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 March 31, 1998
[ ] 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: 0-20881
HEALTHCOR HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-2294072
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8150 North Central Expressway, Suite M-2000, Dallas, Texas 75206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 692-4663
---------------------------------------
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 [ ]
As of May 20, 1998 approximately 10,090,346 shares of
Common Stock were issued and outstanding.
Total number of sequentially numbered pages 16
Exhibit Index on sequentially numbered page 12
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ------------------------------------------------------------------------------
The unaudited condensed consolidated financial statements include the
accounts of HealthCor Holdings, Inc. and subsidiaries (the "Company") and 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
considered necessary for a fair presentation in the following financial
statements have been included. These condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and the related notes for the year ended December 31, 1997, included in the
Company's Report on Form 10-K, as filed with the Securities and Exchange
Commission.
2
<PAGE>
HEALTHCOR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------- ------------
ASSETS 1998 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................... $ 7,506,984 $ 21,820,308
Accounts receivable, net ....................... 44,429,635 38,635,806
Federal income tax refund receivable ........... 5,813,676 5,828,888
Supplies inventory ............................. 4,340,521 4,258,834
Prepaid expenses and other assets .............. 1,876,692 1,358,026
Deferred income taxes .......................... 963,213 973,233
------------- -------------
Total current assets .................... 64,930,721 72,875,095
Property and equipment, net ...................... 30,545,290 29,131,578
Excess of cost of acquired businesses over fair
values of net assets acquired, net ............... 47,600,141 48,085,306
Other assets ..................................... 3,471,833 3,121,044
------------- -------------
Total assets ............................ $ 146,547,985 $ 153,213,023
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued payroll and related expenses ........... $ 7,268,017 $ 8,130,484
Accounts payable and accrued expenses .......... 12,508,577 11,099,771
Current portion of long-term debt .............. 1,086,175 1,576,502
Current portion of capital lease obligations ... 6,405,770 6,738,548
Income taxes payable ........................... 266,316 305,000
------------- -------------
Total current liabilities ............... 27,534,855 27,850,305
Deferred income taxes and other .................. 3,823,974 4,063,260
Long-term debt ................................... 506,306 644,236
11% Senior Notes ................................. 80,000,000 80,000,000
Capital lease obligations ........................ 907,413 1,393,691
------------- -------------
Total liabilities ....................... 112,772,548 113,951,492
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 40,000,000
shares authorized;10,090,346 and 10,089,346 shares
issued and outstanding at March 31, 1998 and
December 31,1997, respectively ................. 100,903 100,893
Additional paid-in capital ..................... 39,908,803 39,906,814
Retained deficit ............................... (6,234,269) (746,176)
------------- -------------
Total stockholders' equity .............. 33,775,437 39,261,531
------------- -------------
Total liabilities and stockholders'
equity ........................................... $ 146,547,985 $ 153,213,023
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets
3
<PAGE>
HEALTHCOR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
------------------------
MARCH 31,
------------------------
1998 1997
---------------------------
(UNAUDITED)
Net revenues ..................................... $ 32,682,376 $33,764,708
Direct expenses .................................. 17,801,443 14,297,338
------------ -----------
Gross profit ..................................... 14,880,933 19,467,370
Other costs and expenses:
General and administrative ..................... 14,232,689 13,652,594
Depreciation and amortization .................. 1,432,914 1,092,976
Provision for doubtful accounts ................ 2,343,625 1,046,543
------------ -----------
Total costs and expenses ................. 18,009,228 15,792,113
------------ -----------
Income (loss) from operations .................... (3,128,295) 3,675,257
Interest expense, net ............................ 2,359,798 661,531
------------ -----------
Income (loss) before income taxes ................ (5,488,093) 3,013,726
Provision for income taxes ....................... -- 1,205,474
------------ -----------
Net income (loss) ................................ $ (5,488,093) 1,808,252
============ ===========
Net income (loss) per common share ............... (0.54) 0.18
