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Abbey Reports Healthy Profit, Up 51.5% for Latest Quarter

April 24, 1993|TED JOHNSON | SPECIAL TO THE TIMES

COSTA MESA — Abbey Healthcare Group Inc., boosted by growing demand for its home health-care products, said Friday that its profit rose 51.5% to $3.1 million for its latest quarter.

The earnings, equal to 33 cents a share, compared to a profit of $2 million, or 31 cents a share, for the same period a year earlier. Revenue for the company's first fiscal quarter, which ended April 3, rose 23.4% to $71 million from $57.5 million.

Chairman and President Timothy Aitken said the improved results were because of "our continued emphasis on high-growth markets and high-margin products." Those include respiratory and sleep disorder therapy and pharmaceutical services, as well as equipment such as clinical beds.

An analyst said the rise in profit probably won't have much effect on Aitken's plan, announced earlier this month, to launch a proxy fight at the annual meeting of Lifetime Corp., a provider of home medical services. Since March, Lifetime has rejected two takeover offers from Abbey. Lifetime's board of directors argued that the most recent offer of $27.50 a share, or $261 million, was insufficient. The board has postponed the annual meeting so it can entertain other offers.

"I don't think it makes much of a difference," said Tom Schreur, an analyst at investment bank Kidder Peabody & Co. in New York. "The earnings were nothing to get excited about. They were pretty much in line with expectations."

Lifetime, based in Boston, said earlier this week that its first-quarter profit rose 32% to $4.9 million, or 50 cents a share, from $3.7 million, or 37 cents a share, for the same period a year earlier. Revenue rose 8% to $230.3 million from $212.3 million.

Richard Rapp, vice president and chief financial officer of Abbey, would not comment Friday on the status of the takeover attempt.

Abbey, based in Costa Mesa, has been making acquisitions this year, buying eight companies with combined annual revenue of $12 million. For all of 1992, Abbey acquired nine companies with $10 million in annual sales.

Abbey has little debt, and in October it raised about $86 million from the sale of bonds.

"We believe that strategic acquisitions will continue to play a role in the company's future growth," Aitken said.

Schreur said analysts will be looking at Abbey's operational performance over the next year, particularly its efforts to attract managed-care accounts. The company last year added more than 400 accounts, including heavyweight names such as Aetna, Cigna, Prudential, Blue Cross and Kaiser Permanente.

"This will be the year when we will see how they operate," he said, noting that Abbey, which had losses in 1991, went public only last year.

In Friday's trading on the NASDAQ market, Abbey's stock closed at $17.625, up 63 cents.

Abbey Healthcare Group's Gains

Greater demand for its home-health care products, coupled with tight control of expenses, helped boost the company's quarterly profit and sales. Abbey also is on an acquisition spree, buying eight firms during the quarter ended April 3. Figures in thousands of dollars, except per-share data:

Percent 1992 1993 change Total revenue $57,526 $71,008 23.4 Net earnings 2,033 3,079 51.5 Earnings per share 0.31 0.33 6.5

Source: Abbey Healthcare Group Inc.

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