<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
AMERICAN MEDICAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-10511 13-3527632
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
AMERICAN MEDICAL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7612 95-2111054
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
8201 PRESTON ROAD, DALLAS, TEXAS 75225
(Address of principal executive offices) (Zip code)
(214) 360-6300
(Registrants' telephone number, including area code)
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. American Medical Holdings, Inc.
Yes X No . American Medical International, Inc. Yes X No .
--- --- --- ---
As of January 11, 1994 there were 77,070,804 shares of American Medical
Holdings, Inc. Common Stock, $.01 par value, outstanding.
All shares of Common Stock, $.01 par value, of American Medical
International, Inc. are held by American Medical Holdings, Inc.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTRODUCTION
American Medical Holdings, Inc. ("Holdings") was organized in July 1989 to
acquire American Medical International, Inc. ("AMI" and, together with Holdings,
the "Company"). As a result of this acquisition, Holdings is the owner of all
of the outstanding shares of common stock of AMI. AMI's financial statements
are the same as Holdings' financial statements except for the components of
shareholders' equity and the impact of Holdings' common stock subject to
repurchase obligations.
The Company is one of the leading hospital management companies in the
United States. Founded in 1960 as the first investor-owned hospital company, AMI
owns and operates 35 acute-care and one psychiatric hospital containing a total
of 8,131 licensed beds. Throughout its history, AMI has focused on delivering
value to its patients and its communities with a full range of quality inpatient
and outpatient services including medical, surgical, obstetric, diagnostic,
specialty and home health care. The Company also operates ancillary facilities
at each of its hospitals, such as ambulatory, occupational and rural healthcare
clinics. The Company's hospitals are principally located in the suburbs of
major metropolitan areas in 12 states including Texas, Florida and California.
1
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC.
AMERICAN MEDICAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
November 30, 1993 August 31, 1993
--------------------------- ---------------------------
Holdings AMI Holdings AMI
------------ ----------- ------------ -----------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and short-term cash investments $ 13,639 $ 13,639 $ 44,335 $ 44,335
Accounts receivable, net 103,490 103,490 90,596 90,596
Income taxes receivable, net (including
current portion of deferred income taxes) 13,031 13,031 24,641 24,641
Supply inventories and prepaid expenses 72,255 72,255 71,133 71,133
---------- ---------- ---------- ----------
Total Current Assets 202,415 202,415 230,705 230,705
---------- ---------- ---------- ----------
Property and Equipment 1,825,832 1,825,832 1,799,945 1,799,945
Less - Accumulated depreciation 423,586 423,586 395,736 395,736
---------- ---------- ---------- ----------
Net Property and Equipment 1,402,246 1,402,246 1,404,209 1,404,209
---------- ---------- ---------- ----------
Cost in Excess of Net Assets Acquired 1,159,261 1,159,261 1,165,435 1,165,435
Investments and Other Assets 64,868 64,868 68,021 68,021
---------- ---------- ---------- ----------
$2,828,790 $2,828,790 $2,868,370 $2,868,370
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $ 340,293 $ 340,293 $ 370,655 $ 370,655
Long-Term Debt 1,263,665 1,263,665 1,283,665 1,283,665
Convertible Subordinated Debt 10,539 10,539 10,487 10,487
Deferred Income Taxes 211,489 211,489 211,451 211,451
Other Deferred Credits and Liabilities 281,410 281,410 288,239 288,239
Commitments and Contingencies
Common Stock Subject to
Repurchase Obligations 7,234 - 6,046 -
---------- ---------- ---------- ----------
Shareholders' Equity
Common stock 769 725 768 725
Additional paid-in capital 596,442 588,068 596,623 587,060
Retained earnings 124,949 140,601 108,436 124,088
Adjustment for minimum pension liability (8,000) (8,000) (8,000) (8,000)
---------- ---------- ---------- ----------
Total Shareholders' Equity 714,160 721,394 697,827 703,873
---------- ---------- ---------- ----------
$2,828,790 $2,828,790 $2,868,370 $2,868,370
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC.
