<PAGE>
HOUSECALL MEDICAL RESOURCES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K\A No. 1
----------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 30, 1996
----------------------
HOUSECALL MEDICAL RESOURCES, INC.
------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 0-28134 58-2114917
- --------------------------------------------------------------------------------
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation or Identification No.)
Organization)
1000 Abernathy Road, Building 400, Suite 1825, Atlanta, Georgia 30328
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 379-9000
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2: Acquisition of Assets
On June 30, 1996, Housecall Medical Resources, Inc. (the "Company" or
the "Registrant") consummated the acquisition of the primary operating assets of
R.N. Registry, Inc. ("R.N. Registry"), an Indiana corporation, located in
Indianapolis, Indiana. R.N. Registry is the owner of a home health agency that
is authorized to provide Medicare/Medicaid certified and private duty home
health services in the following Indiana counties: Boone; Hamilton; Hancock;
Hendricks; Johnson; Madison; Marion; Morgan; Rush; Shelby and Tipton.
Consideration for the acquisition consisted of $225,000 in cash
(including approximately $55,000 in acquisition costs), and the assumption of
$283,000 in liabilities. The acquisition will be accounted for as a purchase,
with the acquired assets being recorded at their respective fair market values.
In connection with the acquisition, certain of the principal shareholders of
R.N. Registry executed non-compete agreements with the Company.
The acquisition of the agency from R.N. Registry is a further step in
the Company's efforts to build critical mass and enhance its presence in the
State of Indiana, where the Company otherwise owns four agencies. R.N. Registry
has had operations in Indiana since 1992, and for its fiscal year ended December
31, 1995, had net revenues of approximately $868,000 and an operating loss of
$271,000. The Company has been providing management and support services to R.N.
Registry's agency since April 1994, and was paid approximately $134,000 in
management fees by R.N. Registry during its fiscal year ended December 31, 1995.
Item 7: Financial Statements
(a) Financial Statements of Business Acquired
Financial statements of R.N. Registry, Inc. ("R.N. Registry"),
including the balance sheet as of December 31, 1995, and the related
statements of operations, Capital deficiency, and cash flows for the
year then ended, including the report of independent auditors.
Unaudited condensed financial statements of R.N. Registry as of and for
the nine months ended March 31, 1996.
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
R.N. Registry, Inc.
We have audited the accompanying balance sheet of R.N. Registry, Inc. as of
December 31, 1995 and the related statements of operations, capital deficiency
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of R.N. Registry, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Atlanta, Georgia
September 9, 1996
<PAGE>
R.N. Registry, Inc.
Balance Sheet
December 31, 1995
<TABLE>
<S> <C>
Assets
Current assets:
Accounts receivable, net $ 109,705
Other current assets 7,933
---------
Total current assets 117,638
Other assets 3,500
Property and equipment, net 4,532
---------
$ 125,670
=========
Liabilities and capital deficiency
Current liabilities:
Cash overdraft $ 23,281
Estimated third party settlements 157,020
Accounts payable 13,296
Accrued payroll and related expenses 90,452
Interest payable to stockholders 9,885
Notes payable to stockholders and former employees 138,600
Other notes payable 64,863
---------
497,397
Capital deficiency:
Common stock, no par value, 100 shares authorized, 91 shares issued 65,157
Accumulated deficit (436,884)
---------
Total capital deficiency (371,727)
---------
$ 125,670
=========
</TABLE>
See accompanying notes.
<PAGE>
R.N. Registry, Inc.
Statement of Operations
Year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Net revenues $ 868,442
Operating expenses:
Patient care 591,932
General and administrative 525,716
Provision for doubtful accounts 4,684
Depreciation 455
--------------
Total operating expenses 1,122,787
--------------
Loss from operations (254,345)
Interest expense (16,279)
==============
Net loss $ (270,624)
==============
</TABLE>
See accompanying notes
<PAGE>
R.N. Registry, Inc.
