National Medical Reports It Lost $226.1 Million in Second Quarter

National Medical Enterprises Inc. said Tuesday that it posted a second-quarter loss of $226.1 million, or $1.36 a share, largely because it declared its psychiatric hospital business a discontinued operation.

The latest results contrast with a restated profit of $52.3 million, or 47 cents a share, in the year-ago second quarter.

Revenue for the three months ended Nov. 30 slipped to $769.9 million from $785.3 million.

The Santa Monica-based company said it decided to divest itself of its 61 psychiatric hospitals on Nov. 30, 1993, and expects to dispose of the properties by the end of its fiscal year in May.

Loss from discontinued operations for the latest quarter was $287.3 million, or $1.73 a share, compared to a loss of $25.6 million, or 15 cents, the prior year. Income from continuing operations was $61.1 million, or 37 cents, compared to $78 million, or 47 cents, a year earlier.

National Medical said the loss from discontinued operations includes an estimated loss on disposal, plus operating losses during the divestiture period. The company will continue to operate its psychiatric hospitals until they are divested.

NME Chairman and Chief Executive Jeffrey Barbakow said results in this fiscal year will continue to reflect the company’s efforts to resolve its legal problems and refocus its business.

“Enormous energy, time and resources have been dedicated to these tasks, and I am encouraged by the rapid progress made in the last seven months,” Barbakow said.

Barbakow said the company is concentrating on its core general hospital business.

In recent months, National Medical has settled billing disputes with several insurance companies, although it remains under investigation by federal authorities, who served criminal search warrants on Aug. 26 at 12 locations.