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Health care business can beat market’s ills

BY PAULA BURKES Published: November 15, 2009
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No. 8 on this year’s list is a company that just joined the rankings. Oklahoma City-based Graymark Healthcare Inc. — a three-year-old medical holding company that owns and operates independent pharmacies, diagnostic sleep centers and a medical equipment company that treats patients for sleep disorders — was private until a January 2008 reverse merger with an Oklahoma film production company that traded its stock over the counter.

Graymark, which began listing on Nasdaq in September 2008, ranked fourth in change in revenue (up 44.33 percent); sixth in change in earnings per share (up 54.55 percent) and 34{+t}{+h} in total one-year return to shareholders — stock price plus dividend (down 68.25 percent). Total revenue was $105.06 million (projections are $120 million for 2009) and net income, negative $2.8 million.

Chief executive Stanton Nelson said the company’s pharmacy arm, ApothecaryRx, accounts for 70 percent of its sales. Of the remaining 30 percent, 80 percent is generated by its sleep labs, which will carry the brand name Nocturna Sleep Care, and 20 percent, its Nocturna Sleep Therapy equipment company.

But with the unique opportunity in the sleep diagnostics industry, Nelson expects the pharmacy and sleep arms to flip flop. The equipment company will drive sales, followed by the labs and pharmacies, he said. Graymark does not expect to grow ApothecaryRx, Nelson said. The company has 18 pharmacies in Oklahoma and four other states. Most are near hospitals and kept original names, like Ken’s Discount Drug in Norman and Tahlequah’s Cox Pharmacy.

"Our goal is to be the national leader in sleep diagnostics and treatment,” Nelson said. Of 3,300 sleep labs nationwide, industry leader SleepMed — a private company in South Carolina — has only 160, he said. Graymark is No. 2 with 28 freestanding facilities and 62 hospital contracts in 11 states. There are three labs in Oklahoma City and three in Tulsa.

"All that fragmentation out there is a unique opportunity for us to consolidate,” Nelson said. "We’ll grow organically (with the industry growth) and also through acquisitions,” he said. Graymark has 600 employees. Joe Harroz, former general counsel for the University of Oklahoma, is president.

Jake Dollarhide, chief executive of Longbow Asset Management Co. in Tulsa, said Graymark seems to have opportunity. He points to the company’s August acquisitions from Avastra Sleep Centres Ltd., which more than doubled its size, and industry consultant Frost & Sullivan, which predicts the $3.