<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
UNITED STATES
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997
Commission File Number- 0-27602
-------
NCS HealthCare, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware No. 34-1816187
-------- -----------------
(State or other jurisdiction of (IRS employer identification number)
incorporation or organization)
3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122
- ----------------------------------------------------------
(Address of principal executive offices and zip code)
(216) 514-3350
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant:
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 requirement for the past 90 days.
Yes X No
--- ---
Common Stock Outstanding
- ------------------------
Indicate the number of shares outstanding of each of the Issuers' classes of
common stock, as of the latest practical date.
Class A Common Stock, $ .01 par value -- 11,118,992 shares as of May 9, 1997
Class B Common Stock, $ .01 par value -- 6,379,100 shares as of May 9, 1997
1
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NCS HEALTHCARE, INC.
AND SUBSIDIARIES
INDEX
Page
----
Part I. Financial Information:
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
March 31, 1997 and June 30, 1996 3
Condensed Consolidated Statements of Income-
Three and nine months ended-
March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows-
Nine months ended-
March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements - March 31, 1997 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8
Part II. Other Information:
Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
NCS HEALTHCARE, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
(Unaudited) (Note A)
March 31, June 30,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 21,207 $ 21,460
Accounts receivable, less allowances 62,598 27,762
Inventories 20,837 7,487
Other 3,960 2,484
-------- --------
Total current assets 108,602 59,193
Property and equipment, at cost
net of accumulated depreciation and amortization 19,242 10,283
Goodwill, less accumulated amortization 174,854 39,101
Other assets 7,362 2,091
-------- --------
Total assets $310,060 $110,668
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 14,905 $ 4,968
Payable for acquisitions 7,500 -
Accrued expenses and other liabilities 23,781 5,889
-------- --------
Total current liabilities 46,186 10,857
Long-term debt 9,615 1,961
Convertible subordinated debentures 6,549 6,549
Other 666 201
Stockholders' Equity:
Preferred stock, par value $ .01 per share, 1,000,000
shares authorized; none issued - -
Common stock, par value $ .01 per share:
Class A - 50,000,000 shares authorized; 11,077,085
and 5,560,492 shares issued and outstanding at
March 31, 1997 and June 30, 1996, respectively 111 56
Class B - 20,000,000 shares authorized; 6,379,100
and 6,603,228 shares issued and outstanding at
March 31, 1997 and June 30, 1996, respectively 64 66
Paid-in capital 232,908 84,907
Retained earnings 13,961 6,071
-------- --------
Total stockholders' equity 247,044 91,100
-------- --------
Total liabilities and stockholders' equity $310,060 $110,668
======== ========
</TABLE>
Note A: The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to condensed consolidated financial statements.
3
<PAGE> 4
NCS HEALTHCARE, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------- --------------------------
1997 1996 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 78,539 $ 30,209 $ 180,904 $ 80,236
Cost of revenues 58,867 22,197 135,013 58,183
--------------------------- --------------------------
Gross profit 19,672 8,012 45,891 22,053
Selling, general and administrative expenses 14,718 5,616 33,547 16,044
Special compensation (1) - - - 2,811
--------------------------- --------------------------
Operating income 4,954 2,396 12,344 3,198
Interest expense (income), net (517) 394 (1,650) 1,775
Income before income taxes 5,471 2,002 13,994 1,423
Income tax expense 2,380 881 6,104 626
--------------------------- --------------------------
Net income $ 3,091 $ 1,121 $ 7,890 $ 797
--------------------------- --------------------------
Net income per share $ 0.18 $ 0.12 $ 0.50 $ 0.10
--------------------------- --------------------------
Shares used in the computation 17,441 9,685 15,682 7,854
<FN>
(1) Represents a one-time, non-recurring charge in connection with the
termination of compensation arrangements with the prior owners of certain
acquired businesses which had the effect of reducing net income per share by
$0.20 for the nine months ended March 31, 1996.
