Health Screening Company Has Closed Cash Flow, Investment Problems Force Move

Article excerpt

Byline: Sarah Skidmore, Times-Union business writer

HealthScreen America, the controversial Jacksonville-based preventative health center, closed its doors to the public Friday and laid off all of its 20 employees. Chris Fey, chairman and chief executive of HealthScreen, said the center likely will reopen once it resolves its financial difficulties.

The company has not filed for bankruptcy, and Fey is confident HealthScreen could reopen either through a merger, acquisition or with significant investment.

But the short path the company forged as an industry leader is littered with other business goals that aimed high but hit the ground.

The center opened just more than two years ago. The local screening center is on Philips Highway, and a corporate support center is on Salisbury Road.

The Jacksonville operations, which opened with $15 million from private investment, were intended to be the primary clinic and support office for a chain of screening centers. The local center nearly doubled its first-year revenue in the second year with $2 million, but it has failed to break even since its inception.

Fey said the company was on target to make a profit by the end of this year. But rather than continue to incur operational losses, management decided to close the doors after a key investment deal fell through Thursday.

"This is all about access to capital; this isn't about 'Is HealthScreen America a good idea?' or 'Does HealthScreen provide a valuable service?' " Fey said.

The next day, the management informed the remaining 20 employees, the ones who survived several rounds of downsizing, that the center was closing. Four key management members, including the founding brothers, Chris and Frederick Fey, continue to work to acquire investments for reopening or other possible business options.

HealthScreen's business plan primarily hinged on acquiring $25 million in capital, of which Fey says it still has $2 million to find, to open a chain of centers. Figures changed, but at one point the company aimed to have 154 sites open by the end of 2002. And there were talks of European locations and mobile centers, as well. The financial goal wasn't reached, and no additional centers ever opened.

And glowing plans for growth and even a possible public offering were dimmed by the economic changes following Sept. 11.

The company trimmed some staff positions created to support the additional centers that never materialized. And management refocused the growth plan away from its own growth toward contracting or licensing out its business model to hospitals, health systems and other organizations. …