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HCA Healthcare (HCA) Scraps Utah Buyout Post FTC's Roadblock

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HCA Healthcare, Inc. HCA recently abandoned the proposed Utah hospitals’ acquisition plan, per the Federal Trade Commission (FTC). FTC challenged the expansion plan as it could reduce competition in the region and bump up the prices.

Last September, HCA forged an alliance with Steward Health Care to acquire the latter’s operations of five Utah hospitals. Subject to certain closing conditions, HCA Healthcare also agreed to lease the related real estate from Medical Properties Trust, Inc. MPW. The terms of the deal were kept under wraps.

HCA anticipated the move to increase its operating efficiency and drive competition in the healthcare market. Per the September acquisition plan, the hospitals were expected to be added to HCA Healthcare’s Mountain Division, comprising 11 hospitals in Utah, Idaho and Alaska.

The FTC expected the deal to combine the Wasatch Front region’s second and fourth largest healthcare systems, reducing competition, which is responsible for innovative services for the consumers. Per the FTC, the area comprises 80% of the state’s residents and it expects the deal to affect pricing for consumers. Earlier this month, the trade watchdog accepted an administrative complaint along with a lawsuit in the federal court to block the acquisition.

The FTC expected the deal to increase market concentration and eliminate Steward Health Care as a low-cost competitor. This move could boost HCA’s bargaining power with the commercial insurers to capture the hiked reimbursement rates. This could amplify premiums and escalate healthcare costs. It might also shoot up prices for employers buying plans for their workers. The called-off acquisition follows another abandoned buyout plan involving RWJBarnabas Health and Saint Peter’s Healthcare System.

Price Performance

Shares of HCA Healthcare have decreased 16.8% in a year’s time compared with the industry’s fall of 23.3%.

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Zacks Investment Research


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Zacks Rank & Key Picks

HCA Healthcare currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Altimmune, Inc. ALT and Progyny, Inc. PGNY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Altimmune’s 2022 bottom line indicates an 8.2% improvement from the 2021 levels. ALT has witnessed four upward estimate revisions in the past 60 days against none in the opposite direction.

Altimmune’s earnings beat estimates in three of the last four quarters and missed once on the remaining occasion.

The Zacks Consensus Estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 60 days. PGNY has witnessed three upward estimate revisions during the same time period against none in the opposite direction.

Progyny’s earnings beat estimates in each of the last four quarters, the average being 169.7%.


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