What Happened?
A number of stocks fell in the afternoon session after sentiment in the healthcare sector weakened, as the Centers for Medicare and Medicaid Services moved to cancel Affordable Care Act coverage for roughly 760,000 people and claw back billions in subsidies.
The Health Care Select Sector SPDR Fund slipped 0.91% in regular trading, according to exchange data. CMS canceled approximately 315,000 enrollments covering over 760,000 individuals following an investigation into unauthorized sign-ups, the agency said in a fact sheet. The administration expects the purge to recoup roughly $2.2 billion in advance premium tax credits, according to CNBC. Rulemaking records show the agency also paused new broker registrations through February 2027 and will review 419,000 additional enrollees.
Because federal premium tax credits flow directly to health plans rather than enrollees, policy terminations immediately cut exchange revenue. Healthcare companies like Centene and Molina write significant marketplace volume, leaving their toplines more exposed to membership purges than commercial peers. Halting broker onboarding also risks crimping sign-ups ahead of open enrollment on November 1. The crackdown shifts the exchange thesis from enrollment growth to regulatory friction. With broker channels restricted and verification tightening, exchange-focused insurers face a shrinking addressable market and higher acquisition costs into the next plan year.
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:
- Outpatient & Specialty Care company Surgery Partners (NASDAQ: SGRY) fell 7.1%. Is now the time to buy Surgery Partners? Access our full analysis report here, it’s free.
- Genomics & Sequencing company 10x Genomics (NASDAQ: TXG) fell 7.1%. Is now the time to buy 10x Genomics? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ: QDEL) fell 4.8%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free.
- Surgical Equipment & Consumables - Diversified company Zimmer Biomet (NYSE: ZBH) fell 4.3%. Is now the time to buy Zimmer Biomet? Access our full analysis report here, it’s free.
- Healthcare Technology for Patients company Tandem Diabetes (NASDAQ: TNDM) fell 7.8%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it’s free.
Zooming In On Tandem Diabetes (TNDM)
Tandem Diabetes’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 30.2% on the news that the company reported better-than-expected fourth-quarter financial results.
The medical device maker posted quarterly sales of $290.4 million, a 15% increase year-on-year that surpassed analyst estimates. The company also recorded a much smaller-than-expected loss of just one cent per share. While this was a slight decline from the one-cent profit reported in the same quarter last year, it handily beat forecasts. Investors appeared to focus on the strong quarterly performance and improved operating margins, driving the stock higher despite the company issuing a 2026 sales forecast that was slightly below market expectations.
Tandem Diabetes is down 25% since the beginning of the year, and at $16.17 per share, it is trading 42.8% below its 52-week high of $28.26 from February 2026. Investors who bought $1,000 worth of Tandem Diabetes’s shares 5 years ago would now be looking at only $128.82.
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