============ ===========
Net income (loss) per common share - assuming
dilution ......................................... $ (0.54) $ 0.18
============ ===========
Weighted average common shares outstanding ....... 10,090,057 10,023,416
============ ===========
Weighted average common shares outstanding and
dilutive common stock
options....................................... 10,090,057 10,177,552
============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
HEALTHCOR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
------------------------
MARCH 31,
------------------------
1998 1997
------------ -----------
Cash flows from operating activities:
Net income (loss) .............................. $ (5,488,093) $ 1,808,252
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization ............... 2,302,041 1,823,766
Proceeds on disposition on assets ........... -- 34,404
Changes in operating assets and
liabilities, net of acquired businesses:
Accounts receivable, net ................. (5,793,925) (7,119,114)
Prepaid expenses and other assets ......... (944,220) 1,048,405
Deferred income taxes ..................... (6,983) (586,095)
Accounts payable and accrued expenses ..... 324,054 (4,315,714)
Income taxes payable/receivable ........... (23,473) 1,769,490
Deferred revenue .......................... -- 41,553
------------ -----------
Net cash used in operating
activities ............................. (9,630,599) (5,495,053)
------------ -----------
Cash flows from investing activities:
Payments and adjustments for business
acquisitions, net of cash acquired ..... 133,648 (510,154)
Additions to property and equipment ............ (3,311,450) (1,739,728)
------------ -----------
Net cash used in investing
activities ............................. (3,177,802) (2,249,882)
------------ -----------
Cash flows from financing activities:
Proceeds from issuance of debt ................. -- 8,585,000
Payments on debt and capital lease
obligations ................................ (1,506,923) (1,665,350)
Issuance of common stock ................... 2,000 38,722
------------ -----------
Net cash provided by (used in)
financing activities ....... (1,504,923) 6,958,372
------------ -----------
Net decrease in cash and cash equivalents ........ (14,313,324) (786,563)
Cash and cash equivalents, beginning of period.... 21,820,308 (184,264)
Cash and cash equivalents, end of period ......... $ 7,506,984 $ (970,827)
============ ===========
Supplemental disclosure of cash flow information:
Debt issued in acquisitions ..................... $ -- $ 50,000
Issuance of capital lease obligations ........... 59,611 130,600
============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
HEALTHCOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited condensed consolidated financial statements include the
accounts of HealthCor Holdings, Inc. and subsidiaries (the "Company") for the
three months ended March 31, 1998 and 1997. All significant intercompany
transactions have been eliminated. Direct expenses on the statements of income
include all costs directly related to the production of net revenues, such as
salary and related benefit costs, depreciation of hand-held point-of-care
computers, billable medical supplies, product purchase costs, and rental
equipment depreciation. Depreciation costs not directly attributable to the
generation of net revenues are included in other costs and expenses. The
accompanying unaudited condensed consolidated financial statements and notes
should be read in conjunction with the Company's consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997. Certain amounts in the statements of
income have been reclassified from earlier presentations.
2. Basis of Reporting
The unaudited condensed consolidated financial statements of the Company
have been prepared under generally accepted accounting principles assuming that
the Company will continue as a going concern. The Company recorded a net loss of
approximately $(15.6) million during 1997 and a net loss of approximately $(5.5)
million during the three months ended March 31, 1998 and had negative cash flow
from operations for both periods. The Company expects to report additional net
losses and negative cash flow amounts in 1998. These factors are expected to
negatively impact the Company's overall liquidity position in 1998.
Management has taken the following actions with respect to these matters:
(i) pursued a secured working capital finance relationship (see note 4.), (ii)
obtained an additional equipment lease finance facility, (iii) identified and
imposed some controls to reduce loss exposures from Medicare nursing operations
(see "Management's Discussion and Analysis of Financial Condition and Results of
Operation - Overview"), (iv) intensified collection efforts, and (v) accelerated
realization of approximately $5.8 million of cash flow from tax positions. Based
on these actions, management believes that the Company will have sufficient
liquidity to meet its capital requirements through December 31, 1998 and
therefore continue as a going concern.
