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Community Health's Weak Estimate Drags Down Hospital Operators

Thursday, 22 Oct 2015 12:51 PM

Oct 22 (Reuters) - Shares of for-profit hospital operators slumped on Thursday, a day after Community Health Systems Inc joined market leader HCA Holdings Inc in estimating weaker-than-expected results for the third quarter.

Shares of Community Health were down 32 percent at $27.41, while Tenet Healthcare's stock was down 17.86 percent at $28.52 in afternoon trading.

HCA Holdings' shares were down 7.5 percent at $65.86, while LifePoint Health's stock was down 15.2 percent at $61.16.

Community Health on Wednesday estimated revenue of about $4.85 billion for the third quarter, hurt by lower hospital admissions.

Analysts on average were expecting revenue of $5 billion, according to Thomson Reuters I/B/E/S.

"Community Health of the past would usually have been able to control costs enough to manage through disappointing mix and volume metrics. This time it couldn't. Is the magic gone?" Mizuho Securities USA Inc analysts wrote in a note.

HCA estimated lower-than-expected third-quarter earnings last week, hurt by higher labor costs and less favorable payer mix.

Last quarter, HCA, said benefits from the Affordable Care Act would taper off over the rest of the year.

The signature healthcare law, popularly called Obamacare, covers medical insurance for Americans and has helped in boosting business for various hospitals and insurers as more people avail of insurance. (Reporting By Samantha Kareen Nair in Bengaluru; Editing by Sriraj Kalluvila)

© 2017 Thomson/Reuters. All rights reserved.

   
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