$52.2 Million Raised by First Consulting

First Consulting Group Inc., which provides information technology and other consulting services to health-care companies, raised $52.2 million Thursday in an initial stock sale that values the company at $198 million.

The Long Beach-based company sold 4 million shares, a 26% stake, at $13 each. That was $1 above the $10 to $12 range set by Hambrecht & Quist LLC, the firm that led underwriters in the sale.

First Consulting has seen demand for its services increase steadily in response to the managed care movement. This movement has put pressure on health-care providers to reduce costs by improving administration, care management and other functions. The company’s revenue grew from $19.1 million in 1993 to $91.6 million in 1997.

“First Consulting is the leader in multifaceted information technology consulting to the health-care community,” said Bill Slattery, a health-care and biotechnology analyst with Amerindo Investment Advisors Inc. in New York. He said the company would “continue its 17-year track record of growth.”

Slattery added that First Consulting has “a reputation of being an execution-oriented organization.” He said it is strong in areas critical to “the efficient delivery of health care in today’s era of managed care.”

First Consulting’s customers include health plans such as those run by Aetna Inc. and Humana Inc. and hospitals such as Mount Sinai Medical Center in New York.

First Consulting says industry sources project that the market for health-care information technology will grow from $17.3 billion in 1997 to $27.9 billion in 2002, and the market for health-care information services will grow from $5.6 billion in 1997 to $11.6 billion in 2002.

The company’s filing with the Securities and Exchange Commission points to employee turnover as a significant risk. The filing says First Consulting had turnover in 1995, 1996, and 1997, of 32.3%, 30.3%, and 21.1% respectively.