Published by ImagingBiz
As valuation professionals, we actively follow publicly traded companies in the healthcare industry. These companies provide insight into how company management and investors evaluate the opportunities and risks faced by a particular industry. Challenges in the diagnostic imaging business are not unique; nearly all ancillary healthcare service companies are experiencing similar macroeconomic headwinds. However, ancillary healthcare stocks have continued to demonstrate gains.
An ancillary service is defined as an auxiliary or supplemental service, such as diagnostic imaging, used to support the diagnosis and treatment of a patient condition. Ancillary services are generally non-core to acute care hospital operations and involve patients in non-life threatening circumstances. Arguably, ancillary services are elective in nature as patients have control over the frequency, timing and choice of service provider, and may even “opt-out” entirely of recommendations by their physician (i.e. ignore a physician-recommended request to get an MRI).
Although not perfectly comparable, the diagnostic imaging industry can gather insights from the experiences of other publicly-traded ancillary companies (collectively referred to as “Ancillary Companies”) which face similar challenges. We will review the stock performance and management commentary of the Ancillary Companies to highlight how these companies have reacted and will continue to address current industry trends.