News in brief - Aug. 25, 2003

Patient monitoring equipment industry growing rapidly, analysts say - MedCath reports drop in net income - More guilty pleas from former HealthSouth executives - Impath probes possible accounting irregularities - Successful debut for Netgear

Patient monitoring equipment industry growing rapidly, analysts say

Hospital consolidation has not damaged the U.S. patient monitor industry, which grew to $6.4 billion in 2002, according to Frost & Sullivan, a San Jose, Calif.-based market research and consulting company.

The industry is expected to reach $8.7 billion by 2005, with the growth following the increase of ambulatory surgery centers and the need for more units within each hospital, analysts said.

Rather than using monitors only in critical care settings, more hospitals are employing them in other areas, which analysts say helps boost the nursing staff and shorten the patient's stay.

MedCath reports drop in net income

MedCath Corp., which builds and manages heart hospitals as joint ventures with physician owners, reported a net income of $778,000 during the third quarter of 2003, a 78.7% drop from the $3.65 million it reported during the third quarter of 2002. The company reported earnings of 4 cents per share in the third quarter this year, compared to 20 cents per share during the same period of 2002.

The Charlotte, N.C.-based company blamed the lowered earnings on the opening of MedCath's two newest hospitals, which its says reduced net income by $2.2 million and dropped earnings by 12 cents per share. Revenue in the third quarter of 2003 was $142.3 million, an 18.1% increase over the $120.5 million it reported during the same period of 2002.

MedCath reported more inpatient catheterization and surgical procedures in the first three quarters of 2003 than the same period of 2002, while the average length of stay and total patient days were down.

More guilty pleas from former HealthSouth executives

Two more former Health-South executives have agreed to plead guilty to charges in a massive accounting scandal that has ensnared top leaders at the outpatient services giant.

U.S. Attorney Alice Martin announced July 31 that Richard Botts, HealthSouth's former senior vice president for tax, agreed to plead guilty to fraud charges, and former investments vice president Will Hicks agreed to plead guilty to making false statements and maintaining false records. The plea deals bring to 14 the number of company officials who have admitted or agreed to admit guilt in the fraud investigation, including all five former chief financial officers.

HealthSouth has been accused of overstating earnings by at least $2.4 billion. Soon after the allegations were first announced in March, chief executive Richard Scrushy was fired. The Securities and Exchange Commission is investigating him for alleged insider trading. No criminal charges have been filed against him.

Meanwhile, HealthSouth is trying to avoid bankruptcy despite a debt of nearly $3.3 billion. In a move to strengthen its financial position, the company announced Aug. 8 that it had reached a deal to sell HealthSouth Doctors' Hospital, a 281-bed acute care hospital in Coral Gables, Fla., to Baptist Health South Florida. The price of the sale was not disclosed.

Impath probes possible accounting irregularities

Impath Inc. has announced its audit committee is investigating potential accounting errors that could lead it to restate earnings and post a net loss for 2003.

The New York-based company, which sells cancer outcomes information to oncologists, pathologists, hospitals and laboratories, will retain independent counsel and forensic accountants to investigate whether its accounts receivable were overstated. Because the investigation is at a preliminary stage, Impath said it could not determine the financial impact of the possible accounting irregularities, but believes it will be "material."

Successful debut for Netgear

Netgear Inc., of Santa Clara, Calif., has raised $98 million by selling 7 million common stock shares at $14 each in an initial public offering. The company, which sells wireless fidelity and other computer networking products, has been trading above its offering price since it went public July 31.