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HCA Healthcare (HCA) Eyes 3 Hospital Divestments for $150M

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HCA Healthcare, Inc. (HCA - Free Report) is planning to divest three Louisiana hospitals for $150 million to LCMC Health, per reports. The employees in the facilities, namely Tulane Medical Center, Lakeview Regional Medical Center and Tulane Lakeside Hospital are expected to remain in their positions, following the divestment.

Several analysts have pointed out that the deal will leave nonprofits, LCMC Health and Ochsner Health as the two major hospital care providers in the New Orleans region. The deal is expected to close by 2022-end or early 2023. The acquirer is expected to work together with Tulane University to enhance academic medicine and research scope. The divestment of three hospitals will likely leave HCA Healthcare with one facility in Louisiana.

In a somewhat similar move, more than a year ago, HCA divested all its Atlanta hospitals for over $1.5 billion. It has four remaining hospitals in Georgia’s eastern and southern parts. Business streamlining plays a major role in HCA Healthcare’s operations, which boosts profitability by divesting less profitable assets and acquiring more efficient ones.

The company’s inorganic growth strategies have led to an increase in patient volumes, enabled network expansion across several markets and added hospitals to its portfolio. During 2020 and 2021, HCA Healthcare paid a total of $568 million and $1.1 billion, respectively, on acquiring hospitals and healthcare entities. All these buyouts helped HCA to boost its portfolio and penetrate further into different geographies.

The company is enhancing its presence in Florida and Texas. In January 2022, HCA Healthcare announced the acquisition of MD Now Urgent Care, which had a network of 59 urgent care centers across Florida, to bolster its capabilities as one of the nation’s leading urgent care providers. In the first half of 2022, the healthcare provider spent $116 million on buyouts of hospitals and healthcare entities. It is also building five new hospitals in Texas.

Price Performance

Shares of HCA Healthcare have declined 15.2% in a year compared with the industry’s fall of 18.2%.

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Zacks Rank & Key Picks

HCA Healthcare currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Molina Healthcare, Inc. (MOH - Free Report) , Centene Corporation (CNC - Free Report) and Inventiva S.A. (IVA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Molina Healthcare’s earnings is currently pegged at $17.65 per share, indicating a year-over-year increase of 30.4%. MOH beat earnings estimates in each of the past four quarters, with an average surprise of 3.2%.

The Zacks Consensus Estimate for Centene’s bottom line indicates a 10.7% increase from the prior-year reported number. CNC beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 3%.

The Zacks Consensus Estimate for Inventiva’s 2022 bottom line indicates an 11.3% year-over-year improvement. IVA has witnessed two upward estimate revisions in the past 30 days against none in the opposite direction.

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