The Company has engaged the services of an investment bank to assist it in
evaluating various approaches to strengthen and grow the Company. Management is
actively engaged in various negotiations designed to result in either
recapitalization, merger or sale of the Company.
3. 11% Senior Notes:
On December 1, 1997, an offering of senior notes was completed to
refinance indebtedness outstanding under the previous bank credit facility. The
Company sold $80 million principal amount of 11% Senior Notes due December 1,
2004 (the "Senior Notes") to qualified institutional buyers in reliance on the
exemption from the registration requirements of the Securities Act of 1933
provided by Rule 144. The Senior Notes bear interest at the rate of 11% per
annum, payable in arrears on June 1 and December 1 of each year, commencing June
1, 1998. The Senior Notes bear interest at the rate of 11.5% from March 1, 1998
through May 29, 1998. The Company filed a Form S-4 registration statement with
the Securities and Exchange Commission to register the Senior Notes so the
original restricted notes may be exchanged, at the option of the holder, for
identical notes without resale or transfer restrictions. The exchange offer
period expires on June 15, 1998.
4. Borrowings:
Simultaneously with the closing of the 11% Senior Notes, the Company
entered into a new bank credit facility, consisting of a three-year revolving
credit line providing up to $20 million of availability. The bank credit
facility was available in multiple drawings from time to time subject to certain
conditions and limitations.
6
<PAGE>
The revolving credit line contained certain financial covenants with respect to
maintenance of various ratios. The Company was in default of several of the
financial covenants and was unable to incur indebtedness under the facility, and
the facility has been replaced.
The Company has replaced its revolving credit line with a two-year
secured line of credit with a maximum availability of $20 million and an initial
availability of $10 million. The advances are based on 80% of the net
collectable value of the Company's accounts receivable. "Net Collectable Value"
is defined as the amount the Company bills third party payors less patient
co-payments and deductible obligations and contractual allowances established by
the Company and acceptable to the lender. Interest on the outstanding balance of
the facility is payable monthly at an annual rate of the prime rate plus two
percent. The Company will also pay a collateral management fee of 0.083% per
month on the average outstanding balance. Collections of receivables by the
Company will be credited to the facility on a daily basis. Advances under this
facility may be used to finance the working capital and general corporate
requirements of the Company.
5. Earnings Per Share
In February 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128 entitled "Earnings Per Share"
which requires publicly held companies with potentially dilutive securities to
change their earnings per share computation for years ending after December 15,
1997, and show a basic earnings per share (based on the weighted average number
of common shares outstanding) and a diluted earnings per share (based on the
weighted average number of common shares outstanding plus the effect of all
dilutive securities, such as stock options and warrants). The Company adopted
SFAS No. 128 in the fourth quarter of 1997.
6. Income Taxes
As a result of the net loss recorded during the three months ended March
31, 1998, and the inability to
carry the net loss back to prior periods, the Company did not record an income
tax benefit for the three months ended March 31, 1998.
7. Litigation
On March 20, 1998, the Company and several of its current and former
officers were named as defendants in a lawsuit alleging certain violations of
federal securities laws by the Company. The plaintiffs in the lawsuit seek to
represent a class of persons who purchased shares of the Company's common stock
from March 31, 1997 through and including March 31, 1998. The Company intends to
vigorously defend the lawsuit but is currently unable to assess the likelihood
of success in the litigation, which is in the early stages of fact finding. An
adverse result in the litigation could have a material adverse effect on the
Company's business and operations.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------------
OVERVIEW
The Company provides fully integrated home health care services, including
nursing, respiratory therapy/medical equipment and infusion therapy, in nine
states in the southwestern and central United States.
