Word On The Street: Hospitals On Deck, HCA’s Surgery Softness Driving Questions

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Word On The Street: Hospitals On Deck, HCA’s Surgery Softness Driving Questions

BTSG. Top Picks

Into Q2 Releases: BTSG, RDNT, ACHC, CVS. Thoughts on key stocks/sub-sectors below:

Hospitals: Sentiment on hospitals was already weak heading into last wk, as investors worried

about volumes & payor mix. Sure enough, HCA prereleased Q2 results that showed in line vols but

had weak surgery vols; more important, HIX headwinds were worse in Q2 and forced mgmt to cut

'26 EBITDA guide. HCA's prerelease has brought questions about surgeries and overall vol trend

(which we think is fairly intact ex-HIX), while also bringing down the expectation bar for the rest of

the hospitals, in our view. Incremental color on HIX M/M trends could provide needed confidence

for achievability of current guidance ranges.

Distys: Most of our inbounds were from investors gauging where the C2Q results bars are for

CAH, COR, MCK. Our take is that expectations are low heading into prints, evidenced by reduced

valuations, and AOI/EPS beats with positive commentary around RxTS and oncology for MCK and

stabilization of generics/biosimilars for COR are likely enough to drive positive momentum in the

group. Questions about CVS distribution contract unlikely to be addressed this qtr.

BKD: The co released June occupancy (click for our note) the wk prior, and we received numerous

follow-ups from investors assessing if the steep pullback earlier in the wk was warranted (and an

entry oppty). Our take is that secular trends/theses still hold, though NT stock performance hinges

on go-fwd occupancy gains, which are being impacted temporarily by some divestiture delays.

SGRY: We've had inbounds from investors asking what mgmt would have to say on their Q2 call

for the stock to go up from current levels.