Record Homedco Profit Sends Stock to All-Time High $29.50

Homedco Group Inc. stock jumped 9% to hit an all-time high of $29.50 Tuesday after the home health care company reported a record increase in its first-quarter earnings.

Homedco provides respiratory therapy and intravenous treatment at home to patients who otherwise might need institutional care. The company has benefited both from the cost-cutting trend toward outpatient care and from new technologies that have made such home treatment possible, said Homedco’s chief financial officer, Larry H. Smallen.

First-quarter revenues jumped 26% to $66.7 million, up from $52.9 million last year, the company said. Net income for the first quarter ended Dec. 31 was $3.8 million, or 29 cents per share, contrasted with a loss of $3.1 million, or 38 cents per share, for the same quarter last year.

However, the comparison of quarterly earnings is somewhat misleading, as 1991 earnings were depressed by a technical accounting adjustment, Smallen said. Excluding that adjustment, earnings for the first quarter of 1991 would have been $1.2 million, or 13 cents per share.

Nevertheless, the current results exceeded expectations, sending the stock up $2.50 in over-the-counter trading Tuesday. Homedco made its initial public offering in May, 1991. The stock’s previous 52-week high was $28.125.

“The earnings were terrific,” said Vivian Wohl, who follows health-care issues at Robertson, Stephens & Co. in San Francisco, and who had forecast Homedco to have earnings of 24 cents a share, a nickel less than the results.

Wohl, who continues to make a “buy” recommendation on the stock despite Tuesday’s run-up, said she had increased her annual earnings forecast to $275 million, or $1.30 to $1.35 per share.

Contributing to earnings, Wohl said, were Homedco’s successful acquisition in September of 12 therapy sites from Glasrock Home Health Care Inc., a 32% increase in the home respiratory therapy business and 22% growth in its home infusion business.

Homedco has 2,800 employees and operates through 119 branch locations in 35 states.