Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Apr. 30, 2015 | Jun. 03, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | BIO REFERENCE LABORATORIES INC | |
Entity Central Index Key | 792641 | |
Document Type | 10-Q | |
Document Period End Date | 30-Apr-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -21 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,802,976 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Apr. 30, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ||
Cash and Cash Equivalents | $25,146 | $17,507 |
Accounts Receivable - Net | 285,361 | 263,346 |
Inventory | 20,783 | 20,791 |
Other Current Assets | 9,224 | 10,165 |
Deferred Tax Assets | 39,456 | 40,040 |
TOTAL CURRENT ASSETS | 379,970 | 351,849 |
PROPERTY AND EQUIPMENT - AT COST | 172,893 | 156,342 |
LESS: Accumulated Depreciation | -101,250 | -89,954 |
PROPERTY AND EQUIPMENT - NET | 71,643 | 66,388 |
OTHER ASSETS: | ||
Investments in Unconsolidated Affiliate | 5,290 | 5,153 |
Deposits | 1,127 | 1,056 |
Goodwill - Net | 35,185 | 35,185 |
Intangible Assets - Net | 13,450 | 14,403 |
Other Assets | 1,615 | 1,415 |
Deferred Tax Asset | 4,438 | 3,414 |
TOTAL OTHER ASSETS | 61,105 | 60,626 |
TOTAL ASSETS | 512,718 | 478,863 |
CURRENT LIABILITIES: | ||
Accounts Payable | 66,073 | 71,166 |
Accrued Salaries and Commissions Payable | 26,950 | 15,822 |
Accrued Taxes and Expenses | 11,493 | 15,620 |
Other Short Term Acquisition Payable | 1,695 | 1,924 |
Revolving Note Payable - Bank | 49,315 | 33,380 |
Current Maturities of Long-Term Debt | 541 | 524 |
Capital Lease Obligations - Short-Term Portion | 6,259 | 6,128 |
TOTAL CURRENT LIABILITIES | 162,326 | 144,564 |
LONG-TERM LIABILITIES: | ||
Capital Lease Obligations - Long-Term Portion | 10,863 | 12,252 |
Long-Term Debt -- Net of Current Portion | 2,871 | 3,145 |
TOTAL LONG-TERM LIABILITIES | 13,734 | 15,397 |
SHAREHOLDERS' EQUITY: | ||
Preferred Stock $.10 Par Value; Authorized 1,666,667 shares, including 3,000 shares of Series A Junior Preferred Stock None Issued | ||
Common Stock, $.01 Par Value; Authorized 35,000,000 shares: Issued and Outstanding 27,798,976 and 27,272,644 at April 30, 2015 and at October 31, 2014, respectively | 278 | 277 |
Additional Paid-In Capital | 40,640 | 39,979 |
Retained Earnings | 295,740 | 278,646 |
TOTAL SHAREHOLDERS' EQUITY | 336,658 | 318,902 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $512,718 | $478,863 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Apr. 30, 2015 | Oct. 31, 2014 |
Preferred Stock, Par Value (in dollars per share) | $0.10 | $0.10 |
Preferred Stock, Authorized shares | 1,666,667 | 1,666,667 |
Preferred Stock, Issued shares | 0 | 0 |
Common Stock, Par Value (in dollars per share) | $0.01 | $0.01 |
Common Stock, Authorized shares | 35,000,000 | 35,000,000 |
Common Stock, Issued shares | 27,798,976 | 27,272,644 |
Common Stock, Outstanding shares | 27,798,976 | 27,272,644 |
Series A Preferred Stock | ||
Preferred Stock, Authorized shares, including Series A Junior Preferred Stock | 3,000 | 3,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
NET REVENUES: | $223,986 | $201,366 | $432,820 | $382,635 |
COST OF SERVICES: | ||||
Depreciation and Amortization | 5,091 | 4,659 | 10,057 | 9,234 |
Employee Related Expenses | 56,491 | 51,566 | 110,176 | 100,676 |
Reagents and Laboratory Supplies | 42,977 | 38,352 | 83,559 | 75,583 |
Other Cost of Services | 20,444 | 18,240 | 40,290 | 36,439 |
TOTAL COST OF SERVICES | 125,003 | 112,817 | 244,082 | 221,932 |
GROSS PROFIT ON REVENUES | 98,983 | 88,549 | 188,738 | 160,703 |
General and Administrative Expenses: | ||||
Depreciation and Amortization | 1,606 | 1,586 | 3,174 | 2,700 |
General and Administrative Expenses | 58,797 | 50,992 | 117,056 | 100,578 |
Bad Debt Expense | 19,654 | 17,092 | 37,654 | 32,665 |
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES | 80,057 | 69,670 | 157,884 | 135,943 |
INCOME FROM OPERATIONS | 18,926 | 18,879 | 30,854 | 24,760 |
OTHER (INCOME) EXPENSE: | ||||
Interest Expense | 666 | 597 | 1,226 | 1,206 |
Interest Income | -23 | -12 | -45 | -26 |
Other (Income) Expense | 2 | 56 | -112 | 86 |
TOTAL OTHER (INCOME) EXPENSES - NET | 645 | 641 | 1,069 | 1,266 |
INCOME BEFORE INCOME TAXES | 18,281 | 18,238 | 29,785 | 23,494 |
Provision for Income Taxes | 7,820 | 7,965 | 12,691 | 10,267 |
NET INCOME | $10,461 | $10,273 | $17,094 | $13,227 |
NET INCOME PER COMMON SHARE - BASIC: (in dollars per share) | $0.38 | $0.37 | $0.62 | $0.48 |
