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 April 30, 1999
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 June 14, 1999 was
5,106,350
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NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1999
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of April 30, 1999
and July 31, 1998 (unaudited) 3-4
Consolidated Statements of Operations for the three
months ended April 30, 1999 and April 30, 1998 and the
nine months ended April 30, 1999 and April 30, 1998
(unaudited) 5
Consolidated Statements of Cash Flows for the nine
months ended April 30, 1999 and April 30, 1998
(unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
April 30, 1999 July 31, 1998
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ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $7,664,000 $10,992,000
Investments 313,000 488,000
Accounts receivable-less allowance for doubtful
accounts of $434,000 at April 30, 1999 and
$295,000 at July 31, 1998 10,245,000 8,269,000
Income taxes receivable 25,000 123,000
Prepaid expenses and other assets 70,000 195,000
Deferred taxes 417,000 289,000
------------ ------------
Total current assets 18,734,000 20,356,000
Furniture, equipment and leasehold
improvements, net 513,000 395,000
Excess of cost over fair value of net assets of
businesses acquired, net 5,404,000 3,179,000
Other intangible assets, net 1,308,000 745,000
Deposits and other assets 168,000 154,000
Investment in unconsolidated investee ----- 674,000
----------- -----------
TOTAL $26,127,000 $25,503,000
=========== ===========
</TABLE>
(Continued)
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
April 30, 1999 July 31, 1998
-------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable and accrued expenses $1,208,000 $1,013,000
Estimated third-party payor settlements 302,000 209,000
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Total current liabilities 1,510,000 1,222,000
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Total liabilities 1,510,000 1,222,000
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Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 6,228,746 shares 6,000 6,000
Additional paid-in capital 18,525,000 18,525,000
Retained earnings 7,736,000 7,045,000
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26,267,000 25,576,000
Less treasury stock (1,093,736 and 1,028,879 shares)
at cost (1,650,000) (1,295,000)
-------------- -------------
Total stockholders' equity 24,617,000 24,281,000
----------- -----------
TOTAL $26,127,000 $25,503,000
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</TABLE>
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
April 30, April 30,
------------------------ -----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net patient revenue $9,645,000 $8,303,000 $28,872,000 $26,206,000
---------- ---------- ----------- -----------
Operating expenses:
Cost of revenue 6,238,000 5,310,000 18,884,000 16,884,000
General and administrative 2,741,000 2,212,000 7,667,000 6,724,000
Amortization of intangibles 142,000 93,000 409,000 280,000
------------ ------------- ----------- -------------
Total operating expenses 9,121,000 7,615,000 26,960,000 23,888,000
----------- ----------- ---------- ----------
Income from operations 524,000 688,000 1,912,000 2,318,000
Other income (loss):
Interest income 95,000 133,000 290,000 407,000
(Loss) from equity investee ----- (247,000) (674,000) (1,158,000)
------------- ------------- ------------- ------------
Income before taxes 619,000 574,000 1,528,000 1,567,000
Provision for income taxes 199,000 311,000 837,000 755,000
---------- ---------- ---------- -----------
NET INCOME $420,000 $263,000 $691,000 $812,000
========= ======== ======== ========
Net income per share:
Basic $0.08 $0.05 $0.13 $0.15
=========== =========== =========== =============
Diluted $0.08 $0.05 $0.13 $0.15
=========== =========== =========== =============
Weighted average shares outstanding:
Basic 5,148,647 5,221,946 5,178,124 5,239,625
Diluted 5,239,987 5,284,036 5,257,145 5,316,892
</TABLE>
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
For the nine months ended April 30,
------------------------------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income $691,000 $812,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 502,000 357,000
Loss from equity investee 674,000 1,158,000
Gain on sale of assets (3,000)
Deferred tax ----- (316,000)
Changes in:
Accounts receivable (1,186,000) (883,000)
Income taxes receivable/payable 93,000 (127,000)
Prepaid expenses and other assets 139,000 19,000
Accounts payable, accrued expenses and other liabilities 67,000 (255,000)
Estimated third party payor settlements 93,000 461,000
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Net cash provided by operating activities 1,070,000 1,226,000
----------- ------------
Cash flows from investing activities:
Proceeds of investments 175,000 20,000
Purchase of property, plant and equipment (127,000) (63,000)
Purchase of assets of business (1,943,000) -----
Purchase of Accredited Health Services, Inc., net of cash acquired (1,733,000) -----
------------ ------------
Net cash (used in) investing activities (3,628,000) (43,000)
------------ -------------
Cash flows from financing activities:
Proceeds from exercise of stock options ----- 49,000
Purchase of treasury shares (355,000) (263,000)
Repayment of notes payable (421,000) -----
Proceeds from sale of assets 6,000 -----
----------- ------------
Net cash (used in) financing activities (770,000) (214,000)
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,328,000) 969,000
Cash and cash equivalents-beginning of period 10,992,000 9,324,000
----------- ------------
CASH AND CASH EQUIVALENTS-END OF PERIOD $7,664,000 $10,293,000
=========== ============
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Taxes $605,000 $1,218,000
Interest ----- 2,000
</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 and nine month periods ended
April 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending July 31, 1999. 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, 1998.
