HCA's Third-Quarter Net Up After Divestiture
Oct. 14, 1987
NASHVILLE, Tenn. (AP) _ Hospital Corporation of America reported Wednesday a 24 percent increase in net income for the third quarter largely due to the sale of 104 hospitals.
Net income totaled $66.5 million, or 80 cents a share, up from $53.8 million, or 65 cents a share in the year-ago quarter, the company said.
Revenue declined to $1.16 billion from $1.24 billion.
The Nashville-based firm, one of the country's largest healthcare chains, said it posted a $154 million after-tax gain from the sale of 104 general acute-care hospitals during the quarter.
The facilities were sold to HealthTrust Inc., a spinoff company that eventually will be 51 percent-owned by its employees under an employee stock ownership plan. HCA received $1.64 billion in cash plus HealthTrust preferred stock under terms of the sale agreement.
HCA plans to use about $900 million of the proceeds from the deal to pay off debts and another $600 million to buy back 12 million shares of HCA stock.
Equicor, a joint venture health insurance company owned equally by HCA and the Equitable Life Assurance Society of the United States. lost approximately $25 million in the third quarter.
HCA now has 82 hospitals, 50 psychiatric centers and additional management contracts. Its hospitals are larger, more urban and more profitable than those sold to HealthTrust.
A $2.5 billion lawsuit by some present and former shareholders of HCA claims HCA violated securities laws in the sale. HCA has denied the claims.
For the first nine months of the year, HCA reported net income of $208 million, or $2.52 a share, compared with net income of $216.7 million, or $2.57 a share in the year-ago period.
Revenue for the period totaled $3.75 billion, compared with $3.74 billion for the first nine months of 1986.