SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE X
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1995
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 0-12927
NATIONAL HOME HEALTH CARE CORP.
(Exact name of registrant as specified in its charter)
Delaware 22-2981141
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
850 Bronx River Road, Yonkers, New York 10708
(Address of principal executive offices with zip code)
Registrant's telephone number including area code: 914-776-6800
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 No
Applicable only to corporate issuers:
The number of shares of common stock outstanding as of April 30,
1995 was 4,718,075.
NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1995
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of April 30, 1995
and July 31, 1994 (unaudited) 3-4
Consolidated Statements of Operations for the
three months ended April 30, 1995 and
April 30, 1994 and nine months ended
April 30, 1995 and April 30, 1994 (unaudited) 5-6
Consolidated Statements of Cash Flows for the
nine months ended April 30, 1995 and
April 30, 1994 (unaudited) 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
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NATIONAL HOME HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
April 30, 1995 July 31, 1994
ASSETS
Current assets:
Cash and cash equivalents $2,807,000 $5,017,000
Investments 5,824,000 1,553,000
Accounts receivable - patients
less allowance for doubtful accounts of
$71,000 at April 30, 1995 and $84,000
at July 31, 1994 5,710,000 4,823,000
Notes receivable 354,000 271,000
Income taxes receivable 215,000 2,625,000
Prepaid expenses and other assets 233,000 193,000
Deferred taxes 80,000 200,000
__________ __________
Total current assets 15,223,000 14,682,000
Furniture, equipment and leasehold
improvements, net 479,000 512,000
Notes receivable - noncurrent 773,000 1,011,000
Restricted cash 260,000 260,000
Excess of cost over fair value of net
assets of businesses acquired, net 1,045,000 1,073,000
Other intangible assets, net 387,000 248,000
Deposits and other assets 103,000 140,000
___________ ___________
TOTAL $18,270,000 $17,926,000
=========== ===========
(Continued)
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
April 30, 1995 July 31, 1994
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 534,000 $ 667,000
Capital lease obligations-current 27,000 31,000
Reserve for state income tax settlement --- 300,000
Estimated losses on discontinued
operations 200,000 200,000
________ _________
Total current liabilities 761,000 1,198,000
Capital lease obligations-noncurrent 21,000 40,000
________ _________
Total liabilities 782,000 1,238,000
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 5,670,075
shares 6,000 6,000
Additional paid-in capital 15,552,00 15,544,000
Retained earnings 2,881,000 1,881,000
_________ __________
18,439,000 17,431,000
Less: treasury stock
(955,000 shares) at cost (951,000) (743,000)
Total stockholders' equity 17,488,000 16,688,000
__________ __________
TOTAL $18,270,000 $17,926,000
=========== ===========
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
For the three months ended
April 30,
1995 1994
Patient fee income $6,296,000 $4,977,000
Operating expenses:
Personnel costs 4,931,000 3,810,000
General and administrative 730,000 640,000
Amortization of intangibles 43,000 46,000
_________ _________
Total operating expenses 5,704,000 4,496,000
Income from operations 592,000 481,000
Other income:
Interest income 118,000 36,000
_________ _________
Income from continuing operations
before taxes 710,000 517,000
Provision for income taxes 310,000 281,000
Income from continuing operations 400,000 236,000
Discontinued operations:
Income from discontinued operations
(net of income taxes of $740,000 in 1994 ---- 993,000
__________ __________
NET INCOME $ 400,000 $1,229,000
========== ==========
Net income per share of common stock:
Continuing operations $0.08 $0.05
Discontinued operations ---- 0.21
_____ _____
Net income $0.08 $0.26
===== =====
Weighted average shares outstanding 4,776,794 4,779,075
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
For the nine months ended
April 30,
1995 1994
Patient fee income $18,070,000 $14,789,000
__________ __________
Operating expenses:
Personnel costs 14,050,000 11,064,000
General and administrative 2,373,000 1,791,000
Amortization of intangibles 115,000 137,000
__________ __________
Total operating expenses 16,538,000 12,992,000
__________ __________
Income from operations 1,532,000 1,797,000
Other income:
Interest income 283,000 100,000
_________ _________
Income from continuing operations
before taxes 1,815,000 1,897,000
Provision for income taxes 815,000 909,000
__________ _________
Income from continuing operations 1,000,000 988,000
__________ _________
Discontinued operations:
