Ambitious Expansion : Care Enterprises’ Revenue for 1985 Jumps by 57%

Care Enterprises, its revenue and debt continuing to climb as a result of a massive expansion drive, reported net earnings of $3.6 million for 1985, up 10.8% from $3.25 million.

Revenue for the year, however, hit $238.5 million, a 57% increase from $151.6 million.

The increase came largely because of the Laguna Niguel-based nursing home company’s 1984 and 1985 acquisitions of three out-of-state geriatric care facility operators.

And Care’s long-term debt more than doubled in 1985 to $194 million, from $72.8 million at the end of 1984.

But the company, which operated 40 facilities when it went public in 1983 and now has 125 nursing homes with 13,000 beds, is reaching its expansion goal and does not intend to grow much more, according to Derwin Williams, the company’s executive vice president and chief financial officer.

Williams said Care will continue buying and selling convalescent facilities--it netted $1.7 million in 1985 from such transactions--but only to “improve our mix.”

He said Care is attempting to reduce the number of low-profit patients whose bills are paid by MediCal and other state insurance programs for the indigent and to increase the number of its more-profitable, private and federal Medicare-paid patients.

Williams said Care is now in the process of purchasing Santa Monica-based C-V American Corp., which owns or leases several facilities with a total of 806 beds.

Care, which has agreed to pay $15.6 million for C-V, already leases more than half of the Santa Monica company’s facilities, and will net only 367 beds from the deal. C-V’s assets, Williams said, include $4 million in cash.

That cash will come in handy for Care, which saw its fourth-quarter profits rise only 2.7% to $902,000, from $878,000, despite revenues that increased 43% to $66.7 million, from $46.6 million.

A major drain on Care’s income has been the interest that it must pay to service its long-term debt, which includes $82 million worth of convertible bonds issued to finance acquisitions.

Interest payments for 1985 totaled $17.8 million, Williams said, including about $5.2 million paid during the fourth quarter.

Williams said Care’s large revenue increases came in part from the September, 1984, acquisition of North American Health Care Inc. and the 1985 acquisitions of First Ohio Investment Group Inc. and its Americare Inc. nursing home subsidiary.

But Care’s 124 nursing facilities also did a better job of marketing their services last year, he said, and improved sales of their physical, speech and occupational therapy services by about 50%.

Care is the nation’s fourth-largest publicly owned nursing home operator, with facilities in California, Utah, Ohio, West Virginia, Arizona, Montana and New Mexico.