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Chad Therapeutics (Chatsworth, CA) said last week its senior vice president, Frank Fleming, will retire March 31. Chad said Fleming’s retirement had been planned since last year. No replacement has been named, officials said. Fleming will continue to serve the company as a consultant, primarily in marketing, sales, government, and industry affairs.
Community Care Services’ (CCSE; Mount Vernon, NY) Bernard Kruger, a director of the company since August 1996, has resigned from CCSE’s board, effective March 23, for personal reasons. In addition, Bruce Ansnes, a director since August 1996 and vice chairman of the board, also resigned, effective March 23. CCSE said last week its annual shareholders meeting, scheduled for Tuesday, March 23, has been rescheduled to Thursday, April 8.
Coram Healthcare (Denver) has entered into an agreement with Blue Cross and Blue Shield of Texas (BCBSTX; Richardson, TX), a division of Health Care Service Corp., a Mutual Legal Reserve company. Coram also has entered into two agreements with Horizon Blue Cross Blue Shield of New Jersey (BCBSNJ).
Under the agreement with BCBSTX, Coram will provide 260,000 BCBSTX members covered under the HMO Blue and BlueChoice plans access to a variety of prescription drug therapies that are delivered intravenously in the home. The agreement will reach those HMO Blue and BlueChoice members in Austin and San Antonio, TX, and the surrounding areas.
Under a new agreement with Horizon BCBSNJ, Coram will provide hemophilia patients covered under Horizon BCBSNJ’s 2.1-million-member plans access to blood products and services. Concurrently, a separate contract was renewed in which Coram will continue providing home infusion therapy services to Horizon BCBSNJ’s 1.4 million indemnity and PPO members.
Graham-Field Health Products (GF; Hauppauge, NY) has appointed John McGregor president/CEO. McGregor replaces Paul Bellamy, who resigned, GF said, due to a disagreement with the board over management issues. Bellamy, who served a short term as CEO, was appointed in late February. GF’s board also announced the appointment of Soren Reynertson as vice president/CFO. McGregor is a principal and Reynertson a senior associate with Jay Alix & Associates, internationally known for corporate turnarounds and financial restructurings.
The management changes come after an announcement from GF earlier last week that it will have to restate its financial statements for FY96 and FY97. GF said an internal investigation being conducted by the Audit Committee of GF’s board has identified certain accounting irregularities and errors that will likely have a material effect on the company’s FY96 and FY97 operating results, requiring the company to restate its financial statements for those periods. As a result, GF said it believes neither the previously issued FY96 and FY97 financial statements nor the auditors reports for those years should be relied upon, consistent with guidelines promulgated by the auditing profession.
GF said it does not expect the adjustments to materially impact its business or operations on a going-forward basis. Officials also said GF does not know of any material irregularities or errors relating to its financial results for FY98. The investigation was initiated, officials said, after management discovered some information that raised questions regarding the accuracy of GF’s FY97 financial results. Based on the results of the investigation as of last week, GF has preliminarily determined that pre-tax losses may increase to $10.7 million, from $9 million, in FY96 and to $38.6 million, from $30.2 million, in FY97.
Simultaneously with the appointments of McGregor and Reynertson, GF’s board also elected Rupert Morely, the operations director of GF’s largest shareholder, Brierly Investments (New Zealand), as its new chairman.
The Department of Health and Human Services’ (Washington) Office of Inspector General has issued subpoenas to Lincare Holdings (Clearwater, FL) requesting documents from the company’s offices in the Tampa, FL, area. The department requested documents for Medicare patients who received home oxygen therapy in 1996 and 1997. Lincare said the reason for the inquiry was not disclosed, but that it plans to fully cooperate. Shares of Lincare fell as much as 36% following announcement of the inquiry. In November, a former Lincare employee in Orlando, sued the company for paying kickbacks to doctors who referred patients for oxygen services, reported the St. Petersburg Times. The government declined to join the lawsuit, but the employee’s attorney said the Tampa subpoenas show that the government is still interested in the case. "The government can join the lawsuit at any time, and I believe they will," Mike Bothwell, attorney for the employee, told the Times. "And for Lincare to say they don’t know what this is all about is ridiculous."
Prudential Securities (New York) has reiterated its strong buy/SBI rating of Lincare, as well as its $53 target price. The company’s stock weakness is not warranted, Prudential said in a report. It could be attributed to expectations of a 57% Medicare cut.
