Tokos Medical Stock Falls Amid Quarterly Loss

The price of Tokos Medical Corp. stock fell nearly 16% to $6 a share Thursday after the company reported a fourth-quarter loss that exceeded expectations of investors who have been waiting since 1992 for the company to post a profit.

The Santa Ana company, which provides managed care in obstetrics, said it lost $2.4 million, or 14 cents a share, in the quarter ended Dec. 31. Wall Street had expected the loss to be about 6 cents a share, according to a survey of analysts.

Tokos common shares traded at $7.125 on Wednesday, the day before the company issued its 1994 financial statement and reported a loss of $5.9 million--34 cents a share--for the year, compared to a 1993 loss of $26.4 million, or $1.53 a share. The company said that annual revenue fell almost 17% to $100.7 million.

Joe Millsap, an analyst at brokerage Morgan Keegan & Co. in Memphis, said the surprisingly large fourth-quarter loss led to a selloff of Tokos stock Thursday. “The report came in and revenue was lower than anticipated and the loss was greater,” he said.

Revenue for the fourth quarter was down 9% to $24.0 million.

Tokos officials also expressed disappointment with the financial report but said that changes made over the last year have simply not been in place long enough to realize benefits.

Over the course of 1994, the company laid off more than 200 workers; its work force now totals just over 1,000 people. But not enough savings were realized, said Nicholas Mione, Tokos’ chief financial officer. More layoffs are projected for 1995, but Mione said company officials do not yet know how many more Tokos employees will lose their jobs in the next 12 months.

Tokos, he added, has been repositioning itself as part of a plan to increase revenue. The company, which began by developing an in-home monitor to check the progress of patients with risky pregnancies, has in the last year changed its focus to provide a wide range of services to complement its technology.

Tokos has developed educational programs and counseling services, for example, to further reduce the risk of premature birth or complications that come with high-risk pregnancies. “The eventual goal is to do everything from early pregnancy screenings to working with the newborn babies,” Mione said.

The company also is redirecting its sales force to reflect the company’s new emphasis. Rather than selling individual physicians on using the monitors, Tokos’ sales force is changing gears to market its comprehensive prenatal care programs to health maintenance organizations.

Mione said the undertaking has taken its toll on the company in terms of lower-than-expected earnings. But he said the company is slowly stabilizing, as its decreasing annual loss shows.

He said Tokos should soon begin seeing benefits from its restructuring. “If we realize some cost savings and sales growth in the early part of the year, we should see quarterly profits by the third or fourth quarter,” Mione said.