Tax-exempt healthcare bond volume in the three months ended Sept. 30 reached its highest third-quarter level since 1993, according to Securities Data Co., a Newark, N.J.-based financial services firm. Bond volume jumped 64% to $3.4 billion over 93 issues in the July-to-September period. That compares with total sales of $2.1 billion over 76 issues in the third quarter of 1995. In 1993, Securities Data recorded 192 tax-exempt healthcare deals with principal amounts totaling $6.8 billion, representing the highest third-quarter sales volume in recent years. Orrick, Herrington & Sutcliffe, with eight tax-exempt deals worth $670 million, was the top bond counsel in this year's third quarter. Lehman Brothers, top managing underwriter, booked six deals totaling $707.7 million, including a $345.9 million issue for University of California, Davis Medical Center in Sacramento.
Because of a shortfall in commercial sales, HCIA said it expects third-quarter earnings to fall short of projections. The news sent shares tumbling on NASDAQ trading to close at $32.88 on Oct. 1, the day of the announcement. The previous day, shares had closed at $60.75. By Oct. 3, the stock edged up to close at $33.75. For the quarter ended Sept. 30, the Baltimore-based healthcare information provider said it expects to post earnings of 10 to 15 cents per share, before a previously announced one-time charge. It expects fourth-quarter earnings in the range of 15 to 20 cents per share. "I think what you see here is a growing pain," not a longer-term event, said Ann Gallo, an analyst with Alex. Brown & Sons. Gallo has lowered projections for HCIA's earnings to 15 cents in the third quarter and 20 to 25 cents in the fourth quarter from a previous estimate of 30 cents in each quarter.
The president and chief executive of Legacy Emanuel and Good Samaritan hospitals in Portland, Ore., has resigned, effective immediately, without explanation. James E. May had run both hospitals since their merger four years ago. "It is now time for me to move on and reach for new challenges," May, 44, said in his resignation letter. He could not be reached for further comment last week. The company that owns the hospitals also was mum on the reason for May's sudden departure, issuing a one-page news released that stated: "May's announcement came as a surprise to Legacy employees and senior management." John G. King, president and chief executive of Legacy Health System, said May had made enormous contributions to the organization. John M. Mootry, a senior hospital executive, was named interim president of the two hospitals.
Forbes Health System's bonds, rated BBB+, were placed on CreditWatch by Standard & Poor's Corp. with positive implications following news that the Pittsburgh-based system plans to merge with Allegheny Health, Education and Research Foundation, also of Pittsburgh (Sept. 23, p. 17). Standard & Poor's cited the potential for increased operating efficiencies, access to additional managed-care clients, an enhanced competitive position and broadened geographic coverage as reasons for the move.
Apria Healthcare Group, a home-care provider based in Costa Mesa, Calif., said it expects to report year-end and third-quarter results that fall below analysts' expectations. The company said it plans to report in early February net income for the year ending Dec. 31 of between $1.62 and $1.66 per fully diluted share, compared with $1.40 per fully diluted share in 1995. Analysts had estimated that the company's year-end results would be closer to $1.77 per fully diluted share. Apria also said it expects to report in late October net income for the third quarter ended Sept. 30 of between 38 cents and 42 cents per fully diluted share, compared with 37 cents per fully diluted share for the year-ago period. Analysts had pinned the third-quarter figure at 46 cents per share. The company attributed the dips to the effects of its previously announced $212 million merger with Vitas Healthcare Corp., a hospice provider based in Miami, and to its conversion of 450 of its computer systems to a single operating platform. Apria provides home-care services through 350 locations serving patients in 49 states.