IHS reports loss of 10 cents a share for second quarter

Reduced payments by Medicare blamed

Earnings

July 22, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Integrated Health Services Inc. said yesterday that it had a net loss of $4.6 million, or 10 cents a share, in its second quarter, a result the company attributed to the continuing adverse impact of a new Medicare payment system.

Owings Mills-based IHS, a provider of post-hospital services, including nursing and rehabilitation, lost 3 cents more per share than was projected by eight analysts surveyed by Zacks Investment Research.

For the second quarter, the company posted net earnings of $43.7 million, or 80 cents a share.

Net revenue in the quarter that ended June 30 totaled $625.4 million, 16 percent less than in the second quarter last year.

Net revenue for the first half of the year was $1.2 billion, 17 percent less than in the 1998 period. The net loss was $11.2 million, or 22 cents a share, for the first six months compared with net earnings of $79.1 million, or $1.50 a share, in the corresponding period last year.

The second-quarter numbers indicated a slight recovery for IHS from the effects of the new Medicare "prospective payment system," or PPS, which is designed to save $9.2 billion over five years. Under the reduced-payment system, nursing homes that contract with IHS have been ordering fewer therapy sessions per patient and admitting fewer Medicare patients.

Compared with the first quarter of the year, IHS increased revenue and improved its loss per share, largely because of cost reductions, said Marc B. Levin, IHS' executive vice president.

"We're pleased with our performance in the quarter," Levin said. "We're moving in the right direction, and we expect to see continued improvement."

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