Why HMS Holdings Shares Got Crushed

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 medical information company HMS Holdings (Nasdaq: HMSY  ) plummeted 23% today, after its quarterly results and guidance missed Wall Street expectations.

So what: HMS' third-quarter results -- EPS of $0.12 on revenue of $113.2 million versus the consensus of $0.15 and $123.2 million -- and 2013 guidance were so disappointing, that analysts have no choice but to lower their growth estimates, yet again. Ongoing problems with its Medicaid program, and rapidly rising operating costs, continue to weigh heavily on the company, leaving investors little hope for a near-term turnaround.

Now what: Management now sees 2013 adjusted EPS of $0.95-$1.02 on revenue of $570 million-$600 million, below the average analyst estimate of $1.10 and $606 million. CEO Bill Lucia reassured investors:

We continue to lay the groundwork for growth in 2013 and beyond. We are focused on implementing numerous Medicaid RACs, continuing to deliver a high level of Medicare RAC performance, preparing for the Medicare coordination of benefits contract award that was recently announced, bringing innovative eligibility verification solutions to state agencies, and increasing our presence in the commercial market.

With the stock hitting a new 52-week low today, now might even be a good time to bet on the success of those long-term objectives.

Interested in more info on HMS? Add it to your watchlist.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2080110, ~/Articles/ArticleHandler.aspx, 4/16/2014 3:17:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement