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 health-care service provider Kindred Healthcare (NYSE: KND) plunged 15% on Friday after its quarterly results disappointed Wall Street.

So what: Kindred's fourth-quarter whiff was so big -- adjusted EPS from continuing operations of $0.27 versus the consensus of $0.36 -- that analysts are being forced to lower their valuation estimates yet again. In fact, the shares are now down about 55% over the past year as Medicare cuts continue to weigh heavily on the company.  

Now what: Management now sees full-year EPS from continuing operations of $1.35-$1.55, down significantly from its prior forecast of $1.65-$1.85. "Our 2012 earnings outlook reflects a more-difficult-than-expected operating environment under the recent RUGs IV and rehabilitation therapy Medicare rule changes," said CEO Paul Diaz. "Nevertheless, our strategic goals to expand our cluster market development and accelerate growth in areas like home health and contract therapy have not changed in light of current reimbursement pressures." With the stock beaten down so much and trading at a paltry forward P/E of 6, betting on that optimism might not be such a bad idea.

Interested in more info on Kindred? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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