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3 Stocks Pushing The Health Care Sector Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Health Care sector as a whole closed the day up 0.3% versus the S&P 500, which was unchanged. Laggards within the Health Care sector included Allied Healthcare Products ( AHPI), down 3.9%, VirtualScopics ( VSCP), down 4.8%, Natural Alternatives International ( NAII), down 2.0%, Merus Labs International ( MSLI), down 2.5% and NephroGenex ( NRX), down 3.7%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

Merus Labs International ( MSLI) is one of the companies that pushed the Health Care sector lower today. Merus Labs International was down $0.06 (2.5%) to $2.33 on heavy volume. Throughout the day, 53,756 shares of Merus Labs International exchanged hands as compared to its average daily volume of 29,400 shares. The stock ranged in price between $2.21-$2.36 after having opened the day at $2.28 as compared to the previous trading day's close of $2.39.

Merus Labs International Inc., a specialty pharmaceutical company, is engaged in the acquisition and licensing of branded prescription medicines in the United States, Canada, and Europe. Merus Labs International has a market cap of $114.2 million and is part of the health services industry. Shares are up 67.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Merus Labs International as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from TheStreet Ratings analysis on MSLI go as follows:

  • Net operating cash flow has decreased to $2.93 million or 29.74% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, MERUS LABS INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MERUS LABS INTERNATIONAL INC is currently very high, coming in at 81.89%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MSLI's net profit margin of -21.74% significantly underperformed when compared to the industry average.
  • MERUS LABS INTERNATIONAL INC has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, MERUS LABS INTERNATIONAL INC continued to lose money by earning -$0.05 versus -$0.70 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 36.7% when compared to the same quarter one year prior, rising from -$2.30 million to -$1.46 million.

You can view the full analysis from the report here: Merus Labs International Ratings Report

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