WEIGHTED AVERAGE NUMBER OF SHARES BASIC: (in shares) | 27,786,309 | 27,716,644 | 27,781,143 | 27,712,525 |
NET INCOME PER COMMON SHARE - DILUTED: (in dollars per share) | $0.38 | $0.37 | $0.61 | $0.47 |
WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED: (in shares) | 27,881,908 | 27,857,467 | 27,874,074 | 27,855,141 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Apr. 30, 2015 | Apr. 30, 2014 |
OPERATING ACTIVITIES: | ||
Net Income | $17,094 | $13,227 |
Adjustments to Reconcile Net Income to Cash Provided by (Used for) Operating Activities: | ||
Depreciation and Amortization | 13,231 | 11,934 |
Deferred Income Tax (Benefit) Expense | -440 | 5,976 |
Stock Based Compensation | 40 | 290 |
(Gain) Loss on Disposal of Fixed Assets | 173 | 109 |
Undistributed Equity Method (Income) Loss | -112 | 86 |
Change in Assets and Liabilities, (Increase) Decrease in: | ||
Accounts Receivable | -20,244 | -13,227 |
Provision for Doubtful Accounts | -1,771 | -14,480 |
Inventory | 8 | -855 |
Other Current Assets | 941 | 87 |
Other Assets | -200 | -200 |
Deposits | -71 | -38 |
Increase (Decrease) in: | ||
Accounts Payable and Accrued Liabilities | 1,908 | -3,097 |
NET CASH - OPERATING ACTIVITIES | 10,557 | -188 |
INVESTING ACTIVITIES: | ||
Acquisition of Equipment and Leasehold Improvements | -15,739 | -7,048 |
Business Acquisitions and Related Costs | -254 | -258 |
NET CASH - INVESTING ACTIVITIES | -15,993 | -7,306 |
FINANCING ACTIVITIES: | ||
Payments of Long-Term Debt | -257 | -243 |
Payments of Capital Lease Obligations | -3,225 | -2,933 |
Increase (Decrease) in Revolving Line of Credit | 15,935 | 17,021 |
Proceeds from Exercise of Options | 622 | 177 |
NET CASH - FINANCING ACTIVITIES | 13,075 | 14,022 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 7,639 | 6,528 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIODS | 17,507 | 17,952 |
CASH AND CASH EQUIVALENTS AT END OF PERIODS | 25,146 | 24,480 |
Cash paid during the period for: | ||
Interest | 1,189 | 1,166 |
Income Taxes | 16,538 | 9,867 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Capital Leases | 1,967 | 5,905 |
Write-off of property and equipment | $1,155 | $920 |
Basis_of_Presentation
Basis of Presentation | 6 Months Ended |
Apr. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | |
[1] Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for complete audited financial statements. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these statements. Interim results are not necessarily indicative of results for a full year. Reference is made to the October 31, 2014 audited consolidated financial statements of Bio-Reference Laboratories, Inc.(“BRLI” or the “Company”) contained in its Annual Report on Form 10-K for the year ended October 31, 2014. | |
The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended October 31, 2014 as filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K. Significant accounting policies followed by the Company are set forth in Note 2 to the Company’s 2014 Annual Report on Form 10-K. | |
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended |
Apr. 30, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | |
[2] Fair Value Measurements | |
As of April 30, 2015, the Company’s financial instruments primarily consist of cash, short-term trade receivables and payables for which their carrying amounts approximate fair values, and long term debt, for which based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, its carrying amount approximates its fair value. | |
New_Accounting_Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Apr. 30, 2015 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | |
[3] New Accounting Pronouncements | |
Removed and Reserved. | |
Revenue_Recognition_and_Contra
Revenue Recognition and Contractual Adjustments | 6 Months Ended | |||||||||
Apr. 30, 2015 | ||||||||||
Revenue Recognition and Contractual Adjustments | ||||||||||
Revenue Recognition and Contractual Adjustments | ||||||||||
[4] Revenue Recognition and Contractual Adjustments | ||||||||||
Service revenues are principally generated from laboratory testing services including chemical diagnostic tests such as blood analysis, urine analysis and genetic testing among others. Service revenues are recognized at the time the testing services are performed and are reported at their estimated net realizable amounts. | ||||||||||
