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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1996
Commission file number 0-15893
CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
Nevada 91-1256470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38 Pond Street, Suite 305
Franklin, Massachusetts 02038
(Address of principal executive offices) (Zip Code)
(508) 520-2422
Registrant's telephone number, including area code
Not applicable
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 periods that the registrant was
required to file such report), 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
stock, as of March 31, 1996.
Common Stock, $.012 Par Value -- 14,122,306
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INDEX
CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets--March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations--Three months ended March 31,
1996 and 1995
Condensed Consolidated Statements of Cash Flows--Three months ended March 31,
1996 and 1995
Notes to Condensed Consolidated Financial Statements--March 31, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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Part 1. Financial Information
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CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
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Condensed Consolidated Balance Sheets
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<TABLE>
<CAPTION>
(unaudited)
3/31/96 12/31/95
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<S> <C> <C>
ASSETS:
Current Assets:
Cash $ 123,213 $ 85,557
Accounts receivable (net of allowance for doubtful accounts of $840,000 in
1996 and $815,000 in 1995) 1,915,943 2,016,846
Other current assets 331,286 218,316
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Total Current Assets 2,370,442 2,320,719
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Property and Equipment, at Cost:
Equipment 1,296,085 1,292,487
Less accumulated depreciation and amortization (733,904) (694,903)
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Property and equipment, net 562,181 597,584
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Other Assets:
Goodwill (net of accumulated amortization of $328,460 in 1996 and $309,290
in 1995) 2,484,713 2,503,515
Other 238,837 144,979
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Total Other Assets 2,723,550 2,648,494
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TOTAL $ 5,656,173 $ 5,566,797
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Short-term debt, current portion of long-term debt and Lease obligations $ 492,238 $ 521,248
Accounts payable 778,492 799,888
Accrued personnel costs 390,362 326,468
Accrued expenses and other liabilities 207,043 214,583
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Total Current Liabilities 1,868,135 1,862,187
Long-term debt 1,621,527 1,699,360
Other liabilities 76,563 26,998
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Total liabilities 3,566,225 3,588,545
Stockholders' Equity:
Common stock, $.012 par value, 50,000,000 shares authorized; issued
14,822,306 in 1996 and 14,702,306 in 1995 176,428 176,428
Preferred stock, 10,000,000 shares authorized; issued 1,727,305 in 1996 and
1995 1,727,305 1,727,305
Additional paid-in capital 7,661,116 7,661,116
Accumulated deficit (7,387,401) (7,499,097)
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2,177,448 2,065,752
Less-Treasury stock, 700,000 shares, at cost (87,500) (87,500)
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Total Stockholders' Equity 2,089,948 1.978,252
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TOTAL $ 5,656,173 $ 5,566,797
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</TABLE>
Note: The Balance Sheet at December 31, 1995 has been derived from the Audited
Financial Statements at that date. See notes to Condensed Consolidated
Financial Statements.
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CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
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Condensed Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31,
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1996 1995
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Revenue, net $ 2,363,132 $ 2,221,361
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Operating costs 1,735,951 1,793,049
Administrative and selling costs 399,688 260,662
Depreciation and amortization 57,803 58,948
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Total operating costs 2,193,442 2,112,659
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Operating income (loss): 169,690 108,702
Interest expense, net 53,883 50,504
Other (income)/expense 1,611 0
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55,494 50,504
Profit/(loss) before income taxes 114,196 58,198
Income tax provision 2,500 2,500
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Net income (loss) from continuing operations 111,696 55,698
Discontinued operations: 0 0
Net profit /(loss) $ 111,696 $ 55,698
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Net income (loss) per share:
Continuing operations $0.01 $0.00
Discontinued operations -- --
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Net income (loss) per share $0.01 $0.00
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Average shares outstanding 14,002,306 12,698,630
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See notes to Condensed Consolidated Financial Statements.
