As Flu Subsides, So Does Interest in Hospital Stocks

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(Bloomberg) -- Investors may be rotating out of hospital stocks after a flu-fueled rally and moving back into insurers.

Facilities were the lone underperformers among health-care stocks on Monday, with a Bloomberg gauge of hospitals shares falling as much as 2.2 percent intraday. Health insurers, on the other hand, rose as much as 2.7 percent along with a rebound in the broader market. CDC data shows that this year’s flu season peaked in early February and influenza activity continues to decline.

Investors may be cashing in on the hospitals’ 18 percent gain this year and trading may be partly driven by funds closing positions for the first quarter, Bloomberg Intelligence Jason McGorman said. Analysts see insurers enjoying a better fundamental backdrop that’s likely to help them outperform hospitals in the long run.

Not all facilities received a flu boost. Community Health Systems is down 2 percent year-to-date and has sunk about 56 percent in the past 12 months as earnings keep deteriorating. The Franklin, Tennessee-based company is also working to restructure its debt to address more than $3 billion of maturities in the next 18 months, excluding term loans.

©2018 Bloomberg L.P.

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