Service revenues before provision for bad debts are determined utilizing gross service revenues net of contractual adjustments and discounts. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or a commercial insurance provider to pay all or a portion of their healthcare expenses; the majority of services provided by BRLI are to patients covered under a third party payor contract. In certain cases, the individual has no insurance or does not provide insurance information and in other cases tests are performed under contract to a professional organization (such as physicians, hospitals, and clinics) which reimburse BRLI directly; in the remainder of the cases, BRLI is provided the third party billing information and seeks payment from the third party under the terms and conditions of the third party payor for health service providers like BRLI. Each of these third party payors may differ not only with regard to rates, but also with regard to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of highly complex procedures and judgments that require industry specific healthcare experience and an understanding of payor methods and trends. We review our calculations on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings due to the contractual adjustments and discounts and that our estimates remain sensitive to variances and changes within our payor groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payor groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. This calculation is routinely analyzed by BRLI on the basis of actual allowances issued by payors and the actual payments made to determine what adjustments, if any, are needed. The table below shows the adjustments made to gross service revenues to arrive at net revenues, the amount reported on our statement of operations. | ||||||||||
($) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
April 30, | April 30, | |||||||||
[Unaudited] | [Unaudited] | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Gross Service Revenues | 1,175,282 | 1,017,621 | 2,240,575 | 1,927,499 | ||||||
Contractual Adjustments and Discounts: | ||||||||||
Medicare/Medicaid Portion | 101,262 | 94,520 | 195,325 | 183,439 | ||||||
All Other Third Party Payors* | 838,004 | 706,234 | 1,587,205 | 1,330,379 | ||||||
Total Contractual Adjustments and Discounts | 939,266 | 800,754 | 1,782,530 | 1,513,818 | ||||||
Service Revenues Net of Contractual Adjustments and Discounts | 236,016 | 216,867 | 458,045 | 413,681 | ||||||
Patient Service Revenue Provision for Bad Debts** | 12,030 | 15,501 | 25,225 | 31,046 | ||||||
Net Revenues | 223,986 | 201,366 | 432,820 | 382,635 | ||||||
* All Other Third Party and Direct Payors consists of almost eight hundred distinct payors, including commercial health insurers and administrators as well as professionally billed accounts such as physicians, hospitals, clinics and other direct billed accounts. | ||||||||||
** Represents the amount of Bad Debt Expense that is required to be presented as a deduction from patient service revenue (net of contractual allowances and discounts) pursuant to ASU No. 2011-7. | ||||||||||
When new business is received by BRLI, service revenues net of contractual adjustments and discounts are calculated by reducing gross service revenues by the estimated contractual allowance. The Patient Service Revenue Provision for Bad Debts represents the amount of bad debt expense expected to occur on patient service revenue based upon our experience. The remaining bad debt expense is presented as part of operating expenses. The bad debt expense presented as part of operating expense represents the bad debt expense related to receivables from service revenues determined after taking into account our ability to collect on such revenue. | ||||||||||
BRLI recognized the amounts in subsequent periods for actual allowances/discounts to gross service revenue; bad debt may have been adjusted over the same periods of time to maintain an accurate balance between net revenues and actual revenues. Management has reviewed the allowances/discounts recognized in subsequent periods and believes the amounts to be immaterial. A number of proposals for legislation or regulation continue to be under discussion which could have the effect of substantially reducing Medicare reimbursements for clinical laboratories or introducing cost sharing to beneficiaries. One such legislation is Protecting Access to Medicare Act of 2014 (Public Law 113—93)(“PAMA”) was signed into law on April 1, 2014. The legislation directed CMS to conduct a market survey and to determine whether Medicare is reimbursing at a commercially reasonable rates. To date, CMS has fallen behind the schedule legislated in PAMA. As the result, the current reimbursement rates remain unchanged, subject to typical annual reviews, until 2017. | ||||||||||
