Financially struggling U.S. HomeCare last week began looking for someone to buy it or merge with it.
Its investors rejoiced in the news, which spurred a 47% jump in the company's stock to $5.88. It was the biggest gainer on the over-the-counter market on Feb. 15. The stock's 52-week high is $10.
Last week, Donaldson, Lufkin & Jenrette, a New York-based investment banking firm, was hired to assess "strategic alternatives" for the company. That could include a sale or merger, said W. Edward Massey, U.S. HomeCare's president and chief executive officer.
U.S. HomeCare had been a Wall Street favorite when it initially sold its stock to the public in 1991 for $9 a share, but problems began in 1993. An expansion program had put the company's operations in 28 locations in nine urban markets in the Northeast and Southeast. However, that growth was scaled back when the company reported losses in both the second and third quarters.
For the nine months ended Sept. 30, 1993, the Hartsdale, N.Y.-based company reported a net loss of $3 million, or 36 cents per share, compared with net earnings of $2.9 million, or 36 cents per share, in the year-ago period. Revenues increased 43% to $69.6 million.
Since reporting the losses, U.S. HomeCare has started a program that seeks to "realign costs with current revenue levels," Mr. Massey said.
In November, the company entered an agreement to start a $50 million accounts receivable securitization program with Chase Manhattan Bank, New York, to maintain cash flow.
U.S. HomeCare has yet to report its financial results for the fourth quarter ended Dec. 31, 1993.