Nichols Posts $7.7-Million Quarterly Loss

Nichols Institute, which operates medical testing laboratories, Thursday reported a second-quarter loss of $7.7 million resulting from a onetime charge of $13 million to restructure its Dallas operations.

The quarterly loss amounted to 48 cents per share. Net income before the charge would have been $1.2 million, or 8 cents per share, the company said. This contrasts with profits of $2.3 million in the same period last year.

Sales for the second quarter were $73.3 million, up 24% from the $59.1 million in the same quarter of 1991.

Albert L. Nichols, chairman of the San Juan Capistrano-based company, laid out no specific plans for fixing the problems in the Dallas operation, other than saying the company will “relieve the adverse impact from this operation in the future.”

The $13-million non-recurring charge, which amounted to 56 cents per share after taxes, will cover the write-down, or devaluation, of certain Texas operations and future costs anticipated because of the restructuring. The company has stopped short of saying it will close the laboratory, which employs more than 100 workers.

But in relation to the overall operation of the company, the Dallas laboratory is but a drop in the test tube. It accounts for about $10 million in annual revenue out of nearly $300 million for the entire company, said Chief Financial Officer Jim Whitmer. The laboratory was founded in 1990 as a joint operation between three Dallas-area hospitals and Nichols.

The company took an additional $4-million charge against profits last December to try to straighten out the Dallas lab’s problems by integrating its operations with labs in east and west Texas. Now, Whitmer said, more drastic action is needed.

Nichols stock, which is traded on the American Stock Exchange, closed Thursday at $8.50 a share, up $1.37.

Health-care industry analyst Jeff Berg of Chicago Corp., an investment bank in Chicago, said the $13-million charge shows “they realized they had a problem.” He said that Nichols is a solid company that does best in specialized work, but has been less successful with general medical laboratory work.

For the first six months of the fiscal year, Nichols lost $6.6 million, or 43 cents per share, contrasted with a profit of $4.2 million, or 28 cents per share, last year. Revenue was $143 million, a 30% increase over $109.7 million in the first six months of 1991.