SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
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 0-12927
NATIONAL HOME HEALTH CARE CORP.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
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(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
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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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of December 13, 1996 was
5,095,321.
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of October 31,
1996 and July 31, 1996 (Unaudited) 3-4
Consolidated Statements of Operations for the
three months ended October 31, 1996 and
October 31, 1995 (Unaudited) 5
Consolidated Statements of Cash Flows for the
three months ended October 31, 1996 and
October 31, 1995 (Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
October 31, July 31,
1996 1996
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,668,000 $ 8,929,000
Investments 528,000 528,000
Accounts receivable -
less allowance for doubtful accounts of
$391,000 at October 31, 1996 and
$414,000 at July 31, 1996 8,147,000 8,499,000
Income taxes receivable 69,000 203,000
Prepaid expenses and other assets 170,000 218,000
Deferred taxes 236,000 304,000
----------- -----------
Total current assets 18,818,000 18,681,000
Furniture, equipment and leasehold
improvements, net 372,000 319,000
Excess of cost over fair value of net assets of
businesses acquired, net 2,525,000 2,557,000
Other intangible assets, net 115,000 132,000
Deposits and other assets 110,000 110,000
Investment in unconsolidated investee 2,592,000 2,622,000
----------- -----------
TOTAL $24,532,000 $24,421,000
=========== ===========
</TABLE>
(continued)
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
October 31, July 31,
1996 1996
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,192,000 $ 1,315,000
Estimated third-party payor settlements 784,000 1,078,000
------------ ------------
Total current liabilities 1,976,000 2,393,000
------------ ------------
Deferred tax liability 514,000 524,000
------------ ------------
Total liabilities 2,490,000 2,917,000
------------ ------------
Stockholders' equity:
Common stock, $.001 par value: authorized
20,000,000 shares, issued 6,050,321 shares 6,000 6,000
Additional paid-in capital 17,660,000 17,660,000
Retained earnings 5,327,000 4,789,000
------------ ------------
22,993,000 22,455,000
Less treasury stock (955,000 shares) at cost (951,000) (951,000)
------------ ------------
Total stockholders' equity 22,042,000 21,504,000
------------ ------------
TOTAL $ 24,532,000 $ 24,421,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
For the three months ended
October 31,
1996 1995
----------- -----------
<S> <C> <C>
Net patient revenue $ 8,686,000 $10,074,000
----------- -----------
Operating expenses:
Cost of revenue 5,691,000 6,300,000
General and administrative 2,069,000 2,939,000
Amortization of intangibles 48,000 73,000
----------- -----------
Total operating expenses 7,808,000 9,312,000
----------- -----------
Income from operations 878,000 762,000
Other income:
Interest income 105,000 104,000
(Loss) from equity investee (30,000)
----------- -----------
Income before taxes 953,000 866,000
Provision for income taxes 415,000 414,000
----------- -----------
NET INCOME 538,000 452,000
----------- -----------
Net income per share of common stock 0.11 0.09
=========== ===========
5,095,321 5,001,160
Weighted average shares outstanding
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
For the three months ended October 31,
--------------------------------------
1996 1995
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 538,000 $ 452,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 76,000 124,000
Loss from equity investee 30,000
Deferred tax 58,000
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 352,000 (276,000)
Decrease in income taxes receivable 134,000 531,000
Decrease (increase) in prepaid expenses and other
assets 48,000 (38,000)
(Decrease) in accounts payable and accrued
expenses (123,000) (245,000)
(Decrease) increase in estimated third party payor
settlements (294,000) 498,000
----------- -----------
Net cash provided by operating activities 819,000 1,046,000
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (80,000) (13,000)
Purchase of Nurse Care, Inc., net of cash acquired (2,595,000)
----------- -----------
Net cash (used in) investing activities (80,000) (2,608,000)
----------- -----------
Cash flows from financing activities:
Decrease in notes receivable 89,000
----------- -----------
Net cash provided by financing activities -- 89,000
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 739,000 (1,473,000)
Cash and cash equivalents - beginning of period 8,929,000 9,237,000
----------- -----------
CASH AND CASH EQUIVALENTS-END OF PERIOD $ 9,668,000 $ 7,764,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $ 395,000 $ 298,000
Interest -- 5,000
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
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) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended October 31,
1996 are not necessarily indicative of the results that may be expected for the
year ended July 31, 1997. 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, 1996.
NOTE 2 - INITIAL PUBLIC OFFERING OF SUNSTAR HEALTHCARE, INC.
On May 21, 1996, the initial public offering of common stock by
SunStar Healthcare, Inc. ("SunStar") was consummated. Prior to the offering,
SunStar had been a wholly-owned subsidiary of the Company, consisting of its
Florida outpatient medical center operations. As a result of the offering, the
Company currently owns 900,000 shares, or approximately 37.6%, of SunStar. The
Company is accounting for its investment in SunStar using the equity method of
accounting.
