Sector Wrap: Hospital operators decline as MedCath tumbles

MedCath's profit and revenue forecasts were significantly lower than Wall Street expected, as the Charlotte, N.C., company said inpatient volumes were weaker than expected. The company also cut its fiscal year revenue forecast to a range of $620 million to $630 million, from $685 million to $700 million.

On average, analysts polled by Thomson Financial expected MedCath to report $688.1 million in revenue for the year ending in September.

Shares fell $3.70, or 16.1 percent, to $19.32 in afternoon trading, and reached a low of $16.09. Trading was more than six times heavier than average.

Deutsche Bank analyst Darren Lehrich said MedCath Corp. is handling more charity care, and a greater number of patients are having outpatient procedures. Both of those factors lead to lower prices, he said.

Lehrich said he was surprised by the weak inpatient admissions.

Stephens analyst Whit Mayo, however, said investors have overreacted somewhat, as the lower full-year forecast is "not as bad as it looks."

Elsewhere in the sector, shares of Tenet Healthcare Corp. slipped 8 cents to $5.36.

Health Management Associates Inc. lost 12 cents, or 2 percent, to $5.78.

Shares of AmSurg Corp. dipped 29 cents to $22.71.