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Dianon Systems Inc.
200 Watson Boulevard, Stratford 06615
President and CEO: Kevin C. Johnson
Revenues (FYE December 31, 1999): $76,097,031
Net income (FYE December 31, 1999): $4,131,059
Market capitalization: $267.5 million
No. employees: 681
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Business New Haven
8/21/2000
By: Kristine Hansen
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Dianon Systems touts itself as “more than a laboratory.” The company provides anatomic pathology testing using tissue and cell specimens and clinical chemistry testing. The company provides diagnosis for most types of cancers and for several genetic and chronic diseases. Dianon also does prognostic testing and also uses serum tumor markers for detecting disease and monitoring therapies.
So what sets Dianon apart from the rest? Unlike the approximately 80 percent of pathologists who work in hospital-affiliated groups numbering ten or fewer, this company focuses its business on a centralized pathology operation instead, facilitating its Dianon Pathology Systems and creating a pathology network in key locations around the country.
Also, Dianon emphasizes access to information relying on its information technology system, called Laboratory Information System (LIS), for interfacing between and among the laboratory, health plan information systems and practice management. The system allows for data retrieval, consultation between pathologists, centralized reporting as well as Internet and remote reporting. The system is also a platform for the company's CarePath information.
Dianon's multi-part CarePath program provides critical information to the physician and patient at time of diagnosis and beyond. Besides pathology reporting to the physician, the company offers a pre-procedure guide for the patient and follows with a post-diagnosis counseling report that may include an explanation of the illness and treatment options.
For more effective case management, Dianon also offers additional resources including managed-care notes on the health-care system, identification of the medical support that may be needed and a network profile that includes statistics and utilization information.
Central to its growth strategy is securing multiyear contracts. The company uses its national sales and marketing group to market to clinicians as well as large physician groups and health plans. Last year Dianon garnered a five-year contract for providing pathology services to Aetna U.S. Healthcare and SmithKline Beecham Clinical Laboratories. Also in 1999, Dianon signed a three-year contract with Quest Diagnostics for anatomic pathology and other testing for Oxford Health Plans. By year end the company had 385 contracts, 51 of which were signed in 1999.
Dianon revenues rose by almost 23 percent for the 1999 year to $76.1 million, compared to $62.2 million for 1998. Net income grew by 40 percent in 1999 to $4.13 million (59 cents per diluted share), versus $2.95 million (43 cents per diluted share) for the previous year. The increase in performance continued for the first six months of 2000, with revenues up 33 percent to $46.5 million and net income up 56 percent to $2.8 million (37 cents per diluted share).
This year marks the launch of several initiatives for the company including its HepProgram for hepatitis testing. The company will offer three types of tests in the program. Besides the immulogic tests for antibodies and antigens and chemistry testing for the monitoring of liver function, Dianon will offer molecular genetic assays for the detection of viral DNA and RNA. This will also enable the company to influence therapies based on results from its genomic diagnostics tests.
The company also announced a new telepathology initiative that will allow the company to conduct pathology consultations remotely nationwide. The company will use the Illumea telepathy application provided by e-MedSoft.com for the project. In addition, Dianon plans in concert with e-MedSoft to offer Internet Microscopy services to its surgical center clients.
Reflecting the company's performance and current initiatives, analyst outlook is positive with recommendations of moderate buy and strong buy. Analyst earnings estimates come in at 81 cents per share for the year 2000, and $1.07 for 2001. The price range for the company's stock over the past 52 weeks was a low of 8 5/8 to a high of 39 3/4. It is trading closer to the high range presently, closing at 37 on August 7.
Considering Dianon's initiatives and innovations, the company has developed itself into what may very well be “more than a laboratory.”
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