HMA's Emergency Room Pain

Mississippi Hurting

HMA faces other looming threats as well.

For example, in nearby Mississippi -- HMA's second-largest market -- the company could see its tax payments surge. There, the state has imposed new taxes on hospitals in an effort to make up for a Medicaid shortfall so that it can still qualify for federal funds. The Mississippi Hospital Association has sued the state in an attempt to block the new taxes, the Associated Press reported on Thursday, but the hospitals will have to cough up millions of dollars -- beginning next month -- if their efforts fail.

Because the state will base its taxes on hospital list prices -- and HMA's are especially high -- HMA could feel some major pain going forward.

"Within our coverage universe, HMA has the largest footprint in Mississippi, with the state representing 18% of the company's portfolio," Deutsche Bank analyst Darren Lehrich wrote earlier this month. "We estimate as much as 8 cents of negative impact to HMA's annual earnings per share. (Moreover), it is unclear at this time whether the tax would be a one-time event or a recurring annual expense for Mississippi hospitals."

Lehrich has a hold recommendation on HMA's stock. His firm seeks to do business with the companies it covers.

A competing analyst -- and former HMA bull -- has given up on the stock altogether. Last month, Credit Suisse analyst Glen Santangelo downgraded HMA from outperform to underperform because he no longer believes the company deserves the premium valuation that it has enjoyed for so long.