Why Accretive Health Shares Got Crushed
Feb 27th 2013 1:05PM
Updated Feb 27th 2013 2:10PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Accretive Health plummeted 25% today after the hospital revenue services provider postponed the release of its fourth-quarter and full-year 2012 financial results.
So what: Accretive said that it is reviewing the way it recognizes revenue under its revenue cycle management agreements, triggering serious investor concern that it may have to restate earnings for previous periods. While the company said the any such restatement shouldn't impact total revenue recognized over the life of a contract, the announcement alone brings yet another cloud of uncertainty over the stock and calls management's credibility into question.
Now what: Expect the stock to remain under plenty of pressure in the short term.
"The company's gone radio silent, so we don't know the complete extent of what they're reviewing and what the outcome may be," cautioned Eric Coldwell, an analyst at Robert W. Baird & Co. "It's a riskier situation."
Of course, with a balance sheet boasting $177 million in cash and zero debt, Accretive's downside seems limited enough to make it an intriguing long-term bargain candidate.
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The article Why Accretive Health Shares Got Crushed originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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