1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-24260
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AMEDISYS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 11-3131700
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
11100 Mead Road, Suite 300, Baton Rouge, LA 70816
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(Address of principal executive offices including zip code)
(225) 292-2031
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(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [X] No [ ]
Number of shares of Common Stock outstanding as of March 31, 2001: 5,655,431
shares
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PART I.
FINANCIAL INFORMATION
<Table>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000........................... 3
Consolidated Statements of Operations for the Three Months Ended March 31, 2001 and 2000......... 4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000......... 5
Notes to Consolidated Financial Statements....................................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............ 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS...................................... 12
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................................................ 12
ITEM 2. CHANGES IN SECURITIES............................................................................ 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................................................. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................. 13
ITEM 5. OTHER INFORMATION................................................................................ 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................. 13
</Table>
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AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
(DOLLAR AMOUNTS IN 000'S)
<Table>
<Caption>
DECEMBER 31, 2001
MARCH 31, 2001* (RESTATED)
--------------- -----------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 12,209 $ 6,967
Accounts Receivable, Net of Allowance for Doubtful Accounts
of $1,987 in March 2001 and $1,385 in December 2000 3,154 6,628
Prepaid Expenses 217 196
Inventory and Other Current Assets 846 414
Current Assets Held for Sale 862 715
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Total Current Assets 17,288 14,920
Property and Equipment, net 3,096 2,935
Other Assets, net 20,468 20,426
Long-term Assets Held for Sale 611 689
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Total Assets $ 41,463 $ 38,970
=============== =================
CURRENT LIABILITIES:
Accounts Payable $ 1,445 $ 1,590
Accrued Expenses:
Payroll and Payroll Taxes 4,608 6,203
Insurance 887 708
Income Taxes 608 638
Other 4,108 3,925
Notes Payable 9,490 2,952
Notes Payable to Related Parties 10 10
Current Portion of Long-term Debt 3,197 3,379
Current Portion of Obligations under Capital Leases 354 385
Deferred Revenue 2,119 2,119
Current Liabilities Held for Sale 434 480
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Total Current Liabilities 27,260 22,389
Long-term Debt 9,389 9,343
Long-term Medicare Liabilities 3,636 6,053
Deferred Revenue 3,354 3,884
Obligations under Capital Leases 8 30
Other Long-term Liabilities 826 826
Long-term Liabilities Held for Sale 944 966
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Total Liabilities 45,417 43,491
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Minority Interest 30 --
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STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock 6 5
Preferred Stock (370,000 Shares in March 2001 and 390,000
Shares in December 2000) -- 1
Additional Paid-in Capital 15,249 14,096
Treasury Stock (4,667 Shares of Common Stock in
March 2001 and December 2000) (25) (25)
Retained Earnings (Deficit) (19,214) (18,598)
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Total Stockholders' Equity (Deficit) (3,984) (4,521)
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Total Liabilities and Stockholders' Equity $ 41,463 $ 38,970
=============== =================
</Table>
* As restated, see Note 2
The accompanying notes are an integral part of these statements.
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AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(UNAUDITED, IN 000'S, EXCEPT PER SHARE DATA)
<Table>
<Caption>
MARCH 31, 2001* MARCH 31, 2000
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Income:
Service revenue $ 22,171 $ 23,418
Cost of service revenue 9,766 11,361
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Gross margin 12,405 12,057
General and administrative expenses:
Salaries and benefits 6,643 7,864
Other 5,641 5,009
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Total general and administrative expenses 12,284 12,873
Operating income (loss) 121 (816)
Other income and expense:
Interest income 155 26
Interest expense (703) (621)
Other income, net 18 49
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Total other expense, net (530) (546)
Net income (loss) before income taxes
& discontinued operations (409) (1,362)
Income tax expense -- --
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Net income (loss) before discontinued operations (409) (1,362)
Income (loss) from discontinued operations,
net of income taxes (207) 70
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Net income (loss) $ (616) $ (1,292)
============== ==============
Basic weighted average common shares outstanding 5,492 3,203
Basic income (loss) per common share:
Net income (loss) before discontinued operations $ (0.07) $ (0.42)
Income (loss) from discontinued
operations, net of income taxes (0.04) 0.02
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Net income (loss) $ (0.11) $ (0.40)
============== ==============
</Table>
* As restated, see Note 2
The accompanying notes are an integral part of these statements.
