Integrated Health Services' strong second-quarter earnings performance demonstrated to healthcare providers that it pays to expand into subacute care.
The Owings Mills, Md.-based provider of subacute and long-term-care services said its net income for the second quarter ended June 30 in- creased 65% to $6.8 million, or 40 cents per share, compared with $4.1 million, or 32 cents per share, in the year-ago period.
Revenues skyrocketed 120% to $139 million.
For the six months, net income rose 69% to $13.2 million, or 78 cents per share, compared with $7.8 million, or 62 cents per share, in the year-ago period. Revenues soared 125% to $271 million.
IHS Chairman and Chief Executive Officer Robert N. Elkins, M.D., pointed to the company's successful strategy of developing its subacute-care programs in its recent acquisitions as the primary factor behind the earnings. Revenues from the company's subacute-care programs increased 134% to $74.4 million during the second quarter, compared with $31.7 million during the second quarter of 1993.
In February, IHS increased its subacute-care presence by signing a deal with Crestwood Hospitals of California, Stockton, to manage 14 of its long-term-care facilities and nine of its psychiatric facilities. It also has successfully integrated subacute care into 39 long-term-care facilities purchased in October from Central Park Lodges, a wholly owned subsidiary of Trizec Corp., Alberta, Canada.
"The growth of the company will continue to be driven by increasing subacute beds and services in existing facilities and by transforming recent acquisitions to subacute care," Dr. Elkins said.
Also this quarter, the company completed a public offering of 3.5 million shares of its common stock and $100 million in senior subordinated notes.
Overall, IHS is on target to meet or exceed its goal of operating 4,000 subacute-care beds by the end of 1994. It now operates 148 facilities with 19,000 beds in 27 states nationwide. Some 2,400 of those beds are designated for subacute care.