Healthcare Services Previewing 2Q Earnings: MCO Sentiment Shift, Distributor Resiliency & Facility Policy - Key Thoughts Heading into the Quarter

Research evidence excerpt

Healthcare Services Previewing 2Q Earnings: MCO Sentiment Shift, Distributor Resiliency & Facility Policy - Key Thoughts Heading into the Quarter

Lisa C. Gill AC North America Equity Research

(1-212) 622-6466 09 July 2026 J P M O R G A N

lisa.c.gill@jpmorgan.com

potential FY27 impacts. Management noted expectations for an update on data collection

compliance sometime in September, lining up with prior commentary for progress on the

CBO scoring more likely to be made after Congress returns from the summer recess.

• With foot traffic growth decelerating y/y during 2Q, we expect investors to focus on

“core” utilization trends and potential offsets ahead of the MSPP phase-down in

2028. For the hospitals, we think that 2Q will appear optically strong for HCA/THC/UHS

given the FL DPP approval and would otherwise expect beneficiaries to raise guidance.

However, we think that investors will look past the benefit as a one-time item following

the proposed rule from CMS last month and will instead be more focused on “core”

changes excluding the FL DPP. Here we believe that the underlying mix data will be in

greater focus with foot traffic data improving q/q but flatlining during May/June and

appearing softer vs company expectations for 2026, as well as previous commentary from

ARDT regarding weaker surgical trends on a national level. This includes 2H26 volume

outlooks, particularly expected impact from anticipated enrollment declines across the

ACA Exchanges. We also flag 340B-related changes under the CY2027 OPPS proposed

rule as a potential upside opportunity for the group for 2027. For other healthcare facilities

names, we note an anticipated step-up during 2Q resulting from typical seasonality

(AVAH, CON, INNV), acceleration following respiratory/weather impacts during 1Q