This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Messy Call for Matria

The honeymoon has clearly ended for Matria Healthcare (MATR - Get Report).

Just months after its celebrated marriage to a competitor, Matria has crushed its fans with a disappointing outlook for the future. Notably, the disease-management firm has already lost out on one major contract it was counting on.

Matria managed to hit first-quarter target, but issued new guidance that has left investors worried about the rest of the year. The company is now forecasting far less growth in the second quarter than the market had been anticipating. It is then counting on major second-half improvements to lift its performance for the entire year.

Some clearly have their doubts.

"It's just clear as a bell to me that the stock market doesn't believe" the full-year guidance, one investor said during a conference call on Friday morning. "Can you give us something here to hang on to? This is painful."

The stock, indeed, suffered a major fall. The shares -- which peaked at $45 just two months ago -- plunged 14% to a nine-month low of $30.30 on Friday.

Bridging the Gap

Still, Matria's first-quarter results looked strong.

Revenue more than doubled to $80.9 million -- just topping the consensus estimate -- following the recent acquisition of CorSolutions. Meanwhile, earnings jumped more than eightfold to $12 million. Operating profits of 16 cents a share met the consensus estimate exactly.

However, Matria's second-quarter guidance fell well below analyst expectations. The company is forecasting second-quarter revenue of $82 million to $84 million instead of the $92.5 million Wall Street had anticipated. It is also looking for second-quarter profits of 16 cents to 19 cents a share -- which is a far cry from the current 28-cent consensus estimate.

Even so, Matria has simply tightened its full-year guidance to a range that -- at the high end -- still includes Wall Street's $1.20 target. To hit its goals, Matria must double its first-half earnings in the second half of the year.

"I know you want some additional comfort that we're not down here hallucinating in terms of what we expect to do," Matria CEO Parker Petit acknowledged during Friday's conference call. "It's very doable because of the huge operating leverage that comes with every new revenue dollar. ... We're comfortable. If we weren't, we would be so signaling."

Banking on Business

Still, Matria also felt pretty comfortable about landing a major contract that it failed to get in the end.

"It was a nice piece of business we would have liked," Petit explained. But "we came out on the short end of the stick ... (So) we've taken that out of our forecast."

Matria indicated that it had tried -- but failed -- to win that contract away from competitor Healthways (HWAY - Get Report). The company said that it had emerged as one of two finalists for the business, before losing out on the contract about 10 days ago. Meanwhile, it said that CorSolutions recently lost "a fairly substantial employer-type" account that has been eliminated from its forecasts as well.

On a positive note, Matria did portray its second-quarter guidance as conservative and hinted at possible upside in both the near and long term. The company then went on to ask for investors' trust in the meantime.

"We're going to get plenty of business," Petit promised. "It's just not visible to you yet."

Meanwhile, Petit attempted to shoot down any notion that short-sellers -- who have been betting against the stock -- might be right about the company.

"There have been so many inaccuracies in those short reports," he said. "I don't even know how they get that information."

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs