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Columbia bleeds money
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February 6, 1998: 11:54 a.m. ET
Troubled hospital chain says it will post loss topping $1.25 billion for 4Q
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NEW YORK (CNNfn) - Troubled hospital operator Columbia/HCA Healthcare Corp. said Friday it expects to post a loss of $1.25 billion to $1.35 billion for the fourth quarter due to charges against earnings.
The overall weaker results will translate into a loss of $1.95-$2.10 per diluted share (COL) for the quarter ended Dec. 31, 1997. First Call's consensus of analysts' estimates predicted a 16 cent per share profit.
The loss from continuing operations during the fourth quarter will be about $375 million to $450 million, or 60-70 cents per diluted share.
About $60 million of the charges are related to the current investigation into Columbia/HCA's billing practices. Federal investigators have alleged that Columbia/HCA, the nation's largest for-profit hospital chain, improperly billed the government for Medicare and Medicaid charges.
"The second half of 1997 was a period of tremendous challenge and change for this company," said Thomas F. Frist, chief executive officer of Columbia/HCA.
"However, we are confident that we have taken significant steps forward in our efforts to reposition the company for 1998 and future years." To that end, Columbia announced a restructuring plan that began at the first of the year.
Columbia said the fourth-quarter after-tax charges will be comprised of $750 million of impairment charges relating to closing or selling assets. It said $450 million of that results from the sale of its home health operations and some businesses acquired from Value Health in 1997.
An additional $60 million in charges are related to changes in accounting principles, it said.
Nashville, Tenn.-based Columbia said revenues declined by approximately 10 percent from the year-ago quarter due to changes in discounts and contracts with its customers.
At the same time, however, admissions to its hospitals increased during the quarter by about 0.5 percent.
Columbia/HCA expects to issue its actual fourth-quarter earnings around Feb. 13.
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