Homefusion Company Stocks Slip as Sales Projections Rise
Freudenheim, Milt, THE JOURNAL RECORD
By Milt Freudenheim
N.Y. Times News Service
NEW YORK _ Profiting from pressures to get patients out of expensive hospital beds quickly, companies that provide intravenous nutrition and drugs in the home have been on a roll. Sales of these solled homefusion companies tripled in three years to $3.2 billion in 1991 and may reach $4 billion this year, analysts said.
But when healthre stocks began slipping early this year, some highying homefusion stocks were hit even harder. Many investors who thought the economy would pick up this year switched from health care to cyclical stocks like autos and chemicals.
Companies like Baxter International's Caremark division, Critical Care America and T2 Medical Inc. can provide hundreds of intravenous therapies, notably to treat cancer and AIDS patients. About 100 new home therapies are approved each year. The pace should quicken as more products of biotechnology move out of the laboratories.
Baxter, a diversified hospital supply company, plans to spin off Caremark later this year as a separate entity that will be listed on the New York Stock Exchange.
Caremark, with about $775 million in 1991 homefusion and related sales, dominates a market served by 10 mediumzed companies and dozens of small momdc partnerships. Baxter, which has been selling at 18 times 1991 earnings, hopes to push Caremark into the homefusion league, where Critical Care America shares soared to 30 times earnings.
Critical Care, which has about 8 percent of the infusion market, plunged to $33.875 from a high of $63.75 in January. It traded last week around $35.
The company, based in Westboro, Mass., took extra lumps when Massachusetts Blue Cross and Blue Shield chose lowerdding competitors (including Caremark) to serve patients with traditional insurance. Critical Care shares dipped again on the news that it planned to merge with Medical Care International, a chain of surgery centers, although many analysts praised the deal.
The homefusion companies have already had to make price concessions to stay on the preferred list of large health maintenance organizations and other managedre networks, just as hospitals and doctors do. But Critical Care and three other infusion companies spurned by Massachusetts Blue Cross are suing to block the practice for traditional insurance. Massachusetts tightly regulates such matters, and the outcome of the lawsuit is uncertain. The companies got the Legislature to take their side, but Gov. …