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Nichols Institute Reports Record Sales but Net Loss

July 15, 1986

Despite record sales for the period, the Nichols Institute of San Juan Capistrano said it recorded a substantial loss for the second fiscal quarter ended May 31.

The company, which performs hospital assays and manufactures the Allegro medical diagnostic kit, posted a $60,000 loss on $8.8 million in revenues, contrasted with income of $255,000 on revenues of $5.8 million last year. The second quarter results bring the company's loss for the first half of the fiscal year to $28,000 on revenues of $16.4 million, compared to last year's profit of $489,000 on sales of $10.8 million.

Dr. William Patterson, president of the institute's reference laboratories, said that much of the revenues were brought in by two companies that were acquired by Nichols late last year, American Clinical Laboratories in San Diego and BioDiagnostic Laboratories in San Pedro, which have expanded the number of assays the company can perform to more than 900 from about 260 two years ago. He said that the company should be able to perform about 1,000 assays by the end of the year, which would account for virtually every kind of assay requested by hospitals.

The loss was attributed to heavy investment in internal development. Patterson said that the company had added laboratory personnel and equipment in San Juan Capistrano, in addition to training new sales representatives, and that it had stepped up its use of marketing and educational materials.

FOR THE RECORD
Los Angeles Times Friday July 18, 1986 Orange County Edition Business Part 4 Page 2 Column 6 Financial Desk 3 inches; 83 words Type of Material: Correction
The Nichols Institute said that about two-thirds of its expanded ability to perform medical assays has been through internal growth. The remainder was through two recent acquisitions, according to Wayne Patterson, the company's president. A story in Tuesday's edition incorrectly reported that most of the growth was from the acquisitions and misidentified Patterson. Analysts have expected the company to earn about 48 cents to 50 cents a share during all of 1986, not in the two final quarters of the year, as reported Tuesday. The company expects that profit will be lower than anticipated.

The company expects earnings to improve over the rest of the year, but third and fourth quarter earnings will still be lower than previously anticipated. Though he couldn't say what the estimates were in dollars, Patterson said that analysts expected earnings of 48 to 50 cents a share in the final two quarters of the year. Nichols has about 3.9 million common shares outstanding.

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