DALLAS -- Hospital operator Tenet Healthcare Corp. plans acquisitions, a new share repurchase program and a 4-to-1 reverse stock split to help speed up growth and improve the value of its stock for shareholders.
Shares of the Dallas company jumped as much as 7.5 percent in Monday morning trading after it announced the plans, and ended trading up nearly 3.3 percent, or 21 cents, to close at $6.48 while broader trading indexes moved higher. The stock price has risen about 26 percent so far this year.
The Dallas company said it will issue one new share of its stock for every four existing shares in an exchange that becomes effective Oct. 11.
Its plan also includes a new, $500 million authorization to repurchase stock and $800 million in new debt, which the hospital operator said will help reduce the outstanding balance on its bank line and fund acquisitions.
Tenet said it plans about $400 million in near-term acquisitions to help its main business lines, which include acute-care hospitals, outpatient locations and business process services.
"Historic low interest rates and a strong acquisition pipeline across our three major business lines provide the compelling catalysts for these aggressive actions," CEO Trevor Fetter said in a statement from the company.
Standard & Poor's Ratings Services downgraded Tenet's senior secured debt rating to `B+' from `BB-' on the news, citing the company's increased debt. The new rating remains in non-investment-grade, or "junk status" and is now four notches below investment grade. Standard & Poor's maintained its `B' corporate credit rating on Tenet. That rating is five notches below investment grade.