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In a strategic financial move, HCA Healthcare (NYSE:HCA), Inc., a prominent healthcare provider with a market capitalization of nearly $80 billion and an overall "GREAT" financial health score according to InvestingPro, has entered into a new $8 billion unsecured credit agreement while simultaneously terminating its previous senior secured credit facilities. This development was formalized on February 20, 2025, and the information was disclosed in an 8-K filing with the Securities and Exchange Commission.
The new credit agreement provides HCA Inc., a wholly-owned subsidiary of HCA Healthcare, with $8 billion in senior unsecured revolving credit commitments with a five-year term. With total debt of $45.2 billion and a manageable debt-to-total-capital ratio of 0.35, this facility replaces the company’s previous credit arrangements, which included a $3.5 billion secured revolving credit facility and a $1.238 billion secured term loan, as well as a $4.5 billion asset-based lending (ABL) credit facility. These prior agreements were set to mature on June 30, 2026, but were paid off and terminated by the borrower. For detailed analysis of HCA’s debt structure and financial metrics, investors can access the comprehensive Pro Research Report available on InvestingPro.
HCA Healthcare utilized the new senior unsecured credit facility to repay all outstanding obligations under the former senior secured credit facilities. The new agreement’s interest rates are tied to the Term Secured Overnight Financing Rate (Term SOFR), plus a margin based on the company’s credit rating, currently resulting in an initial interest rate of Term SOFR plus 1.250% plus a 0.10% credit spread adjustment.
The new credit arrangement includes a leverage ratio covenant, which restricts HCA Inc. to a maximum ratio of 4.50:1.00, with an option to increase to 5.00:1.00 following significant acquisitions. The agreement also carries customary affirmative and negative covenants, such as limitations on liens, subsidiary indebtedness, and certain fundamental changes. Notably, the senior unsecured credit facility is not guaranteed by HCA Healthcare or any of its subsidiaries.
This financial restructuring provides HCA Healthcare with greater flexibility, as the new credit agreement also allows for borrowings in euros and pound sterling up to a $400 million sublimit, letters of credit up to a $750 million sublimit, and swingline loans up to a $250 million sublimit, mirroring the capacities of the former senior secured credit facilities.
The detailed terms of the New Credit Agreement are included as Exhibit 10.1 in the 8-K filing, which is available for public review. This strategic financial maneuver is based on the company’s recent SEC filing and marks a significant shift in HCA Healthcare’s financial structure.
In other recent news, HCA Healthcare reported its fourth-quarter 2024 results, with revenues aligning with expectations at $18.3 billion and an Adjusted EBITDA of $3,712 million. However, the company faced a $200 million earnings impact due to hurricanes, and same-store equivalent admission growth was below expectations. Mizuho (NYSE:MFG) Securities maintained its Outperform rating on HCA Healthcare, with a price target of $425, noting robust demand and improved capacity utilization. Cantor Fitzgerald also upheld an Overweight rating, with a price target of $405, citing confidence in HCA’s projected EBITDA for 2025.
Bernstein SocGen Group raised its price target for HCA Healthcare to $342 from $331, while maintaining a Market Perform rating, highlighting risks such as policy changes and wage inflation. TD Cowen adjusted its price target down to $377 from $440 but reiterated a Buy rating, emphasizing HCA’s effective labor management and revenue growth. Additionally, HCA Healthcare announced plans for a senior notes offering through its subsidiary, intending to use the proceeds for general corporate purposes. These developments reflect HCA Healthcare’s strategic efforts and challenges in a dynamic healthcare landscape.
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