As we head into the third quarter of 2012, our Healthcare team remains bullish on hospital names, particularly LifePoint Hospitals (LPNT) and HCA Holdings (HCA). There are multiple fundamental drivers in 3Q12, with only one significant headwind going into the quarter. So as the aforementioned stocks report earnings, we remain net positive.
The one meaningful headwind at hand is births, which according to our models, suggest year-over-year declines in 3Q12. Births are likely the single biggest driver of hospitals admissions this quarter because of its high proportion to total admits and seasonal strength in 3Q.
3Q12 Positives include a 27% uptick in quarter-to-date flu data (read: more sick people), a modest acceleration in year-over-year growth for physician utilization (improving outpatient utilization), and the annualizing cardio acuity comp that began in 2Q11 (help stabilize volumes and improve pricing).