<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 000-21505
INTENSIVA HEALTHCARE CORPORATION
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 43-1690769
--------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7733 FORSYTH BLVD., 8TH FLOOR, ST. LOUIS, MISSOURI 63105
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(314) 725-0112
----------------------------
(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 registrant's Common Stock, par value
$0.001 per share, at July 31, 1997, was 9,953,212 shares.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTENSIVA HEALTHCARE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
1997 DECEMBER 31,
(UNAUDITED) 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents
Short-term investments $ 1,787,675 $ 2,884,977
Accounts receivable, less allowance for doubtful 6,528,474 12,987,220
accounts of $1,248,000 and $1,270,000, 15,596,488 7,579,922
respectively 288,559 254,177
Inventories 281,554 583,204
Prepaid expenses ----------- -----------
Total current assets 24,482,750 24,289,500
5,104,172 3,434,560
309,873 147,117
Property and equipment, net 1,054,626 593,185
Organizational and preopening costs, net ----------- -----------
Other assets $30,951,421 $28,464,362
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ 765,410 $ 484,966
Current installments of long-term obligations 4,253,577 3,077,326
Accounts payable and accrued expenses 1,358,239 1,036,071
Accrued salaries, wages and benefits ----------- -----------
Total current liabilities 6,377,226 4,598,363
Long-term obligations, less current installments 1,235,341 634,781
Deferred rent expense 1,080,972 1,085,300
Stockholders' equity: 9,905 9,905
Common stock, $0.001 par value, 70,000,000 30,184,544 30,184,544
shares authorized, 9,905,062 shares issued (7,936,567) (8,048,531)
and outstanding ----------- -----------
Additional paid-in capital 22,257,882 22,145,918
Accumulated deficit ----------- -----------
Total stockholders' equity $30,951,421 $28,464,362
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 3
INTENSIVA HEALTHCARE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net patient service revenues $14,258,880 $ 3,567,356 $26,659,263 $ 6,076,075
Costs and expenses:
Operating expenses 12,437,232 3,702,268 22,895,616 6,304,812
General and administrative 1,187,837 672,059 2,200,560 1,323,748
Provision for doubtful accounts 195,624 136,140 1,058,958 150,036
Depreciation and amortization 313,302 174,537 606,512 248,879
----------- ----------- ----------- -----------
Total costs and expenses 14,133,995 4,685,004 26,761,646 8,027,475
----------- ----------- ----------- -----------
Operating income (loss) 124,885 (1,117,648) (102,383) (1,951,400)
Interest income 122,531 116,655 325,258 235,601
Interest expense (49,902) (19,440) (110,911) (34,172)
----------- ----------- ----------- -----------
Net income (loss) $ 197,514 $(1,020,433) $ 111,964 $(1,749,971)
=========== =========== =========== ===========
Income (loss) per share $ 0.02 $ (0.64) $ 0.01 $ (1.10)
=========== =========== =========== ===========
Weighted average outstanding shares 10,455,328 1,589,775 10,458,493 1,589,775
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 4
INTENSIVA HEALTHCARE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 111,964 $(1,749,971)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 606,512 248,879
Provision for doubtful accounts 1,058,958 150,036
Increase in accounts receivable (9,075,524) (3,814,680)
Decrease (increase) in inventories, prepaid expenses
and other assets 266,204 (621,535)
Increase in accounts payable and accrued expenses 1,176,251 649,872
Increase in accrued salaries, wages and benefits 322,168 303,522
Increase (decrease) in deferred rent expense (4,328) 371,792
---------- -----------
Net cash used in operating activities (5,537,795) (4,462,085)
---------- ------------
Cash flows from investing activities:
Additions to property and equipment (1,413,285) (1,372,543)
Proceeds from sale of equipment - 337,792
Organizational and preopening costs (268,516) (117,789)
Sales and maturities of short-term investments 6,458,746 -
--------- ------------
Net cash provided by (used in) investing activities 4,776,945 (1,152,630
--------- ------------
Cash flows from financing activities:
Payments on long-term obligations (336,452) (164,204)
Repayment of note payable - stockholder - (265,200)
Proceeds from issuance of preferred stock - 22
--------- -----------
Net cash used in financing activities (336,452) (429,382)
--------- -----------
Increase (decrease) in cash and cash equivalents (1,097,302) 6,044,097
Cash and cash equivalents, beginning of period 2,884,977 11,261,422
---------- -----------
Cash and cash equivalents, end of period $1,787,675 $5,217,325
========== ===========
Supplemental cash flow information - cash paid for
interest $ 110,911 $ 34,172
========== ===========
Supplemental information - noncash activity:
Acquisition of equipment through capital leases $1,217,456 $ 587,554
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 5
INTENSIVA HEALTHCARE CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The condensed consolidated balance sheet as of June 30, 1997 and the
related condensed consolidated statements of operations and cash flows for
the three and six month periods ended June 30, 1997 and 1996 contained in
this Form 10-Q, which are unaudited, include the accounts of Intensiva
HealthCare Corporation and its wholly-owned subsidiaries ("Intensiva" or
the "Company"). All significant intercompany accounts have been eliminated
in consolidation. In the opinion of management, all adjustments,
consisting of normal recurring items, necessary for a fair presentation of
such financial statements have been included. The results of operations
for the three and six month periods ended June 30, 1997 are not necessarily
indicative of the results to be expected for the year ended December 31,
1997.
