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EXHIBIT 99.1
MAGELLA HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, 2001
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(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents ..................... $ 997
Accounts receivable, net ...................... 11,867
Prepaid expenses .............................. 1,032
Deferred income taxes ......................... 5,673
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Total current assets ...................... 19,569
Property and equipment, net ........................ 4,029
Goodwill and other assets, net ..................... 101,669
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Total assets .............................. $125,267
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit ................................ $ 26,600
Current portion of capital lease obligations .. 224
Current portion of long-term debt ............. 8,250
Accounts payable and accrued expenses ......... 4,772
Income taxes payable .......................... 2,658
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Total current liabilities ................. 42,504
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Long term debt ..................................... 15,238
Deferred income taxes .............................. 1,628
Capital lease obligations .......................... 364
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Total liabilities ......................... 59,734
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Commitments and contingencies
Series A convertible preferred stock ............... 42
Additional paid-in capital ......................... 41,739
Shareholders' equity:
Common stock .................................. 446
Additional paid-in capital .................... 17,492
Retained earnings ............................. 5,814
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Total shareholders' equity ................ 23,752
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Total liabilities and shareholders' equity $125,267
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The accompanying notes are an integral part of
these condensed consolidated financial statements
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MAGELLA HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2001 2000
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(IN THOUSANDS)
Net patient service revenue .................................... $23,507 $17,977
Operating expenses:
Salaries and benefits ....................................... 13,808 10,780
Supplies and other operating expenses ....................... 2,010 1,708
Depreciation and amortization ............................... 1,683 1,526
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Total operating expenses .............................. 17,501 14,014
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Income from operations ................................ 6,006 3,963
Interest expense, net .......................................... 840 886
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Income before income taxes ............................ 5,166 3,077
Income tax provision ........................................... 2,170 1,292
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Net income ................................................ $ 2,996 $ 1,785
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The accompanying notes are an integral part of
these condensed consolidated financial statements
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MAGELLA HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
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2001 2000
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(IN THOUSANDS)
Cash flows from operating activities:
Net income ............................................................... $ 2,996 $ 1,785
Adjustments to reconcile net income to net cash provided from
operating activities:
Depreciation and amortization ........................................ 1,683 1,526
Debt issuance amortization ........................................... 40 37
Changes in assets and liabilities:
Accounts receivable ............................................. 1,317 212
Prepaid expenses and other current assets ....................... (648) 90
Accounts payable and accrued expenses ........................... (2,881) (1,118)
Income taxes payable ........................................... 1,074 683
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Net cash provided from operating activities ................. 3,581 3,215
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Cash flows from investing activities:
Physician group acquisition payments ..................................... (3,350) (7,120)
Purchase of property and equipment ....................................... (448) (334)
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Net cash used in investing activities ....................... (3,798) (7,454)
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Cash flows from financing activities:
Redemption of common stock from stockholder .............................. -- (788)
Proceeds from long-term debt ............................................. 12,400 6,900
Payments on long-term debt ............................................... (11,100) (1,528)
Payments of capital lease obligations .................................... (86) (85)
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Net cash provided from financing activities ................. 1,214 4,499
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Net increase in cash and cash equivalents ..................................... 997 260
Cash and cash equivalents at beginning of period .............................. -- 478
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Cash and cash equivalents at end of period .................................... $ 997 $ 738
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The accompanying notes are an integral part of
these condensed consolidated financial statements
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MAGELLA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements
of MAGELLA Healthcare Corporation (the "Company" or "Magella")
presented herein do not include all disclosures required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the results of interim periods.
The results of operations for the three months ended March 31, 2001 are
not necessarily indicative of the results of operations to be expected
for the year ended December 31, 2001.
2. BUSINESS ACQUISITIONS:
In January 2001, the Company completed the acquisition of a neonatology
group practice. Total consideration and related costs for this
acquisition approximated $4.5 million, consisting of $3.2 million in
cash and $1.3 million in convertible subordinated notes.
The Company accounts for acquisitions using the purchase method of
accounting and the excess of cost over fair value of net assets
acquired is amortized on a straight-line basis over 25 years. The
results of operations of acquired practices have been included in the
consolidated financial statements from the dates of acquisition.
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
MARCH 31,
2001
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(IN THOUSANDS)
Accounts payable ................. $ 790
Accrued salaries and bonuses ..... 1,136
Accrued payroll taxes and benefits 1,279
Other accrued expenses ........... 1,567
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$4,772
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4. CONVERTIBLE SUBORDINATED NOTES
In January 2001, the Company retired $1.6 million of 6% convertible
subordinated notes which were initially due on December 31, 2003.
5. SUBSEQUENT EVENTS
On May 8, 2001, holders of $5 million of 3% convertible subordinated
notes elected to convert their notes into 5 million shares of Magella
common stock.
On May 14, 2001 the Company accelerated the vesting of all outstanding
stock options. As a result the Company incurred compensation expense
of approximately $12 million.
On May 15, 2001, the Company completed its merger with Pediatrix
Medical Group, Inc. ("Pediatrix") which was previously announced on
February 15, 2001.
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MAGELLA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
Under the terms of the merger agreement, Pediatrix issued approximately
7.3 million shares of Pediatrix common stock in exchange for all
outstanding shares of Maqella capital stock (including shares of
Magella non-voting common stock that were issued upon the exercise
immediately prior to the merger of substantially all outstanding
warrants of Magella), and assumed certain obligations to issue up to
1.39 million shares of Pediatrix common stock pursuant to Magella stock
option plans. Pediatrix also guaranteed approximately $16.0 million of
Magella's convertible subordinated notes which are convertible into
approximately 600,000 shares of Pediatrix common stock.
Additionally, Pediatrix repaid approximately $23.5 million of Magella's
bank debt and approximately $2,446,000 of Magella's convertible
subordinated notes in connection with the merger.
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