(Bloomberg) -- HCA Healthcare Inc. sank as much as 12% Tuesday as second-quarter results showcased a slowdown in the hospital's pricing, dragging down peers with it.
The health-care company, which was among the sector's best stocks from an April bottom, fell the most intraday since the 2016 election after its earnings before interest, taxes, depreciation and amortization missed analysts' estimates and reflected softening prices. The results will likely draw investor focus on “what is driving the pricing slowdown” and what HCA's forward run-rate looks like, Evercore ISI analyst Michael Newshel wrote in a note to clients.
Peers also fell on the soft results, combined with the Centers for Medicare and Medicaid issuing a hospital price transparency proposal, which would mandate hospitals to disclose the prices they have negotiated with insurance plans. The Bloomberg Intelligence North America Hospitals Valuation Peer Group dropped as much as 6.8%, the most since April, led also by declines in Community Health Systems Inc., Tenet Healthcare Corp., and Universal Health Services Inc.
“Price transparency could be challenged in the courts and that even if enacted, adoption would be slow, limiting impact on the hospitals,” Jefferies analyst Brian Tanquilut wrote. Publicly traded hospitals could “potentially benefit if price transparency gains traction, especially for facilities in markets where there are dominant, academic medical institutions as these facilities can charge a premium.”
To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lisa Wolfson
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