Accounts_Receivable_Allowances
Accounts Receivable Allowances | 6 Months Ended | |||||
Apr. 30, 2015 | ||||||
Accounts Receivable Allowances | ||||||
Accounts Receivable Allowances | ||||||
[5] Accounts Receivable Allowances | ||||||
It is typically the responsibility of the patient to pay for laboratory service bills. Most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or commercial insurance to pay all or a portion of their healthcare expenses; this represents the major portion of payment for all services provided by BRLI. In certain cases, the individual has no insurance or does not provide insurance information; in the remainder of the cases, BRLI is provided the third party billing information, usually by the referring physician, and seeks payment from the third party under the terms and conditions of the third party payor for health service providers like BRLI. Each of these third party payors may differ not only with regard to rates, but also with regard to terms and conditions of payment and coverage of specific tests. BRLI routinely reviews the reimbursement policies and subsequent payments and collection rates from these different types of payors. Contractual adjustments and discounts are recorded as reductions to gross service revenues and are collectively referred to as the contractual allowance. BRLI has not been required to record an adjustment in a subsequent period related to revenue recorded in a prior period which was material in nature. Aging of accounts receivable is monitored by billing personnel and follow-up activities including collection efforts are conducted as necessary. BRLI writes off receivables against the allowance for doubtful accounts when they are deemed uncollectible. For client billing, accounts are written off when all reasonable collection efforts prove to be unsuccessful. Patient accounts, where the patient is directly responsible for all or a remainder portion of the account after partial payment or denial by a third party payor, are written off after the normal dunning cycle has occurred, although these may be subsequently transferred to a third party collection agency after being written off. Third party payor accounts are written off when they exceed the payer’s timely filing limits. Accounts Receivable on the balance sheet is net of the following amounts for contractual credits and doubtful accounts: | ||||||
($) | ||||||
[Unaudited] | ||||||
April 30, | October 31, | |||||
2015 | 2014 | |||||
Contractual Credits/Discounts | 582,180 | 513,466 | ||||
Doubtful Accounts | 81,505 | 83,276 | ||||
Total Allowance | 663,685 | 596,742 | ||||
Intangible_Assets
Intangible Assets | 6 Months Ended | ||||||||||||
Apr. 30, 2015 | |||||||||||||
Intangible Assets | |||||||||||||
Intangible Assets | |||||||||||||
[6] Intangible Assets | |||||||||||||
The following disclosures present certain information on the Company’s intangible assets as of April 30, 2015 (Unaudited) and October 31, 2014. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual value. | |||||||||||||
April 30, 2015 | |||||||||||||
Weighted-Average | Accumulated | ||||||||||||
Amortization Period | Amortization | Net of Accumulated | |||||||||||
Intangible Asset | Years | Cost ($) | ($) | Amortization ($) | |||||||||
Customer Lists | 20 | 8,738 | 3,469 | 5,269 | |||||||||
Covenants Not-to-Compete | 5 | 11,131 | 6,325 | 4,806 | |||||||||
Patents and Licenses | 17 | 5,297 | 1,922 | 3,375 | |||||||||
Totals | 25,166 | 11,716 | 13,450 | ||||||||||
October 31, 2014 | |||||||||||||
Weighted-Average | Accumulated | ||||||||||||
Amortization Period | Amortization | Net of Accumulated | |||||||||||
Intangible Asset | Years | Cost ($) | ($) | Amortization ($) | |||||||||
Customer Lists | 20 | $ | 8,738 | $ | 3,275 | $ | 5,463 | ||||||
Covenants Not-to-Compete | 3 | 11,131 | 5,738 | 5,393 | |||||||||
Patents and Licenses | 17 | 5,297 | 1,750 | 3,547 | |||||||||
Totals | $ | 25,166 | $ | 10,763 | $ | 14,403 | |||||||
