HCA Wraps Up $2-Billion Sale of 104 Hospitals

Hospital Corp. of America completed a $2.1-billion sale of 104 hospitals Thursday, intending to use the proceeds to buy back stock and reduce the debt of the giant international health-care concern.

The sale covers 13,844 beds in 22 states and is part of a major reorganization HCA announced in June. HealthTrust Inc., a newly formed Nashville company owned largely by the approximately 23,000 workers in the 104 hospitals, is buying the hospitals through an employee stock ownership plan.

“It leaves HCA in a much sounder, streamlined position,” said Thomas F. Frist Jr., HCA’s chairman and chief executive.

ESOP Financing

HCA shed its smaller, community-based facilities to maintain what Frist called a “homogenous group” of 162 hospitals--132 mainly large urban facilities with emphasis on either psychiatric or acute-care services and 30 hospitals in other countries.

HCA officials said HealthTrust is financing purchase of the hospitals through an employee stock ownership plan, which Frist called the largest ESOP in the nation.

He also said some of the money from the sale will be used to buy back about 12 million shares of HCA’s approximately 82.2 million shares of outstanding stock.

The board authorized a cash offer for the stock to begin Monday and end Oct. 19. HCA plans to repurchase its common stock at a price between $47 and $51 a share. It has reached a maximum of about $50 during the past year, company spokesman Vic Campbell said.

At the upper end of the $47 to $51 range, the 12 million shares would cost HCA around $600 million, Campbell said.

HCA stock closed at $44.75 at the end of trading Thursday.

Frist said the balance of the sale proceeds will be used to pay off HCA debt and pay taxes on about $150 million the company will make from the hospitals’ sale.

The sale will bring HCA $1.6 billion in cash and $500 million in HealthTrust preferred shares.

“Through this restructuring transaction, we are streamlining HCA’s operations, improving the company’s financial strength and enhancing our future growth potential,” Frist said.

An analyst said the sale would prove that HCA was interested in the bottom line as opposed to how many hospitals it could own.

“This should end the criticism that HCA is more interested in empire building than it is in taking care of its investors,” said John Hindelong, a health-care industry analyst for Smith Barney, Harris Upham & Co. in New York.