Dental Chain Reports Losses for Full Year

Citing overly ambitious expansion of its dental clinic chain, Safeguard Health Enterprises Inc. last week reported net losses for the final quarter and full year ended Dec. 31

The losses contrast sharply with strong year-earlier net earnings.

The Anaheim-based prepaid dental care company, said it had a 1986 net loss of $1 million, compared to net earnings of $3.4 million a year earlier. By contrast, 1986 revenues increased 24% to $61.8 million from $49.9 million a year earlier.

Safeguard, which recently announced plans to cut up to one-third of the 40 dental clinics it operates, said it took a $2.8-million write-down during the fourth quarter in anticipation of that cut.

Losses at the dental centers, coupled with the write-down, resulted in a fourth-quarter net loss of $2.4 million. A year earlier, Safeguard had net earnings of $970,000 in the quarter.

Quarterly revenues increased 17.2% to $15.7 million from $13.4 million in 1985.

The centers mushroomed to 40 by 1986 from five in 1983.

Although the dental center concept still makes sense, “we just over-expanded and it became hard to keep control of this empire,” said W. Bruce Steever, Safeguard’s chief financial officer.

Safeguard expects to either sell or close as many as 13 of the dental centers, potentially idling between 50 and 75 employees. As a result, the company expects to be profitable during the current quarter and for all of 1987, Steever said.