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ADVACARE, INC. ANNOUNCES FIRST QUARTER RESULTS

 DALLAS, Jan. 28 /PRNewswire/ -- AdvaCare, Inc. (NASDAQ: AVCR) today announced its results for its first quarter ended Dec. 31, 1992.
 Revenues for the quarter increased 13 percent to $20,039,000 as compared to $17,711,000 for the comparable quarter of the prior year. This increase was due primarily to the inclusion of revenues from companies acquired during fiscal 1992 and growth in a majority of the company's physician businesses, offset by a decline in the company's northeastern hospital businesses.
 For the first fiscal quarter ended Dec. 31, 1992, the company reported a pretax loss of $894,000 as compared to income of $614,000 for the same period of the prior year. No income tax benefit was recorded in the current quarter to reduce this loss. The tax benefit of this loss will be recognized against the pretax income of the subsequent quarters. Thus the net loss for the quarter was $894,000 compared to net income of $318,000 for the same period a year ago. The net loss per common share was $.08 compared to net income per common share of $.01 for the first fiscal quarter a year ago. If a tax benefit had been recognized in the current fiscal quarter using the company's anticipated effective tax rate for fiscal 1993, the current period loss would have been reduced by approximately $456,000 or $.04 per common share.
 The comparison of results for the fiscal quarter ended Dec. 31, 1992, to the prior year was affected by the company's move of its software systems approach toward an open systems environment, the principal cost of which was expensed in the current fiscal quarter. The company capitalized approximately $800,000 more of software development costs in the prior year (in connection with the development of its older software systems and technologies) than it capitalized in the first quarter of the current year.
 "We expect that throughout the remainder of the year we will recover the shortfall which resulted from the slower growth brought about by seasonal factors," said William Joe Davis III, president and chief executive officer of the company. "We also expect that the second fiscal quarter will see a reversal of the trend of losses in the company's northeastern hospital businesses, which have resulted from the loss of revenues from accounts receivable backlog projects."
 AdvaCare also announced that it was in the process of revising its medical accounts receivable funding program to make the program available to a broader range of providers. The company said it had made substantial progress in negotiations with a third party funding source which should allow AdvaCare to offer funding to providers while enabling AdvaCare to confine its efforts to the billing and collection activities associated with the program. Specific terms and conditions of the relationship between AdvaCare and the third party funding source are still under negotiation. However, the company said that it is pursuing alternative sources of funding in case it is unable to reach agreement. The company also said that, based on negotiations to date, AdvaCare Funding, Inc., the independent special purpose corporation that funds the receivables funding program presently offered by AdvaCare, expects to be able to wind down the existing program on satisfactory terms.
 The number of physicians serviced by AdvaCare increased to 5,587 at Dec. 31, 1992, from 5,526 at Sept. 30, 1992. The company also provides services to 88 hospital and ambulatory care departments at Dec. 31, 1992, as compared to 86 departments at Sept. 30, 1992.
 AdvaCare is one of leading providers of business services, particularly reimbursement management services, to health care providers throughout the United States.
 ADVACARE, INC.
 Statements of operations
 (Unaudited)
 Three months ended Dec. 31 1992 1991
 Revenues $20,039,305 $17,710,679
 Operating expenses:
 Payroll and fringe benefits 12,035,145 9,592,966
 Selling, general and administrative 6,497,389 5,208,418
 Depreciation and amortization 1,513,568 1,075,719
 Total 20,046,102 15,877,103
 Operating income (loss) (6,797) 1,833,576
 Interest expense 887,664 1,219,896
 Income (loss) before income taxes (894,461) 613,680
 Income tax provision -- 296,136
 Net income (loss) (894,461) 317,544
 Preferred dividends and accretion -- (215,394)
 Net income (loss) available to
 common stockholders (894,461) 102,150ares
 outstanding 11,661,368 7,552,798
 December 1991 amounts restated to reflect adjustments to capitalized software development costs.
 -0- 1/28/93
 /CONTACT: Gregory S. Campbell, chairman, or Frank Treadaway, vice president of AdvaCare, 214-226-0348; or Anthony J. Russo, or Susan Noonan of Noonan/Russo Communications, 212-979-9180, for AdvaCare/
 (AVCR)


CO: AdvaCare, Inc. ST: Texas IN: HEA SU: ERN

CK-WB -- NY029 -- 0183 01/28/93 11:05 EST
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Date:Jan 28, 1993
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