Care Enterprises Reports Lower First-Quarter Net

Offsetting an operating loss with profits from the sale of three nursing home facilities, Care Enterprises said Friday that it posted net income for the first quarter of $264,000, less than half the $572,000 net income earned in the same quarter last year.

Care, the nation’s fourth largest nursing home operator, had a quarterly operating loss of $190,000 but managed to remain profitable because of the net gain of $454,000 on the nursing home sales, Derwin Williams, the company’s executive vice president and chief financial officer, said in an interview.

Williams said, however, that the Laguna Hills-based company should post operating profits for the current quarter as it refinances its debt, increases its occupancy and adds more higher-paying patients.

Revenues for the quarter increased 37.5% to $64.1 million from $46.6 million.

The company, which operated 40 facilities when it went public in 1983, has taken on $194 million in long-term debt since then to swell to 124 facilities in seven states at the end of the year.

While Care does not plan to make any major sales or acquisitions, it sold three facilities and purchased one in the “normal course of business” during the first quarter, Williams said.

While Care’s aggressive expansion has been expensive, “assimilation is almost complete and economics of scale will soon result,” Boyd Hendrickson, president and chief operating officer, said.

Hendrickson said the quarterly net income also was affected by a higher provision for income taxes because of changes in credits and higher non-deductible expenses.

Part of the company’s refinancing plan, Kristof said, is to sell five bond issues, at 7.3% interest, to erase the 13.5% interest it is paying on a $13.5-million debt.