<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
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 No. 0-13849
RAMSAY HEALTH CARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-0857352
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ONE POYDRAS PLAZA
639 LOYOLA AVENUE, SUITE 1700
NEW ORLEANS, LOUISIANA 70113
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (504) 525-2505
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
----- -----
The number of shares of the Registrant's Common Stock outstanding at
November 10, 1994 follows:
Common Stock, par value $0.01 per share - 7,723,799 shares
<PAGE>
RAMSEY HEALTH CARE, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - September 30, 1994
and June 30, 1994..................................... 1
Consolidated statements of income - quarter ended
September 30, 1994 (unaudited) and
1993 (unaudited)...................................... 3
Consolidated statements of cash flows -
quarter ended September 30, 1994 (unaudited) and
1993 (unaudited)...................................... 4
Notes to consolidated financial statements -
September 30, 1994 (unaudited)........................ 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Current Reports on Form 8-K........... 15
SIGNATURES................................................. 16
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 June 30
1994 1994
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments............................ $ 3,197,000 $ 6,207,000
Restricted cash............................................ 2,256,000 5,311,000
Patient accounts receivable, less allowances for doubtful
accounts of $4,360,000 and $3,925,000 at
September 30, 1994 and June 30, 1994, respectively........ 22,247,000 23,019,000
Amounts due from third-party contractual agencies.......... 10,821,000 6,604,000
Other accounts receivable.................................. 2,594,000 2,139,000
Other current assets....................................... 3,099,000 3,040,000
------------ ------------
TOTAL CURRENT ASSETS..................................... 44,214,000 46,320,000
OTHER ASSETS
Cash held in trust......................................... 1,786,000 1,805,000
Cost in excess of net asset value of purchased businesses.. 11,941,000 12,042,000
Unamortized preopening and loan costs...................... 3,713,000 3,731,000
Other intangible assets.................................... 2,995,000 3,048,000
Real estate held for sale.................................. 1,150,000 1,150,000
Other non-current assets................................... 4,914,000 4,911,000
------------ ------------
26,499,000 26,687,000
PROPERTY AND EQUIPMENT
Land....................................................... 9,009,000 9,009,000
Building and improvements.................................. 118,684,000 118,555,000
Equipment, furniture and fixtures.......................... 21,202,000 20,626,000
------------ ------------
148,895,000 148,190,000
Less accumulated depreciation.............................. 39,359,000 38,029,000
------------ ------------
109,536,000 110,161,000
------------ ------------
$180,249,000 $183,168,000
============ ============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 JUNE 30
1994 1994
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................................ $ 2,972,000 $ 2,306,000
Accrued salaries and wages...................................... 3,392,000 4,291,000
Other accrued liabilities....................................... 3,681,000 4,386,000
Amounts due to third-party contractual agencies................. 6,022,000 4,729,000
Current portion of long-term debt............................... 10,220,000 9,460,000
------------ ------------
TOTAL CURRENT LIABILITIES...................................... 26,287,000 25,172,000
DEFERRED INCOME TAXES............................................ 4,879,000 4,932,000
LIABILITIES FOR SELF-INSURANCE CLAIMS, less
current portion................................................. 1,476,000 1,341,000
LONG-TERM DEBT, less current portion............................. 63,339,000 67,707,000
MINORITY INTERESTS............................................... 3,279,000 3,548,000
STOCKHOLDERS' EQUITY
Class A convertible preferred stock, $1 par value--authorized
800,000 shares; issued 22,910 shares........................... 23,000 23,000
Class B convertible preferred stock, Series C, $1 par value
--authorized 152,321 shares; issued 142,486 shares
(liquidation value of $7,244,000) including accrued dividends
of $91,000..................................................... 233,000 233,000
Common Stock, $.01 par value--authorized 20,000,000
shares; issued 8,212,849 shares at September 30, 1994 and
8,200,760 shares at June 30, 1994.............................. 82,000 82,000
Additional paid-in capital...................................... 100,025,000 100,048,000
Retained earnings (deficit)..................................... (15,895,000) (16,483,000)
Treasury Stock, at cost--489,050 shares at September 30, 1994
and 481,750 shares at June 30, 1994............................ (3,479,000) (3,435,000)
------------ ------------
80,989,000 80,468,000
------------ ------------
$180,249,000 $183,168,000
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30
--------------------------
1994 1993
----------- -----------
<S> <C> <C>
NET REVENUES $35,823,000 $31,983,000
Operating Expenses:
Salaries, wages and benefits.......................... 17,734,000 15,460,000
Other operating expenses.............................. 11,011,000 9,318,000
Provision for doubtful accounts....................... 1,285,000 1,715,000
Depreciation and amortization......................... 1,840,000 1,580,000
Interest and other financing charges.................. 2,167,000 2,276,000
----------- -----------
TOTAL OPERATING EXPENSES......................... 34,037,000 30,349,000
----------- -----------
INCOME BEFORE MINORITY INTERESTS
AND INCOME TAXES...................................... 1,786,000 1,634,000
Minority interests....................................... 847,000 790,000
----------- -----------
INCOME BEFORE INCOME TAXES............................... 939,000 844,000
Provision for income taxes............................... 351,000 236,000
----------- -----------
NET INCOME......................................... $ 588,000 $ 608,000
=========== ===========
Income per common and dilutive common equivalent share:
Primary............................................... $0.06 $0.06
Fully diluted......................................... $0.06 $0.06
Weighted average number of shares outstanding:
Primary............................................... 9,481,000 9,646,000
Fully diluted......................................... 9,547,000 9,757,000
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30
--------------------------
1994 1993
----------- ------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income........................................................ $ 588,000 $ 608,000
----------- ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................. 2,034,000 1,788,000
Provision (benefit) for deferred income taxes.................. (53,000) 48,000
Provision for doubtful accounts................................ 1,285,000 1,715,000
Minority interests............................................. 847,000 790,000
Cash flows from (increase) decrease in operating assets:
Accounts receivable......................................... (513,000) 445,000
Amounts due from third-party contractual agencies........... (4,217,000) (540,000)
Other current assets........................................ (514,000) (5,000)
Other non-current assets.................................... (12,000) (352,000)
Cash flows from increase (decrease) in operating liabilities:
Accounts payable............................................ 666,000 (1,063,000)
Accrued salaries, wages and other liabilities............... (1,604,000) 1,008,000
Unpaid self-insurance claims................................ 135,000 (788,000)
Amounts due to third-party contractual agencies............. 1,293,000 (748,000)
----------- ------------
Total adjustments........................................ (653,000) 2,298,000
----------- ------------
Net cash provided by (used in) operating activities... (65,000) 2,906,000
----------- ------------
Cash Flows from Investing Activities
Proceeds from sale of facility................................. --- 11,950,000
Expenditures for property and equipment........................ (787,000) (1,090,000)
Preopening costs............................................... (296,000) (68,000)
----------- ------------
Net cash provided by (used in) investing activities... (1,083,000) 10,792,000
----------- ------------
Cash Flows from Financing Activities
Loan costs..................................................... (145,000) (200,000)
Proceeds from exercise of stock options and employee
stock purchase plan.......................................... 68,000 8,000
Distributions to minority interests............................ (1,116,000) (503,000)
Payments on debt............................................... (3,608,000) (3,016,000)
Payment of preferred stock dividends........................... (91,000) ---
Purchase of treasury stock..................................... (44,000) (205,000)
Restricted cash (reserved) used for debt payments.............. 3,055,000 (8,013,000)
Cash held in trust............................................. 19,000 153,000
----------- ------------
Net cash used in financing activities................. (1,862,000) (11,776,000)
----------- ------------
Net increase in cash and cash equivalents......................... (3,010,000) 1,922,000
Cash and cash equivalents at beginning of period.................. 6,207,000 10,682,000
----------- ------------
Cash and cash equivalents at end of period........................ $ 3,197,000 $ 12,604,000
=========== ============
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest....................................................... $ 1,747,000 $ 2,087,000
Income taxes................................................... 616,000 6,000
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1994
NOTE 1
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
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation of the interim information are of a normal
recurring nature and have been included. The Company's business is seasonal in
nature and subject to general economic conditions and other factors.
Accordingly, operating results for the quarter ended September 30, 1994 are not
necessarily indicative of the results that may be expected for the year. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
June 30, 1994.
NOTE 2
At September 30, 1994, the Company's credit facilities included
$45,200,000 in senior secured notes, approximately $22,000,000 in letters of
credit (to support the Company's variable rate demand revenue bonds), $2,538,000
in subordinated secured notes and $4,000,000 in a working capital facility. The
senior secured notes bear interest at 11.6% and are due in semi-annual
installments that began on March 31, 1993 and end on March 31, 2000. The
subordinated secured notes bear interest at 15.6% and are due in semi-annual
installments that began on March 31, 1994 and end on March 31, 2000. The
variable rate demand revenue bonds were issued in 1984 and 1985, have terms of
30 years, and, as of September 30, 1994, require annual principal payments of
$800,000 (through year 2000) and $900,000 to $1,300,000 from years 2001 to
maturity. Amounts outstanding under the working capital facility bear interest
at a variable rate. There were no amounts outstanding under the working capital
facility at September 30, 1994 or June 30, 1994.
As part of the acquisition of Florida Psychiatric Management, Inc.
("FPM") in October 1993, the Company issued
5
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
7%, three-year debentures totalling $2,500,000. As part of the acquisition of
Human Dynamics Institute ("HDI") in June 1994, the Company issued an 8.25%,
$1,000,000 three-year promissory note, payable in 36 equal monthly installments.
These obligations are secured by the common stock issued by these subsidiaries
to the Company in connection with these acquisitions.
Restricted cash in the accompanying balance sheets represent remaining
proceeds from the sale of Cumberland Hospital in August 1993. These monies are
held in trust and used to pay principal amounts due on the senior secured notes
and the subordinated secured notes. Restricted cash totalling $3,055,000 was
used to satisfy the September 30, 1994 principal payment on the senior secured
notes and the subordinated secured notes.
6
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - Continued)
The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 JUNE 30
1994 1994
------------ -----------
<S> <C> <C>
11.6% senior secured notes.......... $45,200,000 $48,025,000
Variable rate demand revenue bonds.. 20,900,000 21,000,000
15.6% subordinated secured notes.... 2,538,000 2,769,000
7% debentures....................... 2,083,000 2,292,000
8.25% note payable.................. 917,000 1,000,000
Capital lease obligation............ 1,221,000 1,318,000
Other notes payable................. 700,000 763,000
----------- -----------
73,559,000 77,167,000
Less amounts due within one year.... 10,220,000 9,460,000
----------- -----------
$63,339,000 $67,707,000
=========== ===========
</TABLE>
The Company has pledged as collateral substantially all of its real property,
plus restricted cash.
NOTE 3
The provision for income taxes included in the consolidated statements
of income differs from the amounts computed by applying the normal statutory
rates to income before income taxes because such provision includes a) amounts
reportable as income for federal income tax purposes which are not income for
financial reporting purposes, b) amounts deducted for financial reporting
purposes that are not allowable deductions for federal and state income tax
purposes and c) amounts for state income taxes applicable to profitable
subsidiaries which do not utilize the operating losses generated by unprofitable
subsidiaries to offset taxable income. At September 30, 1994, the Company has
estimated operating loss carryforwards available to reduce future taxable income
of approximately $16 million subject to significant annual limitations pursuant
to Section 382 of the Internal Revenue Code of 1986, as amended.
NOTE 4
On October 27, 1994, the Company announced its intention to distribute
the stock of its subsidiary, Ramsay Managed Care, Inc. (RMCI) to the Company's
shareholders. RMCI, which was formed in October 1993 and manages and provides
the delivery of mental health care and substance abuse treatment, includes
primarily the operations of FPM
7
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
and HDI. The distribution is subject to the declaration of effectiveness of a
registration statement filed by RMCI with the Securities and Exchange
Commission, the receipt of certain investment banking opinions and certain other
conditions. The Company anticipates that the record date for the distribution
will be in February 1995 and that the distribution will be made in March 1995.
For the three months ended September 30, 1994, net revenues and income
before income taxes of RMCI were $3,463,000 and $63,000, respectively. Net cash
advances made by the Company to or on behalf of RMCI are represented by an
unsecured, interest-bearing subordinated promissory note due from RMCI and
issued on October 25, 1994. In addition, the intangible assets and liabilities
associated with RMCI, totalling approximately $10,000,000 and $5,000,000,
respectively, along with other assets and liabilities associated with RMCI,
will, as a result of the distribution, no longer be reflected on the Company's
consolidated balance sheet.
8
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company pursues business expansion opportunities which are
consistent with its overall strategic plan and disposes of operations no longer
considered viable or consistent with this plan. In February 1994, the Company
sold its inpatient facility (Atlantic Shores Hospital) in Daytona Beach, Florida
due to, among other reasons, restrictive state certificate of need laws that
precluded the Company from expanding services at this location. Also, in June
1994, two outpatient day treatment centers were closed due to poor operating
performance.
The Company's strategic plan also called for the development of
medical subacute units in certain of its inpatient facilities. Three such units
opened between January 1994 and July 1994. In addition, to further the
continuum of care at one of these units, an outpatient rehabilitation clinic was
acquired and began operations in January 1994.
In October 1993, the Company entered the managed mental healthcare
business through its acquisition of FPM. This business subsequently expanded
through an additional acquisition in June 1994 and through on-going development
efforts. As noted elsewhere in this report, the Company has announced its
intention to distribute the common stock of this business to the holders of its
common and preferred stock.
In August 1993, the Company sold its inpatient facility (Cumberland
Hospital) in Fayetteville, North Carolina. The decision to sell this facility
occurred in June 1993, at which time the facility's basis of accounting was
changed from the going concern basis to the liquidation basis. As a result, the
operating results of the Cumberland Hospital facility in July and August 1993
were recorded as part of the loss on sale of this facility in the Company's June
1993 financial statements and the net revenues and expenses of the Cumberland
Hospital facility were not included in the Company's operating results for the
quarter ended September 30, 1993. Accordingly, the sale of this facility had no
impact on the comparison of the operating results between the quarters ended
September 30, 1994 and 1993.
9
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
The following table sets forth, for the period indicated, certain
items of the Company's Consolidated Statements of Income as a percentage of the
Company's net revenues.
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
QUARTER ENDED
SEPTEMBER 30
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
Net revenues.......................... 100.0% 100.0%
----- -----
Operating expenses:
Salaries, wages and benefits .. 49.5 48.3
Other operating expenses....... 30.7 29.1
Provision for doubtful accounts 3.6 5.4
Depreciation and amortization.. 5.1 5.0
Interest expense............... 6.1 7.1
----- -----
Total operating expenses.............. 95.0 94.9
----- -----
Income before minority interest and
income taxes................... 5.0 5.1
Minority interests.................... 2.4 2.5
----- -----
Income before income taxes............ 2.6 2.6
===== =====
</TABLE>
Net revenues in the quarter ended September 30, 1994 were $35.8
million, compared to $32.0 million in the comparable quarter of the prior fiscal
year. The material changes in net revenues between these periods consisted of
(a) a $900,000 decrease in same facility net inpatient revenues between periods,
(b) a $1.4 million increase in same facility net outpatient revenues between
periods, (c) net revenues of $1.0 million attributable to the Company's subacute
operations, (d) net revenues of $3.4 million attributable to managed care
businesses acquired after September 30, 1993 and (e) a $1.2 million decrease in
net patient revenues due to the sale of the Atlantic Shores Hospital facility
and the closure of two outpatient day treatment centers (the "sold/closed
facilities").
Same facility net inpatient revenues decreased slightly between
periods (3%) even though same facility patient days increased 2% primarily due
to a continued shift in patient mix and the corresponding shift from charge-
based payors to cost-based and negotiated per diem rate payors, particularly
state governments and other governmental agency payors which administer Medicaid
programs. Net revenue per patient day on cost-based and negotiated per diem
rate payors is generally less than that for charge-based payors. The percentage
of the Company's net revenues related to charge-based payors decreased from 21%
in the prior year comparable quarter to 19% in the current quarter. Same
10
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
facility net outpatient revenues increased from $2.9 million in fiscal 1993 to
$4.3 million in fiscal 1994 due to payor demands for increased outpatient
treatment protocols, an expansion of service levels and a market focus by
facility CEOs to increase partial hospitalization day services.
Salaries, wages and benefits in the quarter ended September 30, 1994
were $17.7 million, compared to $15.5 million in the comparable quarter of the
prior fiscal year. Same facility salaries, wages and benefits increased $700,000
(from $13.9 million to $14.6 million) between periods, or 5%. In addition,
salaries, wages and benefits attributable to managed care businesses acquired
and subacute operations totalled $1.4 million and $600,000, respectively. These
increases were offset by a decrease in salaries, wages and benefits of $700,000
attributable to the sold/closed facilities.
Other operating expenses in the quarter ended September 30, 1994 were
$11.0 million, compared to $9.3 million in the comparable quarter of the prior
fiscal year. Same facility other operating expenses remained flat between
periods ($7.9 million in the current quarter compared to $7.8 million in the
prior fiscal year quarter). Also, other operating expenses attributable to
managed care businesses acquired and subacute operations totalled $1.6 million
and $800,000, respectively. These increases were offset by a decrease of
$500,000 in other operating expenses attributable to the sold/closed facilities.
The provision for doubtful accounts in the quarter ended September 30,
1994 totalled $1.3 million, compared to $1.7 million in the prior year
comparable quarter. The overall provision for doubtful accounts associated with
the same facilities decreased $300,000 while the provision for doubtful accounts
attributable to the sold/closed facilities decreased $100,000. The decrease in
the provision for doubtful accounts attributable to the same facilities is due
to the aforementioned shift in the Company's overall payor mix as the patient
portion of billings due from cost-based and negotiated per diem rate payors is
substantially less than those of charge-based payors.
Depreciation and amortization in the quarter ended September 30, 1994
totalled $1.8 million, compared to $1.6 million in the prior year comparable
quarter. This increase is due to the increased depreciation and amortization
attributable to managed care businesses acquired and subacute operations of
$200,000 and $100,000, respectively,
11
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
net of decreased depreciation and amortization of $100,000 attributable to the
sold/closed facilities.
Interest expense decreased from $2.3 million for the quarter ended
September 30, 1993 to $2.2 million for the comparable 1994 quarter. Debt levels
were reduced between periods through principal payments of $5,650,000 on the
senior secured notes, $231,000 on the subordinated secured notes and $800,000 on
the variable rate demand revenue bonds still outstanding. In addition, in
connection with the sale of Atlantic Shores Hospital in February 1994, the
variable rate demand revenue bonds associated with that facility, totalling
$4,300,000, were repaid.
Minority interests reflects the limited partners' share of income
before income taxes of Three Rivers Hospital.
The Company's managed care and subacute businesses reported net
revenues of $3,463,000 and $992,000, respectively, for the quarter ended
September 30, 1994. In addition, the managed care business reported net income
before income taxes for the quarter ended September 30, 1994, after management
fees payable to the Company totalling $109,000, of $63,000. Management fees
paid to the Company by all of the Company's subsidiaries, including its managed
care subsidiaries, approximate 5% of such subsidiaries' respective net revenues.
The management fees payable to the Company represent reimbursement to the
Company of its indirect costs for providing financial oversight by Company
employees and information systems support provided by the Company. The amount
of such fees are determined based upon the amount of time spent by Company
employees in providing such services. These management fees are eliminated upon
consolidation and have no effect on the consolidated results of operations of
the Company and its subsidiaries.
In October 1994, the Company announced its intention to distribute the
common stock of this subsidiary, RMCI, to the holders of the Company's common
and preferred stock. This distribution is subject to the declaration of
effectiveness of a registration statement filed by RMCI with the Securities and
Exchange Commission, the receipt of certain investment banking opinions and
certain other conditions. The Company anticipates that the record date for the
distribution will be in February 1995 and that the distribution will be made in
March 1995.
12
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
A condensed analysis of the September 30, 1993 operating results of
Atlantic Shores Hospital and the two outpatient day treatment centers closed
after September 30, 1993, is as follows:
<TABLE>
<S> <C>
Net revenues $1,368,000
Operating expenses 1,451,000
----------
Loss before income taxes $ (83,000)
==========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's credit facilities include $45,200,000 in senior secured
notes, approximately $22,000,000 in letters of credit, $2,538,000 in
subordinated secured notes and $4,000,000 in a working capital facility. The
senior secured notes bear interest at 11.6% and require semi-annual principal
payments of $3,531,000 through September 30, 1998 and semi-annual principal
payments of $5,650,000 from March 31, 1999 through March 31, 2000. The
subordinated secured notes bear interest at 15.6% and require semi-annual
principal payments of $231,000 through March 31, 2000. Required annual principal
payments on the variable rate demand revenue bonds total $800,000 through year
2000 and $900,000 to $1,300,000 in years 2001 through 2015. Amounts outstanding
under the working capital facility bear interest at a variable rate. There were
no amounts outstanding under the working capital facility at September 30, 1994.
At September 30, 1994, restricted cash included $2,256,000 held in
trust to partially pay the March 31, 1995 principal amount due on the senior
secured notes.
The Company records amounts due to or from third-party contractual
agencies (Medicare, Medicaid and Blue Cross) based on its best estimate, using
the principles of cost reimbursement, of amounts to be ultimately received or
paid under current and prior years' cost reports filed (or to be filed) with the
appropriate intermediaries. Ultimate settlements and other lump-sum adjustments
due from and paid to these intermediaries occur at various times during the
fiscal year. At September 30, 1994, amounts due from Medicare, Medicaid and
Blue Cross totalled $4.3 million, $5.0 million and $1.5 million, respectively.
Also at September 30, 1994, amounts due to Medicare, Medicaid and Blue Cross
totalled $4.7 million, $1.1 million and $200,000, respectively. During the
quarter ended September 30, 1994, amounts due from the Medicare program
increased $1.3 million as a result of settlements and current year estimates
recorded by the Company. Also during the quarter ended
13
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
September 30, 1994, amounts due from the Medicaid program increased $2.3 million
primarily as a result of disproportionate share payments due the Company from
the State of Louisiana.
At September 30, 1994, the amounts outstanding on debentures and notes
payable associated with RMCI totalled $3,000,000. This liability is expected to
be transferred to RMCI upon distribution of its stock to the Company's
shareholders in March 1995.
At the current time, the Company does not have any commitments to make
any material capital expenditures. The Company's current primary cash
requirements relate to its normal operating and debt service expenses, routine
capital improvements at its facilities and selective expansion of outpatient
programs and services. In addition, at the current time, the Company's specific
development projects include expansion of its management contract operations and
its network of affiliations with medical/surgical hospitals and other healthcare
providers. Management expects future construction and working capital fundings
in connection with the Company's subacute business will be minimal and that this
business will generate positive cash flow in the coming months. Also, in June
1994, the Company closed two outpatient day treatment centers which were
producing negative cash flow.
On the basis of its historical experience and projected cash needs,
the Company believes that its internally generated funds from operations,
together with its $4,000,000 working capital facility and funds derived from any
future asset sales will be sufficient to fund its current cash requirements and
future identifiable needs. At the present time, the Company does not have any
agreement to sell any of its assets.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are as follows:
Exhibit 11 Computation of Net Income per Share
Exhibit 99 Press Release dated October 27, 1994
(b) Current Reports on Form 8-K
There were no Current Reports on Form 8-K filed with the
Commission during the quarter ended September 30, 1994.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereupon duly authorized.
RAMSAY HEALTH CARE, INC.