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AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(UNAUDITED, DOLLAR AMOUNTS IN 000'S)
<Table>
<Caption>
FOR THE THREE MONTHS ENDED
MARCH 31, 2001* MARCH 31, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (616) $ (1,292)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 682 642
Provision for bad debts 702 587
Compensation expense 70 --
Deferred revenue (530) (530)
Changes in assets and liabilities: --
(Increase) decrease in cash included in assets held for sale (200) 108
(Increase) in accounts receivable 2,821 (404)
(Increase) in inventory and other current assets (449) (110)
(Increase) decrease in other assets 48 (225)
Increase (decrease) in accounts payable (145) 277
Increase in accrued expenses (311) 1,348
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Net cash provided by operating activities 2,072 401
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment -- 93
Purchase of property, plant and equipment (379) (38)
Minority interest investment in subsidiary 30 76
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Net cash provided (used) by investing activities (349) 131
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit agreements 6,539 (2,589)
Proceeds from issuance of notes payable -- 1,000
Payments on notes payable and capital leases (218) (582)
Cash used in purchase acquisitions (440) --
Increase (decrease) in long-term Medicare liabilities (2,417) 1,150
Accrued interest expense -- 331
Proceeds from issuance of stock 55 --
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Net cash provided (used) by financing activities 3,519 (690)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,242 (158)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,967 1,425
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,209 $ 1,267
============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 727 $ 325
============== ==============
Income taxes $ 266 $ --
============== ==============
</Table>
* As restated, see Note 2
The accompanying notes are an integral part of these statements.
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Amedisys, Inc., a Delaware corporation ("Amedisys" or "the Company"),
is a leading multi-state provider of home health care nursing services. The
Company operates fifty home care nursing offices, one ambulatory surgery center,
and one corporate office in the southern and southeastern United States.
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the Company's
financial position at March 31, 2001, the results of operations for the three
months ended March 31, 2001 and 2000, and cash flows for the three months ended
March 31, 2001 and 2000. The results of operations for the interim periods are
not necessarily indicative of results of operations for the entire year. These
interim consolidated financial statements should be read in conjunction with the
Company's annual financial statements and related notes in the Company's Form
10-K.
2. RESTATEMENT
The Company has restated the Consolidated Financial Statements for the
quarter ended March 31, 2001 due to a net revenue overstatement for the first
quarter of 2001. The Medicare reimbursement changes effective October 1, 2000
required substantial changes to the Company's software application, both from an
operational and an accounting perspective, including the recording of revenue
related to patients receiving therapy services. Under the changed reimbursement
system, if a patient, upon initial assessment by the nurse, is expected to
require ten or more therapy visits in an episode, the expected reimbursement for
that episode is increased ("therapy add-on"). If, upon completion of the
episode, the expected therapy utilization of ten or more visits was not met, the
provider is not entitled to the therapy add-on. The Company's software did not
detect differences between the initial nurse's assessment that called for ten or
more visits and the therapist's subsequent evaluation which indicated that fewer
than ten visits were necessary.
The Company has modified its software and has changed certain processes
to detect any discrepancies in assessed therapy need and to more closely monitor
the patient's progress as it relates to scheduled therapy services. In addition
to the revenue restatement, the Company has also reversed $900,000 in incentive
compensation for the quarter ended March 31, 2001.
