Health Care Edges Higher as Divergent Earnings Split the Sector

The Health Care Select Sector SPDR Fund, an exchange-traded fund that tracks the sector under the ticker XLV, closed +0.3% on Wednesday, October 28, with 52.0% of the sector's graded weight sitting in companies rated A or B. Breadth across the sector was positive as 59.3% of its component stocks advanced, while equal-weighted performance finished +0.4%, indicating that smaller constituents did more of the work. The day's modest advance, however, masked wide single-stock dispersion driven by corporate earnings: Laboratory Corporation of America Holdings led the group, closing +8.9%, and GE HealthCare Technologies Inc. finished +6.6%, while Boston Scientific Corp closed -5.8%. That divergence reflected third-quarter financial updates, as diagnostic testing and imaging companies raised their annual forecasts while medical device disruptions weighed on expectations elsewhere.

Laboratory Corporation of America Holdings rallied after delivering third-quarter earnings that exceeded expectations, posting adjusted earnings of $4.78 per share on $3.81 billion in revenue. The company also raised its full-year guidance, lifting projected revenue growth to between 5.9% and 6.7% and boosting adjusted profit expectations to a range of $18.30 to $18.70 per share. In a similar vein, GE HealthCare Technologies Inc. advanced after reporting third-quarter adjusted profit of $1.34 per share on revenue of $5.51 billion, which climbed 7.2% from a year earlier. The medical equipment maker also increased its full-year profit forecast to between $4.95 and $5.05 per share.

At the other end of the group, Boston Scientific Corp fell after its third-quarter adjusted profit of $0.73 per share missed its own guidance range, reflecting an estimated $0.07 earnings per share drag and a 300 basis point revenue hit from an August cybersecurity incident. The company subsequently reduced its full-year adjusted profit forecast to between $3.16 and $3.18 per share and projected a fourth-quarter sales contraction of 1% to 3%, triggering a sharp decline that capped the sector's overall upside.

CVS Health filed a lawsuit challenging the federal government over its 2027 Medicare Advantage star ratings, seeking to prevent an estimated revenue loss exceeding $2 billion tied to calculated score changes. In the broader market, the cap-weighted Health Care sector finished +0.3%, while 6 of the 11 sectors rose on the day.

Over longer horizons, XLV has sustained steady momentum, closing at $179.76. Its return of +5.3% over the past month builds on +17.8% across the past 100 sessions, showing persistent sector resilience that also leaves the fund +23.1% over the past six months. The concentration of gains in diagnostic and imaging leaders on Wednesday highlights how individual operational execution continues to separate winners from laggards, even within a defensive sector where half the portfolio holds high quality grades.