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Forecast of Coming Losses Sends SysteMed Stock Down 7.7% : Earnings: New president sees red ink for at least several months. He hints at restructuring later in year.

September 16, 1993|ANNE MICHAUD | TIMES STAFF WRITER

LAGUNA HILLS — SysteMed Inc.'s stock fell 7.7% on Wednesday after the company's president and chief executive predicted losses for the next several months.

Samuel Westover, who took the helm of SysteMed a little more than a month ago, said during a teleconference with securities analysts: "I expect SysteMed will operate at close to, but probably short of, break-even for the next several months. . . . We expect a small loss in the third quarter and cannot predict profitability in the fourth quarter."

The company, which manages prescription drug benefits for corporations and insurers, may even undergo a restructuring later this year, he said. And that may result in a fourth-quarter charge against earnings.

Details of a possible restructuring are not worked out, said Judith W. Archbold, a SysteMed spokeswoman. "I don't think it will involve massive layoffs," she said.

The company employs about 20 people at its headquarters in Laguna Hills. Another 400 to 450 employees are based in the Midwest, Archbold said. SysteMed is in the process of selling off some overseas operations.

In Wednesday's NASDAQ trading, SysteMed's stock closed at $3.75 a share, down 31 cents.

One observer called Westover's comments "disappointing news." But "they've brought some new people in, they've looked the company up and down, and they've found some inadequacies," said Evan Sturza, editor of Sturza's Medical Investment Letter in New York. "They weren't on track for growing their earnings as it was."

Sturza is still recommending the stock.

For the first six months of 1993, SysteMed posted a loss of $426,000 on revenue of $65.4 million. That contrasted with a profit of $666,000 on revenue of $58.3 million for the first half last year.

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