ADAC struggles continue in Q3

An 8% increase in quarterly revenues wasn’t enough to restore ADAC Laboratories to profitability. The nuclear medicine and healthcare information systems vendor reported revenues of $75.6 million for the quarter (end-July 4), compared with revenues of $69.8 million for the third quarter of 1998. Net loss for the quarter, however, was $5.4 million, compared with net income of $3.4 million in the same period a year ago. The unsatisfactory earnings report was the latest in a series of disappointments for the Milpitas, CA-based firm, which has been beset by a decline in nuclear medicine market share and an earnings restatement that took place in late 1998 (SCAN 8/4/99).

These financial results put ADAC out of compliance with its $75 million revolving credit facility, and the company is negotiating an amendment to the facility that will include a waiver of its third-quarter default as well as modified financial covenants that better reflect the company’s current financial performance. As of Aug. 24, ADAC stock was trading at $6.31; slightly above its 52-week low of $5.75 but well below its high of $22.75. Revenues are expected to rise again in the fourth quarter, according to Andrew Eckert, ADAC chairman and CEO.