AMERICAN MEDICAL INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended November 30,
---------------------------------------------------------------
1993 1992
--------------------------- ---------------------------
Holdings AMI Holdings AMI
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net Revenues $ 558,217 $ 558,217 $ 541,893 $ 541,893
Operating Costs and Expenses:
Salaries and benefits 205,414 205,414 200,075 200,075
Supplies 79,482 79,482 77,426 77,426
Provision for uncollectible accounts 39,036 39,036 39,021 39,021
Depreciation and amortization 38,273 38,273 36,108 36,108
Other operating costs 126,654 126,654 123,404 123,404
---------- ---------- ---------- ----------
Total Operating Costs and Expenses 488,859 488,859 476,034 476,034
---------- ---------- ---------- ----------
Operating Income 69,358 69,358 65,859 65,859
Interest expense, net (38,848) (38,848) (45,073) (45,073)
---------- ---------- ---------- ----------
Income before taxes and minority
equity interest 30,510 30,510 20,786 20,786
Provision for income taxes (12,900) (12,900) (9,800) (9,800)
---------- ---------- ---------- ----------
Income before minority equity interest 17,610 17,610 10,986 10,986
Minority equity interest (1,097) (1,097) (425) (425)
---------- ---------- ---------- ----------
Net Income $ 16,513 $ 16,513 $ 10,561 $ 10,561
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per Share Data:
Net Income Per Common and
Common Equivalent Share $ 0.21 N/A $ 0.14 N/A
---------- ----------
---------- ----------
Shares Used for Computation of
Net Income Per Share 76,938 N/A 76,662 N/A
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC.
AMERICAN MEDICAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended November 30,
---------------------------------------------------------------
1993 1992
--------------------------- ---------------------------
Holdings AMI Holdings AMI
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 16,513 $ 16,513 $ 10,561 $ 10,561
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 38,273 38,273 36,108 36,108
Amortization of debt discount, deferred
financing costs and non-cash interest 12,481 12,481 16,375 16,375
Decrease (increase) in accounts receivable,
net (12,808) (12,808) 5,602 5,602
Increase in supply inventories and prepaid
expenses (1,122) (1,122) (2,373) (2,373)
Decrease in accounts payable and accrued
liabilities (7,646) (7,646) (7,299) (7,299)
Increase in accrued interest 7,775 7,775 12,524 12,524
Income taxes, net 11,610 11,610 (20,695) (20,695)
Decrease in other liabilities (9,734) (9,734) (1,901) (1,901)
Other non-cash items 129 129 (515) (515)
---------- ---------- ---------- ----------
Net cash provided by operating activities 55,471 55,471 48,387 48,387
---------- ---------- ---------- ----------
Cash Flows from Financing Activities:
Payments on debt (31,507) (31,507) (29,148) (29,148)
Reducing revolving credit facility (28,000) (28,000) - -
Contribution to AMI by Holdings - 1,008 - 371
Issuance of Holdings common stock 1,008 - 371 -
---------- ---------- ---------- ----------
Net cash used in financing activities (58,499) (58,499) (28,777) (28,777)
---------- ---------- ---------- ----------
Cash Flows from Investing Activities:
Property and equipment additions (27,093) (27,093) (24,918) (24,918)
Increase in deferred costs 1,251 1,251 - -
Additions to notes receivable and investments (1,773) (1,773) (2,674) (2,674)
Decrease in notes receivable and investments 1,453 1,453 3,953 3,953
Other (1,506) (1,506) 1,955 1,955
---------- ---------- ---------- ----------
Net cash used in investing activities (27,668) (27,668) (21,684) (21,684)
---------- ---------- ---------- ----------
Increase (Decrease) in Cash and
Short-Term Cash Investments (30,696) (30,696) (2,074) (2,074)
Cash and Short-Term Cash Investments,
Beginning of Period 44,335 44,335 70,536 70,536
---------- ---------- ---------- ----------
Cash and Short-Term Investments,
End of Period $ 13,639 $ 13,639 $ 68,462 $ 68,462
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
American Medical Holdings, Inc. ("Holdings") was organized in July 1989 to
acquire American Medical International, Inc. ("AMI" and, together with Holdings
the "Company"). AMI's financial statements are the same as Holdings' financial
statements except for the components of shareholders' equity and the impact of
Holdings' common stock subject to repurchase obligations.
