Leaders and Laggards.
May was a disappointing month for the long term care sector as investors openly fretted about the deteriorating fundamentals of most of the nursing home companies. The Raymond James Long Term Care Index declined 9.5%, while the NASDAQ Composite fell only 2.8%, and the Russell 2000 increased 1.4% with the recent small stock rally. Sun, Mariner, and Vendor negotiated covenant default waivers as the troubled chains attempted to balance perilously leveraged capital structures with a murky operating outlook.
Company Gain/ Closing Loss price Integrated Health Services +22.1% $5.88 (NYSE:IHS) Beverly Enterprises +11.5% $7.25 (NYSE:BEV) Capital Senior Living +10.1% $10.88 (NYSE:CSU) Alterra Healthcare -44.9% $12.25 (ASE:ALI) Genesis Health Ventures -36.0% $4.44 (NYSE:GHV) Mariner Post Acute Network -34.5% $2.25 (NYSE:MPN) Company Key factors Integrated Health Services The stock bounced on the announcement (NYSE:IHS) that IHS would manage long term care contract rehabilitation operations previously operated by NovaCare. Beverly Enterprises On Little stock-specific news, the stock (NYSE:BEV) advanced as investors looked past the OIG investigation and concentrated on the company's lack of contract rehab and high 1995 costs as a basis for PPS payments. Capital Senior Living The company announced the election of Larry (NYSE:CSU) Cohen as CEO and increased its Banc One credit line to $34 million with no change in terms, at a time when competitors experi- enced more expensive capital with REITS. Alterra Healthcare The stock was crushed following the (ASE:ALI) company's earnings release, which reported operating EPS that fell $0.03 short of expectations, increasing financing costs, and longer fill-up periods. Genesis Health Ventures Speculation about potential financial buyers (NYSE:GHV) died following a disappointing quarter, a dispute with HCR Manor Care over the possible termination of pharmacy contracts, and union press releases accusing the company of understaffing facilities. Mariner Post Acute Network Hopes for a near-term turnaround were (NYSE:MPN) dashed with a second quarter 1999 loss of $1.07 per share, the violation of certain debt convenants, and the layoffs of nearly 7,000 therapists. SOURCE: RAYMOND JAMES & ASSOCIATES, ST. PETERSBURG, FLORIDA. FOR INFORMATION, CALL JAMES KUMPEL AT 727-573-8178.
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|Publication:||Contemporary Long Term Care|
|Article Type:||Statistical Data Included|
|Date:||Jul 1, 1999|
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