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 890,000 shares of common stock, or approximately 30.5%, of
SunStar. The Company utilizes the equity method of accounting for its investment
in SunStar. As of April 30, 1999, the Company's carrying value of its investment
in SunStar is $0.
NOTE 3 - ACQUISITIONS
On August 10, 1998, the Company, through its wholly owned subsidiary
Health Acquisition Corp. ("Health Acquisition"), acquired, for $1,943,000 in
cash, including acquisition costs of $8,000, certain assets of Bryan Employment
Agency, Inc., d/b/a Bryan Home Care Services ("Bryan Home Care"), a New York
licensed home health care company which provides home care services in
Westchester County, New York. The acquisition was accounted for as a purchase
and the cost was allocated as follows: $285,000 to personnel files, $285,000 to
patient files, $30,000 to furniture and equipment, $200,000 to covenant not to
compete and $1,143,000 to excess of cost over fair value of net assets of
businesses acquired. The purchase price was generated from internal funds. The
acquisition expanded the geographic presence of the Company and enabled Health
Acquisition to become a participating provider in the Westchester County
Department of Social Services Medicaid Program. Annual revenues for Bryan Home
Care approximated $5,700,000 in calendar 1997.
On October 30, 1998, the Company acquired all of the outstanding common
shares of Accredited Health Services, Inc. ("Accredited"). Accredited is a
licensed home health care company that provides home health aide services in
Bergen, Hudson, Passaic, Essex, Morris, Union, Somerset and Middlesex Counties,
New Jersey. The purchase price of approximately $1,946,000 in cash,
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including acquisition costs of $82,000, was generated from internal funds. The
acquisition was accounted for as a purchase. The allocation of purchase price
was as follows: $1,119,000 to total current assets, $59,000 to furniture and
equipment, $40,000 to other assets, $550,000 to total current liabilities,
$4,000 to other liabilities and $1,282,000 to the excess of purchase price over
the fair value of assets acquired. Revenues from Accredited approximated
$5,300,000 for the fiscal year ended March 31, 1998.
NOTE 4 - PER SHARE DATA
The Company adopted Statement of Financial Accounting Standard No. 128
("SFAS 128"), "Earnings Per Share," during the fiscal quarter ended January 31,
1998.
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<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the attached consolidated financial
statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended July 31, 1998.
This discussion contains forward-looking statements that are subject to
a number of known and unknown risks that, in addition to general economic,
competitive and other business conditions, could cause actual results,
performance and achievements to differ materially from those described or
implied in the forward-looking statements.
The Company is subject to significant external factors that could
significantly impact its business, including changes in Medicare and Medicaid
reimbursement, government fraud and abuse initiatives and other such factors
that are beyond the control of the Company. These factors, as well as future
changes in reimbursement, could cause future results to differ materially from
historical results.
The Balanced Budget Act of 1997, as amended (the "Act"), was signed
into law on August 5, 1997. Under the Act, for cost reports beginning on or
after October 1, 1997, Medicare-reimbursed home health agencies will be
reimbursed under an interim payment system ("IPS") for a two-year period prior
to the implementation of a prospective payment system. Under IPS, home health
care providers are reimbursed the lower of (i) their actual costs, (ii) cost
limits based on 105% of median costs of freestanding home health agencies, or
(iii) an agency-specific per patient cost limit, based on 98% of 1994 costs
adjusted for inflation. Prior to the implementation of IPS, Medicare reimbursed
providers on a reasonable cost basis subject to program-imposed cost per visit
limitations. The Act calls for payments to Medicare providers for cost reporting
periods beginning on or after October 1, 2000 to be made in accordance with a
prospective payment system to be established by the Secretary of the Department
of Health and Human Services.
