The hospitals -- Tenet Healthcare (THC), Community Health Systems (CYH), HCA Holdings (HCA), Health Management Associates (HMA), Lifepoint Hospitals (LPNT), and Universal Health Services (UHS) -- are the most obvious winners; implementation of the ACA should increase payments and reduce bad debt burdens. I still don't like these businesses generally, but I think some earnings multiple expansion will take place over the next few months.
I think the ACA is a negative for medical device companies -- particularly Stryker (SYK), St. Jude (JUD), Medtronic (MDT), Boston Scientific (BSX), and Zimmer (ZMH). The medical device industry will now have to find ways to pass along ACA-associated penalties, despite limited innovation and ongoing pricing pressure. That will be a challenge, and I would be bearishly inclined over the long-term.
I don't really think there is a clear macro impact on biotech stocks like Gilead Sciences (GILD), Celgene (CELG), Amgen (AMGN) or Vertex Pharmaceuticals (VRTX). Winners will still win and losers will still lose. Innovation, or at least what passes as innovation, will still reign supreme. (As an aside: I'm not so sure the threat of biosimilars, basically biologic "generics," will turn out to be as big a deal as some investors believe although upholding the law means the 12-year exclusivity on biotech drugs remains in place.)Pharma seems adequately prepared to deal with the taxes and will probably keep acquiring promising biotech companies and paying reasonable dividends. I like Pfizer (PFE) and Merck (MRK) the most of the pharma group. Obviously, I haven't had the time to parse every nuance of the court's ruling, but I wanted to get some preliminary thoughts out for my readers. I must say I'm very excited to finally move forward. The uncertainty surrounding the ACA was awful and has made for a very difficult investment environment in healthcare. Overall, I think the future looks bright. Disclosure: Sadeghi has no in any of the other stocks mentioned in this article. Follow Nathan Sadeghi-Nejad on Twitter.
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