The condensed consolidated financial statements do not include all
information and footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Reference is made to the
Company's audited financial statements and the related notes, included in
the registrant's annual report on Form 10-K for the year ended December
31, 1996.
(2) Net (Income) Loss Per Share
The Company's per share calculations are based upon the weighted average
number of shares of common stock outstanding. Pursuant to the requirements
of the Securities and Exchange Commission Staff Accounting Bulletin No. 83,
options to purchase common stock issued at prices below the initial public
offering (IPO) price during the twelve months immediately preceding the
contemplated initial filing of the registration statement have been
included in the computation of net loss per share as if they were
outstanding for all periods prior to the effective date of the IPO. Other
shares issuable upon the exercise of stock options or conversion of
convertible preferred stock have been included in historical per share
amounts if the effect of their inclusion is dilutive.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 6
In February 1997, Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings Per Share," was issued and establishes new standards
for computing and presenting earnings per share. The historical measures
of earnings per share (primary and fully diluted) are replaced with two new
computations of earnings per share (basic and diluted). The Company will
adopt SFAS 128 as of December 31, 1997. Income (loss) per share, on a pro
forma basis, for the three and six month periods ended June 30, 1997 and
1996, computed pursuant to the provisions of SFAS 128, would have been as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic income (loss) per share $0.02 $(0.64) $0.01 $(1.10)
Diluted income (loss) per share $0.02 $(0.64) $0.01 $(1.10)
</TABLE>
(3) Income Taxes
The Company utilized net operating loss carryforwards to offset taxable
income for the six months ended June 30, 1997.
(4) Reclassifications
Certain amounts in the balance sheet as of December 31, 1996 have been
reclassified to conform with current year presentation.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDITION AND RESULTS OF
OPERATIONS
Overview
Intensiva provides highly specialized, acute long-term care for critically
ill or injured patients who require intensive medical monitoring and treatment,
and who often have multiple medical conditions and are medically unstable. The
Company provides high quality, cost effective, specialized care for its
patients, who typically require an average length of stay of greater than 25
days in an intensive inpatient setting. Intensiva's medical staffs provide
specialized medical services, as well as nursing and respiratory care, and the
Company is developing disease-specific pathways to treat pulmonary, cancer,
renal and cardiac conditions, among others. The Company's clinical programs
utilize specialized staff, equipment and protocols for the treatment of its
patients.
Intensiva leases underutilized space from general acute care hospitals
("Host Hospitals") in underserved secondary markets, creating a separate
"hospital within a hospital." By leasing space from the Host Hospital,
Intensiva is able to minimize capital and overhead costs, including the costs
to purchase and operate the physical plant and certain expensive medical and
diagnostic equipment. The Company is able to purchase certain services from
its Host Hospitals, such as laboratory and radiology (MRI, CAT Scan, X-Ray), as
well as hotel services such as laundry, housekeeping, dietary and property
management. The Company's business model provides for each of its specialized
hospitals to become certified by Medicare as "long-term care hospitals" exempt
from PPS after approximately seven months of operations. This exemption will
enable the hospitals to receive cost-based reimbursement, which the Company
believes is more appropriate given the medical condition of its patients. In
addition, the Company's business model anticipates a payor mix that includes
both non-governmental and governmental payors. The Company is reimbursed by
non-governmental payors on per diem, per discharge or other capitated forms of
payment, fee for service arrangements or negotiated charges.
Operations begin approximately four to five months after an agreement is
executed with a Host Hospital. During the qualification period, the Company
spends approximately one million dollars per facility on renovation costs,
equipment purchases, pre-opening costs and working capital before the facility
becomes eligible for certification as a long-term care hospital. Patient
volumes are lower during the qualification phase while physicians, case
managers, and payors are educated as to the benefits of the Company's clinical
services.