Statement of Capital Deficiency
<TABLE>
<CAPTION>
Common Accumulated
Stock Deficit Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance at January 1, 1995 $ 55,157 $ (166,260) $ (111,103)
Exchange of note payable
for common stock 10,000 - 10,000
Net loss - (270,624) (270,624)
------------- ------------- -------------
Balance at December 31, 1995 $ 65,157 $ (436,884) $ (371,727)
============= ============= =============
</TABLE>
See accompanying notes.
<PAGE>
R.N. Registry, Inc.
Statement of Cash Flows
Year ended December 31, 1995
<TABLE>
<S> <C>
Operating activities:
Net loss $ (270,624)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 455
Changes in operating assets and liabilities:
Accounts receivable (4,944)
Other current assets 3,051
Accounts payable (6,922)
Estimated third party settlements 81,404
Accrued payroll and related expenses 7,556
Interest payable to stockholders 9,885
---------------
Net cash used by operating activities (180,139)
Investing activities:
Additions to property and equipment (1,946)
--------------
Net cash used by investing activities (1,946)
Financing activities:
Cash overdraft 10,622
Net proceeds from notes payable to stockholders 99,600
Net proceeds from other notes payable 71,863
--------------
Net cash provided by financing activities 182,085
--------------
Net decrease in cash and cash equivalents -
Cash at beginning of year -
--------------
Cash at end of year $ -
==============
Supplemental disclosure of cash flow information
Interest paid $ 6,394
</TABLE>
See accompanying notes.
<PAGE>
R.N. Registry, Inc.
Notes to Financial Statements
December 31, 1995
1. Description of Business
R. N. Registry, Inc. (the "Company") was incorporated and commenced operations
in December 1990. The Company's principal line of business is to provide home
health services within an eleven county radius in central Indiana.
On June 30, 1996, Housecall Medical Resources, Inc. acquired all of the
operating assets of R. N. Registry, Inc. No adjustment has been made to the
carrying values of the assets and liabilities in the accompanying financial
statements related to this transaction.
2. Summary of Significant Accounting Policies
Property and Equipment
Property and equipment are recorded at cost. Deprecation and amortization are
computed using the straight-line method over lives ranging from 5 to 15 years.
Income Taxes
Income taxes have been provided in accordance with Statement of Financial
Accounting Standards No. 109.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Although these estimates are based on management's knowledge of current events
and actions it may undertake in the future, they may ultimately differ from
actual results.
Concentration of Credit Risk
The Company's principal financial instruments subject to potential concentration
of credit risk are its trade accounts receivable. At December 31, 1995,
approximately $59,000 of net accounts receivable were due from Medicare. The
concentration of credit risk with respect to accounts receivable from
non-governmental payors is limited due to the large number of payors and their
dispersion across many different insurance companies and individuals.
3. Net Revenues
Payments for services rendered to patients covered by Medicare and Medicaid
programs are generally less than billed charges. Provisions for contractual
adjustments are made to reduce charges to these patients to estimated
receipts based upon the program's principles of payment generally based on cost
reimbursement determined on a retrospective basis. Final settlements under these
programs are subject to administrative review and audit, and provisions are
currently made for adjustments which may result during the period in which such
adjustments become known. Contractual provisions are deducted from gross patient
service revenues to arrive at net revenues.
<PAGE>
R.N. Registry, Inc.
Notes to Financial Statements - (continued)
3. Net Revenues (continued)
The following represents amounts included in the determination of net
revenues:
Gross revenues $1,203,483
Less provision for contractual adjustments (335,041)
----------------
Net revenues $ 868,442
================
The Company derived approximately 70% of its gross revenues from services
provided under the Medicare and Medicaid programs for the year ended
December 31, 1995.
In the ordinary course of business, the Company renders services to patients
who are financially unable to pay. In 1995, such charity care was not
significant.
4. Leases
The Company leases office space and equipment under operating lease
agreements through the year 2000.
Aggregate rental expense under all operating leases was approximately
$14,000 for the year ended December 31, 1995.
