Leaner Care Enterprises Posts Loss : Reorganization: The Tustin-based nursing home operator reports a $46.7-million shortfall for 1989 as it sells marginal and money-losing facilities.

Nursing home operator Care Enterprises on Tuesday reported a $46.7-million loss for 1989, mostly because of writedowns related to its ongoing reorganization in federal bankruptcy court.

The Tustin-based company said that although it sold some facilities last year, its revenue increased to $257 million due to a substantial boost in Medicare business. In 1988, Care Enterprises reported a $29-million net loss on revenue of $247.8 million.

Gary Massimino, Care Enterprises’ chief financial officer, said the losses reflected the wish of the company’s new management “to take a realistic, objective view of the company” and to sell marginal and money-losing facilities in order to raise cash to pay off creditors.

Richard Carpe, partner in charge of health care consulting for Laventhol & Horwath in Costa Mesa, said Care Enterprises’ financial results are not astounding or shocking. “It is what you would expect for a company that is attempting to retrench into a profitable long-term operating format,” he said.

The biggest factor contributing to greater losses in 1989, Massimino said, is a $17.6-million reserve set aside for discontinued operations, which reflects anticipated losses related to the sale of real estate or leasehold interests in 14 of the company’s nursing facilities.

Care Enterprises operates 77 nursing homes in California, New Mexico, Ohio, Utah and West Virginia.

The sale of facilities is central to a plan of reorganization approved by the U.S. Bankruptcy Court in March to help Care Enterprises raise about $21 million to pay its creditors. Under this plan, the company, which filed a Chapter 11 bankruptcy petition two years ago, intends to emerge from bankruptcy by the end of this year.

Massimino said the the company’s 1989 loss also includes an $8.6-million writeoff of good will acknowledging a decline in the value of 23 of its nursing facilities due to the bankruptcy and $2.8 million in legal and other professional fees associated with Chapter 11 proceedings.

He said the company took yet another $10.6 million in a combination of writedowns of other assets and the provision of reserves for the funding of employee benefits as specified by the reorganization plan.

Massimino said that, as of the end of 1989, the company had also set aside reserves to cover the $616,107 in fines it agreed last week to pay the state for health care violations during the past seven years.

Despite sales of facilities, Care Enterprises reaped more revenue in 1989 than in 1988, Massimino said, because last year Congress enacted legislation allowing more patients to qualify for Medicare reimbursement of nursing home care. However, he noted that the federal legislation was subsequently repealed and so will not contribute to the company’s revenue this year.

Nonetheless, Massimino predicted that by cutting back money-losing operations and expanding its more profitable endeavors, including its pharmacy and home health care businesses, the management of Care Enterprises is “looking to break even during 1990.”