Now This Is Real Managed Care

Most health-care stocks have been looking rather anemic so far this year. But not Medaphis, a robust provider of management services to doctors and hospitals. It has been chalking up alluring profits, pushing Medaphis' stock from 25 a share in mid-July to 36.

What drugs is Medaphis on? "Nothing but plain, old-fashioned aggressive growth and dominance in a lucrative market," says investment adviser Andrew Lanyi. Based on performance and recent acquisitions, he expects Medaphis to earn $1.15 a share this year and $1.50 in 1995, vs. 80 cents in 1993.

Over the past two years, Medaphis has acquired two of its biggest competitors, making it the largest provider of management services to the medical industry--a market estimated to generate more than $30 billion in annual revenues. With Medaphis sales at only $250 million in 1993, "its potential for sustained rapid growth is great," says Lanyi. The key to the growth, he explains, is the repeat business that Medaphis gets from its major customers.

Its most recent acquisition was AdvaCare, a provider of management services for $38 milllion. AdvaCare posted sales of $68 million in 1993.

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