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HALLMARK HEALTHCARE CORPORATION REPORTS THIRD QUARTER EARNINGS

 HALLMARK HEALTHCARE CORPORATION REPORTS THIRD QUARTER EARNINGS
 ATLANTA, May 7 /PRNewswire/ -- Hallmark Healthcare Corporation announced today that its net income for the third fiscal quarter ended March 31 was $3,237,000, compared to $3,202,000 for the same period a year ago.
 Net income per common and common equivalent share for the third quarter was $0.18 on 17,330,000 average shares outstanding, which increased 1,349,000 shares from the 1991 quarter primarily due to the dilutive effect of certain employee stock options, compared to $0.20 a year ago on 15,981,000 average shares outstanding. Net income for the 1992 third quarter and nine months ended March 31 was positively affected by reduced interest expense and credits to contractual allowances and operating expenses. The company also reported an extraordinary credit of $1,197,000, or $0.07 per share, resulting from the utilization of net operating loss carryforwards. Net income for the comparable period a year earlier included an extraordinary credit of $1,085,000, or $0.07 per share resulting from the utilization of net operating loss carryforwards, and an extraordinary gain of $1,070,000, or $0.06 per share, from the restructure of $708,000 principal amount of the company's 14.5 percent Subordinated Debentures.
 Net income for the nine months ended March 31 was $4,510,000, up from $3,796,000 for the same period a year ago. Net income before extraordinary items per common and common equivalent share for the nine months ended March 31 was $0.16 on 17,058,000 average shares outstanding, compared with $0.08 a year ago on 15,981,000 average shares outstanding. Extraordinary items composed primarily of the utilization of net operating loss carryforwards added $0.11 per share for the nine months ended March 31, bringing total net income per common and common equivalent share to $0.27, compared to a total net income per share of $0.24 for the same period a year earlier which included extraordinary items of $0.16 per share.
 Net patient service revenues for the quarter ended March 31 totaled $43,140,000, up 4.5 percent from $41,280,000 for the comparable period a year earlier. Net patient service revenues for the nine months ended March 31 totaled $124,350,000, up 6.6 percent from $116,613,000 for the comparable period a year earlier. The increase in net patient service revenues resulted primarily from the addition of new services, increased charges at the company's hospitals, and in the quarter ended March 31, a $623,000 increase in favorable settlements of prior year cost reports with the Medicare and Medicaid programs. The provision for contractual allowances as a percent of gross operating revenues was 33 percent for the quarters ended March 31, 1992 and 1991, respectively. The provision for uncollectible accounts as a percent of net patient service revenues decreased from 7.9 percent for the quarter ended March 31, 1991, to 6.1 percent for the quarter ended March 31, 1992, largely due to the implementation of procedures at selected facilities to improve collections.
 Interest expense decreased approximately $867,000 in the quarter ended March 31, primarily due to a reduction in the company's bank debt, the amortization of deferred debt restructuring credits, and the restructuring of $6,231,000 principal amount of the company's 14.5 percent Subordinated Debentures during fiscal 1991.
 Operating expenses for the quarter ended March 31, excluding interest and a $1,166,000 reduction in the company's general and professional liability reserves, increased approximately $3.0 million or 8.9 percent from the prior year due to pay rate increases, increased costs under the company's employee health insurance plan, the addition of new services, increased use of outside contractual services and fees paid to outside medical specialists at the company's hospitals.
 Operating earnings, excluding the $1,166,000 reduction in the company's general and professional liability reserves, were approximately $3.5 million and $4.0 million in the quarters ended March 31, 1992 and 1991, respectively. This decrease was due primarily to a decline in patient days which was partially offset by increased outpatient revenues and a $623,000 increase in favorable settlements of prior year cost reports with the Medicare and Medicaid programs.
 Working capital decreased from $4,306,000 at June 30, 1991, to $1,317,000 at March 31, 1992, due to payments on the Bank Credit Agreement and capital expenditures at the company's hospitals.
 Hallmark Healthcare Corporation is an Atlanta-based corporation which provides healthcare services to communities through ownership or management of general acute care hospitals and related healthcare services. The company operates 19 hospital facilities in nine states.
 FINANCIAL HIGHLIGHTS
 (in thousands, except per share data)
 Quarter ended 3/31/92 3/31/91
 Net patient service revenues $43,140 $41,280
 Net income before extraordinary
 items 1,982 1,047
 Extraordinary items 1,255 2,155
 Net income $ 3,237 $ 3,202
 Net income per common
 and common equivalent share:
 Net income before extraordinary
 items $ 0.11 $ 0.07
 Extraordinary items 0.07 0.13
 Net income per common
 and common equiv. share $ 0.18 $ 0.20
 Weighted average common and common
 equivalent shares outstanding 17,330 15,981
 9 mos. ended 3/31/92 3/31/91
 Net patient service revenues $124,350 $116,613
 Net income before extraordinary
 items 2,657 1,251
 Extraordinary items 1,853 2,545
 Net income $ 4,510 $ 3,796
 Net income per common
 and common equivalent share:
 Net income before extraordinary
 items $ 0.16 $ 0.08
 Extraordinary items 0.11 0.16
 Net income per common
 and common equiv. share $ 0.27 $ 0.24
 Weighted average common and common
 equivalent shares outstanding 17,058 15,981
 3/31/92 6/30/91
 Working capital $ 1,317 $ 4,306
 Long term debt and capital
 lease obligations $98,555 $104,168
 Stockholders' deficit $(7,479) $(11,839)
 A copy of the company's Form 10-Q for the period ending March 31 may be obtained by written request to Robert M. Thornton Jr., executive vice president and chief financial officer, Hallmark Healthcare Corporation, 300 Galleria Parkway, Suite 650, Atlanta, GA 30339.
 -0- 5/7/92
 /CONTACT: Robert M. Thornton Jr., executive vice president of Hallmark Healthcare, 404-933-5500/ CO: Hallmark Healthcare Corporation ST: Georgia IN: HEA SU: ERN


EA-BR -- AT014 -- 7800 05/07/92 16:28 EDT
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Date:May 7, 1992
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