<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-8527
------
DIALYSIS CORPORATION OF AMERICA
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1757642
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2337 West 76th Street, Hialeah, Florida 33016
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(305) 364-1308
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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] or No [ ]
Common Stock Outstanding
Common Stock, $.01 par value -- 3,588,844 shares as of April 30, 1997.
<PAGE> 2
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
INDEX
PART I -- FINANCIAL INFORMATION
- ------ ---------------------
The Consolidated Condensed Statements of Operations (Unaudited) for the
three months ended March 31, 1997 and March 31, 1996 include the accounts of the
Registrant and its subsidiaries.
Item 1. Financial Statements
- ------- --------------------
1) Consolidated Condensed Statements of Operations for the three
months ended March 31, 1997 and March 31, 1996.
2) Consolidated Condensed Balance Sheets as of March 31, 1997 and
December 31, 1996.
3) Consolidated Condensed Statements of Cash Flows for three
months ended March 31, 1997 and March 31, 1996.
4) Notes to Consolidated Condensed Financial Statements as of
March 31, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- of Operations
-----------------------------------------------------------------------
PART II -- OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
<PAGE> 3
PART I -- FINANCIAL INFORMATION
-------------------------------
Item 1. Financial Statements
- ------- --------------------
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Revenues:
Medical service revenue $ 1,034,488 $ 893,079
Interest and other income 79,883 37,822
----------- -----------
1,114,371 930,901
Cost and expenses:
Cost of medical services 626,607 628,914
Selling, general and administrative expenses 443,384 373,088
Interest expense 22,494 18,693
----------- -----------
1,092,485 1,020,695
----------- -----------
Income (loss) before minority interest 21,886 (89,794)
Minority interest in earnings of consolidated subsidiaries 319 5,145
----------- -----------
Net income (loss) $ 22,205 $ (84,649)
=========== ===========
Income (loss) per common share $ .01 $ (.03)
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE> 4
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996(A)
--------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $3,982,400 $4,579,273
Restricted cash 140,270 137,896
Accounts receivable, less allowances of $144,000 at
March 31, 1997 and $154,000 at December 31, 1996 529,871 461,269
Inventories 117,199 156,648
Prepaid expenses and other current assets 104,766 85,278
---------- ----------
Total current assets 4,874,506 5,420,364
Property and Equipment:
Land 168,358 168,358
Buildings and improvements 1,360,355 1,221,531
Machinery and equipment 1,162,347 1,144,191
Leasehold improvements 265,556 265,556
---------- ----------
2,956,616 2,799,636
Less accumulated depreciation 761,256 716,728
---------- ----------
2,195,360 2,082,908
Deferred expenses and other assets 93,917 49,017
---------- ----------
$7,163,783 $7,552,289
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 82,367 $ 148,660
Accrued expenses 129,881 182,986
Current portion of long-term debt 548,579 560,120
---------- ----------
Total current liabilities 760,827 891,766
Long-term debt, less current portion 213,814 215,466
Advances from parent 91,746 369,547
Minority interest in subsidiaries 75,153 75,472
Commitments and Contingencies
Stockholder's Equity
Common stock, $.01 par value, authorized 20,000,000
shares; issued and outstanding 3,588,844 shares 35,888 35,888
Capital in excess of par value 3,748,595 3,748,595
Retained earnings 2,237,760 2,215,555
---------- ----------
Total stockholders' equity 6,022,243 6,000,038
---------- ----------
$7,163,783 $7,552,289
========== ==========
</TABLE>
(A) Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 filed with the Securities and Exchange
Commission in March 1997.
See notes to consolidated condensed financial statements.
<PAGE> 5
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income (loss) $ 22,205 $ (84,649)
Adjustments to reconcile net income (loss) to net cash used
in by operating activities:
Depreciation 59,007 47,153
Amortization 3,003 2,297
Bad debt expense 37,310 28,646
Minority interest (319) (5,145)
Increase (decrease) relating to operating activities from:
Accounts receivable (105,912) (56,511)
Inventories 39,449 1,094
Prepaid expenses and other current assets (19,488) (29,310)
Accounts payable (66,293) (94,938)
Accrued expenses (53,105) (52,682)
----------- -----------
Net cash used in operating activities (84,143) (244,045)
Investing activities:
Additions to property and equipment, net of minor disposals (154,459) (14,218)
Proceeds from restricted cash 137,896 131,889
Restricted cash (140,270) (134,231)
Deferred expenses and other assets (47,903) (56,084)
----------- -----------
Net cash used in investing activities (204,736) (72,644)
Financing activities:
(Decrease) increase in advances from parent (277,801) 204,614
Payments on long-term debt (30,193) (25,907)
----------- -----------
Net cash (used in) provided by financing activities (307,994) 178,707
----------- -----------
(Decrease) increase in cash and cash equivalents (596,873) (137,982)
Cash and cash equivalents at beginning of period 4,579,273 1,061,351
----------- -----------
Cash and cash equivalents at end of period $ 3,982,400 $ 923,369
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE> 6
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Dialysis
Corporation of America ("DCA") and its subsidiaries, collectively referred to as
the "Company". All material intercompany accounts and transactions have been
eliminated in consolidation. The Company is a 67.2% owned subsidiary of
Medicore, Inc. (the "Parent"). See Notes 5 and 7.
