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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
- ----- Exchange Act of 1934 for the quarterly period ended June 30, 1996.
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or
Transition Report pursuant to Section 13 or 15 (d) of the Securities
- ------ Exchange Act of 1934 for the transition period from to .
------- ------
Commission file number 0-20619
Matria Healthcare, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2205984
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 Parkway Place, 12th Floor, Marietta, Georgia 30067
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(Address of principal executive offices) (Zip Code)
(770) 423-4500
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(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 requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of the issuer's only class of Common Stock,
$ .01 par value, as of July 30, 1996 was 36,028,610 .
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PART I - FINANCIAL INFORMATION
MATRIA HEALTHCARE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
- ------ ---------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,875 4,793
Short-term investments 27,694 3,273
Trade accounts receivable, less allowances of $17,370
and $7,600 in 1996 and 1995, respectively 24,306 17,767
Inventories 2,163 1,288
Prepaid expenses and other current assets 4,265 708
-------- -------
Total current assets 70,303 27,829
Property and equipment, less accumulated depreciation of
$14,092 and $16,130 in 1996 and 1995, respectively 15,460 7,858
Excess of cost over net assets of businesses acquired, less
accumulated amortization of $12,770 and $1,967 in
1996 and 1995, respectively 156,736 4,556
Software and other intangibles, less accumulated amortization
of $992 and $587 in 1996 and 1995, respectively 7,363 1,034
Other assets 3,277 3,306
-------- -------
$253,139 44,583
======== =======
</TABLE>
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MATRIA HEALTHCARE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
- ------------------------------------ --------- ------------
<S> <C> <C>
Current Liabilities:
Accounts payable, principally trade $ 6,802 2,625
Current installments of long-term debt
and obligations under capital leases 2,902 1,914
Accrued expenses and other current liabilities 35,021 8,431
-------- --------
Total current liabilities 44,725 12,970
Long-term debt and obligations under capital leases, excluding
current installments 4,163 2,124
Other long-term liabilities 11,094 -
-------- --------
Total liabilities 59,982 15,094
Shareholders' equity:
Preferred stock, $.01 par value, 50,000 shares
authorized at June 30, 1996 and $.001
par value 2,000 authorized at December 31, 1995.
None issued at June 30, 1996 and December 31, 1995 - -
Common stock, $.01 par value, 100,000 shares
authorized, 35,189 shares issued at June 30, 1996;
$.001 par value, 60,000 shares authorized, 17,660
shares issued at December 31, 1995 360 18
Additional paid-in capital 279,755 87,608
Notes receivable and accrued interest from officers (3,333) (3,630)
Accumulated deficit (83,625) (53,968)
-------- --------
193,157 30,028
Treasury stock, at cost - (539)
-------- --------
Total shareholders' equity 193,157 29,489
-------- --------
$253,139 44,583
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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MATRIA HEALTHCARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months ended June 30, Six Months ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 35,588 22,067 60,338 45,931
Cost and expenses:
Cost of revenues 15,317 9,753 26,041 19,895
Selling and administrative 18,385 12,049 34,034 25,017
Provision for doubtful accounts 2,086 1,324 3,553 2,758
Amortization of goodwill and other intangibles 8,687 432 11,698 724
Restructuring costs - 530 15,025 2,053
Settlement of litigation - 4,300 - 4,300
-------- ------- -------- -------
44,475 28,388 90,351 54,747
------- -------- -------
Operating loss (8,887) (6,321) (30,013) (8,816)
Interest expense (112) (91) (255) (193)
Interest income 448 194 650 399
Other income (expense), net (16) 42 (39) 88
Loss before income taxes (8,567) (6,176) (29,657) (8,522)
Income tax expense - 75 - 150
-------- ------- -------- -------
Net loss $ (8,567) (6,251) (29,657) (8,672)
======== ======= ======== =======
Net loss per common share
and common share equivalent $ (.25) (.36) (1.04) (.50)
======== ======= ======== =======
Weighted average number of common shares
and common share equivalents 34,960 17,338 28,505 17,311
======== ======= ======== =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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MATRIA HEALTHCARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended
-----------------------------------
June 30,
-----------------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(29,657) (8,672)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Restructuring costs and asset write-downs 15,025 -
Depreciation and amortization 13,986 3,473
Provision for doubtful accounts 3,553 2,758
Unrealized losses (gain) on short-term investments 108 (89)
Purchase of short-term investments (8,381) (526)
Sales of short-term investments 12,739 956
Other 186 (166)
Changes in operating assets and liabilities, net of
effect of acquisitions:
Decrease in accounts receivable 827 998
Decrease in prepaids and other current assets 1,455 663
Decrease (increase) in other assets 190 (246)
Increase (decrease) in accounts payable 2,528 (1,251)
Increase (decrease) in accrued expenses and other current liabilities (8,476) 3,755
-------- -------
Net cash provided by operating activities 4,083 1,653
Cash Flows from Investing Activities:
Purchases of property and equipment (2,144) (821)
Disposition of property and equipment 621 -
Acquisition of businesses, net of cash acquired 2,378 76
-------- -------
Net cash provided by (used in) investing activities 855 (745)
Cash Flows from Financing Activities:
Proceeds from issuance of debt 1,530 -
Principal repayments of debt and capital lease obligations (2,619) (3,117)
Proceeds from issuance of common stock 3,233 495
-------- -------
Net cash provided by (used in) financing activities 2,144 (2,622)
-------- -------
Increase (decrease) in cash and cash equivalents 7,082 (1,714)
Cash and cash equivalents at beginning of period 4,793 9,149
-------- -------
Cash and cash equivalents at end of period $ 11,875 7,435
======== =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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MATRIA HEALTHCARE, INC.
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
1. General
The consolidated condensed financial statements as of June 30, 1996
are unaudited. Certain reclassifications of prior period information
have been made to conform to current year presentation. On March 8,
1996 Tokos Medical Corporation (Delaware)("Tokos") and Healthdyne,
Inc. ("Healthdyne") merged with and into Matria Healthcare,
Inc.("Matria" or the "Company") (see Note 3 - Acquisitions). The
merger was accounted for using the purchase method with Tokos being
deemed to be the acquirer, and accordingly, the financial statements
include only the results of operations for Tokos for 1995 and the
first two months of 1996 and for the combined Tokos and Healthdyne
since such date. Effective June 1, 1996 the Company also acquired
National Reproductive Medical Centers, Inc. ("NRMC") (see Note 3).
The NRMC acquisition was accounted for using the purchase method of
accounting and the results of operations of NRMC since June 1, 1996
are included in the consolidated operations of the Company. The
results for the three and six months ended June 30, 1996 are not
necessarily indicative of the results for the full year ending
December 31, 1996.
The consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and related
notes of Tokos and Healthdyne incorporated by reference into the
Company's Form 10-K for the year ended December 31, 1995 from the
Company's Report on Form 8-K/A filed on March 29, 1996.
2. Loss Per Share of Common Stock
The loss per common share and common share equivalent was based on the
weighted average number of common shares outstanding. The inclusion
of additional shares assuming the exercise of stock options would have
been antidilutive. The computation of fully diluted net loss per
share was antidilutive in each of the periods presented; therefore,
the amounts reported for primary and fully diluted loss are the same.
3. Acquisitions
On March 8, 1996, the Company completed a merger (the "Merger") with
Tokos and Healthdyne, national providers of specialized obstetrical
home healthcare and
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risk assessment services, following the approval of the respective
shareholders of each company. Under the terms of the Agreement and
Plan of Merger, each share of common stock outstanding on March 8,
1996, of Tokos and Healthdyne was exchanged for one share of Common
Stock, par value $.01 per share, of Matria, a newly created Delaware
corporation. In the Merger, Matria issued approximately 17.0 million
shares of its Common Stock to Healthdyne shareholders and
approximately 17.7 million shares of its Common Stock to Tokos
shareholders. The Merger was accounted for using the purchase method
and Tokos has been deemed the acquirer since Tokos shareholders
received approximately 51% of the newly issued shares.
The purchase price of Healthdyne was $186.697 million, of which
$156.922 million was allocated to goodwill and other intangibles and
is being amortized on a straight-line basis over 5 years.
The financial position and results of operations of Tokos and
Healthdyne were consolidated effective March 1, 1996.
In March 1995 Healthdyne made a $ 1.250 million cash payment to
acquire a 15% ownership interest in NRMC, a multi-site provider of
infertility treatment services. Effective June 1, 1996 the Company
purchased the remaining 85% ownership interest in NRMC. Total
acquisition costs of $14.207 million included the issuance of 779,679
shares of the Company's Common Stock valued at $8.50 per share ($6.627
million), assumption of NRMC common stock options and the substitution
of options to purchase 60,604 of the Company's Common Stock valued at
$8.50 per share ($515,134), and payment of $6.740 million payment in
cash to former NRMC shareholders (including the $1.250 million payment
for the initial 15% investment) and $325,000 of transaction costs.
