3 Stocks Pushing The Health Services Industry 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 Services industry as a whole closed the day up 0.1% versus the S&P 500, which was unchanged. Laggards within the Health Services industry included Allied Healthcare Products ( AHPI), down 3.9%, VirtualScopics ( VSCP), down 4.8%, Span-America Medical ( SPAN), down 1.6%, InfuSystems Holdings ( INFU), down 1.9% and Biocept ( BIOC), down 3.8%.

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

Span-America Medical ( SPAN) is one of the companies that pushed the Health Services industry lower today. Span-America Medical was down $0.35 (1.6%) to $21.40 on average volume. Throughout the day, 3,916 shares of Span-America Medical exchanged hands as compared to its average daily volume of 3,600 shares. The stock ranged in price between $20.71-$21.50 after having opened the day at $20.71 as compared to the previous trading day's close of $21.75.

Span-America Medical Systems, Inc. manufactures and distributes various therapeutic support surfaces and related products for the medical, consumer, and industrial markets primarily in the United States and Canada. The company operates in two segments, Medical and Custom Products. Span-America Medical has a market cap of $62.8 million and is part of the health care sector. Shares are up 4.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Span-America Medical as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from TheStreet Ratings analysis on SPAN go as follows:

  • SPAN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.31, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 221.49% to $1.08 million when compared to the same quarter last year. In addition, SPAN-AMERICA MEDICAL SYS INC has also vastly surpassed the industry average cash flow growth rate of 7.63%.
  • 37.90% is the gross profit margin for SPAN-AMERICA MEDICAL SYS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.05% trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

You can view the full analysis from the report here: Span-America Medical Ratings Report

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At the close, VirtualScopics ( VSCP) was down $0.22 (4.8%) to $4.36 on light volume. Throughout the day, 1,684 shares of VirtualScopics exchanged hands as compared to its average daily volume of 7,000 shares. The stock ranged in price between $4.23-$4.64 after having opened the day at $4.64 as compared to the previous trading day's close of $4.58.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $14.0 million and is part of the health care sector. Shares are up 32.4% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates VirtualScopics as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from TheStreet Ratings analysis on VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 18.8%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Life Sciences Tools & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from -$1.11 million to -$0.65 million.
  • VIRTUALSCOPICS INC has improved earnings per share by 42.5% 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, VIRTUALSCOPICS INC continued to lose money by earning -$1.02 versus -$1.10 in the prior year.

You can view the full analysis from the report here: VirtualScopics Ratings Report

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Allied Healthcare Products ( AHPI) was another company that pushed the Health Services industry lower today. Allied Healthcare Products was down $0.10 (3.9%) to $2.46 on heavy volume. Throughout the day, 10,087 shares of Allied Healthcare Products exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in price between $2.31-$2.57 after having opened the day at $2.57 as compared to the previous trading day's close of $2.56.

Allied Healthcare Products, Inc. manufactures, markets, and distributes respiratory care products, medical gas equipment, and emergency medical products in Canada, Mexico, Central and South America, Europe, the Middle East, and the Far East. Allied Healthcare Products has a market cap of $19.4 million and is part of the health care sector. Shares are up 12.3% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Allied Healthcare Products as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on AHPI go as follows:

  • ALLIED HEALTHCARE PRODS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, ALLIED HEALTHCARE PRODS INC reported poor results of -$0.15 versus -$0.06 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 247.3% when compared to the same quarter one year ago, falling from -$0.28 million to -$0.97 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ALLIED HEALTHCARE PRODS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ALLIED HEALTHCARE PRODS INC is rather low; currently it is at 22.80%. Regardless of AHPI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AHPI's net profit margin of -10.63% significantly underperformed when compared to the industry average.
  • The share price of ALLIED HEALTHCARE PRODS INC has not done very well: it is down 8.33% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

You can view the full analysis from the report here: Allied Healthcare Products Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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