Hospitals and health systems were assured another month of super-low borrowing rates as the Federal Reserve Wednesday again punted on raising interest rates.
Hospital stocks fell in the day's trading led by Universal Health Services, which missed analyst expectations with its second-quarter earnings.
The Federal Reserve, which economists predicted might raise interest rates four times in 2016, has not done so since December. Rates remain at historic lows of about .4%.
In her usual manner, Fed Chair Janet Yellen declined to tip her hand on whether a rate hike was in the works for September, though she did point to improvements in hiring and recent increases in household spending as possible clues.
The Federal Reserve has said it will increase interest rates to tamp down inflation if it shows signs of growing above its target of 2%.
Low interest rates have generally buoyed healthcare companies, including not-for-profit systems, because debt is widely used to finance growth.
But rates have remained so low for so long that last month Fitch Ratings managing director Megan Neuburger said a half-point increase would do little to dampen borrowing.
The Federal Reserve left rates unchanged in June on the eve of the United Kingdom's vote to leave the European Union. That possible threat to the U.S. economy seems to have eased, even equity markets were initially roiled by the so-called Brexit.
Universal Health Services, the giant hospital and behavioral health system, got the second-quarter earnings season off to a rocky start by missing analyst expectation on revenue and earnings.
In the quarter, the King of Prussia, Pa.-based company reported net income of $185.6 million, or $1.89 per share, compared with net income of $182.2 million, or $180 million in the year-earlier second quarter.
In a note Wednesday, J.P. Morgan said the results were “disappointing following a year of hurdling seemingly impossible comps with strong performance.” Universal Health's quarterly revenue of $2.43 billion also was slightly below what J.P. Morgan was expecting.
Universal Health led lower the eight healthcare systems that comprise the Modern Healthcare Hospital Stock Index. Universal Health's stock price plunged $7.73 per share Wednesday, or nearly 6%, to $130.60.
Tenet Healthcare's shares fell 88 cents, or nearly 3%, to $30.72. HCA Holdings and LifePoint Health also lost about 2% each Wednesday.
