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 June 30, 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 1-9848
CARETENDERS HEALTH CORP.
(Exact name of registrant as specified in its charter)
Delaware 06-1153720
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9200 Shelbyville Road, Suite 810, Louisville, Kentucky 40222
(Address of principal executive offices) (Zip Code)
(502) 425-4707
(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 and 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.
X
Yes ______ No______.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock $.10 par value
Shares outstanding at June 30, 1995 - 3,129,413
<PAGE>
<TABLE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS June 30, 1995 March 31,1995
------------- -------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,513,666 $ 1,264,775
Accounts receivable - net of allowance
for uncollectible accounts of
$3,149,952 and $2,910,272 15,493,240 15,277,812
Inventories 524,186 525,974
Prepaid expenses and other current 770,768 410,023
assets
Deferred tax assets 813,000 813,000
----------- -----------
TOTAL CURRENT ASSETS 19,114,860 18,291,584
PROPERTY AND EQUIPMENT - net 4,523,711 4,677,321
COST IN EXCESS OF NET ASSETS ACQUIRED-net
of accumulated amortization of $1,037,702
and $986,513 7,154,087 7,203,706
OTHER ASSETS 842,023 900,178
----------- -----------
$31,634,681 $31,072,789
=========== ===========
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
(Continued)
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY June 30, 1995 March 31, 1995
------------- --------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable - trade $ 3,360,007 $ 3,433,691
Accrued expenses 2,798,285 2,507,421
Current portion of long-term debt and
capital leases 456,579 609,436
Other current liabilities 100,000 100,000
----------- -----------
TOTAL CURRENT LIABILITIES 6,714,871 6,650,548
----------- -----------
LONG-TERM LIABILITIES
Revolving Credit Facility 5,923,060 5,771,502
Term debt and capital lease obligations 748,907 632,335
Other liabilities 424,216 456,785
Deferred tax liabilities 133,500 233,000
----------- -----------
TOTAL LONG-TERM LIABILITIES 7,229,683 7,093,622
----------- -----------
TOTAL LIABILITIES 13,944,554 13,744,170
----------- -----------
Commitments and Contingencies
Stockholders' equity:
Common stock, par value $.10;
authorized 10,000,000 shares;
3,129,436 issued and outstanding 312,944 312,944
Treasury stock, at cost, 10,000 shares (95,975) (95,975)
Stock options 162,110 162,110
Warrants 119,880 119,880
Additional paid-in capital 25,055,886 25,055,886
Accumulated deficit (7,864,718) (8,226,226)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 17,690,127 17,328,619
----------- -----------
$31,634,681 $31,072,789
=========== ===========
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended
June 30, June 30,
1995 1994
------------ -----------
<S> <C> <C>
Net revenues $14,969,434 $15,461,368
Cost of sales and services 11,577,029 12,618,002
Selling, general and administrative expenses 1,846,884 1,451,122
Depreciation and amortization expense 561,689 559,010
Provision for uncollectible accounts 418,029 382,324
Income before other income (expense) and ----------- -----------
income taxes 565,803 450,910
Other income (expense):
Interest expense (181,295) (164,811)
Other - 97,500
----------- -----------
Income before provision for income taxes 384,508 383,599
Provision for income taxes 23,000 25,000
----------- -----------
Net income $ 361,508 $ 358,599
=========== ===========
PER SHARE:
Weighted average common and common
equivalent shares outstanding for
primary and fully diluted earnings
per share 3,139,397 3,220,867
----------- -----------
Net income per share $ 0.12 $ 0.11
=========== ===========
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ending
June 30, June 30,
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating
activities:
Net income $ 361,508 $ 358,599
Adjustments to reconcile net
income to net cash provided
(used) in operating activities:
Depreciation and amortization 561,689 559,010
Provision for uncollectible 418,029 382,324
accounts
Deferred Income Taxes (99,500) -
Other - (97,500)
---------- ----------
1,241,726 1,202,433
Change in certain net current
assets
(Increase) decrease in:
Accounts receivable (633,457) (1,794,569)
Inventories 1,788 (1,785)
Prepaid expenses and other
current assets (360,745) (520,837)
Increase (decrease) in:
Accounts payable and
accrued liabilities 217,180 1,191,106
Other liabilities (32,569) (41,751)
Net cash provided by ---------- ----------
operating activities 433,923 34,597
---------- ----------
Cash flows from investing
activities:
Capital expenditures (332,805) (491,489)
Other assets 32,500 (126,164)
Net cash used in investing ---------- ----------
activities (300,305) (617,653)
---------- ----------
Cash flows from financing
activities:
Principal payments on long-
term debt (156,641) (355,887)
Issuance of long-term debt
and capital leases 120,356 -
Net revolving credit facility
borrowings 151,558 (620,446)
Net cash provided by (used ---------- ----------
in) financing activities 115,273 (976,333)
---------- ----------
Net increase (decrease) in cash 248,891 (1,559,389)
Cash and cash equivalents at
beginning of period 1,264,775 2,515,849
---------- ----------
Cash and cash equivalents at
end of period $1,513,666 $ 956,460
========== ==========
<FN>
See accompanying notes to interim consolidated financial statements.
</TABLE>
<PAGE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995 and 1994
1. BASIS OF PRESENTATION
The accompanying interim consolidated financial statements for the
three months ended June 30, 1995 and 1994 have been prepared
pursuant 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 omitted pursuant
to such rules and regulations. Accordingly, the reader of this Form
10-Q may wish to refer to the Company's Form 10-K for the year ended
March 31, 1995 for further information. In the opinion of management
of the Company, the accompanying unaudited interim financial
statements reflect all adjustments (consisting only of normally
recurring accruals) necessary to present fairly the financial
position at June 30, 1995 and the results of operations and cash
flows for the periods ended June 30, 1995 and 1994.
The results of operations for the three months ended June 30, 1995
are not necessarily indicative of the operating results for the
year.
2. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company currently, and from time to time, is subject to claims
and suits arising in the ordinary course of its business, including
claims for damages for personal injuries. In the opinion of
management, the ultimate resolution of any of these pending claims
and legal proceedings will not have a material adverse effect on the
Company's financial position or results of operations.
On January 26, 1994 Franklin Capital Associates and Aetna Life and
Casualty, shareholders, who at one time held almost 320,000 shares
of the Company's common stock (approximately 13% of shares
outstanding) filed suit in Chancery Court of Williamson County,
Tennessee claiming unspecified damages not to exceed three million
dollars in connection with registration rights they received in the
Company's acquisition of National Health Industries in February
1991. The suit alleges the Company failed to use its best efforts
to register the shares held by the plaintiffs as required by the
merger agreement. The Company believes it has meritorious defenses
to the claims and does not expect that the ultimate outcome of the
suit will have a material adverse impact on the Company's results of
operation or financial position. The Company plans to vigorously
defend its position in this case.
3. SALE OF ASSETS
On June 3, 1994, the Company entered into a strategic arrangement
with Columbia/HCA Healthcare Corporation, under which Columbia
acquired one of the Company's two Louisville Certificates of Need
for nursing services and hired the Company to manage the operations
under the certificate for five years. The transaction provided the
Company with an infusion of approximately $1.8 million in cash
(after transaction costs). On February 18, 1995, the Company
entered into another arrangement with Columbia/HCA Healthcare
Corporation, under which Columbia acquired the Company's Certificate
of Need license to provide nursing services to patients in eight
counties in the Elizabethtown, Kentucky area and hired the Company
to manage the operations until the year 2000. This transaction
provided the Company with approximately $550,000 in cash.
Simultaneously the Louisville agency management agreement was
extended for one year.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
OVERVIEW
Strategic Focus
The Company is positioning itself to take advantage of healthcare
reform activities by focusing its resources into its home and community
based health care business units which consist of comprehensive home
health care and adult day care (home health includes home nursing,
infusion therapy and durable medical equipment). These businesses are
involved with the delivery of health care in alternative settings at
lower costs than hospitals and nursing homes can typically provide.
The trend toward alternative site delivery of healthcare is increasing,
as more payor organizations are seeking to reduce the costs of medical
care. The Company plans to accelerate its development through the
addition of adult day care capacity in home health care markets and the
addition of home health care services in adult day care markets.
Earnings
Strong improvements continue to be made in the profitability of
operations with center contribution improving by 19.3% due principally
to revenue growth (after removing 1994 revenues related to operations
sold). The Company continues to experience very strong market demand
for its services. Selling, General and Administrative costs remained
stable as a percent of revenues owned and managed increasing overall
due largely to increased billing and collection efforts and overhead
additions preparing the Company for expansion. Pre-tax income from
continuing operations improved by 34.4%. Operating earnings per share
from continuing operations were $.12 in 1995 as compared to $.08 for
1994 while net income per share improved from $.11 to $.12. The quarter
ended June 30, 1994 included a non-operating gain of $97,500 related to
the sale of certain operations.
<PAGE>
<TABLE>
Results of Operations
Caretenders Health Corp.
