Tenet Healthcare Corporation THC recently priced the previously announced private offering of newly issued notes. The notes were issued primarily to repay Tenet Healthcare’s outstanding notes worth $3.541 billion.
Tenet Healthcare suffers from heavy debt obligations, which it tried to settle through various divestures and notes offerings. Although long-term debt grew 0.05% in the first quarter of 2017 from year-end 2016 despite the initiatives, the shareholders appreciated Tenet Healthcare’s relentless efforts to repay its liabilities. Probably as a result, the stock has gained nearly 16% year to date outperforming the Zacks categorized
Medical-Hospitals industry’s increase of 11.4%.
Coming back to the recent pricing of notes, Tenet Healthcare has priced senior secured first lien notes worth $830 million due 2024, at a rate of 4.625% per annum. The company also priced first lien notes worth $1.040 billion due 2024 which are to be issued by THC Escrow Corp at the same interest rate. Concurrently, $1.410 billion of senior secured second lien notes due 2025, also to be issued by THC Escrow Corp, are slated to bear interest at a rate of 5.125% per annum. In addition, notes worth $500 million due 2025, again to be issued by THC Escrow Corp, have been priced at a rate of 7.00% per annum.
The company’s $3.541 billion of outstanding notes at this point include floating rate senior secured notes worth $900 million and Senior Notes worth $500 million at a rate of 8%, both due 2020. It also includes $1.100 billion, 5% Senior Notes due 2019 and $1.041 billion, 6.25% Senior Secured Notes due 2018.
Similar to its other notes offerings, Tenet Healthcare intends to use the net proceeds from its recently priced notes to redeem these above mentioned obligations after the payment of fees and expenses. We expect Tenet Healthcare’s continuous efforts to reduce its debt level to bear positive results in the future.
Zacks Rank and Key Picks
Tenet Healthcare presently sports a Zacks Rank #1 (Strong Buy). Other stocks that warrant a look include Align Technology, Inc. (
ALGN Quick Quote ALGN - Free Report) , Nobilis Health Corp. HLTH and Inogen Inc. INGN. All these stocks also flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology (
ALGN Quick Quote ALGN - Free Report) , a medical dental supplies company, topped estimates in each of the last four quarters with an average beat of 59.23%
Nobilis Health, an HMO behemoth, surpassed expectations in two of the last four quarters with an average positive surprise of 100.2%
Inogen is a medical instruments seller, which delivered positive surprises in each of the last four quarters with an average beat of 82.42%.
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