HCA Healthcare issues $5.25 billion in senior notes

HCA Healthcare, Inc. (NYSE: NYSE:HCA), a leading healthcare services provider with a market capitalization of $78.36 billion and annual revenue of $70.6 billion, has completed a significant public offering of senior notes totaling $5.25 billion, according to a recent 8-K filing with the Securities and Exchange Commission. The offering, which was finalized on Thursday, involves a series of notes with varying maturities and interest rates, all guaranteed by HCA Healthcare. According to InvestingPro analysis, HCA maintains a "GREAT" financial health score, positioning it well for this strategic debt offering.

The issuance includes $700 million of 5.000% Senior Notes due in 2028, $300 million Floating Rate Senior Notes also due in 2028, $750 million of 5.250% Senior Notes due in 2030, $750 million of 5.500% Senior Notes due in 2032, $1.5 billion of 5.750% Senior Notes due in 2035, and $1.25 billion of 6.200% Senior Notes due in 2055.

Interest on the fixed-rate notes will be paid semi-annually starting September 1, 2025, while interest on the Floating Rate Notes will be paid quarterly beginning June 1, 2025. The notes were issued under an existing shelf registration statement and are unsecured obligations of HCA Inc., a wholly owned subsidiary of HCA Healthcare.

The notes rank senior to any potential subordinated debt and equal with any current or future senior indebtedness. However, they are effectively subordinated to secured indebtedness to the extent of the value of the collateral and are structurally subordinated to the liabilities of HCA’s subsidiaries. With total debt of $45.2 billion and a current ratio of 1.08, HCA maintains a balanced financial structure. InvestingPro subscribers can access detailed debt analysis and 12+ additional financial health indicators for comprehensive investment decision-making.

The indentures contain covenants restricting the issuer’s and certain subsidiaries’ ability to secure debt with liens and engage in sale and lease-back transactions. Additionally, there are limitations on the issuer’s and guarantor’s ability to consolidate, merge, or sell assets.

The issuer reserves the right to redeem the notes at specified prices before maturity, with the exception of the Floating Rate Notes, which cannot be redeemed early. In the event of a change in control accompanied by a ratings downgrade, note holders have the right to require the issuer to repurchase their notes at 101% of the principal amount, plus any accrued interest.

The underwriting agreement for the offering was executed on February 18, 2025, with a syndicate of banks including BofA Securities, Barclays (LON:BARC) Capital, Citigroup (NYSE:C) Global Markets, J.P. Morgan Securities, Mizuho (NYSE:MFG) Securities USA, and Wells Fargo (NYSE:WFC) Securities.

This capital raise is a strategic move by HCA Healthcare as it continues to expand and invest in its healthcare services across the United States. With an impressive EBITDA of $13.86 billion and strong free cash flow yield, the company demonstrates robust operational performance. The transaction details are based on the company’s filing with the SEC and serve as an official record of the company’s financial activities. InvestingPro’s Fair Value analysis suggests HCA is currently undervalued, making it an interesting prospect for investors seeking opportunities in the healthcare sector. For deeper insights, investors can access HCA’s comprehensive Pro Research Report, part of InvestingPro’s coverage of 1,400+ US equities.

In other recent news, HCA Healthcare has entered into a significant $8 billion unsecured credit agreement, replacing its previous secured credit facilities. This new arrangement provides the company with enhanced financial flexibility, including borrowing options in euros and pounds sterling, and is not guaranteed by HCA Healthcare or its subsidiaries. Additionally, HCA Inc., a subsidiary of HCA Healthcare, announced plans to offer senior notes, with proceeds intended for general corporate purposes such as repaying existing or future senior credit facility borrowings. The offering will be managed by several major financial firms, including BofA Securities and J.P. Morgan Securities.

Analysts have recently weighed in on HCA Healthcare’s stock. Cantor Fitzgerald has maintained an Overweight rating with a price target of $405, citing confidence in the company’s projected EBITDA for 2025. Meanwhile, Bernstein SocGen Group raised its price target to $342 from $331, following HCA’s fourth-quarter results that met revenue expectations but were impacted by hurricanes. Mizuho Securities also reaffirmed its Outperform rating with a $425 price target, despite a recent earnings miss attributed to direct provider payments.

HCA Healthcare’s recent earnings report showed revenues of $18.3 billion, aligning with expectations, though challenges such as a $200 million earnings impact from hurricanes were noted. The company’s compensation and supplies ratios slightly exceeded consensus expectations. Despite these hurdles, HCA’s strong historical performance and strategic focus on labor supply strategies are seen as competitive advantages in addressing policy risks and wage inflation.

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