The following table presents the impact of the restatement (in 000's,
except per share data):
<Table>
<Caption>
Quarter ended March 31, 2001
----------------------------
Amount
Previously
Reported* As Adjusted
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Statement of Operations:
Service Revenue $ 26,171 $ 22,171
Gross Margin 16,405 12,405
Salaries and Benefits 7,543 6,643
Total general and administrative expenses 13,184 12,284
Operating income (loss) 36 (2,564)
Net (loss) before income taxes, discontinued
operations, and extraordinary item 2,691 (409)
Income tax expense 267 --
Net Income 2,217 (616)
Basic income (loss) per common share 0.40 (0.11)
Balance Sheet:
Accounts Receivable, net 9,754 3,154
Current Assets 23,888 17,288
Total Assets 48,063 41,463
Retained Earnings (Deficit) (13,781) (19,214)
Total Liabilities and Stockholders' Equity 48,063 41,463
</Table>
* As reported in the Company's financial statements in its Quarterly Report on
Form 10-Q dated May 11, 2001.
3. REVENUE RECOGNITION
Prior to the implementation of the Medicare Prospective Payment System
("PPS") on October 1, 2000 reimbursement for home health care services to
patients covered by the Medicare program was based on reimbursement of allowable
costs subject to certain limits. Final reimbursement was determined after
submission of annual cost reports and audits thereof by the fiscal
intermediaries.
Under PPS, the Company is paid by Medicare based on episodes of care.
An episode of care is defined as a length of care up to sixty days with multiple
continuous episodes allowed. A standard episode payment has been established by
the Medicare Program at $2,115 per episode, to be adjusted by a case mix
adjuster consisting of eighty (80) home health resource groups ("HHRG") and the
applicable geographic wage index. The standard episode payment may be subject to
further individual adjustments due to low utilization, intervening events and
other factors. The episode payment will be made to providers regardless of the
cost to provide care. The services covered by the episode payment include all
disciplines of care, in addition to medical supplies, within the scope of the
home health benefit. Revenue is recognized for visits during the earnings period
at the expected payment amount.
4. EARNINGS PER SHARE
Basic net income (loss) per share of common stock is calculated by
dividing net income (loss) applicable to common stock by the weighted-average
number of shares outstanding during the period. Diluted net income (loss) per
share is not presented as stock options, stock warrants and convertible
securities outstanding (equivalent to 2,085,191 and 3,366,711 shares of common
stock at March 31, 2001 and 2000, respectively) during the periods presented
were not dilutive.
5. MEDICARE REIMBURSEMENT AND REFORM
The Company derived approximately 89% of its revenues from continuing
operations from the Medicare system for the three months ended March 31, 2001
and 92% for the three months ended March 31, 2000.
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As disclosed in Note 3, on June 28, 2000, HCFA issued the final rules
for PPS, which were effective for all Medicare-certified home health agencies on
October 1, 2000. The final regulations establish payments based on episodes of
care. An episode is defined as a length of care up to sixty days with multiple
continuous episodes allowed under the rule. A standard episode payment has been
established at $2,115 per episode for federal fiscal year 2001, to be adjusted
by a case mix adjuster consisting of eighty (80) home health resource groups
("HHRG") and the applicable geographic wage index. The standard episode payment
may be subject to further individual adjustments due to low utilization,
intervening events and other factors. Providers are allowed to make a request
for anticipated payment at the start of care equal to 60% of the expected
payment for the initial episode and 50% for each subsequent episode. The
remaining balance due to the provider is paid following the submission of the
final claim at the end of the episode. In contrast to the cost-based
reimbursement system whereby providers' reimbursement was limited, among other
things, to their actual costs, episode payments are made to providers regardless
of the cost to provide care, except with regard to certain outlier provisions.
As a result, home health agencies have the opportunity to be profitable under
this system.
