Meditrust Reports $83.4 Million Loss

If you really can gain through pain, the Meditrust Cos. probably has a bright future ahead of it. Mid-year figures released yesterday by the paired-share REIT shows red ink continuing to flow as the organization implements a five-point plan aimed at restoring it to fiscal health.

For the three months ended June 30th, Meditrust is reporting a loss from continued operations of $83.4 million versus income of $47.6 million for the same period last year. Company officials cite expenses from the five-point plan as a key reason for the loss, including professional and advisory fees and costs arising from the early repayment and modification of certain debt.Revenues for the second quarter were also down from 1999, with Meditrust reporting $219.4 million in 2000, compared to $329.7 million. The decline was attributed to a decrease in healthcare assets from 394 on June 30th, 1999 to 310 at present.

A major tenet of the reorganization plan is for Meditrust to divest itself of a large portion of its healthcare assets to focus on the lodging industry and its recent purchase of the La Quinta hotel chain.Meditrust announced its repositioning in January due to concerns about limited income from the Federal Government for its chain of nursing homes, as well as various supply and labor issues. But while the firm holds great hope in the future of the 300-motel La Quinta chain, that sector has also been hit hard of late, with Meditrust reporting a decline in revenues for the second quarter from $162.3 million to $158.2 million. Occupancy was down from 73.0% to 67.4%, while revenue per available room also dipped significantly, from $44.14 in the second quarter of 1999 to $42.58 this year.

“While we are disappointed with the operating results of La Quinta for the second quarter, the companies have made progress during my first 90 days as CEO,” says Meditrust executive Francis W. Cash in announcing the results. He adds that, “With its senior management team solidified and a new organizational structure in place, La Quinta is positioned to begin the process of improving its results and to once again grow through the recently announced franchise program.”