Triggers: Debt Ceiling and Skilled Nursing Stocks

There is a broad sell-off in healthcare stocks today on fears that the debt ceiling deal would cut healthcare spending.A few weeks ago a few hedgies were on CNBC touting their “short healthcare” trade so maybe they were on to something. The bellwether ETF index XLV is down 2.55% in early trading. The ETF was up as much as 14% YTD with a 52 week high of $36.57 and is now up only 5.5%. Healthcare dividend stocks have been touted as a safe haven in a volatile market.The Google finance healthcare index is the worse performer with healthcare facilities hard hit but normally stabe major drugs down as well : ABT ($50.22) down 2%, JNJ($63.82) down 1.5%,Merck (MRK $32.94) down 3.5%, and Pfizer(PFE $18.87) down 1.97%. Medical equipment and supplies were hard hit as well with blue chips such as Baxter (BAX), Covidien (COV) and Medtronic (MDT) down over 2%. Large cap biotechnology is not immune to the sell-off with Amgen(AMGN $53.31) down 2.5% and Gilead (GILD $41.26) down 2.6%.

The Rayno Life Science Portfolio is down 1.93% with smaller caps and diagnostics/tools harder hit than large cap biopharmaceuticals.

A lot of the momentum from this sell-off came early when skilled nursing stocks plunged on Medicare rate changes. Skilled nursing stocks were down 25% on a reduction of 11.1% in reimbursement rates. Health insurance stocks followed the lead.

We’ll survey the damage tomorrow to see what sub-sectors can hold up.

%d bloggers like this: