InSight considers internal growth as net income soars

Barely three months after InSight Health Services began exploring strategic alternatives aimed at bolstering the company’s value, another option has emerged: standing pat.

In late January, Newport Beach, CA-based InSight, which develops, operates, and manages freestanding imaging centers in several regions of the country, hired a financial advisor and charged it with exploring strategic alternatives designed to enhance shareholder value. Sale of the company, a merger, or recapitalization were the three primary options being considered.

Although InSight president and CEO Steven Plochocki is tight-lipped about any progress that had been made, he has signaled that the early interest in pursuing outside options has dissipated, hinting that the company may decide to continue its present course and make no drastic change.

“Management believes in this business, management believes in this company, and we believe we can create a much larger company with our existing management team,” Plochocki said. “We’re interested in doing that, we’d love to stay on and do that.”

Whether Insight’s most recent operating results-which showed total revenue for the third quarter and first nine months of the fiscal year up 13% and net income up 105%-is influencing the company’s tilt toward the status quo is not known. But Plochocki, who joined the company less than two years ago, definitely has his sights set on increasing Insight’s role in what he estimates is a $60 billion industry.

“We worked very hard these last six quarters to develop operating models and logistics models so that we would have a strong foundation for layering on new business and assimilating it into our system,” he said. “Now that we’ve done all that work and established ourselves in a credible way through performance, we believe the time is right to grow.”

One way to do that is to expand the company’s repertoire. MRI services make up 80% of Insight’s business. Although this modality will remain a core offering, InSight is eyeing PET with cautious enthusiasm.

“We want to let PET mature a little more before we roll it out in a big way,” Plochocki said. “When we make our decision about where to make our capital expenditures, we may still find that getting 1.5 tesla into certain markets where we can do 20 scans per day is the best business decision for us. However, there may come a point when we’ll be able to invest in PET units in a certain market, and that will be the better decision.”

Until then, InSight, which boasts 70 fixed-site imaging centers and 77 mobile MRI networks serving patients in 30 states, will continue striving toward its stated goal of $200 million in revenue for the current fiscal year. The company hopes revenue will top $500 million in the not-too-distant future.