SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM 8-K
Current Report Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 15, 1998
Caretenders Health Corp.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9848 06-1153720
(Commission file number) (I.R.S. Employer Identification No.)
100 Mallard Creek Road, Louisville, KY 40207
(Address of principal executive offices) (Zip Code)
(502) 899-5355
(Registrant's telephone number, including area code)
Item 5. Other Events
Prior to October 1, 1998 the Company managed two home health agencies operating
in the Louisville, KY area, which were owned by Columbia/HCA. The Company also
owns and operates a competing agency in Louisville. The Company performed the
management services pursuant to management agreements scheduled to expire in
February and June 2000. These services generated approximately $3 million of
management fee revenues in the Company's most recent fiscal year, which ended
March 31, 1998 and $1.3 million in the six months ended September 30, 1998. On
September 30, 1998 Columbia sold the agencies to a third party and notified the
Company that its services would no longer be needed for home health visits
performed after that date. The Company believes that the contracts are
non-cancelable in the event of a sale, and, accordingly, the Company believes
that Columbia's action constitutes a breach of contract, for which the Company
is entitled to monetary damages.
The Company is pursuing recovery of damages through litigation and through
settlement discussions with Columbia. The Company is also attempting to
mitigate the financial impact of the loss of these contracts through its
company-owned agency also operating in the Louisville market. Due to the
current status of events, the Company is unable to predict the ultimate outcome
of this matter. The Company estimates that the loss of this business will
lower its revenues by $1.2 million and its net income by $575,000 or $0.18 per
share over the balance of the fiscal year ending March 31, 1999.
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As indicated in the Company's filing on Form 10Q for the quarter ended June 30,
1998, the Company effected a restructuring of its operations on July 31, 1998
resulting in a reduction of operating costs totaling an estimated $7.0 million
annually. This restructuring included substantial reductions in staff, closing
certain unprofitable branch locations and the write-down of goodwill and
deferred pre-opening costs. Management believes that this restructuring and
other changes in the Company's operations, should enable the Company to operate
profitably in the third and fourth quarters of this fiscal year even after the
loss of the contract management services business described above.
All statements, other than statements of historical facts, included in this
document, including the Company's ability to maintain operating costs at levels
below reimbursements and the objectives and expectations of management for
future operating results, are forward-looking statements. These
forward-looking statements are based on the Company's current expectations.
Although the Company believes that the expectations with respect to internal
matters reflected in such forward-looking statements are reasonable, there can
be no assurance that such expectations will prove to be correct.
Because forward-looking statements involve risks and uncertainties, the
Company's actual results could differ materially. The potential risks and
uncertainties which could cause actual results to differ materially could
include the Company's ability to achieve cost savings without negatively
impacting operations; the impact of further changes in the Medicare
reimbursement system, including the ultimate implementation of a prospective
payment system; government regulation; health care reform; pricing pressures
from third-party payors; and changes in laws and interpretations of laws
relating to the healthcare industry. For a more complete discussion regarding
these and other factors which could affect the Company's financial performance,
refer to the Company's Securities and Exchange Commission filings on Forms 10-K
and 10Q, in particular information under the headings "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company disclaims any intent or obligation to update its
forward-looking statements.
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 hereunto duly authorized.
Caretenders Health Corp.
(Registrant)
By:/s/C. Steven Guenthner
------------------------------
C. Steven Guenthner
Senior Vice President and Chief
Executive Officer
Exhibit Index
None.
