August 7, 2012 / 4:45 PM / in 5 years

Hospital operators spring back on good results

2 Min Read

(Reuters) - Shares of the top three U.S. hospital operators rose by at least 5 percent as strong quarterly results at each pointed to the sector's resilience, a day after the stocks were pressured by HCA Holdings Inc (HCA.N) announcing that it was being investigated by regulators for billing practices.

Tenet Healthcare Corp (THC.N), HCA and Community Health Systems Inc (CYH.N) all reported second-quarter profits above market estimates and reaffirmed their full-year forecasts.

Jefferies analyst Arthur Henderson dismissed the probe as being "not uncommon.".

"The Obama Administration remains focused on eliminating waste, fraud and abuse, so this could be a motivating factor behind this inquiry," Henderson wrote in a note to clients.

In a quarterly filing with regulators, the No. 1 player HCA disclosed on Monday that authorities were probing its billing practices and the necessity of heart procedures performed over about eight years.

Shares of HCA, which fell as much as 10 percent on Monday on news of the probe, were up 6 percent at $27.04 on the New York Stock Exchange.

Community Health's shares, which fell as much as 4.5 percent on Monday, were up about 4 percent at $24.77 and the stock of Tenet Healthcare was up about 6 percent at $4.96, after a 6 percent drop on Monday.

Reporting by Vidya P L Nathan in Bangalore; Editing by Joyjeet Das

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