Arcadia Resources Inc. plans to let its stock be delisted from the NYSE Amex Equities Exchange as the company focuses instead on selling one of its business units to raise cash.
The struggling Indianapolis-based company’s stock price had dwindled to just 5 cents a share as of late Tuesday morning. After the markets closed Monday, Arcadia announced its first-quarter earnings and its decision to delist its stock. Arcadia’s shares will now trade over the counter, which makes them harder to buy and sell.
Arcadia, which had been planning a huge expansion in Indianapolis, is running low on cash, in part because the ramp-up of its DailyMed pharmacy service has been slower than expected. DailyMed is a service that packages patients’ medications into packets marked by the time of day or the meal at which they are to be taken. The service has major contracts with Indiana Medicaid and Indianapolis-based WellPoint Inc.
In May 2010, Arcadia announced that it expected to add 930 jobs in Indiana by 2013. But, according to the company’s annual report released in June, its administrative staff has actually fallen slightly in the last year, to 229. Its field staff, most of whom are not in Indiana, has remained steady from a year ago.
DailyMed sales drove up Arcadia’s pharmacy division revenue by 7 percent, to $4.3 million, in the three months ended June 30. Arcadia’s home health care services unit posted $20.4 million in revenue, flat from the same quarter a year ago.
Overall, Arcadia lost $3 million in the quarter, or 2 cents per share, compared with a loss of $4.7 million, or 3 cents per share, a year ago.
Revenue rose 1.6 percent, to $24.8 million.
Arcadia had negative cash flow in the quarter of $1.6 million, but the company said it still has $2.2 million in cash and a line of credit to work with.
“The company’s focus during the quarter has been on implementing our previously announced restructuring actions. We continue to be in discussions to sell the Services segment, but we do not yet have a definitive agreement to sell that business,” said Marvin Richardson, CEO of Arcadia, in a prepared statement.
“Our immediate focus is on managing the near-term liquidity needs of the company. Management is aggressively managing our cash availability while the company considers broader strategic alternatives to address our near-term and longer-term liquidity needs.”
Arcadia has intended to shift its focus exclusively to DailyMed since it launched the service in January 2008. It sold its home health equipment and industrial staffing businesses in 2009 to help fund DailyMed’s expansion. Now it is trying to do the same with its services segment, but has yet to complete a sale.
In the meantime, Arcadia is trying to conserve cash and boost profit margins in the DailyMed business.
“While we have seen improvements in our operating results, the rate of our progress is slower than we planned,” Richardson said. “In our Pharmacy segment, we continue to work with potential new payors. We have made improvements in our Pharmacy operating results without significant increases in volume as we gradually improve gross margins and carefully manage our expenses.”
In June, Arcadia announced that its auditor issued a going-concern warning about the company, because it faces a pile of debt that comes due in April 2012. Arcadia needs to sell its services business to help pay off those debts, but will also likely need to raise additional financing to completely wriggle out of its financial pinch.