Caremark International reported a first-quarter loss of $48.3 million, including a charge of more than $65 million related to the company's settlement of a four-year federal investigation last June.
The previously announced charge resulted from Caremark's resolution of good-faith business disputes. In March, the company said it would pay $42.3 million plus related charges to resolve litigation with several private payers but said the settlement was not an admission of wrongdoing (March 25, p. 30).
Last June, Caremark agreed to pay $161 million to the government to settle charges that it had made improper payments to physicians in return for patient referrals. Its home infusion unit, which it sold to Coram Healthcare Corp. in April 1995, was the target of that probe.
The more recent payer agreements resulted in a $68.9 million charge, including related expenses and other items, in this year's first quarter ended March 31.
The Northbrook, Ill.-based company reported a loss of $48.3 million, or 63 cents per share, compared with net income of $21.4 million, or 29 cents per share, in the year-ago quarter. Net revenues rose 43% to $764 million, compared with $534.1 million in the first quarter of 1995.
Not including the one-time charges, Caremark's net income was $18.5 million, or 24 cents per share.
The company said its physician practice management business grew significantly, reporting net revenues of $228.2 million for the first quarter, compared with $68.6 million in the year-ago quarter. The division's operating income grew to $8 million, compared with $1.9 million in the first quarter of 1995.
The company attributed that subsidiary's performance to the purchase of Cigna Medical Group clinics, through Caremark's Friendly Hills HealthCare Network, last September in Southern California.
Revenues declined in Caremark's disease management business, falling 10% to $92.3 million. Earnings dropped 18% to $15.1 million.
In an unrelated announcement, Caremark said it extended its agreement to distribute Genentech's three human growth hormone products through 1999. Caremark is the South San Francisco-based biotechnology firm's preferred distributor of those products in the United States.