Healthcare Stocks Take Big Hit On Obamacare Delay

by 

Obamacare isn’t going according to plan.

The President delayed a key component of the Patient Protection and Affordable Care Act yesterday. Employers will not be required to provide health insurance for its employers until 2015 – a year later than originally planned. That hasn’t been good news for some healthcare stocks.

Shares of health insurance companies and hospitals have tanked since the news broke. Healthcare stocks with a market cap of $1 billion or above that declined at least 2% today included the following:

  • Health Management Associates (NYSE: HMA) fell 4.4%
  • Tenet Healthcare Corp. (NYSE: THC) fell 4.3%
  • HCA Holdings (NYSE: HCA) fell 3.9%
  • Universal Health Services (NYSE: UHS) fell 3.5%
  • Select Medical Holdings (NYSE: SEM) fell 2.5%
  • Community Health Systems (NYSE: CYH) fell 2%

One smaller healthcare company, USMD Holdings (NASDAQ: USMD), had a 15% dropoff today. It was all part of a mass sell-off in healthcare insurers and hospitals, both of which stand to making less than they initially thought now that Obamacare is delaying insurance requirements another year.

Whether or not this is a one-day – or actually a half-day – sell-off or the start of a longer trend remains to be seen. If healthcare stocks get beaten up too badly in the coming days as a result of yesterday’s news, that could convince some investors to buy the stocks on the cheap.

Furthermore, long-term investors in the healthcare space aren’t likely to abandon ship just because a health insurance requirement is being delayed one more year. Considering the requirement has never existed, one more year seems like small potatoes.

That said, the latest Obamacare tweak is sure to reverberate for some time … which could make the next few weeks rough for healthcare stocks.

To top