Why Accretive Health 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: Revenue-cycle management company Accretive Health (NYSE: AH  ) fell as much as 10% after the company reporting its third-quarter earnings results before the opening bell today.

So what: For the quarter, Accretive reported a 1.9% improvement in net revenue to $223.1 million and a drop in net income to $0.06 per share. Overall, EPS topped Wall Street's forecast by $0.01, however, revenue came in well shy of the $231.1 million analysts had been expecting. Similarly, Accretive's full-year guidance of $0.23-$0.27 in EPS is perfectly in line with consensus estimates, but now expects revenue to be at the low end of its previous $948 million-$980 million projections. The current consensus is $963.2 million.

Now what: Even with Accretive putting its legal issues in Minnesota in the rearview mirror, it doesn't appear that rapid growth is on the horizon. Management appears optimistic about Accretive's 2013 growth prospects, but I'm less than enthused about a company trading at 24 times forward earnings with minimal growth. I'll gladly stay on the sidelines for now.

Craving more input? Start by adding Accretive Health to your free and personalized watchlist so you can keep up on the latest news with the company.


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