The Company's net revenue mix has changed dramatically as a result of
acquisitions and internal growth, shifting from predominantly nursing services
to higher margin respiratory therapy/medical equipment and infusion therapy
businesses. Following is a breakdown of net revenue mix (dollars in thousands):
THREE MONTHS ENDED MARCH 31,
---------------------------------
1998 1997
--------------- ---------------
Nursing .................................... $10,323 31.6% $18,253 54.0%
Respiratory therapy/medical equipment ...... 13,995 42.8 9,352 27.7
Infusion therapy ........................... 4,785 14.6 4,758 14.1
Other ...................................... 3,579 11.0 1,402 4.2
------- ----- ------- -----
$32,682 100.0% $33,765 100.0%
======= ===== ======= =====
The Company has experienced a significant change in its operating
environment due to substantial changes and reductions made in reimbursement for
Medicare Part A nursing and therapy services. Medicare's complex revised
methodology and the lack of provider specific per beneficiary limits have
required the Company to assess the economic impact of the reduced reimbursement
and re-evaluate its participation in the Medicare program. To that end, the
Company has announced and implemented the first phase of restructuring its
operations through branch closure and consolidation in the first quarter of
1998. The Company is currently in the process of finalizing additional
significant reductions in Medicare operations to be implemented in the second
quarter of 1998
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain items included in the Company's
unaudited condensed consolidated statements of income as a percentage of net
revenues:
THREE MONTHS ENDED
MARCH 31,
1998 1997
-------- --------
Net revenues ................................... 100.0% 100.0%
Direct expenses ................................ 54.5 42.3
-------- --------
Gross profit ................................... 45.5 57.7
Other costs and expenses:
General and administrative ................. 43.5 40.4
Depreciation and
amortization ........................... 4.4 3.2
Provision for doubtful
accounts ............................... 7.2 3.1
-------- --------
Total costs and
expenses ......................... 55.1 46.7
-------- --------
Income from operations ......................... (9.6) 11.0
Interest, net .................................. (7.2) (2.0)
-------- --------
Income (loss) before income
taxes .......................................... (16.8) 9.0
Provision for income taxes ..................... -- 3.6
-------- --------
Net income (loss) .............................. (16.8)% 5.4%
======== ========
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
NET REVENUES. Net revenues decreased from $33.8 million for the three
months ended March 31, 1997 to $32.7 million for the same period in 1998, a
decrease of $1.1 million, or 3.2%. This decrease is attributable to a reduction
in Medicare nursing revenues resulting from regulatory changes and declining
visit volumes. These decreases resulted in the closing or consolidation of 32
Medicare nursing offices during the first quarter of 1998. This decrease is
partially offset by an increase in net revenues generated from acquisitions and
from internal growth in respiratory therapy, infusion therapy and managed care
nursing revenues.
As a result of 1998 Medicare per-visit cost limitations and the recently
announced per-beneficiary limitations enacted by the Medicare Interim Payment
System (IPS), the Company recorded a $5.6 million revenue adjustment during the
three month ended March 31, 1998. This revenue adjustment is based on estimates
of the potential effect these reimbursement changes will have on the Company's
1998 results of operations. Medicare has not furnished the Company's specific
provider based per-beneficiary limits. Accordingly, the actual effects related
to the per-beneficiary limits could differ from the estimates used during the
three months ended March 31, 1998.
DIRECT EXPENSES. Included in direct expenses are all costs directly
related to the production of net revenues, including salary and employee benefit
costs, depreciation of hand-held point-of-care computers, billable medical
supplies, product purchase costs, and rental equipment depreciation. Direct
expenses increased from $14.3 million for the three months ended March 31, 1997
to $17.8 million for the same period in 1998, an increase of $3.5 million, or
24.5%. This increase is the result of the expenses associated with the
operations of companies acquired during 1997 and internal growth. As a
percentage of net revenues, direct expenses increased from 42.3% in 1997 to
54.5% in 1998 primarily as a result of the higher costs incurred for
pharmaceutical and nursing supplies and higher costs incurred for respiratory
sales and rental equipment.
GENERAL AND ADMINISTRATIVE. Included in general and administrative
expenses are occupancy costs, field office administration, corporate office
salaries and benefits, legal and accounting fees, and other non-patient care
operating expenses. These costs increased from $13.7 million for the three
months ended March 31, 1997 to $14.2 million for the same period in 1998, an
increase of $0.5 million, or 4.2%. The general and administrative expenses
increased as a percent of net revenues from 40.4% in 1997 to 43.5% in 1998. The
shift in business mix contributed to higher general and administrative expenses.