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
NCS HEALTHCARE, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 7,890 $ 797
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Special compensation - 2,811
Depreciation and amortization 5,673 2,174
Other - 423
Changes in assets and liabilities, net of effects of
assets and liabilities acquired:
Accounts receivable, net (13,461) (6,605)
Accrued expenses and other liabilities 13,267 (2,399)
Other, net (3,173) (472)
--------------------------
Net cash provided by (used in) operating activities 10,196 (3,271)
INVESTING ACTIVITIES
Purchases of businesses (131,036) (12,125)
Capital expenditures for property and equipment, net (6,033) (2,871)
Other (4,971) (2,286)
--------------------------
Net cash used in investing activities (142,040) (17,282)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 123,626 68,878
Proceeds from convertible subordinated debentures - 12,925
Repayment of long-term debt (14,164) (4,784)
Borrowings on line-of-credit 10,895 31,400
Payments on line-of-credit (10,895) (48,900)
Accrued Initial Public Offering expenses - 1,500
Proceeds from issuance of long-term debt 22,129 -
--------------------------
Net cash provided by financing activities 131,591 61,019
--------------------------
Net (decrease) increase in cash and cash equivalents (253) 40,466
Cash and cash equivalents at beginning of period 21,460 286
--------------------------
Cash and cash equivalents at end of period $ 21,207 $ 40,752
--------------------------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
NCS HEALTHCARE, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine month period ended March 31, 1997 are not necessarily indicative of
the results that may be expected for the year ending June 30, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant's Form 10 - K for the year
ended June 30, 1996 (File No. 0 - 27602).
2. On February 14, 1996, the Company issued 4,476,000 shares of Class A Common
Stock at $16.50 per share in connection with an initial public offering. A
portion of the net proceeds from the stock issuance were used to repay
approximately $27,000,000 of outstanding indebtedness under long-term and
short-term borrowings.
On October 4, 1996, the Company completed a public offering of 4,235,000
shares of Class A Common Stock at $31 per share. The offering raised
approximately $123,600,000 (net of underwriting discounts and expenses). A
portion of the net proceeds from the stock issuance was used to repay
approximately $7,000,000 of outstanding indebtedness under short-term
borrowings.
3. Significant acquisitions completed by the Company during the nine months
ended March 31, 1997 include Advanced Rx Services, Inc. in Northfield, New
Jersey, IPAC Pharmacy, Inc. in Portland, Oregon, Medical Arts Pharmacy in
Grand Rapids, Michigan, Northside Pharmacy Inc. and Thrifty Medical Supply,
Inc. in Oklahoma City, Oklahoma, Thrifty Medical of Tulsa L.L.C. in Tulsa,
Oklahoma, Hudson Pharmacy of Wichita, Inc. in Wichita, Kansas, Spectrum
Health Services, Inc. in Tampa, Florida, Clinical Health Systems in
Vancouver, Washington, Rescot Systems Group, Inc. in Philadelphia,
Pennsylvania, W.P. Malone, Inc. in Arkadelphia, Arkansas, Long Term Care
Pharmacy Services in East Greenwich, Rhode Island, Eakles Drug Store, Inc.
in Hagerstown, Maryland, Pharmacare in Glendale, California, Advanced
Pharmaceutical Services, Inc. in Tujunga, California, Dahlin Pharmacy, Inc.
in Paramount, California, Stoll Services, Inc. in Modesto, California,
Cooper Hall Pharmacy, Inc. in Mount Pleasant, South Carolina, Hammer
Incorporated in Des Moines, Iowa, Daven Drug in Los Angeles, California and
Medi-Centre Pharmacy in Lansing, Michigan The aggregate purchase price for
all businesses acquired during the nine months ended March 31, 1997 was
$155,461,000 consisting of $125,727,000 in cash, $5,309,000 of debt and
$24,425,000 of Class A Common Stock of the Company.
