Billing Allegations Spawn $48M Impairment Charge

Netherlands-based Royal Philips Electronics reports that its stake in a company accused by a whistle-blower has deteriorated in value.
Stephen TaubJuly 6, 2007

Royal Philips Electronics will take an impairment charge of about $47.7 million for its 70 percent stake in beleaguered MedQuist Inc., according to Reuters.

Mount Laurel, New Jersey–based MedQuist, which provides medical transcription and health information management services, saw its troubles begin in late 2003, when a whistle-blower charged that it engaged in improper billing practices, the wire service reported. In June 2004, the company was delisted from Nasdaq for failure to file its results with the Securities and Exchange Commission. The SEC also launched a probe into the company’s billing practices in 2004. On Thursday, however, MedQuist finally filed its 2005 annual report, which contained results for 2003 through 2005.

In the filing, the company stated that it has been fully cooperating with the SEC since the commission opened its investigation. “We have complied and are continuing to comply with information and document requests by the SEC,” reported MedQuist reported.

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According to Reuters, Pierre-Jean Sivignon, CFO of Netherlands-based Royal Philips, said that his company is “very pleased to see that MedQuist has taken this major step forward in its filings with the SEC.” At the same time, the company is mulling all of its future options for its stake in MedQuist, he said, calling it “a noncore holding.”

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