FPA Medical Management, San Diego, last week confronted a shareholder lawsuit and the downgrading of its debt by Moody's Investors Service after the physician practice management company reported serious financial problems.
FPA said it has frozen hiring and capital spending, undertaken a work-force reduction and began other initiatives to reduce administrative expenses by $25 million annually. It also will close a facility in Long Beach, Calif., and consolidate other operations.
FPA said it anticipates a $200 million pre-tax charge in the second quarter ending June 30 to write off goodwill, shared risk and other receivables, and severance payments.
It reported a loss of $9.1 million, or 20 cents per share, in the first quarter ended March 31, compared with a loss of $24.5 million, or 60 cents per share, in the year-ago quarter. Revenues grew 33% to $392.2 million.
First-quarter earnings were hurt by a 45.5% rise in interest expenses due to increased borrowings, FPA said. Its Sacramento and Arizona operations incurred pre-tax losses of about $5 million.