The Franklin-based medical transcription company terminated its registration with the Securities and Exchange Commission in a Tuesday filing with the federal agency.
Spheris, a privately held company backed by large private-equity players Warbrug Pincus and TowerBrook Capital Partners, had publicly reported its financial results under SEC rules since 2006. The company's shares aren't listed, but it does have about $123 million worth of senior subordinated notes outstanding.
Those notes, which matures in late 2012, traded in the low $30s early this year but have since almost doubled. They closed Thursday trading at $58.50, giving them a yield triple the 11 percent with which they were issued.
According to Tuesday’s filing, the number of people holding that debt has since January 2007 been below the 300 threshold that requires SEC reporting. The company has been filing voluntarily for the past three years, but appears to be curbing its disclosure as it works its way through the recession. After releasing the company’s first-quarter results, CEO Daniel Kohl had said it was “only the start to what we expect will be a very challenging year.”
Calls to the company seeking comment were not returned Thursday.
Spheris' termination notice came about a week after its execs typically reports third-quarter results. In the previous quarter, Kohl and his team reported a 15 percent drop in revenue that was “due primarily to the impact of net lost business and lower average contract pricing,” according to a release. It did post net income of $460,000 versus a $1.9 million loss the year before.
For the first half of 2009, Spheris' profits were $1.4 million, reversing a $6.7 million in the first six months of 2008. But that improvement was due almost single-handedly to a sharp drop in the company's depreciation and amortization costs.
The company also noted in its Q2 filing with the SEC that it needed to post stronger second-half EBITDA numbers in order to stay in compliance with one of the covenants governing its senior credit line, under which it has borrowed another roughly $75 million. Falling short of its EBITDA requirement would affect Spheris' senior notes as well.
"Default under, and acceleration of amounts due on, the Company’s obligations under the 2007 Senior Credit Facility would create an event of default under the Senior Subordinated Notes, which would cause the Senior Subordinated Notes to become due and payable immediately upon notice by the holders," the company's filing said.
According to the company’s Web site, Spheris employs about 5,500 skilled medical language specialists in the United States and India. However, its most recent quarterly report, which was filed Aug. 7, put the number at 4,400, with 2,000 of those working out of India.
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