FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ___________ Commission file number: 1-11144 Regency Health Services, Inc. State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) Delaware 33-0210226 Regency Health Services, Inc. 2742 Dow Avenue Tustin, California 92680 714-544-4443 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act ofv1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ____ No X Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Title Outstanding Common stock 16,705,265 Part I. Financial Information Item 1. Financial Statements. REGENCY HEALTH SERVICES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) ASSETS March 31, December 31, 1996 1995 ------------- ------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 33,955 $ 104,238 Restricted cash 3,925 - Accounts receivable, net of allowances of $4,259 at March 31, 1996 and $3,757 at December 31, 1995 71,500 54,050 Notes and other receivables 1,736 2,182 Deferred income taxes 5,447 5,447 Assets held for sale 7,751 8,970 Other current assets 8,286 6,396 ------------- ------------- Total current assets 132,600 181,283 ------------- ------------- PROPERTY AND EQUIPMENT: Land 21,249 21,249 Buildings and improvements 98,481 96,396 Leasehold interest - other 17,549 17,556 Leasehold interest - related party 2,075 2,075 Equipment 27,710 24,610 ------------- ------------- 167,064 161,886 Less - accumulated depreciation and amortization (36,965) (34,679) ------------- ------------- Total property and equipment 130,099 127,207 ------------- ------------- OTHER ASSETS: Mortgage notes receivable, net of allowances of $950 at March 31, 1996 and $951 at December 31, 1995 4,929 5,163 Goodwill, net of accumulated amortization of $1,207 at March 31, 1996 and $563 at December 31, 1995 59,515 13,621 Other assets, net of accumulated amortization of $2,641 at March 31, 1996 and $2,206 at December 31, 1995 27,163 15,697 ------------- ------------- Total other assets 91,607 34,481 ------------- ------------- $ 354,306 $ 342,971 ============= ============= The accompanying notes are an integral part of these consolidated financial statements. REGENCY HEALTH SERVICES, INC. CONSOLIDATED BALANCE SHEETS (Continued) (In thousands, except par value) LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 1996 1995 ------------ ------------- (Unaudited) CURRENT LIABILITIES: Current portion of long-term debt $ 1,706 $ 4,371 Accounts payable 25,854 22,285 Accrued expenses 5,330 5,946 Accrued compensation 18,894 18,051 Accrued workers' compensation 4,653 5,377 Deferred revenue 1,829 1,743 Accrued interest 6,082 4,231 ------------ ------------- Total current liabilities 64,348 62,004 LONG-TERM DEBT, NET OF CURRENT PORTION 184,148 179,615 OTHER LIABILITIES AND NONCURRENT RESERVES 12,938 13,017 DEFERRED INCOME TAXES 9,413 7,946 ------------ ------------- Total liabilities 270,847 262,582 ------------ ------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.01 par value; authorized - 35,000 shares; 16,705 and 16,670 shares issued and outstanding at March 31, 1996 and December 31, 1995, respectively 167 167 Additional paid-in capital 57,012 56,679 Retained earnings 26,280 23,543 ------------ ------------- Total stockholders' equity 83,459 80,389 ------------ ------------- $ 354,306 $ 342,971 ============ ============= The accompanying notes are an integral part of these consolidated financial statements. REGENCY HEALTH SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three months ended March 31, ------------------------------------------ 1996 1995 ---- ---- (Unaudited) NET OPERATING REVENUE $ 129,962 $ 97,548 ------------------- -------------------- COSTS AND EXPENSES: Operating expenses 106,967 78,972 Corporate general and administrative 5,126 5,248 Rent expense 5,607 4,153 Depreciation and amortization 3,175 2,286 Interest expense 4,327 1,910 ------------------- -------------------- Total costs and expenses 125,202 92,569 ------------------- -------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 4,760 4,979 PROVISION FOR INCOME TAXES 2,023 1,892 ------------------- -------------------- NET INCOME $ 2,737 $ 3,087 =================== ==================== INCOME PER COMMON SHARE: Primary $ 0.16 $ 0.19 =================== ==================== Fully diluted $ 0.16 $ 0.18 =================== ==================== WEIGHTED AVERAGE SHARES OF COMMON STOCK AND EQUIVALENTS: Primary 16,803 16,587 =================== ==================== Fully diluted 20,755 20,540 =================== ==================== The accompanying notes are an integral part of these consolidated financial statements. REGENCY HEALTH SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The unaudited consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have not been presented. The accompanying unaudited financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in Regency Health Services, Inc.'s ("Regency" or the "Company") 1995 Annual Report on Form 10-K. In the opinion of the management of Regency, all material adjustments necessary to present fairly the Company's financial condition, results of operations, and changes in financial position have been made. All material intercompany balances, profits, and transactions have been eliminated. The consolidated results of operations presented are not necessarily indicative of the consolidated results for a full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain amounts in the 1995 financial statements have been reclassified to conform to the 1996 presentation. 