Short-seller Jim Chanos told CNBC on Thursday of which he’s taken positions against health-care stocks Envision Healthcare along with Mednax.
“I’m betting these companies might be worth nothing,” the founder of Kynikos Associates told CNBC’s “Squawk Box.” “They are not even close to profitable.”
He said he’s been short Envision Healthcare since the middle of last year along with Mednax as of This specific year.
Both stocks tumbled after the announcement. Nashville-based Envision, which carries a market cap of $4.6 billion, was down 3 percent along with Mednax skidded 4.9 percent. Both regained territory through even deeper drops during the premarket.
Chanos, known for his big bet against Enron before of which collapsed in 2001, said Thursday his firm has been concerned about the “rent seekers” from the U.S. health-care system who he alleges are ripping off the system. Envision Healthcare along with Mednax business products involve “deception or aggressive use of reimbursement,” Chanos claimed.
The Kynikos president also mentioned UnitedHealthcare’s terminated agreement with Envision Healthcare after UnitedHealthcare alleged of which Envision had significantly over-billed patients for its services, particularly in emergency rooms. Envision has blamed insurance companies.
“You go the emergency room, you sprain your ankle along with you get two bills — one through the hospital along using a separate one through the emergency room,” Chanos said. UnitedHealthcare created a website targeting the company’s billing practices.
Separately, the Centers for Medicare along with Medicaid Services on Tuesday proposed hospitals have more transparency along with publicly list their standard charges on the web. The Affordable Care Act, also known as Obamacare, mandates publishing charges, yet the provision hasn’t been enforced.
As for Mednax, Chanos said he doesn’t like the way the company will be accounting for contracts with health-care providers.
“Both companies have put themselves up for sale hoping of which private equity will buy them out,” he added. “Winter will be coming from the U.S. health-care system.”
Envision Healthcare along with Mednax did not immediately respond to CNBC’s requests for comment.
Kynikos Associates, with more than $2 billion in assets under management, saw its short-only fund down 12 percent last year, according to sources familiar with the matter. Kynikos’ hedge fund was up 22 percent last year, sources said, adding both funds are about flat in 2018.