National Medical Net Falls 23% in Quarter

National Medical Enterprises Inc., one of the nation’s largest health-care companies, on Wednesday said its net earnings dropped by 23% for the second quarter and 10% for the half.

The decline in profits at the Los Angeles-based health-care concern was attributed primarily to a higher tax rate. The company lost certain investment tax credits for the current fiscal year as well as a portion of those for its previous fiscal year under this year’s tax reform measures.

For the second quarter ended Nov. 30, the company earned $29 million on revenue of $1.01 billion, compared to a year earlier when it earned $38.5 million on revenue of $862.5 million.

The company said its tax rate was 51.8% for the six months ended Nov. 30, compared to 43.8% in the previous year.

National Medical officials were not available for comment on Wednesday.

However, in a prepared statement, NME Chairman Richard K. Eamer said the new tax legislation eliminated most investment tax credits for the current fiscal year and a portion of those for the company’s fiscal year that ended in May.

“The higher effective tax rate negatively impacted our second-quarter and six-month earnings by 13 cents per share,” Eamer said. “While the new law penalizes us in the short term, our corporate tax rate is expected to drop sharply in fiscal 1988 and beyond to approximately 40% or less,” Eamer concluded.

For the six months, the company earned $65.2 million on revenue of $2.01 billion. During the same period a year earlier, it earned $72.7 million on revenue of $1.67 billion.

Pretax income from continuing operations rose by 3% for both the second quarter and the half.

National Medical owns, operates or manages 554 acute, rehabilitative, psychiatric and long-term care facilities with more than 67,000 beds.