Hospital operator HCA Holdings Inc. got off to a good start on its first day of trading as a public company Thursday, marking the launch of the largest private-equity backed IPO in the U.S. to date.

The company's stock opened at $31.20 a share on the New York Stock Exchange, up 4% from its initial public offering price of $30, during a morning in which broader market indexes were down.
Around midday in New York, the stock was trading at $31.16.

A total of 126.2 million shares were sold, two million more than expected. The deal sold at the high end of its $27 to $30 range.

Nashville's HCA is the largest private-sector hospital operator in the U.S., with 164 hospitals and 106 surgery centers. Though the majority are across 20 states, it also operates six hospitals in England.

HCA booked revenue of $30.7 billion and earnings of $1.2 billion last year. Though revenue and profit growth slowed from what was seen in 2009 compared with 2008, the metrics were still up 2% and 14.5%, respectively, during a period of economic uncertainty and high unemployment.

Both revenue per admitted patient and the overall number of admissions increased in 2010 on an equivalent admissions basis, which is a measure of combined inpatient and outpatient revenue.

One of HCA's major selling points is the shift in U.S. demographic trends, with a larger aging population headed for hospitals. What's more uncertain is the effect of U.S. health-care overhaul on hospitals.

While more people will have medical insurance under the new health-care law, reductions are expected in the growth of Medicare spending and in Medicare and Medicaid payments to hospitals that treat a large share of poor patients. Nearly 41% of HCA's revenue in 2010 was from Medicare and Medicaid, so spending cutbacks could negate the benefits of having more patients.

HCA has developed its own back-office services that could expand its reach in the health-care sector, if it successfully markets them to other firms. It runs its own revenue-cycle management organization, a health-care group-purchasing organization, an information-technology and services provider, a nurse-staffing agency, and a medical malpractice insurance underwriter.

Those services have helped HCA save money and operate more efficiently. It's in the process of creating a subsidiary that will offer some of those services to other health-care companies.

Of the shares sold in the IPO, 36.3 million, or 29%, were scheduled to be sold by existing owners, according to the company's prospectus, so those proceeds won't benefit the company. The sellers included private equity firms Bain Capital, KKR & Co., the private-equity arm of Bank of America Corp. and the company's founding Frist family.

The deal raised $3.79 billion, making it the largest private-equity-backed IPO ever in the U.S., according to data from Dealogic.

It is the third billion-plus IPO backed by private-equity owners this year; the previous two, Nielsen Holdings NV and Kinder Morgan Inc., were well-received during their respective debuts in January and February.

HCA was acquired for $21 billion in late 2006 by its private-equity owners, who put down about $4.9 billion of their own money collectively. The rest of the purchase price was financed with borrowings, leaving the company with $28.3 billion of debt at the end of 2010.

Since their purchase of HCA, the owners have rewarded themselves with about $4.3 billion in dividends, nearly the same amount they initially invested.

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