The push on Capitol Hill to revive Trumpcare stalled yesterday, but not before the chatter out of Washington instigated a slide for stent graft makers’ stocks.
The Affordable Care Act covers a 1-time screening for abdominal aortic aneurysms in men who smoke or smoked in the past, listing the test as an “essential health benefit.”
The GOP’s healthcare reform proposal would do away with the AAA screening coverage, shifting the cost of the test to patients, which could in turn affect AAA repair procedure volumes. Investors reacted by pushing share prices down yesterday on Wall Street for Lombard Medical Technologies (NSDQ:EVAR), Endologix (NSDQ:ELGX) and C.R. Bard (NYSE:BCR), although the stocks have recovered somewhat today.
EVAR shares closed down -9.3% at 68¢ apiece, but today climbed 4.9% to 71.4¢ in mid-morning activity. ELGX also clawed back some value, after closing down -7.2% yesterday at $6.66 per share, rising 4.8% to $6.98 each. BCR, which closed down -0.8% at $248.40 yesterday, was up 0.2% to $249.00 per share.
Analysts at Leerink Partners, writing yesterday in a note to investors, said the sell-off was overdone
“Of course the GOP proposal is just that (a proposal) and very well could get changed or not pass at all. Nevertheless, if implemented, the measures in this plan could represent an incremental negative for AAA device companies. At a minimum it represents another overhang for a stock (ELGX) that already is working through a number of other issues. The noise around today’s GOP proposal could create a short term trade opportunity, but we remain on the sidelines as we are not yet convinced that there is enough out year revenue upside beyond our current thinking to support a higher valuation. Maintain MP and increase PT to $7.50 (vs. $7) based on multiple expansion for the group,” Ravi Misra and Richard Newitter wrote.
Shares in U.S. hospital operators also fell yesterday as politicians sought to revive the prospects for Trumpcare. The White House, including VP Mike Pence, met with the moderate Republican “Tuesday Group” at the White House and later with the radical Freedom Caucus, which withheld support for the reform bill that flamed out last month.
Legislators and the administration are hoping to get a Trumpcare vote by the end of this week, before a 2-week recess begins. But the prospects looked dim yesterday after top White House deputies and key Republican groups failed to bridge the gap.
“Good talk, good progress,” Pence said after the Tuesday Group meeting, without providing details. Freedom Caucus leader Rep. Mark Meadows (R-N.C.) said the meeting with his group focused on an amendment to create a “backstop” to ensure individuals with chronic illnesses in high-risk pools do not see spikes in insurance premium costs if other aspects of Obamacare are repealed.
“No decisions were made. We’re going to get back together tomorrow at a time to be determined,” Meadows said.
Republican Study Committee chairman Rep. Mark Walker (R-N.C.) said the next round of talks involve sticking points such as whether to allow states to opt out of Obamacare mandates covering minimum-tier services and barring higher charges for pre-existing conditions.
“We’re taking our time and working through policy and structure until we reach consensus,” Ways & Means Committee chairman Rep. Kevin Brady (R-Texas) said. “Let’s let the solution and common ground drive the timetable, rather than the other way. That was really the consensus.”
Material from Reuters was used in this report.