Respiratory therapy/medical equipment and infusion therapy
9
<PAGE>
businesses are proportionality higher because the majority of all personnel
costs for these businesses are classified in this category. Additionally,
central office overhead increased in order to support Company growth,
particularly in the occupancy and information technology areas. These increases
are partially offset by the closing or consolidation of 32 Medicare nursing
locations during the first quarter of 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased from $1.1 million for the three months ended March 31, 1997, to $1.4
million for the same period in 1998, an increase of $0.3 million, or 31.1%. The
increase is primarily due to the depreciation of increased capital expenditures
for purchases of home medical equipment to service the growing
respiratory/infusion therapy business and an increased investment in information
technology equipment and costs capitalized as part of the development of the
Company's clinically based management information system.
PROVISION FOR DOUBTFUL ACCOUNTS. The provision for doubtful accounts
increased from $1.0 million for the three months ended March 31, 1997, to $2.3
million for the same period in 1998, an increase of $1.3 million, or 123.9%.
This increase is primarily due to the Company's continuing evaluation of certain
accounts receivable in view of the current industry environment.
INTEREST, NET. Interest, net increased from $0.7 million for the three
months ended March 31, 1997, to $2.4 million for the same period in 1998, an
increase of $1.7 million, or 256.7%. This increase is primarily a result of the
issuance of the 11% Senior Notes on December 1, 1997.
PROVISION FOR INCOME TAXES. The provision for income taxes decreased
from $1.2 million for the three months ended March 31, 1997, to $0 for the same
period in 1998, a decrease of $1.2 million. The decrease is a result of the loss
before income taxes in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are for debt service, for
additional working capital to fund growth of the Company's managed care business
and accounts receivable. The Company recorded a net loss of $(5.5) million
during the first quarter 1998 and had negative cash flow from operations. The
Company expects to have additional losses and negative cash flow amounts in
1998. This has negatively impacted the availability of the Company's current
bank financing sources and is expected to decrease the Company's overall
liquidity position during the remainder of 1998. Management believes that
assuming the addition of a secured working capital finance relationship (see
below), an additional equipment lease finance facility, controls to reduce
losses from Medicare nursing operations, intensified collection efforts and
accelerated realization of approximately $5.8 million of positive cash flow from
tax positions, the Company will have sufficient liquidity to meet its capital
requirements through December 31, 1998.
At March 31, 1998, the Company had current assets of $64.9 million and
current liabilities of $27.5 million, resulting in working capital of $37.4
million as compared to working capital of $45.0 million as of December 31, 1997.
Working capital decreased by $7.6 million primarily as a result of increased
working capital requirements associated with operations and additional capital
expenditures.
Accounts receivable at March 31, 1998, were $44.4 million, compared to
$38.6 million at December 31, 1997. Days of Sales Outstanding ("DSO"), defined
as trade accounts receivable divided by average daily net revenues for the
preceding three months, were 114 as of March 31, 1998, compared to 94 at
December 31, 1997. The increase in DSO from December 31, 1997 to March 31, 1998
is attributable primarily to an overall increase in net revenue from respiratory
therapy/medical equipment and infusion therapy. Historically these lines of
business have higher DSO and slowness by third parties in paying. In addition,
Medicare nursing, which produces shorter dated receivables has sharply declined.
Also, Medicare has implemented a policy to slow, by 14 days, the payment of
respiratory/medical equipment billings. The Company is continuing intensified
initiatives to address the increase in DSO, including adding more experienced
billing and collecting management, commencing installation of an electronic
claims submission system, and more closely managing the billing and collecting
process to increase efficiency and effectiveness.
