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Columbia/HCA has relapse
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July 29, 1998: 9:05 a.m. ET
Embattled hospital chain's 2Q profit falls short; $1B stock buyback set
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NEW YORK (CNNfn) - Beleaguered Columbia/HCA Healthcare Corp. Wednesday reported second-quarter operating earnings Wednesday of $191 million, below Wall Street estimates.
Columbia's earnings mark the latest round of bad news for the hospital chain, which has been the target of federal investigations for fraud in its Medicare billing practices as well as securities violations.
Columbia said its second-quarter operating earnings equaled 30 cents a share, below First Call estimates of 32 cents a share and far below year-ago earnings of 58 cents a share. Columbia posted operating profits of $385 million in last-year's second quarter.
The company reported revenue of $4.78 billion, compared with $4.85 billion a year earlier.
This year's second-quarter results don't include charges related to restructuring and investigation-related costs. Including those items, Columbia reported earnings of $78 million, or 12 cents a share.
The company also said its board of directors has authorized the repurchase of up to $1 billion of its common stock.
Columbia said it expects to begin the buyback through a series of forward-purchase contracts. A $1 billion repurchase program at current trading prices represents approximately 5 percent of the company's $19 billion market capitalization.
Columbia's board also approved the filing of a request with the Internal Revenue Service for tax-free spin-offs to stockholders of its America and Pacific groups.
"We believe the future of this company lies in returning to a focused strategy that concentrates on those communities where we have a major health-care presence," said Thomas Frist, Columbia chairman and chief executive officer. "Those hospitals and other service units which do not fit this profile are being repositioned into other organizations that can more effectively serve the needs of those local communities."
For the first half of 1998, Columbia posted operating earnings of $432 million, or 67 cents a share, on $9.7 billion in revenue, compared with $840 million, or $1.24 a share, on $9.8 billion in revenue in the year-ago period.
Including restructuring and investigation-related charges, Columbia reported first-half earnings of $275 million, or 43 cents a share.
Columbia (COL) shares closed at 29-3/16 in Tuesday trading, down 11/16. 
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Columbia/HCA
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