CBJ Business Daily

FRIDAY, MAY 22, 2020 | IN THIS ISSUE

• Mercy Iowa City Rehabilitation Hospital opens in Coralville

• KemPharm shares move to OTC trading

• Iowa's unemployment rate increases to 10.2 percent in April

• Deere earnings, revenue drop in Q2, but still beat estimates

• Greater Iowa City Area HBA plans Zoom toast today for 60th anniversary

• Corridor events, KCRG-TV9 headlines and First Alert Forecast

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Mercy Iowa City Rehabilitation Hospital opens in Coralville

Kindred Healthcare LLC and Mercy Iowa City, an affiliate of MercyOne, announced Thursday the opening of Mercy Iowa City Rehabilitation Hospital, a 40-bed inpatient rehabilitation hospital in Coralville. The hospital expects to admit its first patient May 28.

This is the first freestanding inpatient rehabilitation hospital in Eastern Iowa and the second in the state. In June 2018, Kindred and MercyOne opened MercyOne Rehabilitation Hospital in Clive, a suburb of Des Moines.

Mercy Iowa City Rehabilitation Hospital is dedicated to the treatment and recovery of individuals who have experienced a loss of function due to an injury or illness. The hospital offers intensive, patient-focused, specialized rehabilitation services.

The hospital features all private rooms; a secure, acquired brain injury unit with private dining and a therapy gym; large interdisciplinary gyms; a therapeutic courtyard with golf, bocce ball and varied surfaces, and plants and finishes made possible by the Mercy Hospital Foundation of Mercy Iowa City; rooms specifically designed to treat dialysis patients; and specialty programs dedicated to neuro, stroke, brain injury, spinal cord injury and amputation. The facility also includes a transitional living apartment designed to simulate a residential apartment, to prepare patients for their daily living tasks before they are discharged.

“Mercy Iowa City is known statewide for the high quality of care it provides and its leadership role in working with others to meet health needs in not only Johnson County but throughout southeast Iowa,” said Sean Williams, president and CEO of Mercy Iowa City. “We know there is a tremendous need for inpatient rehabilitation care in our service area. By working with Kindred we can provide an extraordinary level of care for patients much closer to home which is beneficial for both the patients and their loved ones.”

For more information about Mercy Iowa City Rehabilitation Hospital, go to: www.mercy rehab iowa city.com .

IMAGE: The Mercy Iowa City Rehabilitation Hospital in Coralville on May 20. The new facility is set to open to its first patients on May 28. CREDIT: KCRG

KemPharm shares move to OTC trading

Trading in KemPharm moved to an over-the-counter quotation board on Thursday after the specialty pharmaceutical company was unable to meet the Nasdaq Capital Market’s requirements for minimum value of listed securities (MVLS).

KemPharm shares have traded as high as $2 in the past year, but as of Wednesday were down to less than 18 cents per share. In a SEC filing this month, KemPharm said it had been notified by the Nasdaq Listings Qualifications Panel that it failed to regain compliance with the $35-million MVLS for the Nasdaq Capital Market after being granted an extension earlier in the year.

KemPharm is now traded directly between securities companies on the OTCQB, which is also known as The Venture Market. The market caters to early-stage and developing companies.

While KemPharm will continue to report its financial results under the Exchange Act, and investors will still be able to buy and sell its shares, moving to the over-the-counter market could affect investors, according to an SEC filing by the company. KemPharm said moving off the stock market to the quotation board could impair liquidity and the market price of KemPharm’s common stock. In addition, it said the shift could affect its ability to access the capital markets to raise money and any reduction in liquidity or drop in its stock price could make it harder to raise capital on acceptable terms.

Founded in Coralville, KemPharm continues to have a Coralville operation but is now headquartered in Centennial, Florida.

KemPharm reported a net loss of $5.8 million, or 12 cents per share in the first quarter of this year, an improvement from its loss of $12.3 million, or 46 cents per share in the first quarter of 2019. The company reported revenue of $2.1 million, and its third consecutive quarter of booking research and development revenue under a license agreement. Heavy losses are common in companies developing new drugs until they are approved and in the marketplace due to the heavy research and development and regulatory costs.

