Matria's Health a Matter of Contention

Last month, with the company's stock under heavy attack by short-sellers, Matria Healthcare (MATR Quote) CEO Parker Petit offered a reassuring comment that could prove quite telling in the end.

The company's CFO, Stephen Mengert, had abruptly resigned less than a week earlier. Petit responded by explaining that Mengert had left to pursue "an opportunity of a lifetime" as the CFO of another health care company that was poised for an initial public offering.

To be fair, Mengert could score big if his new employer pulls off an IPO as planned. At the same time, however, he seemed to be managing finances for a Wall Street winner already.

Notably, Mengert walked away just as Matria was reinventing itself as a pure-play disease-management firm and attracting growth-hungry investors in the process.

Late last year, Matria thrilled the market with plans to acquire CorSolutions -- an even larger DM player than itself -- and shed some businesses outside its new core strategy. The company's stock, which had spiraled toward $30 on a profit warning just two months earlier, jumped into the $40s for the first time ever. It went on to peak in mid-February at $45 a share.

Within weeks, however, short-sellers had taken direct aim at the company. By then, several Matria executives had walked out the door. Moreover, Matria was in the process of acquiring a company that had recently lost some major players of its own. And that exodus had come at a time when hopes for DM companies -- especially big ones like Matria and CorSolutions -- had never been higher.

As a result, skeptics have started to question whether Matria's new strategy is as bullet-proof as it seems. The company's stock, up 63 cents to $35.76 on Wednesday, has fallen 20% from its all-time high. It has undergone some notable one-day swings leading up to Friday morning's earnings report.