A flagging stock price has prompted West Palm Beach, Fla.-based PhyMatrix to explore a buyback of the physician practice management company, Chairman Abraham Gosman said last week.
"We're going to have management see if it has the ability to take the company private," Gosman said.
While a buyback is the first choice, management may contemplate other strategic options including selling the entire company or pieces of it.
PhyMatrix has changed strategy several times in its short history, creating several "interesting little pieces," including a clinical trials management unit, its New York network and its oncology practice management unit, said Tom Hodapp, an analyst with San Francisco-based BancAmerica Robertson Stephens.
"I think they've been approached recently by a lot of interested buyers," Hodapp said.
PhyMatrix shares traded at a low of $9.50 on April 29. Shares were priced at $15 for the company's initial public offering in 1996, and the all-time high was $25.50 on July 18, 1996.
Gosman blamed the price drop on the languishing PPM industry, led by Birmingham, Ala.-based MedPartners and Nashville-based PhyCor. The industry's market value slid 18% between Jan. 1 and April 15, according to Gwynedd, Pa.-based Sherlock Co.
Gosman said the market has undervalued the company's 7-month-old clinical trials research site management company, Clinical Studies. "I think sometimes when a company gets a little too complicated it could have a negative effect," he said.
PhyMatrix started by acquiring specialty medical groups such as oncology and urology and shifted into network development. It also builds ancillary facilities and owns subsidiaries that develop medical properties.
Over the past year, PhyMatrix cracked the New York market by developing a management services organization serving 1,600 physicians at New York's Beth Israel Medical Center and St. Luke's-Roosevelt Hospital Center.
PhyMatrix manages more than 8,000 physicians in independent practice associations and affiliated medical groups. It reported 1997 net income of $20.3 million on revenues of $346.5 million.