<PAGE>
UNITED STATES
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 SEPTEMBER 30, 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
- ------------------------------- ---------------------------------
(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 September
30, 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 September 30, 1996
(unaudited) and December 31, 1995 (audited)................ 3
Consolidated Statements of Operations for the three and
nine months ended September 30, 1996 and September 30, 1995
(unaudited)................................................ 4
Consolidated Statements of Cash Flows for the three and
nine months ended September 30, 1996 and September 30, 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
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited) (audited)
------------- -------------
Assets
<S> <C> <C>
Current Assets
Cash $ 7,324,173 $ 7,566,472
Accounts receivable 990,277 -
Interest receivable 29,255 -
Prepaid expenses 228,404 -
Loan receivable 250,000 -
Advances to affiliates - 811,357
----------------------------
Total current assets 8,822,109 8,377,829
Fixed Assets, net 24,403 -
Other Assets
Restricted cash 2,402,571 1,036,223
Investments 52,243 -
Other assets 206,359 52,982
------------- -------------
Total assets $ 11,507,685 $ 9,467,034
============= =============
<CAPTION>
Liabilities and Stockholders Equity
<S> <C> <C>
Current Liabilities
Accounts payable $ 5,024,92 $ -
Due to affiliates 115,973 1,079,586
Deferred revenue 45,043 10,934
------------- -------------
Total current liabilities 5,185,941 1,090,520
Minority interest 618,256 40,404
Stockholders Equity
Class A common stock, $.001 par value; 2 2
10,000 shares authorized, 1,523
issued and outstanding
Class B common stock, $.001 par value; 4 4
25,000 shares authorized, 4,319
issued and outstanding
Additional paid in capital 11,485,935 11,274,536
Accumulated deficit (5,782,453) (2,938,432)
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Total stockholders equity $ 5,703,488 $ 8,336,110
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Total liabilities and stockholders equity $ 11,507,685 $ 9,467,034
============= =============
</TABLE>
See notes accompanying financial statements
-3-
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
1996 1995 1996 1995
----------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Revenue $ 7,275,332 $ - $ 15,372,365 $ -
----------- ---------- ------------- -----------
Total gross revenue 7,275,332 - 15,372,365 -
Medical Expense 6,033,857 - 12,731,012 -
----------- ---------- ------------- -----------
Total medical expenses 6,033,857 - 12,731,012 -
Net revenue 1,241,475 - 2,641,353 -
----------- ---------- ------------- -----------
Operating Expense
Management fees 2,021,818 - 5,733,279 -
General and administrative expenses 375,390 282,952 1,033,241 1,339,319
----------- ---------- ------------- -----------
Total operating expenses 2,397,208 282,952 6,766,520 1,339,319
Interest income 111,185 1,726 326,755 1,959
Loss from operations before income from
equity investments and minority interest (1,044,548) (281,226) (3,798,412) (1,337,360)
Income from equity investments (16,163) - 32,243 -
Minority interest in loss of subsidiary 165,018 - 922,148 -
----------- ---------- ------------- -----------
Net loss $ (895,693) $ (281,226) $ (2,844,021) $(1,337,360)
=========== ========== ============= ===========
Loss per share $ (155.50) $ - $ (491.53) $ -
=========== ========== ============= ===========
Weighted average shares 5,760 5,786 -
=========== ========== ============= ===========
</TABLE>
See notes accompanying financial statements
-4-
<PAGE>
Long Island Physician Holdings Corporation
Consolidated Cash Flows Statements
(unaudited)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (2,844,021) $ (1,337,360)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation 2,537 -
Minority interest in loss of subsidiary 577,852 -
Changes in current assets and current liabilities:
(Increase) in accounts receivable (990,277) -
(Increase) in interest receivable (29,255) -
(Increase) in prepaid expenses (228,404) (8,176)
(Increase) in loans receivable (250,000) -
(Decrease) in advances to affiliates 811,357 (242,896)
Increase in accounts payable 5,024,925 -
(Decrease) in due to affiliates (963,613) 1,449,478
Increase in deferred revenue 34,109 -
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Net cash used in operating activities 1,145,210 (138,954)
Cash flows from investing activities:
Purchases of fixed assets (26,940) -
Investment in NextStage Healthcare (52,243)
Net increase in other assets (153,377) -
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Net cash used in investing activities (232,560) -
Cash flows from financing activities:
Proceeds from issuance of common stock 211,399 2,800,157
Payments from cash flow reserve (1,366,348) (6,000)
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Net cash used in financing activities (1,154,949) 2,794,157
Net increase (decrease) in cash (242,299) 2,655,203
Cash beginning of period 7,566,472 -
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Cash and cash equivalents, end of period $ 7,324,173 $ 2,655,203
============= =============
</TABLE>
See notes accompanying financial statements
-5-
<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 and nine
month periods ended September 30, 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 Corp. (the "Company" or "LIPH"), a holding
company for purposes aimed at advancing the delivery of healthcare on
Long Island, its wholly-owned subsidiaries which consists of Island
Practice Association, Inc., Island Behavioral Health Association,
Inc., and Island Dental Professional Association, Inc. ("IPAs"), and
its seventy-two percent (72%) 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 owns a thirty-three and one-third (33-1/3) interest in
NextStage Healthcare Resources, Inc. ("NextStage Resources"). LIPH
records the investment in NextStage Resources utilizing the equity
method.
