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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.20549
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FORM 10-Q
(Mark one)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 0R 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 0-17292
ACCUHEALTH, INC.
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(Exact name of registrant as specified in its charter)
New York 13-3176233
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Ridge Hill
Yonkers, New York 10710
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 964-6700
Indicate by check mark (X) whether the registrant 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at November 6, 2000
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Common stock, par value $.01 per share 4,989,503 Shares
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PART I. FINANCIAL INFORMATION
Page No.
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Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at
September 30, 2000 and March 31, 2000..........................3
Condensed Consolidated Statements of Operations
and for the three and six months ended
September 30, 2000 and 1999....................................4
Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 2000 and 1999...........5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................6-8
Item 3 Quantitative and Qualitative Disclosures About Market
Risk Not Applicable............................................8
SIGNATURES...................................................................8
2
ACCUHEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
September 30, March 31,
2000 2000
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ASSETS
Current Assets:
Cash ............................................................. $ 8 $ 6
Accounts receivable, net ........................................ 7,264 11,676
Inventories ...................................................... 140 579
Prepaid expenses and other current assets ........................ 212 156
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Total Current Assets ............................................. 7,624 12,417
Revenue producing equipment, net ...................................... -- 558
Fixed assets, net ..................................................... 962 1,191
Other ................................................................. 124 184
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Total Assets ..................................................... $ 8,710 $ 14,350
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Notes payable - revolving credit facility ........................ $ 5,415 $ 7,545
Current portion of notes payable - other ......................... 1,328 1,400
Current portion of notes payable-term loan ....................... 188 192
Accounts payable ................................................. 3,171 3,714
Accrued expenses and other current liabilities ................... 4,331 3,030
Current portion of other capital lease obligations ............... 337 333
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Total Current Liabilities .......................................... 14,770 16,214
12% Subordinated Debentures ........................................... 6,250 6,250
Notes payable - term loan ............................................. -- 462
Notes payable - other, less current portion ........................... 3,281 3,287
Other capital lease obligations, less current portion ................. 50 141
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Total Liabilities .................................................. 24,351 26,354
Stockholders' Deficiency:
Preferred Stock, $.01 par value: authorized 3,650,000 shares; no
shares issued and outstanding
Preferred stock, $.01par value;6% cumulative convertible, $223 and
liquidation preference, authorized 1,350,000 shares; issued and
outstanding 105,000 shares ....................................... 1 1
Common stock $0.1 par value; authorized 15,000,000 shares; 5,297,507
and 5,268,709 shares issued and outstanding, respectively 53 52
Additional paid-in capital ......................................... 7,634 7,628
Accumulated deficit ................................................ (22,705) (19,061)
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(15,017) (11,380)
Less treasury stock (308,004 shares) at cost ....................... (624) (624)
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Total Stockholders' Deficiency ........................................ (15,641) (12,004)
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Total Liabilities and Stockholders' Deficiency ........................ $ 8,710 $ 14,350
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3
ACCUHEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
September 30, September 30,
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2000 1999 2000 1999
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Net sales ................................................... $ 3,121 $ 9,164 $ 8,378 $ 18,111
Cost of goods sold .......................................... 1,958 6,895 5,593 12,517
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Gross Profit ................................................ 1,163 2,269 2,785 5,594
Selling, general and administrative expenses ................ 2,968 3,703 5,387 6,730
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Operating loss ............................................. (1,805) (1,434) (2,602) (1,136)
Interest expense ............................................ 542 563 1,036 1,050
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Net loss .................................................... $ (2,347) $ (1,997) $ (3,638) (2,186)
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Net loss per common share applicable to common shareholders:
Basic ................................................... $ (.47) $ (.39) $ (.73) $ (.43)
Diluted ................................................. $ (.47) $ (.39) $ (.73) $ (.43)
Weighted number of common shares and equivalents outstanding:
Basic ................................................... 4,989,503 5,136,754 4,979,904 5,133,684
Diluted ................................................. 4,989,503 5,136,754 4,979,904 5,133,684
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ACCUHEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Six Months Ended
September 30,
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2000 1999
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OPERATING ACTIVITIES
Net loss .................................................. $ (3,638) $ (2,186)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization ........................ 230 163
Changes in operating assets and liabilities:
Accounts receivable .................................. 4,412 (643)
Inventories .......................................... 439 212
Prepaid expenses and other current assets ............ (56) 29
Other assets ......................................... 60 (78)
Accounts payable ..................................... (543) 714
Accrued expenses and other current liabilities ....... 1,301 129
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Cash provided by (used in) operating activities ........... 2,205 (1,660)
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INVESTING ACTIVITIES
Sale (purchase) of fixed assets ........................... 558 (486)
Proceeds from sales of marketable securities .............. -- 1,095
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Cash provided by investing activities ..................... 558 609
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FINANCING ACTIVITIES
Proceeds (repayments) - revolving credit facility note, net (2,130) 1,325
Repayments notes payable - other .......................... (78) (224)
Repayments on term loan ................................... (466) --
Principal payments on capital lease - Facility ............ -- 16
Payments on other capital lease obligations ............... (87) (103)
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Cash provided by (used in) financing activities ........... (2,761) 1,014
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Net increase (decrease) in cash ........................... 2 (37)
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Cash at beginning of period ............................... 6 85
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Cash at end of period ..................................... 8 $ 48
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid ............................................. 560 $ 632
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NONCASH INVESTING AND FINANCING ACTIVITIES:
Accrued dividends on redeemable preferred stock ........... $ 6 $ 6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This Management's Discussion and Analysis should be read in conjunction with the
condensed consolidated financial statements of the Company included elsewhere in
this Form 10-Q.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
NET REVENUES. Net revenues decreased approximately $6 million or 66% from the
comparable 1999 quarter to approximately $3.1 million for the three months ended
September 30, 2000. The decrease was primarily the result of decreases in the
Company's institutional pharmacy business and decreases in the sale and rental
of durable medical equipment (DME). In May 2000 the DME business was sold and in
August 2000 the Company ceased its institutional pharmacy business.