2. Net Income per Share For the three months ended March 31, 1996 and 1995, primary income per share was calculated based on the weighted average number of common and common equivalent shares outstanding during the periods. For the three months ended March 31, 1996 and 1995, fully diluted income per share was computed as described above and includes the issuance of common shares upon the assumed conversion of the Convertible Subordinated Debentures. Additionally, interest and amortization of underwriting costs related to such debentures were added, net of tax, to income for the purpose of calculating fully diluted income per share. Such amounts aggregated $488,000 and $510,000 for the three months ended March 31, 1996 and 1995, respectively. 3. Acquisitions Effective February 1, 1996, the Company acquired leasehold interests in 18 health care facilities in Tennessee and North Carolina with 2,375 beds from Liberty Healthcare Limited Partnership ("Liberty") through an asset purchase for $39.3 million cash and a note payable for $2.2 million. The Company also acquired Executive Pharmacy with a $763,000 note payable and an enteral feeding business for $1.5 million cash from businesses affiliated with Liberty. In addition, the Company paid $400,000 cash for the inventory of Liberty. A portion of the purchase was funded with notes payable may be reduced as a result of certain seller liabilities and audit adjustments. Escrow accounts established at the time of purchase were funded with $2.96 million for payment on the notes payable and are included in other assets on the accompanying consolidated balance sheet as of March 31, 1996. Effective January 2, 1996, the Company completed the acquisition of the assets of Assist-A-Care, a pharmacy located in San Diego, California. The purchase price was $5.8 million, comprised of $3.2 million cash and a $2.6 million note payable. These transactions were accounted for using the purchase method of accounting under generally accepted accounting principles. Revenues and expenses are included in the accompanying financial statements subsequent to the purchase date. The purchase price allocation related to these transactions has not yet been finalized. The following unaudited proforma condensed consolidated statements of earnings present the summarized consolidated results of operations of the Company after giving effect to the acquisitions of Liberty and affiliated businesses to Liberty for the three months ended March 31, 1996 and 1995, as if such acquisitions had been consummated on January 1, 1995 (in thousands, except per share data): 1996 1995 ---- ---- Net operating revenue $136,768 $117,447 Total costs and expenses 131,427 112,243 - -------------------------------------------------------------------------------------------------------------- Income before provisions for income taxes 5,341 5,204 Provision for income taxes 2,256 1,982 - -------------------------------------------------------------------------------------------------------------- Net income $ 3,085 $ 3,222 - -------------------------------------------------------------------------------------------------------------- Income per common share: Primary $.18 $.19 Fully diluted $.17 $.18 ============================================================================================================== The pro forma results are presented for informational purposes only and are not necessarily indicative of what results of operations actually would have been had such acquisitions been consummated at the beginning of such period or of future operations or results. The effect of the other acquisition is immaterial. 4. Dispositions On March 1, 1996, the Company disposed of a 98-bed facility in Lynwood, California resulting in a net loss of $182,000 charged against the reserve established in the fourth quarter 1995. 5. Workers' Compensation Claims Trust In 1995, the Company established a revocable workers' compensation claims payment trust ("Trust") to pre-fund its workers' compensation obligations. The Trust was funded in March 1996 with approximately $10.6 million from available cash. At March 31, 1996, $3.9 million of the amount funded was classified as current restricted cash and $6.7 million was classified as other long-term assets. 