Hospital stocks enjoyed a banner day on Wall Street Friday as House Speaker Paul Ryan pulled a GOP replacement for the Affordable Care Act just minutes before a scheduled afternoon House vote on the legislation.
Shares of struggling Community Health Systems jumped 10%, or 85 cents per share, Friday to close at $9.55.
Tenet Healthcare saw its shares climb 7%, or $1.24 per share, Friday to $18.28.
HCA Holdings, the nation's largest investor-owned hospital company, saw its share rise 3% Friday, while another big chain, LifePoint Health, also added 3%.
In contrast, the broad benchmark Dow Jones Industrial Average fell a fraction Friday and the S&P 500 was flat on the day.
Mizuho Securities Director of Research Sheryl Skolnick early Friday predicted a “relief rally” for hospital stock in the likely event that Congress rejected Ryan's alternative to the ACA, known as RyanCare.
In a note to investors, Skolnick said Tenet and CHS in particular were likely to rise on the news. That's because the defeat would buy time for them to reduce debt, while investors shorting the stocks, or expecting shares price to drop, would have to buy back shares on their bets.
Hospitals and physicians have been dreading the elimination of ACA because of Congressional Budget Office projections that 24 million Americans would no longer have health insurance under the bill.
Shares of HealthSouth, a major provider of rehabilitation and home health services, and physician staffing giant Envision Healthcare also climbed. HealthSouth's share rose 2% Friday and Envision's 3%.