For a day, Advanced Health Corp. got to be a high-flying Internet stock just by uttering the magic word, "e-commerce."
Advanced Health posted an 84% gain Jan. 13, the largest of any stock on any exchange that day, when it announced it will concentrate on Internet-based clinical commerce between doctors and healthcare organizations. In November, the Tarrytown, N.Y.-based company said it would move out of physician practice management and concentrate on its technology unit.
But the latest announcement came with more details, including word that as of Feb. 1, Advanced Health would take a new name, AHT Corp., and a new Nasdaq stock-ticker symbol, AHTC instead of ADVH.
Also, Jonathan Edelson, M.D., chairman and chief executive officer, said he would take over as president March 31, replacing Alan Maserak.
Maserak is staying on to help investment bank Hambrecht & Quist find a buyer for the company's PPM unit, which, unlike most PPMs, managed practices without buying their assets. Maserak also lost his board seat in favor of Chief Information Officer Rob Alger.
Advanced Health, which manages about 300 doctors, was one of many PPMs whose stock price fell precipitously in 1998, resulting in shareholder class-action lawsuits.
Part of the reason Advanced Health posted such a large gain is its stock opened that day at $2. It closed at $3.68, up $1.68, although at one point in the day it had reached more than $4. The stock fell below $3 per share by Jan. 15 as the euphoria wore off.
Wall Street has fallen in love with electronic-commerce companies, sending stocks like Amazon.com and eBay into the hundreds of dollars per share. But Advanced Health spokesman Arthur Dague says his company didn't throw out the term "e-commerce" in hopes of seeing a similar jump.
"We have been saying e-commerce because it's the electronic management of prescriptions and transactions between physicians and healthcare companies," Dague says. "That is what I think a growing number of investors are referring to as healthcare e-commerce."
Unlike their consumer brethren, Internet healthcare stocks have yet to take investors by storm.
On Jan. 14, Santa Clara, Calif.-based Healtheon Corp. refiled its initial public offering for $35 million in stock. In 1998 it pulled a $50 million offering because of market troubles late in the year and bad publicity surrounding its software installation at San Francisco-based Brown & Toland Medical Group. Beech Street, a PPO, represented 90% of Healtheon's 1997 revenues of $13.4 million, according to Healtheon's filing.
Despite its struggles, including a $26 million loss in 1997, Healtheon has landed big-name firm Morgan Stanley Dean Witter as its lead underwriter.
Healtheon has attracted attention because its chairman is former Netscape Communications Corp. Chairman James Clark, and its investors include SmithKline Beecham and United HealthCare Corp.
Advanced Health itself has struggled financially, primarily because of its PPM operations. The company lost $29.9 million, or $2.99 per share, on revenues of $53.7 million for the first nine months of 1998. In the same period in 1997, the company had profits of $3.6 million, or 44 cents per share, on revenues of $39.7 million.
Advanced Health this year has written off $9.7 million, mostly in restructuring charges for the PPM business. The company also is seeking through arbitration and litigation $4.5 million it says it's owed by the New York-based Madison Medical Group.