In a news release, KemPharm CFO LaDuane Clifton said KemPharm has extended its “cash runway” through a combination of debt restructuring, improvements in expense management and continuing services revenue, and is working to complete its debt restructuring prior to March 2021.

Iowa's unemployment rate jumps to 10.2 percent in April

Iowa’s seasonally adjusted unemployment rate increased to 10.2 percent in April, up from 2.7 percent one year ago. The U.S. unemployment rate rose to 14.7 percent in April.

“April is the first month we have seen the real impact of the pandemic on our unemployment rate. We remain hopeful that as we reopen the state and more people return to work, the rate will decrease quickly and this unprecedented rate will be a very temporary one,” Iowa Workforce Development Director Beth Townsend stated in a press release. “The silver lining in this month's report is that over 1.5 million Iowans remained in the workforce despite the pandemic and this will do the most to decrease the recovery time.”

The number of unemployed Iowans jumped to 175,300 in April from 56,600 in March. The current estimate is 128,300 higher than the year ago level of 47,000.

The total number of working Iowans decreased to 1,536,200 in April. This figure was 129,200 less than March and 144,200 lower than one year ago.

Iowa total nonfarm employment fell by 177,100 jobs in April as social distancing efforts to curtail spread of the coronavirus took effect, following a loss of 8,900 in March.

Overall, the state’s payrolls were trimmed by 11.3 percent versus last month, slightly lower than the U.S. drop of 13.5 percent in total nonfarm employment. Virtually every sector began working in a reduced capacity, although goods-producing sectors displayed a lower reduction of staff (-6.0 percent). Private service industries declined by 13.3 percent and were driven down by sizable layoffs and furloughs within hotels, restaurants, and entertainment industries.

Government was also not spared, declining 9.4 percent or 24,500 jobs. Much of this reduction can be attributed to state universities and public schools dropping to summer levels. Most institutions ended in-person classes after spring break.

Deere earnings, revenue drop in Q2, but beat estimates

Deere & Co. saw its earnings and revenue slump in the second quarter and lowered its outlook for the year, but still managed to beat Wall Street estimates, pushing its stock up in morning trading.

The Moline-based manufacturer posted earnings of $665.8 million, or $2.11 per share for the quarter ended May 3, down 40% from last year’s mark of $3.52 but still above the Zacks estimate of $1.94. Net sales of equipment reached $8.22 billion for the quarter, down 20% year over year, while total net sales (including financial services and others) hit $9.3 billion, down 18%.

The company said it is forecasting a decline in global sales of agriculture and turf equipment of 10-15% for fiscal 2020, with ag equipment expected to be down about 10% in the U.S. and Canada, and 10-15% in the South American market. Construction and forestry equipment sales are expected to be hit even harder, with the company projecting a drop of 30-40% in 2020, while its Financial Services division is provisioning for more credit losses and less-favorable financing spreads.

Deere is now forecasting full-year earnings of $1.6-$2 billion for the full year, down from $3.25 billion in fiscal 2019, although it warned “many uncertainties remain regarding the effects” of the pandemic. It has already raised $4.5 billion in medium- and long-term funding, worked to lower operating expenses and cut its capital spending.

“John Deere’s foremost priority in confronting the coronavirus crisis has been to safeguard the health and well-being of employees while fulfilling its obligation as an essential business serving customers throughout the world,” said John May, chairman and CEO in a release, adding that the company’s network of strong relationships is “extremely valuable in difficult times.”

“We remain committed to offering a full suite of advanced digital tools that give our customers unique capabilities and help them do their work more efficiently and profitably,” he said. “As a result, we’re confident the company will successfully manage the pandemic’s effects and strengthen its position serving customers in the future.”

Shares of Deere & Co. (DE) were up nearly 2% as of this deadline, to $145.46.

Greater Iowa City Area HBA celebrates 60th anniversary

The Greater Iowa City Area Home Builders Association (HBA) celebrates its 60th anniversary May 24, the date its charter with parent organization, the National Association of Home Builders, began in 1960. It initially was named the Home Builders Association of Iowa City, changing to its current moniker in 2005.

Iowa City Area HBA members and friends will mark the occasion today with a Zoom virtual toast from 4-5 p.m. Email [email protected] or call (319) 351-5333 for link details. An anniversary party is slated during the association’s Sept. 17 membership meeting.