The aggregate intangible amortization expense for the three months ended April 30, 2015 and 2014 was $474 and $730, respectively. The aggregate intangible amortization expense for the six months ended April 30, 2015 and 2014 was $952 and $959, respectively. The estimated intangible asset amortization expense for the remainder of fiscal year ending October 31, 2015 and for the four subsequent years is as follows: | |||||||||||||
October 31, | ($) | ||||||||||||
2015 | 900 | ||||||||||||
2016 | 1,540 | ||||||||||||
2017 | 1,063 | ||||||||||||
2018 | 946 | ||||||||||||
2019 | 904 | ||||||||||||
Thereafter | 8,097 | ||||||||||||
Total | 13,450 | ||||||||||||
Revolving_Note_Payable_Bank
Revolving Note Payable - Bank | 6 Months Ended |
Apr. 30, 2015 | |
Revolving Note Payable - Bank | |
Revolving Note Payable - Bank | |
[7] Revolving Note Payable - Bank | |
On February 3, 2014, the Company entered into an amended revolving note payable loan agreement with PNC Bank, N.A. (“PNC Bank Credit Line”). This amendment increased the maximum credit line to $70,000. The maximum amount of the credit line available to the Company pursuant to the loan agreement is the lesser of (i) $70,000 or (ii) 50% of the Company’s qualified accounts receivable, as defined in the agreement. The amendment to the Loan and Security Agreement provides for an interest rate on advances to be subject, at the election of the Company, to either the bank’s base rate or the Eurodollar rate of interest plus, in certain instances, an additional interest percentage. The additional interest percentage charge on bank’s base rate borrowings and on Eurodollar rate borrowings ranges from 1% to 4% and is determined based upon certain financial ratios achieved by the Company. At April 30, 2015, the Company elected to have all of the total advances outstanding to be subject to the bank’s base rate of interest of 3.50%. The credit line is collateralized by substantially all of the Company’s assets. The line of credit is available through October 2016 and may be extended for annual periods by mutual consent, thereafter. The terms of this agreement contain, among other provisions, requirements for maintaining defined levels of capital expenditures and fixed charge coverage, and the prohibition of the payment of cash dividends by the Company. As of April 30, 2015, the Company utilized $49,315 of the available credit under this revolving note payable loan agreement. | |
On May 14, 2015 a date subsequent to the period covered in these financial statements the Company further amended its PNC Bank Credit Line to increase the maximum that can be borrowed under the credit line to $120,000 as well as extended the credit line through October 2020. This amendment is effective as of May 5, 2015. The other terms of the amendment remained substantially unchanged. | |
LongTerm_Debt_Bank
Long-Term Debt - Bank | 6 Months Ended |
Apr. 30, 2015 | |
Long-Term Debt - Bank | |
Long-Term Debt - Bank | |
[8] Long-Term Debt - Bank | |
In December 2010, the Company issued a seven-year term note for $5,408 at the rate of interest of 6.12% per annum for the financing of new equipment. The note is payable in 84 equal monthly installments commencing on January 29, 2011 of $61 including principal and interest followed by a balloon payment of the principal and interest outstanding on the loan repayment date of December 29, 2017. The balance on this note as of April 30, 2015 is approximately $3,412. | |
Provision_for_Income_Taxes
Provision for Income Taxes | 6 Months Ended |
Apr. 30, 2015 | |
Provision for Income Taxes | |
Provision for Income Taxes | |
[9] Provision for Income Taxes | |
The provision for income taxes for the three-months ended April 30, 2015 consists of a current tax provision of $9,400 and a deferred tax benefit of $1,580. | |
The provision for income taxes for the six-months ended April 30, 2015 consists of a current tax provision of $13,131 and a deferred tax benefit of $440. | |
The provision for income taxes for the three-months ended April 30, 2014 consists of a current tax provision of $7,508 and a deferred tax provision of $457. | |
The provision for income taxes for the six-months ended April 30, 2014 consists of a current tax provision of $4,291 and a deferred tax provision of $5,976. | |
