ProMedCo Management Co., Fort Worth, Texas, which posted healthy profits for three straight years after an initial public offering in March 1997, filed for Chapter 11 bankruptcy protection.
"It's a shame, because that was one of those practice management companies that looked like they were making a success of it," said Doug Sherlock, senior healthcare analyst at Sherlock Co., Philadelphia. "We had hoped they had found the golden key. But it doesn't look that way."
The company, created in 1994, has consolidated and managed doctors' groups in small metropolitan areas, including Midland, Texas; Las Cruces, N.M.; and Boca Raton, Fla.
Robert Smith, ProMedCo's senior vice president and chief financial officer, declined to comment after the petition was filed in U.S. Bankruptcy Court in Fort Worth.
ProMedCo is the second PPM company to file for bankruptcy protection in recent days. Response Oncology, Memphis, Tenn., which operates cancer-treatment centers and manages oncology practices, filed for Chapter 11 bankruptcy protection on March 30, listing $55.4 million in debt (April 2, p. 10).
ProMedCo, which offered 4 million shares at $9 per share for its IPO, was consistently profitable until the third quarter of 2000, when it lost about $49 million on total revenue of $72 million. It had posted a $4.1 million profit on $84 million in revenue for the third quarter of 1999.
In a statement timed to the bankruptcy filing, company officials said it's uncertain whether stockholders will recover money in the reorganization.
As of December 1999, ProMedCo operated in 25 communities across the U.S., where affiliated medical groups employed about 830 physicians. The company also worked with about 1,850 physicians in associated independent practice associations.