Medical Properties Trust, the largest hospital landlord in the U.S., is coming under additional scrutiny after running into regulatory hurdles over a deal it previously said had closed.

California regulators temporarily blocked a deal between MPT and Prospect Medical Holdings, its second-largest tenant, that would have allowed Prospect to offer MPT equity in its business in place of repaying its debts. But MPT failed to disclose in its latest quarterly report that the deal, announced in May, was blocked by California regulators before the earnings report came out, The Wall Street Journal reported.

MPT has been losing revenue amid hospital closures, reporting a $42M loss in the second quarter after posting $190M in net income a year prior.

MPT’s stock price has plunged by almost 50% from the start of the year, falling from $11.53 per share on the New York Stock Exchange on the first day of trading this year to $6.40 on Friday afternoon. The share price fell by more than 7% on Friday after the WSJ's story published.

Prospect and MPT had originally struck a deal in May allowing for Prospect’s managed care business, PHP Holdings, to grant MPT a large stake in the business in place of $573M in cash payments for loans, unpaid rent and interest. But PHP Holdings also owns small health insurer Prospect Health Plan, leading California regulators to block the deal temporarily on July 20.

MPT didn’t disclose the temporary block in its quarterly earnings report and said last week that it owned 49% of PHP Holdings, the WSJ reported. While MPT spokesperson Drew Babin told the WSJ that the company expects the deal to go ahead, it is unclear how PHP will pay its debts to MPT if the block becomes permanent.

MPT responded to the WSJ's story in a Friday press release, claiming the piece was "the most recent of several false and misleading articles" around the REIT.

MPT claims the California Department of Managed Health Care's action was "a standard, expected, and non-controversial part of the approval process for this transaction." It also said that it expects California regulators to fully approve the equity transaction.

"In the unlikely event that the regulator does not grant approval for the transaction, MPT’s investment in PHP would remain a convertible note with identical economics to equity ownership," the release says. "As a result, DMHC’s request was deemed immaterial to MPT’s financials and thus did not require disclosure."

The new revelations about the blocked deal come as another potential blow to the publicly traded company, which has already been downgraded by analysts and targeted by short sellers this year as its business model has come into question.

MPT’s business model has relied on using cheap financing to buy up hundreds of hospital facilities across the country from private equity-owned hospital companies. As the landlord, MPT faced difficulties when private equity owners began to squeeze the hospital companies, leading some rural hospitals to shutter.

Fewer tenants meant trouble on the horizon for MPT.

MPT’s rapid decline began earlier this year, following a late January report from Viceroy Research that sent the company’s share price plummeting. Viceroy, which calls itself an investigative financial researcher, alleged that MPT had “engaged in billions of dollars of uncommercial transactions” and took a short seller position on the company. MPT sued Viceroy in March over the report.

Another blow for MPT came last week when investment manager Raymond James issued a triple downgrade for the firm and changed MPT’s rating from "Strong Buy" to "Underperform." MPT’s stock slid by almost 4% following the announcement.