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HOSPITAL STAFFING SERVICES REPORTS THIRD QUARTER RESULTS

 FORT LAUDERDALE, Fla., Oct. 15 /PRNewswire/ -- Hospital Staffing Services, Inc. (NYSE: HSS) today announced its results for the third quarter and nine months ended Aug. 31, 1993.
 Net revenue during the third quarter ended Aug. 31, 1993 was $13,071,200 compared to $30,348,567 during the third quarter ended Aug. 31, 1992. The company incurred a net loss during the third quarter of fiscal 1993 of $5,576,277, or $.99 per share, compared to net income of $352,309, or $.06 per share, during the third quarter of fiscal 1992.
 Net revenue during the nine months ended Aug. 31, 1993 totaled $62,817,882, compared to $93,459,055 during the nine months ended Aug. 31, 1992. The net loss incurred during the first nine months of fiscal 1993 totaled $5,333,240, or $.94 per share, compared to net income of $1,956,994, or $.33 per share, during the same period in fiscal 1992.
 The computation of net loss per share for both the quarter and nine months ended Aug. 31, 1993 was negatively impacted by $.22 and $.21 per share, respectively, as a result of an effective tax rate that differed significantly from the statutory tax rate due to the inability to carry back all of the current year's loss from operations to taxable income of prior periods.
 The company noted that, as expected, the decrease in net revenue during the recently ended quarter reflects, in part, the downsizing of the company's South Florida Medicare offices which began in mid-December 1992 and which were effectively closed by the end of the quarter ended Feb. 28, 1993. As previously reported, it is anticipated that the company will realize a decrease in fiscal 1993 net revenue as compared to fiscal 1992 of at least $30 million as a result of the closure of the South Florida Medicare offices. The decrease in net revenue also reflects the effect of constraints imposed on the company's operations by the absence of a new revolving credit facility during the period. The remaining decrease in net revenue is attributable to a $6.9 million provision for estimated Medicare reimbursement disallowances related primarily to potentially non-reimbursable costs which were incurred during fiscal years 1991 and 1992 on subcontracted staffing in the company's now closed Dade County Medicare offices. This additional provision for estimated Medicare reimbursement disallowances resulted from the development of additional information and analysis since Nov. 30, 1992 in connection with an ongoing internal investigation of its Dade County operations, including the company's detailed patient chart review program which commenced in the second quarter of fiscal year 1993. Such additional provision could not have been made in prior periods of fiscal year 1993 as substantive information was not available to the company until the third quarter of fiscal 1993. Because revenue from services are calculated net of estimated reimbursement disallowances, the company's third quarter 1993 gross margin was negatively impacted by the $6.9 million provision for estimated reimbursement disallowances, resulting in the loss reported for the period. Without giving effect to the $6.9 million provision for estimated Medicare reimbursement disallowances, net revenue for the third quarter and nine months ended Aug. 31, 1993 would have been approximately $20 million and $69.7 million, respectively.
 As previously reported in its fiscal 1992 10-K, the company at Nov. 30, 1992, and based on information available to management at that time, provided for estimated Medicare reimbursement disallowances for potentially non-reimbursable costs incurred during fiscal years 1991 and 1992 from subcontracted staffing in its now closed Dade County Medicare offices. Commencing in the second quarter of fiscal 1993, the company undertook a program to bill visits that were conducted in fiscal 1992 and 1991 but not previously billed to Medicare. Integral to that program, and in connection with the company's internal investigation, was the establishment of certain parameters and guidelines to assure that the visits were billable based on a detailed patient chart review. Although the patient chart review program is in its early stages, management, based on information available to it as of Aug. 31, 1993, recorded additional estimated Medicare reimbursement disallowances. As the patient chart review program continues, information will be evaluated and the estimate of reimbursement disallowances will be subject to change. Collection, if any, of the amounts underlying such disallowances will be recorded as revenue during the period in which they are received.
 In light of the loss from operations during the third quarter ended Aug. 31, 1993, the third quarter operating results also include a reversal of the entire accrual for the company's 1992 bonus pool in the amount of $1.1 million, as well as an additional $475,000 representing a significant portion of the 1993 bonus accrual which had been recorded through Aug. 31, 1993.
 Hospital Staffing Services, Inc. is a leading professional home health care services and recruitment organization. The company specializes in the provision of nursing services to patients at home and in health care institutions through a national network of home health care offices, and in the placement of medical personnel, on a temporary and interim basis, in hospitals and other health care facilities located throughout the United States, the United Kingdom and the Virgin Islands.
 HOSPITAL STAFFING SERVICES, INC.
 COMPARATIVE OPERATING HIGHLIGHTS
 For the Three Months Ended
 Aug. 31, 1993 Aug. 31, 1992
 Net Revenue $ 13,071,200 $ 30,348,567
 Income (Loss) before taxes $ (6,998,858) $ 658,309
 Provision (Benefit)
 for income taxes (1,422,581) 333,000
 Net income (Loss) $ (5,576,277) $ 352,309
 Earnings (Loss) per share $(.99) $.06
 Weighted average number
 of shares outstanding 5,646,020 5,781,060
 For the Nine Months Ended
 Aug. 31, 1993 Aug. 31, 1992
 Net Revenue $ 62,817,882 $ 93,459,055
 Income (Loss) before taxes $ (6,633,821) $ 3,316,994
 Provision (Benefit)
 for income taxes (1,300,581) 1,360,000
 Net income (Loss) $ (5,333,240) $ 1,956,994
 Earnings (Loss) per share $(.94) $.33
 Weighted average number
 of shares outstanding 5,646,020 5,889,143
 -0- 10/15/93
 /CONTACT: Mary Fanizzi of Hospital Staffing Services, 305-771-0500; or Barry A. Rothman of Greenstone Roberts Public Relations, 305-975-3500, for Hospital Staffing Services/
 (HSS)


CO: Hospital Staffing Services, inc. ST: Florida IN: HEA SU: ERN

AW-JV -- FL018 -- 2913 10/15/93 16:40 EDT
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Date:Oct 15, 1993
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