HCA Takes Down Guidance

Hospital operator HCA ( HCA) tamped down third-quarter guidance Thursday, but lightened the blow with a plans for a potentially above-market stock repurchase that will begin Friday.

The news followed a published report that the SEC is seeking documents from Senate Majority Leader Bill Frist related to his trading in HCA shares.

HCA, whose hospitals suffered damage in the Gulf Coast hurricanes, expects to earn 61 cents to 63 cents a share in the third quarter ended Sept. 30. The forecast includes a charge of 5 cents a share related to the storms and an offsetting gain reflecting the repatriation of overseas earnings.

Analysts were expecting earnings of 66 cents a share in the quarter.

The 2005 quarter will reflect a provision for doubtful accounts of about $618 million, or 10.3% of revenue, compared with $688 million, or 11.9%, a year ago. Same-facility revenue should be up 8.8% in the quarter, including a $238 million discount to uninsured patients. HCA said uninsured admissions on a same-facility basis probably rose 15% in the third quarter from a year ago.

The company predicted third-quarter revenue that is in line with the $6.03 billion Wall Street consensus.

For full-year 2005, HCA sees earnings of $3.10 to $3.20 a share. The projection includes a smorgasbord of special items that net out to a gain of 24 cents a share. Analysts surveyed by Thomson First Call were forecasting earnings of $3.10 a share for the year on $24.45 billion in sales.

For 2006, HCA sees earnings of $3.25 to $3.45 a share, including items that will boost reported results by 25 cents to 30 cents share. Analysts were forecasting earnings of $3.55 a share in the year on $25.67 billion in sales.

HCA also announced plans to carry out a Dutch auction tender for up to 50 million of its 452.7 million common shares outstanding at prices from $43 to $50 apiece. The stock closed Thursday at $46.69. The tender, which is being financed in part through new borrowings, will start Friday and expire Nov. 14.

"The tender offer represents an opportunity for the company to deliver value to shareholders who elect to tender their shares, while at the same time increasing the proportional ownership of non-tendering shareholders in HCA," the company said. "We believe the company possesses the financial strength to successfully complete the tender offer and the related borrowings without jeopardizing future capital investments in our existing hospitals and communities."

According to The Wall Street Journal, Frist has been subpoenaed by the Securities and Exchange Commission in connection to his sale in early July of HCA shares just prior to a company profit warning. Frist's father and brother founded the company.

In early trading, HCA lost 69 cents to $46.

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