UnitedHealth's Optum Scraps Acquisition of Steward Health, Pulling MPW Stock Down

Medical Properties Trust (NYSE:MPW) shares plunged 8% after Optum withdrew from a deal to purchase Steward Health, a move that would have helped Steward settle debts with MPW. MPW has struggled with investor confidence and cut its dividend in 2023. Steward's bankruptcy further strained MPW, with a significant portion of MPW's assets at risk. Despite a 48% drop in share price, Wall Street analysts maintain a Moderate Sell consensus, with an average price target indicating potential upside.

The shares of Medical Properties Trust (MPW) took a significant hit on Wednesday, plunging 8% following Optum's withdrawal from a deal to purchase Steward Health, a move that would have helped Steward settle debts with MPW [1]. This latest development comes amidst MPW's ongoing struggles with investor confidence, which led the company to cut its dividend in 2023 [2].

Steward Health, a hospital operator grappling with financial issues under MPW's portfolio, had struck a deal to sell its physician network to UnitedHealth's (UNH) Optum Care arm [2]. This proposed sale aimed to strengthen Steward's national network of 33 hospitals following financial setbacks last year, which resulted in overdue bills and rents [2]. RBC Capital Markets analyst Michael Carroll viewed this move as a positive step to help Steward resolve its immediate financial issues, as proceeds from the sale would enable Steward to repay all outstanding obligations to MPW [2].

However, Optum's withdrawal from the deal dealt a significant blow to Steward and MPW. The specific reasons behind Optum's decision have not been disclosed, leaving several unknowns in the transaction [2]. As a result, RBC's Carroll left his sentiment indicator neutral, expressing concerns about the deal's price, timing, and the likelihood of receiving necessary regulatory approvals [2].

The withdrawal of the deal adds to MPW's ongoing financial woes. In January, MPW announced that it had identified material weaknesses in its internal control over financial reporting, which could result in a restatement of financial statements [2]. Additionally, MPW has faced concerns about its exposure to tenants facing financial difficulties, such as Steward [2].

Despite the 48% drop in share price, Wall Street analysts maintain a Moderate Sell consensus on MPW, with an average price target indicating potential upside [1]. This suggests that despite the challenges facing MPW, there may be potential for the company to turn around its fortunes.

Sources:

1. TipRanks. Medical Properties Trust (NYSE:MPW) Sinks 8% After Optum Abandons Steward Deal. https://www.tipranks.com/news/medical-properties-nysempw-sinks-8-after-optum-abandons-steward-deal
2. Seeking Alpha. Medical Properties Trust's Tenant Steward To Sell Doctor Network To UnitedHealth. https://seekingalpha.com/news/4084335-medical-properties-trusts-tenant-steward-to-sell-doctor-network-to-unitedhealth