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Matria Mashed Again

Matria (MATR) is turning into a chronic pain for shareholders.

The company, which manages the treatment of long-term illnesses, punished investors Thursday with its second weak forecast in two months. The company slashed its aggressive full-year targets, sending shares down 18%.

Matria maintained its recently lowered second-quarter forecast, but cut full-year revenue guidance to between $337 million and $341 million. Wall Street analysts had been banking on revenue of $361 million. Matria's new full-year profit target of $1.10 to $1.17 share looks to come in at the low end of Wall Street expectations even before stock-option expenses have been subtracted.

Matria blamed a big recent acquisition.

"The market's reaction to our acquisition of CorSolutions appears to be a general delay in awarding new-employer business to Matria," explained CEO Pete Petit. "Because our acquisition of CorSolutions is currently the largest transaction of this nature to occur in the disease-management market, consultants and prospective clients are being cautious. ... We believe this market pause is temporary, [and] the metrics upon which we acquired CorSolutions are still very compelling."

Mainstream analysts originally embraced that acquisition, issuing bullish reports that sent the company's stock rocketing to an all-time peak in February of $45 a share. But short-sellers soon pounced on the stock and triggered a big selloff. The stock now fetches less than it did before the acquisition and, in fact, sits at a new 52-week low.

Thus, those who believed in management -- which pointedly dismissed a negative report by Off Wall Street three months ago -- have paid dearly for their faith.

"I have been around Wall Street 25 years," BI Research analyst Tom Bishop boasted in a March conference call that Matria held in response to Off Wall Street's first report. "If I had to side with you or Off Wall Street, I think I would side with you."

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