GOVERNMENT REGULATION
Most of the Company's revenues are attributable to payments received
under Medicare, which is supplemented by Medicaid or comparable benefits in the
states in which the Company operates. Reimbursement rates under these programs
are subject to regulatory changes and governmental funding restrictions.
Although the Company is not aware of any future rate changes, significant
changes in reimbursement rates could have a material effect on the Company's
operations.
INTEREST AND OTHER INCOME
Interest and other income is comprised as follows:
Three Months Ended
March 31,
------------------
1997 1996
---- ----
Rental income $25,142 $24,546
Interest income 51,072 10,839
Other income 3,669 2,437
------- -------
$79,883 $37,822
======= =======
INCOME PER COMMON SHARE
Income (loss) per share has been computed on the basis of the weighted
average number of shares outstanding plus dilutive common equivalent shares
using the modified treasury stock method for 1997 and on the basis of weighted
average shares outstanding for 1996.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 financial
statements to conform to the 1997 presentation.
NOTE 2--INTERIM ADJUSTMENTS
The financial summaries for the three months ended March 31, 1997 and
March 31, 1996 are unaudited and include, in the opinion of management of the
Company, all adjustments (consisting of normal recurring accruals) necessary to
present fairly the earnings for such periods. Operating results for the three
months ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1997.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these Consolidated
Condensed Financial Statements be read in conjunction with the financial
statements and notes included in the Company's audited financial statements for
the year ended December 31, 1996.
<PAGE> 7
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
MARCH 31, 1997
(UNAUDITED)
NOTE 3--LONG TERM DEBT
In December 1988, the Company obtained a $480,000 fifteen-year mortgage
through November 2003 on its building in Lemoyne, Pennsylvania with interest at
1% over the prime rate. The remaining principal balance under this mortgage
amounted to approximately $216,000 and $224,000 at March 31, 1997 and December
31, 1996, respectively. In December 1988, the Company also obtained a $600,000
fifteen-year mortgage through November 2003 on its building in Easton, Maryland
with interest at 1% over the prime rate. The remaining principal balance under
this mortgage amounted to approximately $270,000 and $280,000 at March 31, 1997
and December 31, 1996, respectively. The bank has the right to demand repayment
on the outstanding balance of the borrowings under these mortgages which have
accordingly been classified as current liabilities. At December 31, 1996, the
Company was in violation of certain covenants under these loans principally
relating to net worth and debt service ratio requirements. The lender waived
compliance with these covenants through December 31, 1997.
The Company has an equipment purchase agreement for kidney dialysis
machines for its facilities in Pennsylvania and Florida. Monthly payments were
originally $4,435 commencing September 1995, including principal and interest,
through June 2000 with additional monthly payments of $2,750 on 1996 financing
commencing December 1996, including principal and interest through September
2001 with interest at 12%. Additional monthly payments of $344 commenced March
1997 on new financing, including principal and interest through February 2002,
with interest at 8%. The initial principal balance of $195,130, additional
financing of $124,096 in 1996 and $17,000 in March 1997, net of down payments,
represent noncash financing activities which is a supplemental disclosure
required by FAS 95. The remaining principal balance under this agreement
amounted to approximately $276,000 and $272,000 at March 31, 1997 and December
31, 1996, respectively.
The prime rate was 8.5 % as of March 31, 1997 and 8.25% as of December
31, 1995.
Interest payments on long-term debt amounted to approximately $19,000
for the three months ended March 31, 1997 and for the same period of the
preceding year.