As part of the transaction in, the Company agreed to provide stock
price protection at $8.50 per share, until the shares of Common Stock
issued in connection with the transaction have been registered for
resale under a Registration Statement to be filed with the Securities
and Exchange Commission. If the average closing price per share of
the Company's Common Stock for the five trading days prior to the
effective date of the Registration Statement falls below $8.50 per
share, the Company must, at its sole discretion, issue either
additional shares of its Common Stock or pay cash to former NRMC
shareholders. The issuance of such additional shares or payment of
cash will not affect the recorded purchase price. Contingently
issuable shares will be measured at the end of each reporting period
based upon the market price of the Company's common stock at the close
of such period.
The NRMC acquisition has been accounted for using the purchase method
of accounting. The purchase price was allocated based on estimated
fair values at acquisition. The excess of purchase price over the fair
values of the net assets acquired was $14.034 million and is being
amortized on a straight-line basis over 5 years.
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Results of operations of NRMC have been included in the consolidated
results of operations of the Company since June 1, 1996.
Pro forma unaudited consolidated operating results of the Company,
Healthdyne and NRMC for the three and six month periods ended June 30,
1996, assuming the acquisitions had been made as of January 1, 1996
are summarized below:
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data)
Three Months ended Six Months ended
June 30, 1996 June 30, 1996
---------------------- -----------------------
<S> <C> <C>
Revenue 38,023 77,264
Net loss (9,042) (36,547)
Loss per share (0.25) (1.03)
</TABLE>
The pro forma information includes certain adjustments such as
additional amortization expense as a result of goodwill. The pro
forma results do not purport to be indicative of the results of
operations which actually would have resulted had the combinations
been in effect on January 1, 1996 or the future results of operation
of the consolidated entities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
GENERAL.
On March 8, 1996, Tokos and Healthdyne merged with and into the
Company which had been created solely for the purpose of the Merger. Pursuant
to the terms of the Agreement and Plan of Merger, dated October 2, 1995, as
amended, among Tokos, Healthdyne and the Company, each share of common stock
outstanding on March 8, 1996 of Tokos and Healthdyne was exchanged for one
share of the Company's Common Stock. The Company issued approximately
17,007,000 shares of Common Stock to former Healthdyne shareholders and
approximately 17,655,000 shares to former Tokos shareholders. The Merger was
accounted for using the purchase method of accounting, and Tokos was deemed to
be the acquirer since its shareholders received approximately 51% of the newly
issued shares of Company's Common Stock.
In March 1995, Healthdyne acquired a 15% ownership interest in NRMC
for $1.250 million cash and effective June 1, 1996 the Company acquired the
remaining 85% by the issuance of 779,679 shares of the Company's Common Stock
and the assumption of NRMC common stock options which were converted into
options to purchase 60,604 of the Company's Common Stock with a total combined
value of $7.142 million and cash payments of $5.815 million, including
transaction costs of $325,000. The acquisition was accounted for using the
purchase method of accounting.
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The Company's present operations and future prospects may be
influenced by several factors, including developments in the healthcare
industry, third-party reimbursement policies and practices, and changes in
regulatory requirements or the manner in which such requirements are enforced.
As a result of the increasing cost of healthcare in the United States and
overall efforts to reduce or control government and corporate spending,
government and third-party payors are becoming increasingly focused on
promoting cost-effective healthcare services, and payors, in particular, have
become more involved in decisions regarding diagnosis and treatment to ensure
that care is delivered in a cost-effective manner.
Substantially all of the Company's current revenues are derived
directly from third-party payors for services rendered to patients by the
Company. The financial performance of all healthcare companies, including the
Company, could be adversely affected by the financial condition of certain
governmental and private payors and by their continuing efforts to reduce
healthcare costs by lowering reimbursement rates, increasing medical reviews of
invoices for services and negotiating for reduced contract rates. The Company
and its predecessor companies responded to these developments by attempting to
emphasize cost-effective therapies and procedures, pre-qualifying insurance
coverage prior to the delivery of services and educating third-party payors on
the benefits of Matria's home therapies. Although reduction in the
reimbursement rates that the Company receives for services rendered could have
an adverse impact on operations, it is hopeful that the overall cost-effective
nature of treatment in the home (as compared to hospitalization), coupled with
the potential benefits to be derived from prenatal care, will be recognized and
encouraged by any new healthcare initiatives.
