HCA (HCA) Stock Slides After Company Annouces Special Dividend

Shares of HCA Holdings (HCA: Charts, News) closed down -0.95 or -2.99 percent to $30.85 per share on Tuesday, after news that the company would be paying out a special dividend to shareholders of $2.50 per share. The special dividend is the second the company pays out this year.

The special dividend will largely benefit the company's largest shareholders, Bain Capital and KKR & Co. L.P. (KKR: Charts, News), which each own about 20 percent of HCA Holdings. The total value of the dividend estimated at $1.15 billion, along with the dividend of $982 million paid out in February, brings the total amount paid out by HCA to shareholders this year to over $2 billion. In addition to the special dividend announcement, HCA also released its outlook for the company's quarterly earnings and said it would be issuing $2 billion in a new debt offering of senior notes. The debt will be used in part to pay for the special dividend and for the repayment of its existing term loan B-1 facility due in November of 2013. Daily Chart
Nashville, Tennessee based HCA Holdings, also known as Hospital Corporation of America is the world's largest private operator of health care facilities. The company operates and manages 163 hospitals and 110 surgery centers in both the United States and the UK. Founded in 1968 by a father/son team of doctors, Dr. Thomas Frist Sr. and Thomas Frist Jr., Hospital Corporation of America was taken private in 2006 in a $25 billion deal by a group of private equity firms that included, Bain Capital, Kohlberg Kravis Roberts & Co. and Merrill Lynch Global Private Equity (BAC: Charts, News). The Frist family continues owning a significant part of the company. The company then went public again in March of 2011 with an offering of 142.6 million shares at $30 per share. HCA raised over $4 billion in the offering, which was its third IPO in the company's 44 year history. HCA first went public in 1969 until 1988 when it was taken over in a leveraged buyout; the company then went public again in 1992 until going private again in 2006. HCA's third quarter preliminary estimates failed to meet analyst expectations, despite a rise in hospital admissions. The company announced net income jumped to $360 million or $0.78 per share, versus $61 million, or $0.11 per share in the same period one year ago, due in part to a $0.49 per share loss the company took in the retirement of debt. Revenues increased to $8.1 billion, versus $7.3 billion for 2011's third quarter. Despite the results, third quarter 2012 profit came to $0.77 per share after certain adjustments for the sale of facilities, falling short of the analyst consensus of $0.80 per share. HCA stock reacted negatively to the news on Tuesday, in part due to the preliminary earnings report. Investors will now look to November 1st for indications on HCA stock when the company releases its third quarter earnings. Other News About HCA HCA Midwest Aims to Buy St. Joseph and St. Mary's Hospitals HCA plans on purchasing two large Midwestern hospitals. HCA Holdings Raises $2.5 Billion in Second Bond Sale This Year Article on the company's new issue of senior secured notes. Other Stocks in the News Citigroup Picks Spartacus-Trained Corbat to Cut Fat After Pandit Citigroup picks Michael Corbat to replace CEO Vikram Pandit. Intel's Profit Drops 14% as PC Demand Falls Chipmaker reports decline in profits due to weaker demand for its products. Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Oct 17, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

Posted in ...