<PAGE>
10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended MARCH 31, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-27654-NY
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Long Island Physician Holdings Corporation
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(Exact name of small business issuer specified in its charter)
New York 11-3232989
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(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
275 Broadhollow Road, Melville, NY 11747
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(Address of principal executive offices) (Zip Code)
(516) 454-1900
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(Issuer's telephone number)
None
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (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
requirements for the past 90 days.
Yes X No
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Number of shares of Common Stock, $ .001 par value, outstanding as of March 31,
1996.
1,523 Class A and 4,319 Class B shares
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Transitional Small Business Disclosure Format (Check One) Yes No X
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<PAGE>
INDEX
Page No.
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Part I. Financial Information
Consolidated Balance Sheets as of March 31, 1996 (unaudited)
and December 31, 1995....................................... 3
Consolidated Statements of Operations for the three months
ended March 31, 1996 and March 31, 1995 (unaudited)......... 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995 (unaudited)......... 5
Notes to Consolidated Financial Statements.................. 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 8-9
Part II. Other Information........................................... 10
Signatures.................................................. 10
2
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, Dec 31,
1996 1995
(unaudited) (audited)
------------ ------------
<S> <C> <C>
Assets
Current Assets
Cash $ 7,722,980 $ 7,566,472
Accounts receivable 778,029 --
Interest receivable 29,171 --
Prepaid expenses 155,950 --
Advances to affiliates 400,000 811,357
------------ ------------
Total current assets 9,086,130 8,377,829
Other Assets
Restricted cash 1,035,313 1,036,223
Other assets 20,000 52,982
------------ ------------
Total assets $ 10,141,443 $ 9,467,034
============ ============
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable $ 1,534,870 $ --
Due to affiliates 98,175 1,079,586
Deferred revenue 119,940 10,934
------------ ------------
Total current liabilities 1,752,985 1,090,520
Minority interest 661,232 40,404
Stockholders Equity
Class A common stock, $.001 par value; 10,000 shares 2 2
authorized, 1,523 issued and outstanding
Class B common stock, $.001 par value; 25,000 shares 4 4
authorized, 4,319 issued and outstanding
Additional paid in capital 11,498,936 11,274,536
Accumulated deficit (3,771,716) (2,938,432)
------------ ------------
Total stockholders equity $ 7,727,226 $ 8,336,110
------------ ------------
Total liabilities and stockholders equity $ 10,141,443 $ 9,467,034
============ ============
</TABLE>
3
See notes to consolidated financial statements
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
----------- -----------
<S> <C> <C>
Revenue $ 2,665,692 $ --
----------- -----------
Total gross revenue 2,665,692 --
Medical Expense 2,212,524 --
----------- -----------
Total medical expenses 2,212,524 --
Net revenue 453,168 --
----------- -----------
Operating Expense
Management fees 1,625,661 --
General and administrative expenses 148,072 613,650
----------- -----------
Total operating expenses 1,773,733 613,650
----------- -----------
Interest income 108,109 --
Loss from operations before minority interest (1,212,456) (613,650)
Minority interest in loss of subsidiary 379,172 --
----------- -----------
Net loss $ (833,284) $ (613,650)
=========== ===========
Loss per share $ (144.67) $ --
=========== ===========
Weighted average shares 5,760 --
=========== ===========
</TABLE>
4
See notes to consolidated financial statements
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Cash Flows Statements
(unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (833,284) $ (613,650)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Minority interest in loss of subsidiary 620,828 --
Changes in current assets and current liabilities:
(Increase) in accounts receivable -- --
(Increase) in interest receivable -- --
(Increase) in prepaid expenses -- --
(Decrease) in advances to affiliates 411,357 --
Increase in accounts payable 1,534,870 --
(Decrease) in due to affiliates (981,411) 616,184
Increase in deferred revenue 109,006 --
----------- -----------
Net cash used in operating activities 861,366 2,534
Cash flows from investing activities:
Net increase in other assets 32,982 (1,933)
----------- -----------
Net cash used in investing activities 32,982 (1,933)
Cash flows from financing activities:
Proceeds from issuance of common stock 224,400 6,000
Payments from cash flow reserve 910 --
----------- -----------
Net cash used in financing activities 225,310 6,000
Net increase (decrease) in cash 1,119,658 6,601
Cash beginning of period 7,566,472 --
----------- -----------
Cash and cash equivalents, end of period $ 8,686,130 $ 6,601
=========== ===========
</TABLE>
5
See notes to consolidated financial statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Statements:
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements have been
condensed or omitted pursuant to such rules and regulations although
management believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management,
the accompanying consolidated financial statements contain all
adjustments necessary to present a fair statement of the results for
the interim period presented. Operating results for the three (3)
month period ended March 31, 1996, is not necessarily indicative of
the results that may be expected for the year ending December 31,
1996. These financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year
ended December 31, 1995, included in the Company's Registration
Statement 10-SB.
2. Principles of Consolidation:
The consolidated financial statements include the accounts of Long
Island Physician Holdings Corporation (the "Company"or "LIPH"), a
holding company for purposes aimed at advancing the delivery of
healthcare on Long Island, its wholly-owned subsidiaries, independent
practice associations, which consists of Island Practice Association,
Inc., Island Behavioral Health Association, Inc., and Island Dental
Professional Association, Inc. ("IPAs"), its two-third (2/3) owned
subsidiary, MDLI Healthcare, Inc. ("MDLI"), a health maintenance
organization ("HMO"). Intercompany balances and activities are
eliminated in consolidation.
3. Net Loss Per Share of Common Stock:
Net loss per share of common stock is based on the weighted average
number of shares of common stock outstanding during each period.