The trend within the healthcare industry to deliver quality healthcare
services in a more cost-effective manner had an impact on the Company's
predecessor companies and is expected to continue to have an impact on the
Company. Driven by employers and third-party payors, as well as by legislation
and regulation, prices for services provided to patients, in general, are being
reduced, cost-effective preventative health care is being stressed and
vertically integrated networks of care providers (some of whom are accepting
the insurance risk of providing care through capitation contracts with
third-party payors) are being established. The Company anticipates that this
trend will continue and is attempting to focus its efforts on services, some of
which are offered in conjunction with third-party payors, which it believes can
benefit from this new environment. There can be no assurance, however, that
either additional changes or presently unforeseen consequences from this trend
may not develop.
The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the consolidated
financial statements and related notes of Tokos and Healthdyne incorporated
into the Company's Annual Report on Form 10-K for the year ended December 31,
1995 as filed with the Securities and Exchange Commission (the "Commission").
Since the results of Matria for the six month period ended June 30, 1996
include the results of Healthdyne only since March 1, 1996 and NRMC only since
June 1, 1996 and also include certain costs and expenses associated with the
Merger, the historical results of operations are not necessarily indicative of
the results that will be achieved by the Company during future periods.
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RESULTS OF OPERATIONS.
Revenues increased $13.521 million or 61.3% and $14.407 million or
31.4% in the three and six month periods ended June 30, 1996, respectively, as
compared to the same periods in 1995. The decline in revenues experienced by
Tokos throughout 1995 as a result of decreases in preterm labor management
patient service days continued into the first half of 1996; however, this
decline was offset by the additional Healthdyne revenues included in the
Company's revenues from March 1, 1996 through June 30, 1996, and by the
additional NRMC revenues for June 1996 included in the Company's revenues.
Revenues of the Company are expected to increase in 1996 as a result
of the addition of Healthdyne's and NRMC's revenues to the revenues of Tokos
(Healthdyne's 1995 revenues were $69.600 million and NRMC's revenues for the
period January 1, 1996 through June 30, 1996 were $7.300 million). Additional
revenues are also expected in 1996 from the marketing of the fetal fibronectin
immunoassay, a new in vitro diagnostic device used as an aid in assessing the
risk of preterm delivery in women with symptoms of preterm labor. Through a
marketing agreement entered into by Tokos in 1991, the Company has exclusive
rights to market this product in the United States, Canada and Puerto Rico.
The FDA approved a Pre-Market Approval Application for this product in
September, 1995 and the Company began marketing the product during the second
quarter of 1996 as a means of predicting whether preterm delivery was likely in
women with symptoms associated with preterm labor. The FDA recently granted
expedited review status to an application filed by the manufacturer of the
product in an effort to expand the marketing indication for the fetal
fibronectin immunoassay to asymptomatic patients - women who do not have
symptoms of preterm labor.
Cost of patient services as a percent of revenues for the three month
period ended June 30, 1996 declined to 43.0% from 44.2% in the same period in
1995. These costs remained relatively constant at 43.2% and 43.3% for the six
month periods ended June 30, 1996 and 1995, respectively. Reductions of these
costs are expected to be achieved through further consolidation of service
sites and operating efficiencies.
Selling and administrative expenses increased $9.017 million to
$34.034 million (56.4% of revenues) for the six month period ended June 30,
1996 compared with $25.017 million (54.5% of revenues) for the same period in
1995. The increase was primarily related to maintaining duplicate facilities
and staffing during the transition phase of the Merger. Although these costs
increased in absolute dollars in the three month period ended June 30, 1996 to
$18.385 million (51.7% of revenues) from $12.049 million (54.6% of revenues),
these costs declined as a percentage of revenues as facilities were
consolidated and staff reductions were made as a result of the Merger.
Excluding the amortization of the additional goodwill and other
intangibles associated with the Merger ($32.451 million per year for five
years), the Company expects to achieve annualized cost savings compared to the
historical combined costs of Tokos and Healthdyne of approximately $30.000
million by 1997, primarily as a result of reductions of patient services center
expenses in overlapping geographic locations, elimination of duplicate
facilities including corporate headquarters, and synergies in staff
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and functional areas. No assurance can be given, however, that difficulties
will not be encountered in integrating the operations of Tokos and Healthdyne
or that the full benefits and attendant cost savings expected from such
integration will be realized or achieved in the expected time frame.
