Dr. Allen Levy, a pathologist who built a medical empire that was embroiled in a scandal over Pap smear tests, has sold his interest in Unilab Corp., a Tarzana-based provider of medical services.
The sale completed an October, 1989, deal in which Unilab acquired three laboratories controlled by Levy for about $36 million of convertible preferred shares. Last October, Levy converted the preferred stock into 6.8 million shares of Unilab common stock, representing 15% of the company, and began selling them to outside investors at the conversion price of $5.265 a share.
Rich Michaelson, Unilab's chief financial officer, said Levy sold the last block of 2.8 million shares a week ago. "It's our understanding he has no more equity in the company," he said.
The three labs that Levy sold to Unilab were Central Diagnostic, Bio-Psychiatric Toxicology and Golden State Medical. In 1989, a sister lab of Central Diagnostic was closed by the state and fined $558,000 after a state health inspection found that the lab had misinterpreted 21% of a random selection of Pap tests, used to detect cervical cancer and other diseases in women.
Unilab has agreed to a restructuring plan that includes selling its non-California labs to one of its major stockholders, Corning Inc., a New York-based maker of industrial materials. For the first quarter of this year, it earned $3.2 million on sales of $57 million.