The well-publicized leak of a possible blockbuster merger of National Medical Enterprises and two other investor-owned hospital firms did not prompt any shareholder questions at NME's annual meeting last week.
Jeffrey Barbakow, NME chairman and chief executive officer, would not take questions from the press at the Sept. 28 gathering about rumors that NME, American Medical International and Healthtrust are discussing a $10 billion merger that would create the nation's second-largest hospital company (Sept. 26, p. 2).
But he told reporters after the meeting in Santa Monica, Calif., that "we have the balance sheet to do just about anything." And indeed, NME seems to be champing at the bit.
While it undertook multimillion-dollar writeoffs to settle fraud charges at its now-divested psychiatric facilities, NME "has had to sit on the sidelines during the last couple of years of rapid change in the healthcare industry. We have only since early July been in a position to realistically explore the alternatives available to us.
"We are now aggressively reviewing those opportunities, and...we are in discussions with a number of parties regarding a variety of options for the company," Mr. Barbakow said in his speech at the meeting.
Those options include acquiring "multifacility providers," repurchasing "a substantial number of shares of NME stock" to increase shareholder value, or accepting another company's "attractive" offer to be acquired, he said.
There may be further "indictments against certain individuals for activities that relate to past psychiatric problems," Mr. Barbakow said (See related stories, pages 16 and 38).
But Mr. Barbakow added that NME has made what he termed a "dramatic" financial turnaround. NME's latest earnings report, released last week, showed a profit of $64 million, or 38 cents per share, for the first quarter ended Sept. 30. That compares with a net loss of $40.8 million, or 25 cents per share, in the year-ago period. Revenues dropped 14% to $662.8 million.
The first-quarter results included a $29.5 million gain from the sale of NME's dialysis services business. NME said operating profit margins improved to 12.8%, compared with 11% in the year-ago period.
NME operates 33 hospitals nationwide.