Health Grades Inc. is gaining momentum on Wall Street, spurred by the disclosure last week that two large mutual- fund firms recently purchased a combined 17 percent stake in the Golden-based company.
Shares of the health care information provider surged by 18.7 percent for the week, closing Friday at $6.74, up from $5.68 a week ago.
Founded in 1999, Health Grades provides online profiles of doctors, hospitals and nursing homes. Users also can view information on a doctor’s education, certification and any previous disciplinary sanctions.
General information on doctors and hospitals are free, with Health Grades charging a fee for more detailed reports.
Health Grades employs 135 people nationwide, including 120 in Colorado.
Fidelity Investments purchased 2.76 million shares, or 10 percent, of Health Grades, and RS Investments of San Francisco snapped up another 2.08 million shares, or 7 percent, according to documents filed last week with the U.S. Securities and Exchange Commission.
“That’s a great vote of confidence from a fund that has a lot of influence,” chief executive Kerry Hicks said of the Fidelity purchase.
The selling shareholder, Essex Woodlands Health Ventures of Chicago, remains Health Grades’ largest shareholder, even after the transactions.
Health Grades, with a market value of $185.9 million, is poised to grow in 2006, according to a report by Forrester Research, an independent market research firm in Cambridge, Mass.
With more Americans enrolling in “consumer-driven” health care plans – which allow individuals to customize their benefits and choose groups of doctors or hospitals for patient care – websites such as Health Grades are gaining popularity. About 12 million people are expected to enroll in consumer-driven plans in 2007, according to Forrester, up from 2.7 million enrollees in 2005.
Hicks said revenues of Health Grades are expected to grow at least 40 percent this year alone.
However, the company faces competition. Websites such as Subimo and WebMD present results in a more user-friendly format, Forrester said.
Forrester’s report also stated that the amount of free medical information available from Health Grades is greater than that on other sites, which will help the company gain market share.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
