Medical Properties Trust (NYSE: MPW) stock plummeted 16% in pre-market trading Monday following news of its primary tenant, Steward Health Care, intending to declare bankruptcy.
Steward Health Care System, the leading physician-owned hospital operator in the U.S., is gearing up to file for Chapter 11 protection, the Wall Street Journal reports. This move would mark one of the most significant hospital bankruptcies in decades.
The decision to pursue Chapter 11 protection comes amidst mounting financial pressures. Steward Health has been grappling with liquidity challenges and seeking avenues to stabilize its balance sheet for months. In January, it enlisted the expertise of restructuring advisers in a bid to address these issues.
In late March, Steward Health Care inked an agreement to divest its physician network to Optum Care, a subsidiary of UnitedHealth Group (UNH). Steward anticipated that the transaction would inject much-needed liquidity into its operations and enable it to repay outstanding obligations to its landlord, Medical Properties Trust (MPW).
However, the proposed transaction has sparked concern among lawmakers, with Senator Elizabeth Warren (D-MA) and others urging regulatory bodies to “closely scrutinize” its potential implications. They argue that UnitedHealth, already wielding significant market power, could further consolidate its dominance through this merger, potentially limiting competition and consumer choice.
Medical Properties Trust (MPW) experienced a significant stock plunge of 29% on January 5 following revelations that it had initiated measures to recover unpaid rents from Steward. Steward, in response, outlined its strategic initiatives aimed at bolstering liquidity and stabilizing its financial footing. These initiatives involve exploring options like selling or re-tenanting some hospital operations and divesting non-core assets.
Medical Properties Trust (NYSE: MPW) Stock Price Action
At the time of this report, MPW stock has dropped 16.02% compared to the previous trading session and is trading at $4.09.
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