Dynacq Healthcare operates specialty surgical hospitals that perform bariatric (weight-loss), orthopedic and neuro-spine surgeries. The company's two hospitals are located in Texas, tying its profitability to demographic and economic trends in the state. The high obesity rate in Texas, for example, has increased demand for bariatric surgeries, boosting Dynacq's revenues.
Dynacq's specialty procedures are high-margin - bariatric surgeries, for instance, net its hospitals about $25,000 per procedure. Nevertheless, Dynacq has struggled to remain profitable during the past three years, facing difficulties in specialty surgeon recruitment and below-cost reimbursements from workers compensation plans, which account for about half of revenues. After the sales of two facilities, the firm posted a positive net income in 2007 for the first time in four years.(Read more at Wikinvest )