Six Best & Worst Health Care IT Stocks

(Health care IT story corrected for Sidoti rating on Quality Systems, Allscripts fiscal 2Q data)

NEW YORK (TheStreet) -- Whatever happened to 2009 market darling "health care information technology"?

January was, indeed, a rough month for health care information technology stocks, with hefty double-digit share price percentage declines among some of the best-performing health care IT companies.

Athenahealth(ATHN) was down 12% in January; Quality Systems(QSII) was down approximately 20%; while Cerner(symbol) -- the health care IT stock that ran up the most in 2009 -- was down 14% in January.

And the situation for health care IT stocks didn't improve in the first week of February.

Health care IT stocks were among the darlings of the market in 2009 primarily because their fortunes were not tied directly to the expected healthcare reform, and that reform effort -- pre-Scott Brown -- made just about every other health care sub-sector unattractive. Cerner led the charge among the health care information space in 2009, with its stock soaring from the $30s to the $90s. Last week, Cerner fell back to $75.

As hopes for health care reform have faded -- making the previously beaten down health care stocks suddenly more attractive -- investors have been booking profits from the health care IT space and rotating into other health care names so far in 2010. And it's not even just general investor sentiment driving down the stocks.

In the case of Athenahealth [see above], the company had to announce last Friday a change in the way it reports non-GAAP net income.

Athenahealth was down 4% on Monday, after a Barron's article mentioned last Friday's accounting change -- and, on top of the 12% share price decline in January, the accounting situation is probably the last thing that a health care IT stock needed after the huge January share price declines.

Bret Jones, an analyst at Brean Murray, Carret & Co. and Anthony Vendetti, an analyst at Maxim Group, do not expect the level of the accounting restatement at Athenahealth to merit an SEC inquiry. Regardless, the most important and immediate negative for Athenahealth is that the accounting change forces many street analysts to bring down estimates of earnings for 2009-2011 by a significant amount. Brean Murray estimates the earnings overstatement at 17% of 2009 earnings and 10% of 2010 forecasts.