HCIA's earnings soar in 1st quarter Acquisitions boosted company's rapid growth

Health care

April 16, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

HCIA Inc. yesterday reported that its first-quarter net income nearly quadrupled, jumping to $1.3 million from $343,000 a year ago.

The per-share earnings of 14 cents, compared with a nickel a year ago, were consistent with analysts' projections for the rapidly growing Baltimore health care data firm.

The profit gain for the quarter which ended March 31 came on revenues of $14.2 million, up 63 percent from $8.7 million in the corresponding quarter of 1995.

"The company is pleased with the earnings," said Barry C. Offutt, HCIA's chief financial officer. "I think they were in line with our expectations."

Mr. Offutt said he could not say how much of the increase came from continuing operations and how much could be attributed to growth through acquisitions.

HCIA has made two major purchases since the first quarter of 1995. Last April, it bought Datis Corp., a health information company in San Mateo, Calif., for $14.25 million in cash. And in December, it paid $17.5 million in cash for the Champ database from William M. Mercer Inc., a benefits consulting firm whose database contains medical information on more than 3 million people working for 80 large employers.

HCIA maintains data on health costs and charges, helping its clients analyze their own data and compare it with national benchmarks. Its customers now include more than 2,000 hospitals, 17 of the 25 largest insurers, 14 of the 25 largest managed care companies, and 21 of the 25 largest drug manufacturers.

The company began about 10 years ago as a project of two Johns Hopkins health policy faculty members and an undergraduate student. Initially, the company was called Health Care Investment Analysts, but the firm now uses just the initials.

HCIA went public in February 1995, selling 1.75 million shares at $14. By the end of its first day on the market, the price was up to $19.25. In August, the company sold another 2.3 million shares at $28.50 each.

It closed yesterday at $54, up 25 cents.

HCIA is preparing another stock offering, expected some time in this quarter. The offering will allow AMBAC, a New York insurance holding company that once owned all of HCIA, to sell the 4.2 million shares it still owns, about 44 percent of HCIA's outstanding stock.

HCIA announced yesterday that it has amended its registration statement, filed with the Securities and Exchange Commission in preparation for the offering, to take account of AMBAC's plan to sell the shares directly rather than through a debt offering that eventually could be exchanged for HCIA shares.

Pub Date: 4/16/96

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