Cash Woes Force to IPS to Take $3-Million 3rd Quarter Charge

Blaming the recession and “growing pains,” IPS Health Care Inc. said Friday that it is having cash-flow problems and will take a $3-million charge for its third quarter.

The company, which provides Magnetic Resonance Imaging services, said it is also in default on various leases and owes the Internal Revenue Service $500,000 in payroll taxes, interest and penalties. Problems collecting unpaid bills have been compounded by a new billing system, the company said.

While IPS is having “preliminary success” working out a payment plan with its creditors and the IRS, “there can be no assurance as to the success of either negotiation,” a company statement said.

Meanwhile, the company seeks to sell unspecified assets to raise cash, said chief financial officer Andrew Galligan, who was hired three weeks ago to help put IPS on sounder footing.

The $3-million charge for the quarter ended Jan. 31 includes $1.9 million for receivables, $900,000 for equipment write-downs and $200,000 for other operational charges.

The company has not yet announced its complete third-quarter financial results but warned that they will be “disappointing.”

For the six months ended Oct. 31, the company reported revenues of $6.3 million and earnings of $286,000, up from revenues of $4.5 million and a net loss of $134,000 for the same period of 1990.