“November 26, 2001 Intelligence: Late Breaking Lab News”

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Here’s clear evidence that laboratories will play a big role in healthcare’s future. AMIDEX Funds, Inc. just launched the first index-based mutual fund that focuses on cancer companies. Called “AMIDEX Cancer Innovations and Healthcare Mutual Fund” (symbol: CNCRX), it holds investments in 45 pharmaceutical, biotechnology, and medical device companies. Clinical lab industry vendors such as Abbott Laboratories, Beckman Coulter, and Cytyc are included in the fund’s holdings.


Pathologists take note! DIANON Systems, Inc. completed its acquisition of UroCor, Inc. on November 9. Post-merger, DIANON says it provides diagnostic and other services to 5,000 of the nation’s urologists. That’s a significant share of the market for urology diagnostics, all coming at the expense of local anatomic pathology groups which traditionally served office-based urologists in their local community.


It’s been a tough financial road for WebMD since its merger with Healtheon in 1999 and the subsequent acquisition of several healthcare companies in 2000. All those Silicon Valley wonder boys who founded Healtheon and defined a grand scheme to help healthcare cut transaction costs have long since disappeared from WebMD. But the financial losses remain. In its third quarter earnings report, WebMD reported an operating loss of $19.5 million on revenues of $167 million. However, the big item was a whopping $3.83 billion write down, “primarily of goodwill and other acquired intangible assets.”


There’s another interesting number on WebMD’s financials. For the nine months ending September 30, 2001, the company posted a loss from continuing operations of $6.5 billion! Corporate executives certainly have to be way out of step with the marketplace to incur losses on this scale, particularly with a company that is currently only generating about $706 million in revenues annually. It should be noted that Healtheon’s original intent, to build a cost-effective transaction platform to link payers, providers, and patients, got rapidly lost as WebMD became enamored of its ability to do grandiose deals with media companies and big corporations.


Here are additional items of interest about companies profiled in this issue of THE DARK REPORT.

  • ProxyMed, Inc. recently promoted Nancy J. Ham to President and COO. She had been the company’s COO.
  • Beckman Coulter Corp., on November 14, raised $235 million from a sale of 10-year notes. It will use the funds to retire existing credit lines.
  • On November 1, Memorial Hermann Healthcare System (MHHS) and Dynacare, Inc. announced termination of their outreach joint venture. Dynacare purchased the assets of the JV for an undisclosed price.


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