Amid Market Turmoil, HCA Files for a $4.6 Billion IPO

There's been lots of buzz that Hospital Corporation of America (HCA) -- the largest hospital operator in the U.S. -- has been preparing for an offering. As a sign of the company's strength, there was even a $1.75 billion dividend to its private-equity investors early in the year. These include KKR, Bain Capital Partners and Merrill Lynch Global Private Equity.

Today, HCA has taken the final step -- it has filed the necessary papers with the Securities and Exchange Commission for an initial public offering. The capital it aims to raise may be as much as $4.6 billion and would be the largest private-equity-backed offering since the onset of the financial crisis in 2007.

The underwriters include Bank of America Merrill Lynch (BAC), Citigroup (C) and JP Morgan (JPM).

A Long History of Deals

When it comes to dealmaking, HCA certainly understands the game. The company itself is the result of many acquisitions of smaller hospitals -- going back to the 1970s.

HCA has also had good timing with taking itself private. The first time came in 1988, with a $5.1 billion deal. Then in 2006, the company went private in a whopping $33 billion transaction.

Since then, HCA has continued to bulk up and now has 162 hospitals and 106 freestanding surgery centers across 20 states (it also has a presence in England). Indeed, the company has a substantial market footprint in 14 of the 20 fastest-growing markets.

HCA has also made significant investments in information technology to improve facilities and systems. At the same time, there have been efforts to improve clinical quality and patient safety.

So far, the results have been strong. From 2007 to 2009, revenues have increased by $3.194 billion, to $30 billion, and EBITDA has increased by $880 billion, to $5.472 billion. These are impressive numbers in light of HCA's enormous scale.

Benefit From Health-Care Reforms

HCA is likely to benefit from strong long-term trends. There's the aging population. Growth in the group of people 65 and over is expected to be 3% anually over the next 20 years. By 2030, this group will account for 19.3% of the total population.

Interestingly enough, President Barack Obama's health-care reform is another positive. With expanded coverage -- which is expected to increase by 32 million to 34 million -- HCA will have fewer problems with collections.

Despite all this, an IPO could still prove difficult. The offering isn't likely to hit the market for a couple of months. And as we've seen lately, equities markets can suddenly get volatile and make things challenging for new issues.