‘Substantial Loss’ Forces Cutbacks at Intercare
Intercare, which had hoped its operations would be strengthened by its purchase of a competing chain of Southern California health clinics last year, said it will report a “substantial loss” for the fiscal year ended Jan. 31.
Officials of the Culver City company had no immediate estimate on how large the loss might be, but company Chairman Philip J. Fagan Jr. said in a statement that as a result of Intercare’s poor financial performance, the company is reducing its 170-person work force, closing two medical centers and is considering additional closings.
Intercare, the largest chain of walk-in urgent-care clinics in Los Angeles and Orange counties, said the loss results from the writeoff of expenses associated with last summer’s acquisition of 12 clinics in Los Angeles and Orange counties from U.S. Medical Enterprises for $3.1 million in cash and stock.
Intercare also attributed the loss to expenses associated with a recently terminated equity and debt offering, expenses associated with restructuring certain partnerships operated by the company and an increase in its reserve against accounts receivable.
Clinics advertising extended hours and specializing in urgent care first began sprouting up in shopping centers and in other heavily traveled areas a decade ago. But they have been forced to change their focus from urgent care to other kinds of medicine because of cutthroat competition.
In 1982, for example, there were only 30 clinics in California; now there are more than 200 statewide, according to the National Assn. for Ambulatory Care Centers, an industry trade group in Dallas.
In a brief telephone interview, Fagan said last summer’s deal to acquire U.S. Medical Enterprises was poorly timed since it came during a period of increased competition in the industry. “Some of our clinics are up and others are flat,” he said, because of competition from “the significant number of physicians in Southern California.” In an effort to shore up operations, he said, Intercare is “looking at all kinds of affiliations” for its clinics with other health-care providers. Some areas being explored, he said, include health maintenance organizations and providing health services for individual companies.
Formed in 1985, Intercare operates 39 health-care facilities in Southern California, including the 12 clinics acquired last year from U.S. Medical. For the year ended Jan. 31, 1986, the company had net income of $962,912 on revenue of $12.9 million.
