Highland connection

BRENTWOOD, Tenn. - With the market value of American HomePatient's publicly held shares at about $20.6 million in late November, the provider's “on the edge of finding itself in the same position as Rotech,” said Rick Glass, president of Steven Richards & Associates. To remain listed on the NASDAQ, companies must maintain a market value of at least $15 million (In late November, Rotech's was $12.75 million). Unlike Rotech, however, AHP's market value surprised industry watchers. When the Dallas-based Highland Capital Management and a partner became the provider's largest shareholder in April 2007, they expected it to shake up AHP's management or take the company private. Some thought Highland might try to merge AHP and Rotech (In late 2006, Rotech received a $120 million line of credit from a Highland affiliate). Instead, “American HomePatient has just been plodding along,” said Schuyler Hoss, president of Northwest Healthcare Management. “Highland got the control it sought, and it hasn't done anything.” While the current Medicare reimbursement landscape hasn't been kind to anyone, there's no doubt AHP and Rotech have stumbled more than others, industry watchers said. In late November, AHP was trading at $1.17 per share and Rotech at $0.51. Lincare and Apria,were trading at $34.24 and $21.69, respectively. “It's all about execution and funding,” said Bob Leonard, an associate with The Braff Group. “From the get go, American HomePatient and Rotech both had limited war chests. And Rotech, especially, has been vulnerable due to its focus on oxygen and respiratory meds.”