Inquiry Halts Trading of Premier Laser
Premier Laser Systems Inc. said Wednesday that the Nasdaq market has halted trading in the company’s stock indefinitely until it reviews information it has requested from the Irvine maker of dental and medical lasers.
The news came a day after Premier announced that its outside auditor had resigned. The accounting firm Ernst & Young LLP said it had “serious disagreements” with Premier and took issue with the “limited scope and breadth” of an internal investigation into the company’s finances.
The investigation stemmed from a dispute with a major distributor, which resulted in last month’s announcement by Premier that it might be forced to lower its reported revenue by $7 million for the second half of its fiscal year ended March 31.
Premier’s stock, which last traded Friday at $4.19 a share, has lost more than 60% of its value since mid-March. The company is also facing a shareholder lawsuit accusing it of violating securities laws and misleading investors.
Premier said in a prepared statement that it would “compile the information requested, and will fully cooperate with Nasdaq in its inquiry.” Nasdaq set a June 8 deadline for Premier to reply to the request.
Nasdaq spokesman Michael Whitehouse said he couldn’t comment specifically about the information requested from Premier, but added that “it’s not unusual for Nasdaq to use that tool when no available financial information is provided.”
Such trading halts occur about 25 to 30 times a year. While they can be short-lived, Whitehouse said, they have also been known to last for several months.
Premier is also required to file a report with the Securities and Exchange Commission by Monday explaining why Ernst & Young quit. The accounting firm then has 10 days to respond if it disagrees with Premier’s version.
The laser maker’s fortunes have sagged considerably since last May, when it became the first company to receive federal approval to market a dental laser designed for use directly on teeth. The news was greeted as a significant development in dentistry because of the prospect of replacing some painful drilling procedures with relatively comfortable laser treatments.
In December, Premier entered a marketing agreement with Henry Schein Inc., a Melville, N.Y.-based health care products distributor, to sell the new dental laser. But last month, Premier said its revenue for its fiscal third quarter would be restated, and its fourth-quarter revenue would be lower than expected, after subtracting about $7 million that it had booked as sales to Schein. The distributor said it never ordered the lasers in question.
In resigning, Ernst & Young also withdrew its report on Premier’s financial results for the fiscal year ended March 31, 1997. Premier has not yet reported final results for fiscal 1998.