As of June 30, 1997, the Company operated thirteen facilities in five
states. In addition, as of June 30, 1997, the Company had signed agreements
involving four other facilities, all except one of which the Company
anticipates will begin operations during the last half of 1997. Although the
Company has generated historical operating losses as a result of its rapid
growth, it generated an operating profit in the second quarter of 1997 as
profit from its mature facilities exceeded losses at facilities in the
qualification or early operating periods.
Sources of Revenues
The Company receives payment for health care services from
non-governmental payors such as managed care organizations (e.g. preferred
provider and health maintenance organizations) and other commercial health
insurance carriers (e.g. traditional indemnity insurance plans), and the
federal government and state governments under the Medicare, Medicaid and other
governmental programs. Consistent with initiatives to control health care
costs, the Company generally negotiates payments with non-governmental payors
based upon the type and extent of services to be provided to individual
patients.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 8
The following table sets forth the approximate percentages of the
Company's net patient service revenues derived from the specified payor sources
indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Medicare 74.0% 65.1% 77.3 % 65.4%
Medicaid 2.5 0.5 1.6 1.7
Indemnity and other insurance providers 9.9 25.3 8.4 22.3
HMO 4.1 1.0 2.7 1.5
PPO 8.9 5.3 9.6 4.6
Other negotiated arrangements 0.6 2.8 0.4 4.5
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
</TABLE>
The increase in Medicare net revenues as a percentage of total net
revenues is primarily attributable to the addition of new facilities in the
early stages of operation. The Company historically experienced a trend toward
higher percentages of Medicare patients in the early months of operation. The
decrease in indemnity and other insurance net revenues as a percentage of total
net revenues corresponds to the net increase in Medicare revenues as noted
above.
Results of Operations
Net Patient Service Revenues. Net patient service revenues for the three
and six month periods ended June 30, 1997 increased $10.7 million, or 299.7%,
and $20.6 million, or 338.8%, respectively, from the comparable periods in
1996. This growth is primarily a result of the increase in the number of
operational facilities, as the Company had thirteen operational facilities at
June 30, 1997, ten of which had been operating for at least six months, as
compared to six operational facilities at June 30, 1996.
Operating Expenses. Operating expenses for the three and six month
periods ended June 30, 1997 increased $8.7 million, or 235.9%, and $16.6
million, or 263.1%, respectively, from the comparable periods in 1996. This
increase is also attributable to the increased number of operational facilities
at June 30, 1997. As a percentage of net revenues, operating expenses for the
three months ended June 30, 1997 decreased to 87% from 103% for the comparable
period in 1996. The Company expects this percentage to continue to decline as
its new facilities mature.
General and Administrative Expenses. General and administrative expenses
for the three and six month periods ended June 30, 1997 increased $520,000, or
76.7%, and $880,000, or 66.2%, respectively, from the comparable periods in
1996. The increase in expenses was primarily attributable to salaries, related
payroll taxes, and employee benefits relating to additional personnel retained
to support the Company's growth strategy. As a percentage of net revenues,
general and administrative expenses for the three months ended June 30, 1997
decreased to 8% from 19% for the comparable period in 1996. The Company expects
that general and administrative expenses as a percentage of net revenues will
stabilize as the Company achieves certain economies of scale.
Provision for Doubtful Accounts. The provision for doubtful accounts for
the three and six month periods ended June 30, 1997 increased $60,000, or
43.7%, and $910,000, or 605.8%, respectively, from the
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 9
comparable periods in 1996. The increase in the provision in 1997 compared
to 1996 is primarily attributable to the growth in net revenues.
Depreciation and Amortization. Depreciation and amortization for the
three and six month periods ended June 30, 1997 increased $140,000, or 79.5%,
and $360,000, or 143.7%, respectively, from the comparable periods in 1996.
The increase relates to the acquisition of additional property and equipment
and the amortization of a computer software license and organizational and
pre-opening costs associated with the thirteen open facilities at June 30,
1997.
Income Taxes. The Company utilized net operating loss carryforwards to
offset taxable income for the six months ended June 30, 1997.
Selected Quarterly Financial Results
The Company's quarterly financial position and results of operations have
fluctuated due to its emergence from development stage status in March 1995 and
the opening of facilities and the obtaining of PPS-exempt status for such
facilities since November 1995 through the first half of 1997. The following
table presents unaudited quarterly operating results for each of the eight
quarters in the period from July 1, 1995 through June 30, 1997. The Company
believes that all necessary adjustments have been included in the amounts
stated below to present fairly the following selected quarterly information
when read in conjunction with the financial statements included elsewhere in
this Form 10-Q.
<TABLE>
<CAPTION>
Three Months Ended
Sept 30, Dec 31, Mar 31, June 30, Sept 30, Dec 31, Mar 31, June 30,
1995 1995 1996 1996 1996 1996 1997 1997
---- ---- ---- ---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue $459 $864 $2,509 $3,567 $4,663 $8,009 $12,400 $14,259
Operating income (loss) (839) (919) (834) (1,118) (1,623) (1,780) (227) 125
Net income ( loss) (772) (875) (729) (1,021) (1,597) (1,639) (86) 198
</TABLE>
Liquidity and Capital Resources
Through June 1997, the Company has financed its operations primarily
through proceeds from the sale of the Company's equity securities. Cash flows
from operations have not been sufficient to support ongoing operations
primarily due to the time lag that is required in obtaining Medicare provider
numbers at new facilities and the continuing development of new facilities in
accordance with the Company's growth strategy. On October 10, 1996, the
Company completed its initial public offering which, together with the
underwriters' exercise of its over-allotment option, resulted in net proceeds
to the Company of $15.3 million.
Cash flows used in investing activities have consisted primarily of
capital renovations, equipment purchases, and organizational and pre-opening
costs incurred prior to providing patient services at each new facility. Cash
has been used in financing activities for payments on borrowings under capital
leases.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 10
Capital expenditures totaled $1.4 million for each of six month periods
ended June 30, 1997 and 1996. Additional equipment acquired through capital
leases totaled $1,220,000 and $590,000 for the six months ended June 30, 1997
and 1996, respectively.
During March 1996, the Company entered into a sale-leaseback agreement
with a third party to take advantage of favorable borrowing rates and maintain
liquidity. The third party received warrants to purchase 15,950 shares of
common stock as a part of the transaction. The net book value of assets sold
and subsequently leased under this agreement totaled $342,244. Net proceeds
were $337,792, resulting in a net loss of $4,452. As part of this agreement,
the Company obtained a $1 million line of credit from the third party to
finance additional capital expenditures. In May 1997, this agreement was
amended to increase the line of credit to $1.5 million. Unutilized borrowing
capacity under the line of credit was approximately $470,000 at June 30, 1997.
Accounts receivable balances have increased $9.1 million since December
31, 1996. The majority of the increase is a result of increased census at the
Company's facilities and the time lag required in obtaining new Medicare
provider numbers from the Medicare fiscal intermediaries once a facility opens
and upon completion of the qualification period.
Working capital at June 30, 1997 was $18.1 million, representing a
decrease of $1.6 million from December 31, 1996. The decrease was primarily
attributable to the financing of current operations and the funding of capital
renovations and pre-opening costs for the three facilities that opened in the
first half of 1997.
The Company leases space from Host Hospitals under operating lease
agreements having initial terms of five or more years. The Company leases
corporate office space under a noncancellable operating lease which expires in
the year 2002. Minimum annual lease payments on noncancellable operating
leases with maturities in excess of one year are as follows: $4.6 million in
1997, $6.5 million in 1998, $6.7 million in 1999, $6.7 million in 2000, $6.3
million in 2001 and $6.6 million thereafter.
The Company believes that its current cash and cash equivalents and
short-term investments, together with existing or planned financing
commitments, will be sufficient to fund its continued development and meet
anticipated cash needs of the Company through at least 1997. However, there
can be no assurance that the Company will not be required to seek additional
capital.
Health Care Legislation
Legislation respecting Medicare reimbursement of long-term care hospitals
was enacted and signed into law as part of the Balanced Budget Act of 1997 (the
"Act"). The Act imposes various caps and reductions on Medicare reimbursement,
but did not create a direct moratorium on opening new long-term care hospitals.
Because the Company is a low-cost provider of quality long-term care, it
believes that it will be able to respond to these changes in Medicare
reimbursement with minimal impact on its bottom line results.