NOTE 4--INCOME TAXES
The Company was included in the consolidated federal and state income
tax returns of the Parent until the completion of its public offering in April
1996. The Company had a net operating loss carryforward of approximately
$567,000 at December 31, 1995, which was available to offset consolidated
taxable income. Subsequent to the completion of the Company's public offering,
the Company files separate federal and state income tax returns with the income
tax liability reflected on a separate return basis with its previously available
net operating loss carryforwards having been utilized prior to completion of its
public offering.
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The Company had
deferred tax liabilities of approximately $90,000 at December 31, 1996,
consisting primarily of tax over book depreciation, and deferred tax assets of
approximately the same amount, consisting primarily of differences in book and
tax basis of receivables and accrued expenses.
There were no income tax payments for the three months ended March 31,
1997 or March 31, 1996.
<PAGE> 8
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
MARCH 31, 1997
(UNAUDITED)
NOTE 5--TRANSACTIONS WITH PARENT
The Parent provides certain administrative services to the Company
including office space and general accounting assistance. These expenses and all
other central operating costs are charged on the basis of direct usage, when
identifiable, or on the basis of time spent. In the opinion of management, this
method of allocation is reasonable. The amount of expenses allocated by the
Parent totaled approximately $60,000 for the three months ended March 31, 1997,
and for the same period of the preceding year.
The Company has an intercompany advance payable to the Parent of
approximately $345,000 and $370,000 at March 31, 1997 and December 31, 1996,
respectively, which bears interest at the short-term Treasury Bill rate.
Interest on this intercompany advance amounted to approximately $3,000 for the
three months ended March 31, 1997, which is included in the intercompany advance
payable. The Parent has agreed not to require repayment of the intercompany
advances prior to April 1, 1998 and therefore, the advances have been classified
as long-term at March 31, 1997.
NOTE 6--STOCK OPTIONS
In November, 1995, the Company adopted a stock option plan for up to
250,000 options. Pursuant to this plan, in November, 1995, the Board of
Directors granted 210,000 options to certain of its officers, directors,
employees and consultants of which 193,500 options were outstanding at March 31,
1997. These options are exercisable for a period of five years through November
9, 2000 at $1.50 per share.
In August 1996, the Board of Directors granted 15,000 options to the
medical directors at its three kidney dialysis centers. These options are
exercisable for a period of 3 years through August 18, 1999 at $4.75 per share.
NOTE 7--COMMON STOCK
The Company completed a public offering of common stock and warrants
during the second quarter of 1996, providing it with net proceeds, including the
exercise of the underwriters' overallotment option, of approximately $3,445,000.
The Company intends to use the proceeds from the offering to acquire or develop
free standing outpatient dialysis centers and for expanding its inpatient
dialysis treatment services.
Pursuant to the offering 1,150,000 shares of common stock were issued,
including 150,000 shares from exercise of the underwriters' overallotment
option, and there are 2,300,000 redeemable common stock purchase warrants to
purchase one common share each with an exercise price of $4.50 exercisable from
April 17, 1997 through April 17, 1999. The underwriters received options to
purchase 100,000 shares of common stock and 200,000 common stock purchase
warrants, with the options exercisable at $4.50 per unit from April 17, 1997
through April 17, 2001 with the underlying warrants being substantially
identical to the public warrants except that they are exercisable at $5.40 per
share.
NOTE 8--COMMITMENTS AND CONTINGENCIES
Effective January 1, 1997 the Company established a 401(k) savings plan
(salary deferral plan) with an eligibility requirement of 1 year of service and
21 year old age requirement.
Upon completion of its public offering, the Company retained the
underwriters to provide financial consulting services pertaining to the
Company's business, at a monthly fee of $3,000 per month for a period of 18
months, which was paid in full at closing of the offering.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- of Operations
-----------------------------------------------------------------------
The statements contained in this Quarterly Report on Form 10-Q that are
not historical are forward looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"), including statements regarding the Company's expectations,
intentions, beliefs, or strategies regarding the future. Forward looking
statements include the Company's statements regarding liquidity, anticipated
cash needs and availability, and anticipated expense levels in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
including anticipated development and acquisition of dialysis centers, new
facility completions and related anticipated costs. All forward looking
statements included in this document are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward looking statement. It is important to note that the Company's
actual results could differ materially from those in such forward looking
statements. Among the factors that could cause actual results to differ
materially are the factors detailed in the risks discussed in the "Risk Factors"
section included in the Company's Registration Statement Form SB-2, as filed
with the Securities and Exchange Commission (effective on April 17, 1996).
