Taking Care Aggressive acquisition plans make this firm an up-and-comer.
Opinions expressed by Entrepreneur contributors are their own.
The Company: Scarsdale, New York, National Home HealthCare Corp., incorporated in 1983, is a home health-care serviceprovider.
Markets: National provides a wide variety of homehealth-care services throughout the New York City metropolitan areaand Long Island, as well as certain counties in Connecticut.In-home health care is attractive to patients because it allowsthem to receive treatment in familiar surroundings and to insurancecompanies because it lowers overall treatment costs. Convenienceand cost savings have made home health care a $35 billion businessand one of the fastest-growing segments of the health-careindustry.
The Sizzle: Many companies in home health care have beenaggressively acquiring other companies, consolidating the industry.National made its first acquisition last year by purchasing NewEngland Home Care, nearly doubling its revenues and expanding intoConnecticut. Armed with a strong balance sheet and access toadditional capital, further acquisitions appear likely. Combinedwith internal growth, this should continue the company's trendof record sales, net income and earnings per share.
The Risks: The federal government has discussed makingsignificant changes in the health-care system. Sweeping changescould adversely affect National Home Health Care.
Historical Financial Performance: Income from continuingoperations, net income and earnings per share have all nearlytripled since 1994, even as National built and defined its corebusiness. In 1994, the company divested itself of its National HMOsubsidiary; earlier this year it completed an initial publicoffering of 63 percent of its outpatient medical servicessubsidiary (resulting in a onetime net gain to National ofapproximately $1 million). These moves, combined with lastyear's acquisition, should allow National's expertmanagement team to focus on growing the business in comingyears.
Projected Financial Performance: The projections in thechart (below, left) are based on current operations and should belooked at with the understanding that long-term estimates aredifficult to make because acquisitions are highly likely. We feel aprice-earnings ratio of 20 to 25 is reasonable for a growingcompany in this field.
Steven N. Bronson is president of Barber & Bronson Inc.,a brokerage firm in Ft. Lauderdale, Florida. Jeffrey P. Hasse,editor of The Market Monitor, a monthly newsletter dedicated tocoverage of small cap stocks, also contributed to this article. Theabove opinions are those of the authors and not of Entrepreneur.These investment vehicles may not be right for you. Carefullyinvestigate before investing.
Contact Sources
Barber & Bronson Inc., 2101 W. Commercial Blvd.,#1500, Ft. Lauderdale, FL 33309, (800) 729-7173;
The Market Monitor, P.O. Box 14541, Gainesville,FL 32604, (352) 378-2133.
