Community Care of America has postponed a public stock offering indefinitely, but the company's top executive said he doesn't expect the delay to slow acquisitions.
The Naples, Fla.-based rural healthcare firm postponed a second offering this month in light of an investigation of one of its nursing homes in Iowa. CCA, which had its initial public stock offering last year, had planned an offering of 3.1 million shares of common stock in hopes of raising $48.1 million.
"We felt the timing of that (investigation) precluded us from making the offering, but we don't think it will affect pending acquisitions," said Kenneth Creasman, the company's president and chief executive officer.
CCA's stock plummeted 13% to $10.25 a share on March 27 in NASDAQ trading, two days after HCFA decertified one of its nursing homes in Council Bluffs, Iowa. HCFA's decision came after the Iowa Department of Inspections and Appeals said a CCA facility failed to eliminate five violations of healthcare standards. (April 1, p. 14). The company is appealing the state's finding.
Analysts say CCA's postponement of the offering is a smart move.
"The stock is too cheap to give away," said Scott Mackesy, an analyst with Dean Witter Reynolds in New York. "They should wait for the stock to rebound, report some new earnings and revisit the transaction."
Meanwhile, CCA has said it has worked to correct the problems, which the company said existed when they bought the facility in April 1995.
"Our operations team is confident we will get this resolved, it will be recertified, and we don't think it will have a material effect on acquisitions," Creasman said. "We will continue to close the two agreements that are pending."
CCA signed a consulting agreement with Memorial Health Services, Adel, Ga., which owns and operates five rural hospitals. CCA has until July to exercise an option to buy those facilities. (April 8, p. 29).
In addition, CCA signed an agreement to acquire Atlanta-based Southern Care Centers, which operates eight long-term-care facilities in Georgia, Louisiana and Texas. Those deals would give CCA six rural hospitals and 64 long-term-care facilities.