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Healthcare best performing sector on S&P 500 in March; Centene sees 12.1% gain

Healthcare was the best performing sector on the S&P 500 index with a loss of 3.8% in March, which saw big, one-day swings as news about the severity of the coronavirus pandemic and the economic impact of measures taken to control it continued to affect the markets.

Consumer Staples and information technology were the only other sectors with single-digit losses during March amounting to 5.4% and 8.6%, respectively. The S&P 500 Energy was the worst-performing sector with a loss of 34.8%.

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Managed care company Centene Corp. was among the bottom three performers in the S&P 500 Healthcare index during February but witnessed a turnaround in March and had the best return among the healthcare companies with a gain of 12.1%.

The company, which provides services to government and commercial healthcare programs, expects total revenues for 2020 in the range of $104.8 billion and $105.6 billion after including the impact of the WellCare Health Plans Inc. acquisition.

Pharmaceutical giant Eli Lilly and Co. had the second-best returns among the healthcare companies on the S&P 500 index in March with a gain of 10%.

The Indianapolis-based company delayed a majority of new clinical trials and paused patient enrollment in ongoing studies due to the coronavirus outbreak. Lilly does not expect the pandemic to impact its 2020 financial guidance or the timelines of ongoing late-stage studies, except for one evaluating its bowel disease drug mirikizumab.

S&P Global Ratings and industry analysts expect the outbreak to have only a moderate impact on the pharmaceutical industry compared to market disruptions in other sectors.

"While we see some pharma companies poised to benefit and others facing moderate headwinds, we don't anticipate many rating actions as a result of COVID-19 at this time, especially as we would generally view this as a nonrecurring situation," S&P Global Ratings analysts said. The agency expects this to change if COVID-19 related disruptions are prolonged.

Biotech companies Regeneron Pharmaceuticals Inc. and Gilead Sciences Inc., which were among the top performers in the S&P 500 Healthcare index for February, continued the positive trend in March and saw gains of 9.8% and 8.9%, respectively.

Centene, Lilly and Regeneron were also among the top ten best performers on the overall S&P 500 index for March.

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HCA Healthcare Inc. and Universal Health Services Inc., which are among the largest for-profit hospital chains in the U.S., saw negative returns of 29.3% and 19.9% in March, respectively. The losses are primarily attributed to a patient volume decline due to the cancellation of elective procedures during the coronavirus outbreak.

Moody's Investors Service downgraded the outlook for-profit hospital sector to negative on March 19 but still maintains a stable outlook for both HCA Healthcare and Universal Health.

Laboratory Corp. of America Holdings, a services company that provides various clinical laboratory tests, had the second-highest loss among the healthcare companies on the S&P 500 index. It had negative returns of 28.1% in March.

Healthcare equipment companies, Zimmer Biomet Holdings Inc. and Hologic Inc., saw losses of 25.6% and 25.5%, respectively. The medical products and devices sector has also been impacted by a decline in elective procedures, with a pullback in consumption expected in the first half of the year, according to Moody's.

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READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.