<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=192888919167017&amp;ev=PageView&amp;noscript=1">
Friday, March 29, 2024
March 29, 2024

Linkedin Pinterest

Barrett stock slumps after major 3Q net loss

Vancouver-based firm posted $37.7M loss in third quarter

By Gordon Oliver, Columbian Business Editor
Published: October 29, 2014, 12:00am

Barrett Business Services, Inc. took a huge hit in its stock price Wednesday following its release of third-quarter earnings showing a net loss of $37.7 million, largely due to an $80 million increase in reserves for payments of drawn-out worker compensation claims.

The Vancouver-based provider of employment services to small and midsized companies saw its stock price slump by nearly 60 percent, to $18.28 per share at closing. The stock sell-off accelerated over the course of the day. Before Wednesday, its stock price ranged over 52 weeks from a low of $28.55 to a peak of $102.20 per share.

The company provides what are called “professional employer organization” services. Under the system, Barrett becomes a co-employer of a client’s workforce, handling human resources responsibilities, including workers’ compensation claims. Its national client base includes companies in a variety of industries, including telecommunications, transportation and shipping, manufacturing and food processing.

The company said net revenues increased by 18 percent, to $175 million, during the quarter. Barrett added 182 new clients in the quarter, and its same-store sales increased by 8.2 percent, which was at the upper end of its expectations, the company said it its earnings report.

Barrett said its $80 million addition to the reserve fund was part of a “reserve strengthening process” initiated in late 2013. That strategy followed a policy change, also made in 2013, which calls on the company to set aside money and pay claims more quickly and to increase claims team staffing. Those initiatives are “causing disruption in the incurred and paid trends in the claims data during 2014, making it difficult for the company’s actuary to provide management with the best estimate of probable liability,” Barrett said in its quarterly report. It said that over the next several quarters, it expects to see “a clearer indication of potential liability. “

Mike Elich, Barrett’s president and CEO, said in a conference call with analysts that the company’s fundamentals remain strong.

“My observation from being in the field the last eight weeks is that we have never looked better,” Elich said. “That’s leading me to believe that we have turned the corner.”

Loading...
Tags
 
Columbian Business Editor