<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q\A
(Mark One)
/X/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 1995, 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 0-12787
MEDICAL IMAGING CENTERS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3643045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9444 Farnham St., Suite 100
San Diego, California 92123
(Address of principal executive offices) (Zip Code)
(619) 560-0110
(Registrant's telephone number, including area code)
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
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
12,136,560 shares of Common Stock as of May 5, 1995
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MEDICAL IMAGING CENTERS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
(in thousands except share information) 1995 1994
--------- ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents (includes restricted cash of $643 in
1995 and $832 in 1994) $ 8,161 $ 8,524
Trade and notes receivable, net of allowance for doubtful accounts
of $5,486 in 1995 and $5,554 in 1994 9,154 9,524
Prepaid expenses and other current assets 1,467 1,611
------- -------
Total current assets 18,782 19,659
Equipment and leasehold improvements, net of accumulated
depreciation and amortization of $32,979 in 1995 and
$33,674 in 1994 24,576 28,813
Equipment held for sale, net of accumulated depreciation
of $2,461 in 1995 and $1,137 in 1994 600 400
Investment in and advances to unconsolidated entities, net of allowance
for doubtful accounts of $1,788 in 1995 and 1994 1,752 2,069
Intangible assets, net of accumulated amortization of
$1,755 in 1995 and $1,606 in 1994 1,129 1,269
Other assets 1,219 1,259
------- -------
$48,058 $53,469
======= =======
LIABILITIES AND NET CAPITAL DEFICIENCY:
Current liabilities:
Current portion long-term debt and capital lease obligations $11,044 $11,541
Current portion convertible subordinated debt 2,800 2,800
Accounts payable 1,957 2,062
Accrued payroll and related taxes 791 1,493
Other accrued liabilities 2,575 3,230
------- -------
Total current liabilities 19,167 21,126
Long-term debt and capital lease obligations 21,311 25,406
Minority interest in consolidated partnerships 1,317 1,598
Convertible subordinated debt 8,200 8,200
Commitments
Net Capital Deficiency:
Preferred stock, no par value, 5,000,000 shares authorized;
Series B preferred shares, no par value, 300,000 shares
authorized, no shares issued or outstanding --- ---
Common stock, no par value, 30,000,000 shares authorized;
12,136,560 and 12,133,227 shares issued and outstanding at
March 31, 1995 and December 31, 1994, respectively 54,473 54,473
Accumulated deficit (56,410) (57,334)
------- -------
Total Net Capital Deficiency (1,937) (2,861)
------- -------
$48,058 $53,469
======= =======
</TABLE>
See accompanying notes.
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MEDICAL IMAGING CENTERS OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
(in thousands except per share information) 1995 1994
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<S> <C> <C>
REVENUES:
Medical services $12,139 $14,157
Equipment and medical suite sales 2,036 235
------- -------
Total revenues 14,175 14,392
COSTS AND EXPENSES:
Costs of medical services 7,406 9,034
Costs of equipment and medical suite sales 1,542 213
Marketing, general and administrative 782 1,080
Provision for doubtful accounts 268 402
Depreciation and amortization of equipment
and leasehold improvements 2,633 3,048
Amortization of intangibles and deferred costs 158 93
Equity in net income of unconsolidated entities (183) (127)
Interest expense 919 1,375
Interest income (154) (85)
------- -------
Total costs and expenses 13,371 15,033
------- -------
Income (loss) before minority interest 804 (641)
Minority interest in net (income) loss of
consolidated partnerships 120 (21)
------- -------
Net income (loss) $924 $(662)
======= =======
NET INCOME (LOSS) PER SHARE $.07 $(.05)
======= =======
SHARES USED IN PER SHARE AMOUNTS 12,382 12,123
======= =======
</TABLE>
See accompanying notes.
