Medical Employee Firm’s Stock Gets Shot in Arm

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Doctors saw more patients and charged more money.

That’s why net income at North Hollywood’s IPC the Hospitalist Co. Inc. jumped 12 percent, beating analysts’ expectations and boosting the company’s stock to a six-month high.

Shares of IPC, which employs doctors and medical workers at hospitals and other facilities, rose 13 percent April 25, the day after the company announced first quarter earnings that surprised most Wall Street analysts.

Dana Hambly, an analyst who follows IPC for Stephens Inc. in Little Rock, Ark., said the company’s big quarter was the result of good fundamentals.

“They’re seeing more people,” he said. “That’s a function of them going out and attracting more patients. It’s blocking and tackling.”

IPC reported that its doctors saw 1.6 million patients, up 16 percent over the first quarter last year, and that revenue per patient was up slightly. The growth was especially surprising to analysts because of recent announcements from publicly traded hospital operators, including HCA Holdings Inc. of Nashville, Tenn., that patient volumes are down.

Adam Singer, IPC’s chief executive, told analysts during an April 24 conference call that the company’s fortunes aren’t necessarily tied to hospitals. It also employs doctors, physician’s assistants and other medical professionals who work in nursing homes and rehabilitation facilities.

Singer also said IPC hires most new doctors at the end of the year, meaning the company has the capacity to see more patients in the first quarter.

“This is when doctors are finishing their residencies and come on board. They start ramping up and getting productive in the first quarter,” said Singer, who is also a physician.

IPC bought up more than a dozen regional medical practices last year and two more in the first quarter of this year, and the company plans to grow through more acquisitions.

Some analysts who follow the company remain cautious. IPC posted good earnings in the first quarter for the past two years, but ultimately had to revise annual estimates down late in both years.

Hambly, who rates IPC a “hold,” said he wants to see a few more good quarters before getting his hopes up.

“I like the story. I’d just like to feel a little more certain that this pattern is replicable,” he said.

Singer said disappointments in the previous two years were due to one-time events. In 2011, the company had a shortage of workers at some hospitals and had to hire expensive temporary labor.

“Then last year, we exited several contracts where we were at risk for more of that,” Singer said. “Those were specific one-time events.”

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