MEDPARTNERS: Downgrades Earnings Estimates For 1998
MedPartners Inc., the nation's largest physician-management firm, yesterday "lowered its earnings targets for 1998 and 1999," a move that caused the company's shares to lose 12.5% of their value "amid the widespread plunge on Wall Street." The Birmingham, AL-based company said expected earnings for the year would amount to 10-14 cents a share, "down from a First Call consensus analysts' earnings forecast of about 21 cents and compares with a loss of 22 cents in 1997." The Wall Street Journal reports that MedPartners said the lower earnings are in part due to "problems consolidating acquisitions in Southern California." Overall for the second quarter, MedPartners lost $23.6 million, down from a $73.4 million loss a year earlier. Net income was $1.8 million, down from $50.2 million in the same quarter of 1997. The company also took a $41 million charge during the quarter, part of which was attributed to "severance costs associated with the dismissal of about 1,000 of its 9,200 employees in Southern California." MedPartners officials said they project that Southern California operations will be profitable in the fourth quarter "before interest, taxes, depreciation, amortization and restructuring charges" (Sharpe, 8/5).
Getting Better All The Time
MedPartners President and CEO Mac Crawford said the quarterly results "are a reflection of our commitment to return the company to a healthy financial condition." He noted that the "continued strength of our Caremark and Contract Services operations provides a solid platform upon which we are rebuilding the physician services side of our business." He also said physician services operations in Southern California "showed meaningful improvement near the end of the second quarter when two of our major initiatives began to be reflected in our financial results" (MedPartners release, 8/4).
Bad Days Are Here Again?
The Wall Street Journal noted that MedPartners' move to lower earnings expectations "followed a similar move late last month by PhyCor Inc., the country's second-largest physician management company." After the PhyCor move, "stocks of most" physician-management firms "tumbled," and MedPartners and PhyCor shares "have yet to recover" (8/5).