Persistence paid off for Debra Cafaro.
The Chairman and CEO of Ventas, which plans to pay $1.8 billion for hospital chain Ardent Health Services, on Monday said she's been calling on CEO David Vandewater for 15 years, hoping the time was right for both sides to make a deal. Cafaro, who has led Chicago-based Ventas since 1999, called Ardent a "beachhead investment" that will complement her moves over the years into medical office buildings and senior housing properties,
"We've been waiting a long time to find the right entry point into the domestic hospital market," she said. "Ardent is the deal we've been waiting for."
Many of the details of Ardent's sale have yet to be finalized, which meant Cafaro didn't have all the answers analysts were seeking on a Monday morning conference call. She did say the Nashville-based company has EBITDA margins of more than 10 percent — in line with those of many of its peers — as well as the management team to grow big time in coming years.
Cafaro also said the Ventas team won't saddle the local company with a ton of debt, leaving it with "capacity to grow" in both its existing markets and beyond.
"We have already identified followup capital investments that will be value-creating," Cafaro said, adding that Ardent can increase both market share and margins in its New Mexico, Texas and Oklahoma markets. "This is huge opportunity for us over time."
Investors like the look of the Ardent deal and a planned spinoff of skilled nursing facilities Cafaro and her team also announced Monday morning. At about 2:20 p.m., Ventas shares (Ticker: VTR) were up almost 5 percent to $76.76, lifting the company's market capitalization to $24.2 billion.
Shares of HCA Holdings are on the list of 10 catalyst-driven picks for the second quarter at BofA Merrill Lynch. The firm's analysts say a favorable Supreme Court ruling in King vs. Burwell — which is expected by late June — will give the country's largest private hospital operator "plenty of upside possibility with little downside." HCA shares (Ticker: HCA) are up slightly so far this year.
Raymond James analysts have added AAC Holdings to their list of must-own health care stocks for the coming months. AAC (Ticker: AAC), which went public late last year, is down just a bit so far in 2015.
Our playbook for 2015 encompasses four key themes to invest behind: above-average growth (relative to peer groups), reform (which has been strong on the exchange front and could see a bump in Medicaid enrollment as more states expand Medicaid), capital deployment optionality, and free cash flow generation (the last two provide downside support and can act as incremental growth drivers).
And lastly for now, Sandler O'Neil analyst Stephen Scouten has lowered his rating on shares of Pinnacle Financial Partners (Ticker: PNFP) to 'hold' from 'buy' after they hit his $44 target. However, he has tweaked that target to $47.
Nashville-based Ameris Health is negotiating the revival of Crittenden Regional Hospital in West Memphis, Arkansas.
According to WREG Memphis, Ameris is proposing a $15 million investment in the bankrupt facility, which closed in 2014.
However, negotiations also include the second passage of a 1 percent sales tax by Crittenden County. The county first passed the tax last year to help the hospital meet budget shortfalls. But when a fire damaged the building and the hospital filed for bankruptcy, the tax was repealed, reported the Memphis Business Journal.
According to Ameris' website, the hospital could be operational by September.
Community Health Systems executives have amended their credit agreement to repay in full a $1.7 billion loan that was set to mature in January 2017.
The new $1.7 billion loan carries the same interest rate as the company's previous loan, LIBOR plus 3.25 percent, and expires nearly two years later, on Dec. 31, 2018.
Shares of CHS (Ticker: CYH) fell 3.5 percent Monday to $48.97. In the last three months, they're down nearly 5 percent.
A handful of executives at some of Middle Tennessee's most prominent public companies saw last week as a good time to book some profits on their stock holdings. Here's a rundown:
As part of a trading plan, HCA Holdings Controller Don Stinnett exercised almost 10,500 options that would have expired in early 2017 for about $5 each and then sold the same number of shares for $76. His profit on the transactions came to more than $740,000. HCA shares (Ticker: HCA) are essentially flat for the year.
Over at Community Health Systems, Chief Administrative Officer Kevin Hammons exercised 8,000 options that would have expired this summer, then sold that number of shares. On top of that, he also sold more than 10,600 other shares. His total proceeds on the deals topped $600,000. In addition, Division President Michael Portacci sold about a quarter of his stock in the Franklin-based company. His bank account is now almost $750,000 to the good. Fellow Division President Bill Hussey grossed $454,000 from a similar sale. He still owns almost $6 million of CHS shares (Ticker: CYH), which are down about 6 percent year to date.
Cracker Barrel Old Country Store's marketing chief Chris Ciavarra also was a seller, unloading a quarter of his stake in the restaurant and retail company for more than $670,000. The sale comes after Cracker Barrel (Ticker: CBRL) popped to an all-time high in the wake of strong earnings. Year to date, the stock is up 5 percent.
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