Tenet Healthcare, Community Health Systems Plunge After HCA Holdings Issues Revenue, Earnings Warning

Tenet Healthcare Corporation shares dropped 8.7% in afternoon trade Monday and Community Health Systems shares dropped 7.5% after rival hospital operator HCA Holdings Inc. warned of a first-quarter revenue and earnings miss. Tenet shares were valued at $15.95 and Community Health Systems shares were valued at $8.42 as of Monday afternoon. HCA Holdings stock dropped 2.7% in afternoon trade after warning Monday morning that it expected earnings to come in at $1.74 per share, below the FactSet consensus of $1.79. The company also said it expects revenue to come in at $10.6 billion, below the FactSet consensus of $10.7 billion. HCA Holdings attributed the results to changes in payer mix, meaning more patients have government insurance such as Medicare, which pays less than employer-sponsored plans. Investors appear to be concerned that those factors will have industry-wide effects. Hospital operator LifePoint Health Inc. shares fell just 1.3% on Monday afternoon, and Universal Health Services shares slumped just 0.2%, compared with a 0.6% rise in the S&P 500 . Tenet shares have dropped 16.1% over the last three months, and Community Health Systems shares have risen 18.1%, compared with a 3.3% rise in the S&P 500 .