The HBA boasts more than 350 members in Cedar, Iowa, Johnson and Washington counties, representing builders, remodelers, developers, suppliers, designers, engineers, real estate brokers, accountants and more. The association’s Vocational Training Council supports area schools, encouraging youth to consider a skilled-trades career.

The public can follow this year's commemorations on Facebook (@IowaCityAreaHBA), Instagram (@icareahba and #ichba60) and YouTube (iowacity homebuilders). A special Iowa City Area HBA 60th anniversary timeline with photos may also be viewed at bit.ly/HBA60Timeline .

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Short Term Event Planner

May 26

Talk Through COVID-19 , by CIRAS, 7:30-8:30 a.m., online. Open to manufacturers, this roundtable will address industry-related COVID-19 concerns. Free. To register, visit bit.ly/2LH2O3x .

May 27

1 Million Cups , by 1MC Iowa City, 9-10 a.m., online. Join this virtual meeting for community connections, free coffee and presentations by entrepreneurs, established companies, experts and more. Free. To join, visit zoom.us/j/818148137 .

Recovering Together in Iowa City-Cedar Rapids (ICR) , by ICR Next, 9:30-10:30 a.m., online. Jay Garner, president of Garner Economics and chair of the Site Selectors Guild, and Robyn Domber, vice president of research for Development Counsellors International, will share insights into what economic development organizations can expect moving forward and how they can and should respond. Free. To register, visit bit.ly/3cN7Jf0 .

COVID-19 and Taxes: Opportunities for Metalworking Manufacturers , by CLA, 1 p.m., online. Tax professionals will explain new and pre-existing tax provisions that metalworking manufacturers can use as they operate during the pandemic. Cost: $40. To register, visit bit.ly/2WOY4ik .

CLA Wealth Advisory Connection , by CLA, 3-3:30 p.m., online. Join the discussion about the importance of evaluating your financial plans, tax and estate planning and donor-advised funds. Free. To register, visit bit.ly/2SZNmDm .

Opening Up Iowa’s Economy - Developer and Contractor Summit , by Cedar Rapids Metro Economic Alliance, 3-4 p.m., online. Developers will learn about the region’s business attraction efforts and application requirements for redevelopment tax credits. IEDA Director Debi Durham will share her perspective on COVID-19’s impact on the state and future economic development. Free. To register, visit bit.ly/2ySKJN0 .

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Headlines from KCRG-TV9

These news items are provided by KCRG-TV9

As of 10:30 a.m. today, the state's website shows over the last 24-hours an additional 18 deaths occurred and there are now an additional 454 cases in the Iowa. This is the fourth straight day of double digit deaths. In total, there have been 16,408 positive COVID-19 cases and 418 deaths related to the virus. Over the last 24-hours 33 COVID-19 patients have been admitted to the hospital, for a total of 362 patients hospitalized. There are 123 patients in the ICU, and 79 are on ventilators. In total, 119,462 Iowans have been tested. That's an increase of 4,431 over the last 24-hours. An additional 329 have recovered, for a total of 8,804 Iowans who have recovered from the virus. For more information about COVID-19 in Iowa, including a breakdown of the numbers, visit coronavirus.iowa.gov .

Two Cedar Rapids men were arrested Thursday after police received a report of shots fired just before 6 p.m. at 2135 North Towne Court NE. There, officers found shell casings outside, but no damage. In the apartment, officers say they found Sedrick Mac Johnson Jr., 23, and Kendall J. Willis, 25, both from Chicago, and two firearms, one of which was determined to have been stolen. Willis and Johnson Jr. were arrested for reckless use of a firearm, carrying weapons and felon in possession of a firearm.

These news items are provided by KCRG-TV9

Your KCRG-TV9 First Alert Forecast

The sun will try hard to peek through today, but those glimpses of blue sky will be few and far between. Highs should manage to hit the upper 60s to around 70 this afternoon. Scattered showers and storms start to return later tonight and will be around tomorrow. That chance ends from west to east in the afternoon. You'll notice more mugginess in the air as highs reach into the 70s. We'll be warmer on Sunday, probably touching about 80, although a storm chance remains. In fact, occasional showers and storms remain in the forecast through a good share of next week as a series of disturbances move through and use the increased humidity that's around. That said, there will also be many dry hours with highs in the 70s.