In December 2000, Congress passed the Benefits Improvement and
Protection Act ("BIPA"), which provides additional funding to healthcare
providers. BIPA provided for the following: (i) a one-year delay in applying the
budgeted 15% reduction on payment limits, (ii) the restoration of a full home
health market basket update for episodes ended on or after April 1, 2001, and
before October 1, 2001 resulting in an expected increase in revenues of 2.2%,
(iii) a 10% increase, effective April 1, 2001 and extending for a period of
twenty four months, for home health services provided in a rural area, and (iv)
a one-time payment equal to two-months of periodic interim payments ("PIP").
6. ACQUISITION
Effective March 1, 2001, the Company acquired from Seton Health
Corporation of North Alabama certain assets and liabilities of Seton Home Health
Services, Inc. ("Seton") associated with their operations in Mobile and
Fairhope, Alabama. The assets acquired consisted primarily of all furniture,
fixtures, equipment (except computer equipment and printers) and leasehold
improvements; supplies; inventory; lists of present and former patients and
mailing lists; vendor lists; employee records; telephone numbers and listings;
intangibles and other rights and privileges; leasehold interest in the
locations; goodwill and going concern; rights under certain agreements; rights
under all contracts including capital leases and non-competition agreements;
licenses and permits relating to ownership, development and operations; and
rights under Medicare Provider Agreements. The liabilities assumed consisted of
accrued but unused vacation and obligations under capital and operating leases.
In consideration for the acquired assets and liabilities, the Company paid
$440,000 cash, which represents a purchase price of $475,000 less the value of
accrued vacation obligations.
7. DISCONTINUED OPERATIONS
During 1999, the Company changed its strategy from providing a variety
of alternate site provider health care services to becoming a leader in home
health care nursing services. Pursuant to this strategy, the Company launched a
restructuring plan to divest its non-home health care nursing divisions. The
Company sold five of its six surgery centers and sold or closed its four
infusion locations during 1999 and 2000.
The Company has one remaining outpatient surgery center yet to sell.
Generally, a plan to dispose of discontinued operations must be carried out over
a period not to exceed one year in order to continue to qualify for discontinued
operation accounting treatment. This remaining surgery center has been involved
in litigation outside of the Company's control, which prevented the Company from
completing a timely disposition. For this reason, the Company has continued to
reflect the outpatient surgery division as discontinued operations. The Company
expects that the remaining surgery center will be sold in 2001.
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Summarized financial information for the discontinued operations is as
follows (in 000's):
<Table>
<Caption>
For the three months
ended March 31
--------------------------
2001 2000
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Outpatient Surgery Division:
Service Revenue $ 538 $ 847
Income (Loss) from Discontinued
Operations before Provision for
Income Taxes (74) 394
Income (Loss) from Discontinued
Operations Net of Income Taxes (74) 394
Infusion Therapy Division:
Service Revenue $ -- $ 2,030
(Loss) from Discontinued Operations
before Provision for Income Taxes (133) (324)
(Loss) from Discontinued Operations
Net of Income Taxes (133) (324)
Total Discontinued Operations:
Service Revenue $ 538 $ 2,877
Income (Loss) from Discontinued
Operations before Provision for
Income Taxes (207) 70
Income (Loss) from Discontinued
Operations Net of Income Taxes (207) 70
</Table>
Included in the accompanying Consolidated Balance Sheets as of March
31, 2001 and December 31, 2000 are the following assets and liabilities relating
to the discontinued operations (in 000's):
<Table>
<Caption>
March 31, December 31,
2001 2000
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Cash $ 220 $ 20
Accounts Receivable 461 510
Prepaid Expenses 11 13
Inventory and Other Current Assets 170 172
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Current Assets Held for Sale $ 862 $ 715
========== ============
Property $ 603 $ 681
Other Assets 8 8
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Long-term Assets Held for Sale $ 611 $ 689
========== ============
</Table>
