Columbia / HCA Reports Slighter Profit Drop
Columbia/HCA Healthcare Corp. on Wednesday reported a smaller-than-expected drop in first-quarter earnings, as the nation’s largest hospital chain sheds businesses and copes with a federal probe of alleged Medicare fraud last year.
The Nashville-based company said profit fell 47% to $241 million, or 37 cents per diluted share, from $455 million, or 66 cents, in the year-earlier period. Revenue declined 2% to $4.9 billion.
The company was expected to earn 31 cents a share, based on the average estimate of analysts polled by IBES International Inc.
Last month, Columbia said it expected a first-quarter profit from continuing operations of 30 to 35 cents a share.
Columbia officials credited a restructuring, announced last fall in response to a federal health-care fraud investigation, with keeping profit from dipping more than 53%.
Columbia also said Wednesday that it will ask the Internal Revenue Service for permission to create tax-free spinoff companies from two of its five regional units with 63 hospitals. The request should be made in about three months.
The company had planned to spin off a third unit with 45 hospitals, but now has decided to sell some of those hospitals and place others in its remaining two units or with the two spinoff companies, spokesman Victor Campbell said.
Columbia is the target of a Justice Department investigation into allegations it overcharged Medicare, Medicaid and other government health programs.
Chief Executive and Chairman Thomas Frist announced the restructuring in November, and Columbia moved quickly to implement it. During the first quarter, the company announced agreements to sell assets worth about $1.4 billion.
Columbia shares dipped 13 cents to close at $32.25 on the New York Stock Exchange.
At a Glance
Other earnings, shown excluding one-time gains and charges unless noted, included:
INSURANCE:
* American General Corp.’s first-quarter earnings rose 17% to $250 million, or 98 cents a diluted share, from a year ago, exceeding estimates of 93 cents a share. The life insurance and consumer finance company benefited from increased sales of tax-deferred retirement saving plans, or annuities and acquisitions.
* Conseco Inc.’s first-quarter earnings rose 41% to $167.5 million, or 81 cents a diluted share, from a year ago, in line with forecasts, as the life and health insurer’s strong sales were bolstered by acquisitions of rival companies. Conseco is acquiring Green Tree Financial in a transaction it hopes to complete in the third quarter.
OTHER INDUSTRIES:
* CompUSA Inc.’s fiscal third-quarter earnings dropped 22% to $25.4 million, or 27 cents a diluted share, from a year ago, despite a 14% increase in revenue to $1.45 billion. Falling personal computer prices eroded profit margins, which the retailer warned is likely to continue for at least another quarter. Sales in stores open more than a year rose 1.2%, but sales including new stores were down 6%. CompUSA said it will scale back store openings in the next fiscal year to 20 to 25 from 30 to 40 and cut an unspecified number of jobs. Analysts had reduced their estimates to 25 cents from 41 cents after the company warned April 1 that earnings would fall in the second half.
* Humana Inc. said first-quarter earnings rose 28% to $50 million, or 30 cents a diluted share, from a year ago, matching estimates, as the managed-health-care company raised premiums for commercial health plans and increased the number of customers from government plans. Revenue jumped 31% to $2.4 billion.
* Qwest Communications International Inc. said its first-quarter loss widened to $6.65 million, or 3 cents a share, from $4.78 million, or 3 cents, a year ago, as revenue more than doubled to $177 million from $72.7 million. The company’s outstanding shares grew 19%. Analysts expected the long-distance company to lose 12 cents a share.
* Reader’s Digest Assn. Inc. said its fiscal third-quarter profit fell 61% to $14.6 million, or 13 cents a diluted share, from a year ago, matching estimates, as sales fell 7.1% to $635.5 million. The publisher of the world’s most widely read magazine also said it tapped Thomas Ryder, the industry veteran who built American Express Co.’s publishing business, as its new chief executive and chairman. Ryder, 53, replaces George Grune, who had been brought out of retirement in August after his successor, James Schadt, abruptly resigned.
* Revlon Inc. said its first-quarter loss narrowed to $19.9 million, or 39 cents a diluted share, much better than the 42 cents analysts expected, from a loss of $25.4 million, or 50 cents, a year ago. The maker of Revlon and Almay cosmetics said sales rose 3% to $534.3 million.
* Royal Caribbean Cruises Ltd. said first-quarter profit doubled to $77.5 million, or 88 cents a diluted share, from a year ago, far exceeding estimates of 79 cents, as revenue soared 67% to $659.8 million.
Associated Press and Bloomberg News were used in compiling this report.
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* INVESTIGATION EXPANDS: Agents searched a Columbia-owned Las Vegas hospital. D12