The accompanying unaudited consolidated condensed financial statements
include the accounts of Holdings, AMI and all majority owned subsidiary
companies and have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation, have been included in the accompanying
interim financial statements. The consolidated condensed balance sheet as of
August 31, 1993 was derived from the audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
All significant intercompany accounts and transactions have been eliminated.
Certain reclassifications have been made to the prior period's financial
statements to be consistent with the fiscal 1994 presentation. For additional
disclosure refer to Holdings' and AMI's Annual Report on Form 10-K for the year
ended August 31, 1993.
(2) ACCOUNTS RECEIVABLE
As of November 30, 1993 and August 31, 1993, Holdings and AMI had reserves
for uncollectible receivables of $100.0 million and $98.1 million, respectively.
(3) COST IN EXCESS OF NET ASSETS ACQUIRED
The cost in excess of net assets acquired is being amortized over 40 years
from the original acquisition date. Holdings' and AMI's cumulative amortization
of cost in excess of net assets acquired at November 30, 1993 and August 31,
1993 was $133.2 million and $125.2 million, respectively. Amortization of cost
in excess of net assets acquired for Holdings and AMI was $8.0 million for the
three months ended November 30, 1993 and 1992.
(4) LONG-TERM DEBT
As of November 30, 1993, $259 million was outstanding under the Company's
$600 million revolving credit facility which accrued interest at 4.7%.
Amounts outstanding under the revolving credit facility accrue interest, at
the option of AMI, at (i) adjusted LIBOR plus 1.5% (subject to reduction upon
the satisfaction of certain conditions) or (ii) the alternative base rate
specified in the revolving credit facility. In addition, $35.5 million in
letters of credit were issued thereunder.
On November 18, 1993, the remaining principal amount of the 6 3/4% Swiss
franc/dollar dual currency senior notes due 1997 were redeemed. The redemption
price of $28 million was financed by borrowings under the revolving credit
facility.
5
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
(Unaudited)
(5) COMMITMENTS AND CONTINGENCIES
Holdings and AMI are subject to claims and suits arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
all pending legal proceedings will not have a material adverse effect on the
business or financial condition of Holdings or AMI.
(6) COMMON STOCK SUBJECT TO REPURCHASE OBLIGATIONS
Certain executive officers of AMI purchased shares of Holdings' common
stock and in connection therewith were granted options to purchase additional
shares of common stock. Under certain circumstances, these purchasers have the
right to sell such shares to the Company at market value ($16.75 per share as of
November 30, 1993) and therefore, such shares are classified separately from
shareholders' equity at their repurchase price. As of November 30, 1993 and
August 31, 1993, 431,858 shares of common stock were subject to repurchase
obligations. These shares are subject to restrictions on transferability and
Holdings generally has the right to repurchase such shares under certain
circumstances.
(7) CAPITAL STOCK
As of November 30, 1993, Holdings had 200 million shares of $0.01 par value
common stock authorized. Of such shares, 76,993,000 and 76,873,000 were
outstanding as of November 30, 1993 and August 31, 1993, respectively. As of
November 30, 1993, Holdings had five million shares of $0.01 par value of
Preferred Stock authorized, of which none were outstanding.
Holdings is the owner of all the outstanding shares of common stock of AMI.
As of November 30, 1993 and August 31, 1993, 72,481,000 shares of AMI common
stock were outstanding.
(8) NET REVENUES
Revenues are presented net of reserves to recognize the difference between
the established rates for covered services and the amount paid by third party or
private payors. Patient revenues received under government and some privately
sponsored insurance programs are based on cost as defined under the programs or
at predetermined rates based upon the diagnosis, plus capital costs, return on
equity, and other adjustments rather than customary charges. Adjustments are
recorded based on estimated amounts and contract interpretations. Such
adjustments are generally subject to final audit and settlement. Holdings' and
AMI's net revenues reflect the impact of these adjustments for the three months
ended November 30, 1993 and 1992 of $490.6 million and $446.6 million,
respectively. In management's opinion, the reserves established are adequate to
cover the ultimate liabilities that may result from final settlements.
Net revenues from government programs represented 42% and 37% of total net
revenues for the three months ended November 30, 1993 and 1992, respectively.
