After dropping $2.625 Tuesday, shares of Manor Care Inc. recovered nearly half that loss yesterday as Wall Street partially forgave the Silver Spring-based company for its disappointing third-quarter results.
The company's shares closed yesterday at $18.125, up $1.125, on the New York Stock Exchange.
According to Margot Vignola, a Salomon Bros. analyst, Manor Care's stock "got nailed" Tuesday after the company's announcement that its net earnings for the period that ended Feb. 28 amounted to $5.3 million, or 14 cents a share.
Though earnings for the quarter showed a slight improvement over those of a year ago, when net income was $5 million, analysts had expected per-share results for the quarter to be in the 15- to 18-cent range.
Manor Care's Choice Hotels International subsidiary -- the largest hotel operator in the country -- franchises the Quality, Comfort, Rodeway, Clarion, Sleep, Friendship Inns and Econo Lodge hotel chains.
The company's recent slump has been attributed to the outbreak of war in the Persian Gulf and the resultant slump in travel.
Occupancies levels of Manor Care's nearly 200,000 hotel rooms "dropped dramatically in the middle of January," said James A. MacCutcheon, the company's chief financial officer.
Now that the war is over, the company is already seeing increases in hotel reservation volume, he said.
Manor Care's nursing home segment, which accounts for 80 percent of its revenues, showed strong operating performance for the quarter, thanks to increases in rates and lower labor costs.
"Historically, labor costs were up 10 to 11 percent year over year," said Tracy A. Munn, Manor Care's manager of investor relations.
She said, "This year we're running somewhere around 7 to 8 percent."She said one reason is that Manor Care is beefing up programs to stem employee turnover.