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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): February 2, 1999
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 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On February 2, 1999, Home Health Corporation of America, Inc. (the
"Company") received notification from PricewaterhouseCoopers LLP, the
Company's independent accountant, that they were resigning as independent
accountant for the Company. The following information is provided in
connection therewith:
A. Pursuant to Item 304(a)(1) of Regulation S-K, the Company reports
the following specific information:
(i) Effective February 2, 1999, PricewaterhouseCoopers LLP notified
the Company that they were resigning as the Company's independent
accountant.
(ii) The report of PricewaterhouseCoopers LLP on the financial
statements for the year ended June 30, 1998 included in the
Company's Form 10-K/A contained an explanatory paragraph regarding
the Company's ability to continue as a going concern. The
financial statements for the year ended June 30, 1997 did not
contain an adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope, or
accounting principles.
(iii) PricewaterhouseCoopers LLP's decision to resign was not
recommended or approved by the Board of Directors or Audit
Committee of the Company.
(iv) There were no disagreements on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure between the Company and
PricewaterhouseCoopers LLP during the two most recent fiscal
years or during the year-to-date period ended February 2, 1999,
which if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused it to make
reference to the subject matter of the disagreements in
connection with their report, except as follows:
(A) The Company was in violation of certain financial covenants
under its senior credit facility (the "Credit Facility") at
March 31, 1998. On May 15, 1998, the Company and its lenders
entered into an amendment to the Credit Facility (the
"Amendment") that waived these violations as of March 31,
1998 and amended certain covenant requirements as of June
30, 1998. At the time of signing the Amendment, the Company
determined that it did not expect to be in compliance with
certain of these
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covenants starting September 30, 1998 without further
amendments to the covenants. In the Amendment the lenders and
the Company agreed to negotiate an additional amendment to the
Credit Facility no later than August 15, 1998 to amend the
financial covenant ratios for the periods after June 30, 1998.
As a result of the Company being unable to demonstrate
compliance with the financial covenants under the Amendment
for at least one year and one day after March 31, 1998 without
further negotiations, PricewaterhouseCoopers LLP requested
the Company change the classification of its debt outstanding
under the Credit Facility to a current liability at March 31,
1998. The Company disagreed with this accounting treatment
as it expected to be in compliance with its covenant
requirements at June 30, 1998 and future periods based upon
the status and nature of the then ongoing negotiations
with the Company's lenders to amend the Company's covenant
requirements effective for those periods. As a result,
the Company in its March 31, 1998 Form 10-Q classified the
outstanding indebtedness as a long-term liability, disclosed
the covenant violations and ongoing negotiations with its
lenders and further disclosed that if negotiations with its
lenders were unsuccessful, an event of default would exist
and the related indebtedness could immediately become due
and payable.
On September 23, 1998, the Company and its lenders amended
the Credit Facility to waive the Company's noncompliance
with certain financial covenants as of June 30, 1998 and
amended these financial covenant requirements for future
periods. After this amendment, the Company was able to
demonstrate compliance with its covenant requirements for at
least one year and one day from June 30, 1998 and the
outstanding indebtedness was classified as non-current at
June 30, 1998. PricewaterhouseCoopers LLP's report on the
June 30, 1998 financial statements included in the Company's
Form 10-K filed on September 24, 1998 did not include an
explanatory paragraph with respect to this issue.
Subsequently, on November 5, 1998, the Company received a
default notice under the Credit Facility. On December 17,
1998, the Company refiled its Form 10-K as a Form 10-K/A to
comply with a request from
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the Securities and Exchange Commission for clarification of
certain disclosures. At that time, PricewaterhouseCoopers LLP
amended their report on the June 30, 1998 audited financial
statements to include an explanatory paragraph on the
Company's ability to continue as a going concern due to the
existence of this default.
(B) PricewaterhouseCoopers LLP discussed the above disagreement
with the Audit Committee of the Board of Directors.
(C) The Company has authorized PricewaterhouseCoopers LLP to
respond fully to the inquiries of the successor accountant
concerning the subject matter of the above disagreement.
(v) No event requiring disclosure under Item 304(a)(1)(v) of
Regulation S-K has occurred.
B. In accordance with the requirements of Item 304(a)(3) of Regulation
S-K, PricewaterhouseCoopers LLP has been provided with a copy of the
foregoing disclosures and has provided the letter required regarding
their concurrence with certain statements made by the Company in this
Form 8-K concerning their resignation as the Company's independent
accountant. This letter is attached as an exhibit to this Form 8-K.
C. There were no events requiring disclosure under Item 304(b) of
Regulation S-K in connection with the resignation of
PricewaterhouseCoopers LLP as the Company's independent accountant.
ITEM 7. EXHIBITS
Exhibits filed with this report are as follows:
Exhibit Number Exhibit
16 Letter dated February 9, 1999 from PricewaterhouseCoopers
LLP addressed to the Securities and Exchange Commission.
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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.
By: /s/ David S. Geller
David S. Geller
Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
Exhibit Number Exhibit
16 Letter dated February 9, 1999 from PricewaterhouseCoopers
LLP addressed to the Securities and Exchange Commission.
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February 9, 1999
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Commissioners:
We have read the statements made by Home Health Corporation of America, Inc.
(copy attached), which we understand will be filed with the Commission,
pursuant to Item 4 of Form 8-K, as part of the Company's Form 8-K report for
the month of February 1999. We agree with the statements concerning our Firm
in such Form 8-K.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Enclosure
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