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University General Health System, Inc. (UGHS) Is “One To Watch”

|Includes: University General Health System, Inc. (UGHSQ)

University General Health System has put together a three-pronged strategy for capturing territory in a domestic healthcare market set to balloon over 34.5% by 2020 alone, with a platform consisting of hospital facilities, senior living communities, and industry-related support services like billing, coding, and customized software solutions for handling the healthcare revenue cycle. This extremely diverse approach, integrating many of the essential logistical facets typical of the sector, has helped UGHS create highly-localized regional health networks with profound impact in a given radius.

The company's flagship healthcare facility is a gorgeous fusion of cutting-edge clinical care capability, highly-personalized care, and a business culture that is omnipresently aware of how environment impacts mood and recovery. It is a kind of boutique approach that blends luxury hotel environs and personnel attitudes with 24-7 emergency service capability in a general acute care setting. The physician-owned University General Hospital was founded back in 2005 and formed the cornerstone of UGHS's business, something which has since grown to encompass the acquisition of many other healthcare facilities, as well as the senior care, and support segments.

University General Hospital is a 69-bed site proximal to the Texas Medical Center in Houston that features amenities like private rooms where meals are served on fine china and catered by the company's own The Sybaris Group, LLC (acquired by UGHS in 2011), a premier hospitality service provider that handles everything from housekeeping to concierge, and event/conference planning. UGHS has made a series of key acquisitions since inception with a heavy emphasis on the Houston market, and today has several University General Hospital departments like the Robert Horry Center For Sports & Physical Rehabilitation, in addition to an imaging center, physical therapy center, and advanced wound care (hyperbaric) facility.

Provider-based Hospital Outpatient Departments (HOPDs), like the University General Hospital Hyperbaric Wound Care Center or the 3-bed Baytown Endoscopy Center (ambulatory surgery), are perfect examples of this standalone capacity and department approach for building acute care license-driven solutions. Beyond backend synergies like that achieved through the Sybaris acquisition, UGHS is grabbing considerable margin through improved billing, coding, and revenue cycle management via Autimis, which not only handles medical billing and coding with ease, but also develops the software in-house. Autimis is shattering expectations in the healthcare transaction space when it comes to ease of use and optimized workflows, with a host of software products engineered to handle everything from business analytics via a powerful dashboard app, to automated claim status, and total healthcare entity support via powerful engines like their proprietary Revenaid Practice Management platform.

With baby boomers retiring in droves, the market for senior living facilities is going to overheat and UGHS is in a prime position to capitalize mightily on this dynamic with upscale community living that brings 24-hour assistance to mid-acuity frail and elderly residents. Trinity Oaks of Pearland, an 80-unit senior living facility nestled in the heart of Pearland Parkway, just off the main strip in fast-growing Pearland, Texas, is a prime example of the kind of senior care we are talking about here. UGHS's TrinityCare Senior Living segment is eager to expand beyond their current footprint of three such facilities. Currently the company offers Trinity Shores over in Port Lavaca, TX, in addition to their Trinity Hills of Knoxville facility in Tennessee, with projections of expansion into identified growth markets in the region, including Brazoria and Katy, TX, Crossville and Seymour, TN, and choice areas in Covington and Shreveport, Louisiana. The emphasis is on quality facilities, as is the case within the company's hospital segment and TrinityCare facilities are typically associated with a local host church. UGHS is constantly striving to develop close-knit relationships with the Christian community and larger community as well in any given area, an approach which has won UGHS mounting favor and customer engagement dynamics.

Further expansion into the thriving Pearland market was announced recently (Dec 21, 2012) as UGHS moved to acquire 31 acres of prime real estate upon which the company intends to construct a multi-purpose facility with a 50-bed general acute care center, as well as a full-service 10-bed ER, and an 8-bed intensive care unit (in addition to ORs and other infrastructure). This new facility will be just 15 miles south of the company's flagship hospital, and in addition to the 50k square foot office building set to be constructed on-site, UGHS intends to put in a 42-unit memory care facility that will help to expand an already strong position in Alzheimer's care which the company has established.

The company's broad-spectrum approach to growth in the sector, focusing on acquiring complementary assets ranging from real estate and senior living infrastructure, to hospitals and other acute care facilities, as well as backend/ancillary support offerings means that shareholders can benefit in a very low-risk fashion from the obvious future sector trend (something evident in UGHS's consistent ability through 2012 to beat out EBITDA margins across the board compared to the competition). Healthcare as a percent of U.S. GDP is set to climb steadily higher over the next decade and the potential for innovations like the physician-centric health care networks UGHS is creating will end up crushing the sector dinosaurs easily with superior cost/quality metrics. Fully integrated, multi-specialty regional healthcare that really focuses on the client relationship while catering to physician's needs, backed up by a strong foundation in top-of-the-line senior care communities, makes UGHS a strong candidate for dominating the antiquated models of its competitors.

Markets will be eager to get some hot feedback on this latest development and obtain other insights into UGHS after the company's presentation at this year's Noble Financial Capital Markets 9th Annual Equity Conference (Jan 22).

Interested parties can head over to University General's website to learn more at www.UGHSystem.com

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