Manor Care Inc., the nation's largest nursing-home operator, reported yesterday that its first-quarter profit dropped 39 percent, largely because of accounting for stock rights given to many of its workers.
This month, many companies will begin accounting quarterly for costs of stock options for executives.
But Manor Care said only a small portion of the $11 million accounting hit for employee stock in the quarter was related to options. The majority of the one-time charge involved stock awards for non-executives.
The firm also said it is getting out of the medical-transcription business, resulting in an additional accounting charge of $7 million. It said it is "in discussions with third parties to evaluate alternatives" for that business segment.
Manor Care reported profit of $24.5 million, or 30 cents a share, for the first quarter, after one-time charges. That compared with $40.4 million, or 46 cents a share, in first-quarter 2005. The firm also said its revenues in this year's first quarter totaled $869.3 million, down slightly from $879.2 million a year ago.
Excluding the one-time charges, the firm earned 51 cents a share, a penny above the consensus of analysts polled by Reuters' Estimates.
Several analysts said Manor Care did well despite significant cuts in Medicare-reimbursement rates.
Despite the one-time charges, "First-quarter operating performance was particularly strong," Paul Ormond, chairman and chief executive officer, said in a statement. He noted that occupancy rose to 90 percent, the firm's highest in more than a decade.
Geoffrey Meyers, Manor Care's chief financial officer, that Manor Care decided to leave medical transcription because it had not been consistently profitable.
The company's shares closed at $43.41, up 16 cents, in New York Stock Exchange trading.
Manor Care reported in its proxy statement this month in advance of its May 9 shareholder meeting that five top executives made about $19 million from exercising stock options in 2005 and were granted new stock options worth an estimated $9 million.
The company declared a cash dividend of 16 cents a share yesterday, payable May 26 to holders of record May 12.
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