Among the biggest losers in Thursday’s early trading are Dendreon (Nasdaq: DNDN), Xyratex (Nasdaq: XRTX) and Amedysis (Nasdaq: AMED).

For Amedysis, the Hits keep on Coming

As Frank Sinatra sang in “That’s Life,” “Riding high in April, shot down in May.” For Amedysis (Nasdaq: AMED), June was also a bummer, and July is off to a bad start as well. Back in Late April, the home health care provider delivered solid quarterly results, and its shares sat comfortably above $60. At the time, a little-noticed article in The Wall Street Journal came out suggesting that some home health-care providers — most notably Amedysis — were billing Medicare for more home visits than it was actually conducting. Two weeks later, the Senate invited company executives to come and testify. That sent shares below $50. As June rolled around, a passel of class-action lawsuits hit the wire, pushing shares down further.

#-ad_banner-#Fast forward to this morning, and shares are plunging -15%. That’s because the Securities and Exchange Commission (SEC) has begun its own investigation, following up on the Senate inquiry. To recap, the company is now vulnerable to very severe restrictions on its business from regulators, and potentially hefty fines from the SEC. And that can’t be good.

Action to Take –> Don’t catch this falling knife. When the dust settles, shares could be well lower, and the company’s operating restrictions and potential liabilities will become clearer. You can re-assess whether shares represent value at that point.

Almost Family (Nasdaq: AFAM), which operates in the same industry, is also being investigated by the SEC. Its shares are down by a similar amount, and the same advice applies. The Senate is also investigating Gentiva Health Services (Nasdaq: GTIV), which is also down sharply, although it is unclear whether the SEC has also piled on.

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Xyratex’s Inexplicable Slump

This one’s a head-scratcher. Xyratex (Nasdaq: XRTX), which makes data storage products, posted a really strong quarter Wednesday evening. And the company issued solid forward guidance, adding that new partner Hitachi may represent a significant chunk of new business in coming years. And shares are plunging -10% on Thursday. Go figure.

Could the sell-off be the result of the fact that per-share profits “only” exceeded estimates by +10%, compared with +23% upside in the prior quarter? Could it be because gross margins of 18.2% were sequentially flat after rising in recent quarters? Probably not. Instead, blame it on the misfortune of releasing solid news on a day when the Nasdaq is once again plunging.

Shares have now fallen from $20 to $12.50 in the past two months, even though the company’s outlook is materially improved since then. While analysts had expected Xyratex to earn $0.87 in the current quarter that is now one-third completed, management thinks EPS could approach $1.16. And while Xyratex had been expected to earn nearly $4 a share in fiscal (November) 2010, that forecast now looks to be shy by about 10%.

Action to Take –> The fact that shares trade for around three times likely earnings is a bit deceptive. EPS are expected to fall back below $3 next year, as demand cools in a slower-growing economic environment. But now that Xyratex can count on Hitachi as a key new customer, earnings could power higher once again in subsequent years. This stock is ultra-cheap, and should rebound nicely when investors stop sprinting away from tech stocks. If you’ve got a strong stomach, this is a great time to be buying tech.

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Dendreon’s Costly Problem

Biotech firm Dendreon (Nasdaq: DNDN) was a super hot-stock during the past few years, as its shares rose from a few dollars in March 2009 to $57 in May 2010. Investors grew excited over the company’s prostate cancer-treating drug, Provenge. Trouble is, a full treatment of Provenge costs nearly $100,000 per patient. And when you consider that many prostate-cancer sufferers eventually die from something else (prostate cancer develops very slowly), it’s fair to question if Provenge is worth it in this cost-constrained health care environment, and that’s just what the Center for Medicare and Medicaid Services (CMS) is doing.

CMS will take its sweet time, and get back to Dendreon within a year or so. The regulators would like to get feedback on if the drug is deemed to be overwhelmingly effective to justify that expense. The clinical data for Provenge have been quite strong, and strong support from the medical community would likely positively sway the regulators.

Action to Take –> This is a real overhang on shares, and they may stay stuck at these lower levels until the issue is resolved. Shares have lost half their value in the past few months, and would see a solid spike if CMS rules favorably. If CMS rules against Provenge coverage, or restricts its use, shares are likely to fall further.