Operating Data
for the three months ended June 30,
<CAPTION>
1 9 9 5 1 9 9 4 Change
-------------------- -------------------- ------------------
% of % of
Amount Revenues Amount Revenues Amount %
--------- -------- ---------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues
Comprehensive Home
Healthcare 11,961,862 100.0% 13,026,445 100.0% (1,064,583) (8.2)%
Adult Day Care 3,007,572 100.0% 2,434,923 100.0% 572,64 23.6%
---------- ---------- ---------
14,969,434 15,461,368 (491,934) (3.2)%
---------- ---------- ----------
Costs of Sales and
Services
Comprehensive Home
Healthcare 9,288,706 77.7% 10,784,763 82.8% (1,496,057) (13.9)%
Adult Day Care 2,288,323 76.1% 1,833,239 75.3% 455,084 24.9%
---------- ---------- ---------
11,577,029 77.3% 12,618,002 81.6% (1,040,973) (8.2)%
---------- ---------- ---------
Center Contribution
Comprehensive Home
Healthcare 2,673,156 22.3% 2,241,682 17.2% 431,474 19.2%
Adult Day Care 719,249 23.9% 601,684 24.7% 117,565 19.5%
---------- ---------- ---------
3,392,405 22.7% 2,843,366 18.4% 549,039 19.3%
---------- ---------- ---------
Selling, General &
Administrative 1,846,884 12.3% 1,451,122 9.4% 395,762 27.3%
Depreciation and
Amortization 561,689 3.8% 559,010 3.6% 2,679 0.5%
Provision for
Uncollectible Accounts 418,029 2.8% 382,324 2.5% 35,705 9.3%
Interest, Net 181,295 1.2% 164,811 1.1% 16,484 10.0%
---------- ---------- ---------
Income Before Taxes 384,508 2.6% 286,099 1.9% 98,409 34.4%
========== ========== =========
</TABLE>
Continuing Operations
Comprehensive Home Health Care
Revenues. Net revenues for 1994 included $3,077,000 related
to operations sold during the year ended March 31, 1995.
Contribution continues to be generated from these operations
under management contracts.
Net revenues from continuing markets increased 21% from
$12,383,685 in 1994 to $14,969,434 in 1995 primarily as a
result of increased volume for nursing services and infusion
therapies offset partially by decreased reimbursement for
providing certain infusion therapies. Nursing volumes
increased 19% and average net revenue per unit increased 4%
while infusion volumes increased 16% with a decrease in
average net revenue per unit of 3% due to competitive
industry pressures on pricing. The Company is seeking to
differentiate itself from its competitors through the
comprehensive delivery of home and community based health
care services. This strategy remains attractive as payor
organizations continue to shift the delivery site of health
care services to more cost effective settings.
Cost of Sales and Services. Cost of sales and services as a
percent of net revenues decreased primarily as a result of
improved volumes in all markets.
Adult Day Care
<PAGE>
Net Revenues. The increase of $572,649 in adult day care
revenues is attributable to the opening of 2 new centers, and
a rate increase of approximately 5% throughout all the
centers. Total days of service provided increased 18% from
45,200 in 1994 to 53,254 in 1995. As of June 30, 1995, the
Company had 13 centers in operation.
Cost of Sales and Services. As a percent of net revenues,
cost of sales and services increased slightly as a result of
the impact of initial operating losses from the development
of new centers. The Company's new centers typically take
from 12 to 15 months to reach break-even. The Company's two
newest centers generated net revenues of $216,949 and losses
of ($60,991).
Selling, General and Administrative. The increase of $395,762 in
these expenses is due primarily to increased billing and
collection efforts and overhead additions in preparation for
expansion. These costs remained stable as a percent of total
owned and managed revenues at approximately 9%.
Provision for Uncollectible Accounts. The provision for
uncollectible accounts for the quarter ended June 30, 1995 was
recorded at approximately 2.8% of net revenues based on
management's evaluation of collectibility. This percentage is
within the range of industry averages.
Depreciation and Amortization. The increase results primarily
from capital additions.
Interest. The increase in Interest is primarily the result of
the higher average outstanding debt levels and higher interest
rates. The Company's outstanding debt is higher as a result of
larger investments in accounts receivable and property and
equipment related to revenue growth while rates have increased due
to increases in the prime rate.
Other. Other income in 1994 consisted of a $97,500 gain on the
sale of certain operations to Columbia/HCA.