On April 30, 2015, the Company had a current deferred tax asset of $39,456 and a long-term deferred tax asset of $4,438 included in other assets. On April 30, 2014, the Company had a current deferred tax asset of $35,964 and a long-term deferred tax asset of $2,291 included in other assets. | |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Apr. 30, 2015 | |
Subsequent Events | |
Subsequent Events | |
[10] Subsequent events | |
On June 3, 2015 the Company, OPKO Health, Inc., a Delaware corporation (“OPKO”) and Bamboo Acquisition, Inc., a New Jersey corporation and a direct wholly owned subsidiary of OPKO (“Sub”), entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the Merger Agreement, Sub will be merged with and into the Company (the “Merger”) and the Company will be the surviving corporation and OPKO’s wholly owned subsidiary. The Merger is intended to qualify as a reorganization within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”). | |
At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s common stock, par value $0.01 per share (the “Company Common Stock”), (other than any shares of the Company Common Stock (including shares held in treasury by the Company) held by OPKO or any OPKO subsidiary or the Company or any Company subsidiary) will automatically be converted into and exchanged for the right to receive 2.75 shares (the “Exchange Ratio”) of OPKO’s common stock, par value $0.01 per share (the “OPKO Common Stock”). No fractional shares of OPKO Common Stock will be issued in the Merger, and the Company’s shareholders will receive one share of OPKO Common Stock in lieu of any fractional shares, after taking into account all of the shares of the Company Common Stock represented by certificates or book-entries, delivered by such shareholder. | |
In addition, subject to certain limitations described in the Merger Agreement, each option to purchase shares of the Company Common Stock will be converted into and become rights with respect to the OPKO Common Stock and OPKO will assume each such option, in accordance with the terms of the applicable option plan and/or stock option agreement. The number of shares of OPKO Common Stock subject to such options will be equal to the number of shares of Company Common Stock subject to such options multiplied by 2.75, rounded down to the nearest whole share. The per share exercise price under each option will be adjusted by dividing the per share exercise price of such option by 2.75 and rounding up to the nearest cent. | |
The obligations of the Company and OPKO to consummate the Merger are subject to customary conditions, including, but not limited to, obtaining the required approval of the Company’s shareholders. | |
Subject to the satisfaction or waiver of the foregoing conditions and the other terms and conditions contained in the Merger Agreement, the transaction is expected to close in the second half of 2015. | |
The Merger Agreement contains certain termination rights for both the Company and OPKO in certain circumstances. | |
If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, the Company will be required to pay OPKO a termination fee of up to $54,000,000. In addition, under certain circumstances, the Company would be obligated to reimburse OPKO’s out of pocket expenses incurred in connection with the Merger Agreement up to $3,000,000. | |
Revenue_Recognition_and_Contra1
Revenue Recognition and Contractual Adjustments (Tables) | 6 Months Ended | |||||||||
Apr. 30, 2015 | ||||||||||
Revenue Recognition and Contractual Adjustments | ||||||||||
Schedule of adjustments made to gross service revenues to arrive at net revenues | ||||||||||
($) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
April 30, | April 30, | |||||||||
[Unaudited] | [Unaudited] | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||
Gross Service Revenues | 1,175,282 | 1,017,621 | 2,240,575 | 1,927,499 | ||||||
Contractual Adjustments and Discounts: | ||||||||||
Medicare/Medicaid Portion | 101,262 | 94,520 | 195,325 | 183,439 | ||||||
All Other Third Party Payors* | 838,004 | 706,234 | 1,587,205 | 1,330,379 | ||||||
Total Contractual Adjustments and Discounts | 939,266 | 800,754 | 1,782,530 | 1,513,818 | ||||||
Service Revenues Net of Contractual Adjustments and Discounts | 236,016 | 216,867 | 458,045 | 413,681 | ||||||
Patient Service Revenue Provision for Bad Debts** | 12,030 | 15,501 | 25,225 | 31,046 | ||||||
Net Revenues | 223,986 | 201,366 | 432,820 | 382,635 | ||||||