The new IPS cost limits apply to the Company's Connecticut-based
Medicare certified nursing agency for the cost reporting period beginning July
1, 1998. The Company has determined that these new limits will reduce current
reimbursement for the Medicare services it provides. Accordingly, in May 1998
the Company combined its operations in Connecticut by merging its Medicare
certified subsidiary with its licensed agency subsidiary to increase operational
efficiencies. In addition, the Company has been closely monitoring utilization
of Medicare services in an effort not to exceed per patient cost limits.
The implementation of IPS has resulted in a decrease in revenues from
the Company's Medicare certified agency from the previous fiscal year. In
addition, the Company's operations in New York and New Jersey are dependent upon
referrals, primarily from Medicare certified home health care agencies, whose
future reimbursement may be adversely affected. Accordingly, there can
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be no assurance that the Company's future referrals will not result in reduced
reimbursement rates or reduced volume of business.
Results of Operations and Effects of Inflation
- ----------------------------------------------
Three Months Ended April 30, 1999 Compared to Three Months Ended April 30, 1998
For the three months ended April 30, 1999, net patient revenue
increased $1,342,000, or 16.2%, to $9,645,000 from $8,303,000 for the three
months ended April 30, 1998. Net patient revenue from Health Acquisition, the
subsidiary providing home health care services in the state of New York,
increased $526,000, or 9.6%, to $6,022,000 from $5,496,000. This increase is
attributable to the revenues generated from the expansion of business into
Westchester County, New York, resulting from the purchase of certain assets of
Bryan Home Care of $1,375,000, offset by the decline in same source revenues of
($849,000). The decline in same source revenues is attributable to the continued
decline in hours from the Medicare certified home health care agencies that
Health Acquisition contracts with, as a result of the implementation of IPS. In
addition, certain of these payor sources have reduced their reimbursement rates.
Net patient revenue from New England Home Care, Inc. ("New England Home Care"),
the subsidiary that is Medicare certified and licensed in the state of
Connecticut, decreased ($492,000), or (17.5%), to $2,315,000 from $2,807,000.
This decrease is attributable to the decline in Medicare revenue of ($477,000)
and a decline in non-Medicare revenue of ($15,000). The decrease in both
Medicare and non-Medicare revenue is the result of the change in Medicare
reimbursement from cost reimbursement to the interim payment system. Net patient
revenue from Accredited, the subsidiary providing home health aide services in
the state of New Jersey, was $1,308,000 for the three months ended April 30,
1999.
Cost of revenue as a percentage of net patient revenue increased to
64.7% for the three months ended April 30, 1999 from 63.9% for the three months
ended April 30, 1998. This increase is attributable to the decreases in certain
reimbursement rates from other existing Medicare certified home health care
agencies that the Company contracts with, as a result of the change in the
Medicare reimbursement system.
General and administrative expenses increased $529,000, or 23.9%, to
$2,741,000 for the three months ended April 30, 1999 from $2,212,000 for the
three months ended April 30, 1998. This increase is attributable to the
additional general and administrative expenses of three branch offices which the
Company acquired in the acquisitions of both Bryan Home Care and Accredited,
offset by the decline in general and administrative expenses of New England Home
Care as a result of the combining of the operations in Connecticut to offset the
impact of the implementation of IPS. As a percentage of net patient revenue,
general and administrative expenses increased to 28.4% for the three months
ended April 30, 1999 from 26.6% for the three months ended April 30, 1998.
Amortization of intangibles increased to $142,000 for the three months
ended April 30, 1999 from $93,000 for the three months ended April 30, 1998.
This increase is attributable to the
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amortization of goodwill and intangibles associated with the acquisitions of
Bryan Home Care and Accredited.
As a result of the foregoing, income from operations decreased
($164,000), or (23.8%), to $524,000 for the three months ended April 30, 1999
from $688,000 for the three months ended April 30, 1998.
Interest income decreased (28.5%) to $95,000 for the three months ended
April 30, 1999 from $133,000 for the three months ended April 30, 1998. This
decrease is attributable to lower average outstanding cash balances resulting
from cash used to acquire certain assets of Bryan Home Care and the stock of
Accredited.
