Richard Drew / AP

Wall Street is closely following the House vote on the American Health Care Act. Health care stocks are almost guaranteed to move in one way or the other next week, depending what happens this afternoon.

But the House vote is just the beginning. "Wall Street seems to understand that the House bill is not the final product, and some of the draconian measures that are most negative to the group almost certainly will be removed to get the bill through the Senate," Spencer Perlman and Sumesh Sood of investment research firm Veda Partners said in a research note Friday.

Here's what could happen to health care stocks in the short term.

If the bill passes the House:

  • Hospital companies (HCA, Tenet Healthcare, LifePoint Health, Community Health Systems, Universal Health Services) could suffer since Trumpcare would increase uncompensated care.
  • Health insurers that focus on Medicaid (Centene, Molina Healthcare, WellCare Health Plans) could trade down since the bill would phase out Medicaid expansion.
  • Medical device companies (Stryker, C.R. Bard, Zimmer Biomet, Boston Scientific) could trade higher since Trumpcare permanently repeals the device tax.
  • Drug companies may not move much, since the bill doesn't tinker with pricing.

If the bill fails:

  • Hospital stocks would "experience a significant relief rally," Mizuho Securities analyst Sheryl Skolnick said in a note Friday. Medicaid companies would, too. But hospitals would still struggle with high labor costs and declining admissions.
  • The failed vote could threaten tax reform and could drive down many other health care stocks that would benefit from that, Perlman and Sood said. Pharmaceutical companies clearly want tax reform. The large health insurance companies (Aetna, Anthem, Cigna, Humana, UnitedHealth Group) — which derive all their earnings in the United States and usually have a tax rate around 40% — also badly want the corporate tax rate lowered to at least half that.

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