So what to make of Vanguard's Arizona trouble?

Take a breath, Vanguard Health Systems investors who stuck around Monday as the stock lost more than 6 percent (Ticker: VHS) following word that Arizona officials will not renew its Medicaid managed care contract.

A number of analysts following the Nashville-based hospital company say there's no need to panic. Deutsche Bank's Darren Lehrich says Vanguard officials appear to have inadequately sold their ability to coordinate care and that Vanguard "could have grounds for appeal given its internal capabilities to run effective care models." Lehrich reiterated his 'buy' rating and $21 price target.

Over at Avondale Partners, Kevin Campbell says the contract loss should not make a material difference to Vanguard's results because the company's acute-care hospital operations aren't affected. Meanwhile, Josh Rankin at Barclays lowered his price target for the company only to $15 from $16, and Joe France at Cantor Fitzgerald said the contract loss "is disappointing but not a serious threat to the stock's attractiveness" because the company's hospitals sport some of the best fundamentals in the sector.