What: Shares of Envision Healthcare Holdings Inc (NYSE:EVHC), Team Health Holdings (NYSE:TMH) and Community Health Systems (NYSE:CYH), were all selling off hard today as each company's stock was down by more than 10% as of 3:30 PM EST.
So what: A handful of recent developments has caused Wall Street to turn bearish on Envision Healthcare Holdings and Community Health Systems, which is putting huge selling pressure on the entire group today.
Earlier in the week, Envision Healthcare Holdings announced that it expected to earn $1.43 to $1.51 on an adjusted earnings-per-share basis during 2016. While that would represent strong growth from the $1.28 it's expected to show for 2015, it was a hair below the $1.52 that analysts were expecting. One analyst who follows the company cut his fourth-quarter earnings estimates for the company to $0.27 per share, down from a prior forecast of $0.33.
The updated guidance has caused analysts to pull back on their price targets for the company's shares, which appears to be contributing to the share-price weakness today.
Community Health Systems has also been on Wall Street's naughty list since the start of the year, as three different analysts have all lowered their ratings on the company's stock. The company announced a few days ago that it was delaying the spinoff of its Quorum Health Resources hospital management and consulting business, due to "various reasons, including market conditions." Combine that with an analyst dropping fourth-quarter earnings estimates for the company down to $0.91 from $1.00, and it's understandable why the stock is taking a dive.
Team Health Holdings has been quiet on the news front in recent weeks, but that hasn't kept its stock from getting sold off right alongside its competitors today.
Now what: Its hard to pinpoint the exact reason why the group is in free fall today, but this isn't the first time that a little bit of news has caused the entire group to sell off together.
Envision Healthcare Holdings and Team Health Holdings are scheduled to give presentations to investors at the JP Morgan Healthcare conference later today. Given the carnage in their share prices, it's likely that their management teams will do their best to help calm investor fears.
If you're bullish on the long-term prospects of any of these stocks, it's probably best to look past today's share-price movement to stay focused on the long-term prospects of each company.