IPC Lowers Guidance, Shares Plunge

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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.

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