(Loss) from discontinued operations
(net of income taxes of
$181,000 in 1994) ---- (5,935,000)
__________ ___________
NET INCOME (LOSS) $1,000,000 $(4,947,000)
Net income (loss) per share of common stock:
Continuing operations $0.21 $0.21
Discontinued operations --- (1.24)
_____ _____
Net income (loss) $0.21 $(1.03)
===== =======
Weighted average shares outstanding 4,775,071 4,779,075
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the nine months ended
April 30,
1995 1994
Cash flows from operating activities:
Net income from continuing operations $1,000,000 $988,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 233,000 242,000
Deferred tax 120,000 ---
Changes in operating assets and liabilities:
(Increase) in accounts receivable (887,000) (87,000)
Decrease in income taxes receivable 2,410,000 ---
(Increase) decrease in prepaid
expenses and other assets (3,000) 113,000
(Decrease) increase in accounts payable
and accrued expenses (133,000) 123,000
(Decrease) in reserve for state
income tax settlement (300,000) ---
Cash provided by discontinued
operations --- 771,000
__________ _________
Net cash provided by operating activiti 2,440,000 2,150,000
_________ _________
Cash flows from investing activities:
Purchase of property, plant and equipment (86,000) (50,000)
Proceeds (purchase) of investments (4,271,000) 120,000
Purchase of assets of businesses (225,000) ---
Net cash provided by (used in) investing
activities (4,582,000) 70,000
__________ ________
(Continued)
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the nine months ended
April 30,
1995 1994
Cash flows from financing activities:
Decrease in notes receivable 155,000 ---
Principal payments under capital lease obligations (23,000) (16,000)
Purchase of treasury shares (208,000) ---
Common stock options 8,000 ---
Payments under capital lease obligations
by discontinued operations --- (15,000)
Net cash (used in) financing activities (68,000) (31,000)
_________ ________
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (2,210,000) 2,189,000
Cash and cash equivalents-beginning of period 5,017,000 3,463,000
___________ __________
CASH AND CASH EQUIVALENTS-END
OF PERIOD $2,807,000 $5,652,000
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $405,000 $631,000
Interest 8,000 9,000
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management,
all adjustments (consisting of normal recurring accruals) con-
sidered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended
April 30, 1995 are not necessarily indicative of the results that
may be expected for the year ended July 31, 1995. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended July 31, 1994.
Note 2 - TAX MATTERS
In February 1995, the Company and the New York State Department
o f T axation and Finance entered into a Stipulation of
Discontinuance regarding all open taxable years for which the
Company previously had been assessed. In consideration for a
payment of approximately $333,000, this matter was settled. The
Company previously established a provision sufficient to cover
the payment and interest.
The Internal Revenue Service (the "IRS") is currently conducting
an examination of the Federal Tax Return filed for the fiscal
year ended July 31, 1993. It is standard procedure for refund
claims in excess of $1,000,000 to be reviewed by the IRS's Joint
Committee on Taxation after the IRS has conducted an examination
to determine that the refund amount is correct. Therefore, since
the Company received a refund claim approximating $2,100,000 as a
result of net operating loss carryback claims relating to the
fiscal year ended July 31, 1994, the years affected by the
carryback (fiscal years ended July 31, 1991 - 1994) are now being
examined. Management does not believe that the result of the
examination will have a material adverse effect on the Company.
-9-
Note 3 - RECLASSIFICATION
Certain amounts in the April 30, 1994 consolidated statements of
operations have been reclassified to conform to the April 30,
1995 consolidated statements of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
ITEM 2 - Managements Discussion and Analysis of Financial
Condition and Results of Operations
In April 1994, the medical provider to which National HMO (New
York), Inc. and National HMO Corp. of Elizabeth, Inc., wholly
o w n e d subsidiaries of the Company, provided non-medical
management services, terminated its relationship with those
subsidiaries. In addition, in July 1994, National HMO (New
Y o r k), Inc. terminated its relationship with the dental
practitioner to which it also provided administrative management
services. In connection therewith, the Company has reclassified
its financial statements to show separately the results of the
discontinued operations. Accordingly, results of operations as
discussed below relate to continuing operations of the Company.
