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HCA Healthcare's (HCA) Utah Acquisition Faces Fed Roadblocks

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HCA Healthcare, Inc. HCA is facing legal roadblocks for its Utah hospitals’ acquisition plan. The Federal Trade Commission (FTC) intends to block the expansion plan as it can 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 expects the move to increase its operating efficiency and drive competition in the healthcare market. However, the FTC expects the deal to combine Wasatch Front region’s second and fourth largest healthcare systems, reducing competition, which is responsible for providing innovative services for consumers.

Per the FTC, the area consists 80% of the state’s residents and it expects the deal to affect pricing for consumers. HCA Holdings is one of the largest non-governmental operators of acute care hospitals in the United States. Per the September acquisition plan, the hospitals will likely be added to HCA’s Mountain Division comprising 11 hospitals in Utah, Idaho and Alaska. The trade watchdog accepted an administrative complaint along with a lawsuit in the federal court to block the acquisition.

The administrative trial is expected to commence on Dec 13, 2022. The complaint is expected to be filed in the U.S. District Court of Utah. The FTC expects the deal to increase market concentration and eliminate Steward Health Care as a low-cost competitor. This move will boost HCA’s bargaining power with the commercial insurers to capture the hiked reimbursement rates. This will amplify premiums and escalate healthcare costs. It might also shoot up prices for employers buying plans for their workers.

Price Performance

Shares of HCA Healthcare have decreased 2.4% in a year’s time compared with the industry’s fall of 10.1%.

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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 Select Medical Holdings Corporation SEM 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 Select Medical’s earnings is currently pegged at $2.19 per share. SEM has witnessed one upward estimate revision in the past 30 days against none in the opposite direction.

Select Medical’s earnings beat estimates in each of the last four quarters, the average being 42%.

The consensus estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 30 days. PGNY has witnessed three upward estimate revisions during this time 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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HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
 
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Medical Properties Trust, Inc. (MPW) : Free Stock Analysis Report
 
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