Hcia Reports First-quarter Earnings Of $2.5 Million

Acquisitions, Alliances Also Boost Revenue

April 24, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

HCIA Inc. reported net income for the first quarter yesterday of $2.5 million -- nearly double the $1.3 million posted in the same quarter a year ago -- with growth coming in part through a series of acquisitions and alliances.

Revenue also showed sharp growth -- at $25.7 million, it was 81 percent higher than the $14.2 million in the corresponding quarter last year.

Income was equal to 21 cents a share -- the consensus estimate of analysts. Last week, after its stock price slipped on rumors of poor performance, the Baltimore health data company had said it would hit the 21-cent target. In the first quarter of 1996, per-share earnings were 14 cents.

The announcement Friday drove the stock up $3.125 a share for the day, to $18.25, after a $3 drop the day before. Earnings were announced after the stock market closed yesterday, with HCIA stock at $17 a share -- down from a high of $67.785 last May. The stock plummeted in October after HCIA said its earnings for the third quarter would be well below expectations.

HCIA acquired Equifax Health Analytical Services of Rochester, N.Y., in November and Response Healthcare Information Management Inc. of Rhode Island in May. Each brought with it a managed-care customer base, which has helped HCIA market a new product, MCO.SYS, an information project aimed at managed-care organizations.

Also, HCIA said yesterday, it has formed alliances with the U.S. Diagnostics division of Bayer Corp. and Zimmer Inc., an orthopedic implant manufacturer, to help market a cost-containment information system for complex inpatient cases.

For example, a version of the system designed for orthopedics patients is being marketed along with Zimmer's products.

Ann C. Gallo, an analyst at Alex. Brown & Co., said the market had not yet responded to the upturn in performance.

"The market is not very forgiving," Gallo said. "It takes a couple of quarters for companies that have misperformed in the past to show they're back on track. [HCIA has] posted two solid quarters, and I think they're on their way to doing that."

Also, she said, the stock price had been depressed by a general decline in share prices for small technology and health information stocks.

The company also announced yesterday a "stockholder rights plan" -- in effect, a "poison pill" against hostile takeovers -- allowing shareholders to purchase more stock if anyone buys or proposes to buy more than 15 percent of outstanding stock without the approval of the board of directors.

"We are not aware of any specific current threat, and we have no particular reason to believe we will be the target of a takeover attempt in the future," said George D. Pillari, HCIA's chairman and chief executive officer.

Barry C. Offutt, the company's chief financial officer, said, "It's pretty standard corporate governance to have one of these plans in place, especially for high-tech and high-growth companies."

Pub Date: 4/24/97

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