Results of Operations and Effects of Inflation
For the three months ended April 30, 1995, total income was
$6,296,000 as compared to $4,977,000 for the three months ended
April 30, 1994, which represents an increase of 27%. Income from
Health Acquisition Corp., the subsidiary providing home health
care services in the New York metropolitan area increased
$975,000 or 24% from the corresponding period of 1994. This
increase is attributable to additional volume from existing
contracts with certified home health care agencies and other
long-term provider programs. In addition, in April 1995, Health
Acquisition Corp. expanded its services to include home care
pediatric skilled nursing services for medically fragile children
and their families. Income from Brevard Medical Center, Inc. and
First Health, Inc., the two subsidiaries in Florida that operate
outpatient medical centers in Brevard County and Volusia County,
Florida, respectively, increased $344,000 from the corresponding
period of 1994. First Health, Inc., which commenced operations
in May 1994, had revenues of $265,000 in the most recent three
month period.
Total operating expenses as a percentage of total income was 91%
for the three months ended April 30, 1995 as compared to 90% for
the corresponding period of 1994. Personnel costs increased to
-10-
78% of total income in the current fiscal quarter as compared to
77% from the corresponding quarter of 1994. This result is
primarily attributable to an increase in medical personnel of the
outpatient medical centers, as a result of becoming preferred
providers for additional managed care plans. In addition, the
Company has incurred substantial increases in both health
i n surance and worker compensation premiums. General and
administrative expenses increased $90,000 from the corresponding
period of 1994, of which $74,000 related to the operations of
First Health, Inc. in the current fiscal quarter.
Interest income for the current three month period increased
$82,000 or 227% to $118,000 from $36,000 in the corresponding
period of 1994. This increase is primarily attributable to
interest earned on notes receivable and the federal income tax
refund received in the current fiscal period of approximately
$2,100,000 as a result of carryback claims.
Income from continuing operations before taxes for the three
months ended April 30, 1995 was $710,000 as compared to $517,000
for the corresponding period of 1994.
For the nine months ended April 30, 1995, the total income was
$18,070,000 as compared to $14,789,000 for the nine months ended
April 30, 1994, which represents an increase of $3,281,000 or
22%. Health Acquisition Corp., the subsidiary providing home
health care services accounted for $2,404,000 or 73% of this
increase. Income from outpatient medical centers increased
$877,000 from the previous nine month period. First Health,
Inc., which commenced operations in May 1994, accounted for
$723,000 of the increase. Total operating expenses as a
percentage of income was 92% for the nine months ended April 30,
1995 as compared to 88% for the nine months ended April 30, 1994.
Personnel costs increased to 78% of income as compared to 75% for
the corresponding period of 1994. This increase is explained in
the above three month discussion. General and administrative
expenses increased $582,000 from the previous nine month period,
of which $200,000 was for professional fees in connection with a
failed business merger, $227,000 related to the commencement of
operations of First Health, Inc. and the balance of $155,000 was
due to other increased costs of operations. Interest income
increased $183,000 or 183% from the previous nine month period as
explained in the above three month discussion.
Income from continuing operations before taxes for the nine
months ended April 30, 1995 was $1,000,000 as compared to
$988,000 for the corresponding period of 1994.
-11-
The rate of inflation had no material effect on operations during
the nine months ended April 30, 1995.
Financial Condition and Capital Resources
The Company believes that it has sufficient cash to fund its
operations for at least the ensuing twelve month period. In
addition, the Company has renewed a $2,000,000 secured line of
credit with the Bank of New York with interest at the alternate
base commercial lending rate of the bank for an additional one
year period. As of April 30, 1995, the Company had no
outstanding balance under the line of credit.
-12-
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
-13-
SIGNATURES
P u rsuant 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.
National Home Health Care Corp.
Date: June 14, 1995 /s/ Robert P. Heller
Robert P. Heller
Vice President of Finance
Chief Financial
and Accounting Officer
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