Special Report: PEDIATRIC SERVICES
SPECIAL CARE FOR SICK KIDS
There's a popular doll making the rounds at Pediatric Services of America Inc. (PSA). If it weren't for the black-felt moustache, you might mistake it for a Cabbage Patch Kid. But the play money bulging from its diapers--and a face resembling CEO Joseph D. Sansone--is a dead giveaway that this doll wasn't made for the kids that PSA serves. Crafted by PSA nurses, the Joe Doll instead starred in a recent employee skit toasting the company's success.
And successful it has been: No.50 on BUSINESS WEEK's Hot Growth list, PSA is the nation's fastest-growing provider of children's home-health-care services. The Norcross (Ga.) company cares for the most fragile patients around: acutely ill babies and children. PSA's 12-state network of nurses, therapeutic services, and equipment offers a thrifty alternative to long, expensive hospital stays. With 63% of PSA's $48 million in sales for the year ended Sept. 30, the pediatric business drives PSA's growth.
HIDDEN JEWEL. Eight years ago, the company, then known as Ambulatory Services of America, was a candidate for intensive care itself. The $17 million company was hemorrhaging red ink, and its balance sheet was awash in uncollected receivables. That's when industry veteran Sansone, 51, was brought in by then-parent Charter Medical Corp. Sansone slashed receivables and automated the back office. He also hired its first-ever chief financial officer. "They basically had an accountant--not even a CPA," he says.
Sansone also discovered the company's hidden jewel: its neglected pediatric home-care operation. He realized that when it came to medical treatment, "children aren't just small adults" and figured a company focusing on their needs would work. So he took a $50,000 second mortgage, and bought the unit in a $9 million leveraged buyout in 1989.
He hasn't looked back. Working closely with pediatricians, PSA has built a reputation for providing equipment geared to children, as well as nurses accustomed to their medication and therapy needs. Last June he took PSA public, raising $14 million. Much has gone to pay for seven acquisitions, which are fueling PSA'S growth as Sansone extends its territory. The deals should boost revenues 46%, to $70 million, for fiscal 1995, while analyst Randy Huyser of Furman Selz expects earnings to rise 86%, to $3.9 million. If the company keeps pulling in cash at this pace, that Joe Doll is going to need a bigger diaper.By Maria Mallory in Norcross, Ga.