Companies in the News
July 19, 1999 5 minutes read
Companies in the News
Coram to record 2Q99 charge
Coram (Denver) said last week it will take a charge in 2Q99 to account for substantial losses under its contract with Aetna U.S. Healthcare (Blue Bell, PA), according to a filing with the Securities and Exchange Commission (Washington). Coram terminated the five-year contract and sued Aetna U.S. on June 30 for more than $50 million, alleging fraud, misrepresentation, and breach of contract. Coram began providing services for more than 2 million Aetna U.S. insureds in eight states from July 1, 1998. Aetna U.S. sued Coram to block the contract termination. A federal district court in Philadelphia issued an order earlier this month keeping the contract in force.
According to the filing, Coram intends to advise both Aetna U.S. and the court this week that unless it reaches an accommodation with Aetna U.S., it will no longer pay network providers for services rendered under the contract. Coram said the service it provides for the insurer costs more than Aetna U. S. has been paying under the contract.
Coram’s contract with Aetna represented about 12% and 20%, respectively, of Coram’s total revenues for FY98 and 1Q99. The loss of Aetna revenue will hurt Coram’s revenue, the company said. The company said if the court rules Coram is financially responsible for service performed after June 30, it would incur substantial additional losses.
Flagship acquires MedChoice
Flagship Healthcare (Miami Lakes, FL) has acquired MedChoice Pharmacy and Infusion Services (Tampa, FL). The acquisition further enhances Flagship’s core specialty pharmacy business and increases annual revenues to $115 million. The terms of the acquisition were not disclosed. MedChoice, which provides pharmacy services to more than 100 skilled nursing and assisted living facilities, will join Flagship’s pharmacy division. Flagship’s pharmacy division will take the name of MedChoice and will be a division of Flagship.
Flagship raised $64 million in debt and equity, funding that was used to finance the MedChoice acquisition and provide capital for future growth. The credit facility was provided by CIBC, Suntrust Bank, and Banque Paribas.
GF now trading on the OTC
Graham-Field Health Products (GF; Bayshore, NY) stock is now being traded on the over-the-counter bulletin board under the symbol GFIH.
RI agency files for Chapter 11
Lifetime Medical Home Care in Rhode Island has filed for Chapter 11 bankruptcy, reported the Providence Journal-Bulletin. The company’s biggest creditor, the federal Medicare program, is also its primary source of income. Medicare wants the company to pay back hundreds of thousands of dollars for reimbursements made in 1998 while a new payment structure was being developed. Under the new structure, Lifetime would have received less money than it did, and now Medicare wants the difference of $906,000 returned. Under a bankruptcy court consent order between Lifetime and Medicare, Lifetime will pay $14,070 a month into an escrow account. The money will go to Medicare once the government proves it has a right to the money, the Journal reported.
Lincare shares rise 20%
Lincare Holdings’ (Clearwater, FL) shares rose 20% following a cut in reimbursements that was smaller than expected in a Medicare pilot program in Polk County. After reviewing competitive bids for certain medical supplies, Medicare will cut oxygen reimbursement by 18%. The shares may have also rose as a result of news that federal prosecutors closed a criminal investigation into the billing practices of Apria Healthcare Group (Costa Mesa, CA), Lincare’s chief competitor. Lincare’s stock has been low since March when the company announced that federal authorities subpoenaed certain billing and patient records from its offices in Tampa, FL. Shares closed a week ago at $30.50, up about $5, and still far below its high a year ago of about $44.
Mariner CIO resigns
Mariner Post-Acute Network (Atlanta) Senior Vice President/CIO Robert Napier will leave the company at the end of July to accept a position with Compaq Computer Corp. (Houston). At Compaq, Napier will also be senior vice president/CIO. Keith Martin, Mariner’s vice president for inpatient systems, will assume the CIO responsibilities once Napier leaves.
Matria to market CooperSurgical product
Matria Healthcare (Marietta, GA) has formed an agreement with the CooperSurgical (Shelton, CT) unit of The Cooper Companies (Irvine, CA) to market and distribute the FemExam pH and Amines TestCard for the diagnosis of vaginitis. This will enable Matria to expand its available women’s health offerings to physicians and payors for the diagnosis and treatment of disorders affecting both the obstetrical and gynecological marketplaces. Matria will generate sales of the product and receive remuneration for those sales.
NM drops investigation of Olsten subsidiary
Olsten Corp. (Melville, NY) has announced that the New Mexico Attorney General’s Office has dropped its criminal investigation into past practices of Quantum Health Resources, a subsidiary acquired in 1996. The investigation focused on allegations of improper billing and fraud against the state’s Medicaid program, mostly during the years before 1996. The company will continue to cooperate with the attorney general’s office concerning related civil inquiries. "We continue to hold constructive discussions with the government," said Olsten President/CEO Edward Blechschmidt. "We believe it is in the best interests of the company, our shareholders, our clients, and our employees to be diligent in these efforts."
In other news, the company’s Olsten Health Services subsidiary has signed an agreement with Apria Healthcare Group (Costa Mesa, CA) establishing Apria as a preferred provider for durable medical equipment for clients served by Olsten.
Priority Healthcare promotes new Web site
Priority Healthcare (Altamonte Springs, FL) has entered into an agreement with healthcentral.com, the first on-air, online brand to provide a single source of accurate, entertaining, and personalized health information for both consumer and professional audiences. The agreement will integrate Priority’s www.hepatitisneighborhood.com links in all hepatitis-related areas of Health Central’s Web site, providing direct access for individuals desiring comprehensive treatment management information and services.
Rehabilicare acquires Compex SA
Rehabilicare (New Brighton, MN) has acquired Compex SA (Lausanne, Switzerland), a private developer of home use electrotherapy products for European markets. The cash transaction includes the purchase of all outstanding Compex shares and repayment of $500,000 debt to shareholders. Rehabilicare paid $11 million at closing. It will pay up to $2 million more if Compex achieves operational targets. Compex will operate as a wholly-owned subsidiary of Rehabilicare, but its products will continue to be marketed under the Compex name.
Sunrise signs contracts valued at $6 million
Sunrise Medical’s (Carlsbad, CA) Home Healthcare Group has signed two major contracts with Novation and the University HealthSystem Consortium (UHC). The three-year contracts stipulate that Sunrise will supply durable medical equipment to Novation customers. They could generate as much as $6 million in annual sales for Sunrise. Each contract includes the option for a two-year extension. The first agreement is the continuation of contracts with VHA Inc., Novation’s supply company, and UHC. It began July 1 and is expected to generate more than $2 million in annual sales for Sunrise. The second contract, which begins Aug. 1, covers products from Sunrise’s personal care products division to be manufactured under Novation’s private label brand. Total annual sales for the second contract are estimated at $4 million.
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