What Happened?
A number of healthcare stocks fell in the afternoon session after several negative developments weighed on the sector. Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively.
Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Healthcare Technology for Providers company Evolent Health (NYSE: EVH) fell 17.4%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.
- Drug Development Inputs & Services company West Pharmaceutical Services (NYSE: WST) fell 6.3%. Is now the time to buy West Pharmaceutical Services? Access our full analysis report here, it’s free.
- Therapeutics company Myriad Genetics (NASDAQ: MYGN) fell 5.7%. Is now the time to buy Myriad Genetics? Access our full analysis report here, it’s free.
- Healthcare Technology for Patients company Tandem Diabetes (NASDAQ: TNDM) fell 4.5%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it’s free.
- Surgical Equipment & Consumables - Specialty company Integra LifeSciences (NASDAQ: IART) fell 7.1%. Is now the time to buy Integra LifeSciences? Access our full analysis report here, it’s free.
Zooming In On Evolent Health (EVH)
Evolent Health’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. But moves this big are rare even for Evolent Health and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 3.4% on the news that the U.S. administration announced a sharp escalation in trade tensions by threatening new tariffs on Canada. The wider market sentiment turned negative after the White House announced plans to impose a 35% tariff on Canadian imports, sparking renewed fears of a trade war. This news prompted a sell-off across major U.S. indexes, including the S&P 500 and the Dow Jones Industrial Average, as investors grew concerned about the potential economic impact of escalating protectionist policies. The healthcare sector is especially vulnerable to such tensions due to its deeply integrated supply chains with Canada for pharmaceuticals and medical devices, meaning increased costs and potential disruptions.
Additionally, ongoing U.S. policy headwinds aimed at lowering drug prices and specific corporate challenges, like those faced by UnitedHealth Group, further compounded the sector's decline. As a result, the Health Care SPDR ETF (XLV) fell 1.0%, underperforming even as major indices pared some losses.
Evolent Health is down 17.1% since the beginning of the year, and at $9.52 per share, it is trading 71.1% below its 52-week high of $32.97 from August 2024. Investors who bought $1,000 worth of Evolent Health’s shares 5 years ago would now be looking at an investment worth $955.82.
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