Health Stocks in Motion

HCA shares rise on first-quarter earnings that beat expectations.
By Mark Martinez ,

Updated from 3:04 p.m. EST

Shares of

LanVision Systems

(LANV)

, which does business as

Streamline Health

, were among the best-performing health-related stocks Tuesday, rising 70.6% after the company posted a 60% jump in fourth-quarter earnings.

The company earned $1.6 million, or 17 cents a share, on sales of $5 million. A year ago, it earned $1 million, or 11 cents a share, on sales of $3.6 million. Looking ahead, LanVision, which provides software used by medical professionals, said that its prospects for 2005 are very encouraging. LanVision is hoping to grow sales by 25% during 2005, which should produce operating income of about $1 million, it said. Shares traded up $1.90 to $4.59.

Shares of

HCA

(HCA) - Get Report

raced ahead after the company previewed first-quarter earnings that were above expectations and said that it would sell 10 of its hospitals by the end of the year. The hospital operator expects first-quarter earnings of 88 cents to 93 cents a share, well above the Thomson First Call consensus of 76 cents a share. A year ago, the company earned 69 cents a share. Increased patient volume, effective expense management, improved bad-debt trends and a reduction in the amount of HCA's outstanding shares helped first-quarter results.

The company said that the divestiture of 10 hospitals, located mostly in rural and small urban markets, would "allow the company to redeploy capital to support our hospitals in growing urban markets." As a group, the hospitals had 2004 sales of $654 million. HCA does not believe the divestitures will have a material impact on its financial position or its results. Shares traded up $3.08, or 6.3%, to $51.95.

Shares of

HealthStream

(HSTM) - Get Report

rose 4% after the company said that it would buy

Data Management & Research

, a privately held company that provides quality and satisfaction surveys, and other research-based measurement tools to health care organizations, for $10.6 million in stock and cash. HealthStream will pay $9.1 million in cash and almost 480,000 shares to DMR. As a result of the acquisition, HealthStream now expects 2005 sales of $27 million to $28 million, up from previous guidance of $23 million to $24 million. The company reiterated its first-quarter earnings outlook, which calls for break-even results. For the second quarter, however, the company now expects to post a modest loss because of costs associated with its annual eLearning summit. Taking into account the accretive impact of the DMR acquisition, HealthStream now expects to post better-than-expected earnings for the second half of the year. Shares traded up 11 cents to $2.83.

First Horizon Pharmaceutical

(FHRX)

fell 2.1% after the company announced the dismissal of its independent auditor Deloitte & Touche. The company said that BDO Seidman would replace Deloitte & Touche. First Horizon said that Deloitte's dismissal was not the result of a disagreement between the firm and the company.

Separately, First Horizon finalized its previously announced acquisition of Fortamet, a type 2 diabetes prescription drug, and Altoprev, a cholesterol medication, from Andrx. To date, First Horizon has paid Andrx $50 million for the worldwide rights to the drugs and may pay up to an additional $35 million if certain milestones are reached. As part of the agreement,

Andrx

(ADRX)

is also entitled to royalties on net sales of 8% on Fortamet and 15% on Altoprev. Shares traded down 33 cents to $15.64.

Other health care movers included

Pfizer

(PFE) - Get Report

, down 59 cents to $25.64;

Tenet Healthcare

(THC) - Get Report

, up 53 cents to $11.72;

Johnson & Johnson

(JNJ) - Get Report

, down 43 cents to $67.92;

Merck

(MRK) - Get Report

, up 25 cents to $32.01;

Elan

(ELN)

, down 19 cents to $7.10;

Amgen

(AMGN) - Get Report

, down 21 cents to $58.26;

Bristol-Myers Squibb

(BMY) - Get Report

, up 2 cents to $25.07;

Genentech

(DNA)

, down 10 cents to $56.80;

Schering-Plough

(SGP)

, down 17 cents to $17.95; and

Biogen Idec

(BIIB) - Get Report

, down 41 cents to $37.69.

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