Registrant
/s/ Gregory H. Browne
--------------------------------
Gregory H. Browne
Chief Executive Officer and
Principal Financial and
Accounting Officer
Date: September 15, 1995
16
<PAGE>
Exhibit 11
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------
SEPTEMBER 30
-----------------------
1994 1993
---------- ----------
<S> <C> <C>
PRIMARY
Weighted average common shares outstanding..... 8,033,278 8,198,356
Class A convertible preferred stock............ 22,910 22,910
Class B convertible preferred stock, Series C.. 1,424,860 1,424,860
---------- ----------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES...................... 9,481,048 9,646,126
========== ==========
Net Income Available to Common Shareholders... $ 588,000 $ 608,000
========== ==========
NET INCOME PER SHARE.......................... $0.06 $0.06
===== =====
FULLY DILUTED
Weighted average common shares outstanding..... 8,099,612 8,308,839
Class A convertible preferred stock............ 22,910 22,910
Class B convertible preferred stock, Series C.. 1,424,860 1,424,860
---------- ----------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES...................... 9,547,382 9,756,609
========== ==========
Net Income Available to Common Shareholders... $ 588,000 $ 608,000
========== ==========
NET INCOME PER SHARE...................... $0.06 $0.06
===== =====
</TABLE>
<PAGE>
EXHIBIT 99
RAMSAY HEALTH CARE, INC.
PRESS RELEASE
NEW ORLEANS, LA., October 27, 1994: Ramsay Health Care, Inc. (NASDAQ:
RHCI) today announced that it plans to distribute its holdings of common stock
of Ramsay Managed Care, Inc. ("RMCI"), its subsidiary, to the holders of the
Company's common and preferred stock. The distribution will take the form of a
dividend payable to the holders of the Company's common and preferred stock on
a pro rata basis (as if the preferred stock had been converted into common
stock) as of a record date to be established by the Executive Committee of the
Board of Directors of the Company.
RMCI manages and provides the delivery of mental health care and
substance abuse treatment through networks of affiliated and independent care
providers on behalf of self-insured employers, HMO's, insurance companies and
governmental agencies. RMCI entered the managed mental health care business
through the acquisition of Florida Psychiatric Management of Orlando, Florida in
October 1993 and Human Dynamics Institute of Phoenix, Arizona in June 1994, and
through development efforts. For the fiscal year ended June 30, 1994 (an eight
month period), RMCI had total revenues of approximately $5.85 million and net
income of approximately $68,000.
Following the distribution, the common stock of the Company will
continue to be traded on the NASDAQ National Market System and it is anticipated
that the common stock of RMCI will be quoted on the NASDAQ OTC Electronic
Bulletin Board. The distribution is subject to the declaration of effectiveness
of a registration statement to be filed by RMCI with the Securities and Exchange
Commission, the receipt of certain investment banking opinions and certain other
conditions. The Company anticipates that the record date for the distribution
will be in December 1994 and that the distribution will be made in January 1995.
The Company also announced that RMCI has completed $3.32 million of a
$5.82 million private placement of its common stock to a corporate affiliate of
Paul J. Ramsay, the Chairman of the Board of the Company and RMCI, and to three
officers of RMCI. The closing for the remaining $2.5 million placement to the
corporate affiliate of Mr. Ramsay will occur on or before June 30, 1995. The
$1.00 purchase
<PAGE>
2
price per share for the RMCI common stock was determined by an independent fair
market valuation and was approved by an independent committee of the Board of
Directors of the Company. The private placement will assist RMCI's growth and
development strategy by providing funds for the establishment of managed care
businesses in the southeastern United States, including Florida and Louisiana.
Following the first closing of the private placement, and before the
distribution and the second closing mentioned above, the common stock of RMCI is
owned 58% by the Company, 36% by the corporate affiliate of Mr. Ramsay, and 6%
in the aggregate by officers of RMCI and an unrelated third party.
In commenting on the proposed distribution and the private placement,
Gregory H. Browne, Chief Executive Officer of the Company, stated "We believe
that the proposed distribution of RMCI will accomplish a number of important
business objectives, including allowing RHCI and RMCI to pursue the development
and growth strategies best suited for their individual goals. We expect that
the distribution will also serve as a means of enhancing shareholder value. The
private placement will provide RMCI with additional capital necessary to
implement its growth strategy and we are pleased that Mr. Ramsay and others were
in a position to provide this equity. We are excited about the prospects for
both companies."
RHCI is one of the leading providers of behavioral health services in
the country and presently operates 15 inpatient hospitals, as well as a managed
mental health care services business.
CONTACT: Gregory H. Browne
Chief Executive Officer
(504) 525-2505
