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 down 0.7% versus the S&P 500, which was down 0.7%. Laggards within the Health Services industry included American Shared Hospital Services ( AMS), down 5.9%, American Caresource Holdings ( ANCI), down 6.4%, Electromed ( ELMD), down 3.3%, Pingtan Marine Enterprise ( PME), down 5.6% and Mela ( MELA), down 10.7%.

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

Mela ( MELA) is one of the companies that pushed the Health Services industry lower today. Mela was down $0.23 (10.7%) to $1.92 on heavy volume. Throughout the day, 108,958 shares of Mela exchanged hands as compared to its average daily volume of 35,500 shares. The stock ranged in price between $1.80-$2.15 after having opened the day at $2.15 as compared to the previous trading day's close of $2.15.

MELA Sciences, Inc., a medical device company, designs, develops, and commercializes a non-invasive point-of-care instrument to aid in the detection of melanoma. Mela has a market cap of $9.6 million and is part of the health care sector. Shares are down 66.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Mela as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MELA go as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, MELA SCIENCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MELA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 76.73%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MELA 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to -$3.92 million or 11.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.26%.
  • MELA SCIENCES INC reported significant earnings per share improvement 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MELA SCIENCES INC continued to lose money by earning -$6.00 versus -$7.30 in the prior year. This year, the market expects an improvement in earnings (-$2.87 versus -$6.00).

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

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At the close, Electromed ( ELMD) was down $0.05 (3.3%) to $1.46 on light volume. Throughout the day, 14,708 shares of Electromed exchanged hands as compared to its average daily volume of 25,900 shares. The stock ranged in price between $1.45-$1.59 after having opened the day at $1.59 as compared to the previous trading day's close of $1.51.

Electromed, Inc. designs, develops, manufactures, markets, and sells airway clearance products in the United States and internationally. Electromed has a market cap of $12.6 million and is part of the health care sector. Shares are down 55.6% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Electromed a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Electromed as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on ELMD go as follows:

  • ELMD's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ELMD's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.39, which clearly demonstrates the ability to cover short-term cash needs.
  • ELECTROMED INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, ELECTROMED INC continued to lose money by earning -$0.15 versus -$0.16 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.15).
  • The gross profit margin for ELECTROMED INC is currently very high, coming in at 74.26%. 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 6.28% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ELECTROMED INC's return on equity significantly trails that of both the industry average and the S&P 500.

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

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American Caresource Holdings ( ANCI) was another company that pushed the Health Services industry lower today. American Caresource Holdings was down $0.19 (6.4%) to $2.78 on average volume. Throughout the day, 13,376 shares of American Caresource Holdings exchanged hands as compared to its average daily volume of 11,300 shares. The stock ranged in price between $2.70-$2.95 after having opened the day at $2.70 as compared to the previous trading day's close of $2.97.

American CareSource Holdings, Inc. provides access to a network of ancillary healthcare service providers in the United States. American Caresource Holdings has a market cap of $19.9 million and is part of the health care sector. Shares are up 81.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates American Caresource Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

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Highlights from TheStreet Ratings analysis on ANCI go as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, AMERICAN CARESOURCE HLDGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$1.24 million or 24.57% 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.
  • AMERICAN CARESOURCE HLDGS has improved earnings per share by 19.2% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AMERICAN CARESOURCE HLDGS reported poor results of -$0.66 versus -$0.54 in the prior year.
  • ANCI, with its decline in revenue, underperformed when compared the industry average of 19.4%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ANCI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ANCI has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.

You can view the full analysis from the report here: American Caresource Holdings 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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