During fiscal 1996, the Company completed acquisitions of Corinthian
Healthcare Systems, Inc., located in Indianapolis, Indiana, The Apothecary,
Inc. in Scranton, Pennsylvania, DeMoss Rexall Drugs, Inc., in Evansville,
Indiana, Care Plus Pharmacy in Decatur, Illinois, Uni-Care Health Services
Inc. in Londonderry, New Hampshire, Uni-Care Health Services of Maine in
Wells, Maine, and Family Care Nursing Home Service, Inc. and Care Unlimited,
Inc. in Herrin, Illinois. The aggregate purchase price for these businesses
was $29,744,000 consisting of $19,983,000 in cash, $7,925,000 of convertible
debentures and $1,836,000 of Class A Common Stock of the Company.
6
<PAGE> 7
Unaudited pro forma data, as though the Company had completed its
initial and secondary public offerings and had purchased each of these
businesses as of July 1, 1995, are set forth below:
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
(In thousands, except per share information)
<S> <C> <C>
Revenues $ 254,812 $ 229,595
Net income (A) $ 8,012 $ 1,387
Net income per common share (A) $ 0.51 $ 0.18
<FN>
(A) The pro forma results of operations of the Company for the nine months
ended March 31, 1996, include a one-time, non-recurring charge of
$2,811,000 in connection with the termination of compensation
arrangements with the prior owners of certain acquired businesses which
had the effect of reducing the net income per share by $0.20.
</TABLE>
4. During April 1997, the Company acquired Vangard Labs, Inc. (Vangard) for
$3,800,000 in cash. Vangard is a drug packaging company. The results of
Vangard have not been included in the pro forma results above.
7
<PAGE> 8
NCS HEALTHCARE, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THREE AND NINE MONTHS ENDED MARCH 31, 1997
Results of Operations
Revenues for the three months ended March 31, 1997 increased 159.9% to
$78,539,000 from $30,209,000 recorded in the comparable period in fiscal 1996.
For the nine months ended March 31, 1997, revenues increased 125.5% to
$180,904,000 from $80,236,000 recorded in the comparable period in fiscal 1996.
The increase in quarter and year to date revenues over comparable prior year
periods is primarily attributed to two factors: the Company's acquisition
program and internal growth. Of the $100,668,000 increase for the nine months
ended March 31, 1997, $60,255,000 was due to the acquisitions of Advanced Rx
Services, Inc. in July, 1996, IPAC Pharmacy, Inc., Medical Arts Pharmacy,
Northside Pharmacy Inc., Thrifty Medical Supply, Inc., and Thrifty Medical of
Tulsa L.L.C. in August, 1996, Hudson Pharmacy of Wichita, Inc., in September,
1996, Spectrum Health Services, Inc. in October, 1996, Clinical Health Systems
in November, 1996, Rescot Systems Group, Inc., W.P. Malone, Inc., Long Term Care
Pharmacy Services and Eakles Drug Store, Inc. in January, 1997, Pharmacare,
Advanced Pharmaceutical Services, Inc. and Dahlin Pharmacy, Inc. in February,
1997 and Stoll Services, Inc., Cooper Hall Pharmacy, Inc., Hammer Incorporated,
Daven Drug, and Medi-Centre Pharmacy in March, 1997. In addition, $27,963,000 of
the increase is attributable to revenues for the first nine months of fiscal
1997 including a full period of operations for fiscal 1996 acquisitions. These
fiscal 1996 acquisitions include Corinthian Healthcare Systems, Inc., acquired
in September, 1995, The Apothecary, Inc., acquired in November, 1995, DeMoss
Rexall Drugs, Inc., acquired in December, 1995, Care Plus Pharmacy acquired in
April, 1996, Uni-Care Health Services Inc. and Uni-Care Health Services of Maine
acquired in May, 1996, and Family Care Nursing Home Service, Inc. and Care
Unlimited, Inc. acquired in June, 1996. Internal growth accounted for
$12,450,000 of the increase as the Company's existing operations continued to
grow through marketing efforts to new and existing clients, increased drug
utilization of long-term care facility residents, and the growth and integration
of new and existing products and services. The total number of beds serviced by
the Company as of March 31, 1997 increased 192% to 146,000 beds, from 50,000
beds at March 31, 1996.