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<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations and Effects of Inflation
- ----------------------------------------------
For the three months ended October 31, 1996, net patient revenue
was $8,686,000 as compared to $10,074,000 for the three months ended October
31,1995. The decrease is primarily attributable to the absence of revenue from
outpatient medical services during the three months ended October 31, 1996 (as a
result of the public offering by SunStar in May 1996 and its resulting
accounting treatment using the equity method) as compared with such revenue of
$1,239,000 during the three months ended October 31, 1995. Revenue from home
health care services decreased to $8,686,000 for the three months ended October
31, 1996 from $8,835,000 for the three months ended October 31, 1995. This
decrease of approximately $149,000, or 2%, is primarily attributable to
increased competition and price pressures incurred by Health Acquisition Corp.
from the certified home health care agencies with which it contracts in the New
York City metropolitan area.
Cost of revenue as a percentage of net patient revenue decreased to
66% for the three months ended October 31, 1996 from 67% for the three months
ended October 31, 1995. This improvement is primarily attributable to
efficiencies achieved in the operations of New England Home Care, Inc. and Nurse
Care, Inc. as compared with the comparable period of 1995. These two
subsidiaries of the Company were acquired in August 1995.
General and administrative expenses as a percentage of revenue
decreased to 24% for the three months ended October 31, 1996 to 29% for the
three months ended October 31, 1995. This decrease is attributable to improved
cost control measures implemented in the operations of New England Home Care,
Inc. and Nurse Care, Inc., as well as the elimination of all general and
administrative expenses relating to outpatient medical services as a result of
the SunStar public offering.
Amortization of intangibles decreased to $48,000 for the three
months ended October 31, 1996 from $73,000 for the three months ended October
31, 1995 as a result of certain intangible assets from prior acquisitions being
fully amortized.
The Company recorded a loss from equity investee of $30,000,
representing its share of the SunStar net loss for the three months ended
October 31, 1996.
The Company's effective tax rate decreased to approximately 44% for
the three months ended October 31, 1996 from 48% for the three months ended
October 31, 1995. This decrease is primarily attributable to the Company
changing to combined filing for state tax purposes.
As a result of the foregoing, net income for the three months ended
October 31, 1996 was $538,000, or $.11 per share, as compared to a net income of
$452,000, or $.09 per share, for the three months ended October 31, 1995.
-8-
<PAGE>
The rate of inflation had no material effect on operations for the
three months ended October 31, 1996.
Financial Conditions and Capital Resources
- ------------------------------------------
Current assets increased to approximately $18,818,000 and current
liabilities decreased to $1,976,000, respectively, at October 31, 1996. These
results increased working capital by $554,000 from $16,288,000 at July 31, 1996
to $16,842,000 at October 31, 1996 and the current ratio increased from 7.8x at
July 31, 1996 to 9.5x at October 31, 1996. Cash and cash equivalents at October
31, 1996 were $9,668,000 as compared with $8,929,000 at July 31, 1996.
The Company provided net cash from operating activities of $819,000
for the three months ended October 31, 1996 as compared to net cash provided by
operating activities of $1,046,000 for the three months ended October 31, 1995.
This decrease is primarily attributable to the reduction in estimated third
party payor settlements at October 31, 1996 as compared to an increase in
estimated third party payor settlements at October 31, 1995. Historically, the
Company has financed its working capital requirements through cash flow from
operating activities. Net cash used in investing activities of the three months
ended October 31, 1996 reflects the purchase of equipment. For the three months
ended October 31, 1995, net cash used in investing activities consisted of the
purchase of Nurse Care, Inc. and the purchase of equipment. For the three months
ended October 31, 1996, the Company had no financing cash flow activities. For
the three months ended October 31, 1995, the Company realized cash from
financing activities from payments received on notes receivable.
The Company believes that it has sufficient cash to fund its
operations for at least the ensuing twelve month period. The Company also has
available a $2,000,000 secured offering line of credit with the Bank of New
York. In addition, New England Home Care, Inc. has a secured advised line of
credit with the Bank of New York, the maximum amount of which shall not exceed
the lesser of eligible accounts receivable or $2,000,000. Both facilities are at
the alternate base commercial lending rate of the Bank of New York. As of
October 31, 1996, there were no outstanding balances under either line of
credit. The Company also believes that its current cash balances and available
credit will allow it to continue to make acquisitions in the home health care
field without affecting its liquidity needs.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
None.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
National Home Health Care Corp.
Date: December 13, 1996 /s/ Robert P. Heller
---------------------
Robert P. Heller
Vice President of Finance,
(chief financial and
accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000728389
<NAME> NATIONAL HOME HEALTH CARE CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 9,668,000
<SECURITIES> 0
<RECEIVABLES> 8,538,000
<ALLOWANCES> (391,000)
<INVENTORY> 0
<CURRENT-ASSETS> 18,818,000
<PP&E> 824,000
<DEPRECIATION> (452,000)
<TOTAL-ASSETS> 24,532,000
<CURRENT-LIABILITIES> 1,976,000
<BONDS> 0
0
0
<COMMON> 6,000
<OTHER-SE> 22,036,000
<TOTAL-LIABILITY-AND-EQUITY> 24,532,000
<SALES> 8,686,000
<TOTAL-REVENUES> 8,686,000
<CGS> 0
<TOTAL-COSTS> 7,808,000
<OTHER-EXPENSES> (30,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,000
<INCOME-PRETAX> 953,000
<INCOME-TAX> 415,000
<INCOME-CONTINUING> 538,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538,000
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