Liquidity and Capital Resources
Cash Flows
Key elements of the Consolidated Statements of Cash Flows were (in
thousands):
Net Change in Cash
and Cash Equivalents 1995 1994
-------- --------
Provided by (used in)
Operating activities $ 434 $ 35
Investing activities (300) (618)
Financing activities 115 (976)
Net Change in Cash -------- --------
and Cash Equivalents $ 249 $(1,559)
======== ========
Net cash provided by operating activities of $434,000 resulted
principally from current period earnings offset by increases in
accounts receivable caused by revenue growth. Net cash used by
investing activities resulted principally from capital expenditures.
Net cash provided by financing activities resulted primarily from
principal payments on term debt and capital leases, additional capital
leases and payment on the revolving credit facility.
<PAGE>
Revolving Credit Facility
The Company maintains a three-year $7.5 million revolving credit
facility with Heller Financial, a subsidiary of Fuji Bank. The
facility bears interest at 1.5% over prime and is collateralized by
accounts receivable, inventory and the stock of the Company's
subsidiaries. Availability is determined pursuant to a formula
principally consisting of 85% of accounts receivable under 150 days old
subject to certain exclusions. At July 31, 1995, the Company had total
cash and unused borrowings of approximately $3 million.
This facility should provide working capital resources sufficient to
support operations. However, management will continue to pursue
additional capital including possibly debt and equity investments in
the Company to support a more rapid development of the business than
would be possible with internal funds
Health Care Reform
In recent years, an increasing number of legislative initiatives
have been introduced or proposed in Congress and in state legislatures
that would effect major changes in the health care system, either
nationally or at the state level. Among the proposals under
consideration are various insurance market reforms, forms of price
control, expanded fraud and abuse and anti-referral legislation and
further reductions in Medicare and Medicaid reimbursement. The Company
cannot predict whether any of the above proposals or any other
proposals will be adopted, and if adopted, no assurance can be given
that the implementation of such reforms will not have a material
adverse effect on the business of the Company.
Impact of Inflation
Management does not believe that inflation has had a material
effect on income during the past several years.
<PAGE>
Commission File No. 1-9848
Part II - Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 (attached)
(b) No reports on Form 8-K have been filed during the
quarter ended June 30, 1995
<PAGE>
<TABLE>
CARETENDERS HEALTH CORP. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11
Three Months Ended
June 30,
------------------------
1995 1994
--------- ---------
<S> <C> <C>
PRIMARY
Net income for primary income per
common share $ 361,508 $ 358,599
========= =========
Weighted average outstanding shares during
the period 3,139,397 2,370,155
Add- common equivalent shares representing
shares issuable upon exercise of
dilutive options and warrants and conversion
of convertible preferred stock - 850,712
Weighted average number of shares used in --------- ---------
calculation of primary earnings per share 3,139,397 3,220,867
========= =========
PER SHARE
Net income from continuing operations $0.12 $0.11
========= =========
FULLY DILUTED
Net income $ 361,508 $ 358,599
Add interest expense reduction related to
conversion of debt for common stock
(net of tax) - - (A)
Net income for fully diluted income --------- ---------
per common share $ 361,508 $ 358,599
========= =========
Weighted average number of shares used in
calculation of primary earnings per share 3,139,397 3,220,867
Add- incremental shares representing shares
issuable upon conversion of convertible debt - - (A)
Weighted average number of shares used in --------- ---------
calculation of fully diluted earnings
per share 3,139,397 3,220,867
========= =========
PER SHARE
Fully diluted earnings per common share $0.12 $0.11
========= =========
<FN>
(A) Anti-dilutive impact.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Date: August 14, 1995
CARETENDERS HEALTH CORP.
BY: /s/ William B. Yarmuth
William B. Yarmuth,
Chairman of the Board, President
and Chief Executive Officer
BY: /s/ C. Steven Guenthner
C. Steven Guenthner,
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1514
<SECURITIES> 0
<RECEIVABLES> 18643
<ALLOWANCES> 3150
<INVENTORY> 524
<CURRENT-ASSETS> 19115
<PP&E> 10814
<DEPRECIATION> 6290
<TOTAL-ASSETS> 31635
<CURRENT-LIABILITIES> 6715
<BONDS> 0
<COMMON> 313
0
0
<OTHER-SE> 17377
<TOTAL-LIABILITY-AND-EQUITY> 31635
<SALES> 14969
<TOTAL-REVENUES> 14969
<CGS> 11577
<TOTAL-COSTS> 13986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 418
<INTEREST-EXPENSE> 181
<INCOME-PRETAX> 385
<INCOME-TAX> 23
<INCOME-CONTINUING> 362
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 362
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
