Once 'Gentle' Ride Gets Wild.

Radiopharmaceutical company faces uncertainty after stock woes, pending sale of supplier

NOT-long ago, Syncor International Corp. was a little known Woodland Hills company focused on dominating the small U.S. market for radiopharmaceuticals. Its stock was relatively stable when the Business Journal profiled the company in September 1998.

But a stock split and a buyout of its primary supplier helped take Syncor shares on a roller-coaster ride that drove the company to diversify.

Once on a "gentle train ride," the company has been on a much bumpier track on which the stock reached a high of $50 and fell to a low of $22.70 in the last year. But despite dips caused by a slowing economy and the uncertainty surrounding the provider of one of Syncor's most popular products, growth has far outpaced that of the radiopharmaceutical industry as a whole.

Syncor reported net income of $11 million (41 cents per diluted share) for the second quarter ended June 30, up from $9.1 million (34 cents) in the like year-earlier quarter. Revenue was $187.7 million vs. $154.4 million in the second quarter of 2000.

"Syncor has continued to post very good fund results and has really shown good earnings consistency," said Lawrence Marsh, an analyst with Lehman Brothers.

The stock was hovering just below $30 last week.

In the past three years, the company has grown to include 128 domestic and 19 foreign nuclear pharmacies, which provide radioactive medications used for the diagnosis and treatment of diseases such as cancer and heart disease. The pharmacies stock and deliver products with limited stability or short shelf-lives that hospitals and other healthcare facilities cannot afford to keep on their premises.

Syncor also serves as the sole U.S. distributor of Cardiolite, a popular heart-imaging agent produced by DuPont Pharmaceutical Co. The distribution deal had been in effect until 2003, although DuPont Co. recently announced plans to sell its pharmaceutical branch to Bristol-Myers Squibb Co.

President and Chief Executive Robert Funari said he didn't know what the DuPont sale would mean for Syncor. But Marsh pointed out that "when your supplier or that product sneezes, you catch a cold. As a business, you don't particularly want to have all your eggs in one basket."

While nuclear medicine represents 75 percent of the company's business, attention is focused on other medical technologies, including positron emission tomography, which uses radioactive material for the early detection of cancers and other diseases.