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3 Horrendous Health-Care Stocks This Week

Keith Speights
July 5, 2013

The past week held plenty of fireworks, food -- and its fair share of flops. Here are three health-care stocks that didn't exactly light up the skies over the past few days.

Liver quivers
Achillion Pharmaceuticals (NASDAQ: ACHN) ranks as the top drop of the week. Shares plunged 24% on news that the Food and Drug Administration placed a clinical hold on experimental hepatitis C drug sovaprevir.

The FDA's concerns stem from elevated liver enzyme levels found in patients participating in a phase 1 drug-drug interaction study with sovaprevir with ritonavir-boosted atazanavir. Clinical holds for hep-C drugs have become something of a pattern for the FDA. Last August, the agency halted trials for two drugs developed by Idenix Pharmaceuticals (NASDAQ: IDIX). Idenix ultimately dropped both clinical programs earlier this year.

Despite the huge fall with its stock, Achillion didn't receive totally bad news from the FDA. The company can continue to enroll patients in its phase 2 study for sovaprevir plus ACH-3102 and ribavirin. The elevated liver enzyme levels haven't been seen with any other trials involving sovaprevir. Achillion plans to respond to the FDA's request for reports from two drug-drug interaction studies and a safety analysis of ongoing sovaprevir studies within the next six weeks.

Medicare mayhem
Unwelcome news from Medicare last week sent home health provider stocks reeling at the end of last week. The aftermath continued into the first week of July, particularly for Gentiva Health Services (NASDAQ: GTIV). Gentiva's shares dropped almost 11% this week after falling by roughly the same amount last Friday.

All of the tumult stems from a proposal by the Centers for Medicare and Medicaid Services, or CMS, to cut reimbursements for in-home care by 1.5% in fiscal 2014. CMS proposed rebasing the home health prospective payment system to incorporate 3.5% annual cuts from 2014 to 2017, the maximum reduction allowed under the Affordable Care Act.

While the cuts aren't set in stone yet, there's no reason to think that the situation will improve for any of the home health providers. Gentiva will be hit particularly hard, since the company receives more than 90% of its revenue from Medicare.

Good news or bad news?
Arena Pharmaceuticals (NASDAQ: ARNA) shares fell 9% this week as investors processed early sales results for obesity drug Belviq. The problem is that whe