Laguna Hills-Based Psychiatric Chain Turns a Profit

Community Psychiatric Centers on Tuesday reported a return to profitability for its second fiscal quarter, rebounding from a large first-quarter loss caused by restructuring costs.

But the company, which operates a chain of psychiatric hospitals, said its financial results continue to be depressed by nationwide efforts to control health-care costs. The company reported a profit of $3.5 million, or 8 cents a share, for the quarter that ended May 31, off 73% from earnings of $12.9 million, or 29 cents a share, for the same period a year earlier.

Revenue also declined, falling to $86.1 million from $94.7 million a year earlier, largely because of the sale or closure of seven of Community Psychiatric’s 51 hospitals in the United States, Puerto Rico and the United Kingdom.

“Their results this quarter were a little better than expected but are still weak,” said Todd B. Richter, an analyst with the brokerage Dean Witter Reynolds Inc. in New York. “They are a very well-run company doing all they can do in a very difficult industry.”

In the past few years the company’s hospitals have suffered as health insurers have targeted psychiatric care costs as one of the first areas in which to cut back.

Revenue generated from each patient at the hospitals fell to $450 for the latest quarter from $488 a year earlier. Average length of patients’ hospital stays fell to 15.7 days from 16.6 days.

The company, based in Laguna Hills, is in the process of selling off its less profitable hospitals and cutting about 10% of its work force of 4,000 to increase efficiency. It is also trying to diversify its operations by opening long-term acute care centers offering patients a less-expensive alternative to hospital stays, a business hoped to be more resistant to cost-containment pressures. In Tuesday’s trading on the New York Stock Exchange, Community Psychiatric’s stock lost 25 cents a share to close at $11.75.