If there was one group of companies which actually got off close to Scott-free during the Obamacare experiment, it was the for-profit hospitals. They were in many cases immune from having to be so regulated on the cost of health care. If Donald Trump is truly going to get rid of Obamacare entirely or is going to replace it with something else, this could be a disaster for the for-profit hospital sector.
24/7 Wall St. already assumed that this would be a negative for hospitals. In many cases, insurance companies do not get to really set strong limits or challenge what hospitals charge for a large portion of the services and rates.
Now BofA Merrill Lynch has opined about the election for health care facilities. They said:
The Republican win is a negative for HC Facilities as Republicans want to repeal Reform (Obamacare) and would be more willing to cut spending. We are turning more cautious on hospitals, cutting price objectives and downgrading LifePoint to Underperform, Tenet and UHS to Neutral. HCA remains Buy as its growth profile stands out from its peers and is combined with track record of capital deployment.
A more detailed view in the Merrill Lynch report said:
With Republicans control of Congress, there is the potential for major revisions to the Reform, but without 60 votes in the Senate, Republicans may not be able to make all the changes they want. Nevertheless, the general trend is likely to be towards less coverage, which in turn will hurt volumes and increase bad debt. Hospitals benefited the most from coverage expansion under Reform and will see the largest impact on the downside.
HCA Holdings Inc. (NYSE: HCA) was last seen down 11% at $72.08 in the final minutes of trading on Wednesday. Its 52-week range is $60.07 to $83.69 and its post-drop market cap was still over $27 billion. The 21.7 million shares that were traded with just a few minutes before the close was also more than 8 times normal volume.
Universal Health Services Inc. (NYSE: UHS) was down almost 7% at $119.28 late on Wednesday, with a 52-week range of $100.82 to $139.77. Universal has a market cap of $11.6 billion after the drop. Its trading volume of 3.48 million shares right before the closing bell was more than 4 times normal volume.
Community Health Systems, Inc. (NYSE: CYH) was last seen down 21.7% at $4.65 in the final minutes of Wednesday’s trading session. Its 52-week range is $4.15 to $25.32 and its market cap is about $530 million. Community Health had also traded close to 33 million shares for a 5-times normal volume spike.
Tenet Healthcare Corp. (NYSE: THC) was last seen down 25% at $15.15 with a $1.5 billion market cap. The new 52-week range is $14.55 to $35.35 and the trading volume of more than 16.5 million shares was 7 times normal.
LifePoint Health, Inc. (NASDAQ: LPNT) was down 13.5% at $52.80 right before Wednesday’s close. LifePoint’s market cap is now about $2.2 billion and it has a 52-week range of $51.50 to $75.94. The 2.4 million shares traded with only a few minutes left in the day was almost 6 times normal trading volume.