Arcadia restructures

Sunday, April 8, 2007

SOUTHFIELD, Mich. - It appears Arcadia Resource's expansion spree has come to a screeching halt.

The provider announced last week that it plans to make several changes, including closing "unprofitable" DME locations, to "further sharpen its focus on its core businesses, strengthen future cash flow, integrate recent acquisitions, enhance organizational efficiency and significantly reduce operating expenses."

Arcadia plans to:

* Close its Orlando, Fla., office, which provides corporate accounting and administrative functions;
* Close several "unprofitable" DME facilities and consolidate their operations with other nearby facilities;
* Relocate its Hollywood, Fla., pharmacy facility to a "more economical" location;
* Centralize certain pharmacy operations in Paducah, Ky.;
* Reduce management of its Care Clinic operation by closing its New Jersey office and relocate certain functions to its corporate headquarters in Southfield, Mich.;
* Eliminate duplicate functions resulting from its PrairieStone acquisition; and
* Exit all six DME retail facilities in Sears store locations.

Due to severance costs, lease termination expenses and other non-recurring restructuring charges, Arcadia expects to record expenses totaling about $1.2 million ($670,000 recognized in the fourth quarter ended March 31, 2007; the remainder recognized in the first quarter ended June 30, 2007).

"We have taken a hard look at our operations and expense structure to ensure that we have the streamlined, cost-efficient organization we need to take full advantage of our considerable future opportunities," stated Chairman and CEO John Elliott in a release. "We expect our increased cost discipline and flat administrative structure will have a profound, positive impact on the company's financial performance over the long term."