In addition, the Company has net revenues from other contracted business which
represented 26% and 25% of total net revenues for the three months ended
November 30, 1993 and 1992, respectively.
6
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(9) INTEREST EXPENSE, NET
Interest expense, net consists of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Ended November 30,
------------------------------------
1993 1992
---------------- ----------------
Holdings and AMI Holdings and AMI
---------------- ----------------
<S> <C> <C>
Interest costs $ 27,743 $ 30,359
Amortization of debt discount, deferred
financing costs and non-cash interest 12,481 16,375
Interest costs capitalized (624) (302)
-------- --------
39,600 46,432
Interest income (752) (1,359)
-------- --------
Interest expense, net $ 38,848 $ 45,073
-------- --------
-------- --------
</TABLE>
(10) MINORITY EQUITY INTEREST
Minority equity interest expense of $1.8 million and $0.6 million for the
three months ended November 30, 1993 and 1992, respectively, is presented net of
income taxes in the accompanying consolidated condensed statements of income.
(11) EARNINGS PER SHARE
Holdings' earnings per share for the three months ended November 30, 1993
and 1992 is based upon the weighted average number of shares of Holdings' common
stock outstanding. In accordance with APB Opinion No. 15, the impact of common
stock equivalents is not considered since they either have no dilutive effect or
the effect on dilution is less than three percent.
7
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(12) SUPPLEMENTAL CASH FLOW INFORMATION
Holdings and AMI paid income taxes (net of refunds) of $0.6 million and
$30.3 million for the three months ended November 30, 1993 and 1992,
respectively. Holdings and AMI paid interest (net of capitalized costs) for the
three months ended November 30, 1993 and 1992 of $19.3 million and $19.2
million, respectively.
For the three months ended November 30, 1993 and 1992 a non-cash increase in
common stock subject to repurchase obligations of $1.2 million and $.6 million,
respectively was recognized by Holdings due to market price changes.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended November 30, 1993, the Company invested $27.1
million in capital expenditures and, as of November 30, 1993, had approximately
$17.8 million of construction commitments outstanding. Such capital
expenditures are for new construction and renovations to facilitate and
accommodate new inpatient and outpatient programs and to develop and acquire new
lines of business, including home health care, surgery centers, and physician
practices. The Company intends to continue to invest in new and existing
operations within the healthcare industry, however, the terms of the Company's
revolving credit facility, its principal bank indebtedness, limit the Company's
ability to make capital expenditures. Capital expenditure limitations excluding
capitalized interest, are approximately $225 million in fiscal 1994, $225
million plus carryforwards for fiscal 1995 and $200 million plus carryforwards
thereafter. The Company is also authorized to use up to an additional $150
million for acquisitions.
The Company decreased its debt outstanding (including the current portion
of long-term debt) by approximately $50.5 million since August 31, 1993,
resulting in $1.28 billion outstanding as of November 30, 1993. Cash provided
by operating activities, short-term cash investments and borrowings under the
revolving credit facility were the primary sources used to repay (excluding
repayments on the revolving credit facility) $31.5 million of long-term debt
during the three months ended November 30, 1993. Repayments of $28 million were
for the redemption of the remaining principal amount of the 6 3/4% Swiss
franc/dollar dual currency senior notes due 1997. The amount outstanding under
the revolving credit facility decreased to $259 million as of November 30, 1993,
from $287 million outstanding as of August 31, 1993.
For the three months ended November 30, 1993 the Company had $55.5 million
in net cash provided by operating activities as compared to $48.4 million for
the three months ended November 30,1992. Management believes that sufficient
funds will be generated from operations, augmented by borrowings under the
revolving credit facility, to finance operations, capital expenditures and
service debt. Payments of interest and principal on the Company's $1.28 billion
of consolidated long-term debt, including the current portion of such long-term
debt, will continue to affect funds available to the Company to finance capital
expenditures and operations. Scheduled principal payments, excluding amounts
that may become due on the revolving credit facility, will be $9.4 million in
the remainder of fiscal 1994, $155.1 million in fiscal 1995, $56.1 million in
fiscal 1996, $178.3 million in fiscal 1997, $2.0 million in fiscal 1998 and $2.2
million in fiscal 1999.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The terms of certain indebtedness of the Company impose significant
operating and financial restrictions (subject to certain exceptions) requiring
the Company to maintain certain financial ratios and restrict the Company's
ability to incur additional indebtedness and enter into leases and guarantees of
debt; to make loans and investments; to pay dividends or repurchase shares of
stock; to repurchase, retire or refinance indebtedness prior to maturity; and to
purchase or sell assets. The Company has pledged the capital stock of certain
direct (first tier) subsidiaries and certain patient receivables as security for
the Company's obligations under the revolving credit facility and certain other
senior indebtedness of the Company. Management believes that the Company is
currently in compliance with all material covenants and restrictions contained
in all financing agreements.
