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 Greenway Medical Technologies (NYSE:GWAY), a cloud-based health-care management services company, dipped as much as 17% after the company revised its full-year 2013 outlook.
So what: Before the opening bell, Greenway offered an update for its remaining fiscal 2013 based on preliminary results for the third quarter. Greenway now expects full-year revenue of $132 million to $134 million, and a GAAP EPS loss of $0.11 to $0.13 on gross margin ranging from 51.5% to 52.2%. At the end of the second quarter in mid-February, it had been forecasting revenue of $145 million to $150 million, and a GAAP EPS profit of $0.10 to $0.17 on gross margin of 54.5% to 56%. Greenway's CEO, Tee Green, noted that a shift away from one-time licensing models to a recurring revenue stream is what hurt Greenway's revenue outlook. He also noted that recurring revenue is up to 56% of total revenue in the current quarter, as opposed to just 46% in the year-ago period.
Now what: It's pretty easy based on the above figures to see why the Street isn't one bit happy with Greenway today. As a provider of electronic health records and other cloud-based health-management tools, I don't see any reason why it should be struggling to recruit new customers and/or boosting its recurring revenue stream. I applauded Greenway for landing a whale in Walgreen last summer, and I feel it could offer a very compelling investment thesis on paper moving forward; unfortunately it has failed to deliver for investors now on multiple occasions.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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