Outsourcing company COHR is using proceeds from its recent initial public offering for a shopping spree in the equipment-service industry.
The Los Angeles-based company recently bought three small independent service organizations and has acquired a total of 14 firms in the past 21/2 years. Another 14 potential deals are in the works, said David Langness, COHR senior vice president. "We are the main consolidator in the ISO industry," he said.
COHR Masterplan, one of the company's two divisions, provides equipment maintenance to 1,200 healthcare facilities in 28 states.
The other division includes software operations and Purchase Connection, which is one of the largest hospital purchasing groups with 1,500 members.
COHR was launched 20 years ago as the Center of Health Resources by the former Hospital Council of Southern California. It changed its name to COHR in a 1994 reorganization.
In its February offering, COHR sold 3 million shares at $9 per share, netting a total of about $19 million after fees.
Its stock has risen to as high as $30.50 per share on the NASDAQ National Market, but it is now trading at $23.50 per share. Its symbol is CHRI.
"I think several things are attractive to Wall Street about us," Langness said. "The maintenance is chief, but it isn't the only (thing). Wall Street loves high tech, loves software, because the margins are good. They know, too, that we are one of the biggest group purchasing organizations."
Independent service organizations represent about 20% of the estimated $6 billion U.S. market for hospital-equipment servicing, according to Jenks Healthcare Business Report. Downers Grove, Ill.-based ServiceMaster is the largest independent firm with estimated annual service revenues of $75 million to $100 million, Jenks said. Equipment manufacturers and hospitals provide the majority of service.
Analysts project that COHR Masterplan revenues will grow to $86 million in 1998. COHR Masterplan represented about 70% of total COHR revenues of $66.3 million in the year ended March 31. The company reported net income of $2.1 million for the year, up 50% from the previous year.