RESULTS OF OPERATIONS
GENERAL TRENDS
The Company's net revenues have increased as a result of the increased
volume of outpatient and inpatient services and general price increases.
Outpatient volume has increased, and is expected to continue to increase, due to
(i) continued advances in medical technologies, thus allowing procedures
previously performed on an inpatient basis to be available on an outpatient
basis and (ii) the pressures from payors to control costs by directing those
patients with less severe illnesses from inpatient care to outpatient care. As
the increased utilization of outpatient services is expected to continue,
several of the Company's hospitals are expanding or redesigning their outpatient
facilities and services.
As an increasing portion of the Company's net revenues continue to be
derived from Medicare/Medicaid programs, the Company's overall rate of revenue
growth may decrease as a result of (i) this corresponding shift in payor mix and
(ii) the disparity between the rate of increase of the Company's customary
charges and the government's reimbursement rate. The Medicare program
reimburses the Company's hospitals primarily based on established rates by a
diagnosis related group for acute care hospitals and by a cost based formula for
psychiatric hospitals. While Medicare payment rates are indexed for inflation
annually, the increases have historically lagged behind actual inflation. The
increase in the Company's revenues derived from Medicare/Medicaid programs is
due to a larger portion of the population qualifying for coverage as a result of
the general aging of the population and expanded state Medicaid programs.
In addition to the Medicare program, states and insurance companies
continue to actively negotiate the amounts they will pay for services performed
rather than simply paying healthcare providers their customary charges. The
entrance of insurance companies into the managed care environment is
accelerating the introduction of managed care in more localities. Current
managed care conditions vary across the markets in which the Company operates.
Hospitals that operate in mature managed care markets typically have contributed
smaller profit margins than hospitals that operate in other markets. However,
management believes that through continued cost-control efforts, the Company is
positioned to have a competitive edge in pursuing market share growth in the
managed care environment.
To offset factors which may limit net revenue growth, the Company continues
to look at providing expanded healthcare services through the development of the
Company's operations and through the integration of broad healthcare networks,
including hospital/physician and physician contracting entities.
10
<PAGE>
INFLATION
A significant portion of the Company's operating costs and expenses are
subject to inflationary increases. Since the healthcare industry is labor
intensive, salaries and benefits are continually affected by inflation. In
addition, increasing supply costs are the result of vendors passing on rising
costs through price increases. The Company's ability to pass on a certain
portion of the increased costs associated with providing healthcare to
Medicare/Medicaid patients may be limited by existing government reimbursement
programs for healthcare services unless the federal and state governments
correspondingly increase the rates of payment under these programs.
Although the Company cannot predict its ability to continue to cover future cost
increases, management believes that through the continued adherence to the cost
reduction programs, labor management and reasonable price increases, the effects
of inflation should not have a material adverse effect on operating margins.
HEALTHCARE REFORM
The Clinton Administration's proposed healthcare reform plan contains
provisions which would impose among other things, cost controls on hospitals,
insurance market reforms to increase the availability of group health insurance
to small businesses, requirements that all businesses offer health insurance
coverage to their employees and the creation of a single government health
insurance plan (to reduce administrative costs) that would cover all citizens.
The healthcare reform plan also proposes healthcare coverage for all citizens, a
circumstance which may result in additional revenues for the Company; however
this increase in revenues may be offset by lower levels of reimbursement from
various payors. In addition, some states, including Florida, have already
enacted reforms and continue to consider additional reforms. Management
believes that some form of healthcare reform is imminent; however until such
reform is finalized, management cannot predict the impact on the Company's
results of operations. The type and impact of such reform continues to be
debated at both the federal and state levels.