6. Subsequent Events On April 1, 1996, the Company completed the acquisition of the assets of Buena Vista Nursing Center, a health care facility with 64 skilled nursing beds and 22 assisted living beds, located in Lexington, North Carolina. The purchase price was $2.875 million, consisting of $2.675 million in cash and a $200,000 deferred note. Payment of the note is dependent upon certain financial performance targets being achieved. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. General The following table sets forth certain operating data for the Company on the dates indicated: March 31, 1996 1995 ---- ---- Long-term care operations................................... Facilities............................................. 111 93 Licensed beds.......................................... 11,455 9,134 Subacute beds.......................................... 1,108 879 Subacute facilities.................................... 46 35 Contract rehabilitation therapy operations Non-affiliated facilities served....................... 78 -- Regency operated facilities served..................... 34 -- ------ ----- Total........................................ 112 -- ====== ===== Pharmacy operations Non-affiliated facilities served....................... 78 Regency operated facilities served..................... 53 34 ------ ---- Total........................................ 131 39 ====== === Home health operations Visits per period...................................... 74,977 62,015 Hours per period....................................... 105,879 67,406 Long-Term Care Operations The Company's long-term care operations derive its net operating revenue from the performance of routine and ancillary services at the Company's facilities. Revenue from routine services is comprised of charges for room and board and basic nursing services for the care of patients, including those in the Company's subacute specialty units. Long-term care operations revenue from ancillary services is comprised of charges for rehabilitative services, subacute specialty services, and pharmaceutical products and services provided to patients at the Company's facilities. The long-term care operations derive most of its ancillary services revenue from Medicare and HMO eligible patients. During the fourth quarter of 1995 the Company exchanged leasehold interests in three healthcare facilities with 360 beds in New Mexico for leasehold interests in four healthcare facilities with 461 beds in Ohio previously operated by another company. In October 1995, the Company also opened a newly constructed facility and disposed of one additional facility that was not announced in 1994. Effective December 31, 1995, the Company determined to dispose of 13 facilities located in California as part of its strategic plan of diversifying from California. The results of operations of these facilities will continue to be reflected in the Company's financial statements until the disposition is completed, which is expected in 1996. Effective March 1, 1996, the Company disposed of one of the thirteen facilities. Effective February 1, 1996, the Company acquired 18 healthcare facilities with 2,375 beds, 2 pharmacies and an enteral feeding business in Tennessee and North Carolina, accounted for under the purchase method of accounting (See Note 3 to the Consolidated Financial Statements). Ancillary Businesses Operations In July 1995, the Company acquired SCRS & Communicology, Inc. ("SCRS") accounted for under the purchase method of accounting. SCRS provides rehabilitation services to Company operated and third party healthcare facilities in 14 states in the West, Midwest, and Southeast. In the first quarter 1996, 72% of SCRS revenues were derived from providing services to non-affiliated healthcare providers. The Company's pharmacy operations provide prescription services and basic pharmaceutical dispensing programs to Company and third party healthcare facilities. During the first quarter of 1996 and 1995, 66% and 55%, respectively, of revenues from pharmacy operations were derived from providing services to non-affiliated healthcare providers and patients at Regency facilities billed directly to third-party payors. In January and February of 1996, the Company acquired three additional pharmacy operations accounted for under the purchase method of accounting. The Company's home health operations provide skilled nursing, rehabilitation and other services in selected areas in California and Ohio. The Company has positioned its home healthcare capabilities to serve its facilities' home health needs. The Company's growth strategy includes the selective acquisition of both new facilities as well as other service providers. The Company incurs certain costs and operating inefficiencies in connection with the acquisition of a new facility following such acquisition, relating to the integration of such facility's financial and administrative systems, physical plant and other aspects of its operations into those of the Company. In addition, the introduction of a substantial portion of the Company's contract rehabilitation therapy, pharmacy and other ancillary services to a new