What happened
Shares of Aveanna Healthcare Holdings (AVAH 1.76%) were crashing by 28.1% as of 11:31 a.m. ET on Tuesday. The steep decline came after the home health company announced its 2021 fourth-quarter and full-year results before the market opened.
Aveanna reported revenue in the fourth quarter of $414.1 million, down 1.9% year over year. The result fell far short of the consensus Wall Street revenue estimate of $494.8 million.
The company posted a fourth-quarter net loss of $126.2 million, or $0.68 per diluted share. This reflected deterioration from the net loss of $9.7 million, or $0.07 per diluted share, in the prior-year period. It also badly missed the average analysts' earnings estimate of a positive $0.11 per share.
Missing on both the top and bottom lines is certainly enough to cause a healthcare stock to tumble. But investors were also unhappy with Aveanna's full-year 2022 revenue guidance of $1.89 billion to $1.92 billion. The consensus estimate on projected revenue is $2.02 billion.
So what
It's important to understand the reasons behind a disappointing quarterly performance. Aveanna said that the fourth-quarter revenue decline stemmed primarily from its private duty services (PDS) segment. The company blamed the weakness on the coronavirus omicron variant, which made recruiting and retention more challenging and caused PDS patient volumes to be lower than expected.
But those should only be temporary issues. Even though Aveanna didn't make analysts happy with its 2022 guidance, the company should return to growth mode.
Image source: Getty Images.
Now what
Be on the lookout for more business-development activity from Aveanna. Executive chairman Rod Windley stated that the company has "a robust pipeline of potential targets to drive our strong growth trajectory."
The stock certainly hasn't delivered a "strong growth trajectory" since its initial public offering last year, with shares down 66%. However, Aveanna could attract some interest from value investors with its shares trading below 9.5 times expected earnings.
