Shares of Health Management Associates rose 8% Tuesday, as investors applauded the hospital operator's plan to sell a 27% stake in seven of its hospitals in North and South Carolina to Novant Health for $300 million.

Shares rose 45 cents, or 8.5%, to $5.74 in afternoon trading.

Health Management, which owns a total of 58 hospitals, said it will use the deal's proceeds for general corporate purposes. The company also backed its 2008 earnings outlook in line with Wall Street expectations.

Cowen and Co. analyst Kemp Dolliver said he expects HMA to use the funds to partially pay down $575 million worth of debt which is due Aug. 1, and then use added borrowings and asset sales to refinance the balance.

He rates the shares "Neutral," due to industry headwinds including bad debt, a weakening economy and competition.

Oppenheimer & Co.'s Michael Wiederhorn also viewed the transaction as a positive way to de-lever HMA's balance sheet, but backed a "Perform" rating as well.

"The hospitals continue to struggle with weak volumes, increasing bad debt, and the rising uninsured population. We see no signs that these industry headwinds will moderate in the near term," he wrote in a note to clients. "In addition, a struggling economy could pressure results, as hospitals are probably the group in our universe that is most exposed to a downturn."