HCA on Thursday announced it would offer new debt to help fund several hospital acquisitions, including its $725 million buyout of three Tenet Healthcare Corp. hospitals in Houston.
The Nashville-based system proposed to offer senior secured notes due in 2047 but did not disclose terms of the offering.
Fitch Ratings assigned a stable "BB+" rating to the proposed offering based on HCA's industry-leading operating margins and consistent cash flow. The ratings apply to $31.7 billion of outstanding debt as of the end of the first quarter. Moody's rated the offer "BB."
Fitch forecasts that the nation's largest operator of investor-owned hospitals will produce cash flow from operations of about $4.8 billion in 2017. At the end of the first quarter, HCA had $753 million of cash on hand.
"HCA's operating outlook and financial flexibility are among the best in the hospital industry," Fitch wrote.
Fitch expects HCA will reach organic revenue growth of 4% in 2017 and 2018, driven by a 2% to 3% increase in patient volumes and price increases. Yet, these gains may not keep pace with past growth as more care shifts to outpatient facilities and given the uncertainty surrounding healthcare policy, according to Fitch.
