HMA's Emergency Room Pain

Santangelo offered multiple reasons for his sudden change of heart. He dwelled on the company's falling same-store admissions and deteriorating profit margins in particular. Moreover, he said, the company's shift away from acquisitions -- while understandable in the current environment -- could further curtail growth going forward. Finally, he added, even the company's strong balance sheet no longer stands out from the pack.

"HMA has historically traded at close to a 20% premium to its hospital peer group," Santangelo noted. "At this point, however, we believe the current and historic premium valuation afforded HMA shares is no longer warranted given both industry and company-specific challenges."

Santangelo has, therefore, lowered his price target on HMA's stock from $22 to $19, with the stock fetching a recent $20.50. His firm owns at least 1% of the shares itself.