facility may take as long as 12 months to fully implement. There can be no assurance that each of the service providers the Company may acquire will be profitable, or that the acquisition of new facilities that result in significant integration costs and inefficiencies will not adversely affect the Company's profitability. The acquisitions occurring in the first quarter 1996 will be collectively referred to as the "1996 Acquisitions." Results of Operations The following table sets forth the amounts of certain elements of net operating revenue and the percentage of total net operating revenue for the periods presented: Three months ended March 31, 1996 1995 (dollars in thousands) Long term care - basic nursing............................. $66,547 51% $57,277 59% Long term care - subacute and rehabilitation............... 41,544 32 31,326 32 --------- ----- --------- ---- Subtotal long term care............................... 108,091 83 88,603 91 Home health operations..................................... 8,692 6 6,913 7 Contract rehabilitation therapy operations to non-affiliates (1).................................... 7,463 6 -- -- Pharmacy operations to non-affiliates (2).................. 4,726 4 1,532 2 Interest................................................... 990 1 500 0 --------- ----- --------- ---- Total................................................. $129,962 100% $ 97,548 100% ======== ==== ======== ==== (1) Net of intercompany billings of $2,928,000 for the three months ended March 31, 1996. (2) Net of intercompany billings of $2,472,000 and $1,252,000 for the three months ended March 31, 1996 and 1995, respectively. The following table presents the percentage of net operating revenue represented by certain items reflected in the Company's Consolidated Statements of Operations for the three months ended March 31: 1996 1995 Net operating revenue........................................... 100.0% 100.0% ------ ------ Costs and expenses: Operating expenses.............................................. 82.3 81.0 Corporate general and administrative............................ 4.0 5.4 Rent expense.................................................... 4.3 4.2 Depreciation and amortization................................... 2.4 2.3 Interest expense................................................ 3.3 2.0 ----- ----- Total costs and expenses.................................... 96.3 94.9 ----- ----- Income before provision for income taxes ...................... 3.7% 5.1% ====== ====== Quarter Ended Comparison 1996 to 1995 Net Operating Revenue The Company's net operating revenue for the three months ended March 31, 1996 ("First Quarter 1996") was $130.0 million compared to $97.5 million for the three months ended March 31, 1995 ("First Quarter 1995"), an increase of $32.5 million or 33.2%. Net operating revenue from long-term care operations increased $19.5 million or 22.0% due to the 1996 acquisition of 18 long-term care facilities, increased levels of reimbursement, and a shift in payor mix from Medicaid to Medicare and managed care, partially offset by a slight decrease in total patient days on a same store basis. Net operating revenue from the 1996 acquisition of 18 long-term care facilities for First Quarter 1996 was $12.6 million. On a same store basis, the average increase in reimbursement rates per patient day was 8.1% and was primarily due to providing services to higher acuity patients. The Company experienced a 0.3% net decrease in total patient days in First Quarter 1996 from First Quarter 1995 on a same store basis, consisting of a decrease of 8,114 and 6,781 from Medicaid and private and other sources, respectively, and an increase of 5,379 and 7,614 from Medicare and managed care, respectively. Net operating revenue from home health operations grew $1.8 million or 25.7% in First Quarter 1996 over First Quarter 1995, primarily reflecting additional patient visits and treatment hours. Pharmacy operations revenues increased $3.2 million or 208.5% in First Quarter 1996 over First Quarter 1995, primarily due to the acquisition of Assist-A-Care in January 1996 and Executive Pharmacy in February 1996 (collectively, the "Pharmacy Acquisitions"). Net operating revenue from the Pharmacy Acquisitions for First Quarter 1996 was $2.7 million. Net operating revenue from contract rehabilitation therapy operations are a result of the purchase of SCRS in July 1995. The Company had no net operating revenue from contract rehabilitation therapy operations in the First Quarter 1995. Interest income increased $0.5 million in First Quarter 1996 over First Quarter 1995 due to investment of proceeds from the issuance of the 9-7/8% Senior Subordinated Notes ("Subordinated Notes") in an aggregate amount of $110 million in October 1995. Costs and Expenses Total costs and expenses for First Quarter 1996 increased $32.6 million, or 35.3%, to $125.2 million (96.3% of net operating revenue) from $92.6 million (94.9% of net operating