For-Profit Hospital Stock Report: Week of April 21-25, 2014

Despite a mostly dismal showing from Wall Street, hospital stocks soared last week due to optimism surrounding the healthcare reform law.

Brentwood, Tenn.-based LifePoint Hospitals and King of Prussia, Pa.-based Universal Health Services each posted first-quarter earnings last week. Both for-profit hospital operators beat analyst expectations and recorded above-average profit and revenue increases.

Brian Tanquilut, a hospital research analyst with Jefferies, says the Patient Protection and Affordable Care Act appeared to positively influence LifePoint's and UHS' earnings, as both companies reported lower uninsured patient admissions and higher mixes of Medicaid patients. Executives for both companies also said in earnings calls that healthcare reform has helped their bottom lines. LifePoint's stocks surged more than 11 percent to $56.87, its highest level all year. UHS also ended the week up 11 percent to $82.92.

Darren Lehrich, a healthcare analyst with Deutsche Bank, agreed the rally in hospital stocks had much to do with the initial earnings from LifePoint and UHS, which bodes well for the other hospital chains. "The basic read from the investment community is that this is tracking a little bit better than expectations," Mr. Lehrich says. "And in the first quarter, we didn't really have much benefit from the exchange enrollment."

Dallas-based Tenet Healthcare Corp. was the biggest winner of the week, gaining more than 16 percent to close at $46.12 per share. Stocks of Franklin, Tenn.-based Community Health Systems rose almost 12 percent to $39.92, while Nashville, Tenn.-based Hospital Corporation of America increased 9 percent to $53.44, its highest mark of the year. HCA will announce its first-quarter results this week.

•    Community Health Systems (Franklin, Tenn.): $39.92 per share (up 11.88 percent)

•    Hospital Corporation of America (Nashville, Tenn.): $53.44 per share (up 9.04 percent)

•    LifePoint Hospitals (Brentwood, Tenn.): $56.87 per share (up 11.07 percent)

•    Tenet Healthcare Corp. (Dallas): $46.12 per share (up 16.11 percent)

•    Universal Health Services (King of Prussia, Pa.): $82.92 per share (up 11.08 percent)

More Articles on For-Profit Hospitals:
LifePoint Scores Boosts in Q1 Profit, Revenue
UHS Acute-Care Hospitals Post 20% Margin in Q1
HCA May Acquire Australian Hospital Operator

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