Of the $48,330,000 increase in revenues for the three months ended March 31,
1997, $36,593,000 was due to the fiscal 1997 acquisitions noted above. In
addition, $6,798,000 of the increase is attributable to revenues for the three
months ended March 31, 1997 including a full period of operation for the fiscal
1996 acquisitions noted above and internal growth accounted for $4,939,000 of
the increase.
Cost of revenues for the three months ended March 31, 1997 increased 165.2% to
$58,867,000, from $22,197,000 recorded in the comparable period in fiscal 1996.
For the nine months ended March 31, 1997, cost of revenues increased 132.0% to
$135,013,000 from $58,183,000 recorded in the comparable period in fiscal 1996.
Cost of revenues as a percentage of revenues for the three and nine month
periods ended March 31, 1997 was 74.9% and 74.6%, respectively, compared to
73.5% and 72.5% for the comparable periods during the prior fiscal year.
The increase in cost of revenues as a percentage of revenues was primarily the
result of two factors; acquisitions and a change in the State of Pennsylvania
Medicaid reimbursement rates. First, at the time of acquisition, the gross
margins of the acquired companies are typically lower than the Company as a
whole. This is the result of several factors, including less advantageous
purchasing terms, lack of formulary management and higher production costs.
Second, during the second quarter of fiscal 1996, the State of Pennsylvania
changed the reimbursement methodology under the State Medicaid program which
resulted in a lower reimbursement percentage for Company sites located in
Pennsylvania.
Selling, general and administrative expenses for the three months ended March
31, 1997 increased 162.1% to $14,718,000, from $5,616,000 recorded in the
comparable period in fiscal 1996. For the nine months ended March 31, 1997,
selling, general and administrative expenses increased 109.1% to $33,547,000
from $16,044,000 recorded in the comparable period in fiscal 1996. Selling,
general and administrative expenses as a percentage of revenues was 18.7% and
18.5% for the three and nine month periods ended March 31, 1997, compared to
18.6% and 20.0% during the comparable periods in fiscal 1996. The percentage
decrease for the nine month period ended March 31,
8
<PAGE> 9
1997 is the result of operational efficiencies and continuing efforts to
leverage corporate overhead over a larger revenue base. The increase in selling,
general, and administrative expenses in absolute dollars is mainly attributable
to expenses associated with the operations of businesses acquired during the
current fiscal year.
Special compensation of $2,811,000 for the nine months ended March 31, 1996
represents a one-time, non-recurring charge resulting from the termination of
compensation and performance incentive arrangements with the prior owners of
certain acquired businesses.
As a result of interest income of $799,000 and $2,514,000, interest expense, net
of interest income, decreased to $(517,000) and $(1,650,000) for the three and
nine months ended March 31, 1997, from $394,000 and $1,775,000 during the
comparable periods in fiscal 1996. These decreases are primarily attributed to
the reduction of long-term debt with funds from the initial public offering
completed on February 14, 1996 and interest income earned on funds from a public
offering completed on October 4, 1996.
Liquidity and Capital Resources
Net cash provided by operating activities was $10,196,000 for the nine months
ended March 31, 1997, as compared to net cash used in operating activities of
$3,271,000 during the comparable period in fiscal 1996. Net cash provided by
operating activities increased from the comparable period in fiscal 1996 due to
increased profitability and an increase in accrued expenses and other
liabilities. The increase in accrued expenses and other liabilities resulted
primarily from an increase in income taxes payable, an increase in trade
accounts payable and accrued expenses associated with new acquisitons and the
timing of payment of certain accruals. These cash flow increases were offset by
increases in accounts receivable and inventory during the period.
