Gentiva Health Services Shares Plunged Again: What You Need to Know

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: For the third time this week shares of Gentiva Health Services (NAS: GTIV) plunged more than 10%, but unlike Monday and Tuesday, this was a doozy. As I'm writing, shares are down 34% after the company released earnings.

So what: The drops earlier this week were due to speculation that Gentiva would be hurt by reimbursements because of the debt deal agreed upon in Congress; today is a different story. We got solid confirmation that worrying is justified when Gentiva missed estimates and cut its earnings outlook to $2.00 to $2.20 per share.

Now what: Today everything Gentiva reported fell short of expectations, and pressure on the company's shares hit a crescendo. It's tough to be a buyer with the kind of momentum we're seeing this week, but I have to look at a four-times forward P/E ratio at the low end of guidance as some sort of value, right? The problem is that pesky $1 billion of long-term debt lurking on the balance sheet, which will keep me far, far away from shares today.

Interested in more info on Gentiva Health Services? Add it to your watchlist.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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.

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