The way isn’t greener
Lowering guidance doesn’t tend to help a stock very much. Greenway Medical Technologies, Inc. (NYSE:GWAY) found that out this week, with shares plunging more than 23%.
Greenway Medical Technologies, Inc. (NYSE:GWAY) doesn’t report its quarterly results until next week, but the electronic health record systems vendor decided to let the cat out of the bag early. The company projects revenue for the fiscal year ending June 30 of $132 million to $134 million. That range is lower than the $145 million to $150 million Greenway Medical Technologies, Inc. (NYSE:GWAY) expected less than three months ago.
Earnings will also probably be lower. Greenway Medical Technologies, Inc. (NYSE:GWAY)’s earlier guidance called for GAAP earnings of $0.10 to $0.17 per share. The company now expects a loss of $0.11 to $0.13 per share.
Greenway Medical Technologies, Inc. (NYSE:GWAY) CEO Tee Green says the reason behind the weaker numbers is a faster-than-expected move by customers to the company’s software-as-a-service model. Under the previous approach, Greenway Medical Technologies, Inc. (NYSE:GWAY) booked higher revenue up front. While this shift was planned, the transition is going faster than executives thought it would.
Falling stars
The sky didn’t fall, but it might have seemed like it this week for shareholders of Five Star Quality Care, Inc. (NYSE:FVE). The stock dropped 21% after the operator of long-term-care facilities reported quarterly earnings.
Five Star Quality Care, Inc. (NYSE:FVE) announced first-quarter earnings of $1.9 million, or $0.04 per share. That reflected improvement from the $369,000, or $0.01 per share, reported in the same quarter of 2012. However, the earnings fell short of the $0.07 per share analysts expected.
The chief problem for Five Star Quality Care, Inc. (NYSE:FVE) came from a lower occupancy rate. CEO Bruce Mackey expressed disappointment in this trend. However, Mackey and investors probably aren’t too disappointed with the stock over the past year. Shares are up 44% since May 2012 even with this recent big drop.
Waning welcome
Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) shares fell nearly 14% this week. The company reported financial results for the first quarter that the market initially welcomed, with shares up 1% in after-hours trading on Monday. That welcome wore out quickly, though.
The biotech reported first-quarter earnings of $488,000, or $0.01 per share, down from $4.2 million, or $0.05 per share, in the same period from last year. Revenue for the quarter totaled $22,1 million, only slightly higher than the $22 million reported for first quarter 2012.
Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) hopes to eventually transition from dependence on bone marrow disease drug Dacogen for its viability. The company has several drugs in mid-stage clinical studies, including experimental candidate SGI-110, which targets treatment of myelodysplastic syndromes and acute myeloid leukemia.
Blue skies
Does Willie Nelson need to write a depressing country song for all three of these stocks? Maybe not.
I think Greenway Medical Technologies, Inc. (NYSE:GWAY) could see blue skies ahead. The company’s woes seem to be largely transitory in nature. The market for health technology should remain strong, and I think Greenway’s shift to the software-as-a-service revenue model will be good over the long run.
However, I think there are better plays in this health technology sector. Like most investors, finding the best stocks out there is always on my mind.
The article 3 Horrendous Health-Care Stocks This Week originally appeared on Fool.com and is written by Keith Speights.
Fool contributor Keith Speights and The Motley Fool have no position in any of the stocks mentioned.
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