One of the country's leading hospital outsourcing companies said late last week it's considering putting itself up for sale.
Chatsworth, Calif.-based COHR hired Lehman Brothers, a New York investment banking firm, to shop it around. COHR dealt investors a double-whammy by revealing that earnings would be hurt by a raft of special charges.
"It is the board's responsibility to the shareholders to explore various strategic alternatives, including the possible sale of the company," said Lynn Reitnouer, chairman of COHR's board, in a statement.
COHR provides clinical equipment maintenance and group purchasing services to nearly 400 healthcare clients nationwide.
Based on preliminary estimates, COHR said it expects to take $8 million in special charges for the third quarter ended Dec. 31 to cover "doubtful accounts receivable" and to shore up its fast-growing equipment maintenance business.
About $3.2 million of those charges are for the company's Maintenance MasterPlan service contracts. Under those plans, hospitals outsource maintenance for a wide range of equipment to COHR for a fixed price with guaranteed savings over their previous servicing arrangements.
COHR said some of the reserves would be used to cover mounting accounts payable and to beef up reserves for service savings commitments.
Finally, COHR said it is unlikely to meet analysts' earnings estimates for the third quarter. A consensus estimate of analysts compiled by First Call put third-quarter earnings at 23 cents per share. In the year-ago quarter, COHR reported net income of $1.3 million, or 23 cents per share, on revenues of $23.5 million.
COHR's deepening financial woes are only its latest troubles.
On Dec. 22, David Langness resigned from his position as senior vice president of communications and investor relations for COHR. Effective Feb. 1, Langness will become director of the University of California at Los Angeles' health sciences communications department.
Before joining COHR in February 1996, Langness was vice president of communications for the Healthcare Association of Southern California. HASC spun off COHR, which went public in early 1996.
-With Ron Shinkman