Investopedia: Lincare Shows That You Can Go Home Again

If I had to guess the sort of healthcare company that would get a premium acquisition offer, Lincare (Nasdaq:LNCR) would be low on my list, as relatively few buyers would want to pay a premium to get into a business that is beset by constant reimbursement pressures. But, as the old saying goes, you only need one buyer to make a deal and Lincare found that one.

In a deal that reverses a spin-out from nearly 25 years ago, German industrial gases company Linde will be acquiring Lincare for $4.6 billion in total considerations. That works out to $41.50 per share for Lincare's shareholders; a 22% premium to Friday's closing price (which had been moving up on takeover rumors) and a whopping 67% premium to the stock's three-month average price.

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Seeking Alpha: Lincare's Short-Term Pain Can Become Long-Term Gain?

Some investors love to parrot the thesis that the aging of America will be a boon to health care companies of all stripes. What these investors aren't always able to explain, though, is who is going to pay for all of that growth. That's a key issue with home oxygen therapy provider Lincare (LNCR). While efforts to diversify the business are pressuring margins and cash flow in the near-term, long-term investors should support these as moves towards better long-term sustainability.

First Quarter Results Not Bad On Balance
Revenue growth of 16% looks pretty flashy, but organic growth was a more modest 6%. Lincare saw a 1% negative impact from Medicare rate changes, with about 11% growth coming from various acquisitions. Interestingly, patient growth was the slowest it has been in some time (up about 2%), while revenue per patient rose by double-digits.

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Lincare's Short-Term Pain Can Become Long-Term Gain

Seeking Alpha: A Battered Healthcare Play With Favorable Long-Term Demographics

There is no point in sugar-coating it - 2011 was a disastrous year for home health providers following a terrible 2010. The entire industry is under pressure as Congress cuts Medicare reimbursement and looks to implement new rules and regulations to address and punish prior wrong-doing, while the overall economy applies its own pressures. Although Amedisys (AMED) has been hit hard, patient investors willing to take on the risk may see a multi-year turnaround story unfold here.

What Amedisys Does
Amedisys is the largest publicly-traded provider of home health care and hospice services. Active in 45 states (but focused on the East/Southeast), Amedisys operates over 500 facilities offering skilled nursing, home health aides, physical/occupational therapy, and specialty nursing services.

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A Battered Healthcare Play With Favorable Long-Term Demographics

Investopedia: Uncertainty Still Means Discount For WellPoint

Maybe apart from taxes on carried interest, there's nothing Wall Street hates more than uncertainty. Unfortunately, there's abounding uncertainty in the world of health insurance these days as nobody is quite sure how the Supreme Court will rule in the challenges to the Obama administration's health insurance laws, nor whether or not there will be even more pressure on premiums in the years to come. While the long-term picture on WellPoint (NYSE:WLP) may lack digital precision, there's enough apparent value here for investors to take a serious look. 

Going Through a Slow Spell  
With the economy and employment in the dumps, it is no great surprise that revenue growth has been sluggish of late at this large national insurer. Enrollment has been limited by the poor job market, while premiums have been constrained by both regulatory push-backs and competitive actions from other rival insurers like UnitedHealth (NYSE:UNH) and Aetna (NYSE:AET).

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Investopedia: Is Hologic A Coiled Spring?

It's frankly more difficult to find overvalued health care stocks today than undervalued ones, assuming that the market can transition through this dry spell and that procedure volumes pick up with an eventual economic recovery. Given that Hologic (Nasdaq:HOLX) serves markets largely seen as mature, many investors question whether the company can grow fast enough to be worthwhile. Although that is a legitimate concern, investors have become pessimistic to a point where even modest growth could lead to a strong rebound in the stock.

A Respectable End to the Year  
Hologic's business is a combination of solid higher-growth businesses and some smaller, more sluggish operations. Overall growth rose 9% this quarter, with breast health and diagnostics up 11 and 12% respectively, while the surgical and skeletal health businesses grew 1 and 2%. Given that this is still a pretty unhealthy market for capital equipment and doctor office visits, these are pretty solid results. (For related reading on heath care, see How To Avoid Medical Debt.)