The Company recorded no loss from equity investee in the three months
ended April 30, 1999, as the Company's carrying value of its investment in
SunStar was reduced to $0 in the quarter ended January 31, 1999. The Company
recorded a loss from equity investee of ($324,000) in the three months ended
April 30, 1998, representing the Company's share of the net loss reported by
SunStar for the period.
The Company's effective tax rate decreased to 32.1% for the three
months ended April 30, 1999 from 54.2% for the three months ended April 30,
1998. This decrease is attributable to the Company's share of SunStar's net
loss, in which no income tax benefit was recorded for the three months ended
April 30, 1998. Excluding the tax effect of loss from equity investee, the
effective tax rate decreased to 32.1% from 38.6% for the three months ended
April 30, 1998, as a result of an overaccrual of taxes recorded in 1998.
Nine Months Ended April 30, 1999 Compared to Nine Months Ended April 30, 1998.
For the nine months ended April 30, 1999, net patient revenue increased
$2,266,000, or 10.2%, to $28,872,000 from $26,206,000 for the nine months ended
April 30, 1998. Net patient revenue from Health Acquisition increased
$1,673,000, or 9.7%, to $18,899,000 from $17,226,000. This increase is
attributable to the revenues generated from the expansion of business into
Westchester County, New York, resulting from the purchase of Bryan Home Care of
$4,335,000, offset by the decline in same source revenues of ($2,682,000). This
decrease is explained in the above three-month discussion. Net patient revenue
from New England Home Care decreased ($1,647,000), or (18.3%), to $7,333,000
from $8,980,000. This decrease is explained in the above three-month discussion.
Net patient revenue from Accredited was $2,640,000 for the nine months ended
April 30, 1999.
Cost of revenue as a percentage of net patient revenue increased to
65.4% for the nine months ended April 30, 1999 from 64.4% for the nine months
ended April 30, 1998. This increase is explained in the above three-month
discussion.
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General and administrative expenses increased $943,000, or 14.0%, to
$7,667,000 for the nine months ended April 30, 1999 from $6,724,000 for the nine
months ended April 30, 1998. This increase is attributable to the additional
general and administrative expenses of three branch offices which the Company
acquired in the acquisitions of both Bryan Home Care and Accredited, offset by
the decline in general and administrative expenses of New England Home Care as a
result of the combining of the operations in Connecticut to offset the impact of
the implementation of IPS. As a percentage of net patient revenue, general and
administrative expenses increased to 26.6% for the nine months ended April 30,
1999 from 25.7% for the nine months ended April 30, 1998.
Amortization of intangibles increased to $409,000 for the nine months
ended April 30, 1999 from $280,000 for the nine months ended April 30, 1998.
This increase is attributable to the amortization of goodwill and intangibles
associated with the acquisitions of Bryan Home Care and Accredited.
As a result of the foregoing, income from operations decreased
($406,000), or (17.5%), to $1,912,000 for the nine months ended April 30, 1999
from $2,318,000 for the nine months ended April 30, 1998.
Interest income decreased (28.7%) to $290,000 for the nine months ended
April 30, 1999 from $407,000 for the nine months ended April 30, 1998. This
decrease is attributable to lower average outstanding cash balances resulting
from cash used to acquire certain assets of Bryan Home Care and the stock of
Accredited.
The Company recorded a loss from equity investee of ($674,000) in the
nine months ended April 30, 1999 as compared to a loss of ($1,158,000) for the
comparable period of 1998, representing the Company's share of the net loss
reported by SunStar for the same periods. As of April 30, 1999, the Company's
carrying value of its investment in SunStar is $0.
The Company's effective tax rate increased to 54.8% for the nine months
ended April 30, 1999 from 48.2% for the nine months ended April 30, 1998. This
increase is attributable to no income tax benefit recorded for the nine months
ended April 30, 1999, as compared to ($316,000) recorded for the nine months
ended April 30, 1998 related to the Company's share of SunStar's net loss.
Excluding the tax effect of loss from equity investee, the effective tax rate
decreased slightly to 38.0% for the nine months ended April 30, 1999 as compared
to 39.3% for the comparable period of 1998.
The rate of inflation had no material effect on operations for the nine
months ended April 30, 1999.
