What: Shares of healthcare staffing providers were given a collective pink slip today as shares of AMN Healthcare Service (NYSE:AMN), Team Health Holdings (NYSE:TMH) and AmSurg (NASDAQ:AMSG) were all down more than 18% in early trading on heavy volume after several hospital stocks released information that has left investors in the space spooked.
So what: Hospital provider Community Health Systems (NYSE:CYH) released preliminary results for its third quarter earlier today, and investors appear to be displeased with the news. The company reported that its revenue and earnings per share are expected to be $4.84 billion and $0.56, respectively, for the quarter, both of which are well below the $4.99 billion in revenue and $0.88 EPS that analysts were expecting. The company's stock plunged more than 30% as a result.
Another hospital stock, Envision Healthcare Holdings, also released results today that came up well short of expectations, and its stock is also down more than 30% as a result.
Separately, shares of Tenet Healthcare, yet another hospital company, were also tossed in the discount pile as a result of an analyst downgrade.
This trio of bad new for hospital stocks clearly has investors fearing the worst about the near term outlook for healthcare staffing providers, so the market is selling off the entire sector as a result.
Now what: In addition to today's huge sell-off, AmSurg and Team Health investors have been put on a wild ride already this week after AmSurg made an offer to acquire Team Health earlier in the week, which Team Health quickly rejected. The uncertainty about the near term future for these two companies is likely adding fuel to the fire that is causing today's sell-off.
Watching your stocks fall so fast is never fun, but before you make any buy or sell decisions it's probably best to wait until each of these companies report quarterly results in the coming weeks, as analysts are likely to ask plenty of questions about the health of their customers that could help you figure out the industry's future.
In the long-term, as the population ages the demand for healthcare staffing services is likely to grow, so if you are bullish on any of these stocks it's probably best to ignore today's price movement and stay focused on each company's long-term prospects.
Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.