Approximate future annual lease payments under operating leases with initial
non-cancelable lease terms in excess of one year are as follows:
Year Ending
December 31,
---------------
1996 $ 35,225
1997 34,673
1998 33,652
1999 31,588
2000 21,059
---------------
$ 156,197
===============
5. Property and Equipment
Property and equipment, at cost, consists of:
Furniture and equipment $ 12,639
Less: Accumulated depreciation (8,107)
------------------
$ 4,532
==================
<PAGE>
R.N. Registry, Inc.
Notes to Financial Statements - (continued)
6. Notes Payable
Short-term borrowings at December 31, 1995 are as follows:
Notes payable to stockholders $ 131,600
Note payable to former employee 7,000
Note payable to management company 54,863
Note payable - other 10,000
------------------
$ 203,463
==================
The notes payable to stockholders consists of 14 unsecured notes totaling
$126,000 bearing interest of 10% for the first 90 days and 21% thereafter, with
no repayment terms and an unsecured $5,000 note that bears interest at 13%
for the first 90 days and 21% thereafter.
The note payable to the former employee arose out of the settlement of
litigation with the employee. The note is due in $1,000 monthly installments
with no interest payable on the balance.
The note payable to the management company bears an interest rate of 12% and is
payable in monthly installments of $4,875 for a period of twelve months. The
note is unsecured.
The note payable - other consists of an unsecured $10,000 note bearing an
interest rate of 21%.
7. Management Contract
In 1995, the Company paid approximately $134,000 in management fees to Houseall
Medical Resources Inc. for administrative and claims processing services.
8. Common Stock
During 1995, the Company issued 10 shares of common stock to retire a $10,000
note payable.
9. Professional and Liability Risks
The Company maintains general and professional liability insurance with
independent insurance carriers on an occurrence basis.
10. Retirement Plan
The Company's employees may participate in a defined contribution plan upon
attaining one year of service and twenty-one years of age. Company contributions
to the plan is at the discretion of the Company. For the year ended December 31,
1995, the Company made no contributions to the plan.
<PAGE>
R.N. Registry, Inc.
Notes to Financial Statements - (continued)
10. Income Taxes
Due to the uncertainty of future operating income levels, the net deferred tax
asset of approximately $163,000 at December 31, 1995 has been offset by a
valuation allowance of the same amount. The valuation allowance changed by
approximately $100,000 in 1995. Deferred tax assets relate primarily to net
operating loss carryforwards.
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $250,000 which expire starting in 2004.
<PAGE>
R.N. Registry, Inc.
Unaudited Condensed Balance Sheet
As of March 31, 1996
Assets
Current assets:
Accounts receivable, net $ 102,099
Other current assets 7,376
---------------
Total current assets 109,475
Property and equipment, net 5,902
Other assets 3,500
===============
$ 118,877
===============
Liabilities and Capital deficiency
Cash overdraft $ 59,012
Estimated third party settlement 157,020
Accounts payable 37,071
Notes payable 207,898
Interest payable to stockholder 9,885
Other accrued liabilities 56,650
---------------
Total current liabilities 527,536
Capital deficiency:
Common stock 65,157
Accumulated deficit (473,816)
---------------
Total Capital deficiency (408,659)
---------------
$ 118,877
===============
See note to condensed financial statements
<PAGE>
R.N. Registry, Inc.
Unaudited Condensed Statement of Operations
Nine months ended March 31, 1996
Net revenues $ 697,907
Operating expenses:
Patient care 449,496
General and administrative 401,559
Provision for doubtful accounts 5,471
Depreciation and amortization 1,250
-------------
Total operating expenses 857,776
Loss from operations (159,869)
Interest expense, net 11,814
--------------
Net loss (171,683)
==============
See note to condensed financial statements
<PAGE>
R.N. Registry, Inc.
