Summary Business: Medical technology services Headquarters: Woodland Hills CEO: Robert Funari Market Cap: $758 million Dividend Yield: None* Total Liabilities: $299.4 million P/E: 25.0 Long-Term Debt: $230.9 million *Syncor does not pay dividends Slowdown? What slowdown? That could be the rhetorical question Wall Street is asking about Syncor International Corp. A third quarter that included three acquisitions also had a 25-percent increase in operating income (to $15.4 million) over the same period last year. For years, the Woodland Hills-based Syncor dominated the nuclear pharmacy services field. Then, four years ago it launched a diversification strategy that has focused on although has not been limited to the delivery of medical imaging services in both the U.S. and foreign markets. The results so far have included a growth in revenue, from sales of $381 million in 1997 to $629 million in 2000. Net income in the third quarter of this year was $7.8 million on $193.8 million in revenue, compared to a net income of $6.3 million on $155.5 million in revenue in the same quarter of 2000. Much of that revenue growth can be attributed to the acquisitions Syncor has steadily made over the last three years. In fact, two of those completed in the third quarter, InteCardia Inc. and Inovision Radiation Measurement, contributed $5.7 million in revenue in the same quarter to the pharmacy services side of the business. “Both acquisitions had positive profit contributions in the third quarter,” said CFO William Forster. The strategy that led to the acquisitions and corporate growth, of course, has included taking on more debt than the once small and relatively unambitious company was accustomed to in the past. Apparently, that has not been a problem for Syncor. “Their numbers are in line with what Wall Street is looking for,” said Mitra Ramgopal, an analyst with Sidoti & Co. LLC. “If you look at their balance sheet three years prior, their rate wasn’t as high. But with an acquisition story, to make those kinds of moves it has to incur debt.” In the quarter ended Sept. 30, Syncor had outstanding debt of $230.9 million, up from $128 million in the same quarter of 2000. At the end of fiscal year 1997, that figure was $17.3 million. Though Syncor’s acquisition strategy will continue into next year, it may do so more with available cash than by taking on debt. “I don’t think (debt balances) will go up significantly from what we have now,” Forster said. Syncor Executive Vice President David Ward said he did not anticipate any more acquisitions in the fourth quarter. Forster said the company will probably spend $40 million to $50 million on acquisitions in 2002 and about $50 million to $60 million on capital expansion. Ramgopal said, “I think you’re betting here on execution, that Syncor is going to make medical imaging a success.” Ramgopal and others seem to think it is a bet worth taking. Third-quarter earnings met analyst consensus estimates of 29 cents a share, up from 23 cents in the same quarter a year earlier. The consensus of First Call/Thompson Financial analysts calls for earnings of 32 cents a share in the fourth quarter, $1.40 for all of 2001 and $1.73 for 2002. Ramgopal said, “This has been a very strong management team that has consistently met or exceeded Wall Street’s expectations, at least as far as EPS is concerned.” Syncor’s stock closed on Friday at $28.84 a share. Its stock reached a 52-week high of $44.09 in April and a 52-week low of $24 last November. It closed on Sept. 10, the day before the attacks on the World Trade Center and the Pentagon, at $33.28 and maintained that level despite downturns in the stock market once it opened the following week.