HCA, the largest hospital chain by revenue, had a strong 2014 that raised its share price more than 50%. And now it appears that performance was enough to earn it a spot on the elite Standard & Poor's 500.
The Nashville-based chain will replace supermarket chain Safeway on the index after the close of trading Monday. Safeway is being taken private in a deal led by Cerberus Capital Management, the private-equity firm that owns Boston-based Steward Health Care System.
HCA shares closed Friday at $68.64, giving the company a market capitalization of $29.6 billion. Shares gained another 4% in after-hours trading to top $71.
The chain earlier this month raised its earnings guidance for 2014. It was the third consecutive quarter when the company bested expectations. Healthcare reform played a role in boosting patient volumes and improving HCA's payer mix, particularly in states that expanded Medicaid.
HCA did not respond to a request for comment.
Being added to the S&P 500 index means the company will be introduced to a new set of buyers including index funds and exchange-traded funds, said Paula Torch, an analyst at Avondale Partners. That will give shares another few percentage points in value—a benefit for current investors.
“You'll certainly see a nice little uptick,” she said.
Follow Beth Kutscher on Twitter: @MHbkutscher
Follow Adam Rubenfire on Twitter: @arubenfire