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MEDICAL IMAGING CENTERS OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
(in thousands) 1995 1994
-------------- ------ ------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $924 ($662)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 2,791 3,141
Provision for doubtful accounts 268 402
Equity in net income of unconsolidated entities, net of distributions --- (11)
Minority interest in net income (loss) of consolidated partnerships (120) 21
Net value of equipment dispositions 1,555 227
Change in assets and liabilities
Decrease in trade receivables 27 59
Decrease in prepaid expenses and other current assets 133 278
(Decrease) increase in accounts payable and other accrued liabilities (702) 30
Decrease in accrued payroll and related taxes (701) (222)
------ ------
Net cash provided in operating activities 4,175 3,263
INVESTING ACTIVITIES:
Capital expenditures (169) (461)
Cost of acquisitions (50) ---
Investment in and advances to unconsolidated entities, net 337 96
Other, net 3 (4)
------ ------
Net cash used in investing activities 121 (369)
FINANCING ACTIVITIES:
Principal payments on long-term debt and capital
lease obligations (4,506) (2,885)
Distribution to minority interests (151) (317)
Other, net (2) (56)
------ ------
Net cash used in financing activities (4,659) (3,258)
------ ------
Net decrease in cash and cash equivalents (363) (364)
Cash and cash equivalents at beginning of period 8,524 8,182
------ ------
Cash and cash equivalents at end of period $8,161 $7,818
====== ======
SUPPLEMENTAL CASH FLOW DATA:
Interest paid $754 $1,210
====== ======
Income taxes paid $6 $11
====== ======
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Additions to capital lease and long-term debt obligations $280 $1,754
====== ======
Retirement of debt and termination of capital lease obligations $389 $---
====== ======
</TABLE>
See accompanying notes.
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MEDICAL IMAGING CENTERS OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The financial statements included herein have been prepared by the Company,
without audit, according to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures that are made are
adequate to make the information presented not misleading. Further, in the
opinion of the Company, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position and results of
operations of the Company as of and for the periods indicated, have been
included.
It is suggested that these financial statements be read in conjunction with the
audited financial statements and the notes thereto for the year ended December
31, 1994, which are included in the Company's Form 10-K. The results of
operations for the three months ended March 31, 1995 are not necessarily
indicative of results to be expected for the full fiscal year ending December
31, 1995.
2. Primary net income (loss) per share is computed on the basis of weighted
average number of common shares outstanding and includes common stock
equivalents when their effect is dilutive. For the quarter ended March 31,
1994, common stock equivalents were excluded from the net loss computation as
their effect was antidilutive.
3. No income tax provisions have been recorded for the three months ended
March 31, 1995 and 1994 due to net operating loss carryforwards available for
income tax purposes.
4. Certain 1994 amounts have been reclassified to conform with the March 31,
1995 presentation.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
BUSINESS Medical Imaging Centers of America, Inc. ("MICA" or the "Company") is
a California corporation organized in July 1981 which provides outpatient
services and medical equipment rentals to physicians, managed care providers
and hospitals. These services include magnetic resonance imaging ("MRI"),
computed tomography ("CT"), nuclear medicine and ultrasound. The Company's
operations include diagnostic medical centers ("DMC's"), diagnostic equipment
rentals, fee-for-service agreements (fixed and mobile), and management,
marketing and related support services.
RESULTS OF OPERATIONS
REVENUES FROM MEDICAL SERVICES Revenues for the first quarter declined $1.7
million from $7.1 million in 1994 to $5.4 million in 1995 primarily due to the
Company's sale of underperforming assets and termination of certain
unprofitable leases and contracts used in its fee-for-service business.
Revenues declined $.3 million from $7.1 million in 1994 to $6.8 million in 1995
primarily due to declining trends in both reimbursement and utilization
experienced at its DMCs. As noted above, a number of factors exist that could
have an impact on the Company's future revenues, including declining prices and
an oversupply in the diagnostic equipment market, declining trends in
reimbursement and competition in the healthcare industry.
REVENUES FROM EQUIPMENT AND MEDICAL SUITE SALES Revenues from equipment and
medical suite sales for the first quarter increased from $.2 million in 1994 to
$2 million in 1995. The increase in sales is due to the quantity and type of
equipment and medical suites sold and will vary accordingly. The Company
intends to sell equipment and its remaining inventory of medical suites in the
future, but such sales are subject to market conditions and there can be no
assurances that such sales will or will not occur.
COSTS OF MEDICAL SERVICES Costs for the first quarter decreased from $9
million (64% of medical services revenues) in 1994 to $7.4 million (61% of
medical services revenues) in 1995, primarily due to the Company's sales of
underperforming assets and termination of certain unprofitable leases and
contracts used in its fee-for-service business.
