SFBC ( SFCC) has left investors feeling sick.

With the market waiting for a much-anticipated update, the company finally announced Thursday night that it was postponing its fourth-quarter earnings release, withdrawing its 2006 guidance and preparing for a "substantial" charge due to a "significant decline in business" at its Miami operations.

The news came after TheStreet.com reported that short-sellers were expecting to see a potentially major hit to earnings as a result of pressures in Miami. They also raised questions about the company's financial reporting in general.

After dropping 5.6% on Thursday, SFBC plummeted 17% Friday to $18.42.

SFBC performs clinical drug trials for major pharmaceutical companies. However, the company's once-prized operations in Miami have suffered a downturn in the wake of a devastating expose by Bloomberg that pointed to testing irregularities. As a result, Wall Street had expected SFBC to lower its guidance and even announce some sort of impairment charge during its scheduled update on Thursday.

But some analysts, including one who has been recommending the stock in recent weeks, found themselves caught off guard when the company delayed its report instead.

"Management gave us what we least expected -- NO numbers," Jefferies analyst David Windley wrote on Friday. Thus, "we are suspending our rating pending greater visibility into the impairment and guidance issues raised in last night's inadequate press release."

Windley has already tried with little success to obtain important answers from the company. He, like many, remains uncertain about the company's Miami operations in particular. Specifically, he wonders just how much cash flow that business can now generate and whether operations there have deteriorated even further in recent days.

After all, SFBC itself was still reassuring investors with a sunny outlook as recently as last month. But some former employees, caught up in massive layoffs at the Miami center, have offered a much darker view to TheStreet.com.

"They have no project managers left" in Miami, says a former supervisor who left the clinic in December. "People have left because there's no work. ... There are no studies -- there is no money -- coming in."

SFBC declined to comment.

'Simple Algebra'

In any case, the hit to the bottom line could be huge.

Despite calls for more disclosure, SFBC has so far broken out only revenue figures for its Miami operations. Specifically, SFBC has said that Miami accounts for no more than 20% of revenue, whereas recently acquired Pharmanet -- whose leaders now run the show -- accounts for more than twice that much.

But bearish investors, who have sold an astonishing 89% of the company's stock short, offer some profit estimates as well. All told, they believe that SFBC has been relying on Miami for as much as half of its earnings.

They point to one of SFBC's own regulatory filings as evidence.

A year ago, they note, SFBC published pro forma data for both its own operations and the PharmaNet business it had just acquired. That amended S-3 filing shows SFBC earning $25.9 million on revenue of $160 million, or a pretax profit margin of roughly 16%. The same filing shows PharmaNet earning $10.6 million on revenue of $118 million, or a pretax profit margin of only 9%.

Since then, SFBC has offered some clues indicating that the difference between Miami and the rest of its business is even greater. As noted on Thursday by TheStreet.com, SFBC has mentioned figures suggesting that Miami could be generating pretax profit margins in excess of 20%.

"Simple algebra would tell you that if 20% of your business is at a 21% net profit margin, the other 80% must be at around 4.5%," one short-seller says. "Miami appears to be far more profitable than the rest of SFBC, including PharmaNet, and we believe they have lost a considerable amount of business in that facility."

Some former Miami-based employees have raised questions about the viability of that clinic altogether.

"I think the company will recover," one says. "But I don't know about Miami. I just don't know."

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