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<Table>
Accounts Payable $ 193 $ 190
Accrued Payroll 32 50
Accrued Other 9 34
Current Portion of Long-term Debt 192 192
Current Portion of Obligations under
Capital Leases 8 14
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Current Liabilities Held for Sale $ 434 $ 480
========== ============
Long-term Debt $ 944 $ 966
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Long-term Liabilities Held for Sale $ 944 $ 966
========== ============
</Table>
8. NOTES PAYABLE
Notes payable as of March 31, 2001 consists primarily of an asset-based
line of credit with availability, depending on collateral, of up to $25 million
with National Century Financial Enterprises, Inc. ("NCFE") and borrowings under
a revolving bank line of credit of up to $2.5 million. The $25 million
asset-based line of credit, which expires December, 2003, is collateralized by
eligible accounts receivable and as of March 31, 2001 and December 31, 2000, had
an outstanding balance of $9,490,000 and $2,952,000, respectively. Eligible
receivables are defined as receivables, exclusive of workers' compensation and
self-pay, that are aged less than 181 days. The effective interest rate on this
line of credit was 9.53% and 15.29% for the periods ended March 31, 2001 and
December 31, 2000, respectively. The revolving bank line of credit of $2.5
million bears interest at the Bank One Prime Floating Rate, which was 8.5% and
9.5% at March 31, 2001 and December 31, 2000, respectively. At March 31, 2001
and December 31, 2000, there were no amounts drawn on the line of credit.
9. LONG-TERM DEBT
Long-term debt consists primarily of a $9.7 million note payable to NPF
Capital, a $1.1 million note payable to Merrill Lynch, $1 million in notes
payable to individuals, a $900,000 note payable to CareSouth Home Health
Services, Inc. ("CareSouth"), an $876,000 note payable to Winter Haven Hospital,
and various other notes.
The $9.7 million note to NPF Capital is payable over a three year term
with interest only payments for a six month period ending June, 2001 and monthly
payments of principal and interest of $387,000 for the remainder of the term.
The Company makes monthly principal and interest payments of $25,000 on the
$900,000 note to CareSouth, which is due July, 2003 and monthly principal and
interest payments of $30,000 on the $876,000 note to Winter Haven Hospital. The
notes payable to individuals of $1 million bear interest, payable monthly at
13%, with four equal monthly principal payments beginning in April, 2001. In
connection with the issuance of the notes payable to the individuals, 20,000
warrants were also issued (exercise price of $4.00 per share). These warrants
have not been recorded in the financial statements as the value has been deemed
by management to be immaterial.
The Company makes monthly principal and interest payments of $27,000 on
the $1.1 million note to Merrill Lynch, which is secured by equipment located at
one surgery center and is due in April, 2002. Due to the anticipated divestiture
of the outpatient surgery division, this note is classified as Held for Sale in
the Consolidated Balance Sheets.
10. AMOUNTS DUE TO AND DUE FROM MEDICARE
Prior to the implementation of PPS, the Company recorded Medicare
revenues at the lower of actual costs, the per visit cost limit, or a per
beneficiary cost limit on an individual provider basis in accordance with
established guidelines. As of March 31, 2001, the Company estimates an aggregate
payable to Medicare of $19 million resulting from interim cash receipts in
excess of expected reimbursement. In the accompanying Consolidated Balance Sheet
as of March 31, 2001, the amounts due to Medicare within one year of $15.4
million are netted against accounts receivable. The amount payable to Medicare
in excess of one year of $3.6 million is shown as Long-term Medicare
Liabilities. Of the $15.4 million netted against accounts receivable, $7.4
million is attributed to a provision in BIPA whereby a lump-sum
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payment equal to two months of PIP was issued to providers. Upon completion of
the annual cost reports, the Company will request extended repayment plans for
these payments. There can be no assurances, however, that the extended repayment
plans will be accepted. Also included in the $15.4 million is a $3.2 million
overpayment relating to Alliance Home Health, a wholly-owned subsidiary of the
Company which filed for bankruptcy protection on September 29, 2000.
