SysteMed Posts $477,000 Loss in First Quarter

Blaming a poor performance by its mail-order pharmacy subsidiary, SysteMed Inc. said Friday that it lost $477,000 for the first quarter.

The company, which manages prescription drug benefit systems for corporations and insurers, warned last month that it would post “no better than break-even” results after a faulty computerized processing system stymied operations at the company’s America’s Pharmacy Inc. unit, based in Des Moines, Iowa.

To fill the orders, the subsidiary was forced to hire additional personnel and ship orders overnight. Problems with the computer processing system have since been resolved.

The quarterly loss, equal to 2 cents a share, contrasted with a profit of $618,000, or 3 cents a share, for the same period a year earlier. Three-month revenue rose 7% to $30.8 million from $28.8 million.

The company, based in Laguna Hills, also said that, while America’s Pharmacy gained accounts during the quarter, initial sales were below expectations. The subsidiary had been banking on the additional revenue to offset promotional expenses in gaining the new business.

“Our business is growing significantly,” SysteMed spokeswoman Judith Woodward Archbold said. She added that the company expected about 15% of the new clients to begin ordering prescriptions but that only about 10% actually did.

Even so, the company said, it expects sales to grow by 20% to 25% by year’s end because of increased business at America’s Pharmacy and another subsidiary, INSURx Inc.

“Management has redoubled its efforts to ensure that the company’s operating cost structure is consistent with future profitability and reflects these growth expectations,” said J. Roberts Fosberg, president and chief executive of SysteMed.

In Friday’s trading on the NASDAQ market, the company’s stock closed at $4.625 a share, up 12.5 cents.