For-Profit Hospital Stocks in 2012: The Year in Review

Staff - Thursday, December 27th, 2012

When it comes to healthcare stocks and shares, few enjoyed a better 2012 than for-profit hospital companies. This past year involved the Supreme Court upholding President Barack Obama's 2010 healthcare law, and for-profit hospital operators stand to gain a lot from the law, including thousands of new Medicaid-insured patients in 2014 who would have otherwise been uninsured.

Here is company-by-company breakdown of how each of the seven largest for-profit hospital operators fared in 2012 in terms of stock value. (Note: Analysis and share prices are based on calendar year 2012, from Jan. 3 through Dec. 26.)

Community Health Systems (Franklin, Tenn.)

As of Dec. 26, 2012, CHS owned and operated 135 hospitals across the country, making it the second-largest for-profit hospital operator. Its stock price grew significantly this past year and more than other investor-owned hospital companies. CHS opened 2012 with a share value of $17.22, and it has increased nearly 75 percent since then. From September through December, its value never fell below $26 per share.

Share value (Jan. 3): $17.22
Share value (Dec. 26): $30.13
Difference: Up 75 percent

Health Management Associates (Naples, Fla.)

For Health Management, 2012 certainly had its ups and downs. Its share value rose a healthy 24.3 percent on the year, but there were some hurdles along the way. Through the first three quarters, the 70-hospital company's net income was down 21.6 percent compared with the first three quarters of 2011, though net revenue was up. Health Management also weathered a storm in early December after the news program "60 Minutes" aired a segment that focused on alleged emergency department practices and Medicare fraud at hospitals owned by Health Management. Shares sank almost 6 percent the day after the segment aired, but the company has since recovered with a share price above $9.

Share value (Jan. 3): $7.25
Share value (Dec. 26): $9.01
Difference: Up 24.3 percent

Hospital Corporation of America (Nashville, Tenn.)

Like many of the for-profit hospital companies, HCA's stocks skyrocketed after June, when the Supreme Court upheld President Barack Obama's signature healthcare law. On the year, HCA's shares increased more than 40 percent, and in the second half of the year, its share value did not fall below $25.50. Earlier this month, two of HCA's biggest stockholders — Bain Capital Partners and Kohlberg Kravis Roberts & Co. — sold roughly 32 million shares of HCA's common stock in an underwritten secondary offering. As of the last quarter, HCA operated 162 hospitals and 112 freestanding ambulatory surgery centers.

Share value (Jan. 3): $21.64
Share value (Dec. 26): $30.44
Difference: Up 40.7 percent

LifePoint Hospitals (Brentwood, Tenn.)

LifePoint was one of the few hospital companies that didn't experience double-digit growth in its share value in 2012. LifePoint, which owns 56 hospitals, endured two rough patches in May and October. In October, the company lost more than $4 per share after posting dismal third quarter figures due to acquisition expenses, higher operating costs, lost revenue from Hurricane Isaac and experiences with Medicare recovery auditors. LifePoint's stock had gotten as high as $43.41 per share.

Share value (Jan. 3): $36.29
Share value (Dec. 26): $37.64
Difference: Up 3.7 percent

Tenet Healthcare (Dallas)

Tenet's share value grew significantly in the last quarter of the 2012 calendar after it released a new four-point plan centered on accelerating the rate of growth for the business and its shareholders. Included in Tenet's plan were $400 million in near-term acquisitions of acute-care hospitals, outpatient facilities and healthcare business services and a $500 million repurchasing of common stock. Tenet, which owns 49 hospitals, also conducted a reverse stock split, meaning that a new Tenet share was issued in exchange for every four existing shares. In total, Tenet's share value shot up 63 percent in 2012.

Share value (Jan. 3): $19.84
Share value (Dec. 26): $32.33
Difference: Up 63 percent

Universal Health Services (King of Prussia, Pa.)

UHS reported very strong financials thus far in 2012, as both profit and revenue were up compared with 2011. The company owns 25 acute-care hospitals but has a stronger foothold in the behavioral health sector, owning 175 behavioral health facilities. UHS has the highest-priced stock at $47.85, as of Dec. 26, and shares have remained above $40 since the middle of August.

Share value (Jan. 3): $37.71
Share value (Dec. 26): $47.85
Difference: Up 26.9 percent

Vanguard Health Systems (Nashville, Tenn.)

During the first part of the year, Vanguard's stock slowly dipped from $10.32 per share down to a low of $7.35 in June. After the Supreme Court upheld the Patient Protection and Affordable Care Act, Vanguard's share value rose steadily back, reaching a high of $12.59 in October. Vanguard operates 28 hospitals and made several big moves this year, including an announcement in August that it will sponsor a Consumer Operated and Oriented Plan with Boston-based Tufts Medical Center and the New England Quality Care Alliance — a non-profit physician network of Tufts with 1,600 physicians.

Share value (Jan. 3): $10.32
Share value (Dec. 26): $12.19
Difference: Up 18.1 percent

Financial Management