Hospital company LifePoint Health will soon have more cash in the bank than expected. The company's offering of eight-year senior notes grew Thursday to $500 million from $300 million and has been priced at 5.875 percent. Executives plan to use the moeny for general corporate purposes, including acquisitions and share buybacks. LifePoint stock (Ticker: LPNT) was up more than 1 percent to nearly $70 early Friday.
Hospital stocks already had fallen a long way from their spring peaks. On Thursday, they took another tumble after executives with insurance giant UnitedHealth Group said they may not return to the insurance exchange market in 2017. That's a sharp turnabout from last month, when the company said it would add 11 states to its exchange lineup. But now execs say they expect to take a $500 million bath on their insurance exchange business in 2016, and they have scaled back their marketing of those products.
“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”
The news delivered an early-morning blow to the shares of Middle Tennessee's hospital companies and there was no recovery during the day. Heading into the last few minutes of trading, HCA Holdings was down 6.1 percent while Community Health Systems was off 8.5 percent and LifePoint Health was giving up 5.6 percent. Shares of surgery center and physician services company AmSurg (Ticker: AMSG) also were down more than 5 percent.
Combined, those drops wiped out $2.4 billion of the market value of the four local companies — $1.7 billion of that number in HCA alone. Industry peers Tenet Healthcare and Universal Health Services also didn't avoid the red ink.
LifePoint Health executives are going to the debt market to raise $300 million in eight-year senior debt for all-encompassing "general corporate purposes." We don't have details yet about the terms of that funding, but the Brentwood-based hospital owner says it might spend the money on acquisitions or to buy back its shares. LifePoint shares (Ticker: LPNT) this morning are down some 5 percent to about $70.25. They've dropped about 7 percent over the past six months.
A joint venture between RegionalCare Hospital Partners — which will soon have a new majority owner — and a large Montana physicians group has ended talks about teaming up with a nonprofit health system in North Dakota. Catch up on the info here.
RBC Capital Markets analyst Paul Quinn really likes the look at Louisiana-Pacific shares following the company's third-quarter earnings report. He has boosted his rating on the downtown-based company to 'top pick' status from 'outperform' and lifted his price target to $22 from $20, citing stronger pricing trends for its oriented strand board products and an upswing in its siding business. On Thursday afternoon, LP shares (Ticker: LPX) were trading up about 1 percent to $17.35.
A number of analysts have trimmed their price target for LifePoint Health shares in the wake of that company's Q3 report. BMO Capital Markets has taken its target to $74 from $81 while Leerink Partners has come down to $82 from $87 and RBC Capital Markets now sees the stock climbing to $96 instead of $107. LifePoint shares (Ticker: LPNT) have traded around $70 all week. Year to date, they're off slightly.
Keefe Bruyette & Woods analyst Jefferson Harralson has tweaked his price target for shares of Pinnacle Financial Partners following the downtown bank's recent third-quarter results. Harralson, who rates Pinnacle a 'buy,' now sees Pinnacle climbing to $58, up from $54. That still leaves little upside, however, for Pinnacle (Ticker: PNFP), which closed Friday trading at $54 and change.
Analysts at Goldman Sachs have removed LifePoint Health from their 'conviction buy' list following the recent profit warnings from HCA Holdings and Community Health Systems. The Goldman team still rates Brentwood-based as a 'buy' and is sticking to its $87 price target. LifePoint (Ticker: LPNT) ended last week at a little more than $64.
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