Forward Looking Statements
Certain of the statements made herein are forward looking statements, as
that term is defined under the Private Securities Litigation Reform Act of 1995
and releases by the Securities and Exchange Commission. The Company cautions
readers that actual results could be materially different as a result of
various possibilities and differences between anticipated and actual
developments. Factors that could cause
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 11
actual results to differ from anticipated results include, but are not limited
to, changes in health care regulation and/or health care reform, changes in the
regulation of relationships among health care providers, difficulty in obtaining
necessary licenses or certifications, ability to collect accounts receivable,
changes in reimbursement policies or procedures, changes in payor mix, changes
in referral source practices, changes in relationships with Host Hospitals
and/or the leases with such Host Hospitals, competition, and the adequacy of
professional liability insurance. The Company undertakes no obligation to
publicly release the results of any revisions to any forward looking statements
contained herein which may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
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<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no reportable proceedings.
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
(c) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) Not applicable.
(b) Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of the Stockholders of the Company was held on
May 23, 1997. Of the 9,905,062 shares entitled to vote at such
meeting, 9,199,701 were represented by proxy.
(b) Mr. Phillip M. Nudelman, Ph.D., and Mr. James B. Tananbaum, M.D.,
were elected as Class I Directors of the Company. Mr. David W.
Cross and Mr. Jeffrey J. Collinson continue as Class II Directors.
Mr. Wilfred E. Jaeger, M.D., and Mr. David L. Steffy continue
as Class III Directors.
(c) The results of the voting for Class I Directors were as follows:
Number of Shares Voted
----------------------
Nominee For Withheld
--- --------
Mr. Phillip M. Nudelman, PH.D. 9,185,601 14,100
Mr. James B. Tananbaum, M.D. 9,185,601 14,100
The Stockholders approved the appointment of KPMG Peat Marwick LLP
as independent auditors for the Company. 9,181,801 shares voted
in favor of the appointment, 11,200 shares voted against the
appointment, and 6,700 shares abstained.
(d) Not applicable.
ITEM 5. OTHER INFORMATION
In June 1997, Mr. Michael R. Hogan was elected to the Company's Board
of Directors. Mr. Hogan is Corporate Vice President and Controller
of Monsanto Company.
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index for list of Exhibits.
(b) Not applicable.
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<PAGE> 14
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.
INTENSIVA HEALTHCARE CORPORATION
Date: August 6, 1997 By /s/ John P. Keefe
--------------------------------------
John P. Keefe, Chief Financial Officer
(Principal Financial and Accounting Officer)
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<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT
- ------ -------
10.27 Equipment Schedule VL-2 dated as of May 5, 1997 to Master Lease
Agreement dated as of December 11, 1995 by and between the Company
and Comdisco, Inc.
27.1 Financial Data Schedule
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Intensiva HealthCare Corporation
Form 10-Q FQE 6/30/97
<PAGE> 1
EXHIBIT 10.27
EQUIPMENT SCHEDULE VL-2
DATED AS OF MAY 5, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF DECEMBER 11, 1995 (THE "MASTER LEASE")
LESSEE: INTENSIVA HEALTHCARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
John Keefe - Chief Financial Officer 6111 North River Road
(314) 725-0112 - phone Rosemont, Illinois 60018
(314) 725-0443 - fax Attn.: Venture Group
Address for Notices:
7733 Forsyth Blvd., Suite 1100
St. Louis, MO 63105
Attn.: John Keefe
Central Billing Location: Rent Interval: Monthly
SAME AS ABOVE
Attn.: Accounts Payable
Lessee Reference No.:
----------- ----------
(24 digits maximum)
Location of Equipment: Initial Term: 48 Months
(Number of Rent Intervals)
VARIOUS
Lease Rate Factor: 2.425%
Attn.:
EQUIPMENT (as defined below): Advance: $12,125.00
Equipment specifically approved by Lessor, which shall be delivered to
and accepted by Lessee during the period May 5, 1997 through January
15, 1998 ("Equipment Delivery Period"), for which Lessor receives
vendor invoices approved for payment, up to an aggregate purchase price
of $500,000.00 ("Commitment Amount"); excluding custom use equipment,
leasehold improvements, installation costs and delivery costs, rolling
stock, special tooling, "stand-alone" software, applications software
bundled into computer hardware, hand held items, molds and fungible
items. In no event shall any furniture exceed ten percent (10%) of
Lessor's aggregate cost hereunder.
