Cost Reductions Boost Profits for Safeguard

Crediting a “back-to-basics” cost-cutting program, Safeguard Health Enterprises Inc., an Anaheim provider of prepaid dental plans, said that second quarter profits jumped to $740,000, a 30% increase over the $570,000 posted a year ago.

Revenues for the period were $17.4 million, up 11% from the $15.7 million recorded last year.

For the first six months, profits were $1.3 million, up 39% from the $936,000 posted a year ago. Sales of $33.9 million were up 11% from the $30.4 million of the year before.

W. Bruce Steever, Safeguard’s chief financial officer, said the quarter’s performance validated the company’s decision at the end of 1986 to close unprofitable dental offices and concentrate on its primary business of operating a prepaid dental plan.

Steever said the company has closed or sold nine of its 40 dental offices in California since January and expects to dispose of more offices within coming months.

Steever said that Safeguard realized last year that its aggressive expansion into dental office operation in 1983 was a mistake and caused an abrupt dive into red ink last year.

“We have sharply reduced the bleeding, and it’s back to basics now,” he said.

Steven Baileys, Safeguard’s president and chief operating officer, said that the company’s revenue growth was from membership gains in the prepaid plans. He said the company’s owned-and-operated dental offices continue to lose money.

Safeguard operates dental plans in 13 states and provides services through more than 2,350 independent dentists. As of June 30, Safeguard had 925,000 plan members, compared with 800,000 on the same date in 1986.