After 5 quarters in red, HCIA posts a slim profit Health data company earns $69,000, helped by staff cutbacks

July 23, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

HCIA Inc., a Baltimore health data company, ended a string of five consecutive quarters in the red as it posted a slim profit yesterday for the quarter that ended June 30.

Earnings were $69,000, or a penny a share, in line with analysts' expectations. In the second quarter of 1997, HCIA lost $2.2 million, or 18 cents a share.

Revenue was $18.8 million, 2 percent less than the $19.2 million in the same quarter a year ago. But expenses were cut to $18.7 million, down 15 percent from $21.9 million in the corresponding 1997 period.

The savings were achieved by cutting the staff, from about 800 entering the second quarter of 1997 to 676 at the end of the second quarter this year.

Most of the cutbacks were in Denver, where HCIA acquired LBA Health Care Management Inc. in July 1996 for $130 million. LBA's consulting business, intended as a complement to HCIA's basic number-crunching business, failed to develop as expected.

Expenses also were reduced by writing off some LBA assets in the first quarter of 1998.

"In returning the company to profitability, we have spent the last 12 months focusing on expense reductions," said George D. Pillari, chairman and chief executive officer.

"Now we have done so, we will continue to pursue our previously stated strategy of building recurring, or 'core,' revenues to the point where they substantially cover expenses as we enter a quarter."

For the quarter that just began, HCIA reported, core revenue is estimated at 92 percent of expenses, compared with 78 percent for the same quarter a year ago.

HCIA hopes to reach former profitability levels -- 15 to 20 cents a share and 20 percent pretax operating margins -- next year.

The results were posted after yesterday's stock market close. Shares of HCIA closed yesterday at $12.125, down 6.25 cents for the day.

Pub Date: 7/23/98

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