Net cash used in investing activities increased to $142,040,000 during the nine
months ended March 31, 1997, as compared to $17,282,000 during the comparable
period in fiscal 1996. The increase is primarily the result of fiscal 1997
acquisitions, as well as an increase in capital expenditures. Significant
capital expenditures during the nine months ended March 31, 1997 included
computer and information systems equipment, computer software, furniture and
fixtures at a new facility in Eastlake, Ohio, leasehold improvements and
medication carts for new and existing customers.
Net cash provided by financing activities increased to $131,591,000 during the
nine months ended March 31, 1997, from $61,019,000 during the comparable period
in fiscal 1996. The increase is primarily the result of funds received from a
secondary public offering completed on October 4, 1996.
The Company is currently in the process of negotiating a new $150,000,000 credit
facility. The Company believes that its cash and available sources of capital,
including funds anticipated to be available under the new credit facility, are
sufficient to meet its normal operating requirements and acquisition needs
through June 30, 1998.
Factors That May Affect Future Results
Except for historical financial information contained in this Form 10-Q, the
statements made in this report are forward-looking statements. Factors that may
cause actual results to differ materially from those in the forward-looking
statements include the availability and cost of attractive acquisition
candidates, continuation of various trends in the long-term care market
(including the trend toward consolidation), competition among providers of
long-term care pharmacy services, the availability of capital for acquisitions
and capital requirements, changes in regulatory requirements and reform of the
health care delivery system.
9
<PAGE> 10
ITEM 2. CHANGES IN SECURITIES
The following information is furnished as to all equity securities of the
Company sold during the third fiscal quarter that were not registered under the
Securities Act of 1933, as amended (the "Securities Act").
(A) On January 2, 1997 the Company issued 129,729 shares of its Class A Common
Stock to five stockholders in connection with the acquisition of certain
assets of Rescot Systems Group, Inc. Exemption from registration is claimed
under Section 4(2) of the Securities Act.
(B) On January 6, 1997 the Company issued 74,074 shares of its Class A Common
Stock to five stockholders in connection with the acquisition of certain
assets of W. P. Malone, Inc. Exemption from registration is claimed under
Section 4(2) of the Securities Act.
(C) On January 8, 1997 the Company issued 100,869 shares of its Class A Common
Stock to five stockholders in connection with the acquisition of certain
assets of Loomis Enterprises, Inc. Exemption from registration is claimed
under Section 4(2) of the Securities Act.
(D) On February 1, 1997 the Company issued 4,506 shares of its Class A Common
Stock to one stockholder in connection with the acquisition of certain
assets of Wabash Valley Rehabilitation, Inc. Exemption from registration is
claimed under Section 4(2) of the Securities Act.
(E) On February 4, 1997 the Company issued 15,384 shares of its Class A Common
Stock to one stockholder in connection with the acquisition of certain
assets of Pharmacare. Exemption from registration is claimed under Section
4(2) of the Securities Act.
(F) On February 14, 1997 the Company issued 108,970 shares of its Class A
Common Stock to one stockholder in connection with the acquisition of
certain assets of Advanced Pharmaceutical Services, Inc. and the stock of
Kinetic Services, Inc. Exemption from registration is claimed under Section
4(2) of the Securities Act.
(G) On March 7, 1997 the Company issued 106,232 shares of its Class A Common
Stock to one stockholder in connection with the acquisition of certain
assets of Stoll's Services, Inc. Exemption from registration is claimed
under Section 4(2) of the Securities Act.
