Buoyed by robust growth in the physician practice management industry, healthcare companies reported double-digit earnings growth during the first quarter of this year.
Earnings for publicly held healthcare companies rose 11.4% on a 15% increase in revenues compared with the year-ago quarter, according to an analysis conducted for MODERN HEALTHCARE by WDI Capital Markets, a Hilton Head, S.C.-based healthcare advisory and investment banking firm, and KPMG Peat Marwick's Health Ventures practice, based in Atlanta.
Those healthy results in the first quarter of 1997 followed a strong fourth quarter of 1996, when publicly traded healthcare companies' earnings rose 14.2% and revenues grew 14%.
The quarterly market analysis by WDI and KPMG is based on data from more than 850 public healthcare companies in 34 markets.
The provider segment enjoyed an earnings increase of 16.7% during the first quarter of the year on a 20% rise in revenues.
But gains by providers were overshadowed by large gains by PPM companies. Earnings for publicly traded PPM companies rose 71% on a 35.1% increase in revenues.
Adjusted earnings for the imaging sector jumped 184% on a 72% increase in net revenues. "Imaging services (revenues) were $141 million, which is a small number when you compare it to PPM, which is $2.5 billion," said John Cumming, WDI's chief executive officer.
Also strong in the provider sector was home health, which posted a 49.3% gain in earnings on a 16% rise in revenues.
Hospital sector earnings rose 17.1% on a 10.2% increase in revenues.
Managed-care companies continued to see their profits deteriorate. That sector's first-quarter earnings dropped 4.1% on a 25.3% revenue increase, compared with a 6.5% drop in earnings on a 22.8% revenue increase during the fourth quarter of 1996.