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CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
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Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31,
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<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $111,696 $55,698
Adjustments to reconcile net income to net cash from (used by)
operating activities:
Depreciation and amortization 57,803 58,948
Noncash interest expense 4,500 0
Decrease (increase) in accounts receivable 100,903 (189,645)
Decrease (increase) in other current assets (112,970) (19,967)
Decrease (increase) in other assets and deferred costs (98,358) (202,598)
Increase in accounts payable and accrued expenses 84,523 185,012
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Net cash from (used by) operating activities 141,097 (112,552)
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Cash Flows From Investing Activities:
Purchases of equipment (3,598) (25,543)
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Net cash used in investing activities (3,598) (25,543)
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Cash Flows From Financing Activities:
Proceeds from issuance of debt 0 275,000
Principal payments on debt and lease obligations (106,843) (134,360)
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Net cash provided by (used in) financing activities (106,843) 140,640
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Net increase (decrease) in cash 37,656 2,545
Cash, beginning of year 85,557 213,141
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Cash, end of period $123,213 $215,686
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</TABLE>
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See notes to Condensed Consolidated Financial Statements.
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CONSOLIDATED HEALTH CARE ASSOCIATES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-B. 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 March 31, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Form 10-KSB
for the year ended December 31, 1995.
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PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Revenues increased by 6.4% or $141,771 during the first quarter ended March 31,
1996 compared to the same period of 1995. A substantial portion of the increase
was due to revenues generated by providing staffing and home care services
within communities serviced by the Company's outpatient clinics. These revenues
generated by the Company's Managed Rehabitation Services division increased
25.9% as compared to the same revenues for the same period in 1995. Revenues
from outpatient clinics increased $34,410, a 1.2% increase over first quarter
results of 1995.
Operating costs represented 73.5% of revenue for the first quarter of 1996 as
compared to 80.7% for the comparable period of 1995. This decrease of 7.2% was
principally due to cost reduction programs previously implemented by the
Company. Additionally, the Company achieved lower recruiting,travel, and labor
cost by replacing subcontracted physical therapy labor with internal staff
physical therapists.
Administrative and selling costs increased 5.2% as a percentage of net revenue
or $139,026 during the quarter ending March 31, 1996 as compared to the same
period of 1995. A significant portion of the increase in administrative costs
relates to separation costs associated with the Company's former President and
Chief Financial Officer.
Depreciation and amortization decreased by 2% or $1,145 during the quarter ended
March 31, 1996 compared to the same period of 1995. The decrease is attributable
to lower amortization expense as well as fewer clinics in operations in 1996 as
compared to the same period in 1995. During 1995, the Company closed two
non-performing clinics and one additional clinic in early 1996.
The Company's tax provision is substantially the result of state income tax
accruals.
As a result of the above factors, net income from continuing operations of
$111,696 was achieved for the first quarter of 1996 as compared to a net income
of $55,698 for the same period of 1995.
Liquidity and Capital Resources
The Company acquired therapy equipment and office equipment totaling $3,598
during the first quarter of 1996.
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Financial Position
The Company's liquidity, as measured by its cash and working capital, increased
by $37,656 and $43,775 respectively in the first quarter of 1996 as compared to
the same period in 1995. The increase in cash and working capital was
principally due to the Company's profitable operations and, to a lesser extent,
to renegotiated term debt where extended terms and lower monthly note payments
resulted.
The Company continues to factor a certain portion of its Accounts receivable.
The decrease in accounts receivable of $100,903 during the first three months of
1996 is primarily the result of increased factored receivables with the
Company's factor.
Accounts payable and accrued expenses increased by $84,523. A significant
portion of this increase represents accrued financing cost resulting from debt
restructuring with a current note holder.
Total long-term debt, notes payable, and capital lease obligations decreased by
$106,843 as a result of principal payments made during the quarter.
PART II. OTHER INFORMATION
Items 1 through 6
Not applicable.
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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.
CONSOLIDATED HEALTH CARE
ASSOCIATES, INC.
Dated: May 14, 1996 By: /s/ Robert M. Whitty
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Robert M. Whitty
President
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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.
CONSOLIDATED HEALTH CARE
ASSOCIATES, INC.
Dated: May 14, 1996 By: /s/ Robert M. Whitty
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Robert M. Whitty
President
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