News in brief - Jan. 19, 2004

Analyst downgrades managed care - Pain care company grows - Gentiva raises outlook - Express Scripts gets CuraScript - DrFirst, ePocrates form alliance

Analyst downgrades managed care

A prominent investment analyst started the new year by downgrading the stocks of managed care companies.

In a series of reports, Goldman Sachs analyst Matthew Borsch said the large profits managed care companies had in 2003 would force them to reduce the rate of increases in their premiums. That, in turn, will drag profits down, Borsch said. Managed care stocks went down Jan. 5, the day Borsch issued the reports.

Borsch said large companies such as UnitedHealth, Aetna and Anthem Inc., the latter of which is in the process of buying WellPoint Health Networks, may fare better. He also identified WellChoice, which owns Empire BlueCross BlueShield of New York, as being well-positioned to handle any industry profit downturn.

Pain care company grows

PainCare Holdings Inc., an Orlando, Fla.-based company that runs orthopedic rehabilitation, spine surgery and pain management centers across North America, continued its expansion with the acquisition of two more private practices last month.

The company said in December 2003 that it had completed merger and management agreements with the Spine & Pain Center, a private pain management practice in Bismarck, N.D. It also announced that it had acquired Health Care Center of Tampa Inc., a pain management and orthopedic rehabilitation practice based in Lakeland, Fla.

The firm estimated that the two practices would contribute about $3.5 million in extra revenue each year. PainCare Holdings, which started in 2000, also runs a turnkey orthopedic rehabilitation program for practices to incorporate into their overall service packages.

Gentiva raises outlook

Home health care giant Gentiva Health Services Inc. raised its expectations for 2004 after it renewed its home health contract with CIGNA Healthcare in December 2003.

The company, based in Melville, N.Y., projected earnings in 2004 at between 57 cents and 63 cents per share, compared with its previous estimate of between 55 cents and 62 cents per share. The firm said revenues should reach between $835 million and $850 million.

Gentiva cares for nearly 500,000 patients each year. Its new contract with CIGNA runs through 2006.

Express Scripts gets CuraScript

Express Scripts Inc., a Maryland Heights, Mo.-based pharmacy benefit manager, will acquire CuraScript Inc. for $335 million. Orlando, Fla.-based CuraScript offers specialty pharmaceuticals and pharmacy benefit management services to managed care organizations, providers and employers.

DrFirst, ePocrates form alliance

DrFirst Inc. and ePocrates Inc. have signed an agreement under which physicians using DrFirst's electronic prescribing product will have access to ePocrates' handheld drug reference products. Financial terms were not disclosed.