Companies in the News
Companies in the News
LTTR to become largest CCSE shareholder
Community Care Services (CCSE; Mt. Vernon, NY) has been advised of the execution of a letter of intent covering the sale of 2.1 million shares of CCSE common stock by the company’s former president/CEO, Alan Sheinwald, to LTTR Homecare for an undisclosed purchase price. The payment of a portion of the purchase price is contingent upon the purchaser receiving reasonable assurance on or before April 1, 2000, that the ongoing federal investigation involving CCSE is no longer open or active. CCSE continues to cooperate fully with federal authorities, but cannot at this time predict when or if this matter may be resolved.
The transaction is subject to the approval by the board of directors of CCSE on or before Feb. 8, 1999. A closing will occur on or before the 15th business day following board approval. Upon closing and the receipt by LTTR of Sheinwald’s 2.1 million shares, LTTR will become CCSE’s largest shareholder. LTTR is an affiliate of Landauer Hospital Supplies (New York), a supplier of durable medical equipment and respiratory products.
HHCA to trade on Nasdaq SmallCap
Home Health Corp. of America (HHCA; King of Prussia, PA) said last week that its common stock will continue to be listed on the Nasdaq SmallCap Market because the company received an exemption from the $1-per-share minimum bid price requirement. The company said the exemption will expire April 20. While HHCA failed to meet the minimum bid price requirement, the company was granted an exception from this standard. If the company is able to demonstrate compliance with all the requirements for continued listing on or before April 20, it will have met the terms of the exception and will continue to be listed on the SmallCap Market. HHCA officials said the company expects to meet the requirements.
Interim teams with Crosby Marketing
Interim Healthcare (Annapolis, MD) has named Crosby Marketing Communications (Annapolis, MD) its agency-of-record following a nationwide review. The agency’s first assignment, said Interim, is to create the next phase of Interim’s national image and awareness advertising campaign focused on "Trust." Crosby Marketing will also assist with marketing research, targeted promotions, and web site development. Projected 1999 spending is $2 million.
PSAI fails to meet quorum
Pediatric Services of America (PSAI; Norcross, GA) adjourned its annual meeting until Feb. 2 after failing to reach a quorum. PSAI said the lack of sufficient votes was due to unavoidable delays in the delivery of proxy materials to shareholders. The company said it expects to have a quorum by Feb. 2.
Priority Healthcare’s spin-off complete
Priority Healthcare (Altamonte Springs, FL) recently announced the completion of the spin-off and distribution of the roughly 82% of Priority Healthcare common stock to the shareholders of its former parent company, Bindley Western (Indianapolis). The distribution was completed on Dec. 31. Shareholders of record received .448 shares of Priority Healthcare class A common stock for each share of Bindley Western common stock held on Dec. 15. Bindley Western has received the opinion of Pricewaterhouse Coopers to the effect that this distribution generally will not be taxable for U.S. federal income tax purposes to Bindley Western and its common shareholders.
Although the class A shares will not be listed on any securities exchange or automated dealer quotation system and their will be no trading market for the class A shares, they are valued the same as the Priority Healthcare class B common stock and will be converted into class B shares on a share-for-share basis when sold. Therefore, it is not necessary to convert the class A shares to class B shares prior to the sale of class A shares. Class A shares carry three proxy votes and class B shares carry one vote. Share holders holding the class A shares may sell the shares at anytime without restrictions. The two classes of Priority Healthcare common stock vote together as a single class.
Staff Builders records expense of $29M
Staff Builders (Lake Success, NY) said that during 3Q99 ended Nov. 30, the Medicare fiscal intermediary completed and issued the results of audits performed for the fiscal year ended Feb. 28, 1997. Additionally, the company has reached a settlement for a portion of state Medicaid liabilities. Based upon the company’s assessment of these matters and its estimate of liabilities for subsequent audit periods, it has recorded an aggregate expense of $29 million in the quarter ended Nov. 30, 1998. The company continues to appeal certain audit findings, which can take several years to resolve, and has engaged outside professional advisors to support the company’s positions on these issues, while concurrently negotiating deferred payment terms for amounts payable to the respective agencies, officials said.
As a result of the company’s operational restructuring, including the closure and conversion of many home healthcare locations from franchise to company-owned operations, restructuring costs of $4.5 million are included in the quarter’s results. Included in this amount is the write-off of goodwill and fixed assets related to closed locations, the write-off or reserve for receivables generated from converted franchise locations, the accrual for employee severance payments, and other related costs. Additionally, another $4.5 million was recorded, including the write-off or reserve of receivables from existing franchise and other company owned locations and other costs. The total of the foregoing charges aggregate $38 million in 3Q99.
Revenues during Staff Builders’ 3Q99 reached $99.4 million, a decrease of 24.3% from 3Q98 revenues of $131.3 million. The company recorded a net loss in 3Q99 of $45.4 million, $1.99 per share, compared to a net income in 3Q98 of $1 million, 4 cents per share.
On Jan. 14, the company’s bank, with which it has a secured credit facility, provided Staff Builders with written notification that, in its opinion, the company’s non-compliance with certain financial covenants constitutes an event of default under the terms of the credit facility agreement. Those covenants require the company to maintain a minimum level of net worth and a maximum ratio of senior debt to net worth, failures which resulted from the charges to the company’s 3Q99 results.
The bank has reduced the maximum amount which can be borrowed under the facility from $50 million to $40 million and has increased the rate of interest to 2% and 2.75% over the prime lending rate on its revolving line of credit and its acquisition line of credit, respectively. The bank has advised the company that while it has no obligation to provide additional advances, it is willing to consider making additional advances to the company under such conditions as it may determine. Staff Builders is in the process of negotiating with the bank as well as exploring other financing alternatives, officials said.
Star Multi Care adopts restructuring plan
Star Multi Care (Hicksville, NY) said that during the quarter ended Nov. 30, the company initiated a restructuring plan primarily to aggressively respond to the new reductions in Medicare reimbursement for the company’s Medicare agency, Star Multi Care Services of Florida, doing business as American Healthcare Services, by fundamentally reshaping the company for long-term growth in the changing environment. Restructuring costs include an accrual for the settlement of a lease at an abandoned facility of $300,000 and severance pay and payroll related benefits of $176,346. After giving effect to these and prior restructuring efforts, combined with service utilization adjustments projected for the remainder of FY98-FY99, the company expects to reduce costs to meet the reimbursement shortfalls without any further material adverse effect to the company.
Net revenues for the quarter decreased 16% to $12.8 million from $15.2 million in 3Q97. The decrease is primarily attributable to a reduction in net revenues from American Healthcare Services due to the restructuring. The company reported a net loss in 3Q98 of $101,336, 2 cents per share, compared to a net income of $496,214, 10 cents per share.
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