Dallas-based for-profit hospital chain Tenet Healthcare, which has been beleaguered for years by a weak stock price, announced a reverse stock split and buyback, reported the Associated Press.
Tenet plans to issue one share of stock for every share currently existent, and will spend $500 million buying back stock, the hospital chain said Monday in a statement. Tenet also said it would refinance and take on about $800 million in additional debt, for the sake of acquisitions.
"We have attractive opportunities to accelerate the growth of our core businesses and position our balance sheet to enhance shareholder value," Tenet CEO Trevor Fetter said in the statement. "Historic low interest rates and a strong acquisition pipeline across our…major business lines provide the compelling catalysts for these aggressive actions."
Finance experts believe the Affordable Care Act is prompting hospital operators such as Tenet to acquire more properties and consolidate existing hospitals.
Tenet's stock has consistently traded below $10 a share since 2006. It traded for as low as $1 a share during the height of the financial crisis of 2008 and early 2009. It now trades at around $6.50 a share, although it gained about 6 percent in value after the stock buyback was announced, and is up nearly 20 percent since early September.
For more:
- read the AP article
- here's the Tenet statement (.pdf)