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Seeking Alpha: Can The Government Afford To Let Skilled Healthcare Prosper?

In some respects it may seem like a good thing to have the government as a major customer for your healthcare services. After all, hospitals like HCA (NYSE: HCA) and Health Management Associates (NYSE: HMA) have to wrangle with the fact that they must treat all comers irrespective of ability to pay and bad debt expense is a major issue here. Unfortunately, Medicare and Medicaid are looming as major problem areas in the U.S. federal budget and reimbursement cutbacks threaten to limit Skilled Healthcare's (NYSE: SKH) ability to grow and prosper.

A Deceptively Good Third Quarter
Skilled Healthcare's third quarter results hint at what the company can do. Revenue was up a little less than 4% on flat occupancy. The company's core business, long term care, was down very slightly this quarter, while therapy services and hospice revenue were both up better than 20%. While Skilled Healthcare has stood out a bit from rivals like Kindred (NYSE: KND) and Sun Healthcare (Nasdaq: SUNH) on the basis of a higher mix of skilled services, the skilled mix was a little disappointing this quarter at less than 23%.


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Investopedia: No Rattle At HUM

Managed care, that bizarre euphemism for health insurance, has twisted up investors for a while now. Although there are ever-present worries about the future profitability of this industry, none of the plans on the table would seem to be all that big of a risk. So while Humana (NYSE:HUM) has joined many of its brothers in a healthy rally over the past year, Wall Street still does not seem to be giving full credit to this stock.

Solid Third Quarter Results 

Humana reported that overall revenue rose about 11% this quarter, with operating revenue up a like amount. Growth was underpinned by premium growth of nearly 9% and membership growth above 6%. Profitability was likewise encouraging. The company's medical loss ratio, that is, what it pays out in claims, improved by roughly a full point to 80.7%, and the company's earning before interest, taxes, depreciation and amortization (EBITDA) rose 13%. Operating income was up a similar amount, growing 12% from the year-ago level. (To know more about EBITDA, read: EBITDA: Challenging The Calculation.)

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Seeking Alpha: Lincare - Unreasonably Cheap For A Good Reason

On first blush, Lincare LNCR) would look like one of those great undervalued GARP companies that famous investors like Peter Lynch gush about in their memoirs. The thing is, while Lincare may well have a lot of value in it, that value is a little like a bag of gold resting atop a pedestal … in a minefield … surrounded by razorwire … and on fire. Lincare management has indeed done a great job over the years of running this business, but it seems like government price cuts are going to be an unrelenting drag on the company.

A Pretty Mixed Third Quarter
Lincare's third quarter highlights some of the challenges that the company has to deal with now and in the near future. Reported revenue growth of over 13% sounds great, as does the little note that growth would have been nearly 16% without the impact of negative Medicare changes. Unfortunately, the organic growth was more on the order of 6% and that growth was not especially profitable.

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Lincare: Unreasonably Cheap For A Good Reason

Investopedia: Healthy Dividend Growth Ideas In Healthcare

Healthcare has not always been the most fruitful hunting ground for dividend-growth investors. While there are numerous high-quality companies that generate substantial cash flow, many healthcare companies prefer to hang onto their cash for R&D or M&A purposes, or "return" it to shareholders in the form of share buybacks. That said, there are some worthwhile opportunities that dividend-growth investors should seriously consider.

Drugs - The Old Standby 
Within healthcare, pharmaceutical companies have always been dependable dividend-payers and that is still true today. Novartis (NYSE:NVS), AstraZeneca (NYSE:AZN), GlaxoSmithKline (NYSE:GSK) and Pfizer (NYSE:PFE) are just four prominent examples of above-average dividend yields available in this sector. Novartis is arguably the most attractive today, but AstraZeneca could appeal to those who really look to couple capital growth and dividends, as the market may have overestimated the company's vulnerability to patent cliffs.

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