11. CAPITAL STOCK
In accordance with the terms of conversion of the Company's Series A
Preferred Stock as stated in the Series A Preferred Stock Conversion Agreement,
eight preferred shareholders converted a total of 360,000 preferred shares into
1,200,000 common shares during 2000. During the first quarter of 2001, two
additional preferred shareholders converted a total of 20,000 preferred shares
into 66,667 common shares. The conversion rate for the preferred shares was
$3.33.
12. SUBSEQUENT EVENT
Effective April 6, 2001, the Company acquired, through its wholly-owned
subsidiary Amedisys Home Health, Inc. of Alabama, certain additional assets and
liabilities of Seton Home Health Services, Inc. ("Seton") from Seton Health
Corporation of North Alabama associated with their operations in Birmingham,
Tuscaloosa, Anniston, Greensboro, and Reform, Alabama. The assets acquired
consisted primarily of all furniture, fixtures, equipment (except computer
equipment and printers) and leasehold improvements; supplies; inventory; lists
of present and former patients and mailing lists; vendor lists; employee
records; telephone numbers and listings; intangibles and other rights and
privileges; leasehold interest in four of the five locations; goodwill and going
concern; rights under certain agreements; rights under all contracts including
capital leases and non-competition agreements; licenses and permits relating to
ownership, development and operations; and rights under Medicare Provider
Agreements. The liabilities assumed consisted of estimated accrued but unused
vacation and obligations under capital and operating leases. In consideration
for the acquired assets and liabilities, the Company paid $2,216,000 cash, which
represents a purchase price of $2,325,000 less the estimated value of accrued
vacation obligations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto (the "Notes") appearing in Item 1 and the Consolidated Financial
Statements for 2000, Notes, and the related Management's Discussion and
Analysis as amended and restated in Form 10-K/A.
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GENERAL
Amedisys is a leading multi-regional provider of home health care
nursing services. The Company operates fifty home care nursing offices, one
ambulatory surgery center, and one corporate office in the southern and
southeastern United States.
During 1999, the Company changed its strategy from providing a variety
of alternate site provider health care services to becoming a leader in home
health care nursing services. Pursuant to this strategy, the Company launched a
restructuring plan to divest its non-home health care nursing divisions. The
Company sold five of its six surgery centers and sold or closed its four
infusion locations during 1999 and 2000 and expects to divest the one remaining
surgery center during 2001.
The Company has systematically reduced its operating costs since 1998 in
preparation for PPS. Significant cost reduction measures undertaken by the
Company included the consolidation/closure of offices which overlapped service
areas, converting its method of nurse pay to a variable or per visit rate rather
than a fixed or salary system, utilizing economies of scale, and reducing
corporate overhead when possible. Business functions that are not considered
part of the core business have been outsourced and management levels have been
streamlined.
The Company has positioned its operations to be successful under PPS.
The Company has implemented Disease State Management programs and clinical
protocols as well as supporting technology to monitor and report outcome data,
to standardize care, and to ensure quality outcomes. Using clinical managers to
assess and track patient progress and highly skilled nurses to deliver care are
also important components of the overall strategy.
RESULTS OF OPERATIONS
The Company has restated the Consolidated Financial Statements for the
three months ended March 31, 2001 due to a net revenue overstatement for the
first quarter of 2001 as discussed in Note 2 of the Consolidated Financial
Statements.
Revenues. Net revenues decreased $1,247,000 or 5% for the three months
ended March 31, 2001 as compared to the same period in 2000. This decrease is
primarily attributed to a decrease in patient visits of 111,251 or 35% from
319,484 for the first quarter of 2000 to 208,233 for the first quarter of 2001,
offset by changes in the Medicare reimbursement system that were effective
October 1, 2000.
