Financials

Allied Healthcare International Reports Net Loss for Q3: For the third quarter ended June 30, 2002, New York-based Allied Healthcare International, formerly Transworld Healthcare, reported a net loss of $5.6 million, or a loss of 30 cents per diluted share, compared to a net income of $40,000, or 0 cents per share, for the same quarter the previous fiscal year. Revenue for the quarter was $64.8 million, compared to $37.4 million during the same quarter the previous fiscal year.

Lincare Announces Healthy Q2 Results: For the second quarter ended June 30, 2002, Lincare Holdings of Clearwater, Fla., reported a net income of $46.5 million, or 42 cents per diluted share, compared to a net income of $35.3 million, or 32 cents per share, for the same quarter the previous fiscal year. Revenue for the quarter rose 18 percent to $234.5 million, compared to revenue of $198.4 million during the same period in 2001.

Matria Reports Q2 Loss: For the second quarter ended June 30, 2002, Matria Healthcare of Marietta, Ga., reported a net loss of $721,000, or a loss of 8 cents per diluted share, compared to a net income of $4.3 million, or 48 cents per share, during the same quarter in 2001. Revenue for the quarter increased 7 percent to $69.4 million, compared to revenue of $64.8 million during the same quarter in 2001.

Option Care Reports Record Q2 Earnings: For the quarter ended June 30, 2002, Option Care of Buffalo Grove, Ill., reported a net income of $3.8 million, or 18 cents per diluted share, an increase of 60 percent compared to a net income of $2.3 million, or 14 cents per diluted share, for the same period in 2001. Revenue for the quarter increased 51 percent to $75.5 million, compared to $49.9 million for the same period in 2001.

American HomePatient Files for Bankruptcy: One of the nation's largest home health providers, American HomePatient of Brentwood, Tenn., has filed for Chapter 11 bankruptcy protection. While the declaration offers the company relief from imminent debt trouble, American HomePatient's president, Joseph Furlong, is quick to point out that the company intends to pay all of its debts in full. Under the terms of the bankruptcy plan, American HomePatient would break its debt into two pieces: $250 million would be payed out over a seven-year period, and the other $25 million would be payed out within the first three years. Furlong is optimistic that American HomePatient will emerge from bankruptcy within 9 months, as soon as the court approves the company's plan.

Fraud and Abuse

Florida Court Convicts Eight in Massive Medicare Fraud Case: A federal judge in August convicted eight people, including two doctors, two licensed pharmacists and four owners of pharmacies and durable medical equipment companies, of defrauding Medicare of “millions of dollars,” according to Guy Lewis, U.S. Attorney for the Miami-based Southern District of Florida. The fraud scheme relied on paid patients who provided their Medicare cards and signed a year's worth of delivery receipts for medicine they did not receive; doctors who signed fraudulent prescriptions without seeing the patients; and DME companies that billed Medicare. These practices resulted in the payment of thousands of false claims and prompted the largest Medicare-fraud conspiracy trial in the district, Lewis said. Eighteen other defendants pleaded guilty before the trial began.

Florida Judge Sentences DME Companies to Probation, Fines: As the result of an ongoing fraud investigation, dubbed “Operation Hardgear,” a federal judge on Aug. 7 sentenced seven durable medical equipment companies to five years of probation, and ordered the companies to pay a total of $5.5 million in fines. Each of the companies previously had pleaded guilty to felony offenses related to a massive Medicare and Medicaid fraud scheme that cost the federal government more than $14 million. Investigators also netted guilty pleas from two additional companies and eight individuals — all of whom will stand trial in January 2003, according to U.S. Attorney Paul Perez. The probated Tampa-area companies include: DBB, G.S. Care, Gold Star Healthcare, Med-Care Distributors, T-Tech Medical Services, Trans-Capital Investment Group and Fulcrum Services.

Noteworthy

Med Diversified's Auditor Resigns: Alleging “likely illegal acts” at Andover, Mass.-based Med Diversified, KPMG has resigned as the company's auditor, according to a document filed by Med Diversified on the U.S. Securities and Exchange Commission's Web site. Alexander Bromley, Med Diversified's general counsel, disputed KPMG's charges, saying that KPMG never provided Med Diversified with a report explaining the auditor's findings or conclusions.

Virginia Hospital Organization Sells HME Business: Citing financial problems due to “continuous cuts in reimbursement,” a spokesman for the Newport News, Va.-based Riverside Health System told the Daily Press that the hospital plans to sell its home medical equipment business. Already, three companies have expressed interest in purchasing the business, the Daily Press reported.

For breaking news, go to www.homecaremonday.com, the electronic news service of the home medical equipment industry.