AMI Cites Charges for 1st Quarterly Loss

Despite an increase in revenue, American Medical International has reported its first quarterly loss in 25 years as a public company. The loss came as a result of $175 million in write-downs in its second quarter.

The health-care concern, based in Beverly Hills, had record revenue of $862 million but reported a loss of $82.2 million for the second quarter ended Feb. 28. By comparison, AMI had earnings of $42.8 million on revenue of $649 million for the same period a year ago.

For the first six months of fiscal 1986, the company said it will post a $53.5-million loss despite revenue of $1.67 billion.

AMI’s write-downs included adjustments to the book value of several of its 18 overseas hospitals in Australia, England, Singapore, Spain and Switzerland and of various domestic operating divisions. In addition, the company bolstered reserves to cover bad debts and malpractice claims.

The slide in second-quarter performance came as AMI was buffeted by rumors of a possible takeover bid. The interested parties were said to be Universal Health Services of King of Prussia, Pa., Aetna Life Insurance and the Bass family of Fort Worth, which owns 11.4% of AMI’s stock. However, AMI repeatedly has denied the rumors, saying it has not talked to any of the alleged suitors except members of the Bass family. And AMI officials say the Basses are very supportive of AMI management.

Company officials said write-downs of assets amounted to about $115 million. Of that amount, $50 million was attributed to write-downs of some of its overseas hospitals. The financial slide appeared to be concentrated outside of Switzerland and England, because AMI officials said facilities in those two countries have fared well.

In addition, the company wrote down $45 million of alternative service operations such as alcohol clinics because they were not as valuable as originally estimated.

AMI also moved to curtail about $20 million worth of future development projects.

The write-offs included the beefing up--by $60 million--of reserves for accounts receivable, malpractice insurance and Medicare/Medicaid accounts.

The increases, company officials said, were necessitated by the growing difficulty that patients are having paying hospital bills as government agencies and health insurance plans transfer more of the economic burden for health care to consumers.