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 0.2% versus the S&P 500, which was up 0.5%. Laggards within the Health Services industry included USMD Holdings ( USMD), down 5.3%, Vision-Sciences ( VSCI), down 6.9%, IMRIS ( IMRS), down 6.2%, Response Genetics ( RGDX), down 2.7% and Mela ( MELA), down 2.0%.

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

Response Genetics ( RGDX) is one of the companies that pushed the Health Services industry lower today. Response Genetics was down $0.02 (2.7%) to $0.72 on light volume. Throughout the day, 44,079 shares of Response Genetics exchanged hands as compared to its average daily volume of 85,800 shares. The stock ranged in price between $0.66-$0.77 after having opened the day at $0.73 as compared to the previous trading day's close of $0.74.

Response Genetics, Inc., a life science company, is engaged in the research, development, marketing, and sale of pharmacogenomic tests for use in the treatment of cancer primarily in the United States, Asia, and Europe. Response Genetics has a market cap of $29.0 million and is part of the health care sector. Shares are down 36.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Response Genetics as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RGDX go as follows:

  • 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 Life Sciences Tools & Services industry. The net income has significantly decreased by 142.0% when compared to the same quarter one year ago, falling from -$1.30 million to -$3.14 million.
  • 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 Life Sciences Tools & Services industry and the overall market, RESPONSE GENETICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.18 million or 63.03% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 65.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% compared to the year-earlier 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.
  • RESPONSE GENETICS 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. 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, RESPONSE GENETICS INC continued to lose money by earning -$0.24 versus -$0.31 in the prior year.

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

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At the close, IMRIS ( IMRS) was down $0.02 (6.2%) to $0.30 on average volume. Throughout the day, 132,067 shares of IMRIS exchanged hands as compared to its average daily volume of 122,300 shares. The stock ranged in price between $0.30-$0.33 after having opened the day at $0.31 as compared to the previous trading day's close of $0.32.

IMRIS Inc. designs, manufactures, and sells image-guided therapy solutions that enable surgeons to obtain information and make decisions during the course of procedures. IMRIS has a market cap of $16.2 million and is part of the health care sector. Shares are down 80.5% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates IMRIS a buy, no analysts rate it a sell, and none rate it a hold.

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

Highlights from TheStreet Ratings analysis on IMRS go as follows:

  • The debt-to-equity ratio of 1.12 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, IMRS maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.
  • 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, IMRIS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • IMRS'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 75.33%, 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.
  • IMRIS INC has improved earnings per share by 12.5% 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, IMRIS INC reported poor results of -$0.83 versus -$0.60 in the prior year.
  • IMRS, with its very weak revenue results, has greatly underperformed against the industry average of 3.7%. Since the same quarter one year prior, revenues plummeted by 58.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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

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Vision-Sciences ( VSCI) was another company that pushed the Health Services industry lower today. Vision-Sciences was down $0.07 (6.9%) to $0.95 on average volume. Throughout the day, 32,633 shares of Vision-Sciences exchanged hands as compared to its average daily volume of 35,400 shares. The stock ranged in price between $0.87-$1.03 after having opened the day at $1.03 as compared to the previous trading day's close of $1.02.

Vision-Sciences, Inc., through its subsidiaries, designs, develops, manufactures, and markets endoscopy products. It operates through Medical and Industrial segments. Vision-Sciences has a market cap of $50.0 million and is part of the health care sector. Shares are up 2.0% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Vision-Sciences as a sell. The area that we feel has been the company's primary weakness has been its poor profit margins.

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Highlights from TheStreet Ratings analysis on VSCI go as follows:

  • 35.05% is the gross profit margin for VISION-SCIENCES 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 -52.69% is in-line with the industry average.
  • Net operating cash flow has increased to -$0.95 million or 33.40% when compared to the same quarter last year. In addition, VISION-SCIENCES INC has also vastly surpassed the industry average cash flow growth rate of -40.74%.
  • The stock has risen over the past year at a faster pace than the S&P 500, reflecting the earnings growth of the company. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • VISION-SCIENCES INC has improved earnings per share by 20.0% 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. During the past fiscal year, VISION-SCIENCES INC continued to lose money by earning -$0.16 versus -$0.22 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 Health Care Equipment & Supplies industry average. The net income increased by 18.8% when compared to the same quarter one year prior, going from -$2.43 million to -$1.98 million.

You can view the full analysis from the report here: Vision-Sciences Ratings Report

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