* All Other Third Party and Direct Payors consists of almost eight hundred distinct payors, including commercial health insurers and administrators as well as professionally billed accounts such as physicians, hospitals, clinics and other direct billed accounts. | ||||||||||
** Represents the amount of Bad Debt Expense that is required to be presented as a deduction from patient service revenue (net of contractual allowances and discounts) pursuant to ASU No. 2011-7. | ||||||||||
Accounts_Receivable_Allowances1
Accounts Receivable Allowances (Tables) | 6 Months Ended | |||||
Apr. 30, 2015 | ||||||
Accounts Receivable Allowances | ||||||
Schedule of amounts for contractual credits and doubtful accounts | ($) | |||||
[Unaudited] | ||||||
April 30, | October 31, | |||||
2015 | 2014 | |||||
Contractual Credits/Discounts | 582,180 | 513,466 | ||||
Doubtful Accounts | 81,505 | 83,276 | ||||
Total Allowance | 663,685 | 596,742 | ||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | ||||||||||||
Apr. 30, 2015 | |||||||||||||
Intangible Assets | |||||||||||||
Schedule of information on intangible assets | |||||||||||||
April 30, 2015 | |||||||||||||
Weighted-Average | Accumulated | ||||||||||||
Amortization Period | Amortization | Net of Accumulated | |||||||||||
Intangible Asset | Years | Cost ($) | ($) | Amortization ($) | |||||||||
Customer Lists | 20 | 8,738 | 3,469 | 5,269 | |||||||||
Covenants Not-to-Compete | 5 | 11,131 | 6,325 | 4,806 | |||||||||
Patents and Licenses | 17 | 5,297 | 1,922 | 3,375 | |||||||||
Totals | 25,166 | 11,716 | 13,450 | ||||||||||
October 31, 2014 | |||||||||||||
Weighted-Average | Accumulated | ||||||||||||
Amortization Period | Amortization | Net of Accumulated | |||||||||||
Intangible Asset | Years | Cost ($) | ($) | Amortization ($) | |||||||||
Customer Lists | 20 | $ | 8,738 | $ | 3,275 | $ | 5,463 | ||||||
Covenants Not-to-Compete | 3 | 11,131 | 5,738 | 5,393 | |||||||||
Patents and Licenses | 17 | 5,297 | 1,750 | 3,547 | |||||||||
Totals | $ | 25,166 | $ | 10,763 | $ | 14,403 | |||||||
Schedule of estimated amortization expense related to remaining intangible assets | October 31, | ($) | |||||||||||
2015 | 900 | ||||||||||||
2016 | 1,540 | ||||||||||||
2017 | 1,063 | ||||||||||||
2018 | 946 | ||||||||||||
2019 | 904 | ||||||||||||
Thereafter | 8,097 | ||||||||||||
Total | 13,450 | ||||||||||||
Revenue_Recognition_and_Contra2
Revenue Recognition and Contractual Adjustments (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 |
item | ||||
Revenue Recognition and Contractual Adjustments | ||||
Gross Service Revenues | $1,175,282 | $1,017,621 | $2,240,575 | $1,927,499 |
Contractual Adjustments and Discounts: | ||||
Medicare/Medicaid Portion | 101,262 | 94,520 | 195,325 | 183,439 |
All Other Third Party Payors | 838,004 | 706,234 | 1,587,205 | 1,330,379 |
Total Contractual Adjustments and Discounts | 939,266 | 800,754 | 1,782,530 | 1,513,818 |
Service Revenues Net of Contractual Adjustments and Discounts | 236,016 | 216,867 | 458,045 | 413,681 |
Patient Service Revenue Provision for Bad Debts | 12,030 | 15,501 | 25,225 | 31,046 |
Net Revenues | $223,986 | $201,366 | $432,820 | $382,635 |
Number of distinct payors included in all other third party and Direct | 800 |
Accounts_Receivable_Allowances2
Accounts Receivable Allowances (Details) (USD $) | Apr. 30, 2015 | Oct. 31, 2014 |
In Thousands, unless otherwise specified | ||
Allowances | ||
Total Allowance | $663,685 | $596,742 |
Contractual Credits/Discounts | ||
Allowances | ||
Total Allowance | 582,180 | 513,466 |
Doubtful Accounts | ||
Allowances | ||
Total Allowance | $81,505 | $83,276 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | Oct. 31, 2014 |
Intangible assets | |||||
Cost | $25,166 | $25,166 | $25,166 | ||
Accumulated Amortization | 11,716 | 11,716 | 10,763 | ||
Net of Accumulated Amortization | 13,450 | 13,450 | 14,403 | ||
Estimated residual value | 0 | 0 | |||
Amortization expenses | 474 | 730 | 952 | 959 | |
Estimated amortization expense related to intangible assets | |||||
2015 | 900 | 900 | |||
2016 | 1,540 | 1,540 | |||
2017 | 1,063 | 1,063 | |||
2018 | 946 | 946 | |||
2019 | 904 | 904 | |||
Thereafter | 8,097 | 8,097 | |||
Net of Accumulated Amortization | 13,450 | 13,450 | 14,403 | ||
Customer Lists | |||||
Intangible assets | |||||
Weighted-Average Amortization Period | 20 years | 20 years | |||
Cost | 8,738 | 8,738 | 8,738 | ||
Accumulated Amortization | 3,469 | 3,469 | 3,275 | ||
Net of Accumulated Amortization | 5,269 | 5,269 | 5,463 | ||
