America Service Group (ASGR) will be losing prison health-care contracts generating $100 million in annual revenue, roughly 20% of its current revenue run-rate, the Brentwood company said late Thursday. As a result of the lost contracts and numerous other matters, the company took a pre-tax charge of $22.2 million in the second quarter ended June 30, resulting in an overall loss of $18.4 million, or $3.39 a share.

The majority of the charge stems from the utter implosion of its March 2000 acquisition of Correctional Physician Services Inc. for $14 million in cash. That company generated $41 million in revenue in 1999.

America Service Group said Thursday that two of Correctional Physician Services' contracts, now generating $43.2 million in revenue, are not being renewed. The collapse of those deals caused the company to write off $13.2 million of goodwill associated with the acquisition.

Additionally, the company has lost four contracts in Florida yielding $33 million in revenue and a $25.5 million Pennsylvania contract.

The company also faired poorly on an operational level. The provider of medical services to inmates said that its health-care expenses, as a percentage of revenue, rose to 99.7% from 90.5% in the year-ago period. The company blamed the nursing shortage for driving up its labor expenses and said that pharmacy and off-site services also rose in cost.

The sudden increase in medical costs and utilization prompted America Service Group to take a $6 million charge for medical claims reserves. It also took a $1.7 million charge due to its malpractice insurer seeking state receivership and a $1.3 million charge for transaction costs tied to certain, unidentified strategic initiatives.

The large charges caused the company to get a temporary waiver regarding certain conditions tied to its bank debt. A permanent amendment to its credit agreement is being sought, the company said.

New and renewing contracts have been signed this year that generate revenue of $56.5 million.

In the quarter, revenue increased to $140.8 million from $89.4 million in the second quarter of 2000. The increase was due to three acquisitions and several new contracts.

America Service Group shares rose nine cents Thursday to settle at $18.94. Their 52-week range is $17.13-$29.00.