As a result of the Merger and the acquisition of NRMC, a large
percentage of the assets reflected on the Company's balance sheet are
intangible assets or goodwill (as opposed to tangible assets such as cash,
accounts receivable, inventory and equipment). At June 30, 1996, the Company's
total assets were $253.139 million, of which $164.099 million, or 64.8% of
total assets, were goodwill and intangibles. In addition, the amortization or
any future write-down of such goodwill and intangibles by the Company could
have a material adverse effect on the results of operations of the Company.
The Company provides for estimated uncollectable accounts as revenues
are recognized. The provision for doubtful account as a percentage of revenues
was approximately 6% for the three and six month periods ended June 30, 1996
and 1995. The provision is adjusted periodically based upon the Company's
quarterly evaluation of historical collection experience, recoveries of amounts
previously provided, industry reimbursement trends and other relevant factors.
Therefore, the provision rate could vary on a quarterly basis.
During 1995, as Tokos' revenues continued to decline, specific
decisions were made and communicated by management related to cost reduction
efforts. The cost reduction plan consisted of reductions in the workforce
(comprised of personnel within information systems, reimbursement,
administrative support and to a lesser extent clinical services) and
termination of several facility leases. In connection with these cost
reduction activities, Tokos incurred $2.053 million of restructuring costs in
the first half of 1995. In connection with the Merger, the Company incurred
approximately $15.025 million of restructuring costs which were charged to
operations in the three month period ended March 31, 1996. Of these costs,
approximately $4.100 million related to involuntary severance of employees,
$2.500 million related to the consolidation of facilities, $5.400 million
related to the write-down of software and equipment that will be obsolete as a
result of the adoption of new systems, and $3.000 million related to other
miscellaneous Merger related costs.
Tokos recorded income tax expense of $75,000 and $150,000 related to
state franchise taxes in the three and six month periods ended June 30, 1995,
respectively. Neither Tokos in 1995 nor the Company in 1996 recorded federal or
state income tax benefits. The tax operating loss will be available to offset
future taxable income, if any.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30,1996 the Company had cash and short-term investments of
$39.569 million.
Net cash provided by operating activities was $4.083 million for the
six month period ended June 30,1996, compared with $1.653 million for the same
period in 1995.
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For the six month period ended June 30, 1996, net cash flow, was reduced by
payments of approximately $8.800 million for Merger related costs. Net cash
provided by investing activities increased to $855,000 in the six month period
ended June 30, 1996, as compared to $745,000 cash used in investing activities
in the same period in 1995. During 1995, Tokos purchased certain
physician-owned companies for which it originally provided services and during
1995 and the first quarter of 1996, Healthdyne purchased the minority interest
of certain affiliated partnerships. Notes issued in connection with these
acquisitions have a balance outstanding of $2.592 million at June 30, 1996.
The remaining balances are to be paid at various times over the next one to
four years.
In July 1995, Tokos reached a $10.000 million settlement, subject to
court approval, with the plaintiffs in a class action securities lawsuit.
Tokos accrued an aggregate liability, net of insurance proceeds, of $5.750
million for its portion of the settlement. Tokos, prior to the Merger, paid
$750,000 cash. Final court approval of the settlement was received in June
1996 and in July 1996 the Company made the final $5.000 million payment in
cash, together with accrued interest of $344,623.
The purchase price of NRMC included a $5.500 million cash payment to
shareholders of NRMC. Since these cash payments were made in July 1996, they
have been included in "Accrued Expenses and Other Current Liabilities" in the
Company's Consolidated Condensed Balance Sheet as of June 30, 1996.
The Company incurred substantial costs in connection with the Merger.
These costs include: (i) restructuring costs incurred by Tokos of approximately
$15.025 million, consisting of $4.100 million relating to severance costs of
terminated employees, $2.500 million of lease termination costs for duplicate
facilities, $5.400 million for the write-off of computer equipment and $3.025
million for other Merger-related expenses; (ii) additional liabilities incurred
by Healthdyne as a result of the Merger of approximately $9.350 million,
consisting of $9.200 million relating to severance costs of terminated
employees and $150,000 for patient service centers specifically identified to
be closed; and (iii) transaction costs of approximately $3.700 million,
consisting of $2.275 million for investment banking fees, $1.000 million for
legal and accounting fees and $425,000 for other costs such as document
printing and mailing and filing fees. As of June 30, 1996 the remaining
liability for these estimated costs was approximately $11.575 million.