Estimated residual value | 0 | 0 | |||
Estimated amortization expense related to intangible assets | |||||
Net of Accumulated Amortization | 5,269 | 5,269 | 5,463 | ||
Covenants Not-to-Compete | |||||
Intangible assets | |||||
Weighted-Average Amortization Period | 5 years | 3 years | |||
Cost | 11,131 | 11,131 | 11,131 | ||
Accumulated Amortization | 6,325 | 6,325 | 5,738 | ||
Net of Accumulated Amortization | 4,806 | 4,806 | 5,393 | ||
Estimated residual value | 0 | 0 | |||
Estimated amortization expense related to intangible assets | |||||
Net of Accumulated Amortization | 4,806 | 4,806 | 5,393 | ||
Patents and Licenses | |||||
Intangible assets | |||||
Weighted-Average Amortization Period | 17 years | 17 years | |||
Cost | 5,297 | 5,297 | 5,297 | ||
Accumulated Amortization | 1,922 | 1,922 | 1,750 | ||
Net of Accumulated Amortization | 3,375 | 3,375 | 3,547 | ||
Estimated residual value | 0 | 0 | |||
Estimated amortization expense related to intangible assets | |||||
Net of Accumulated Amortization | $3,375 | $3,375 | $3,547 |
Revolving_Note_Payable_Bank_De
Revolving Note Payable - Bank (Details) (USD $) | 0 Months Ended | 6 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Feb. 03, 2014 | Apr. 30, 2015 | Apr. 30, 2015 | Oct. 31, 2014 | 5-May-15 |
Revolving note payable - Bank | |||||
Amount of credit utilized | 49,315 | 49,315 | $33,380 | ||
Revolving Credit Facility | |||||
Revolving note payable - Bank | |||||
Maximum amount of the credit line available pursuant to the loan agreement | 70,000 | 120,000 | |||
Maximum credit line available as percentage of accounts receivable | 50.00% | ||||
Amount of credit utilized | 49,315 | 49,315 | |||
Revolving Credit Facility | Debt Instrument, Variable Rate Base Rate | |||||
Revolving note payable - Bank | |||||
Variable rate basis | base rate | ||||
Variable rate of interest (as a percent) | 3.50% | 3.50% | |||
Revolving Credit Facility | Debt Instrument, Variable Rate Base Rate | Minimum | |||||
Revolving note payable - Bank | |||||
Percentage of additional interest | 1.00% | ||||
Revolving Credit Facility | Debt Instrument, Variable Rate Base Rate | Maximum | |||||
Revolving note payable - Bank | |||||
Percentage of additional interest | 4.00% | ||||
Revolving Credit Facility | Debt Instrument, Variable Rate Eurodollar | |||||
Revolving note payable - Bank | |||||
Variable rate basis | Eurodollar rate | ||||
Revolving Credit Facility | Debt Instrument, Variable Rate Eurodollar | Minimum | |||||
Revolving note payable - Bank | |||||
Percentage of additional interest | 1.00% | ||||
Revolving Credit Facility | Debt Instrument, Variable Rate Eurodollar | Maximum | |||||
Revolving note payable - Bank | |||||
Percentage of additional interest | 4.00% |
LongTerm_Debt_Bank_Details
Long-Term Debt - Bank (Details) (Medium-term Notes, USD $) | 1 Months Ended | 6 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2010 | Apr. 30, 2015 |
item | ||
Medium-term Notes | ||
Long-term debt | ||
Term of debt | 7 years | |
Debt issued | $5,408 | |
Debt instrument interest rate (as a percent) | 6.12% | |
Number of equal monthly installments | 84 | |
Monthly installment including principal and interest | 61 | |
Debt outstanding | $3,412 |
Provision_for_Income_Taxes_Det
Provision for Income Taxes (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | Oct. 31, 2014 |
Provision for Income Taxes | |||||
Current tax provision | $9,400 | $7,508 | $13,131 | $4,291 | |
Deferred Tax Asset: | |||||
Current Deferred Tax Asset - Net | 39,456 | 35,964 | 39,456 | 35,964 | 40,040 |
Long Term Deferred Tax Asset - Net | 4,438 | 2,291 | 4,438 | 2,291 | 3,414 |
Net deferred tax benefit | |||||
Deferred tax provision (benefit) | ($1,580) | $457 | ($440) | $5,976 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | Apr. 30, 2015 | Oct. 31, 2014 | Jun. 03, 2015 |
Subsequent events | |||
Common Stock, Par Value (in dollars per share) | $0.01 | $0.01 | |
Subsequent Event | OPKO Health, Inc. ("OPKO") | Bamboo Acquisition, Inc. ("Sub") | |||
Subsequent events | |||
Per Share Conversion To Common Stock In Event Of Merger | 2.75 | ||
Common Stock, Par Value (in dollars per share) | $0.01 | ||
Number of fractional shares issued | 0 | ||
Number of OPKO shares of common stock received in lieu of any fractional shares | 1 | ||
Maximum termination fee | $54,000,000 | ||
Maximum out of pocket expense reimbursement | $3,000,000 |