HCA plans big Q4 special dividend

Q3 profit preview falls a bit short of Street expectations

HCA Holdings executives on Tuesday released an early look at mildly disappointing third-quarter results and announced plans for a special dividend of more than $1 billion before year's end.

HCA said it expects to post a profit of $360 million in the third quarter, a sizeable increase from $61 million in 2011, a number that included a $406 million pretax loss on the company’s retirement of debt. Per diluted share and after accounting for the sale of some hospitals, this year's number comes out to 77 cents per diluted share, short of the 80 cents analysts had been looking for.

That had investors pushing down HCA shares (Ticker: HCA) by almost 3 percent in Tuesday afternoon trading. Volume was very heavy, with more than 5.9 million shares changing hands versus the daily average of 2.4 million.

That drop was likely cushioned a good bit by HCA's non-binding intent to pay a $2.50-per-share special dividend to stockholders during the fourth quarter.

“The dividend is expected to be funded through borrowings under the Company’s existing revolving credit facilities and/or incurrence of additional indebtedness,” the October 16 release reads.

In a separate release, HCA officials also announced plans to sell $2 billion in secured and unsecured debt. HCA made it clear in a statement that the proceeds from this move might be used to repay loans due November 2013, meaning the company may use these proceeds to pay the dividend. But more than likely, experts said, this money will be used to pay down loan balances increased by the special dividend.

Here are some other projected Q3 numbers:

• HCA will report almost $8.1 billion in third-quarter revenue, compared to the $7.25 billion the company reported in the third quarter of 2011.

• Earnings before interest, taxes, depreciation and amortization will be roughly $1.53 billion, compared to $1.41 billion for the same period last year.

• Same-facility admissions were up 2.1 percent while same facility-equivalent admissions (similar to same-store sales in retail) were up 2.6 percent from the prior year. One industry expert said HCA’s admission numbers weren’t particularly notable in the third quarter. “Facility equivalent” refers to outpatient surgery admissions and the like, which gives investors a more complete picture of the total number of patients treated.

• Earnings per diluted share are expected to come in at 78 cents for the third quarter compared to 11 cents in the third quarter of last year.