WEST PALM BEACH - Palm Beach health-care magnate Abe Gosman's grand plan to build a dominant physician-management company ended Tuesday when he announced plans to sell part or all of PhyMatrix Inc.
Citing PhyMatrix's poor stock performance, down 33 percent this year, Gosman, 69, said he believes his 4-year-old company may be worth more piece by piece than as a whole.
Although he has no timetable for any sale, he said he might sell some of the money-losing parts of the company, such as his doctor networks, and take the rest private.
"The industry has had some very disappointing earnings, and we have been painted with the same broad brush" said Gosman - chairman of the company and, with 35.5 percent of the stock, its largest shareholder. He said Wall Street has undervalued PhyMatrix, and its share price has lagged because other companies in the industry performed poorly.
Gosman, who made his fortune running a nursing-home business and later drug- and alcohol-rehabilitation facilities, invested $29 million of his own money and guaranteed another $37 million in loans to start PhyMatrix in 1994. In January 1996, he took it public.
The West Palm Beach-based PhyMatrix, which employs 920 people nationwide, owns or manages 374 physicians' businesses around the country, providing them office space and services such as lab tests or radiation therapy and contracting them out to managed-care companies.
PhyMatrix, which owns the 190,000-square-foot, $50 million Medical Mall in Palm Beach Gardens, also planned to build several similar outpatient facilities to attract doctors.
With Gosman's history of making money and the growing desire among doctors to join together or sell their practices to improve negotiating leverage with HMOs, PhyMatrix (Nasdaq: PHMX) generated nationwide interest. The stock price, which opened at $15, jumped to over $20 a share within its first few months, but has since slowly declined. It closed at $10.50 Tuesday, up 50 cents.
Analysts say they were bothered that most of PhyMatrix's profits were generated by Dasco, its medical real estate development subsidiary.
"Clearly the bloom is off the rose in the physician practice-management industry," said Brooks O'Neill, analyst with Piper Jaffey. "And Abe has found the going a little harder than he expected."
Originally published in The Palm Beach Post on Wednesday, May 13, 1998 |
