Universal Health Services shares fall over government's fraudulent billing investigation

Shares of Universal Health Services fell Wednesday after the company disclosed that the U.S. government expanded its fraudulent billing investigation to include the hospital operator as a corporate entity.

The government has been investigating an expanding list of the company's behavioral health care facilities over potential Medicare and Medicaid billing issues since 2013. The King of Prussia, Pennsylvania-based company is now being scrutinized as a whole by the Justice Department's Criminal Frauds Section.

Shares fell $4.85, or 4.1 percent, to $112.86 in afternoon trading.

In a filing, the company said it is uncertain about the potential liability or financial exposure, if any, stemming from the investigation.

The company also runs acute care hospitals, surgical hospitals and radiation oncology centers.

Prior to the behavioral health care centers being investigated, the company and its industry peers were being investigated over billing practices for implantable cardioverter defibrillators, which are medical devices that control irregular heartbeats. That is ongoing and Universal Health said it has a reserve set aside in connection with that matter.

Stern, Agee & Leach analyst Brian Wright downgraded the stock to "Underperform" from "Neutral" and slashed his price target to $98 from $136 over concerns that the escalating investigation poses risks. He said the company has the financial capacity, within reason, to handle fines and settlements. But, the investigations may impact productivity at the company, he said.