<PAGE> 2
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease
to Lessee, either by one of the first three categories listed below or by
providing Lessee with Equipment from the fourth category, in a value up to the
Commitment Amount referred to on the face of this Schedule. If the Equipment
acquired is of category (i), (ii) or (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
Lessor will finance only the acquisition of individual items of Equipment
with a cost to Lessor of more than $500.00.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment
which is specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership
may be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership
satisfactory to Lessor for all Equipment submitted) no later than
June __, 1997*. Lessor will not perform a Sale-Leaseback
Transaction for any request or accompanying Equipment ownership
documents which arrive after the date marked above by an asterisk
(*). Further, any sale-leaseback Equipment will be placed on
lease subject to: (1) Lessor prior approval of the Equipment;
and (2) if approved, at Lessor's actual net appraised Equipment
value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL
DATE MANUFACTURER'S NET EQUIPMENT
-------------------------- COST PAID BY LESSOR
----------------------------
Between 02/04/97 and 05/5/97 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment
which is obtained from a third party by Lessee for its use
subject to Lessor's prior approval of the Equipment and at
Lessor's appraised value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply
new or used Equipment from its inventory at rates provided by
Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar quarter into
a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar quarter
thereafter. Each Summary Equipment Schedule will contain the Equipment
location, description, serial number(s) and cost and will incorporate the terms
and conditions of the Master Lease and this Schedule and will constitute a
separate Lease.
3. OPTION TO EXTEND
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event,
the rent to be paid during said extended period shall be mutually agreed upon
and if the parties cannot mutually agree, then the Summary Equipment Schedule
shall continue in full force and effect pursuant to the existing terms and
conditions until terminated in accordance with its terms. The Summary Equipment
Schedule will continue in effect following said extended period until terminated
by either party upon not less than ninety (90) days prior written notice, which
shall be effective as of the date of receipt.
<PAGE> 3
4. PURCHASE OPTION
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at time of
purchase. Said purchase price shall be paid to Lessor at least thirty (30) days
before the expiration date of the Initial Term or extended term. Title to the
Equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier than the expiration of the fixed
Initial Term or extended term, if applicable. If the parties are unable to
agree on the purchase price or the terms and conditions with respect to said
purchase, then the Summary Equipment Schedule with respect to this Equipment
shall remain in full force and effect. Notwithstanding the exercise by Lessee
of this option and payment of the purchase price, until all obligations under
the applicable Summary Equipment Schedule have been fulfilled, it is agreed and
understood that Lessor shall retain a purchase money security interest in the
Equipment listed therein and the Summary Equipment Schedule shall constitute a
Security Agreement under the Uniform Commercial Code of the state in which the
Equipment is located.
5. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
1. Subsection 14.1 "Board Attendance"
Delete this section in its entirety and replace with "Lessee agrees to
provide to Lessor on a quarterly basis, the executive summary and
minutes of the board of directors meetings which are sent to all
investors, including all attachments so distributed. In addition, the
following statement will accompany the report on a quarterly basis:
profit & loss statement, balance sheet, and cash flow statement."
Master Lease: This Schedule is issued pursuant to the Lease identified on
page 1 of this Schedule. All of the terms and conditions of the Lease are
incorporated in and made a part of this Schedule as if they were expressly set
forth in this Schedule. The parties hereby reaffirm all of the terms and
conditions of the Lease (including, without limitation, the representations and
warranties set forth in Section 8) except as modified herein by this Schedule.
This Schedule may not be amended or rescinded except by a writing signed by
both parties.
INTENSIVA HEALTHCARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: John P. Keefe By: James P. Labe
------------------------------ --------------------
Title: CFO Title: President Comdisco
--------------------------- Ventures Division
------------------
Date: 5/8/97 Date: 5/19/97
--------------------------- ------------------
<PAGE> 4
18 SLXXXXX-XX
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
5. Rent:
6. Acceptance Doc Type:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTENSIVA
HEALTHCARE CORPORATION'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,787,675
<SECURITIES> 6,528,474
<RECEIVABLES> 16,596,488
<ALLOWANCES> 1,248,000
<INVENTORY> 288,559
<CURRENT-ASSETS> 24,482,750
<PP&E> 5,987,881
<DEPRECIATION> 883,709
<TOTAL-ASSETS> 30,951,421
<CURRENT-LIABILITIES> 6,377,226
<BONDS> 0
0
0
<COMMON> 9,905
<OTHER-SE> 22,247,977
<TOTAL-LIABILITY-AND-EQUITY> 30,951,421
<SALES> 0
<TOTAL-REVENUES> 26,659,263
<CGS> 0
<TOTAL-COSTS> 22,895,616
<OTHER-EXPENSES> 2,200,560
<LOSS-PROVISION> 1,058,958
<INTEREST-EXPENSE> 110,911
<INCOME-PRETAX> 111,964
<INCOME-TAX> 0
<INCOME-CONTINUING> 111,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,964
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
