Avondale Partners analyst Paula Torch says investors should expect generally good second-quarter numbers from hospital operators in the coming weeks. The recent positive preview from industry leader HCA Holdings was a good tell and should generally translate to other operators. Torch expects LifePoint report earnings per share of $1.01, two cents above analysts’ consensus, on the back of good patient volumes, better cost controls and the upgrading of acquired hospitals. But she’s not as bullish on the prospects of Community Health Systems, which she expects will earn 88 cents per share, a penny less than consensus. But revenues should be strong, she says, helped by easier comparisons to last year’s Q2 and helping to offset spending on doctor recruitment at former HMA hospitals.
Hospital stocks are seeing a lot of action after the Supreme Court ruled Thursday to uphold subsidies for consumers buying health insurance in states using the federal marketplace.
Avondale Partners analyst Paula Torch reiterated her 'market outperform' rating for HCA Holdings and raised the firm's price target to $103 from $90, saying the Supreme Court ruling "clears the runway for the multiple to expand."
Mizuho analyst Sheryl Skolnick has upgraded the stocks of Community Health Systems from 'neutral' to 'buy' and raised her $52 price target all the way to $83.90. On the flip side, CHS was downgraded by Raymond James John Ransom, who dropped the firm's 'outperform' rating to 'market perform.'
Also happening today:
• Leerink analyst Ana Gupta raised her price target for HCA from $95 to $100. She also raised her target for CHS to $70 from $60 and LifePoint Health from $75 to $85.
• Analysts at Oppenheimer raised their price target on HCA to $82 from $60 and CHS to $102 from $87.
• Jefferies analyst Brian Tanquilut raised his price target for HCA to $108 from $95 and CHS to $79 from $75.
Veteran hospital analyst Gary Lieberman at Wells Fargo expects that the Supreme Court's ruling Thursday safeguarding health insurance exchange subsidies will be the last major challenge to the Affordable Care Act. As a result, he has upgraded shares of locals HCA Holdings and Community Health Systems as well as Tenet Healthcare — even though they soared Thursday — to 'outperform' from 'market perform.' Notably, he left intact his lower rating on LifePoint Hospitals. Overall, Lieberman says the hospital sector should now have solid long-term profit prospects.
Investors bid up shares of many Middle Tennessee health care companies Thursday morning after the U.S. Supreme Court upheld subsidies for people using the federal health insurance marketplace. At about 9:30 a.m., almost a half hour after the justices issued their opinion, both HCA Holdings and Community Health Systems were up about 8 percent — both to all-time highs — while fellow hospital operator LifePoint Health was up 5 percent. Other publicly held locals such as behavioral health plays Acadia Healthcare and AAC Holdings were up slightly. You can track all their movements today here.
Virginia Gov. Terry McAuliffe has appointed David Miller, president and COO of Community Health Systems, to the board of visitors of the Virginia Military Institute. Miller earned his bachelor's degree in economics from VMI before moving on to receive an MBA from the Darden School at the University of Virginia. He joined Franklin-based CHS as a group vice president in 1997 and was promoted to his current roles early last year when the company completed its acquisition of Health Management Associates.
Analyst Sarah James has formally begun covering shares of Nashville's big three hospital operators as well as other prominent health care players. She rates both HCA Holdings and Community Health Systems at 'outperform,' saying investors will benefit from, among other things, the growth of HCA's Parallon support services unit and CHS' potential for margin expansion. James isn't as bullish on the prospects of LifePoint Health, which she has given a 'neutral' rating.
Over at Goldman Sachs, analysts have launched coverage of Amsurg with a 'buy' rating and $81 target. That's 17 percent above where AmSurg (Ticker: AMSG) closed Wednesday trading.
Half of the highest-charging hospitals in the country are owned by Community Health Systems, according to a study published in the Health Affairs journal Monday. Kaiser Health News reports of the 50 hospitals with the highest charges, 49 are for-profit facilities, 20 operate in Florida and half are owned by CHS.
However, the charges referenced in the study are "chargemaster prices," or the sticker price that is later negotiated down by private insurers.
But for uninsured patents asked to pay full charges, insured patients who end up at an out-of-network hospital and patients whose treatment is covered by casualty or workers compensation insurance, these charges can matter a lot.
CHS spokesperson Tomi Galin told Kaiser in a written statement that the company provided more than $3.3 billion in charity care in 2014, and that the charges included in the study "are not relevant measures of what consumers, insurers or the government pay for services."
The highest-charging hospitals were congregated in 13 states, Kaiser said, including Tennessee.
Shares of CHS (Ticker: CYH) fell 2.6 percent to $52.76 Monday. Year to date, they're also down about 2 percent.
This was a tight one.
Shareholders of Community Health Systems last week voted definitively to reinstall the company's board, stick with Deloitte & Touche as the hospital operator's auditor and give a nod to its executive compensation plans. But shareholder requests to expand how the company might claw back some of its executives' compensation as well as make it easier for investors to nominate board candidates were much closer.
Earlier this spring, CHS executives had encouraged shareholders to turn down both proposals, saying the clawback push was too vague and that the proxy access proposal "advances a solution for a problem that does not exist."
In the case of the second of those proposals — advanced by the Connecticut Retirement Plans and Trust Funds — CHS barely got the negative result it wanted: With more than 99 million shares voted at the meeting, the difference between the nays and ayes was only 423,000, or 0.4 percent. Check the numbers here.
We will not be at all surprised next spring to see the Connecticut pension managers return with their plan — if it isn't quietly adopted before CHS' 2016 proxy filing deadline.
Community Health Systems has secured two loans totaling $4.54 billion that will be used to pay off a $4.6 billion loan due in 2021, according to a filing with the Securities and Exchange Commission.
The first, a $1.6 billion loan, has an interest rate of LIBOR plus 275 basis points and matures at the end of 2019. The second loan of $2.94 billion matures in January 2021 and carries an interest rate of LIBOR plus 300 basis points. The 2021 loan being paid off has a rate of LIBOR plus 325 basis points.
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