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UNIVERSAL STANDARD MEDICAL LABORATORIES, INC. REPORTS THIRD QUARTER NET REVENUE INCREASE OF 26 PERCENT

 Previously Announced One-Time-Only Charge To
 Earnings Following New Computer System Conversion;
 Net income of $66,000 or $.01 per share for the Quarter;
 Detroit Board of Education $800,000 Contract Initiated
 SOUTHFIELD, Mich., Nov. 9 /PRNewswire/ -- Universal Standard Medical Laboratories, Inc. (NASDAQ-NMS: USML) announced today that net revenue for the quarter increased 26 percent to $16.8 million, from $13.3 million in the year-earlier quarter. The acquisition of MCL, a Michigan laboratory, accounted for $1.2 million of the increase. The remaining $2.3 million increase in net revenue is primarily attributable to internal growth and purchased accounts, representing a growth rate of 17 percent.
 Following the previously announced conversion to a new companywide computer system, the company recognized one-time charges aggregating $2.2 million for bad debts and reserve adjustments, including increases in contractual allowances. The company had delayed the release of its third quarter results in order to determine these charges and the impact on third quarter financial results.
 Earnings before interest, taxes, depreciation, amortization, and other income and expense (EBITDA) was $1.1 million, or 7 percent of net revenue for the quarter. Without the one-time charge, net of certain expense reductions, EBITDA would have been approximately $3.0 million, or 18 percent of net revenue, compared to EBITDA of $2.6 million, or 19 percent of net revenue, for the year-ago quarter. This decrease in EBITDA, as a percent of net revenue, is principally due to increases in operating costs and changes in reimbursement policies.
 As a result of the new Federal tax act, the company recognized an income tax benefit of $108,000 in the third quarter related to the deductibility of acquisition goodwill, retroactive to July 1, 1991. Excluding the retroactive benefit, the effective income tax rate for the third quarter decreased to 35 percent, from 36 percent in the prior year quarter.
 Net income fell to $66,000 or $.01 per share. Excluding the one- time adjustments and tax benefit, net income would have been $1.2 million, or $.19 per share for the quarter. Net income for the year-earlier quarter, before an extraordinary loss of $680,000 due to the prepayment of debt, was $799,000, or $.18 per share.
 Net revenue for nine months rose 59 percent to $47.9 million, from $30.2 million for the year-ago period. Three acquisitions (MCL, BPS and LCM) accounted for $12.3 million of the increase. The remaining $5.4 million increase in net revenue is primarily attributable to internal growth and purchased accounts, representing a growth rate of 18 percent.
 EBITDA for nine months of 1993 increased 33 percent to $7.3 million, from $5.5 million for the comparable 1992 period. Net income, before an extraordinary gain of $1.0 million representing net life insurance proceeds, was $2.8 million, or $.43 per share, for the nine months of 1993. Excluding the one-time adjustments and tax benefit, net income before the extraordinary gain would have been $3.9 million, or $.60 per share, for the nine months of 1993. For the nine months of 1992, net income, before the extraordinary loss of $680,000, was $2.3 million, or $.51 per share. Net income for the nine months of 1992 benefited from a $570,000 reduction in income tax expense, resulting from the utilization of net operating loss carryforwards.
 The company also announced that it has begun services under a new managed care contract with the Detroit Board of Education. The contract, expected to contribute $800,000 per year to USML revenues, began Nov. 1, 1993.
 "Our completed system conversion will enhance the company's overall efficiency," said John T. Watkins, USML's President and Chief Executive Officer. He added, "Moreover, and equally important, this new system will enable us to better process all our information needs -- billing, patient recordkeeping, test results, and files on the more than 500,000 members of our innovative Managed Care program."
 "We believe that the fundamentals for this business are strong and that USML is poised for continued and solid growth," said Mr. Watkins.
 "The industry is experiencing increased pressures from various market forces. However, we believe that these pressures can be overcome by growth, as well as through the realization of the full potential of our new system," added Mr. Watkins.
 USML is a leading clinical medical laboratory, with approximately 1,000 employees, nine clinical laboratories, and over 80 patient service centers in Michigan and Ohio. USML performs more than 6 million tests annually for over 6,500 physicians, 30 hospitals and 80 long-term care facilities. USML's managed care subsidiaries provide laboratory services to large employer groups in Michigan, Ohio, Kentucky and Indiana on a managed care, fixed-fee basis.
 The following summarizes USML's financial performance for the three and nine months ended Sept. 30, 1993 and 1992:
 UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
 Summarized Financial Information
 (Unaudited; in thousands, except per-share data)
 Three Months Ended Nine Months Ended
 Sept. 30, Sept. 30,
 (a)1993 (a)1992 (a)1993 (a)1992
 Net revenues $16,801 $13,333 $47,870 $30,156
 Operating expenses:
 Laboratory 10,132 7,561 27,534 16,958
 Selling, general
 and administrative 5,571 3,207 12,987 7,663
 Depreciation and
 amortization 932 736 2,478 1,531
 Total operating
 expenses 16,635 11,504 42,999 26,152
 Operating income 166 1,829 4,871 4,004
 Interest expense 301 555 823 1,211
 Other (income) expense,
 net (70) 19 (115) 68
 Income taxes (benefit) (131) 456 1,407 456
 Income before
 extraordinary item 66 799 2,756 2,269
 Extraordinary item, net --- (680) 1,005 (680)
 Net income 66 119 3,761 1,589
 Preferred stock dividends --- 80 --- 240
 Earnings per share:
 Income before
 extraordinary item $0.01 $0.18 $0.43 $0.51
 Extraordinary item --- (0.15) 0.15 (0.15)
 Net income 0.01 0.03 0.58 0.36
 Average shares
 outstanding and
 common equivalent
 shares 6,537 4,472 6,531 4,472
 EBITDA $1,098 $2,565 $7,349 $5,535
 (a) Acquisitions are included in results of operations from the dates of acquisition.
 -0- 11/9/93
 /CONTACT: John T. Watkins or Alan S. Ker of Universal Standard Medical Laboratories, 313-358-0810/
 (USML)


CO: Universal Standard Medical Laboratories, Inc. ST: Michigan IN: MTC SU: ERN

ML-KR -- DE001 -- 2069 11/09/93 08:37 EST
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Date:Nov 9, 1993
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