Caretenders’ site closings to cause 4Q99 $1 million charge
By MEREDITH BONNER
Caretenders (Louisville, KY) has closed and sold home care operations at two sites, and the company said it expects to take a charge of nearly $1 million in 4Q98 because of the closings.
The two sites, Caretenders’ Richmond, VA, nursing operations and its home medical equipment operations in Boston generated revenues of $1.2 million and $3.7 million, respectively, in 3Q98. Caretenders also said the two sites contributed pre-tax losses of $244,000 and $476,000, respectively.
The company’s chairman/CEO, William Yarmuth, said Caretenders will continue to focus its home health business on operating under the Interim Payment System (IPS). "We still see room for improvement in most of our markets," he said. "The positive effects of our restructuring actions have improved our operating results from the prior quarter."
Caretenders responded to the recent Medicare reimbursement cuts in July when the company laid off 150 employees as part of a restructuring designed to save $7 million a year.
In 3Q98 ended Dec. 31, Caretenders’ revenues rose to $24.8 million from 3Q97 revenues of $23.4 million, an increase of 5.9%. The company recorded a net income of $1.1 million, 34 cents per share, compared to net income in 3Q97 of $410,404, 13 cents per share. This net income, Caretenders said, included a one-time gain from settlement of litigation with Columbia/HCA Healthcare (Nashville, TN) of $793,000. The lower operating results were principally due to the impact of IPS for Medicare home health services, officials said.
CFO Steve Guenthner told The Courier-Journal of Louisville, KY, that much of the current improvement is due to increased sales in the company’s adult day care operations, which are not subject to the Medicare cuts that have hurt the rest of the business.
Caretenders also said it has been notified by Nasdaq that it does not meet the minimum public float requirement of $5 million. Caretenders is scheduled for a hearing concerning listing qualifications for the National Nasdaq market system. If Caretenders is unable to meet the requirements of Nasdaq, the company said, its stock would move from the National market system to the Nasdaq SmallCap Market.
Over the last several months, Yarmuth said, the company has been focused on operating under the new reimbursement system.
"We continue to believe that home healthcare is a vital piece of the health system in this country. Furthermore, we believe that our adult day care operations serve as a model for a new way to address the needs of the senior population," he said. "Our goal will continue to be to offer the quality services we think are necessary to allow seniors to remain outside of institutionalized care for as long as possible."