Companies in the News
Companies in the News
Apria’s criminal probe closes with no charges
Apria Healthcare Group (Costa Mesa, CA) said last week the U.S. Attorney’s office in Sacramento, CA, has closed its criminal investigation file relating to eight subpoenas Apria has received since July 1998. The office filed no charges from the investigation. The subpoenas, six of which were received in July 1998 and two that were received since then, were in relation to Apria’s Medicare billing practices.
Apria officials said the company is now in the process of responding to a subpoena from the Department of Health and Human Services (Washington) and has largely completed responding to two subpoenas issued by the U.S. Attorney’s office in San Diego.
The subpoenas received in Sacramento in July 1998 requested documents from Apria’s offices in San Diego and Sacramento and at its regulatory compliance office in Canonsburg, PA.
Columbia saga might not be over yet
A federal prosecutor who has led the Columbia/HCA Healthcare (Nashville, TN) Medicare fraud trial said last week that more indictments are likely. U.S. Attorney Charles Wilson told the Tennessean that the case is being watched closely in other districts, and he expects prosecutors elsewhere to seek indictments from grand juries. Wilson also said his office will continue its investigation of Columbia and that new indictments are possible within the company.
Two weeks ago, two former Columbia executives, Jay Jarrell and Robert Whiteside, were convicted on six of seven fraud and conspiracy counts in connection with allegedly fraudulent cost reports for Fawcett Memorial Hospital (Port Charlotte, FL). The investigation is part of a wide federal probe of the company, started in 1997, that included investigations into the Medicare billing processes of some Columbia home health locations.
The Tennessean reported that the government could seek indictments in connection with Columbia’s home health business with Olsten Corp. (Melville, NY). The government alleges that Olsten sold Columbia some home care units at a bargain, then was paid inflated management fees by Columbia that were reimbursed by Medicare. Olsten agreed to pay a $61 million fine in March, and its Olsten Health Services subsidiary plead guilty to an unspecified charge to settle an investigation in Miami into its business with Columbia.
HealthSphere works its way out of Chapter 11
HealthSphere of America (Memphis, TN) may be returning to profitability now that the company and its seven subsidiaries have had some time to restructure. The eight companies filed for Chapter 11 protection June 10. "As everybody knows, it has been a rollercoaster ride for anyone involved with home care over the past few years," HealthSphere Chairman Kyle Altman told the Memphis Business Journal. "In spite of all that, we are expecting to return to profitable operations over the next month or two. It would be the first time we have achieved profitability in the last two years." The company has cut its staff from 600 employees to 400, and payroll has been reduced in the last year by $500,000. The company has also moved to compensate patient care staff on a per-visit basis, rather than with salaries, and it has reduced its Medicare exposure from about 80% of the business to about 25%, reported the Journal.
Help at Home receives new financing
Help at Home (Chicago) has obtained new accounts receivable financing from Oxford Commercial Funding (Chicago). The new credit facility replaces the company’s $3.5 million revolving credit facility with Harris Bank, which was in technical default on June 30, 1998, and became due on Dec. 30, 1998. Over the last several months, the company was able to reduce its Harris debt to below $2 million while considering its various available financing alternatives, officials said.
In other news, the company said that, effective July 1, it received rate increases for several of its key contracts, which could have a significant effect on revenue and income levels throughout the next year.
Invacare makes offer to buy Scandinavian
Invacare (Elyria, OH) has made a cash tender offer to acquire Scandinavian Mobility International A/S for DKK 105 per share, or $14.58 in U.S. currency. The total value of this price is about $131.3 million. The offer is open until Aug. 11 to shareholders of Scandinavian Mobility. Invacare Chairman/CEO A. Malachi Mixon said Scandinavian’s products are complementary to Invacare’s and will add to the company’s performance in Europe. Scandinavian Mobility reported sales of about $50.4 million for the six months ended Dec. 31 based on current exchange rates.
MiniMed nets $141.2 million from offering
MiniMed (Sylmar, CA) said that the underwriters of its public offering exercised their overallotment option to buy an additional 345,000 shares of common stock at $68.38. The company announced in late June that it had priced a 2.3 million share public offering. The company saw net proceeds of $141.2 million, which includes the overallotment.
Olsten franchise sues parent company
A Chicago franchise of Olsten Corp. (Melville, NY) has filed a lawsuit against the parent company, saying it has destroyed the value of its trademark and breached the license agreement. Olsten’s of Chicago and its president/CEO, Burtis Dolan III, filed the complaint in the United States District Court for the Northern District of Illinois. It alleges that Olsten has failed to comply with provisions for advertising, billing services, and other administrative services. It seeks to rescind the agreement and requests damages of not less than $2 million as well as punitive damages. Olsten’s of Chicago officials said that six of Olsten’s other franchises were considering similar litigation. The company complains that Olsten threatened to discontinue its computer system to coerce it into relinquishing control over payroll. That forced the franchise to spend $2 million implementing an alternate payroll and billing system.
Priority raises more money from stock offering
Priority Healthcare (Altamonte Springs, FL) said last week that the underwriters of its recent secondary offering of 2.6 million shares of class B common stock have exercised in full the overallotment option to purchase an additional 390,000 shares of class B stock at $34 per share, less underwriting discount. All of the shares were sold by Priority Healthcare.
As a result of the sale, the company has raised an additional $13.3 million in gross proceeds, bringing the total gross proceeds from the offering to $101.7 million, before underwriting discounts and expenses.
Respironics fears lower-than-expected 4Q99 results
Respironics (Pittsburgh) has said that results for its 4Q99 will be lower than analysts’ expectations and that it will change its operations to improve its focus on core respiratory markets. The company is consolidating its manufacturing operations and reducing its worldwide workforce by about 10%. It will also discontinue or divest certain product lines and streamline operations, said President/CEO Dennis Meteny.
The company expects sales for 4Q99 ending June 30 to be about $90 million, compared to $85 million. Earnings for the quarter are anticipated to be about 18 cents per share, compared to 17 cents per share in 4Q98. The figures exclude the impact of restructuring charges and an anticipated addition to the reserve for accounts receivable. The addition to the accounts receivable reserve and a review of the company, expected to be released the end of July, will likely result in a one-time pre-tax charge of about $30 million, 57 cents per share. A portion of that charge will be recorded in 4Q99 with the remainder to be recorded over the next several quarters. The restructuring should result in an annual savings of about 20 cents per share, the company said.
Sabratek acquires SRS outstanding stock
Sabratek Corp. (Skokie, IL) has acquired all of the outstanding stock of SRS in a pooling of interests transaction. SRS provides consulting services to healthcare providers. Sabratek CEO K. Shan Padda said SRS is strong financially.
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