HCIA will consider selling the company

Data firm posts profit after losses in six of past seven quarters

Health industry

April 22, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

HCIA Inc., the Baltimore health data company, said yesterday that it will consider selling the company or other "strategic alternatives."

The company also posted a profit for the quarter that ended Jan. 31, after running in the red for six of the past seven quarters.

The news pushed the stock up 81.25 cents, or 21.7 percent, to $4.5625 a share.

The alternatives "could be a sale, could be a strategic investment, could be a partnership or, at the end of the day, could be nothing," said Barry C. Offutt, HCIA's chief financial officer.

Anthony Vendetti, an analyst at Gruntal & Co., said that with a profitable quarter and the sale earlier this month of a division that had been "an unmitigated disaster," HCIA "is now more attractive to potential suitors."

HCIA sells data to hospitals, HMOs, drug companies and others in the health field, allowing them to compare their own performance with that of competitors and with national benchmarks.

It has about 185 employees at its Baltimore headquarters and 480 nationally, Offutt said. In 1996, it spent $130 million to acquire a consulting company that it thought would complement the data business. But the consulting business did not develop, and HCIA began posting losses. The stock, which reached nearly $68 a share in 1996, fell below $4 within the past year.

This month, HCIA unloaded the consulting unit for $7.5 million and promised a return to profitability.

"Given the stability of our current situation, we believe that now is an appropriate time to evaluate our long-term strategic alternatives. We have engaged BT Alex. Brown to assist with this evaluation," said George D. Pillari, chairman and chief executive officer.

Offutt said he could not comment on whether HCIA had been contacted by companies interested in acquiring it.

The promised profitability did appear. HCIA posted earnings for the first quarter from continuing operations (not counting the consulting unit) of $300,000, or 3 cents a share, compared with a loss of $1.2 million, or 10 cents a share, in the first quarter of 1998.

Including a one-time gain from the sale of the consulting unit (after a write-down of the value of the unit in previous quarters), the earnings were $571,000, or 5 cents a share. That compares with a loss, including one-time charges related to the write-down, of $42.1 million, or $3.55 a share, in the first quarter of 1998.

Revenue for the first quarter of 1999 from continuing operations was $16.17 million, up 8.3 percent from $14.93 million in the year-earlier period.

Pub Date: 4/22/99

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