Cost of Revenues. Cost of revenues decreased 14% for the three months
ended March 31, 2001 as compared to the same period in 2000. This decrease is
primarily attributed to a decrease in patient visits of 111,251 or 35% from
319,484 for the first quarter of 2000 to 208,233 for the first quarter of 2001.
Visits have decreased from the prior year period primarily due to the
implementation of Disease State Management Programs ("DSM") during 2000. These
DSM programs are diagnosis-specific treatment protocols implemented in every
agency, which provide for standardized treatment plans for patients to reach a
quality outcome in the most efficient manner possible.
General and Administrative Expenses ("G&A"). G&A decreased $589,000 or
5% for the three months ended March 31, 2001 as compared to the same period in
2000. This decrease is primarily attributed to a decrease in incentive
compensation expense of $623,000 and a decrease in corporate office salaries and
benefits of $385,000, offset by a one-time write off of accounts receivable of
$502,000.
Other Income and Expenses. Other expenses, net decreased $16,000 or 3%
from $546,000 for the three months ended March 31, 2000 to $530,000 for the
three months ended March 31, 2001.
Discontinued Operations. Loss from discontinued operations, net of
income taxes, was $207,000 for the three months ended March 31, 2001 as compared
to income of $70,000 for the three months ended March 31, 2000. As of March 31,
2001, the Company only has one remaining surgery center to divest whereas at
March 31, 2000, the Company had three surgery centers and four infusion therapy
locations reflected as discontinued operations.
FINANCIAL CONDITION
The Company recorded operating losses and had negative cash flow for
the year ended December 31, 1999 and the first three quarters of 2000, during
which time its operations were primarily funded by the divestiture of certain
non-core assets. The significant losses and negative cash flow from operations
were largely attributable to the prior Medicare reimbursement system which was
effective January 1, 1998 for the Company. In the fourth quarter of 2000 and the
first quarter of 2001, the Company reported positive cash flow and a decrease in
operating losses, primarily as a result of the implementation of PPS on October
1, 2000. The Company expects positive cash flow from operations
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will continue and the Company will be able to fund operations primarily from
this source.
For a description of Notes Payable and Long-term Debt, see Notes 8 and
9. For a discussion of Amounts Due Medicare, see Note 10.
The Company's operating activities provided $2.1 million in cash during
the three months ended March 31, 2001, whereas such activities provided $401,000
in cash during the three months ended March 31, 2000. Cash provided by operating
activities in 2001 is primarily attributable to changes in assets and
liabilities of $1.8 million, and net non-cash items such as depreciation and
amortization of $924,000, offset by a net loss of ($616,000). Investing
activities used $349,000 for the three months ended March 31, 2001, whereas such
activities provided $131,000 for the three months ended March 31, 2000. Cash
used by investing activities in 2001 is primarily attributed to the purchase of
property, plant and equipment of $379,000. Financing activities provided cash
during 2001 of $3.5 million, whereas such activities used $690,000 during 2000.
Cash provided by financing activities in 2001 is primarily attributed to
borrowings on line of credit agreements of $6.5 million offset by payments on
notes payable and capital leases of $218,000, cash used in purchase acquisitions
of $440,000, and a decrease in long-term Medicare liabilities of $2.4 million.
The Company does not believe that inflation has had a material effect
on its results of operations for the three month period ended March 31, 2001.
