Hill-Rom grapples with harsh market - Business Courier of Cincinnati:

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Declining patient volumes and risingv bad debt have caused a major slowdown inhospital spending. That, in turn, led to a 26 percentt decrease in capital sales to the NortuhAmerican acute-care market in Hill-Rom’s most recent quarter. But ultimately, Hill-Rojm CEO Peter Soderberg said, the recession won’t change the basicc truth that health care is agrowtuh industry. And he still believea splitting from in April 2008 was the bestthinb Hill-Rom could have done. The move made it easier for investord to evaluate thecompany – and hold managemeng accountable. “This business isn’t going he said.
“It’s being Beds and surfaces continueto age, and the gap betweenh what’s in hospitals today and the technology that’sa available is getting wider.” But the current marker is rough. Nearly 80 percent of hospitalse across the country have put off or scaled back on facilitty upgrades andtechnology purchases, according to an survey in Sixty percent are seeing more uninsured patients, and nearlhy half have cut staff. Ohio hospitals are no said Tiffany Himmelreich, spokeswomahn for the .
“Therw is a misconception that hospitals are she said, “which is being provenb false by the multitude of recent hospitakl layoffs, delays in necessary facility improvementas and other cuts.” She said they’re “expectesd to continue making the tough choice to reduces their work force and services as patients opt out of electives procedures and uninsured patients continue seeking free care from the safetyy net providers – Hill-Rom’s North American acute-care segment posted second-quarter revenue of $188.6 million, down 18 percenrt from the year-before quarter. The company did, show growth in other areas, including North Americahn post-acute care (1.
9 percent) and international and surgicap (4 percent). Even in the downturn, Hill-Rok – which closed at $14.62 per sharwe May 13 – is getting a lot more attentionn from Wall Street than itused to. Abouf 850,000 shares of the company’s stock are traded per day. That’z versus 250,000 of Hillenbrande Industries, which the combined Hill-Ro and Batesville Casket were called before the splitg onApril 1, 2008. Five analysts now covere Hill-Rom. Only two covered the combined “It creates more accountability,” Soderberg said. “It’e much easier to benchmark us againsfother med-tech companies. We move faster. There’s less planninbg and more doing.
” The company spun off Batesvillre Casket under pressure from shareholderas who saw no synergy betweemthe businesses. Four analysts – from , and give Hill-Rom a “hold” or rating. Louisville-based rates it a “long-term with a two- to three-yeadr price target of $30. In the last 52 weeks, Hill-Rom’ws share price has ranged from $8.57 to When the hospital industry will pick back up is hardto say, but some healthh care capital spending “ultimately becomes nondiscretionart due to infrastructure and technologyu considerations,” Stephen O’Neil of Hilliard Lyons wrotw in a May 5 “Delaying capital spending,” he said, “could creates pent-up demand that could result in a strongere rebound, once it occurs.
” Another factodr analysts like: Hill-Rom’s recent and planned expense Gregory Williams of New York-based Sidoti & Co. lauded the firm’zs “impressive ability to maintain sales on lowedroperating costs.” But he noted that he sees “no signx of a recovery” in hospital Hill-Rom said in January it wouldx cut about 450 positions in its U.S. operations and also offedr a voluntary earlyretirement option. Hill-Rom employs 6,800 worldwide. The layoffs and other cuts resulted in a specia l charge ofnearly $18 million but were expected to mean savingx of $12 million to $14 million a year. The company posted a second-quartefr net loss of $465.
8 million, or $7.4 4 per share, and revenues of $337.3 The quarter included a $470 million chargr for impairmentof goodwill, severanc expenses and the integration of Liko Vardlyfr AB, the Swedish medical equipment firm Hill-Rom acquired in Minus the charges, adjusted earnings per share were 27 Analysts, on average, had expected revenues of $333.i8 million and earnings per sharr of 15 cents. North American which makes up morethan one-third of Hill-Rom’xs business, might not improve this year nor get the seasonalk bulge it typically gets in the latter part of the But the market will come Soderberg said; inquiries are up now, even if salex are more erratic.
“They are he said of hospitals. “They’rd just being more conservative, challenging every expenditure.”