bain Capital LLC, filed to sell shares worth as much as $4.6 billion in an initial public offering.
HCA said it plans to raise a net $2.5 billion of the total by selling new shares and will use the proceeds to repay debt, according to a regulatory filing today. Ed Fishbough, a spokesman for HCA, declined to comment.
The stock offering would be the biggest U.S. IPO in two years. The hospital operator may profit from the health-care legislation President Barack Obama signed into law on March 23 that provides for coverage for millions of uninsured patients, said Sheryl Skolnick, an analyst at CRT Capital Group LLC in Stamford, Connecticut. She expects HCA to continue to look for hospitals to acquire, favoring multifacility deals in markets where it doesn’t have a presence.
“I don’t think HCA is really going to change their stance too much in the post-IPO environment,” Skolnick said in an interview. “They have a high-class problem in that, as a $30 billion company, you have to make pretty big acquisitions for it to have an immediate or material impact to your bottom line.”
Buying Spree
Private-equity firms spent $2 trillion, most of it borrowed, to buy companies ranging from Hilton Hotels Corp. to Clear Channel Communications Inc. in the leveraged-buyout boom that ended in 2007 and are now seeking to cut that debt before it matures. HCA’s filing comes after four companies postponed U.S. initial offerings yesterday as stocks plunged the most in a year.
“HCA is timing the market,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC and manager of the Direxion Long/Short Global IPO Fund. “HCA sees the volatility now but they’re filing now because the IPO won’t happen in two or three months.” U.S. IPOs had stumbled at the start of 2010 as the first 14 deals were cut by 22 percent on average, Bloomberg data show. LBO firms took some of the biggest discounts in 2010 after distributions to clients last year decreased to the lowest since at least 2000, according to data from London-based Preqin Ltd.
Blackstone, Generac
Blackstone Group LP in New York, the world’s largest LBO firm, raised less than half of what it sought for Graham Packaging Co. of York, Pennsylvania, in February. Generac Holdings Inc., the Waukesha, Wisconsin-based maker of generators backed by former bankers at New York-based JPMorgan Chase & Co.’s private-equity unit, cut its deal by 29 percent at the time of its offering.
The Nashville, Tennessee-based hospital operator’s 9.25 percent notes due in 2016 were unchanged at 104.25 cents on the dollar as of 11:40 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Moody’s Investors Service placed the HCA’s ratings, under review for possible upgrade.
Bain spokesman Alex Stanton declined to comment on the IPO, as did KKR spokeswoman Kristi Huller.
HCA’s owners put up about $5.3 billion to buy the company, according to a regulatory filing, funding the rest with loans from banks including Bank of America, Merrill Lynch & Co., JPMorgan Chase & Co. and Citigroup Inc.
Shattered Record
The hospital chain’s purchase in 2006 shattered the record for the largest leveraged buyout, held since 1989 by KKR’s acquisition of RJR Nabisco Inc. HCA’s record was eclipsed by Blackstone’s acquisition of Equity Office Properties Trust and again by the 2007 takeover of Energy Future Holdings Corp., by KKR and TPG Inc., for $43 billion including debt.
HCA, the largest U.S. hospital operator, had about $25.7 billion of debt as of Dec. 31, about 4.8 times its earnings before interest, taxes, depreciation and amortization, even before HCA’s owners tapped credit lines in January to pay themselves a $1.75 billion dividend. Tenet Healthcare Corp.’s ratio was 4.4 and LifePoint Hospitals Inc.’s was 2.85 at year- end, according to data compiled by Bloomberg.
Health-care companies have fared better than the average private-equity investment during the economic decline. KKR said in February that its holding in the company had gained as much as 90 percent in value as of Dec. 31, while stakes in Energy Future Holdings Corp. and First Data Corp. were worth less than their initial cost.
Frist Founders
HCA was founded in 1968, when Nashville physician Thomas Frist Sr., and his son, Thomas Frist Jr., and Jack Massey built a hospital there and formed Hospital Corp. of America. By 1987, the company had grown to operate 463 hospitals, according to the company’s Web site. Thomas Frist Sr. is also the father of Bill Frist, a physician and the former Senate majority leader.
HCA went private in a $5.1 billion leveraged buyout in 1989, and then went public again in 1992, according to the company Web site. In 1994, HCA merged with Louisville, Kentucky- based Columbia Hospital Corp. In the mid-1990s the company, then called Columbia/HCA Healthcare Corp., operated 350 hospitals, 145 outpatient clinics and 550 home-care agencies, according to the company.
HCA also reported today that first-quarter net income rose 7.8 percent to $388 million as revenue gained on increased admissions. As of March 31, the company operated 162 hospitals and 106 free-standing surgery centers.
In December 2000, HCA agreed to pay $840 million in criminal and civil penalties to settle U.S. claims that it overbilled states and the federal government for health-care costs. It was the largest government fraud settlement in U.S. history at the time, according to a U.S. Justice Department news release on Dec. 14, 2000.
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