FORWARD LOOKING STATEMENTS
When included in the Quarterly Report on Form 10-Q or in documents
incorporated herein by reference, the words "expects", "intends", "anticipates",
"believes", "estimates", and analogous expressions are intended to identify
forward-looking statements. Such statements inherently are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, current cash flows and operating
deficits, debt service needs, adverse changes in federal and state laws relating
to the health care industry, competition, regulatory initiatives and compliance
with governmental regulations, customer preferences and various other matters,
many of which are beyond the Company's control. These forward-looking statements
speak only as of the date of the Quarterly Report on Form 10-Q. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or any changes in the Company's expectations with regard thereto or any
changes in events, conditions or circumstances on which any statement is based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company does not engage in derivative financial instruments, other
financial instruments, or derivative commodity instruments for speculative or
trading/non-trading purposes.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material developments have occurred on the legal proceedings last
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
ITEM 2. CHANGES IN SECURITIES
In accordance with the terms of conversion of the Company's Series A
Preferred Stock as stated in the Series A Preferred Stock Conversion Agreement,
during the first quarter of 2001, two preferred shareholders converted a total
of 20,000 preferred shares into 66,667 common shares. The conversion was exempt
under Section 3(a)(9) of the Securities Act of 1933.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Identification of Exhibit
- -------- -------------------------
3.1(1) - Certificate of Incorporation
3.2(5) - Bylaws
4.1(1) - Certificate of Designation for the Series A Preferred Stock
4.2(2) - Common Stock Specimen
4.3(2) - Preferred Stock Specimen
4.4(2) - Form of Placement Agent's Warrant Agreement
4.5(3) - Series A Preferred Stock Conversion Agreement Specimen
4.6(3) - Certificate of Amendment of Certificate of Designation
Specimen
4.7(4) - Shareholder Rights Agreement
10.12(5) - Directors' Stock Option Plan
21.1(2) - List of Subsidiaries
- ----------
(1) Previously filed as an exhibit to the Annual Report on Form 10-KSB for
the year ended December 31, 1994.
(2) Previously filed as an exhibit to the Registration Statement on Form
S-3 dated March 11, 1998.
(3) Previously filed as an exhibit to the Quarterly Report on Form 10-Q/A
for the period ended June 30, 1999.
(4) Previously filed as an exhibit to the Current Report on Form 8-K dated
June 16, 2000 and the Registration Statement on Form 8-A dated June 16,
2000.
(5) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for
the period ended March 31, 2001.
----------
(b) Report on Form 8-K
On January 3, 2001, the Company filed a Current Report on Form 8-K with
the Securities and Exchange Commission ("SEC") attaching a press release that
announced the sale effective December 1, 2000 of its interest in East Houston
Surgery Center, Ltd. to East Houston Physician Surgical Services, Ltd, L.P.
On January 16, 2001, the Company filed a report on Form 8-K with the
SEC describing a loan agreement with NPF Capital, Inc. ("NPF") for a principal
sum of up to $11,725,000. At execution, NPF paid $9,000,000 directly to HCA, The
Healthcare Company f/k/a Columbia HCA Healthcare Corp. ("HCA") for the benefit
of the Company. The Company also financed $725,000 of debt issue costs under
this agreement with the remaining unfunded portion of $2,000,000 available for
future acquisitions. Simultaneously, Amedisys entered into a Termination
Agreement with HCA relating to the note payable ("HCA Note") which resulted from
the acquisition of home health agencies from HCA during the latter part of 1998.
The HCA Note, which carried a balance (including accrued interest) of $16.6
million at September 30, 2000, was terminated effective October 1, 2000 for a
cash payment of $9,000,000 and the execution of a warrant agreement that allows
HCA to purchase up to 200,000 shares of Amedisys' Common Stock, subject to
certain conditions. As a result of these transactions, the Company recorded a
pre-tax extraordinary gain of $6.5 million in the fourth quarter of 2000.
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On February 26, 2001, the Company filed a Current Report on Form 8-K
with the SEC attaching a press release that announced that the Company would
release quarter and year ended December 31, 2000 operating results on March 1,
2001 and would also host a conference call at 4:15 p.m. EST on the same day.
On March 1, 2001, the Company filed a Current Report on Form 8-K with
the SEC attaching a press release that announced quarter and year ended December
31, 2000 operating results.
SIGNATURES
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 hereunto duly authorized.
AMEDISYS, INC.
By: /s/ John M. Joffrion
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John M. Joffrion
Senior Vice President of Finance
Principal Accounting and Financial Officer
DATE: August 17, 2001
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