HCA Q2 Profit Beat Lifts Healthcare Services ETFs

HCA Healthcare (NYSE: HCA) surged Tuesday on better-than-expected second quarter profits and a more optimistic full-year guidance, lifting hospital sector-related exchange traded funds.

On Tuesday, the iShares U.S. Healthcare Providers ETF (NYSE: IHF) was up 2.1% and the SPDR S&P Health Care Services ETF (NYSEArca: XHS) was 2.5% higher. Meanwhile, the broader Health Care Select Sector SPDR ETF (NYSEArca: XLV) gained 1.2%.

HCA Healthcare shares jumped 14.2% on Tuesday. HCA makes up 4.6% of IHF’s underlying portfolio and 2.1% of XES.

HCA Healthcare revealed stellar second quarter profits that were bolstered by patients returning to operating tables and hospital rooms after the Covid-19 pandemic caused many to push off surgeries, the Associated Press reports.

Additionally, the country’s largest publicly traded hospital chain upgraded its 2021 outlook after admissions at established locations surged almost 27% when counting both inpatient and outpatient care.

“With the effects of the pandemic moderating in the second quarter, we experienced a strong rebound in demand for services,” CEO Sam Hazen said. “We continue to invest aggressively in our strategic agenda, which is building greater clinical capabilities to serve our communities while also developing more comprehensive enterprise resources to support caregivers and differentiate our local networks.”

However, these gains occurred before U.S. cases of the Covid-19 Delta variant began to rise drastically. Coronavirus cases are now rising in almost every state as the highly contagious variant spreads.

Company officials, though, told analysts on Tuesday that they still anticipate demand for services to strengthen throughout the year as the rebound in demand is partially attributed to growth in employment and insurance coverage with an improving economy.

In comparison, patients stayed home or cancelled elective surgeries last year as the virus forced many hospitals to shift toward treating Covid-19 patients. Since then, Covid-19 patient admissions dipped to 3% of total admissions over the quarter that ended June 30, as compared to 10% in the first quarter.

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