VistaCare, Scottsdale, Ariz., a fast-growing national hospice-care provider, has filed with the Securities and Exchange Commission for an initial public offering worth up to $85 million.
The company expects the offering to take place no sooner than the fourth quarter. If the deal goes through, VistaCare would be the second hospice operator to go public. Odyssey Healthcare, Dallas, completed an IPO in November 2001.
Only a few healthcare-services companies have filed for IPOs in the midst of the country's less-than-booming stock market, but their operating performances have been strong, said Charles Lynch, an analyst for CIBC, New York. "Most of these companies have limited vulnerability to the economy now and healthcare is deemed recessionproof," Lynch said. "Hospital providers and healthcare service companies like those in hospice are doing well operationally."
According to its prospectus with the SEC, VistaCare earned net income of $966,000 for the three months ended March 31, compared with a loss of $2 million in the year-ago period. Its first-quarter revenue was up more than 30% -- to $28.2 million - over the year-ago period. For 2001, the company lost $6.7 million on revenue of roughly $98 million, compared with a loss of $383,000 on revenue of $85 million in 2000. VistaCare's prospectus said the company plans to continue "expansion through same-store growth and the development of new hospice programs, as well as through strategic alliances, partnerships and acquisitions."
In June, VistaCare tapped Mark Liebner, 49, to join its management team as CFO. Company President and CEO Rick Slager said in a written statement that Liebner was brought on to drive a strategy to expand partnerships with other senior-care and hospice service providers. Prior to joining VistaCare, Liebner spent nine years as CFO at Rural/Metro Corp., a provider of emergency healthcare services, where he helped build company revenue to $600 million from $50 million.
"Well-delivered hospice care adds to the quality of life at the end of life, but is dramatically underutilized at the current time," Liebner said in a written statement.
Founded in 1995, VistaCare has grown rapidly over its seven-year existence. As of June 30, it operated 38 hospice programs in 14 states with a census of approximately 3,300 patients.
Competitors include Vitas Healthcare Corp., SouthernCare Hospice and Odyssey Healthcare, which sold 3.6 million shares of stock at $15 per share in its IPO last fall. Odyssey's shares have traded at as high as $35 and are hovering around $25 currently, Lynch said.
Since the first hospice opened in the U.S. in the 1970s, hospice care has grown into a multibillion-dollar industry serving more than 700,000 patients in 2000 through some 3,100 programs. According to the Centers for Medicare and Medicaid Services, the number of hospice programs certified by Medicare increased to 2,273 in 2000 from 31 in 1984.
More than 40 states and the District of Columbia provide hospice coverage through Medicaid, but Medicare covers the majority of hospice services. According to the CMS, Medicare hospice expenditures are expected to reach an estimated $3.8 billion in 2002.