Unaudited Condensed Statement of Cash Flows
Nine months ended March 31, 1996
Cash flows from operating activities $ (158,345)
Cash flows from investing activities (3,570)
Cash flows from financing activities 161,915
------------
Net decrease in cash -
Cash at beginning of period -
------------
Cash at end of period $ -
============
See note to condensed financial statements
<PAGE>
R.N. Registry, Inc.
Notes to Condensed Financial Statements (Unaudited)
March 31, 1996
Note 1: Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. 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, 1996
are not necessarily indicative of the results that may be expected for the year
ended June 30, 1996.
<PAGE>
Item 7: Financial Statements
(b) Financial Statements of Business Acquired
Housecall Medical Resources, Inc.
Unaudited Pro Forma Financial Information
The following unaudited pro forma balance sheet as of March 31, 1996
assumes that the acquisition of R.N. Registry, which was accounted for
as a purchase, had occurred on that date. The unaudited pro forma
statement of operations for the year ended June 30, 1995 is presented
to show the effects as if the acquisition had occurred on July 1, 1994,
as well as, the pro forma statement of operations for the nine months
ended March 31, 1996 is presented to show the effects as if the
acquisition had occurred on July 1, 1995. These pro forma statements do
not necessarily reflect the financial position and results of
operations as they would have been if the Company had completed the
acquisitions on the dates indicated above. The unaudited pro forma
financial information should be read in conjunction with the separate
financial statements and notes thereto of the Company and R.N.
Registry.
<PAGE>
Housecall Medical Resources, Inc.
Unaudited Pro Forma Condensed Balance Sheet
As of March 31, 1996
(in thousands)
<TABLE>
<CAPTION>
As R.N. Pro Forma Pro Forma
Reported Registry Adjustments Combined
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,603 $ $ (225) (A) $ 4,378
Accounts receivable, net 32,847 102 (204) (B) 32,745
Income taxes receivable 1,185 1,185
Deferred income taxes 756 756
Other current assets 2,746 7 (7) (B) 2,746
-------------- -------------- -------------- --------------
Total current assets 42,137 109 (436) 41,810
Property and equipment 6,313 6 1 (B) 6,320
Excess of cost of acquired businesses
over fair value of net assets 53,016 501 (B) 53,517
acquired
Deferred financing costs 1,489 1,489
Other assets 548 4 (4) (B) 548
============== ============== ============== ==============
$ 103,503 $ 119 $ 62 $ 103,684
============== ============== ============== ==============
Liabilities and stockholders' equity
Accounts payable $ 10,099 $ 96 $ (96) (B) $ 10,099
Accrued payroll and other
liabilities 11,263 224 (43) (B) 11,444
Current portion of long-term debt
and capital lease obligations 5,761 208 (208) (B) 5,761
-------------- -------------- -------------- --------------
Total current liabilities 27,123 528 (347) 27,304
Long-term debt 44,040 44,040
Capital lease obligations 1,417 1,417
Other long-term liabilities 1,897 1,897
Commitments and contingencies
Series A Preferred Stock (redeemable),
$1 par value, 200,000 shares 168 168
authorized
Additional paid-in-capital on redeemable
preferred stock 19,361 19,361
Stockholders' equity:
Preferred stock, $.10 par value 9,800,000
shares authorized, no shares issued
and outstanding - -
Common stock, $.01 par value 30,000,000
shares authorized, 6,078,900 shares
issued and outstanding 61 65 (65) (B) 61
Additional paid-in-capital on common
stock 8,835 8,835
Retained earnings 601 (474) 474 (B) 601
-------------- -------------- -------------- --------------
Total stockholders' equity 9,497 (409) 409 9,497
-------------- -------------- -------------- --------------
$ 103,503 $ 119 $ 62 $ 103,684
============== ============== ============== ==============
</TABLE>
<PAGE>
Housecall Medical Resources, Inc.
Notes to Unaudited Pro Forma Condensed
Balance Sheet
The pro forma adjustments are:
A) Reflects the adjustment to cash of $225,000 to finance the acquisition.
For the purposes of the pro forma balance sheet, it is assumed to have
taken place on March 31, 1996.
