HCA, Nashville, will repurchase 80.8 million shares held by Bank of America at a price of $18.61, a total investment of more than $1.5 billion, according to a news release.
HCA plans $1.5 billion share repurchase
HCA's shares have dropped by nearly half since reporting disappointing second-quarter earnings in late July, but its shares are up nearly $2 today, to around $20.60, in mid-morning trading on the New York Stock Exchange. Earlier this week, HCA provided more details about the earnings shortfall, brought on by a $74 million decline in Medicare revenue. The company expects the factors that led to about half of the shortfall will recur.
HCA will finance the repurchases with a combination of cash on hand and borrowing under current credit facilities, according to the release. The shares represent 15.6% of the current total of shares outstanding. HCA had 538.6 million shares outstanding as of June 30, according to its second-quarter earnings release, putting the new total at about 457.8 million shares.
The three directors that Bank of America named to HCA's board will step down once the transaction is complete, which is set to occur Sept. 21. The bank reported holding 84.3 million shares of HCA in an Aug. 24 securities filing. The sale of the shares will reduce the bank's stake in the company to about 3.5 million shares, or a 0.8% stake in the company. Bank of America sold about 19.3 million shares, for proceeds of $579.9 million, when HCA made the third initial public offering in the company's history in March.
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