Health Management Drops on Depressing Outlook

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 Health Management Associates plunged 15% today after the hospital operator cut its outlook for 2013.

So what: Health Management shares have soared over the past year on excitment over the U.S. health care overhaul, but downbeat full-year guidance is forcing Mr. Market to sober up a bit. Management blamed the bleak view on a difficult operating for in-patient services, triggering concerns in other hospital stocks like Tenet Healthcare and Community Health Systems -- both down about 4% today -- as well.


Now what: Management now sees full-year operating EPS of $86-$0.95 on revenue of $6.8 billion-$7 billion, well below its prior view of $0.86-$1.01 and $7 billion-$7.2 billion, respectively.

"[W]e have reduced our costs accordingly going forward, seasonal nursing labor contracts are expiring, and we will continue to closely manage our expenses relative to the volume and acuity of our patients," CEO Gary Newsome reassured investors.

With the stock still up about 80% from its 52-week lows, however, I'd wait for even more of a pullback before buying into that optimism.

Interested in more info Health Management? Add it to your watchlist.

The article Health Management Drops on Depressing Outlook 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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