6
<PAGE>
Notes to Consolidated Financial Statements, cont'd
5. Related Parties:
NextStage Healthcare Management, Inc. ("NextStage Management") is a
wholly owned subsidiary of NextStage Healthcare Resources, Inc.
LIPH, MDLI and the IPAs have a management service agreement with
NextStage Management. This agreement stipulates that NextStage
Management will provide management and consulting services to MDLI for
a five year period ending October 10, 2000. NextStage Management will
perform most administrative services on behalf of MDLI. Under the
terms of the agreement, MDLI is currently providing NextStage
Management a management fee of 100% of costs incurred. When covered
lives, the number of people enrolled, exceed 50,000, fees charged by
NextStage Management will be based on a percentage of premiums
generated by the HMO.
6. Subsequent Events:
MDLI's business plan for 1996 requires additional capital of
$2,000,000. 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
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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 $3,600,000 at September 30,
1996, compared to approximately $1,500,000 at September 30, 1995. Of the
$3,600,000, LIPH had working capital of $1,400,000 and MDLI had working capital
of $2,200,000. The Company's current ratio at September 30, 1996, was 1.7 to 1.
The increase in the Company's working capital and current ratio at September
30, 1996, compared to September 30, 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) and nine (9) months ended September 30, 1996, were
approximately $7,300,000 and $15,400,000, respectively, generated primarily
through the payments of health premiums by or on behalf of MDLI's enrollees.
There were no revenues for the three (3) and nine (9) months ended September
30, 1995. MDLI did not commence operations until January 1, 1996, and no
revenues were generated other than interest income for 1995. Membership at
September 30, 1996, was 8,512 subscribers, representing approximately 17,479
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 September 30, 1996, and allocated globally to the IPAs by contract for the
payment of medical claims. The IPAs are currently spending less than the 83%.
Medical expenses for the three (3) and nine (9) months ended September 30,
1996, were approximately
8
<PAGE>
Management's Discussion and Analysis, cont'd
$6,000,000 and $12,700,000, respectively. Since there were no operations for
the same three (3) and nine (9) month period ended September 30, 1995, there
were no medical claims paid or incurred. Management fees for the three (3) and
nine (9) period ended September 30, 1996, were approximately $2,000,000 and
$5,700,000, respectively. General and administrative expenses were
approximately $380,000 and $1,000,000 for the three (3) and nine (9) month
periods ended September 30, 1996, as compared to approximately $280,000 and
$1,340,000 for the same periods ended September 30, 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 to
develop the provider network.
Net Loss Applicable To Common Shareholders
Net loss applicable to common shareholders for the three (3) and nine (9)
months ended September 30, 1996, were ($896,000) or ($156) net loss per share
and ($2,850,000) or ($492) net loss per share, respectively. There were no
shares issued for the same periods ended September 30, 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
(6) There were no reports on Form 8-K for the nine months ended
September 30, 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, Corp.
-------------------------------------
Date November 15, 1996
----------------- --------------------------------------------------
David Weissberg, MD, President and CEO
Date November 15, 1996
----------------- --------------------------------------------------
Harris S. Topel, CPA, Assistant Treasurer and CFO
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,324,173
<SECURITIES> 0
<RECEIVABLES> 1,019,532
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,822,109
<PP&E> 24,403
<DEPRECIATION> 2,537
<TOTAL-ASSETS> 11,507,685
<CURRENT-LIABILITIES> 5,185,941
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 5,703,482
<TOTAL-LIABILITY-AND-EQUITY> 11,507,685
<SALES> 15,372,365
<TOTAL-REVENUES> 15,372,365
<CGS> 12,731,012
<TOTAL-COSTS> 12,731,012
<OTHER-EXPENSES> 6,766,520
<LOSS-PROVISION> (3,798,412)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,844,021
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,844,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,844,021)
<EPS-PRIMARY> (491.53)
<EPS-DILUTED> 0
</TABLE>
