Newspaper company’s entry into clinical care may inspire other outside players
- - October 16th 2012
The Washington Post Co.’s investment in a home health care and hospice company is an indication of the growing interest of nonclinical companies seeing financial opportunities in businesses involved in patient care, investment analysts said.
Up until the newspaper company’s Oct. 1 announcement that it was buying a majority stake in Mars, Pa.-based Celtic Healthcare, the nonclinical interest in patient care companies had been limited mostly to insurers or others that already had some connection to the health business. But analysts, without identifying other companies by name, said other non-health firms could follow the Washington Post Co.’s lead. An aging population that will need more care and the health reform movement — including an estimated 30 million new insured patients on the rolls in 2014 as a result of the Affordable Care Act — are creating what some companies believe to be a sure profit opportunity, analysts said.
“It’s tempting,” said Sheryl Skolnick, PhD, managing director and senior health care analyst with CRT Capital Group in Stamford, Conn. “There’s tremendous change coming, and with great change comes great opportunity.”
The Washington Post Co. is best known for its daily newspaper but makes most of its revenue from Cable One television and Kaplan educational services. However, Kaplan, which is responsible for more than half of the Washington Post Co.’s revenues, is under pressure because of greater regulation and scrutiny of the for-profit college education industry. Credit ratings agencies have downgraded the Washington Post Co. for this reason.
Terms of the Celtic deal were not released, but analysts believe the investment was around $50 million. This is the Washington Post Co.’s first deal in the health care sector. Analysts said the company’s investment in Celtic, a relatively small player with an annual revenue of $45 million, may allow the home health care company to better compete against larger ones such as Amedisys, which expects to bring in $1.5 billion in 2012.
In a prepared statement, Washington Post Co. Chair and CEO Donald E. Graham said the Celtic deal is part of an “ongoing strategy of investing in companies with demonstrated earnings potential and strong management teams attracted to our long-term investment horizon.”
The full and original article can be found at: http://www.ama-assn.org/amednews/2012/10/15/bisd1016.htm