Companies in the News
Companies in the News
Coram explores alternatives for CPS
Coram Healthcare (Denver) has engaged Deutsche Alex. Brown to work with the company to explore strategic alternatives for its Coram Prescription Services (CPS) division, which provides mail-order pharmacy services and disease management programs. With the launch of www.corampharmacy.com, scheduled for 1Q00, CPS will extend its service reach with on-line transactional capabilities on the Internet. In May, CPS chose Mediconsult.com to promote its new site. Under the agreement with Mediconsult.com, CPS became the exclusive on-line prescription and over-the-counter product provider to Mediconsult.com’s visitor base.
Coram CEO Richard Smith said that while CPS has been a growth story for the company, "it is appropriate at this time to ascertain the market value of CPS and consider all options to strengthen the company’s balance sheet." He added that at the same time, Coram "plans to maintain a close business relationship with CPS, which would continue to benefit the company’s Infusion division and Clinical Research and Medical Informatics division, as well as continue to enhance CPS’ business through joint marketing and breadth of service offerings."
In other news, the Internal Revenue Service (IRS; Washington) demanded Coram pay $12.7 million in additional taxes for FY87-FY91, reported the Denver Business Journal. Coram, on behalf of its T2 Medical subsidiary, filed a petition asking the U.S. Tax Court in Denver to overturn the IRS ruling, saying the IRS erroneously denied it more than $41 million in deductions for abandoned goodwill and for the settlement of litigation brought by T2 stockholders. In a filing with the Securities and Exchange Commission (Washington), Coram vowed to "contest the notice of deficiency through administrative proceedings or litigation and will vigorously defend its current position."
GF board member resigns
Graham-Field Health Products’ (GF; Bay Shore, NY) Rex Fuqua has resigned from the board. Fuqua served as a director of GF from January 1998 to April 1998 and from July 1998 to present.
HealthCor creditors sue indenture trustee
HealthCor Holdings’ (Dallas) official committee of unsecured creditors has filed suit against the indenture trustee for the company’s senior notes seeking to avoid as preferential transfers the liens in substantially all of the assets of the company and its affiliates, which were granted to the bank about one month prior to the petition date. The transfers made to indenture trustee Norwest Bank Minnesota were for or on account of a prior debt owed by the company and were made while the company was insolvent, the committee said.
The transfers, which occurred less than 90 days before the company’s July 27 petition date, enabled Norwest to receive more than it would receive if the bankruptcy case were pending under Chapter 7. The transfers had not been made, and Norwest received payment of its debt to the extent provided under Chapter 11, the committee said.
At the time HealthCor and its affiliates entered into the indenture with Norwest on Dec. 1, 1997, pursuant to which $80 million in senior notes due in 2004 were issued, the companies’ respective obligations under the indenture, and the notes were unsecured. After the companies defaulted under the terms of indenture by failing to make interest payments due under the notes on Dec. 1, 1998, and June 1, the companies and Norwest amended the indenture. The amended indenture, entered into on June 24, granted Norwest liens on all or substantially all of the companies’ respective assets.
The U.S. Bankruptcy Court in Dallas on Aug. 25 authorized the committee to bring the action against Norwest on HealthCor’s behalf.
HHCA asks for more time to restructure
Home Health Corp. of America (HHCA; King of Prussia, PA) is seeking to extend its exclusive periods to file a reorganization plan and solicit plan acceptances to Oct. 29 and Dec. 29, respectively. In a Sept. 21 motion, HHCA argued that "termination of the exclusive periods and the threat of multiple plans filed by other parties would likely lead to an adversarial situation that will cause a deterioration in the debtors’ businesses and the value of their estates."
HHCA also said that although substantial progress has been made in drafting a reorganization plan, "more time is needed to finalize certain of the operational issues related to the business plan . . . and to flesh out the particulars of implementation of a plan."
HHCA’s motion marks the third time the company has sought an exclusivity extension since it filed for bankruptcy on Feb. 18, when it said it was unable to overcome severe liquidity problems caused by various factors. The company’s current exclusive period to file a plan was scheduled to expire on Sept. 30, and the exclusive period to solicit acceptances is scheduled to expire Nov. 29. A hearing on the latest request is slated for Oct. 12 before the U.S. Bankruptcy Court in Wilmington, DE. Objections are due Oct. 8.
In a related matter, HHCA wants court authorization to sell its Lombard, IL, operations to Midwest Home Health Care for $550,000. The proposed sale will be free and clear of any and all liens, claims, and encumbrances, according to HHCA. HHCA said the deal provides a significantly greater realization for the assets proposed to be sold than through the liquidation value that would be obtained if the assets were not sold quickly and the business was forced to abruptly cease operations. The company added that the sale is in the best interests of the debtors, their creditors, and the estates.
The operations in Lombard, IL, will be subject to competitive bidding at an auction, but HHCA said it is unaware of any third parties who are ready, willing, and able to close upon the same or more favorable terms that Midwest’s offer of $550,000.
Infu-Tech recommended by BrookStreet
Infu-Tech (Englewood Cliffs, NJ) has been given a "strong buy" recommendation from BrookSt.com, a division of BrookStreet Securities Corp. The new recommendation initiates coverage of the company by BrookSt.
Invacare one of best companies for employees
Invacare (Elyria, OH) has been selected by the Employers Resource Council (ERC) as one of the best companies to work for in northeast Ohio, based on its policies and programs in compensation and benefits, safety and health, diversity, recruitment and selection, work and family issues, community involvement, and training and education. The award was presented jointly by the ERC and Enterprise Development, a nonprofit subsidiary of Case Western Reserve University and a cooperative venture of the Weatherhead School of Management.
Lexington sees 32% increase in FY99 revenues
Lexington Healthcare (Farmington, CT) reported FY99 ended June 30 revenues of $76.9 million, a 32% increase from FY98 revenues of $58.3 million. The company recorded a net loss in FY99 of $1.6 million, 38 cents per share, compared to a net income in FY98 of $30,000, 1 cent per share.
The increase in FY99 revenues from FY98 revenues was the result of the addition of four nursing homes under management contract and growth in the company’s home care, medical supply, and therapy subsidiaries, and its pharmacy joint venture, Lexington said. The company acquired the operations of two of those managed buildings in September and returned the other two to the owner. The new prospective payment system had a negative affect on revenues and income, Lexington said.
Olsten Health Services signs agreement
Olsten Health Services (Melville, NY) signed an agreement with Mutual of Omaha. Under the agreement, Olsten Health Services Network will become one of Mutual of Omaha’s preferred providers for home care nursing and therapy services, home infusion therapy, home medical equipment, and respiratory therapy. The Olsten Health Services Network division works with managed care organizations to reduce their total cost of providing home care by managing their home care networks, administering their home care benefits through an extensive list of credentialed providers that are compliant with NCQA standards, and providing home care for patients under the direction of their medical management groups.
Staff Builders confirms date for spin-off
Staff Builders (Lake Success, NY) has set a record date of Oct. 12 for the spin-off of its Tender Loving Care Health Care Services division. The spin-off will be accomplished through a distribution of one share of TLC common stock for every two shares of Staff Builders common stock outstanding on the record date. Staff Builders’ stockholders of record on such date will not be required to pay for any share of TLC common stock distributed to them or to take any action to receive such shares. Staff Builders anticipates that the spin off will be complete by the end of October.
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