Financial Condition and Capital Resources
- -----------------------------------------
Current assets decreased to $18,734,000 and current liabilities
increased to $1,510,000, respectively, at April 30, 1999. This resulted in a
decrease in working capital by ($1,910,000) from
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$19,134,000 at July 31, 1998 to $17,224,000 at April 30, 1999. Cash and cash
equivalents decreased ($3,328,000) to $7,664,000 at April 30, 1999 from
$10,992,000 at July 31, 1998 and accounts receivable increased $1,976,000 to
$10,245,000 at April 30, 1999 from $8,269,000 at July 31, 1998. The decrease in
both working capital and cash and the increase in accounts receivable reflect
the acquisitions of Bryan Home Care and Accredited during the nine months ended
April 30, 1999. The combined acquisition costs were $3,889,000.
Net cash provided by operating activities for the nine months ended
April 30, 1999 was $1,070,000 as compared to net cash provided by operating
activities of $1,226,000 for the nine months ended April 30, 1998. The decrease
in operating cash flow of ($156,000) is primarily attributable to the decline in
net income over the comparable period of 1998. Net cash used in investing
activities for the nine months ended April 30, 1999 reflects the proceeds of
investments, acquisitions made by the Company and the purchase of equipment. Net
cash used in investing activities for the nine months ended April 30, 1998
reflects the proceeds of investments and the purchase of equipment. Net cash
used in financing activities for the nine months ended April 30, 1999 reflects
the purchase of treasury shares and the repayment of notes payable to the former
officers of Accredited, offset by the proceeds from the sale of assets. Net cash
used in financing activities for the nine months ended April 30, 1998 reflects
the purchase of treasury shares offset by the proceeds from the exercise of
stock options.
The Company has available a $2,000,000 secured line of credit with its
bank. In addition, a subsidiary of the Company has a secured line of credit. The
maximum amount that can be borrowed under the secured line of credit may not
exceed the lesser of eligible accounts receivable or $2,000,000. Both credit
facilities bear interest at the alternate base commercial lending rate of the
bank and expire January 31, 2000. At April 30, 1999, there was no outstanding
balance under either line of credit.
The Company intends to meet its short and long term liquidity needs
with its current cash balances and its available lines of credit. The Company
believes that its cash balances also will allow it to continue to make
acquisitions in the home health care field without affecting its liquidity
needs.
In August 1998, the Board of Directors extended for one year its
program to repurchase its Common Stock. Purchases in the aggregate amount of up
to $1,000,000 in purchase price during the one-year extension would be made from
time to time in the open market and through privately negotiated transactions,
subject to general market and other conditions. The buyback program will be
financed out of existing cash or cash equivalents.
Year 2000 Compliance
- --------------------
The Year 2000 issue is the result of computer programs which were
written using two digits rather than four to define the applicable year. Certain
purchased systems used by the Company, and for which the Company does not
control the programming code, use two digits for the year. The current systems
used by Health Acquisition and Accredited are relatively old and have been
slated for
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replacement with new systems that better meet the information needs as they
expand and deal with the current operating environment. Health Acquisition's new
computer system is expected to be operational by October 1999, with an expected
cost of approximately $100,000. The Company has spent to date approximately
$80,000 with respect to Accredited's new computer system, which the Company
expects will be operational by August 1999. The Company anticipates that these
conversions will comply with the requirements to handle the year 2000 issue with
no significant operational concerns. The current system utilized by New England
Home Care is a relatively new operating system, which the Company implemented
with minimal cost. The Company has been advised by the system vendor that all
required changes necessary to be year 2000 compliant have been substantially
completed and will be implemented prior to the year 2000. Management currently
believes that the financial resources necessary to accomplish Company-wide year
2000 compliance will not be material to the Company's financial condition,
liquidity or results of operations. However, there is no guarantee that the
Company's expected results will be achieved. In addition, actual results could
differ materially from those expected results.
The Company depends on receipt of payment for services from its payor
sources, most of which utilize computer software to process those payments. The
Company's primary payors include Medicare and Medicaid programs, insurance
companies, other Medicare certified home health agencies and long-term health
care provider programs. The Company has begun formal communications with its
significant payors to determine the extent to which the Company may be
vulnerable to those payors' failures to remediate their own year 2000 issues.
The Company currently is unable to predict what effect, if any, the year 2000
issue may have on the computer systems of those payors, or, in turn, on the
Company.
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PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, 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, 1999 /s/ Robert P. Heller
---------------------
Robert P. Heller
Vice President of Finance and
Chief Financial Officer
(chief financial and accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000728389
<NAME> NATIONAL HOME HEALTH CARE CORP.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
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0
0
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