Hospital names fall on Community Health earnings warning; funds see $3.34 billion inflow

By Paul Deckelman and Paul A. Harris

New York, Oct. 22 – Bonds of hospital operators were in need of emergency care on Thursday. The sector was broadly lower in heavy trading after Community Health Systems, Inc. issued guidance on its expected third-quarter earnings, coming in well below analysts’ expectations.

Bonds of other hospital operators also took it on the chin on Thursday, pulled lower by the weak Community Health outlook. Among them were Tenet Healthcare Corp., LifePoint Hospitals Inc. and HCA Holdings, Inc., which just a week ago also warned that its quarterly earnings would come in below Wall Street’s expectations.

Meanwhile, pharmaceuticals continued to have problems on Thursday. Valeant Pharmaceuticals International Inc.’s paper continued to get hammered in heavy trading, although the carnage was not as bad as that seen on Wednesday, when the Canadian drug maker was accused in a trading house research report of using a string of shadowy specialty pharmacies to artificially inflate its revenues, a charge that the company vehemently denies.

Valeant meanwhile tried to reassure investors, planning a Monday conference call.

Other pharmaceutical and biotech names remained on the downside, including Endo International plc and the newly issued notes of Concordia Healthcare Corp.

High-yield mutual funds and exchange-traded funds posted their third straight net addition of cash in the latest reporting week, a $3.34 billion inflow. It was the biggest such cash gain seen so far this year and the second largest on record.

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