Manor Care posts 32% gain for 3rd quarter

March 15, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Manor Care Inc., the Silver Spring-based lodging and nursing home company, said yesterday that its third-quarter income rose 32 percent to $15.6 million compared with the same period last year, excluding extraordinary financial events.

Stewart Bainum Jr., the company's chairman, attributed the growth to higher occupancy in Manor Care's nursing homes and an upturn in the hotel industry. Manor Care operates 162 nursing facilities in 28 states. It also owns, manages or franchises 3,164 hotels in 30 countries through its Choice Hotels International Inc. subsidiary.

Income from operations rose 21 percent in the three months ended Feb. 28 compared with a year earlier.

Health care revenues, which account for 80 percent of the business, rose 10 percent to $231.5 million, thanks partly to higher occupancy. Lodging revenues increased 49 percent, partly because of the company's decision to buy its hotels in se lected markets, Mr. Bainum said. Manor Care owns 31 properties, up from 17 a year ago, the company said. Three hotels were acquired in the third quarter.

"The results were good, in line with expectations," said Mark Banta, analyst with Salomon Brothers in New York, which has a "hold" rating on the stock.

Earnings reflected a higher Medicare population in the nursing homes, he said, and the purchase of the new hotel properties. The company's aggressive purchasing of hotels caused its margins in that segment to slip, Mr. Banta said, but he said the strategy would pay off long-term.

In addition to the hotel acquisitions, lodging income gained from an increase in hotel occupancy and rates.

Occupancy rates rose 1.3 percentage points, and average daily rates rose between 3 percent and 4 percent, according to Bill Jenkinson, treasury analyst for Manor Care.

In the nursing homes, occupancy rose 2.8 percent to 90 percent, Mr. Jenkinson said. That fulfills a short-term company goal of matching average industry occupancy levels while still catering to a majority of private paying patients. They now represent 54 percent of the total.

For the nine months ended Feb. 28, revenues rose nearly 15 percent to $853 million. Income was $55.7 million, up 32 percent from the same period last year.

Manor ...... ..... Ticker ..... ..... Yesterday's

Care Inc. .. ..... Symbol ..... ..... Cls. Chg.

............ ..... MNR ........ ..... 26 3/4 .. +Period ended

2/28/94 .... ..... 3rd qtr. ... Year ago ... Chg.

Revenue .... ..... $284,071 ... $244,945 .. +16.0%

Net Income ........ $15,651 .... $8,827* .. +77.3%

Primary EPS* ........ $0.25 ..... $0.15* .. +66.7%

........... ...... 9 mos. ...... Year ago ... Chg.

Revenue ... ..... $853,324 ..... $744,052 ... +14.7%

Net Income ....... $55,654 ..... $42,061* ... +32.3%

Primary EPS* ....... $0.93 ....... $0.73* ... +27.4

Figures in thousands (except per share data).

* Includes a one-time charge against earnings of $3.1 million, or 5 cents a share, for early debt redemption.

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