Nashville-based HCA Healthcare announced that it will offer senior secured notes to help fund hospital acquisitions and “general corporate purposes.”
HCA, which has 171 hospitals and 118 freestanding surgery centers in 20 states in the U.S. and U.K., will offer senior secured notes that are due in 2047. The terms of the offering were not disclosed, reported Modern Healthcare.
Fitch Ratings gave the proposed offering a stable “BB+/RR1 ” rating. Fitch said HCA “has hospital industry-leading operating margins and generates consistent and ample discretionary FCF (operating cash flows less capex). Financial flexibility has improved significantly in recent years as a result of organic growth in the business as well as proactive management of the capital structure.” Fitch said HCA had $31.7 billion of debt outstanding as of March 31.
On an earnings call in May, HCA officials said the health system is buying five hospitals in Texas, including four in the Houston market: the 423-bed Houston Northwest Medical Center, the 171-bed Cypress Fairbanks Medical Center Hospital, the 444-bed Park Plaza Hospital and the 65-bed long-term acute care Plaza Specialty Hospital; and one in the San Antonio area: South Texas Regional Medical Center, a 67-bed hospital.
HCA is also buying a Georgia acute care hospital and plans to buy Memorial Hospital in Savannah. The seven-hospital purchases would add 2,000 beds and about $1.5 million in new annualized revenues.
During the call, HCA said its revenues increased by 3.5% to $10.623 billion in the first quarter of the year, which was up from $10.26 billion in the same quarter last year. The health system said its 2017 guidance remains the same, including between $43 billion and $44 billion in revenues expected this year.
Hospital M&A activity remains hot this year, including CHS looking to sell 25 hospitals. Earlier this week, UPMC Susquehanna announced it is looking to buy two Pennsylvania community hospitals from Quorum Health. That deal is expected to close in September.