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 WOBURN, Mass., Sept. 9 /PRNewswire/ -- AdvantageHEALTH Corporation (NASDAQ: ADHC) announced today that its earnings from operations for the fourth quarter ended Aug. 31, 1993 are expected to come in below analyst's expectations.
 The company anticipates that while fourth quarter net revenue will be approximately $25,800,000 or 17 percent greater than the comparable quarter in 1992, fourth quarter earnings per share will be approximately 22 cents to 25 cents as compared to 28 cents in 1992. For the twelve months ended Aug. 31, 1993 it is anticipated that net revenue will be approximately $96,500,000 or 20 percent higher than 1992. In addition it is also anticipated that 1993 net income will exceed $6,300,000 compared to $4,834,000 in 1992, and earnings per share will be approximately $1.06 to $1.09 compared to 97 cents in 1992 (both before a non-cash extraordinary debt extinguishment charge incurred in 1992).
 "Our operating income will be lower than we expected principally because the company incurred costs to support a higher level of revenue growth than has actually occurred," said Raymond Dunn, chairman and chief executive officer. "While there was an impressive increase in our outpatient treatments of approximately 77 percent over the fourth quarter of 1992, the company had budgeted equipment and staffing levels to achieve 100 percent growth. We did not act quickly enough to adjust staffing levels to the 77 percent growth rate and therefore experienced productivity at less than our standard levels. The company is monitoring staffing levels and other expenses to equate these with actual growth levels. The cost of assimilating the acquisitions of several strategically located physical therapy practices, as well as new start-up outpatient facilities also contributed to the pressure on operating margins. These costs, however, should moderate as these practices are integrated into the company's regional network and economies of scale are realized."
 "An additional factor that contributed to the pressure on the company's fourth quarter operating margin was a lower average length of stay at the company's inpatient facilities. For example, this caused our flagship New England Rehabilitation Hospital to experience a temporary decline in June and July's inpatient census to the 88 percent occupancy level despite the fact that referrals, admissions and discharges are at record levels in the fourth quarter and on a year to date basis. These are clear indicators that the demand for rehabilitation services remains strong. We are, however, continually monitoring the programs, clinical models and staffing levels offered in both our inpatient and outpatient operations to implement appropriate procedures to deal with these issues."
 Dunn further stated, "The company's regional growth strategy is sound. We continue to execute our regional hub and spoke growth plan and are confident that our already existing alliances with 18 major tertiary and dominant community hospitals in New England will serve the company well as the integrated health care delivery system trend accelerates. By focusing on general expense controls, staffing skill mix, and new service delivery models, the company is optimistic that it can bring its expenses in line with its revenue momentum. While we expect both revenue and earnings growth to continue, factors such as the continued rapid growth of new outpatient sites and changes in patient acuity will continue to put pressure on our operating margins in the foreseeable future."
 AdvantageHEALTH Corporation operates the largest network of comprehensive medical rehabilitation facilities in New England. The company currently employs in excess of 3,300 employees at 69 locations.
 -0- 9/9/93
 /CONTACT: Raymond J. Dunn, chairman and CEO of AdvantageHEALTH Corp., 617-935-2500/

CO: AdvantageHealth Corp. ST: Massachusetts IN: HEA SU: ERP

CM-DJ -- NE015 -- 0524 09/09/93 17:30 EDT
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Publication:PR Newswire
Date:Sep 9, 1993

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