11
<PAGE>
OPERATIONS OVERVIEW
The following table summarizes certain consolidated results of the Company.
AMI's results of operations are the same as that of the Company's; therefore,
separate results of operations and a discussion and analysis for AMI are not
presented.
<TABLE>
<CAPTION>
Three Months Ended November 30,
-------------------------------
(dollars in millions)
1993 1992
-------- --------
% of Net % of Net % of Dollar Increase
Revenues Revenues (Decrease)
-------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Net Revenues
Medicare/Medicaid $224.9 40.3% $192.0 35.4% 17.1%
Contracted services 143.0 25.6 135.0 24.9 5.9
Non-contracted services 172.4 30.9 199.0 36.7 (13.4)
Other sources 17.9 3.2 15.9 3.0 12.6
----- ----- ----- -----
Total Net Revenues 558.2 100.0 541.9 100.0 3.0
----- ----- ----- -----
Operating Costs and Expenses
Salaries and benefits 205.4 36.8 200.1 36.9 2.7
Supplies 79.5 14.2 77.4 14.3 2.7
Provision for uncollectible accounts 39.0 7.0 39.0 7.2 0.0
Depreciation and amortization 38.3 6.9 36.1 6.7 6.0
Other operating costs 126.7 22.7 123.4 22.8 2.6
----- ----- ----- -----
Total Operating Costs and Expenses 488.9 87.6 476.0 87.9 2.7
----- ----- ----- -----
Operating income 69.3 12.4 65.9 12.1 5.3
Interest expense, net (38.8) (6.9) (45.1) (8.3) (13.8)
----- ----- ----- -----
Income before taxes and
minority equity interest 30.5 5.5 20.8 3.8 46.8
Provision for income taxes (12.9) (2.3) (9.8) (1.8) 31.6
----- ----- ----- -----
Income before
minority equity interest 17.6 3.2 11.0 2.0 60.3
Minority equity interest (1.1) (0.2) (0.4) 0.0 175.0
----- ----- ----- -----
Net Income $ 16.5 3.0% $ 10.6 2.0% 56.4
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
12
<PAGE>
The following table sets forth certain operating statistics of the
Company's hospitals for the three months ended November 30, 1993 and 1992:
<TABLE>
<CAPTION>
OPERATING STATISTICS (1): 1993 1992
-------- --------
<S> <C> <C>
Admissions
Medicare/Medicaid 30,144 27,225
Contracted 15,010 13,326
Non-contracted 11,495 14,313
Other 706 724
------- -------
Total 57,355 55,588
------- -------
------- -------
Equivalent Admissions(2) 78,852 75,014
Outpatient
Visits (3) 510,789 397,069
Surgeries 29,916 29,128
------- -------
Total Outpatient Volume 540,705 426,197
------- -------
------- -------
Patient Days 331,827 335,236
Equivalent Patient Days(2) 449,966 448,118
Licensed Beds Occupancy Rate 44.8% 47.1%
Licensed Beds at End of Period 8,131 7,822
<FN>
(1) Represents statistics for hospitals only and has not been adjusted to
include statistics for related healthcare entities.
(2) Represents actual admissions/patient days as adjusted to include
outpatient and emergency room services by adding to actual
admissions/patient days an amount derived by dividing outpatient and
emergency room revenue by inpatient revenue per admission/patient days.
(3) Includes home health visits of 149,423 and 58,395 for the three months
ended November 30, 1993 and 1992, respectively.
</TABLE>
13
<PAGE>
Net revenues for the three months ended November 30, 1993 increased 3.0% or
$16 million over the three months ended November 30, 1992. Such increase is
primarily attributable to growth in both inpatient and outpatient revenues as a
result of new patient care services, higher utilization of outpatient and
ancillary services and higher third party reimbursement rates. Net revenues
from inpatient services increased 1.6% to $385 million, or 70.1% of net patient
revenues, for the three months ended November 30, 1993 from $379 million, or
70.8% of net patient revenues, for the three months ended November 30, 1992.
