Navigating Healthcare Stocks in a Post-Trump Win World

The election of former President Donald Trump has sparked a wave of reactions in the healthcare sector, with investors cheering and jeering potential policy changes. As the dust settles, it's crucial to understand how to play healthcare stocks in this new landscape. This article explores the implications of Trump's win on key segments of the healthcare sector and provides insights into how investors can position their portfolios.

**Medicare Advantage Providers: A Bright Spot**

Medicare Advantage (MA) plan providers are among the biggest gainers following Trump's victory. Shares of Humana (HUM) surged 8.2% in morning trading, while UnitedHealth Group (UNH) climbed 5.3%. This optimism stems from expectations that a Trump administration will push for more favorable rates and less scrutiny for MA plans. J.P. Morgan analysts anticipate that a Trump administration will be "pushing for more favorable rates and less scrutiny" with its Medicare Advantage policies, which would be music to Humana investors' ears.


**Hospital Operators: A Cautionary Tale**

Hospital operators, however, are facing headwinds. Stocks of HCA Healthcare (HCA), Universal Health Services (UHS), and Tenet Healthcare (THC) all took a hit, falling 4.6%, 3.7%, and 3.8%, respectively. Investors are concerned about the sustainability of Medicaid supplemental payment programs and the future of enhanced medical insurance exchange (HIX) subsidies. KeyBanc analysts warn that the enhanced subsidies provided to those getting health insurance through Affordable Care Act exchanges may expire in 2025, which could lead to a near doubling of individuals covered by exchanges becoming uninsured. This would negatively impact hospitals' payor mix and profitability.


**Vaccine Makers: The Kennedy Factor**

Drugmakers are also grappling with uncertainty, as Trump has hinted at putting anti-vaxxer Robert F. Kennedy Jr. in charge of health initiatives. Shares of Eli Lilly (LLY), Pfizer (PFE), Moderna (MRNA), and BioNTech (BNTX) all fell, with LLY shedding 4.3%, PFE down 2.6%, MRNA sliding 2.9%, and BNTX sinking 4.6%. Kennedy's appointment could lead to reduced public trust in vaccines, impacting demand and sales for vaccine manufacturers. Additionally, his stance on vaccines could influence regulatory policies, affecting the approval and distribution of vaccines.

**International Reference Pricing: A Double-Edged Sword**

Trump's proposed Most Favored Nation (MFN) rule could significantly impact drugmakers' pricing strategies and profitability. By tying prices to lower international rates, it may limit drugmakers' ability to charge higher prices in the U.S. market. However, it could also create opportunities for companies that can adapt to more competitive pricing environments or focus on lower-priced generic drugs.

**AI in Healthcare: A Regulatory Wildcard**

Trump's potential repeal of Biden's AI Executive Order could have significant implications for healthcare technology companies and the broader sector. The repeal could hinder innovation and disrupt ongoing AI developments in healthcare, such as precision medicine and drug discovery. However, it could also foster a more competitive environment, encouraging companies to explore alternative AI solutions and partnerships.

As investors navigate the healthcare sector in a post-Trump win world, it's crucial to stay informed and adaptable. While some segments, like MA providers, may benefit from policy changes, others, such as hospital operators and vaccine makers, face significant challenges. By understanding these dynamics and positioning portfolios accordingly, investors can capitalize on opportunities and mitigate risks in this ever-evolving landscape.