revenue) for First Quarter 1995. Operating expenses as a percentage of net operating revenue increased to 82.3% for First Quarter 1996, from 81.0% for First Quarter 1995. The increase is a result of incurring increased labor costs while reimbursement rates per patient day for room and board charges remained relatively flat. In addition, the home health agency participating in the Medicare Prospective Pay System pilot project beginning in 1996 did not adequately reduce costs at the outset of this program. Corporate general and administrative expense is the corporate overhead and regional costs related to the supervision of operations. This expense decreased as a percentage of net operating revenue to 4.0% for First Quarter 1996 from 5.4% in First Quarter 1995. The decrease as a percentage of revenues is attributed to achieving economies of scale through acquisition and same store growth. Depreciation and amortization expense as a percentage of net operating revenue increased to 2.4% in First Quarter 1996 from 2.3% in First Quarter 1995 primarily due to goodwill amortization related to the purchase of SCRS in July 1995 and Liberty in February 1996. Interest expense as a percentage of net operating revenue increased to 3.3% in First Quarter 1996 from 2.0% in First Quarter 1995 primarily due to the Company issuing the Subordinated Notes partially offset by the repayment of the Senior Secured Notes in October 1995. Liquidity and Capital Resources Working capital at March 31, 1996 decreased $51.0 million to $68.3 million (including cash and cash equivalents of $34.0 million) from $119.3 million (including cash and cash equivalents of $104.2 million) at December 31, 1995. The decrease was primarily attributable to the 1996 Acquisitions. During the First Quarter 1996, the Company funded approximately $16 million in receivables primarily related to the deferral of Medicare and Medicaid billings until the second quarter 1996 caused by delays in securing provider numbers for certain of the 18 healthcare facilities acquired in the 1996 Acquisitions. In addition, the Company established a revocable workers' compensation claims payment trust to pre-fund its workers' compensation obligations which was funded in March 1996 with approximately $10.6 million from available cash. Of the amount funded, $3.9 million is classified as current restricted cash and $6.7 million is classified as other long-term assets as of March 31, 1996 (See Note 5 to the Consolidated Financial Statements). The Company's major requirements for liquidity relate to funding working capital, capital improvements and debt service obligations. The Company must also provide funding to cover potential delays, temporary cessations or interruption in payments by third-party payors due to political or budgetary constraints. Management believes that these liquidity needs can be met from available cash, internally generated funds and existing borrowing capacity under the NationsBank credit agreement (discussed below). The Company's capital expenditures for the three months ended March 31, 1996 and 1995 were approximately $2.6 million and $4.1 million, respectively. These capital expenditures have been financed through a combination of internally generated funds and debt. The Company expects to spend approximately $13.0 million for capital expenditures during 1996. The Company's healthcare facilities require capital improvements for renovations and improvements in physical appearance. In addition, capital improvements may be required in the future as a result of routine regulatory inspections. The Company has financed its acquisitions from a combination of borrowings and funds generated by operations. The Company expects to finance future acquisitions from a combination of existing cash, the NationsBank credit facility, and alternative sources such as real estate investment trusts. Depending on the numbers, size and timing of any such transactions, the Company may in the future require additional financing in order to continue to make acquisitions. Periodically, the Company has funded temporary delays in reimbursement from third-party payors. For example, in July 1995, the State of California, due to budgetary constraints, delayed payment of significant amounts owed to healthcare providers under the Medi-Cal program. In 1992, the State of California reimbursed providers with registered warrants, which some banks temporarily refused to redeem at face value. The Company has been able to mitigate the effects of such payment delays by monitoring the related activities of the California legislature, expediting billings through its direct access electronic billing arrangement, and obtaining the agreement of creditors to extend the due date for payables. The Company has not recently experienced any material adverse effects on its liquidity as a result of such delays. There can be no assurance, however, that the Company will be able to mitigate the effects of any future funding delays by