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Non-Tech : NovaCare Employee Services (NASDAQ:NCES) -- Ignore unavailable to you. Want to Upgrade?

To: Wendel Stoltz who wrote (192)	9/22/1998 11:48:00 AM
From: Kelvin Taylor	Read Replies (1) \| Respond to of 376

Tuesday September 22, 8:27 am Eastern Time Company Press Release SOURCE: NovaCare, Inc. NovaCare Anticipates Lower Earnings KING OF PRUSSIA, Pa., Sept. 22 /PRNewswire/ -- NovaCare, Inc. (NYSE: NOV - news), a leading national provider of rehabilitation and employee services, announced today that it expects financial results for the first quarter ending September 30, 1998 to be as much as 50% below first quarter results for the prior year. NovaCare reported net income of $.16 per share on a fully diluted basis for the three months ended September 30, 1997. The earnings decline reflects reduced performance in the long-term care services business during the quarter as a result of unanticipated delays in the industry's transition to a prospective payment system (PPS), which was initiated by the Health Care Financing Administration (HCFA) on July 1, 1998. ''The majority of our nursing home customers do not have sufficient information to understand their PPS economics for inpatient services,'' stated Timothy E. Foster, Chief Executive Officer. ''To complicate matters, there continues to be great uncertainty with respect to reimbursement available to patients for rehabilitation in nursing homes under Part B of the Medicare Program. Further, the comment period for HCFA's revision of these new regulations has just been extended another 30 days, prolonging the period of reimbursement uncertainty. Understandably, many of our smaller and not-for- profit customers are being very cautious about adding new Medicare patients and incurring therapy and other ancillary service costs in this environment. We anticipate that the number of rehab patients per facility will be down approximately 10% for the first quarter compared with the same quarter last year. In addition, they are deferring contract pricing revisions stemming from the PPS, and they are remaining under salary equivalency guidelines and reducing therapists' time in facility. ''We remain confident of the prospects for contract rehabilitation once our customers understand their own economics under the new reimbursement programs,'' said Foster. ''It is clear, however, that until HCFA and its intermediaries satisfy their program administration responsibilities, we will remain in an uncomfortable limbo. ''In an effort to partially offset revenue shortfalls, we have substantially reduced our costs by lowering rehab staff salaries in keeping with labor market trends in the long-term care industry. Also, in view of the uncertain financial markets and operating environment we have elected to conserve our capital and defer acquisitions for the foreseeable future.'' In concluding, Foster stated that, ''While the deterioration in the public equity and high-yield debt markets has altered our course somewhat, we continue to pursue alternatives for separating our long-term care rehabilitation business from our outpatient services business to de-leverage the company and position for continued growth. We hope to be in a position to be more definitive on this subject in the coming months.'' NovaCare, Inc. is a national leader in physical rehabilitation services and employee services, and a rapidly growing provider of occupational health services. As the clinical leader in rehabilitation, the company treats 47,000 patients per day in cost-effective outpatient and long-term care settings, and has achieved number one market shares in long-term care and orthotic and prosthetic rehabilitation. In addition, NovaCare is the nation's second largest provider of outpatient physical therapy and rehabilitation services. Its subsidiary, NovaCare Employee Services Inc. (Nasdaq: NCES - news), is the second largest professional employer organization, administering the full array of human resource functions, including the management of health care benefits and workers' compensation, for small and medium-sized businesses.