Hospital Stocks Soar Upon the Death of TrumpCare

While the Republican’s unsuccessful attempt to repeal and replace the Affordable Care Act (ACA) was a disaster for the GOP, it was great news for hospital stocks like HCA Holdings (HCA - Free Report) and Universal Health Service Inc. (UHS - Free Report)

Hospital stocks continued to rally from the halt of the American Healthcare Act (AHCA) on Friday. Shares of HCA, UHS, Tenet Healthcare (THC - Free Report), LifePoint (LPNT - Free Report) , and Community Health Systems (CYH - Free Report) are all still gaining from Friday’s news. Meanwhile, insurers associated with management care and Medicare and Medicaid services like Molina (MOH - Free Report) and Centene (CNC - Free Report) also saw growth.

The leader of these hospital stocks is HCA. The company’s stock closed the day with $90.49 per share, up 5.17%. UHS follows closely behind with 3.35% growth at $125.97 per share.

With Obamacare, more patients can enter the emergency rooms at hospitals and would have been able to pay for it, either through insurance or Medicare. If Obamacare was repealed, the hospitals would have had to go back to providing care to more patients that couldn’t pay for it. Now that the ACA is still in place, hospital stocks won’t be taking as big of a hit as they would have had the AHCA been enacted.

Upon the news, both UHS and HCA received a rating upgrade to Buy from Neutral from Mizuho Financial Group’s (MFG - Free Report) Sheryl Skolnick and Ann Hynes.

“With the failure of the GOP to move the ACA repeal out of the House, our covered hospital companies have moved into a nicer, friendlier neighborhood, one that includes continuation of the important benefits of the Medicaid expansion and without a near- or medium-term threat of block grants,” the analysts explained in a note. “Managed Care Organizations increasingly help physicians and patients chose more cost-effective settings.”