Why LHC Group's Shares Dropped

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 LHC Group tumbled after the health-care services provider reported quarterly earnings last night. The stock dropped as much as 10% in today's session, and finished 5.3% lower.

So what: LHC, which specializes in post-acute health-care services, said that revenue grew 2.5%, to $161.8 million, and earnings per share edged up from $0.39, to $0.43, which beat estimates of $0.37. What threw a wrench into the works was its scaled-down guidance for 2013. The company now sees earnings per share of $1.10 to $1.30 against expectations of $1.51. Management said that cuts to Medicare from sequestration would shave $0.30 off the year's per-share profits.


Now what: Oddly, LHC's revenue guidance of $660 million to $680 million was above analyst projections of $658 million. While sequestration was signed into law on March 1, there is still the possibility of a compromise that would restore LHC's missing profits. Keep an eye out for any changes on the federal level, as they could provide a jolt to the stock.

Get more on LHC Group. Add the company to your Watchlist here.

The article Why LHC Group's Shares Dropped originally appeared on Fool.com.

Fool contributor Jeremy Bowman 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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