Most US healthcare technology companies enjoyed solid
growth, based on strong fourth-quarter earnings
reports.
Net income for IDX Systems and Cerner rose 6% and 13%
respectively, compared with the same quarter last year. McKesson
and Per-Se Technologies were up 22% and 10% respectively.
"An upswing in investments in healthcare technology, stemming
from initiatives to increase patient safety and streamline clinical
workflow, played a large part in most companies seeing positive
earnings," said Gene Mannheimer, senior research analyst at Roth
Capital Partners.
Mannheimer was certain the industry's momentum will not slow
down for several quarters. "Automation and adoption in healthcare
technology has, historically, been slow and lagged behind other
industries," he added.
"Now there is some ammo in Congress, and the Bush administration
has increased its budget for healthcare-IT investments, with
vendors slated to be the main beneficiaries. Also, hospital IT
spending, which has typically accounted for 2% to 3% of total
operating budgets, may be as high as 5% in 2004."
Smaller companies also enjoyed positive growth. Neoforma's
year-end revenue was $11.1m, representing a 39% increase from last
year, and Allscripts was up 19% at $23.7m. Yearly profit also rose
at both companies, with Neoforma enjoying a $9.6m increase and
Allscripts up by $7m.
Mannheimer expected "small cap" vendors to see a rise in stock
price of between 10% and 20% over the next year, although he warned
that it is difficult to determine their fair value.
"I think it is safe to say current valuations reflect industry
promise better than they did a year ago," he said.
Another indication of positive growth is the strong performance
of enterprise healthcare software suppliers, said Sean Jackson,
analyst at Avondale Partners. "This was a strong quarter for these
types of companies, and the outlook for the rest of 2004 is
positive."
Jackson added that industry health is as good as it has been in
a number of years because of standards-related initiatives and the
push for healthcare IT being made by politicians, payers and
hospitals.
Increased customer spending, the well-attended HIMSS conference
last month, and the NHS IT project are also strong indicators of a
solid market, Jackson said.
"This is a decent time to be in healthcare technology. There is
a lot of optimism and confidence throughout the industry."
Jeff Berman writes for Health-IT
World