Matria Healthcare (Marietta, GA) director Rod Dammeyer purchased 30,000 shares of the company’s common stock, according to a Form 4 filed with the Securities and Exchange Commission (Washington). He purchased the shares for $3.38 each on March 3. He now directly holds 30,000 shares of company stock and indirectly holds 35,000 shares.
McKesson HBOC (San Francisco) has signed a new five-year contract with UW Health/University of Wisconsin Hospitals and Clinics to provide its CoSource supply management program to UW Health. The program integrates pharmaceutical distribution services, automated technologies, and information systems to help deliver the lowest total patient costs. In a related agreement, UW Health has bought McKesson’s Pathways Laboratory software.
Option Care (Bannockburn, IL) recorded revenues of $114.4 million in FY98 ended Dec. 31, a 14.4% increase over revenues of $100 million reported in FY97. The company reported a net loss of $691,000, 6 cents per share, compared to the previous year’s net loss of $2.1 million, 20 cents per share. The FY98 results include a charge of $739,000, 7 cents per share, due to tax adjustments and changes in reserves. Without this charge, the company would have reported net income for the year, it said in a statement. In 4Q98, the company reported a net loss of $614,000, 6 cents per share, on revenues of $29.2 million, compared to a net loss of $3.9 million, 36 cents per share, on revenues of $28.6 million in 4Q97.
Pediatric Services of America’s (PSAI; Norcross, GA) common share listings have moved to the Nasdaq SmallCap Market. Its stock symbol will remain the same. PSAI’s common shares did not meet the minimum bid price and minimum value of the public float requirements for continued listing on the National Market. The company recently learned that on March 11, a purported shareholder class action lawsuit was filed against the company and certain of its officers. The suit alleges that PSAI violated laws by misrepresenting and omitting material information concerning its finances during FY98. Said Chairman/President/CEO Joseph Sansone: "We have reviewed the complaint and believe the claims are unfounded, and the lawsuit is without merit. This lawsuit represents the very type of shareholder strike suits, instigated by class action plaintiff’s lawyers, that Congress has recognized as abusive. PSAI will vigorously defend itself against this litigation."
Personnel Group of America (PGA; Charlotte, NC) expects to report 1Q99 earnings per share of 21 cents to 23 cents. "It appears that our earnings will fall short of expectations," said PGA Chairman/CEO Edward Drudge. He attributed the results to slower-than-expected commercial staffing sales and low IT gross margin percentages. The company believes revenues in 1Q99 will be between $228 million and $232 million. "Given our slow start, however," Drudge said, "we currently expect diluted earnings per share for FY99 to be in the range of $1.11 to $1.16."
In other news, PGA announced last week an expansion of its existing share repurchase program. Under the expanded program, PGA’s board has authorized the repurchase of up to $52 million of its outstanding shares of common stock. Share repurchases made under this program, officials said, will be made from time to time in accordance with applicable securities regulations in open market or privately negotiated transactions.
Respironics (Pittsburgh) has launched its new Profile Custom Nasal Mask, an advancement in the treatment of sleep apnea. The mask fits the individual’s facial contours. It is submersed in boiling water, cooled, then placed on the face to create a personalized fit, the company said.
Sparta Surgical Corp. (Pleasanton, CA) has signed a non-binding letter of intent to purchase all or almost all of the assets of Western Medical (Walnut Creek, CA). Sparta is executing an agreement, which needs approval from its board of directors. The transaction is expected to be complete before May 31, the end of 1Q99. Western, a provider of home health aides and other health professionals, recorded net sales of about $55 million in FY98. Sparta President/Chairman/CEO Thomas Reiner has also announced that the company has locked up two other acquisition targets to purchase a home care medical equipment and respiratory business and a digital monitoring equipment and supply business.
The Securities and Exchange Commission (Washington) has filed an administrative proceeding barring the former CFO of Bio Clinic Corp., a division of Sunrise Medical (Carlsbad, CA), from practicing before it as an accountant. The action was taken against Robert S. Barton for violations of the antifraud provisions of the Securities Act of 1933. The complaint alleged that Barton committed accounting fraud that inflated Sunrise’s earnings by 16% in FY94 and 40% in FY95.
United Home Health Care of Northern California has plans to acquire assets of the medical services unit of Westaff (Walnut Creek, CA). Westaff signed a letter of intent to sell last week. Financial terms were not disclosed. Westaff said the sale includes three Western Medical Services offices in Jackson, Valley Springs, and Cameron Park. The company will sell most of its other Western Medical offices to Sparta Surgical Corp. (Pleasanton, CA) in a separate transaction, reported Dow Jones News Service. (See Sparta Buys Western Medical above.)