DJ Novacare Employee Svcs Renegotiates Pact With NovaCare
NORRISTOWN, Pa. (Dow Jones)--NovaCare Employee Services Inc. (NCES) renegotiated its contract with NovaCare Inc. (NOV).
In a press release Thursday, NovaCare Employee said the renegotiated contract reflects the "substantial reduction" in the size of NovaCare Inc.'s employee base.
NovaCare Inc., which sells physical rehabilitation services and employee services, is NovaCare Employee's parent company and largest customer.
NovaCare Employee, which sells employee services, said it will take a $1 million restructuring charge in the fourth quarter ending June 30 stemming from the decrease in NovaCare's business.
NovaCare Employee earned $1.9 million, or 7 cents a diluted share, on revenue of $363.9 million for the fourth quarter last year.
NovaCare Employee said it expects annual earnings before interest, taxes, depreciation and amortization derived from the NovaCare Inc. and NovaCare's divested businesses will be about $5 million in fiscal 2000, compared with an estimate of $21 million for fiscal 1999.
The company said the fiscal 1999 figures reflect fees under the contract and staffing services provided to the long-term care services business, which NovaCare exited over the past few months.
NovaCare Employee said the "dramatic" impact on its earnings resulted from NovaCare's challenges with Medicare reimbursement.
As reported April 29, Novacare Employee Services said it was considering selling the company and planned to recommend options to the board in June.
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