Healthcare America, a hospital management firm that emerged from bankruptcy reorganization just a year ago, is struggling with its debt payments and has hired the New York investment banking firm of Alex. Brown & Sons to advise it.
"The debt load was substantial," said Kevin P. Sheehan, Healthcare America's president, about his company's $220 million in loans. However, the Austin, Texas-based chain might have been able to handle it if interest rates hadn't risen and it hadn't experienced a $19.1 million drop in reimbursements from the Civilian Health and Medical Program of the Uniformed Services.
Healthcare America resulted from last year's merger of Healthcare International, a hospital management company, and HealthVest, a real estate investment trust. The company, which operates in six states, owns nine psychiatric hospitals, two rehabilitation hospitals and one acute-care hospital.
Of its total debt, about $160 million is floating-rate debt, which costs more when interest rates rise. That cost Healthcare America $3 million to $4 million in additional payments this year, Mr. Sheehan said, but he added that the company "is not in default and we don't expect to be."
What Healthcare America is facing is a cash crunch. It must repay $22.5 million in principal in 1995, and its coffers consist of an $11.5 million line of credit and $4.6 million in cash.
In its third-quarter filing with the Securities and Exchange Commission, the company said "if a restructuring is not completed, (it) may go into default of its credit agreements."
Healthcare America reported a net loss of $1 million, or 9 cents per share, for the third quarter ended Sept. 30, compared with a net loss of $2.2 million, or 20 cents per share, in the year-ago period. Revenues grew 149% to $36.1 million. For the nine-month period, it had a net loss of $2.5 million, or 23 cents per share, compared with $6 million, or 54 cents per share, in the year-ago period. Revenues increased 121% to $103.6 million.
Since March, the company has assumed operations of three hospitals it formerly leased to other operators.