The dialysis industry is highly competitive and subject to extensive
regulation, including the limitation on fees for dialysis treatment and
services. Significant competitive factors include quality of care and service,
convenience of location and pleasant environment. Additionally, there is intense
competition for retaining qualified nephrologists who normally are the sole
source of patient referrals and are responsible for the supervision of the
dialysis centers. There is also substantial competition for obtaining qualified
nurses and technical staff. Major companies, some of which are public companies
or divisions of public companies, have many more centers, physicians and
financial resources than does the Company, and by virtue of such have a
significant advantage in competing for acquisitions of dialysis facilities in
areas targeted by the Company.
The Company's future growth depends primarily on the availability of
suitable dialysis centers for acquisition or development in appropriate and
acceptable areas, and the Company's ability to compete with larger companies
with greater personnel and financial resources to develop these new potential
dialysis centers at costs within the budget of the Company. Its ability to
retain qualified nephrologists, nursing and technical staff at reasonable rates
is also a significant factor. Management continues in negotiations with
nephrologists for the acquisition or development of new dialysis facilities, as
well as with hospitals and other health care maintenance entities. The Company
has its fourth center in Carlisle, Pennsylvania under construction. A fifth
center is seeking approval for upgraded services which if not granted will
result in further delays in opening that new dialysis facility until a proper
location is secured. Several agreements for acute in-patient services are under
review but there is no assurance that such agreements will be completed. There
is no certainty as to when any new centers or service contracts will be
implemented, or the number of stations, or patient treatments such may involve,
or if such will ultimately be profitable. As noted below, newly established
dialysis centers, although contributing to increased revenues, also adversely
affect results of operations due to start-up costs and expenses with a smaller
developing patient base.
RESULTS OF OPERATIONS
Medical service revenue increased approximately $141,000 (16%) for the
three months ended March 31, 1997 compared to the same period preceding year.
This increase was largely attributable to increased revenues of approximately
$182,000 (71%) compared to the preceding year at the Company's new dialysis
center in Lemoyne, Pennsylvania which commenced treatments in June 1995.
Revenues attributable to the Company's center in Wellsboro, Pennsylvania which
commenced treatments in October 1995 decreased approximately $17,000 (15%).
Revenues attributable to the Company's Florida dialysis center decreased $24,000
(5%) compared to the preceding year.
Interest and other income increased approximately $42,000 for the three
months ended March 31, 1997 compared to the same period of the preceding year
largely due to interest earned on proceeds invested from the Company's security
offering completed in the second quarter of 1996.
<PAGE> 10
RESULTS OF OPERATIONS-CONTINUED
Cost of medical services sales decreased to 61% for the three months
ended March 31, 1997 compared to 70% for the same period of the preceding year
largely as a result of a decrease in healthcare salaries as a percentage of
sales due to the increased sales revenues generated by the Company's Lemoyne,
Pennsylvania facility.
Selling, general and administrative expenses increased approximately
$70,000 for the three months ended March 31, 1997 compared to the preceding year
reflecting increases associated with the new Pennsylvania dialysis centers.
Selling general and administrative expenses as a percentage of medical service
revenues remained relatively stable amounting to 43% for the three months ended
March 31, 1997 compared to 42% for the same period of the preceding year.
Interest expense increased approximately $4,000 for the three months
ended March 31, 1997 compared to the same period of the preceding year. Included
was interest of $3,000 on the advances payable to the Parent for the three
months ended March 31, 1997 with no such interest during the same period of the
preceding year with this interest computed at the short-term Treasury Bill rate.
Also included were increases as a result of the equipment purchase agreements
for dialysis machines. The prime rate was 8.5% at March 31, 1997 and 8.25% at
December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital totaled $4,114,000 at March 31, 1997, which reflected a
decrease of approximately $415,000 during the three months ended March 31, 1997.
Included in the changes in components of working capital was a decrease in cash
and cash equivalents of $597,000, which included net cash used in operating
activities of $84,000, net cash used in investing activities of $205,000
(including additions to property and equipment of $154,000) and net cash used in
financing activities of $308,000 (including a decrease in the advances from the
Parent of $278,000 and debt repayments of $30,000).
During 1988, the Company obtained mortgages totaling $1,080,000 on its
two buildings, one in Lemoyne, Pennsylvania and the other in Easton, Maryland,
each of which housed the Company's dialysis centers. These centers were sold in
October, 1989. The mortgages had a combined remaining balance of $486,000 and
$504,000 at March 31, 1997 and December 31, 1996, respectively. The Company was
in default of certain covenants principally relating to net worth and debt
service ratio requirements under these loan agreements for which the lender has
waived compliance through December 31, 1997.
