HCA - Valens Credit Report - 2021 03 09
CDS markets are slightly overstating credit risk with a CDS of 115bps relative to an Intrinsic CDS of 72bps, while cash bond markets are overstating credit risk with a cash bond YTW of 2.332% relative to an Intrinsic YTW of 1.452%. Meanwhile, Moody's is overstating HCA's fundamental credit risk with its Ba1 rating two notches lower than Valens' IG4 (Baa2) ratingIncentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. HCA's compensation framework should drive management to focus on top-line growth and margin expansion. Moreover, management members are significant holders of HCA equity, indicating they are likely well-aligned with shareholders for long-term value creation. In addition, management members are not well-compensated in a change-in-control, suggesting they may not be incentivized to accept a takeover or pursue a buyout of the firm, limiting event risk
Earnings Call Forensics™ of the firm's Q4 2020 earnings call (02/07) highlights that management is confident their technology initiatives will yield profitability over time, their capital growth projects achieve a high percentage of their expected returns, and that lowering their leverage ratio is a focus of their current capital budgeting
HCA Healthcare is a holding company. Through its subsidiaries, partnerships and joint ventures, the company owns and operates hospitals and related health care entities. Most of the company's general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. The company's psychiatric hospitals provide therapeutic programs including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling.
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