Secomerica to Diversify Into Health Care : Home Security Firm to Pay $255 Million for Therapy Provider
In a move to further diversify into health-care services, Secomerica Inc., the Newport Beach parent of Westec Security Inc., said Sunday it reached an agreement to acquire H.M.S.S. Inc., a Houston home therapy firm, for about $255 million.
Under an agreement signed this weekend, Japanese-owned Secomerica will begin a tender offer later this week to acquire all 5.1 million outstanding shares of H.M.S.S. for $50 per share. The 7-year-old Houston firm, which provides in-home intravenous therapy, closed Friday at $34.75 a share, up $1, in over-the-counter trading.
The acquisition positions Secomerica, whose Westec unit is the largest supplier of home security services, in one of the fastest growing segments of health-care services. Home infusion therapy provides patients with the intravenous administration of medications, nutrients and fluids in their own homes.
Such in-home services--typically 45% to 50% less expensive than those administered in hospitals--have grown explosively with cost-containment efforts in the health-care industry. Revenues from home infusion therapy totaled between $1.1 billion and $1.3 billion industrywide in 1988, according to analysts, who expect that figure to rise to $2.5 billion by 1992.
“What attracted us to them is that they have done a hell of a job growing over the last four years,” explained Michael S. Kaye, Secomerica president and chief executive, in a telephone interview from Dallas. “They have been growing over 60% a year in revenues, and profits are consistently strong. . . . They maintain very high standards of quality in the industry.”
H.M.S.S. said its revenues are expected to rise to $55 million this year from $35 million in 1988, while earnings are projected to rise by an estimated 45% to 50% from last year’s $3.5 million. Secomerica has annual revenues of about $100 million and is targeting the $500-million mark in four or five years.
Last year, Secomerica, a wholly owned subsidiary of Tokyo-based Secom Co. Ltd., began its strategic move into health-care services. In April, 1988, it purchased the emergency medical services unit that provides ambulance service in Seattle and Spokane, Wash., and Pinellas County, Fla. Two months later, it acquired Southland Ambulance of Anaheim, the dominant ambulance company in north Orange County.
R. Dale Ross, president and chief executive of H.M.S.S., called the combination “an excellent strategic fit” that “better positions us for future competition. As the industry continues to mature, competition continues to intensify.” Some consolidation has occurred already. Two years ago, Caremark Inc. of Newport Beach, one of the first companies in home infusion therapy, was acquired for $500 million by Baxter International Inc. of Deerfield, Ill., which today accounts for 40% of the market, according to Ross.
In California, H.M.S.S. serves Irvine, La Jolla, Riverside, Universal City and San Francisco. It plans to open two or three satellite operations in the San Francisco Bay Area before the end of this year. The company also operates in Houston, Dallas, Denver, Minneapolis, Kansas City, St. Louis, Cincinnati, Chicago, Philadelphia, New York, New Jersey, Washington/Baltimore and Tampa.
