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Community Health System Plummets 35.3%, IHF Lost ~6.4%

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IHF down by 6.35%

On October 22, 2015, the US stock markets had a positive day with the S&P 500 moving up by 33 points and the Dow Jones up by 320 points for the day. Biotechnology had a mixed day, as the iShares Nasdaq Biotechnology ETF (IBB) gained 0.55%, whereas the Healthcare Select Sector SPDR ETF (XLV) fell 0.6%, and the SPDR S&P Biotech ETF fell 0.2%, but the biggest losses were in the healthcare service providers segment. The iShares US Healthcare Providers (IHF) fell by 6.35% as some of its holdings reported lower-than-expected 3Q15 earnings. On the other hand, the SPDR S&P 500 ETF (SPY) gave a return of 1.7%. Out of 52 stocks of IHF’s portfolio, only four stocks ended up positively, and 48 stocks ended in red.

The above graph gives a glimpse of the performances of various biotechnology ETFs in comparison with the SPY ETF on October 22, 2015.

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Community Health System falls 35.3%

Community Health Systems (CYH) fell by 35.3% on October 22, 2015, the biggest fall of the day in the iShares US Healthcare Providers ETF’s portfolio. The stock went down as it provided preliminary data for the 3Q15 earnings. The data provided was lower than Wall Street’s expectations. According to a press release, Community Health Systems “anticipates net operating revenues for the three months ended September 30, 2015, will be ~$4.846 billion, compared with $4.780 billion for the same period in 2014. Income from continuing operations before taxes as reported for the three months ended September 30, 2015, is expected to be ~$121 million, compared with $133 million for the three months ended September 30, 2014. Adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] for the three months ended September 30, 2015, is expected to be approximately$661 million, compared with $750 million for the same period in 2014. Income from continuing operations for the three months ended September 30, 2015, excluding expenses from the planned spin-off of Quorum Health Corporation, is expected to be $0.56 per share (diluted), compared with $1.01 per share (diluted) for the three months ended September 30, 2014.”

Community Health Systems also provided the guidance for the full year 2015. It expects the adjusted EBITDA to be in the range of ~$2.9 billion to ~$3.02 billion. Income from continuing operations per diluted share for 2015 is now anticipated to be $3.4 to ~$3.8. The iShares US Healthcare Providers ETF invests ~1.7% of its portfolio in Community Health Systems.

Healthcare Services Group (HCSG), Inovalon Holdings (INOV), and DaVita HealthCare (DVA) gave returns of ~2.5%,-0.35%, and -1.95%, respectively.

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