Net revenues from outpatient services increased 5.1% to 164 million, or 29.9% of
net patient revenues, for the three months ended November 30, 1993 from $156
million, or 29.2% of net patient revenues for the three months ended November
30, 1992. The addition of ancillary facilities associated with several of the
Company's hospitals to accommodate the higher utilization of outpatient services
has contributed to the increase in net revenues from outpatient services.
The Company's growth of home health services resulted in an increase
in the related net revenues.
For the three months ended November 30, 1993, the Medicare/Medicaid
programs and contracted services accounted for a greater portion of the
Company's business as compared to the three months ended November 30, 1992. The
greater portion of the population qualifying for Medicare/Medicaid coverage and
the increasing number of states and insurance companies which are negotiating
contracted amounts paid for services rendered have contributed to this growth.
Expense management continues to be the significant factor in achieving the
operating margin improvement experienced by the Company. Operating expenses
(excluding depreciation and amortization) increased only 2.4% over the three
months ended November 30, 1992. On a volume-adjusted, or per equivalent
admission basis, operating costs declined 2.5% over the three months ended
November 30, 1992.
The increased net revenues and continued control of operating costs
increased the operating margin to 12.4% for the three months ended November 30,
1993 from 12.1% for the three months ended November 30, 1992.
Interest expense, net decreased 13.8% or $6 million for the three months
ended November 30, 1993 as a result of debt refinancings and the use of cash
from operations to reduce indebtedness.
The tax provision for the three months ended November 30, 1993 and 1992 is
greater than that which would occur using the Company's marginal tax rate
against its income before taxes and minority equity interest, due in large part
to the amortization of cost in excess of net assets acquired not being
deductible for tax provision purposes.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material developments in the Company's legal proceedings have
occurred since August 31, 1993.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
11 Computations of earnings per share.
(b) REPORTS ON FORM 8-K.
None.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by undersigned
thereunto duly authorized.
AMERICAN MEDICAL HOLDINGS, INC.
Date: January 13, 1994
ALAN J. CHAMISON
By:_____________________________________
Alan J. Chamison
Executive Vice President and
Chief Financial Officer
Date: January 13, 1994
BARY G. BAILEY
By:_____________________________________
Bary G. Bailey
Vice President and Controller
AMERICAN MEDICAL INTERNATIONAL, INC.
Date: January 13, 1994
ALAN J. CHAMISON
By:_____________________________________
Alan J. Chamison
Executive Vice President and
Chief Financial Officer
Date: January 13, 1994
BARY G. BAILEY
By:_____________________________________
Bary G. Bailey
Vice President and Controller
16
<PAGE>
EXHIBIT 11
AMERICAN MEDICAL HOLDINGS, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
November 30, 1993 November 30, 1992
----------------- -----------------
<S> <C> <C>
SIMPLE
Net income $ 16,513 $ 10,561
-------- --------
-------- --------
Average outstanding shares 76,938 76,662
-------- --------
-------- --------
Simple net income per share $ 0.21 $ 0.14
-------- --------
-------- --------
PRIMARY
Net income $ 16,513 $ 10,561
Adjustment for interest on debentures,
net of tax 72 63
-------- --------
Net income for primary $ 16,585 $ 10,624
-------- --------
-------- --------
Average outstanding shares 76,938 76,662
Common stock equivalents assuming
exercise of stock options 1,522 457
Common stock equivalents assuming
conversion of debentures 210 210
-------- --------
Shares for primary 78,670 77,329
-------- --------
-------- --------
Primary net income per share $ 0.21 (1) $ 0.14 (1)
-------- --------
-------- --------
FULLY-DILUTED
Net income for primary $ 16,585 $ 10,624
Adjustment for interest on debentures,
net of tax 132 123
-------- --------
Net income for fully-diluted $ 16,717 $ 10,747
-------- --------
-------- --------
Shares for primary 78,670 77,329
Common stock equivalents assuming
additional conversion of debentures
and exercise of stock options 514 721
-------- --------
Shares for fully-diluted 79,184 78,050
-------- --------
-------- --------
Fully-diluted net income per share $ 0.21 (1) $ 0.14 (1)
-------- --------
-------- --------
<FN>
(1) The calculations for primary net income per share and fully-diluted net
income per share are submitted in accordance with Regulation S-K Item
601 (b) (11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces either no dilutive effect or the effect on dilution is
less than 3%.
</TABLE>
