HCA Raises $3.79B in IPO

John Commins, March 10, 2011

HCA Inc. late Wednesday sold 126.2 million shares at $30 a share in an initial public offering that raised $3.79 billion – nearly $200 million more than projected by analysts for the third IPO in the history of the Nashville-based hospital chain.

HCA sold 87 million shares, and shareholders sold 38.4 million shares, HCA said. In addition, underwriters have been granted a 30-day option to buy an additional 18.9 million shares from shareholders. The shares are expected to begin trading on the New York Stock Exchange Thursday morning under the ticker symbol "HCA" and the offering is expected to close on March 15, HCA said in a statement.

HCA will use the IPO net proceeds to temporarily reduce its asset-based revolving credit facility and its senior secured revolving credit facility. The hospital chain said it will not get any of the proceeds from the sale of shares of common stock by the shareholders.

HCA has been privately held since November 2006 in a $33 billion leveraged buyout that required about $27 billion in debt to finance the deal.

HCA is the nation's largest for-profit hospital chain, with 154 hospitals and 96 freestanding surgery centers in 20 states and the United Kingdom. HCA reported more than $30 billion in revenues for the 12 months in fiscal 2010.

Standard & Poor's Rating Services said Wednesday that HCA's rating outlook is not expected to be altered by the IPO. "Still, financial sponsors of the largest U.S. hospital company, who have received dividends totaling over $4 billion since its $33 billion buyout in 2006, will continue to dictate a financial risk policy that we believe will be highly leveraged," S&P said. "That means that, in our opinion, debt to EBITDA may average around five times as shareholder-oriented investment and dividend activity consumes much of its cash flow from operations, which was $3 billion in 2010.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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