Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Companies In The News Date: Wed, 25 Nov 92 12:57:53 EST Message-ID: <7.1992Nov25.125753@AmeriCast.com> Lines: 95 11/25/92 TITLE Companies In The News #m#gm#m##m#Photo Gene Burleson#m#GranCare Growing Rapidly By Acquiring Health Centers John A. Jones Acquiring well-placed nursing homes and other health facilities in the West and Midwest has brought steady growth to GranCare Inc. The California-based company began operations as HostMasters Inc. in 1988, and changed its name be- fore going public in October 1991. Investor's Business Daily, Medical - Nursing Homes ranks fourth, based on six-month stock-price performance with added weight given to recent months. In this series, leading companies within the group are reviewed. The demand for nursing-home beds is growing with an aging U.S. population and is intensified by cost-control pressure which has cut traditional hospital stays for patients who still need nursing care. At the same time, the supply of long-term facilities is being squeezed by high building costs and regulatory hurdles. GranCare's strategy is to buy ex- isting facilities in its established markets and in other areas with favorable regulatory and reimbursement policies. Big Boost From Acquisition American Medical Services Inc., the company's first major ac- quisition in December 1990, boosted the operation from eight skilled-nursing facilities to 33, plus four rehabilitation centers, two retirement homes and three pharmacies. In 1991, GranCare acquired 23 more skilled-nursing homes from ARA Living Centers Inc. Two acquisitions this year brought in eight more fa- cilities in the Western U.S. On Oct. 1, GranCare acquired Grana- da Convalescent Pharmacy Inc., known as Convacare, which serves 130 long-term facilities in California and has revenue of about $10 million. After adding 17 more facilities in Michigan last month, GranCare now has 85 long-term health facilities with about 11,500 beds in California, Wis- foto consin, Michigan, Colorado, Arizona, Illinois and South Dakota, plus four institutional pharmacies. Third-quarter earnings rose 67% to 30 cents a share from 18 cents a year earlier. The company averaged 86% more shares in the latest quarter after a secondary offering completed last May. Net income tripled to $2.85 million from $908,000. Revenue rose 96% to $75.4 million from $38.4 mil- lion. Earnings for the nine months to Sept. 30 rose 108% to 75 cents a share from 36 cents a year earlier. Net income surged 265% to $6.62 million from $1.8 million. Nine- month revenue rose 81% to $201 million from $111 million. Long-term debt on Sept. 30 was $15 million, or 29% of total capital, down sharply from $25 million, or 66% of capital, a year earlier. President and CEO Gene E. Burleson said the company's future acquisitions will focus on service companies that provide radiology and other therapy. Burleson, formerly president of American Medical Inter- national Inc., became president of GranCare's predecessor in 1989 and became CEO in December 1990. "Our goal is to provide a continuum of health care, from home health care to subacute activities," Burleson told Investor's Business Daily. "We are moving more and more toward a shorter length of stay. We find we can operate differently than if we had just custodial patients. "We have a couple of young-adult rehab centers. We find long-term care isn't just for old people, with AIDS and the drugs now out in society. "Long-term care for pedi- atrics, adolescents and young adults now is a strong market." Burleson said GranCare will concentrate on several key markets including Orange County and the San Fernando Valley in Southern California, as well as Denver, Milwaukee and the Ann Arbor, Mich., region. Network Got A 25% Boost The recent acquisition of Professional Health Care Management Inc., which operates 17 long-term health-care facilities in Michigan, expanded GranCare's network by 25%. The acquisition also included a provider of ancillary services to the nursing homes, plus an interest in a X-ray service provider. The tran- saction, including GranCare stock, seller financing and assump- tion of debt, was valued at $78 million. The company expanded its pharmacy operations by buying Convacare, which also includes wound care and other ancillary divisions such as intravenous therapies and pain management. Burleson also reported the com- pany launched a new home health-care operation in Orange County, Calif., entering one of the fastest-growing segments of the in- dustry. Analysts said GranCare's strategy of growing by acquisi- tions is allowing the company to increase its bed capacity quick- ly while prevailing prices are still low. They also noted that expanding its pharmacy operations and adding other services have improved the company's profit margins. Friday: Biogen Inc. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM