Los Angeles Business Journal

IPC Lowers Guidance, Shares Plunge

By Deborah Crowe Monday, January 9, 2012

Shares of IPC the Hospitalist Company Inc. slid 33 percent on Monday after the operator of hospital-based physician practices lowered its full-year profit forecast and gave fourth-quarter guidance below analysts’ expectations.

Four of 10 analysts covering the North Hollywood company cut their recommendations on the stock from “buy” to “neutral” on Monday.

In a pre-earnings announcement over the weekend, IPC blamed the lower-than-expected revenue to unexpected “softness” in patient volumes at some hospitals, as well as higher staffing and other costs in establishing new practices.

IPC said it expects to report fourth-quarter earnings per share of 47 cents to 51 cents and revenue of $115 million to $118 million. Analysts surveyed by Thomson Reuters on average have been expecting earnings of 54 cents on revenue of $124 million.

For the full year, IPC now expects to report earnings per share of $1.70 to $1.74 and revenue of $455 million to $458 million. It previously forecast earnings of $1.78 to $1.86 and revenue of $463 million to $465 million.

“We recognize our results for the quarter are disappointing compared to our previous guidance,” said Chief Operating Officer R. Jeffrey Taylor during a Monday conference call with analysts. “We do not believe that the softness (at certain locations) is any fundamental shift in business or less demand for our services on a longer term basis.”

Arthur Henderson at Jefferies & Co. Inc. said investors are becoming frustrated with the company, noting the latest lowered guidance follows lower-than-expected earnings in both the second and third quarters.

“While management is optimistic about 2012, three earnings disappointments in a row will crush the company’s ripe multiple until the management can re-accelerate volume growth and address productivity and staffing issues,” said Henderson in a note to clients.

Shares closed down $15.04, or 33 percent, to $30.61 on the Nasdaq.