10
<PAGE>
Net cash used in operating activities increased from $5.5 million for
the three months ended March 31, 1997, to $9.6 million for the same period in
1998, or an additional cash outflow of $4.1 million. The first quarter net loss,
increase in accounts receivable and the reduction in debt obligations were
primarily responsible for the reduction in operating cash during 1998. Net cash
used in investing activities increased from $2.2 million for the three months
ended March 31, 1997 to $3.2 million for the same period in 1998. This is
attributable to the increased purchases of home medical equipment and
information technology equipment. Net cash provided by (used in) financing
activities decreased from $7.0 million for the three months ended March 31, 1997
to $(1.5) million for the same period in 1998. Cash of $1.5 million was used for
payments on debt and capital lease obligations. The Company utilizes capital
leases to acquire equipment, primarily information technology equipment and
medical equipment needed to accommodate increased sales volume in the
respiratory therapy/medical equipment business. Such lease amounts were $0.06
million and $0.1 million for the three months ended March 31, 1998 and 1997,
respectively. The Company obtained lease financing and deferred payment terms
from two significant home medical/respiratory equipment vendors.
As of March 31, 1998, the Company had a cash balance of $7.5 million and
had no outstanding amounts under its revolving credit line. The Company is
currently in default of several of the financial covenants under the bank credit
facility and is unable to incur indebtedness under the facility. As a result,
the Company has classified certain capital lease obligations as current
liabilities under the cross-default provisions of the bank credit facility. The
Company has letters of credit outstanding amounting to $0.8 million in
connection with the Company's workers' compensation insurance program. In
addition, the indenture under the Company's Senior Notes prohibits the Company
from incurring additional indebtedness (other than limited permitted
indebtedness) or issuing preferred equity interests (as defined in the
indenture) unless the consolidated fixed charge ratio is greater than 2.0 to 1.
At March 31, 1998, the Company's consolidated fixed charge ratio is less than
2.0 to 1. The indenture, however, does permit the Company to incur indebtedness
under any replacement of the bank credit facility in an amount not to exceed
$20.0 million.
The Company expects to replace its revolving credit line with a two-year
secured line of credit with a maximum availability of $20 million in the next
week with immediate availability of $10-12 million. The advances are based on
80% of the net collectable value of the Company's accounts receivable. "Net
Collectable Value" is defined as the amount the Company bills third party payors
less patient co-payments and deductible obligations and contractual allowances
established by the Company and acceptable to the lender. Interest on the
outstanding balance of the facility is payable monthly at an annual rate of the
prime rate plus two percent. The Company will also pay a collateral management
fee of 0.083% per month on the average outstanding balance. Collections of
receivables by the Company will be credited to the facility on a daily basis.
Advances under this facility may be used to finance the working capital and
general corporate requirements of the Company.
11
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
11 Computation of net income per common equivalent share
(b) The Company filed no reports on Form 8-K during the quarterly
period ended March 31, 1998.
12
<PAGE>
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.
HEALTHCOR HOLDINGS, INC.
Date: May 20, 1998 By: S. Wayne Bazzle, Chairman of the
Board and Chief Executive Officer
13
EXHIBIT 11.1
HEALTHCOR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED NET INCOME PER COMMON EQUIVALENT SHARES
THREE MONTHS ENDED
------------------
BASIC AND DILUTED NET INCOME (LOSS) MARCH 31,
PER COMMON SHARE ---------
1998 1997
---- ----
Numerator:
Net income (loss) .............................. $ (5,488,093) $ 1,808,252
============ ===========
Denominator:
Weighted average common shares
outstanding-basic ............................ 10,090,057 10,023,416
Effect of dilutive stock options:
Assuming exercise of options, reduced by
the number of common shares which
could have been purchased with the
proceeds from exercise of such options ....... -- 154,136
------------ -----------
Weighted average number of common shares
outstanding and dilutive stock options -
diluted ...................................... 10,090,057 10,177,552
============ ===========
Net income (loss) per common share ............... $ (0.54) $ 0.18
Net income (loss) per common share- assuming
dilution ......................................... $ (0.54) $ 0.18
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM MARCH 31, 1998 10-Q BALANCE SHEET & INCOME STATEMENT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 7,506,984
<SECURITIES> 0
<RECEIVABLES> 44,429,635
<ALLOWANCES> 0
<INVENTORY> 4,340,521
<CURRENT-ASSETS> 64,930,721
<PP&E> 30,545,290
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