Las Vegas medical lab operator going public

Wednesday, Nov. 28, 2001 | 10:44 a.m.

A company that operates a network of medical laboratories and testing clinics in Las Vegas has filed for an initial public stock offering with the Securities and Exchange Commission.

American Medical Laboratories Inc., Chantilly, Va., plans to sell up to $115 million in common stock, according to a prospectus filed with the SEC last week.

AML merged with Associated Pathologists Laboratories of Las Vegas in 1999 and was renamed AML/APL Inc., keeping the APL identity in Nevada. Earlier this year, however, it adopted the AML name.

The company, the third-largest medical- and drug-testing laboratory in the country, has two primary centers of operation, in Las Vegas and Chantilly.

Craig Shanklin, executive vice president of the company, said the Las Vegas operation has 40 patient testing clinics and five testing laboratories, including its largest, a central lab and administrative center at 4230 Burnham Ave. AML also is contracted to operate the laboratories of three Las Vegas-area hospitals, Valley, Summerlin and Desert Springs.

The company has about 1,300 employees in the Las Vegas area, with more than 800 at the central location. The clinics and labs have varying numbers of employees, with the smallest having two or three and the largest having 30 to 40.

AML has three medical markets, Shanklin said. The company conducts lab testing for physicians, medical tests for hospital labs and employee drug testing from urine and hair samples. Shanklin said the company's hair sample testing techniques are considered to be at the forefront of drug-testing technology.

The company processes lab tests from every state at its two centers of operation.

Shanklin said because of "quiet period" SEC rules, he could not disclose the number of clients the company has in Las Vegas.

According to the SEC filing, the entire company had a client list of 470 hospitals, 150 independent clinical labs, 7,900 doctors and 14 managed care groups as of Sept. 30. The company processes about 430,000 tests a week.

The filing said the company reported nine-month earnings this year of $1 million, 5 cents a share, on revenue of $221.5 million, compared with earnings of $933,000, 4 cents a share, on revenue of $196.3 million for the same period a year ago.

For all of 2000, the company reported a loss of $1.6 million, 8 cents a share, on revenue of $260.8 million.

The prospectus did not disclose the number of shares the company intends to sell or a per-share price.

Proceeds of the sale will pay down debt and repurchase preferred stock. The company plans to repay a portion of outstanding amounts under its senior credit line, $15.6 million of senior subordinated debt and other subordinated debt. Remaining funds would be used to repurchase all outstanding redeemable cumulative preferred stock and pay $1.6 million in fees under a service agreement.

The prospectus says loans attributable to the acquisition of the company in 1997 have balances of $38 million at 7.25 percent interest, maturing Oct. 13, 2004, and $63.7 million at 7.875 percent interest, maturing April 13, 2006.

The offering is being underwritten by Credit Suisse First Boston, Banc of America Securities LLC, U.S. Bancorp Piper Jaffray and Wachovia Securities. The company plans to list on the New York Stock Exchange with the ticker symbol AMJ.