Premier Research Worldwide's stock tumbled 19% in one day last week after it said net revenues would drop dramatically during the second quarter ending June 30 from the $4.3 million earned in the year-ago quarter. The Philadelphia-based clinical research firm has staked its future on a tight marketing relationship with the 1,800-hospital Premier alliance. But the link has yet to pay off (May 5, p. 3). "Second-quarter results will reflect both sponsor-related delays under certain clinical research contracts and lower-than-expected new contract signings," Premier Research said. As revenues are falling, company expenses are rising because of increased hiring in anticipation of future contracts, the company said. Premier Research went public in February at $17 per share. After the bad sales news, the company's stock was the second-biggest daily decliner on the NASDAQ market, losing $1.63 per share to close at $7 on volume of 1.3 million shares.
Foundation Health Systems, Woodland Hills, Calif., has completed its $51.7 million bailout of Red Bank, N.J.-based First Option Health Plan, a financially troubled provider-sponsored HMO launched three years ago. Under an agreement approved last month by First Option's hospital and physician shareholders, FHS purchased $43 million of the HMO's convertible subordinated debentures (April 21, p. 2). As the debentures are converted to equity, FHS will control up to 71% of the HMO, which has more than 190,000 enrollees. FHS also has agreed to invest as much as $8.4 million in First Option before the end of the year. The transaction "marks another important milestone in our Northeastern growth strategy," said Malik M. Hasan, M.D., FHS' president and chief executive officer. With plans in Connecticut and Pennsylvania, FHS covers some 500,000 enrollees in the region.
The California Department of Health Services has informed Kaiser Permanente that emergency departments at Kaiser hospitals in Oakland and Richmond, Calif., have passed Medicare validation inspections. The two hospitals had been under threat of losing their Medicare certification because of complaints from patients and nurses and several patient deaths earlier this year (April 7, p. 64). Kaiser will continue to work with the state agency, which conducted the inspection on HCFA's behalf, to correct other deficiencies at the two hospitals. The full report of what the agency found in its investigation will be publicly released later this month.
Integrated Health Services, an Owings Mills, Md.-based post-acute provider, has agreed to pay Coram Healthcare $21 million for terminating the companies' planned merger last week. The merger fell apart soon after Coram, a Denver-based home-care company, agreed to reduce its purchase price to $184.4 million from $280 million. Both the original and the renegotiated deal included IHS assuming $375 million in Coram debt (April 14, p. 36). In return for the reduced price, IHS agreed to raise the deal's breakup fee to $25 million from $17.5 million. The deal unraveled when the companies continued to dispute the circumstances under which a breakup fee would be paid.
Houston-based Sisters of Charity of the Incarnate Word Healthcare System has completed a $13 million agreement to lease 50-bed Jasper (Texas) Memorial Hospital from the Jasper Memorial Hospital District. Sisters of Charity had been managing the hospital under contract since May 1995. As part of the 10-year lease agreement, the district will receive $700,000 a year for the hospital and two clinics. The balance of the contract includes payments for various hospital accounts receivable. The deal also gives the Roman Catholic system three five-year options. With the Jasper acquisition, Sisters of Charity owns or leases 10 hospitals in Louisiana and Texas.