The bank has liens on the real and personal property of the Company,
including a lien on all rents due and security deposits from the rental of these
properties. The loans contain a provision allowing the bank mandatory repayment
upon 90 days written notice after five years. The five year period has elapsed;
accordingly, while no notice has been given the unpaid principal balance is
carried as a current liability.
The Company has an equipment purchase agreement for kidney dialysis
machines for its Florida and Pennsylvania dialysis facilities which had a
remaining balance of $276,000 and $272,000 at March 31, 1997 and December 31,
1996, respectively, which included additional equipment financing of
approximately $17,000 in the first quarter of 1997. See Note 3 to "Notes to
Consolidated Condensed Financial Statements".
The Company believes that current levels of working capital, including
the proceeds of its securities offering, will enable it to successfully meet its
liquidity demands for at least the new twelve months.
Net proceeds of the Company's security offering completed in the second
quarter of 1996 were approximately $3,445,000 including the underwriters'
over-allotment option exercise. The Company, having operated on a larger scale
in the past, is seeking to expand its outpatient dialysis treatment facilities
and inpatient dialysis care. Such expansion, whether through acquisitions of
existing centers, or the development of its own dialysis centers, requires
capital, which was the basis for the Company's security offering. No assurance
can be given that the Company will be successful in implementing its growth
strategy or that the funds from its securities offering will be adequate to
finance such expansion. See Note 7 to "Notes to Consolidated Condensed Financial
Statements".
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES-CONTINUED
The Company has entered into agreements with medical directors, and
intends to establish two new dialysis centers, one in New Jersey and one in
Pennsylvania. It is anticipated that the Pennsylvania center, currently under
construction, will commence operations in the third quarter of 1997.
Establishment of the New Jersey center is subject to meeting various regulatory
requirements and negotiating satisfactory lease terms.
IMPACT OF INFLATION
Inflationary factors have not had a significant effect on the Company's
operations, although the Company has experienced increased costs of supplies,
salaries and general and administrative expenses.
A substantial portion of the Company's revenue is subject to
reimbursement rates established and regulated by the federal government. These
rates do not automatically adjust for inflation. Any rate adjustments relate to
legislation and executive and Congressional budget demands, and have little to
do with the actual cost of doing business. Therefore, dialysis services revenues
cannot be voluntarily increased to keep pace with increases in nursing and other
patient care costs.
<PAGE> 12
PART II-OTHER INFORMATION
-------------------------
Item 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
(a) Exhibits
Part I Exhibits
(11) Statement re: computation of per share earnings.
Part II Exhibits
None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended March 31,
1997.
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.
DIALYSIS CORPORATION OF AMERICA
By: /s/ DANIEL R. OUZTS
------------------------------------------
DANIEL R. OUZTS, Vice President/Finance
Controller and Principal Financial Officer
Dated: May 7, 1997
<PAGE> 13
EXHIBIT INDEX
Exhibit
No.
(11) Statement re: computation of per share earnings (loss)
(27) Financial Data Schedule (for SEC use only)
<PAGE> 1
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
EXHIBIT 11 -- COMPUTATION OF EARNINGS (LOSS) PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
<S> <C> <C>
PRIMARY AND FULLY DILUTED
Weighted average shares outstanding 3,588,844 2,432,844
===========
Net effect of dilutive stock options based on the modified
treasury stock method 123,222
----------
3,712,066
==========
Net income (loss) $ 22,205 $ (84,649)
========== ===========
Net income (loss) per share $ .01 $ (.03)
========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,982,400
<SECURITIES> 0
<RECEIVABLES> 529,871<F1>
<ALLOWANCES> 0
<INVENTORY> 117,199
<CURRENT-ASSETS> 4,874,506
<PP&E> 2,956,616
<DEPRECIATION> 761,256
<TOTAL-ASSETS> 7,163,783
<CURRENT-LIABILITIES> 760,827
<BONDS> 213,814
0
0
<COMMON> 35,888
<OTHER-SE> 5,986,355
<TOTAL-LIABILITY-AND-EQUITY> 7,163,783
<SALES> 1,034,488
<TOTAL-REVENUES> 1,114,371
<CGS> 626,607
<TOTAL-COSTS> 626,607
<OTHER-EXPENSES> 443,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,494
<INCOME-PRETAX> 21,886
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,205
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
<FN>
<F1>ACCOUNTS RECEIVABLE ARE NET OF ALLOWANCE OF $144,000 AT MARCH 31, 1997.
</FN>
</TABLE>
