Is Obama Care (aka socailized medicine) good for MD?
I think the version of reform that passed was pretty tame and health insurance companies are going to be under some incremental pressure, but there is nothing at this time that is going to put them out of business (stress not at this time). As long as the insurance companies are still going MD's NICU business is ok. Medicaid will expand and it will crowd out commercial insurers somewhat, but the shift will be gradual and might not even be noticed over the next few years if the unemployment rate drops and more people are back on employer sponsored insurance. Not to mention the fact that MD will probably get a significant revenue and profit bump from the incentives around the HCIT part of the stimulus bill, which will help offset any shift for a while.
I do not like the anesthisiology business as much as NICU, but I am not as negative on it as roman. They have arguably overpaid for the first practices they bought, but I don't think they will do this for future deals in the space and now they can get a little profit leverage since they have an infrastructure in place. Reform will eventually provide incremental volume to this business which means deals done now will be more valuable over the long term.
I agree with Roman the company has very little organic growth and needs to do acquisitions to grow, and roll up companies can be a real mess if they are mismanaged, which makes me curious about the CRNA issue you raised. However, the company has always had to do deals to grow and they have hit the magic roll up formula: buy firms at a discount to your valuation, add value to those firms, and lock up the professionals. Given their success in NICU and the length at which they prepared to enter the anesthisiology market I give them the benefit of the doubt (also they are a huge free cash flow generator). I don't think the firm is going away and the stock is not that expensive.
I would like to hear more about their problems with CRNAs...is there any practice in particular that is having issues??