As a physician, I always am a bit annoyed by HMO's which are both our salvation and our burden. Kind of like the same way patients must view HMO's I guess! However, Sierra Health Services (SIE) went to the top of the list today in a group of managed care corporations that outperformed the market on a down day. We also have MME mentioned elsewhere on this site.
Sierra, according to CNN.Money "...is a healthcare services company that operates HMOs, indemnity and workers compensation insurers, military health programs, PPOs and multi-specialty medical groups."
SIE had a great day today closing at $27.09 up $5.79 or 27.18% on the day. They did this on the back of an outstanding earnings report. Quoting from the headline on the NYTimes on the Web from the Business Wire report: "2nd quarter 2003 earnings of $.68 per diluted share, income from continuing operations increases 95%; guidance raised for 2003." (Income was $.34 per diluted share in 2002.)
Morningstar shows a steady growth in revenue from $0.8 billion in 1998, $0.9 billion in 1999, 1.0 billin in 2000, $1.1 billion in 2001, and $1.3 billion in 2002.
Free cash flow has recently improved from a negative $17 million in 2000 to a positive $91 million in 2001, and $124 million in 2002.
The balance sheet is not as pretty as some of our selections but is fairly evenly balanced with $246.3 million in cash and $692 million in other current assets vs. $788.2 million in current liabilities and $166.1 million in long-term liabilities.
Yahoo.com 'profile' shows a market cap of $584.8 million with 27.5 million shares outstanding and 22.8 million float. The p/e is a very reasonable 13.15, no dividend is paid,a nd quite a few shares are out short at 2.25 million representing 7.3 days of trading of average volume.
In general, knowing the pressures and vagaries of health care as a busines, I am not a great fan of HMO stocks. However, trying to avoid personal biases I have to recommend this issue as being appropriate for selection in light of the continued outstanding business performance of this company.
Neither I nor any members of my family own any shares of this company.
Regards to All!