A $17.2 million reserve set aside to cover possible shareholder settlements involving T2 Medical depressed Coram Healthcare Corp.'s second-quarter earnings.
For the second quarter ended June 30, Coram recorded a net loss of $9 million, or 23 cents per share, compared with net income of $12.7 million, or 33 cents per share, in the year-ago period. Revenues dropped 3% to $114 million.
For the six months, Coram posted a net loss of $5.8 million, or 15 cents per share, compared with net income of $23 million, or 60 cents per share, in 1993. Revenues dipped 2% to $226 million.
Coram, the nation's second-largest home infusion concern, was created in July through the four-way merger of home infusion companies T2 Medical, Curaflex Health Services, HealthInfusion and Medisys. The earnings for last year were calculated by combining the performances of the four component companies as if they were merged.
The $17.2 million charge would cover payouts from a possible resolution of a class-action lawsuit filed against T2 Medical in 1993, the company said. The complaint, filed by T2 shareholders, alleges that the company and various senior officers-including Chairman Thomas Haire and former President and Chief Executive Officer Joseph Allegra, M.D.-violated the Security Exchange Act of 1934 (Aug 23, 1993, p. 10).
Last August, T2 restated its earnings for the first and second quarters of fiscal 1993 after an internal investigation of the company's records discovered a series of accounting errors and irregularities (Aug. 16, 1993, p. 4).
The status of settlement talks in the lawsuit wasn't disclosed.
Also recorded during the second quarter was an $8 million charge related to merger expenses. Earlier this month, six Coram executives, including Senior Executive Vice President Charles Laverty, resigned from the company (Aug. 8, p. 6).
Aside from the settlement charge, Coram Chairman and CEO James Sweeney attributed the results to "industrywide continued cost reduction initiatives by third-party payers."
On Aug. 3, Coram announced that it had agreed to purchase HMSS, a Houston-based home-care company, for an undisclosed amount. Coram has indicated that it plans to grow through additional acquisitions over the next two to four years.
Boulder, Colo.-based Coram Healthcare Corp. is the nation's second-largest home infusion company, providing home infusion therapies, disease-specific outpatient care, lithotripsy and physician practice management.