For-Profit Hospital Stocks in 2013: The Year in Review

Despite government investigations, poor admissions figures and rocky earnings results, Wall Street heavily favored the for-profit hospital industry in 2013.

In 2012, investor-owned hospitals gained a lot of traction, thanks in part to the Supreme Court upholding the Patient Protection and Affordable Care Act. The law is expected to be a boon for hospitals, which will start treating more patients with insurance — either Medicaid or private insurance through the exchanges.

However, 2013 had its bumps for the sector. Inpatient volumes were down almost across the board, which led to slips in investor confidence. However, major merger deals patched up some of the holes.

Here is company-by-company breakdown of how each of the seven largest publicly traded, for-profit hospital operators fared in 2013 in terms of stock value. (Note: Analysis and share prices are based on calendar year 2013, from Jan. 2 through Dec. 31.)

 

Community Health Systems (Franklin, Tenn.)

CHS made waves last year when it announced it will acquire Health Management Associates. The deal is expected to close in the first quarter of this year, giving CHS 206 acute-care hospitals across 29 states. Although CHS reported several poor quarters and notified shareholders of continuing investigations from the Department of Justice, the company's shares still soared more than 25 percent.

Share value (Jan 2): $31.22
Share value (Dec. 31): $39.27
Difference: 25.8 percent increase

 

Health Management Associates (Naples, Fla.)

Under the definitive merger agreement with CHS, CHS will purchase Health Management for $3.9 billion in cash and stock, valuing Health Management's stock at $13.78 per share. This was a sizable increase from the start of 2013, when Health Management was trading at less than $10 per share.

Share value (Jan 2): $9.44
Share value (Dec. 31): $13.10
Difference: 38.8 percent increase

 

Hospital Corporation of America (Nashville, Tenn.)

Lagging admissions have negatively affected almost every hospital and health system in the country, but among the for-profit operators, HCA has weathered the storm the best. It is currently the largest hospital company in terms of both revenue (more than $33 billion) and hospitals owned (162). In the third quarter of this year, HCA posted a 1.4 percent increase in net income, which most other operators did not do. Overall, the company's stock shot up more than 50 percent and is inching toward the $50 mark.

Share value (Jan 2): $31.30
Share value (Dec. 31): $47.17
Difference: 52.4 percent increase

 

LifePoint Hospitals (Brentwood, Tenn.)

LifePoint was one of the most active investor-owned hospital chains last year, scooping up rural hospitals in Michigan and Virginia. LifePoint also continued to expand its base with Duke LifePoint Healthcare, a joint venture with Durham, N.C.-based Duke University Health System. In the most recent quarter, LifePoint recorded $32.8 million of profit, a 71 percent jump from the same period a year ago.

Share value (Jan 2): $39.19
Share value (Dec. 31): $52.84
Difference: 34.8 percent increase

 

Tenet Healthcare Corp. (Dallas)

Before CHS and Health Management commenced their merger, Tenet had made the biggest move of the year. It acquired Vanguard Health Systems, a Nashville, Tenn.-based system former owned by a private equity firm, and it beefed up its hospital based to almost 80. Tenet's shareholders have reaped the rewards, despite sluggish earnings throughout the year.

Share value (Jan 2): $33.39
Share value (Dec. 31): $42.12
Difference: 26.2 percent increase

 

Universal Health Services (King of Prussia, Pa.)

UHS mostly operates behavioral health facilities (182 as of Sept. 30), but it also owns and operates 23 acute-care hospitals. The chain has become one of the most powerful healthcare providers in the country, rivaling HCA in terms of quarterly profits, and it ended 2013 with stock valued at more than $80 per share.

Share value (Jan 2): $49.69
Share value (Dec. 31): $81.26
Difference: 63.5 percent increase

 

Vanguard Health Systems — now part of Tenet

Vanguard ceased trading on the New York Stock Exchange the day Tenet closed its deal. Under the terms of the transaction, Tenet paid $1.8 billion in cash, or $21 per share of Vanguard stock.

Share value (Jan 2): $12.38
Share value (Oct. 1): $21.00
Difference: 69.6 percent increase

More Articles on For-Profit Hospitals:
Glenview Buys 1M More Shares in Tenet
Profit at IASIS Healthcare Plummets 86% in 2013
7 Major For-Profit Hospital Companies Post $443M in Quarterly Earnings

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