HCA Holdings (HCA - Get Report) will be taking a new name. Company chairman and CEO R. Milton Johnson said during the earnings call Tuesday to discuss the company's first-quarter results that effective May 8 the company will be known as "HCA Healthcare."
The company board approved the change last week to better reflect the breadth of health services offered.
"Our new name is more reflective of our mission and the broad spectrum of care we provide to our communities and the dedication of our care givers to our patients in our vast networks of inpatient and outpatient facilities across our 42 U.S. markets and the UK," Johnson said.
The company will continue to trade on the New York Stock Exchange under the symbol HCA.
Jefferies analyst Brian Tanquilut wrote in a note Tuesday that acquiring the five hospitals, four in the Houston area and one in the San Antonio market, is a positive for HCA's shares "as it propels HCA to the No. 1 position in the Houston inpatient hospital market."
Three of the Houston hospitals are being acquired from Tenet for $725 million and add to the 10 hospitals, eight surgery centers, two freestanding emergency rooms and 10 imaging centers HCA already has in the city. The agreement includes 423-bed Houston Northwest Medical Center, 181-bed Cypress Fairbanks Medical Center Hospital and 444-bed Park Plaza Hospital.
The other two hospitals are being acquired from subsidiaries of Community Health Systems for an undisclosed amount, although Tanquilut estimated that the purchase is worth between $250 million and $300 million.
HCA currently operates 171 hospitals, 119 freestanding surgery centers, and numerous other outpatient centers in 20 states and the United Kingdom.
Although Tanquilut said he has generally favored HCA using its cash for share buybacks, the deals are "a good strategic move" given "the incremental growth the deals bring to provide a longer-term benefit to the stock, particularly as the HCA realizes revenue and cost synergies from its newfound leading position in Houston."
He argued that the Texas acquisitions are a good use of deployed capital relative to its aggressive share repurchase program because "HCA has struggled with distancing its stock from those of other hospitals ... so we believe its shares have not fully reflected the benefits of its share repurchases."
Acquiring the Texas hospitals should lead to incremental Ebitda growth from the facilities' earnings, as well as synergies it could realize in out-years, he said.
On Obamacare, the health system refused to take sides but said it is actively discussing changes with policy makers.
"While I'm not about to predict where all the repeal, replace and repair discussions will ultimately land, I want to assure you that we are actively engaged in discussions with policymakers in Washington and in our states," HCA's Johnson told analysts during the company's first quarter earnings call. "Most importantly, I'm confident HCA's long-term focus on putting the patient at the center of everything we do will serve us well no matter where these discussions may settle."
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