B) Records the adjustments to reflect the fair market value of the assets
acquired as of the effective date of the acquisition.
<PAGE>
Housecall Medical Resources, Inc.
Unaudited Pro Forma Statement of Operations
Year Ended June 30, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
As R.N. Pro Forma Pro Forma
Reported Registry Adjustments Combined
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net revenues $ 84,219 $ 943 $ (136) (A) $ 85,026
Operating expenses:
Patient care 42,879 654 43,533
General and administrative 34,069 500 (136) (A) 34,433
Provision for doubtful accounts 3,395 0 3,395
Depreciation and amortization 1,568 0 13 (B) 1,581
--------------- -------------- -------------- ---------------
Total operating expenses 81,911 1,154 (123) 82,942
Income (loss) from operations 2,308 (211) (13) 2,084
Interest expense, net 902 7 (7) (C) 902
--------------- -------------- -------------- ---------------
Income (loss) before income taxes 1,406 (218) (6) 1,182
Income taxes 709 0 (85) (D) 624
--------------- -------------- -------------- ---------------
Net income (loss) 697 (218) 79 558
Series A Preferred Stock
dividend and accretion 1,327 0 0 1,327
--------------- -------------- -------------- ---------------
Net loss attributable to common
stockholders $ (630) $ (218) $ 79 $ (769)
=============== ============== ============== ===============
Net loss per common share: $ (0.10) $ (0.12)
=============== ===============
Weighted average common and
common equivalent shares
outstanding 6,283 6,283
=============== ===============
</TABLE>
<PAGE>
Housecall Medical Resources, Inc.
Unaudited Pro Forma Statement of Operations
Nine months ended March 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
As R.N. Pro Forma Pro Forma
Reported Registry Adjustments Combined
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net revenues $ 158,306 $ 697 $ (96) (A) $ 158,907
Operating expenses:
Patient care 72,560 449 73,009
General and administrative 70,586 401 (96) (A) 70,891
Provision for doubtful accounts 5,059 6 5,065
Depreciation and amortization 2,395 1 9 (B) 2,405
--------------- -------------- -------------- ---------------
Total operating expenses 150,600 857 (87) 151,370
Income (loss) from operations 7,706 (160) (9) 7,537
Interest expense, net 3,742 12 (12) (C) 3,742
--------------- -------------- -------------- ---------------
Income (loss) before income taxes 3,964 (172) 3 3,795
Income taxes 1,705 0 (64) (D) 1,641
--------------- -------------- -------------- ---------------
Net income (loss) 2,259 (172) 67 2,154
Series A Preferred Stock
dividend and accretion 1,658 0 0 1,658
--------------- -------------- -------------- ---------------
Net income (loss) attributable
to common stockholders $ 601 $ (172) $ 67 $ 496
=============== ============== ============== ===============
Net income per common share: $ 0.08 $ 0.07
=============== ===============
Weighted average common and
common equivalent shares
outstanding: 7,175 7,175
=============== ===============
</TABLE>
<PAGE>
Housecall Medical Resources, Inc.
Notes to Unaudited Pro Forma
Statements of Operations
The pro forma adjustments are:
A) Reflects an adjustment to remove the management fee income and expense
recorded on Housecall Medical Resources and R.N. Registry's statement of
operations, respectively.
B) Reflects an adjustment in depreciation and amortization expense arising
from the acquisition of R.N. Registry based upon an allocation of the
purchase price. Depreciation for property and equipment is being computed
for a period of 5 - 15 years. Amortization of goodwill is being computed
for a period of 40 years.
C) Reflects a reduction in interest expense arising from the acquisition of
R.N. Registry. The notes payable that existed prior to acquisition were
not assumed as part of the purchase.
D) Reflects an adjustment to income taxes arising from the pro forma
adjustments.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Housecall Medical Resources, Inc.
---------------------------------
(Registrant)
September 13, 1996 /s/ Harold W. Small
Harold W. Small
Chief Operating Officer
