Safeguard Health Plans Cut in Number of Dental Units

Citing the impact of over-expansion and runaway costs, Safeguard Health Enterprises said Friday that it will sell or close one-third of its 40 Community Dental Centers and expects to post a net loss for 1986.

Safeguard, an Anaheim-based prepaid dental-plan operator, said it hopes to unload the unprofitable units by the end of 1987. The move was hailed by analysts, who for months have suggested that the company could improve its own health by eliminating units from its CDC subsidiary, which essentially put Safeguard into the dental-office business.

In the past two years, CDC has added 27 dental offices. “We overexpanded . . . and certain locations don’t make sense,” said W. Bruce Steever, chief financial officer.

Although final results will not be available until early March, Steever estimated that Safeguard will have revenue of about $62 million for 1986, up 19% from $49.8 million a year earlier.

Safeguard had previously reported net earnings of $1.3 million on revenues of $46.1 million through the first nine months of 1986.

The company said it has established a $3.2-million pretax loss reserve in the fourth quarter ended Dec. 31, to cover expected losses from the closures.