from Wall Street Transcript
TWST: By the way, Jim, I don’t think you told us about emerging areas. You said that you hoped there would be some, at least for the sake of the venture capitalists.
Mr. Kumpel: I think there are a couple of areas. I think companies that can offer applications that effectively sift through data to develop market intelligence and clinical intelligence could really add value to the healthcare system. We are familiar with some companies that can partner with a variety of companies on a number of different technology platforms. For example, there are some private companies that allow healthcare organizations to sift through information to understand prescription patterns among physicians, to understand clinical decisions by physicians, to effectively understand just whether or not there has been abuse or overcharging. I think you’re starting to see an increasing focus on data mining. Data mining provides the tools to rationalize costs. I think a second area that is going to be very important and very interesting, given the onset of HIPAA (the Health Insurance Portability and Accountability Act of 1996), is the field of healthcare security platforms. Some might argue that the industry does not necessarily need a healthcare-specific company to deal with security, but there are some organizations out there that are trying to integrate security platforms that ensure privacy and security of data transmissions, such that data will not be compromised. Any number of private companies are trying to do that as well.
TWST: Jim, on the whole, have the mergers and acquisitions in the group worked out well or have there been a fair share of disappointments?
Mr. Kumpel: Well, again, it’s pretty early to say because some of the more prominent mergers have just recently closed. In the case of Healtheon/WebMD (Nasdaq:HLTH), they’ve had all of about eight months to integrate their efforts. Healtheon/WebMD is obviously the poster child of acquisitions and mergers in the e-health space. It remains to be seen how well the companies have melded — they’re viewed as basically an umbrella for lots of disparate organizations. The real challenge for them is to demonstrate internal growth above and beyond the pro forma sum of their parts.
TWST: Jim, is there another one that you believe has been oversold in the group?
Mr. Kumpel: Yes, and this will be controversial. I’d say that at these prices, Healtheon/WebMD has arguably been oversold and a lot of the concerns about execution risk have more than been priced into the stock. When it became clear in their first quarter that it was not all wine and roses and that the path to integration was not completely clear, the market just absolutely punted the stock and it has sold off violently. Again, in a sense, I think most of these issues have been priced into the stock. I’m not going to argue that every part of Healtheon/WebMD is working well or that they’re all integrated. My point, though, is that their assets under the umbrella look to be so valuable and their installed base and captive audience so important to adoption rates, that I think the market’s fickleness presents a nice buying opportunity in HLTH.
Tickers included in this excerpt: HLTH |
