Lack of technology in hospitals and doctors’ offices is seen as a big boost for Irvine-based Quality Systems Inc. and Newport Beach-based TriZetto Group Inc., according to an analyst.
K. Newton Juhng, a BB & T; Capital Markets analyst, told the Wall Street Transcript that a need for better electronic systems, particularly in hospitals and doctors’ offices, is fueling the growth seen in the healthcare software market.
“Right now, the doctors’ office side of the space is really underpenetrated, and it is where a lot of future dollars are going to be spent,” Juhng said.
Changes in government regulations are leading to more business opportunities for healthcare software companies, such as Quality, Juhng said. Quality, which has been a Wall Street darling in recent years, makes software that helps doctors and dentists manage their practices.
“Let’s take the doctor’s office. The repeal of certain aspects of Stark and anti-kickback laws should put hospitals in a position where they could potentially start investing some dollars toward helping their affiliated doctor offices adopt more IT systems,” Juhng told the newsletter. “This would be a new revenue stream for companies like Allscripts, Healthcare Solutions Inc. and Quality Systems that sell IT systems to the doctor’s office.”
The Stark law, which is different from the anti-kickback or fraud laws, prohibits doctors from making referrals to another healthcare group, including a doctor’s own practice, for certain health services covered by Medicare if the doctor or an immediate family member has a financial relationship with that group.
The law also makes it illegal for any healthcare group to submit a claim or bill to any person for a service or item without a legitimate referral.
Hospitals and doctors run less of a risk getting penalized for fraud or violating the Stark law if they have a streamlined and efficient system,programs that Quality, TriZetto and other companies provide.
“So when you see a regulatory move, there is the potential that it could stimulate dollars being brought into the marketplace for that side of the business,” Juhng said.
As for TriZetto, which provides software and services to health plans and benefits administrators, Juhng said it’s a company to watch.
“We also like TriZetto, because in the health plan marketplace for information system, they are one of the dominant players,” Juhng said.
TriZetto’s “very well positioned for changes that happen within the health plan marketplace,” he said.
As health plans decide to change their product offerings or adapt to their environments, whether due to regulatory issues or overall competition, Juhng said TriZetto’s able to “productize the data that they have.”
The report also touched on other aspects of healthcare and mentioned a handful of Orange County-based companies.
Those include Apria Healthcare Group Inc., a Lake Forest-based home healthcare company; and long-term care company Sun Healthcare Inc in Irvine.
Valeant Finds Favor
For some time, Valeant Pharmaceuticals International Chief Executive Timothy Tyson has emphasized a strategy that focuses on product development, selling products in select markets and rigorous cost-cutting.
Valeant’s emphasis on selling new products and cost-cutting gave the company what it needed: improved fourth-quarter results.
The Aliso Viejo drug maker said its fourth-quarter loss was cut nearly in half.
Valeant posted a net loss of $22.1 million in the quarter, compared to a loss of $44.8 million in 2005’s fourth quarter. Excluding charges, the drug maker earned $17 million, in line with Wall Street’s expectations.
Fourth-quarter sales were up 11% to $257.4 million, far outstripping analysts’ projections of $231.8 million.
A 15% sales hike from other products offset a decline in royalties from the company’s longtime hepatitis C treatment, ribavirin. Ribavirin royalties fell 21% to $20.5 million.
For the full year, Valeant posted a net loss of $56.6 million. Revenue was up 10.2% to $907.2 million.
Valeant also said a restructuring program that saved it $30 million last year helped its results.
Visiogen’s Latest Funding
Visiogen Inc., an Irvine-based eye device maker, recently raised $24 million from new and current investors.
The funding was Visiogen’s first since late 2003, when it raised $16.5 million.
CMEA Ventures of San Francisco was the lead investor. Foundation Medical Partners of Rowayton, Conn., Three Arch Partners of Menlo Park, New Leaf Venture Partners of New York and Menlo Park and Palo Alto-based Prospect Venture Partners also participated in the investment.
Visiogen said it will use the money to support development of its Synchrony, an intraocular lens used in cataract surgery.
The company’s currently in third-phase clinical trials for Synchrony in the U.S., and has European regulatory clearance for the device.
Bits and Pieces:
Ipsen, a French drug maker, was granted exclusive rights to develop and market Dysport, a purified botulinum toxin wrinkle-remover that could be a rival to Botox, the bellwether drug made by Irvine’s Allergan Inc. The drug is known as Reloxin in the domestic medical cosmetic market. Inamed Corp., which Allergan bought last year, once held the rights to Reloxin. Allergan gave up those rights to avoid regulatory concerns about having both products … Patient Care Technology Systems Inc., a Mission Viejo healthcare information technology company, was featured in educational sessions late last month at the Healthcare Information and Management Systems Society’s conference and exhibition in New Orleans … Hoag Memorial Hospital Presbyterian in Newport Beach said it introduced a system made by Skylight Healthcare, a San Diego-based company, which provides patient information, communication and entertainment through television networks … Coast Independent Review Board, a Foothill Ranch drug industry ethics organization, said it will open an operations center in Colorado Springs, Colo.