4. Unconsolidated Subsidiaries:
The Company currently owns a thirty-three and one-third (33-1/3)
interest in NextStage Healthcare Management, Inc. (NextStage).
NextStage's income for the period ended March 31, 1996 was $0.
5. Certain Relationships:
LIPH, MDLI, and the IPAs have a management service agreement with
NextStage. This agreement stipulates that NextStage will provide
management and consulting services for a five year period ending
October 10, 2000. NextStage will perform most administrative services
on behalf of LIPH, MDLI and the IPAs. Under the terms of the
agreement, MDLI is currently providing NextStage a management fee of
100% of costs incurred.
6
<PAGE>
Notes to Consolidated Financial Statements, cont'd
When covered lives, the number of people enrolled, exceed 50,000, fees
charged by NextStage will be based on a percentage of premiums
generated by the HMO.
6. Subsequent Events:
The Company has authorized an investment of $1,000,000 in a new
practice management company, MainStreet Practice Management, Inc.
("MainStreet"). As of March 31, 1996, the Company had advanced
$400,000 for working capital needs during the start-up period. The
Company paid MainStreet $100,000 in April 1996, and the balance due of
$500,000 was paid July 5, 1996.
MDLI's business plan for 1996 requires additional capital of
$2,000,000. After March 31, 1996, the Company committed to invest the
additional capital required. The Company paid $1,000,000 July 5, 1996,
and will invest the balance of $1,000,000 by January 1, 1997.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Long Island Physician Holdings Corporation was formed as a holding company to
be owned and controlled by office-based physicians, psychologists, dentists,
chiropractors and podiatrists who reside in New York and provide healthcare
services on Long Island. The initial role of the Company was to finance the
start-up of MDLI as a licensed HMO in the Long Island service area and develop
a provider network in Long Island, consisting of the three IPAs. The IPAs
contract with MDLI to provide services to its enrollees. The Company plans to
use a portion of its capital to make investments in healthcare-related
ventures.
The Company had working capital of approximately $7,300,000 at March 31, 1996,
compared to approximately ($610,000) at March 31, 1995. Of the $7,300,000, LIPH
had working capital of $3,400,000 and MDLI had working capital of $3,900,000.
The Company's current ratio at March 31, 1996 was 5.18 to 1. The increase in
the Company's working capital and current ratio at March 31, 1996 compared to
March 31, 1995 was primarily the result of the Company's efforts in raising
capital through the sale of shares of the Company in an intrastate offering.
MDLI did not commence operations until January 1, 1996.
Inflation
The Company does not anticipate that inflation will have any significant effect
on its business particularly since the United States, the only market in which
the Company currently intends to operate, is presently experiencing a
relatively low rate of inflation.
Results of Operations
Revenues
Revenues for the three (3) months ended March 31, 1996, were approximately
$2,700,000 generated primarily through the payments of health premiums by or on
behalf of MDLI's enrollees. There were no revenues for the three months ended
March 31, 1995. MDLI did not commence operations until January 1, 1996, and no
revenues were generated other than interest income for 1995. At March 31, 1996,
MDLI had 3,350 subscribers, representing approximately 7,300 enrollees.
Costs and Expenses
Costs and expenses are broken down into two major categories, medical expenses
and management fees. Medical expenses are based on percentage of premium, 83%
at March 31, 1996, and allocated globally by MDLI to the IPAs by contract for
the payment of medical claims. The IPAs spend less than the 83% of premiums in
the quarter ended March 31, 1996. Medical expenses for the three (3) months
ended March 31, 1996, were approximately $2,213,000. Since there were no
operations for the same three (3) month period ended March 31, 1995, there were
no medical claims paid or incurred. Management fees for the first three (3)
months of 1996 were $1,626,000. General and administrative expenses were
approximately $148,000 for the three (3) months ended March 31, 1996, as
compared to $614,000 for the
8
<PAGE>
Management's Discussion and Analysis, cont'd
three (3) month period ended March 31, 1995. During 1995, the Company incurred
significant costs during the organizational stage of its development. Expenses
included consulting and professional fees primarily for legal costs to obtain
appropriate licensing and for healthcare business consultants utilized to
develop and design the overall business strategy and develop the provider
networks.
Net Loss Applicable To Common Shareholders
Net loss applicable to common shareholders was a loss of ($833,000) or ($144)
per share for the three (3) months ended March 31, 1996. There were no shares
issued for the same three (3) month period ended March 31, 1995.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes In Securities
None
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission Of Matters To A Vote Of Security Holders
None
ITEM 5 - Other Information
None
ITEM 6 - Exhibits And Reports On Form 8-K
(b) There were no reports on Form 8-K for the three months ended
March 31, 1996.
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 by
Long Island Physician Holdings Corporation
Date September 16, 1996
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David Weissberg, MD, President and CEO
Date September 16, 1996
------------------ ----------------------------------------------
Harris Topel, CPA, Assistant Treasurer and CFO
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,722,980
<SECURITIES> 0
<RECEIVABLES> 778,029
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,086,130
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,141,443
<CURRENT-LIABILITIES> 1,752,985
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 7,727,220
<TOTAL-LIABILITY-AND-EQUITY> 10,141,443
<SALES> 2,665,692
<TOTAL-REVENUES> 2,665,692
<CGS> 2,212,524
<TOTAL-COSTS> 2,212,524
<OTHER-EXPENSES> 1,773,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (833,284)
<INCOME-TAX> 0
<INCOME-CONTINUING> (833,284)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (833,284)
<EPS-PRIMARY> (144.67)
<EPS-DILUTED> 0.00
</TABLE>