COSTS OF EQUIPMENT AND MEDICAL SUITE SALES Costs of equipment and medical
suite sales for the first quarter increased from $.2 million in 1994 to $1.5
million in 1995. The difference in costs is directly related to the quantity
and type of equipment and medical suites sold and will vary accordingly.
MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES Marketing, general and
administrative expenses for the first quarter decreased from $1.1 million (8%
of medical services revenues) in 1994 to $.8 million (6% of medical services
revenues) in 1995. The decrease in costs resulted from reductions in the
number of administrative employees and other spending reductions which took
place throughout 1994.
PROVISION FOR DOUBTFUL ACCOUNTS Provision for doubtful accounts decreased from
$.4 million (3% of medical services revenues) in 1994 to $.3 million (2% of
medical services revenues) in 1995 based on management's evaluation of accounts
receivable.
DEPRECIATION AND AMORTIZATION Depreciation and amortization of equipment and
leasehold improvements for the first quarter decreased from $3.1 million in
1994 to $2.8 million in 1995. This decrease is primarily due to the sale of
underperforming assets and termination of certain unprofitable leases used in
the fee-for-service business.
INTEREST EXPENSE Interest expense for the first quarter decreased from $1.4
million in 1994 to $.9 million in 1995. This decrease resulted from the sale
of underperforming assets and termination of certain unprofitable leases used
in the fee-for-service business.
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LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company's cash and cash equivalents totalled $8.2
million; however, the Company had a working capital deficit of $.4 million.
The working capital deficit reflects the short-term classification of a $2.8
million mandatory redemption payment made in April towards the Company's
convertible subordinated debt. During the first quarter of 1995, cash flows
from operations of $4.2 million were offset by payments against long-term debt
of $4.5 million.
The Company's ability to meet its current obligations is dependent on its
ability to maintain revenues from existing contracts while reducing related
costs. In addition, a number of factors exist that could have an impact on the
Company's future revenues: (i) declining prices and an oversupply in the
diagnostic equipment market; (ii) changes in healthcare legislation which has
limited reimbursement and prohibited referrals from physician investors; (iii)
healthcare initiatives which could reduce reimbursement to the Company; and
(iv) competition in the healthcare industry.
OPERATING TRENDS
Declining reimbursement continues to adversely impact revenues earned by the
Company, and MICA does not expect improvements in reimbursement trends in the
future. The Company's strategy is to offset the declining trends in
reimbursement by securing managed care contracts and developing strategic
alliances with hospitals or other healthcare providers to increase the extent
of its imaging services. By positioning itself to take advantage of managed
care contracts, management believes that it can maintain its DMC revenues. The
Company will continue to pursue opportunities in its fee-for-service business;
however, the Company expects to sell equipment as contracts expire. As such,
the Company believes that revenues from its fee-for-service business will
decline.
The Company will continue to evaluate its operating costs and reduce spending
as appropriate; however, there can be no assurances that such actions will be
sufficient to provide adequate cash to sustain the operations of the Company.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
None
(b) Reports:
None
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<PAGE> 8
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.
MEDICAL IMAGING CENTERS OF AMERICA, INC.
Date : August 31, 1995 /s/ Robert S. Muehlberg
------------------------
Robert S. Muehlberg
Chairman of the Board of
Directors, President and
Chief Executive Officer
Date : August 31, 1995 /s/ Denise L. Sunseri
------------------------
Denise L. Sunseri
Vice President and Chief
Financial Officer
8
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 8,161
<SECURITIES> 0
<RECEIVABLES> 14,640
<ALLOWANCES> 5,486
<INVENTORY> 0
<CURRENT-ASSETS> 18,782
<PP&E> 60,616
<DEPRECIATION> 35,440
<TOTAL-ASSETS> 48,058
<CURRENT-LIABILITIES> 19,167
<BONDS> 29,511
<COMMON> 54,473
0
0
<OTHER-SE> (56,410)
<TOTAL-LIABILITY-AND-EQUITY> 48,058
<SALES> 2,036
<TOTAL-REVENUES> 14,175
<CGS> 1,542
<TOTAL-COSTS> 8,948
<OTHER-EXPENSES> 2,791
<LOSS-PROVISION> 268
<INTEREST-EXPENSE> 919
<INCOME-PRETAX> 804
<INCOME-TAX> 0
<INCOME-CONTINUING> 924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 924
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
