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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM 8-K
Current Report Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 27, 1998
Home Health Corporation of America, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation)
0-26938 23-2224800
(Commission file number) (I.R.S. Employer Identification No.)
2200 Renaissance Boulevard, Suite 300, King of Prussia, Pennsylvania 19406
(Address of principal executive offices) (Zip Code)
(610) 272-1717
(Registrant's telephone number, including area code)
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Item 5. Other Events
On March 27, 1998, Home Health Corporation of America, Inc. (the "Company")
announced an update of its restructuring and cost reduction initiatives. A
copy of the press release setting forth the Company's announcement is filed
as an exhibit to this current report on Form 8-K.
Item 7. Financial Statements and Exhibits
The following exhibit is being filed as part of this report:
99 Press Release issued March 27, 1998 announcing update with respect
to the Company's restructuring and cost reduction initiatives.
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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.
Home Health Corporation of America, Inc.
(Registrant)
By:
Bruce J. Feldman, President and
Chief Executive Officer
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Exhibit Index
99 Press Release issued March 27, 1998 announcing update with respect to
the Company's restructuring and cost reduction initiatives.
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FOR IMMEDIATE RELEASE Contact: Bruce Feldman
Chief Executive Officer
(610) 272-1717
HHCA UPDATES STATUS OF RESTRUCTURING AND IMPLEMENTATION OF COST REDUCTION
INITIATIVES
KING OF PRUSSIA, PA - March 27, 1998 - Home Health Corporation of America,
Inc., (NASDAQ/NMS: HHCA) one of the nation's largest comprehensive homecare
providers, today announced an update of its restructuring and cost reduction
initiatives.
On February 10, 1998, the Company announced certain proactive steps it was
taking to reduce costs and better position the Company for success under the
newly enacted Medicare Interim Payment System (IPS) and reductions in
Medicare oxygen reimbursement. Specifically, the Company closed certain
offices and reduced administrative personnel resulting in approximately $4.0
million in annual reductions in operating costs. As stated on February 10,
1998, management expects the completion of these initiatives by the end of the
fiscal 1998 third quarter.
"The management of HHCA continues to demonstrate their commitment to
improving systems and procedures which will transition the Company to more
effectively manage the impact of the changing reimbursement environment and
challenges specific to the home health care industry. We are continuing to
review our operations and take the appropriate action to create a company
that is more efficient and capable of maintaining long-term growth," stated
Bruce Feldman, President and CEO. "In evaluating our operations and leveraging
economics of scale, management has decided to consolidate into two large
regions from the five regions we currently operate, which is expected to
result in between $3.0 to $4.0 million in additional annual cost reductions.
Additionally, the Company has completed its previously announced review of
caregiver expenses and developed initiatives which are expected to generate
between $1.0 to $2.0 million in additional annual cost reductions."
These additional cost cutting measures are expected to be implemented during
the Company's fiscal 1998 fourth quarter and fiscal 1999 first quarter. At
least half of these cost reductions are expected to impact the Company's
Medicare cost-reimbursed nursing agencies and reduce the Company's exposure
to IPS. As a result of the consolidation of the five regions, the Company
expects to record charges during the third and fourth quarters of fiscal 1998
for employee severance and lease termination costs.
These strategic decisions are expected to result in a decrease in aggregate
net revenues for the two remaining fiscal 1998 quarters. This expected
decrease is principally due to the cost reductions affecting the Company's
Medicare cost-reimbursed nursing agencies and selective cessation of certain
managed care contracts. It is anticipated that the Company will report an
aggregate loss of between $0.07 to $0.12 for the two remaining fiscal 1998
quarters, excluding the expected additional restructuring charges. Factors
expected to affect the operating results for these two fiscal quarters
include an expected loss in the Company's Texas Medicare cost-reimbursed
nursing agency due to implementation of IPS effective January 1, 1998 and the
impact of the reduction in Medicare oxygen reimbursement effective January
1, 1998. Following the transition period in the last half of fiscal 1998,
the Company expects to return to profitability in fiscal 1999 at a level
comparable with the expected aggregate fiscal 1998 results before
nonrecurring charges.
"Management believes that the consolidation of the operating regions and
reduction in caregiver expenses during the remainder of fiscal 1998 and
first quarter of 1999 should enable HHCA to continue to proactively respond to
IPS and the reduction in Medicare reimbursement for oxygen services," stated
Bruce Feldman. "As well as continue to position the Company as a lower cost
provider under the Medicare prospective payment system that is scheduled to be
implemented October 1, 1999. The Company believes that by the beginning of
fiscal 1999, we will be well positioned under the changing reimbursement
environment and able to continue to grow with the lower cost structure and
enhanced sales and marketing efforts currently being implemented."
Home Health Corporation is a leading provider of comprehensive home health
care services and products, delivering nursing and related patient services,
respiratory therapy services, infusion therapy services and durable medical
equipment. The Company currently owns and operates 57 branch locations in
Pennsylvania, New Jersey, Delaware, Maryland, Florida, New Hampshire,
Massachusetts, Illinois and Texas.
All statements, other than statements of historical facts, included in this
news release, including the Company's ability to achieve significant expected
cost savings or synergies from the closing or consolidation of offices and
other restructuring efforts, and the plans, objectives and expectations of
management for future operating results, are forward-looking statements.
These forward-looking statements are based on the Company's current
expectations. Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, there can be no assurance
that such expectations will prove to be correct. Because forward-looking
statements involve risks and uncertainties, the Company's actual results
could differ materially. The potential risks and uncertainties which could
cause actual results to differ materially could include the Company's ability
to achieve the significant expected cost savings described in this release
without negatively impacting operations; the impact of further changes in
the Medicare reimbursement system, including the ultimate implementation of
a prospective payment system; government regulation; health care reform;
pricing pressures from third-party payors, including managed care
organizations; retroactive Medicare audit adjustments; and changes in laws and
interpretations of laws relating to the health care industry. For a more
complete discussion regarding these and other factors which could affect the
Company's financial performance, refer to the Company's Securities and
Exchange Commission filings, in particular the information under the headings
"Business" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The Company disclaims any intent or obligation
to update its forward-looking statements.
