Another suitor eyes HMA for acquisition

Naples-based hospital operator Health Management Associates has been busy acquiring struggling hospitals, but it might be the target of a takeover itself.

In a May 31 note to investors, Chris Rigg, an analyst with Susquehanna Financial Group, says Community Health Systems may be pursuing HMA, which operates 71 hospitals in non-urban areas around the U.S.

Gary Newsome, HMA's president and CEO, recently announced he plans to retire in July, and the company has come under scrutiny from federal regulators investigating hospital reimbursements.

Rigg estimated that Community Health could acquire HMA for $18.50 a share, a premium to HMA's shares that recently traded near $14.

Still, Rigg remained cautious about a deal. “We would be surprised if a transaction were announced in the very near-term,” he wrote. “We do not believe CEO Gary Newsome would be leaving the company in July if a formal auction process, which we expect HMA would conduct, were currently under way. That being said, we believe Community is the best-positioned name in the hospital group to operate HMA rural focused hospital assets.”

Community Health, based near Nashville, Tenn., owns, leases or operates 135 hospitals in 29 states. Like HMA, Community Health focuses on non-urban locations and its stock is publicly traded (symbol: CYH; recent price: $50).