Intercare Inc., the largest chain of walk-in, urgent-care clinics in Los Angeles and Orange counties, moved to slash costs and executive salaries after reporting on Thursday a loss of $1.01 million for the fiscal year ended Jan. 31.
The loss compares to net income of $962,912 for the previous fiscal year and comes eight months after Intercare purchased a competing chain of Southern California health-care clinics in hopes of strengthening its operations.
Officials of the Culver City company said that as a result of Intercare's poor financial performance, the company will sell certain assets, restructure its short-term debt and lay off workers in an attempt to eliminate about $1.5 million in employee-related expenses.
In addition, company Chairman Philip J. Fagan Jr., 43, said he would slash his $390,000 annual salary to $150,000. Richard Scott, executive vice president of Intercare, will take a $90,000 cut in pay, to $100,000.
After years of rapid growth, clinics advertising extended hours and specializing in urgent care have been forced to change their focus because of stiff competition. In 1982, for example, there were only 30 clinics in California; now there are more than 200, according to the National Assn. for Ambulatory Care Centers in Dallas.
But Steve B. Reid, an analyst with the Los Angeles investment house Wedbush, Noble, Cooke Inc., said Intercare's performance last year was below even the industry's average.
And he said he doubted whether the company can quickly solve its financial woes.
However, Scott said: "We're optimistic that we will soon be operating on a positive cash flow basis."
When asked if the salary cuts disclosed Thursday would make a difference in reaching that goal, Scott responded: "A 240-grand cut in pay is not a symbolic gesture."
Intercare, together with a group of five affiliated medical corporations, operates a health-care delivery network consisting of 35 facilities, located primarily in the Greater Los Angeles metropolitan area.