Got Stock?

Posted by Marty Hudson on Mar 29, 2011 10:13:31 AM

HCA, which is the largest hospital operator in the US, is no stranger to buyouts. It struck one in the late 1980s and another in 2006. So far, the strategy has generated huge returns for investors. And on March 10th HCA hit the public markets again. In all, the company raised $3.79 billion -- which makes it the biggest private equity IPO ever.

Opening stock price; $30.  This morning it’s at $33.35.  An 11% return in less than thirty days.  I say that’s pretty good.  Of course, HCA certainly faces some considerable risks. One is the uncertainty regarding health care policy. After all, it seems inevitable that there will be cutbacks because of the huge budget deficits. But they worked a long time on this IPO.  They certainly have weighed the risks.  I put my money (literally) on HCA.

HCA's IPO is benefiting from the strong momentum created by a series of successful IPOs this year. Over the past few weeks, consumer measurement company Nielsen Holdings raised $1.6 billion, Florida-based BankUnited raised $783 million, and pipeline company Kinder Morgan Inc raised $2.9 billion.  Clearly there is a window here that several companies see as an opportunity.

HCA manages a network of acute care hospitals, clinics and outpatient facilities. There are 164 locations, which have a total of 41,000 beds. In fact, HCA has a footprint in 14 of the top 25 fastest growing markets (with populations over 500,000).  In terms of the financials, HCA generated $30.6 billion in revenues last year and net income of $1.2 billion. When adjusting for certain items, the cash flows were a juicy $5.8 billion.

So HCA took a huge step, how about you; Got Stock?

---Marty Hudson

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