Market Watch

Tuesday, December 31, 2002

CHICAGO - Accredo Health is forgoing traditional infusion therapies in favor of more profitable specialty services. Coram Healthcare is in its third year of bankruptcy. Chartwell Home Therapies’ parent company, Med Diversified, recently entered Chapter 11 bankruptcy.

On the face of it, the home infusion industry looks as if it’s lodged in a financial morass. But that’s not really the case, say two veteran market watchers.

“What we’re seeing has nothing to do with the infusion therapy market,” notes Dexter Braff, president of The Braff Group, a Pittsburgh-based mergers and acquisitions firm. “These are all extraneous issues that are very meaningful for the players involved, but are not in any way, shape or form a referendum on the industry.”

Examined separately, the companies’ situations are not directly related to IV provision, he said.

“Accredo had no intention of keeping the core therapies because they provide a limited number of services - that is their mission,” Braff said. “And Med Diversified is involved with a factoring company’s bankruptcy.”

In fact, Chartwell may be insulated from Med Diversified’s bankruptcy. At the time of the filing, Chartwell issued a statement that said it would not be affected.

What could be construed as a sign of industry weakness, however, is the investment community’s perception, Braff said. As it stands now, the infusion market doesn’t offer major consolidation opportunities. Still, there are some “attractive” locals and regionals, he said.

Indeed, locals are the “800-pound gorillas” in their respective markets, agreed Schuyler Hoss, president of Northwest Healthcare Management, Vancouver, Wash.

“Infusion has devolved from a national to a local business,” he said. “Market by market, there are different combinations of providers who are dominating the infusion business. It has always been like that, but nationals were once part of the mix. That doesn’t seem to be the case now.” HME