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Tustin-Based Care Enterprises Reports $29-Million Loss for '88

June 10, 1989|JOHN CHARLES TIGHE | Times Staff Writer

Care Enterprises lost $29 million in 1988, including $7.2 million set aside to cover the costs of its attempt to reorganize under protection of bankruptcy court, the company said Friday.

Tustin-based Care, one of the nation's largest nursing home operators with 94 facilities, lost $66.5 million in 1987.

In explaining the 1988 loss, Care said payments for patient care from the government were not sufficient to cover the company's operating costs.

The company reported that revenue for 1988 declined 2% to $247.8 million from $253 million a year earlier because it reduced its facilities by 11 since the start of 1988.

Although Care has said in court papers that it will be able to return to profitability, the $29-million loss reinforced doubts among some Care creditors about the ability of current managers to direct a recovery.

"They seem to be emphasizing current government regulations as a reason for their loss, when, in fact, they have said they could restore operations in the current environment," said Richard Havel, an attorney for the creditors.

Ralph Hazelbaker, owner of a company that wants to acquire some Care homes, said: "Last year they talked about making Gargantuan changes to produce savings. These obviously have been totally overstated."

The reported loss was larger than creditors had expected. Havel said, and a Care official later confirmed, that the company earlier this year told creditors that it expected its loss for last year to be only about $13 million. In court documents filed last year, Care reported unaudited results showing a loss of $10.6 million for the first nine months of the year.

Care Controller Bob Hodgson said the company's independent auditor, Touche Ross & Co., required that the loss be increased because the company needed to set aside more money to cover costs related to the company's reorganization. In 1987, Care set aside $8 million to cover costs related to its reorganization, the company said.

Care filed for protection from creditors in March, 1988. The firm has $180 million in total debt, including mortgages on its facilities.

A committee of unsecured creditors filed papers last month in U.S. Bankruptcy Court in Los Angeles seeking to remove Care's current management and replace it with an independent trustee. Care is run by its founders, brothers Lee Roy and Dee Roy Bangerter.

Care spokesman Mike Anderson said that the company's operations are improving and that the company will report higher revenues for the first quarter of 1989.

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