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3 Horrendous Health-Care Stocks This Week

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Sometimes, you just have to put things in perspective. North Korea's threats to potentially attack the U.S. with nuclear weapons make stock market gyrations seem somewhat trivial. Nonetheless, there were plenty of gyrations to cause worry for some investors over the past few days. Here are three of the week's most horrendous health-care stocks. 

Maybe somebody needs to go to the hospital
Large hospital systems operator Health Management Associates (UNKNOWN: HMA.DL  ) saw its shares fall 13% this week. That's the biggest drop for the stock in four years. 

The company provided a sneak peek at its first quarter results and gave its outlook for the full year on Tuesday. Adjusted admissions were down by 5.7% compared to the same period in 2012. HMA says that the drop appears to be due to fewer uninsured inpatient admissions and higher observation stays where the patient isn't admitted to the hospital.

HMA also revised its full-year earnings down. In January, the company estimated that 2013 earnings could be as high as $1.01 per share. Now, it says the range will be $0.86 to $0.95 per share. At least one analyst, Jefferies and Co.'s Brian Tanquilut, thinks HMA's woes stem partially from a negative 60 Minutes broadcast focusing on the company's emergency department practices.  

Recall recoil
Medical instrument maker Integra LifeSciences (NASDAQ: IART  ) shares dropped 11% this week. The stock's fall stemmed from a product recall announced on Wednesday. 

The recall includes products made in Integra's Anyasco, Puerto Rico, facility between December 2010 and May 2011 and between November 2012 and March 2013. Integra stated that "there may have been deviations from approved processes" in the manufacturing of several products. 

This bad news wasn't all of the story. Integra also said that the recall would cause revenue to fall by $8 million to $11 million in the first quarter. The company appears likely to lower full-year guidance in its quarterly earnings conference call scheduled for May 2. On Thursday, Northland Capital downgraded Integra from "outperform" to "market perform."

No favors from Favus
Analyst Favus Institutional Research didn't do a favor for Questcor Pharmaceuticals (UNKNOWN: QCOR.DL  ) this week. Questcor shares fell 10% after Favus downgraded the stock from "buy" to "sell."

It appears that Favus is quite jittery about Questcor's upcoming first-quarter results. Concerns center on three areas: potentially sluggish Acthar sales, Questcor's start-up of a new reimbursement center during the quarter, and possible issues resulting in lower Medicaid rebates.Fears about lower-than-expected Acthar sales also tie in with higher volumes filled toward the end of fourth quarter that could impact first-quarter results. 

Short-sellers hope that the worries expressed by Favus prove accurate. And there are plenty of folks out there gunning for Questcor to fail. The stock's short interest currently stands at 49.5%.

Which of these three horrendous stocks of the week are most likely to bounce back? I'd say that Questcor probably stands the best chance. If the company confounds its critics by reporting strong Acthar sales, shares should take off. That's not a given, by any means, though.

Horrendous or humongous?
Questcor is one of the most debated names in all of biotech. Its premium priced drug, Acthar, is growing at a torrid pace -- and minting money in the process. However, recent events have created significant doubts about Questcor's future -- causing shares to bounce up and down. Will insurance companies continue to cover the drug? Will a government investigation lead to huge fines? We highlight these high-profile issues inside our brand new premium research report on Questcor. In it, you'll learn about the key opportunities and threats facing the company, as well as multiple reasons to buy and sell the stock. So make sure to claim a copy today by clicking here now.

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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.

  • Report this Comment On April 12, 2013, at 8:45 PM, NotTheDroid wrote:

    Your comments on Questcor contains an error. You do not understand the Medicaid rebates. Nothing will result in lower Medicaid rebates. The rebate from Questcor to Medicaid stand at 23.1% of AMP for 2013.

    Favus' concern, if you want to call it that, is that the lower rebate won't all be immediate as old inventory with old NDC code product are cleared out.

    It isn't even a valid concern, as Favus showed his lack of knowledge regarding processing of claims.

    The rest of his concerns are pure speculation, and just a few weeks before he issued a BUY rating when it was at 31.50, attacking the 13 short rationales with vigor.

    Flip flopping for a trade, now we know what Favus is about.

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Related Tickers

12/31/1969 7:00 PM
HMA.DL $0.00 Down +0.00 +0.00%
Health Management… CAPS Rating: No stars
IART $85.87 Up +0.20 +0.23%
Integra LifeScienc… CAPS Rating: ****
QCOR.DL $0.00 Down +0.00 +0.00%
Questcor Pharmaceu… CAPS Rating: **