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HCA’s earnings jitter markets

The Tennessean, July 26, 2011

Hospital industry bellwether HCA Holdings Inc. reported second-quarter earnings that were far weaker than analysts had expected, dragging down the entire sector on Monday. The decline reflected patients having fewer costly surgical procedures at hospitals run by the Nashville-based hospital chain. Wall Street analysts were split on whether the drop is a one-time blip or the start of a trend for the broader sector. "It's not right to call it a trend," said analyst Tom Gallucci of Lazard Capital Markets in New York. "It's hard to know, which I think is part of the uncertainty of the situation." Earnings reports expected later this week from rival hospital chains could provide more insight into whether the shift is broader. Most analysts, however, agreed that one quarter wouldn't make a trend. Still, investors reacted to HCA's results by sending shares of publicly traded hospital operators down 6.7% overall. HCA fell 19%, or $6.64 a share, to close at $27.97, a decline analysts called overdone and a "buying" opportunity.