Neonatal and perinatal PPM Pediatrix Medical Group is recovering today from a 23.5% drop in its stock price following disclosure on Tuesday that federal officials are investigating the Fort Lauderdale, Fla., company's Medicaid billing practices.
Pediatrix stock fell to $32.20 Tuesday on the New York Stock Exchange on very heavy volume from the previous close of $42.10. The stock had stabilized Wednesday morning and was trading at $32.17 at 1:15 EDT.
The company announced early Tuesday that an unspecified U.S. attorney's office was conducting a civil probe and was preparing to request documents and information regarding the group's Medicaid business. Pediatrix says it intends to cooperate with the investigation.
News of the investigation prompted downgrades by stock analysts at J.P. Morgan Chase & Co. on Tuesday and Wachovia Securities on Wednesday.
Pediatrix says it has resolved similar Medicare billing questions with attorneys general in six states since 2000, including publicly announced settlements with officials in Florida, Arizona, Nevada and Colorado.
Pediatrix already is facing a Federal Trade Commission investigation over whether the company's 2001 acquisition of former rival Magella Healthcare Corp. was anticompetitive. The $190 million deal gave Pediatrix about one-sixth of the national market for neonatal intensive care patients.
It also is under investigation for its dealings with the Tricare program for dependents of military personnel.