NME Sells Off 7 More Units; Net Sags 25%
A year after it sold off several peripheral businesses, National Medical Enterprises announced Thursday that it has redoubled its restructuring efforts, selling off seven more units in a bid to improve its sagging bottom line. The company also reported a 25% drop in net income for fiscal 1987.
The 80,000-employee, Los Angeles-based National Medical, which is the nation’s third-largest for-profit hospital chain measured by revenue, said the seven subsidiaries it is selling account for 17% of its business. The seven--which include the unprofitable National Medical Homecare of Orange and Stolte Inc., a Los Angeles-based builder of hospitals--have 4,500 employees and had about $500 million in sales in fiscal 1987, company officials said.
The hospital chain’s action came as it announced a $35.9-million net loss in the fourth quarter, compared to a loss of $27.6 million during the same period a year ago. The loss was largely the result of about $77.1 million in writeoffs, all but $4.5 million of which came in the fourth quarter.
Although revenue climbed to $2.9 billion from $2.6 billion for the year ended May 31, net income for the year fell to $63.5 million from $85 million the previous year. But National Medical officials said the latest restructuring would probably be the company’s last and that they expect the sale of the seven units, terms of which were not disclosed, to improve financial performance.
“I had a gentleman ask me, ‘How can you be so happy when you have such negative results,’ ” said Richard K. Eamer, the firm’s chairman. “I said, ‘Because we are like a cancer patient that has cut out the cancer.’ ”
Indeed, the company’s yearlong bid to transform itself into a smaller concern emphasizing speciality hospitals and long-term care was generally hailed by analysts.
“They have really cleaned up their act,” said Randall S. Huyser, a health-care analyst for Montgomery Securities in San Francisco.