the State of California or other third-party payors. On December 28, 1995 the Company entered into a revolving credit loan agreement ("Credit Agreement") with NationsBank of Texas, N.A. as agent for a group of banks, which provides up to $50,000,000 in a revolving line of credit and letters of credit. As of April 30, 1996, no borrowings have been drawn on the Credit Agreement and approximately $9,000,000 of standby letters of credit have been issued in connection with the Company's self-insured workers' compensation programs. Seasonality The Company's income from operations before fixed charges generally fluctuates from quarter to quarter. The fluctuation is related to several factors: the timing of Medicaid rate increases, seasonal census cycles, and the number of calendar days in a given quarter. As a result, the Company's income from operations before fixed charges tends to be higher in its third and fourth quarters when compared to the first and second quarters. Impact of Inflation The healthcare industry is labor intensive. Wages and other labor costs are especially sensitive to inflation. Increases in wages and other labor costs as a result of inflation, or increases in federal or state minimum wages without a corresponding increase in Medicare and Medicaid reimbursement rates, could adversely impact the Company. Reimbursement The majority of the Company's net operating revenue is derived from services provided under the Medicare and Medicaid programs. Numerous proposals relating to healthcare reform have been or may be introduced in the United States Congress, state legislatures or by governmental agencies who regulate the Medicare and Medicaid programs. It is uncertain what reform will ultimately be enacted by the federal government, any state government or governmental agencies and therefore, the Company cannot predict at this time the impact on the Company of any proposed reforms. As discussed above, the Company provides contract rehabilitation and pharmacy services to both Regency operated and non-affiliated facilities. Under current Medicare regulations, reimbursement for these services provided to Medicare eligible patients in Regency facilities is based upon the related entity's cost to provide the services unless a significant portion of the related entity's revenues is derived from non-affiliated facilities. If a significant portion of the related entity's revenues is derived from non-affiliated facilities, Medicare will reimburse the facility's cost, which includes a profit paid to the related entity. During 1995 and prior years, the Company was reimbursed by Medicare based on its pharmacy operation costs on billings to Regency facilities, as it did not meet the significant portion criteria. After the acquisition of Assist-A-Care Pharmacy and Executive Pharmacy in 1996, the Company believes it meets the "significant portion" criteria and began recording a profit on billings for pharmacy services provided to Medicare eligible patients in Regency facilities. The Company believes it meets the "significant portion" criteria for its contract rehabilitation therapy operations provided by SCRS, and therefore has recorded a profit on billings to Regency facilities since the acquisition of SCRS. Medicare regulations do not define a "significant portion," therefore, the Company's and Medicare's interpretations could differ, which could result in retroactive adjustments related to the profit on billings to Regency facilities for pharmacy and contract rehabilitation services. In the recently enacted federal budget deficit reduction bill, various reimbursement rules and regulations were adopted by the federal government that pertain to the Company. The recently effective changes to regulations promulgated under OBRA, some of which expand the remedies available to enforce regulations mandating minimum healthcare standards, may have an adverse effect on the Company's operations. The Company is unable to predict the particular effect on the Company until the manner in which these regulations is implemented becomes known. Part II. Other Information Item 1. Legal Proceedings. None Item 6. Exhibits and Reports on Form 8-K. 1) The Company filed a current report on Form 8-K, dated February 15, 1996, which reported under Item 2 the acquisition of (i) 18 skilled long-term care facilities from Liberty Healthcare Limited Partnership, (ii) an enteral feeding business from Liberty Assisted Living Center Limited Partnership, and (iii) Executive Pharmacy Services, Inc. effective February 1, 1996. 2) The Company filed a Current Report on Form 8-K/A, dated April 12, 1996, which amended the Form 8-K dated February 15, 1996, and provided financial statements and exhibits required under Item 7. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REGENCY HEALTH SERVICES, INC. BRUCE D. BROUSSARD By:_____________________________________________________ Bruce D. Broussard Executive Vice President and Chief Financial Officer Date: June 24, 1996