Hospital Stocks Continue to See Profit as Obamacare Expands Coverage

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As the number of individuals covered by Obamacare continues to rise, so does the stock value of hospitals operating within the United States, according...

As the number of individuals covered by Obamacare continues to rise, so does the stock value of hospitals operating within the United States, according to Investor’s Business Daily.

The Medical-Hospitals industry group (a William O’Neil + Company Inc. proprietary classification of stocks into 197 groups) has reached the No. 10 spot out of 197, up from No. 32 three weeks ago, seeing a 28 percent gain this year.

Conflicting court rulings on the legality of subsidies that make health care more affordable for Obamacare patients so far seems to have had no negative effect on the stock group.

On Tuesday, July 22, two appeals courts split on the decision of whether the law’s premium subsidies are legal in 36 states. The D.C. Circuit Court of Appeals said the Affordable Care Act does not permit the IRS to distribute premium subsidies while the 4th Circuit Court of Appeals ruled that the IRS in fact does have the authority to issue the subsidies on federally run exchanges because of ambiguity in the law.

If the contradictory rulings persist, the case may be taken to the Supreme Court in 2016, if not earlier. But for now, several hospital stocks are being driven higher up amid a pickup of earnings growth.  

Here are the top four hospital stocks with the highest earnings growth, according to IBD.

Universal Health Services (NYSE:UHS) announced a Q2 profit growth of 29 percent to $1.55 a share this week. The group has seen profit growth accelerated for two straight quarters and revenue has climbed 10 percent to reach $2.02 billion.

Universal rose further on Tuesday, July 29, climbing nearly 4 percent to a new high in the number of shares traded.

LifePoint Hospitals (NASDAQ:LPNT) reported a Q2 profit increase of 29 percent to 84 cents a share. Revenue additionally rose 17 percent to $1.05 billion.

Tenet Healthcare (NYSE:THC) has cleared a 50.35 optimal buy point and is 7 percent past the entry. The group’s Q2 results will be released after Aug. 4, once the market closes, with revenue expected to jump 63 percent to $3.94 billion.

HCA Holdings’ (NYSE:HCA) profit for the period is almost up 1 percent to 92 cents a share. Its revenue is expected to rise 6 percent to reach nearly $9 billion.  

 

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