(H) On March 11, 1997 the Company issued 64,190 shares of its Class A Common
Stock to one stockholder in connection with the acquisition of certain
assets of Daven Drug, Inc. Exemption from registration is claimed under
Section 4(2) of the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Numbers Exhibit
------- -------
11 Computation of Earnings Per Common Share
15 Independent Accountants' Review Report
27 Financial Data Schedule
(b) Reports on Form 8-K:
(1) On February 14, 1997 the Company amended its Current
Report on Form 8-K dated November 1, 1996, relating to the
acquisition of Clinical Health Systems.
10
<PAGE> 11
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 thereunto duly authorized.
NCS HealthCare, Inc.
(Registrant)
Date: May 15, 1997 By /s/ Kevin B. Shaw
-----------------------------------------------
Kevin B. Shaw
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: May 15, 1997 By /s/ Jeffrey R. Steinhilber
-----------------------------------------------
Jeffrey R. Steinhilber
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
11
<PAGE> 1
EXHIBIT 11
NCS HEALTHCARE, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ---------------------
1997 1996 1997 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
Net income (loss) used in calculation of primary
earnings per share $ 3,091 $ 1,121 $ 7,890 $ 797
Add impact of assumed conversion of
subordinated debentures 71 123 212 293
--------------------- ---------------------
Net income (loss) used in calculation of fully
diluted earnings per share $ 3,162 $ 1,244 $ 8,102 $ 1,090
--------------------- ---------------------
Weighted average common shares outstanding 17,257 9,544 15,496 7,235
Net effect of dilutive stock options -- Note A 184 141 186 619
--------------------- ---------------------
Shares used in calculation of primary earnings
per share 17,441 9,685 15,682 7,854
Add impact of assumed conversion of
subordinated debentures 627 1,005 625 835
--------------------- ---------------------
Shares used in calculation of fully diluted
earnings per share 18,068 10,690 16,307 8,689
===================== =====================
Primary net income (loss) per share $ 0.18 $ 0.12 $ 0.50 $ 0.10
===================== =====================
Fully diluted net income (loss) per share--
Note B $ 0.18 $ 0.12 $ 0.50 $ 0.13
===================== =====================
<FN>
NOTE A -- Stock options granted within a twelve-month period preceding
the Company's initial public offering in February 1996 are
included as if they were outstanding for all periods
presented. The dilutive effect of all options outstanding was
calculated using the treasury stock method.
NOTE B -- Fully dilutive net income (loss) per share has not been
presented in the Condensed Consolidated Statements of Income
because the effect is either immaterial or anti-dilutive.
</TABLE>
12
<PAGE> 1
EXHIBIT 15
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Stockholders
NCS HealthCare, Inc. and Subsidiaries
We have reviewed the accompanying condensed consolidated balance sheet of NCS
HealthCare, Inc. and subsidiaries (the Company) as of March 31, 1997, and the
related condensed consolidated statements of income for the three-month and
nine-month periods ended March 31, 1997 and 1996, and the condensed consolidated
statements of cash flows for the nine-month periods ended March 31, 1997 and
1996. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of NCS HealthCare, Inc. and
subsidiaries as of June 30, 1996, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then ended, not
presented herein, and in our report dated August 2, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of June 30, 1996 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Cleveland, Ohio /s/ Ernst & Young LLP
May 2, 1997
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001004990
<NAME> NCS Healthcare, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 21,207
<SECURITIES> 0
<RECEIVABLES> 78,299
<ALLOWANCES> 15,701
<INVENTORY> 20,837
<CURRENT-ASSETS> 108,602
<PP&E> 34,596
<DEPRECIATION> 15,354
<TOTAL-ASSETS> 310,060
<CURRENT-LIABILITIES> 46,186
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 247,044
<TOTAL-LIABILITY-AND-EQUITY> 310,060
<SALES> 180,904
<TOTAL-REVENUES> 180,904
<CGS> 135,013
<TOTAL-COSTS> 135,013
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 625
<INTEREST-EXPENSE> 865
<INCOME-PRETAX> 13,994
<INCOME-TAX> 6,104
<INCOME-CONTINUING> 7,890
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,890
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
