Medical Properties Trust (NYSE: MPW) stock plummeted about 8% in intraday trading Monday following reports of its tenant, Steward Health Care, filing for bankruptcy protection.
Steward Health Care System LLC, a prominent Dallas-based hospital operator, filed for bankruptcy early Monday following mounting financial challenges and governmental scrutiny over the impact of its hospital closures on patients, according to a Bloomberg report.
The company is finalizing a rescue loan agreement with its landlord, Medical Properties Trust Inc., as stated in the filing. Seeking Chapter 11 protection in the Southern District Court of Texas, Steward Health listed assets and liabilities ranging from $1 billion to $10 billion.
The bankruptcy filing enables Steward Health Care System to continue its operations while pursuing approval for a restructuring plan. With a network of over 30 hospitals across eight states and employing about 30,000 individuals, Steward Health Care System is the largest private for-profit hospital chain in the United States.
The liquidity crisis deepened for Steward Health this year, leading to struggles in vendor payments and operational management across its facilities. The company initiated hospital closures, including several in Massachusetts to reduce costs. However, these closures faced significant opposition and scrutiny from state politicians, including US Senator Elizabeth Warren.
In addition to hospital closures, Steward Health Care System undertook efforts to sell its managed services organization and enlisted consultancy firm AlixPartners to provide operational assistance, according to Bloomberg.
As part of the restructuring agreement, Medical Properties Trust, a US real estate trust specializing in healthcare facilities, plans to provide initial debtor-in-possession funding of $75 million, and an additional loan of up to $225 million contingent upon certain conditions. This follows Medical Properties’ previous support in January when it provided Steward Health with a $60 million bridge loan and deferred some of its rent arrears.
Medical Properties Trust (NYSE: MPW) Stock Reaction
Following these developments, MPW stock saw a decline of 7.60%, closing at $4.50 on Monday. Its value has decreased by 5.86% this week. Trading activity witnessed 31,687,379 (31.68 million) shares changing hands, well above the average daily volume of 18.76 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
