Boosted by acquisitions and a strong equity market, healthcare companies reported strong earnings in the first quarter of 1996, according to WDI Capital Markets, a Hilton Head Island, S.C.-based investment banking firm.
Adjusted earnings and revenues grew 17% in the first quarter, compared with the year-ago period, WDI reported. The figures include 725 public healthcare companies.
"Aside from a handful of major restructuring charges, first-quarter earnings reflected the positive results of corporate re-engineering, coupled with consolidation over the two years," said John Cumming, WDI's chief executive officer. Noting last week's news of a proposed merger between MedPartners/Mullikin and Caremark International (See p. 2), Cumming said high-priced stock is fueling an appetite for acquisitions. "The number of acquisitions this year will far surpass what anyone estimated," he noted.
Providers marginally outpaced the rest of the industry with 20% growth in adjusted earnings on a 20% gain in revenues. Among providers, hospital companies showed a 21% increase in adjusted earnings on a 13% gain in revenues. Strong quarterly performances in earnings were reported by Tenet Healthcare Corp., Santa Barbara, Calif., which was up 44%, and OrNda HealthCorp, Nashville, Tenn., which was up 37%.
Also active in the provider segment were physician practice management companies. That segment generated a 62% increase in adjusted earnings on a 43% increase in revenues, WDI reported. Most of the growth was driven by acquisitions, Cumming noted.
Medical device and supply companies reported similar results. Adjusted earnings rose 20% on a 14% increase in revenues. On the pharmaceutical side, companies reported a 14% increase in adjusted earnings on an 11% rise in revenues.