NEW YORK (TheStreet) -- Shares of Tenet Healthcare (THC - Get Report) were dropping in late-afternoon trading on Monday after the healthcare services company announced it would pay $514 million to state and federal officials to settle kickbacks allegations.
The allegations claim that the Dallas-based company's hospitals in Georgia and South Carolina paid kickbacks for obstetric referrals, the Wall Street Journal reports.
As part of the settlement, two Tenet subsidiaries will plead guilty to one count of conspiracy to violate the Federal Anti-Kickback Statute. The subsidiaries include the Atlanta Medical Center and North Fulton Hospital in Georgia, the company said.
The settlement will be paid to the Justice Department, Georgia and South Carolina.
The agreement settles a criminal investigation and civil matter alleging that four Tenet hospitals paid kickbacks for referrals of low-income patients from a prenatal clinic operator, the Journal reports.
"The conduct in this matter was unacceptable and failed to live up to our high expectations for integrity," Tenet CEO Trevor Fetter said in a statement.
Tenet sold the Atlanta Medical Center and North Fulton Hospital earlier this year.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
TheStreetRatings team rates Tenet Healthcare as a Hold with a ratings score of C-. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, it also finds weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins.
You can view the full analysis from the report here: THC