Chronic Care from CURE

09/12/2003 12:00 am EST


Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

"We believe buying innovative, quickly-growing companies will in the long term beat the pants off traditional value-oriented strategies," says Ian Wyatt, editor of The Growth Report. "However, every once in a while we are fortunate enough to come across a growth stock that represents a value and growth situation--such as our latest buy--Curative Health.

"Curative Health Services (CURE NASDAQ) services patients experiencing serious or chronic medical conditions. At the end of 2002, the company had contracts with 283 payors and 16 retail pharmacies. It provides injectable or infusable products for individuals with chronic illnesses for which no cure is known, and for those in critical disease states. In such situations, Curative provides education and instruction, monitoring of patients, specialized delivery services, patient and community advocacy, and reimbursement services. In 2002, the vast majority of revenues came from patients suffering from hemophilia.

"The company also operates a network of 90 Wound Care Centers throughout the country on the behalf of hospitals. Its services are tailored for chronic wound patients, which are common for those with diabetes and venous stasis disease. Curative also treats patients with common conditions such as ulcers or sores. It is estimated that some six million people in the US suffer from chronic wounds. During the eight years between 1991 and 1999, 15,922 patients treated under the program had previously been recommended for amputation by their physician. After being treated by Curative, 86% of these patients did not require limb amputation.

"We believe that Curative is operating in an interesting and worthwhile space and providing highly demanded services to critical care patients. The company has proven its ability to deliver both revenue and earnings growth north of 20%. Further, the shares look relatively inexpensive, trading at around 12 times 2003 consensus EPS with a p/e less than one half its growth rate. We believe Curative could trade at 13 times 2004 estimates of $1.78 within the next twelve months, which would translate into a share price of $23. CURE represents a long-term growth stock that should continue to deliver consistent returns to investors."

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