News from Nashville

Research evidence excerpt

News from Nashville

end of management's 8–9% guidance range; Institutional Pharmacy 8.3%

we maintain our Outperform rating and $17 price target. Outsourced Hospital Services 7.5%

Highlights for the week ended June 12th Managed Care 6.9%

Sector price performance: For the week ended June 12th, healthcare AC Hospitals 6.9%

services outperformed the broader market, with the S&P Healthcare Retail Pharmacy 6.3%

Services Select up 4.6% (+1.7% the prior week) vs. the S&P 500’s 0.6% Dialysis 6.2%

increase (-2.6% the prior week). Acute care hospitals were up 6.9% on Senior Living 5.4%

average (-3.0% the prior week), and Managed Care was up 6.9% on Home Health 4.9%

average (+6.2% the prior week). Ambulatory Surgery outperformed other S&P HC Services 4.6%

sub-sectors, up 11.7% for the week. Diagnostic Imaging 4.4%

Pharm. Distribution 4.1%

• ENSG —We are not overly surprised to see another short report out Healthcare REITs 3.1%

on Ensign on Thursday, following the pullback in shares since the initial Personal Care 1.3%

short thesis published on June 8th. Parallel to understaffing claims Behavioral Health 0.7%

cited in the initial report, the latest report primarily alleges a deficiency S&P 500 0.6%

in administrator oversight, claiming that the company is employing a Rehabilitation 0.5%

"license rental" scheme at roughly 20% of facilities. The short report

S&P 500 Health Care 0.5% appears to leave out an important section of the regulation which

Laboratories 0.1% expressly permits administration on a part-time or consulting basis and

Temp Staffing (1.4%) facilitates administrative oversight of multiple facilities - a key element

in our view of the efficient allocation of resources necessary to complete SNFs (3.8%)

an administrative transition following M&A transactions.