Skeptics Remain Despite Abbey’s High Earnings; Stock Drops : Profits: Several analysts are still concerned about changes and accounting strategy at the Costa Mesa home health-care firm.

Fueled by numerous acquisitions, Abbey Healthcare Group Inc. reported record earnings Tuesday for its 1994 fiscal year.

Despite the upbeat news, which was announced after the market closed, the home health-care company’s stock dipped--falling $1.63 a share to close at $27.

For the fourth quarter, the company’s net income increased to $7.7 million, or 51 cents a share, compared to $3.16 million or 29 cents, in 1993. Revenue for the quarter was up 40% to $121.4 million, compared with the same quarter a year ago.

Net income, for the 12 months ended Dec. 31, increased 50% to $19.2 million, or $1.38 cents a share. Revenues rose 58% to $439.2 million compared with the prior year.

Still, several Wall Street analysts expressed concern over recent management changes at Abbey.

Late in December, Abbey President Jerilyn Asher was asked by the board to step down. The request was withdrawn a day later and Asher resigned shortly thereafter. Asher joined the company last June as part of Abbey’s acquisition of Protocare Inc. in Waltham, Mass.

“The company’s performance in the second half of the year has exceeded our expectations,” Abbey Chairman Timothy M. Aitken said in a prepared statement. A company spokeswoman said Abbey’s record fourth-quarter earnings should put to rest any questions about its management changes.

Scott Butler, an analyst with Red Chip Review, a research firm in Portland, Ore., said Abbey’s executive restructuring and its accounting strategy, which stretches out when the company would pay for acquisition-related debt, still concern him. “Yes, Wall Street is nervous about the company, and for very good reason,” he said.

The earnings reported Tuesday were much better than expected by analysts, said Butler, but the numbers require additional scrutiny. “They are amortizing (acquisition expenses), which pumps up their earnings.”

Butler said Abbey is scheduling a longer-than-normal period to absorb costs, which will provide it with higher profits than if it had chosen to write off the expenses faster.

Ann Logue, an analyst with investment bank Volpe, Welty & Co. in San Francisco, said that she is pleasantly surprised with Abbey’s performance, which she expects will bring the stock price up after Tuesday’s drop.

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Abbey’s Record Income

In the fourth quarter ended Dec. 31, Abbey Healthcare Group Inc. reported record quarterly income of $7.7 million on revenue of $121.4 million. (Figures in thousands of dollars, except per-share data:

4th qtr. 4th qtr. 12 months 12 months 1993 1994 1993 1994 Revenue $86,668 $121,369 $278,457 $439,175 Net income 3,164 7,659 14,312 22,662 Per share 0.29 0.51 1.42 1.59

Source: Abbey Healthcare; Researched by HOPE HAMASHIGE / Los Angeles Times