It's probably good for shareholders in HCA
In the deal, a consortium of investors including Bain Capital, KKR, the family of Senate Majority Leader Bill Frist, and Merrill Lynch will pay $51 a share to take this company private, as well as assume about $11.7 billion in debt. That's a modest premium of about 6% to Friday's close, but it's a nice double-digit premium to the prevailing prices before word broke of a possible deal on the way.
It's also likely a fine premium relative to where the stock might have traded given today's earnings. Revenue was up more than 4% on an as-reported basis and up about 6% on a same-facility basis, but profits were down from last year, and bad debt continues to grow -- making up more than 10% of revenue this quarter versus about 9% last year.
I didn't like these shares back in May, and I think the market would have continued to prove me right had these meddling kids not gotten involved and bought the company. Moreover, take a look at some other companies in this sector today -- such as Tenet
And why should they? Bad debt is a problem across the sector, as are cost pressures from managed-care companies such as UnitedHealth
So, intrepid HCA investors, take your cash and be glad for the premium. Other investors -- think long and hard before plunking down money into the hospital sector; it's just not an easy place to make money these days.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).