Syncor's Image Gets Better Amid Diversification Drive.SYNCOR International Corp. is turning heads on Wall Street. A three-year-old diversification strategy at the once-sleepy little pharmaceuticals company has boosted profits and revenues, impressing analysts and running up the stock price by about 170 percent. "It's not often you find companies where everything is going great, and Syncor just happens to be one of those companies right now," said Mitra Ramgopal, senior equity analyst with Sidoti & Co. LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . 'They're firing on all cylinders and they're being rewarded." Shares in the company, which were trading at about $13 apiece in early January, have soared - closing on Sept. 20 at $35.38. (Those figures are adjusted for a two-for-one stock split effective Aug. 9.) The Woodland Hills-based company has long enjoyed a solid, albeit low profile as a maker of radiopharmaceuticals, high-tech compounds used to diagnose cancers and coronary disease. But sales and earnings languished until 1997, when Syncor began acquiring medical imaging centers and expanding its distribution in overseas markets. As a result, Syncor grew to a $520 million company in 1999, from sales of $381 million in 1997. For the second quarter ended June 30, Syncor reported net income of $9.1 million (69 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share), up from $6.4 million (50 cents) for the like year-earlier period. Revenues jumped 18.5 percent to $154 million for the quarter. "I think we saw some very strong growth out of medical imaging, both in revenue and improvement in profitability," said Bob Funari, Syncor's president and chief executive, who assumed his current posts in 1996. "We saw good strength in pharmacy services, and the overseas (division), which was unprofitable in the second quarter of last year, became profitable this year." At the time Funari stepped into the CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. spot, Syncor enjoyed a whopping 52 percent share of the radiopharmaceuticals market, but its single-business strategy was limiting its growth potential. An earlier attempt to diversify by moving into "positron emission Positron emission is a type of beta decay, sometimes referred to as "beta plus" (β+). In beta plus decay, a proton is converted, via the weak force, to a neutron, a positron (also known as the "beta plus particle", the antimatter counterpart of an electron), technology" (a technique for the early detection of cancer) had been unsuccessful, and employee morale suffered as a result. Funari believed that the company's skill set could be applied to a broader range of technologies, and began looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. those opportunities. Since then, the company has acquired 50 medical imaging centers (locations used to administer MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. tests), and on Aug. 4 it announced an agreement to acquire an additional 14 centers for $39.5 million. It has also increased the number of countries where it distributes its products from six to 13. In the second quarter, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from its medical imaging division increased to $3.1 million, a $2 million jump over the same quarter of 1999. "Obviously, they have a pretty good franchise in radiopharmaceuticals," said Robert Gold, director of Standard & Poor's Equity Services. "What I'm looking at is their growth in the imaging-center business. That's an area that's very fragmented that's probably more of a growth opportunity." Many medical imaging centers are struggling because the business requires large capital investments - an MRI machine typically costs upwards of $1 million - that are difficult to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. . Further, most chains only have a single center in a given market, and because patients tend to go to the center that's closest to their homes, they lose out on a lot of business. Syncor' s strategy is to cluster numerous centers in a given area so that it'can dominate the local market, meaning patients have little choice but to go to a Syncor imaging facility. "In our centers, we see as many as 25 patients a day in an MRI room," Funari said. "Many competitors see half that many." Syncor' s international subsidiary, Syncor Overseas Ltd., has focused on developing nations where nuclear medicine is still a very new technique. But the investments in those countries nevertheless contributed $200,000 in operating income and $9.2 million in sales to the company in the second quarter. And Funari believes that by entering those markets early, the company will enjoy a strong position when foreigners Foreigners alienage the condition of being an alien. androlepsy Law. the seizure of foreign subjects to enforce a claim for justice or other right against their nation. gypsyologist, gipsyologist Rare. do embrace the technology. "As health care becomes a bigger priority in those countries, we think those markets are going to grow very rapidly," Funari said. SUMMARY Business: Radiopharmaceuticals Headquarters: Woodland Hills CEO: Bob Funari Market Cap: 794.1 million Dividend Yield: N/A [*] Total Liabilities: $182.97 million P/E Ratio P/E ratio Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings. : 35.67 Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. : $85.8 million (*.) Syncor does not pay dividends. |
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