HCA Holdings (HCA) announced today that it would be undertaking a secondary offering to accommodate 2 shareholders selling partial interests in the company.
My initial reaction upon reading the headline is that I was surprised to see the company attempting to raise additional capital in light of the recent string of debt offerings and aggressive refinancing efforts reported throughout 2012. I would have viewed such a move in a negative light at this time.
However, after digesting the full announcement I feel that this is largely a non-event. The company announced a similar move in September 2011 when it repurchased 80.8 million shares from Bank of America/Merrill Lynch (BAC) (link to the 8-K filing here) and again in December of 2012 (link here) when Bain Capital and Kohlberg Kravis Roberts & Co. sold 32 million shares.
Though the timing may make some investors uneasy, both companies continue to hold an approximate 48 million share stake in the company through their 2006 restructuring efforts and taking the public in 2011.
One should not be overly concerned by a venture company exiting an investment especially under favorable circumstances. I would suggest that the company is now well entrenched in its core markets, appears to be a beneficiary of the Affordable Care Act, has demonstrated an ability to execute on macro events and the 60.3% 12-month share appreciation (as of the 02/08/13 close) and 15.5% run-up in HCA shares since their last sell on December 10, 2012 make a compelling exit point.
The two biggest issues that I harbor are that the selling companies benefited from the special one-time $2.00 dividend (which HCA largely funded through a debt offering) and that the BoA Merrill Lynch IB team sold off entirely too early.