Additionally, the Company may be required to make additional severance
payments of approximately $7.900 million in accordance with employment
agreements with certain officers of Tokos and Healthdyne, and may be required
to place in trust approximately $3.200 million under a retirement benefit
awards program for such officers.
The Company believes that its current cash balances, including those
acquired from Healthdyne and NRMC, and expected cash flows from operations and
investing activities, will be sufficient to finance its current operations and
fund any expansion of NRMC's business for the foreseeable future.
This Management's Discussion and Analysis contains forward-looking
statements including statements concerning expected increases in revenues
arising from the Merger,
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expected increased revenues arising from the marketing of fetal fibronectin
immunoassay, expected synergies arising from the Merger, the effect of goodwill
on the Company's results of operations, capital expenditures to be made in the
future and the adequacy of the Company's sources of cash to finance its current
and future operations. These forward-looking statements involve a number of
risks and uncertainties. In addition to the factors discussed above, among
other factors that could cause actual results to differ materially are the
following: business conditions and growth in the home healthcare industry and
the general economy; competitive factors, such as the possible entry of large
diversified healthcare companies into the obstetrical home healthcare business;
new technologies and pricing pressures; changes in third-party reimbursement
policies and practices and regulatory requirements applicable to the Company's
business; management decisions to pursue new product lines or lines of business
which involve additional costs, risks or capital expenditures; and the risk
factors listed from time to time in the Company's SEC reports, including but
not limited to, its Annual Report on Form 10-K for the year ended December 31,
1995.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As previously disclosed in July 1995, Tokos Medical Corporation
("Tokos"), a predecessor of the Company, reached a $10.000 million settlement
in the lawsuit entitled In re Tokos Medical Securities Litigation filed in the
United States District Court for the Central District of California. Tokos'
cost, was $5.750 million, net of insurance proceeds, was $5.750 million for its
portion of the settlement. Tokos previously paid $750,000 cash and the
remaining $5.000 million, plus interest in the amount of $344,623, was paid in
cash by the Company in July 1996 following final court approval of the
settlement in June 1996. The full cost of the settlement had been accrued by
Tokos prior to the merger with the Company and, consequently, will not impact
the Company's results of operations for current periods.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(27) Financial Data Schedule (For SEC use only)
(11) (b) The Company filed a Current Report on Form 8-K (Item 2.
Acquisition or Disposition of Assets) reporting the merger of a
wholly-owned subsidiary of the Company with and into National
Reproductive Medical Centers, Inc., a Delaware Corporation
("NRMC"), on July 24, 1996 and will amend the same by Amendment
No. 1 on Form 8-K/A on or before September 13, 1996 to provide
pro forma financial information not currently available. The
Form 8-K included copies of certain financial statements,
including audited financial statements of NRMC.
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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 thereunto duly authorized.
Matria Healthcare, Inc.
August 13, 1996 By: /s/ Donald R. Millard
------------------------------------
Donald R. Millard
Senior Vice President-Finance,
Chief Financial Officer and Treasurer
(duly authorized and principal
financial officer.)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HEALTHDYNE FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 11,875
<SECURITIES> 27,694
<RECEIVABLES> 41,676
<ALLOWANCES> (17,370)
<INVENTORY> 2,163
<CURRENT-ASSETS> 70,303
<PP&E> 29,552
<DEPRECIATION> (14,092)
<TOTAL-ASSETS> 253,139
<CURRENT-LIABILITIES> 44,725
<BONDS> 0
0
0
<COMMON> 360
<OTHER-SE> 192,797
<TOTAL-LIABILITY-AND-EQUITY> 193,157
<SALES> 0
<TOTAL-REVENUES> 60,338
<CGS> 0
<TOTAL-COSTS> (86,798)
<OTHER-EXPENSES> 615
<LOSS-PROVISION> (3,553)
<INTEREST-EXPENSE> (259)
<INCOME-PRETAX> (29,657)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,657)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,657)
<EPS-PRIMARY> (1.04)
<EPS-DILUTED> (1.04)
</TABLE>
