Why LHC Group's Shares Dropped


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 LHC Group tumbled after the health-care services provider reported quarterly earnings last night. The stock dropped as much as 10% in today's session, and finished 5.3% lower.

So what: LHC, which specializes in post-acute health-care services, said that revenue grew 2.5%, to $161.8 million, and earnings per share edged up from $0.39, to $0.43, which beat estimates of $0.37. What threw a wrench into the works was its scaled-down guidance for 2013. The company now sees earnings per share of $1.10 to $1.30 against expectations of $1.51. Management said that cuts to Medicare from sequestration would shave $0.30 off the year's per-share profits.

Now what:Oddly, LHC's revenue guidance of $660 million to $680 million was above analyst projections of $658 million. While sequestration was signed into law on March 1, there is still the possibility of a compromise that would restore LHC's missing profits. Keep an eye out for any changes on the federal level, as they could provide a jolt to the stock.

Get more on LHC Group. Add the company to your Watchlist here.

The article Why LHC Group's Shares Dropped originally appeared on Fool.com.

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