GROSS PROFIT. Gross profit for the three months ended September 30, 2000 and
1999 was approximately $1.2 and $2.3 million, respectively, representing
approximately 37% of net sales for the three months ended September 30, 2000 as
compared to 25% for the comparable prior year period. Gross profit increased
primarily as a result of the mix of revenues. The lower profit margin businesses
were either closed or sold resulting in the remaining infusion therapy and home
health aid revenues generating margins that were higher as compared to the
comparable prior year period which contained lower margin services.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $2.9 and $3.7 million or
approximately 95% and 41% of net sales for the three months ended September 30,
2000 and 1999, respectively. There was a decrease primarily due to a reduction
in compensation of $1.3 million offset by an increase in bad debt expense of
$600,000.
INTEREST EXPENSE. Interest decreased by $21,000 for the three months ended
September 30, 2000, to approximately $542,000. This decrease was due to
decreased net borrowings under our revolving line of credit offset by additional
interest accrued on unpaid interest on the subordinated debentures, per the
terms of the agreement.
PROVISION FOR INCOME TAXES. No provision of income taxes has been reflected due
to the Company's federal and state net operating loss credits.
SIX MONTHS ENDED SEPTEMBER 30, 2000
NET REVENUES. Net revenues decreased approximately $9.7 million or 54% from the
comparable 1999 period to approximately $8.4 million for the six months ended
September 30, 2000. The decrease was primarily was primarily the result of
decreases in the Company's institutional pharmacy business and decreases in the
sale and rental of durable medical equipment(DME). In May 2000 the DME business
was sold and in August 2000 the Company ceased its institutional pharmacy
business. In addition the ceasing of doing business with companies who were not
paying according to terms further accounted for the decrease in sales.
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GROSS PROFIT. Gross profit for the six months ended September 30, 2000 and 1999
was approximately $2.8 and $5.6 million, respectively, representing
approximately 33% of net sales for the six months ended September 30, 2000 as
compared to 31% for the comparable prior year period. Gross profit increased
primarily due to a better mix of services. The Company's ceasing business in the
durable medical equipment business and institutional pharmacy business enabled
the Company to focus its revenue production in the infusion therapies and home
health aid businesses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $5.4 and $6.7 million or
approximately 64% and 38% of net sales for the six months ended September 30,
2000 and 1999, respectively. The decrease was due to decrease in compensation of
$1.8 million offset by an increase in the bad debt expense of $500,000.
INTEREST EXPENSE. Interest expenses decreased by $14,000 for the six months
ended September 30, 2000, to approximately $1,036,000. This decrease was
primarily due to decreased net borrowings under our revolving line of credit and
additional interest on the unpaid interest of the subordinated debentures per
the terms of the agreement.
PROVISION FOR INCOME TAXES. No provision of income taxes has been reflected due
to the Company's federal and state net operation loss credits.
FINANCIAL CONDITION
As of September 30, 2000, the Company had negative working capital of
approximately $7,146,000.
The Company's cash provided by financing activities of approximately $1 million
was primarily attributable to the net proceeds of approximately $1.4 million
under the Company's revolving credit facility and term loan offset by principal
payments on capital leases and other notes payable.
Accounts receivable includes amounts due from third party customers, primarily
governmental agencies (Medicare and Medicaid). At September 30, 2000, gross
Medicare and Medicaid receivables aggregated approximately $3.1 million.
In addition to the continuing losses, the Company operates under cash flow
pressure due to the difficulty in collecting its accounts receivable. The need
for additional capital is critical to the ongoing operations of the Company. The
Company's lender under the revolving loan has agreed to extend credit until
November 17, 2000 and will consider further extension if additional capital is
committed to the Company. Management is still in the process of exploring
financing alternatives with its suppliers and investors.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information in Items 1 and 2 of Part I
of this Form 10-Q includes information that is forward looking, such as the
Company's plans to convert accounts payable to notes payable. The matters
referred to in forward-looking statements could be affected by the risks and
uncertainties involved in the Company's business. These risks and uncertainties
include, but are not limited to; the effect of economic and market conditions,
the impact of the cost containment efforts of third-party customers and the
Company's ability to obtain and maintain required licenses. Subsequent written
and oral forward looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements in this paragraph and elsewhere in this Form 10-Q
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ACCUHEALTH, INC.
Date: November 17, 2000 /s/ GLENN C. DAVIS
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Glenn C. Davis as
President and Chief Executive Officer
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