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June 11, 2020 04:36 PM

Hospital stocks slide as COVID-19 cases climb in South

Tara Bannow
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    For-profit hospital operators have watched their share prices fall steadily this week as COVID-19 cases tick up some of their most important states.

    Big hospital chains had benefited in recent weeks from a broader wave of optimism in recent weeks, but that seemed to end on Monday.

    Shares in Dallas-based Tenet Healthcare lost 12% of their value on Thursday alone, but the loss was nearly 25% since Monday. The shares were priced at about $19 as of Thursday's close.

    Tenet, which will host an update for investors on June 16, worked to assuage fear about new cases in a statement. The company said elective procedures are fully operational across its facilities, and the system has developed separate areas for COVID-19 patients and non-COVID-19 patients. Emergency patients are being treated in so-called COVID-SAFE zones, separate areas with clear signage and protocols.

    "Our hospitals and surgery centers have adequate capacity, staffing, PPE and also strong COVID SAFE protocols for patients, and are prepared to handle any spikes in COVID demand should they occur," the statement said.

    Nashville-based HCA Healthcare's stock price fell more than 8% on Thursday, and more than 14% since Monday, when its shares had been valued at $118. The company declined to comment.

    Shares in King of Prussia, Penn.-based Universal Health Services have fallen in value by nearly 15% since Monday, with roughly half of that decline on Thursday alone. The company, which did not respond to a request for comment, ended Thursday at about $95 per share, down from a high of $111 per share on Monday.

    Community Health Systems, based in Franklin, Tenn., fell 5.5% on Thursday to $3 per share. The company's share price has lost about one-quarter of its value since Monday, when it was worth $4.11. CHS did not return a request for comment.

    Nashville-based Surgery Partners, which operates in more than 180 locations nationwide, suffered a 23% drop in share value on Thursday, and almost 29% since Monday. The company did not respond to a request for comment.

    Hospital operator stocks haven't seen the same level of bounce back since March as the rest of the healthcare sector, which might be due to concern about a second wave of COVID-19 infections and the difficulties that would arise as a result, Murray Gunn, head of global research for the investment bank Elliott Wave International, wrote in an email.

    Investors likely were spooked by rising cases of COVID-19 since Memorial Day weekend in some southern states that have reopened, such as Texas and Florida, which are home to a number of for-profit hospitals.

    The number of cases in Texas has spiked 42% since Memorial Day, to almost 80,000 on Wednesday. Fatalities jumped 23% in that time.

    Florida is also seeing a significant rise in cases, with just under 1,700 new cases on Thursday, its highest number in a single day since the pandemic began. The state saw 503 new cases diagnosed on May 25.

    HCA had about 50 hospitals in Texas and 45 in Florida as of last June. CHS has 11 hospitals in Texas and 14 in Florida, according to its website. The company plans to sell two of its Texas hospitals.

    In Arizona, just 201 new cases were confirmed on Memorial Day, compared with almost 1,300 on Wednesday.

    Healthcare stocks largely fell in line with the rest of the market. The Dow lost almost 7% of its value on Thursday. The S&P 500 fell 6% Thursday.

    The Federal Reserve on Wednesday announced it doesn't plan to raise interest rates in an effort to support the post-pandemic economic recovery after dropping them to near-zero in March.

    "The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," the Fed wrote in a news release.

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