A bumpy second quarter for some rehabilitation and home healthcare companies meant slower growth overall for healthcare providers in the quarter.
The figures were compiled by WDI Capital Markets, a Hilton Head Island, S.C.-based investment banking firm that tracked financial reports for 550 investor-owned companies. Earnings are adjusted for one-time charges, such as accounting adjustments, restructurings and write-offs.
In the second quarter of 1995, healthcare providers reported a 16.7% increase in earnings, just half the 33% jump reported in the first quarter. Revenues were up 28.7%.
Providers lost some momentum in the quarter and may be looking for ways to continue their growth, said John Cumming, WDI's president. "There has been an accelerated shift in industry activity in the past six months," he said. "The focus by our clients is clearly on assisting them evaluate options for enhancing value."
Overall, the healthcare industry category, which includes medical device and supply vendors, reported a 15.6% increase in earnings on a 29% rise in revenues, WDI reported.
Medical devices and supply companies led the industry with an adjusted earnings increase of 18.4% on a 16.8% hike in revenues.
Pharmaceutical companies showed renewed life with a 13.7% gain on adjusted earnings on a 35.5% increase in revenues, WDI reported.
On the provider side, rehabilitation posted the worst performance with a 94.1% drop in earnings. Also, home healthcare companies sagged with a 22.8% earnings decrease.
Home healthcare's results were skewed by Coram Healthcare Corp., which reported a larger than expected second-quarter loss this month (See related story, p. 3).
If Coram's losses aren't included, the home health segment's earnings were up 26.6%, Cumming said.
Rehabilitation results were adversely affected by NovaCare, a King of Prussia, Pa.-based firm that sold its hospital division to HealthSouth Corp. earlier this year.
NovaCare's income was buoyed by a one-time gain of $88.2 million from hospital sales. The company also had a $29.9 million write-off for restructuring charges.
However, NovaCare's income from operations, excluding the one-time adjustments, dropped 40% to $19.7 million, the company said. The company attributed the drop to lower therapist productivity and higher expenses.
Hospital companies continued to do well, led by a 23% increase in operating income by Columbia/HCA Healthcare Corp., a Nashville, Tenn.-based chain.
The hospital group overall reported a 23% earnings increase on a 34% hike in revenues.
Long-term-care companies reported a 35.3% increase in earnings on a 28% growth in revenues.
Managed-care companies reported a 26.8% gain in earnings on 25% revenue growth.
Outpatient services, which includes physician management companies, reported a 26.8% climb in adjusted earnings on a 41% growth in revenues.