Fitch Ratings has put the credit ratings of Health Management Associates on "rating watch negative," saying the Naples, Fla.-based for-profit hospital company is facing several major hurdles.
At the forefront is Health Management's two-month bout with Glenview Capital Management, a New York City-based hedge fund and largest shareholder of Health Management with 14.6 percent of shares. Glenview has begun a campaign to "revitalize HMA" in response to Health Management's slumping finances, including the submission of a proposal to other Health Management shareholders that would replace the company's board of directors with Glenview's own nominees.
Fitch analysts also said Health Management has had poor volumes and operating trends for the past five quarters, is dealing with investigations from the Department of Justice and Securities and Exchange Commission and has to find a replacement for departing CEO Gary Newsome, who will officially leave the company July 31.
Reports have surfaced that three other major for-profit hospital operators may be interested in buying Health Management. Fitch has said any sale would likely result in a credit downgrade, and a sale does not seem imminent given Health Management's regulatory troubles and rising stock price.
Health Management's $3.5 billion of debt is currently rated at "BB-".
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