<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended: NOVEMBER 30, 1994
Commission File Number: 1-9369
____________________________________
HORIZON HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1346899
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530, ALBUQUERQUE, NEW MEXICO 87110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (505) 881-4961
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 report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes XX No
------- -------
Shares of the registrant's Common Stock, $.001 par value, outstanding exclusive
of treasury stock, was 28,607,464 shares at January 6, 1995.
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1994 AND MAY 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
November 30 May 31
(unaudited)
----------- ------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 17,555 $ 6,522
Patient care accounts receivable, net 108,801 76,862
Estimated Medicare and Medicaid Settlements 11,558 6,702
Current portion of notes receivable 400 535
Prepaid and other current assets 33,369 17,071
------------ -----------
Total current assets 171,683 107,692
------------ -----------
Land, buildings and equipment
Land and land improvements 38,313 21,605
Buildings and improvements 240,022 144,213
Equipment 52,521 39,377
------------ -----------
330,856 205,195
Less accumulated depreciation 17,983 11,769
------------ -----------
Net land, buildings and equipment 312,873 193,426
Notes receivable, excluding current portion 22,552 22,436
Lease purchase costs, net 6,017 6,507
Lease, utility and other deposits 16,563 11,870
Deferred income taxes 7,359 7,271
Goodwill, net 58,879 41,673
Other intangible assets, net 8,676 7,609
Other assets 9,607 7,967
------------ -----------
Total assets $ 614,209 $ 406,451
------------ -----------
------------ -----------
</TABLE>
(continued)
See accompanying notes to consolidated financial statements.
<PAGE>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1994 AND MAY 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
November 30 May 31
(unaudited)
----------- ------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 2,075 $ 1,697
Current portion of obligations under capital leases 582 0
Accounts payable 20,105 14,200
Accrued payroll 9,367 10,680
Accrued property and payroll taxes 15,559 14,318
Other accrued liabilities 7,793 8,157
----------- -----------
Total current liabilities 55,481 49,052
----------- -----------
Long-term debt, excluding current portion 84,770 76,673
Obligations under capital leases, excluding current portion 47,874 0
Deferred lease credit, net 19,618 20,494
Convertible subordinated notes 30,906 30,906
----------- -----------
Total liabilities 238,649 177,125
----------- -----------
Stockholders' equity:
Preferred stock of $.001 par value, authorized
500,000 shares, none issued
Common stock of $.001 par value, authorized
150,000,000 shares; 28,182,192 shares issued with
27,854,046 shares outstanding at November 30, 1994
and 22,738,073 shares issued with 22,409,927
shares outstanding at May 31, 1994 28 22
Additional paid-in capital 332,864 200,273
Retained earnings 43,408 29,771
Treasury stock held (740) (740)
----------- -----------
Total stockholders' equity 375,560 229,326
----------- -----------
Total liabilities and stockholders' equity $ 614,209 $ 406,451
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
NOVEMBER 30, 1994 AND NOVEMBER 30, 1993
(UNAUDITED)
(in thousands, except per share data)
Three months ended Six months ended
November 30, November 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net patient care revenues $ 152,602 $ 77,366 $ 287,434 $ 151,270
Other operating revenues 2,628 1,565 5,499 2,628
----------- ----------- ----------- -----------
Total operating revenues 155,230 78,931 292,933 153,898
----------- ----------- ----------- -----------
Routine expenses:
Nursing services 46,472 24,008 89,166 48,029
Ancillary services 33,506 15,974 62,022 31,457
Dietary services 9,783 5,636 18,509 11,125
Facility operations and maintenance 5,800 3,141 11,155 6,238
Housekeeping services 3,295 1,914 6,390 3,790
Laundry services 1,957 1,089 3,682 2,205
Administrative and general 16,256 9,238 30,197 16,743
Other services 4,593 2,351 8,745 4,746
----------- ----------- ----------- -----------
Total routine expenses 121,662 63,351 229,866 124,333
----------- ----------- ----------- -----------
Property expenses:
Facility lease expense 9,590 5,762 19,138 11,499
Interest expense 5,498 1,536 8,895 2,765
Depreciation and amortization 4,738 1,499 8,589 2,886
Other 1,984 1,085 3,808 2,120
----------- ----------- ----------- -----------
Total property expenses 21,810 9,882 40,430 19,270
----------- ----------- ----------- -----------
Total operating expenses 143,472 73,233 270,296 143,603
----------- ----------- ----------- -----------
Earnings before income taxes 11,758 5,698 22,637 10,295
Income taxes 4,653 2,198 8,950 3,979
----------- ----------- ----------- -----------
Net earnings $ 7,105 $ 3,500 $ 13,687 $ 6,316
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per common and
common equivalent share $ 0.29 $ 0.26 $ 0.57 $ 0.49
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share - assuming full dilution $ 0.29 $ 0.22 $ 0.57 $ 0.43
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
HORIZON HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 30, 1994 AND NOVEMBER 30, 1993
(IN THOUSANDS, UNAUDITED)
Six Months ended November 30,
1994 1993
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 13,687 $ 6,316
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation and amortization 8,589 2,886
Gain on sale of assets (900) 0
Deferred lease credit amortization (875) 0
Provision for losses on patient care receivables 241 429
Changes in assets and liabilities:
Patient care and settlement receivables (30,193) (7,204)
Prepaid and other current assets (15,633) (3,452)
Lease, utility and other deposits (3,221) 2,310
Accounts payable 4,176 (1,286)
Accrued payroll (2,568) (92)
Other current liabilities 880 3,182
Deferred income taxes (81) 0
----------- ----------
Net cash provided by (used for) operating activities (25,898) 3,089
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable 220 5
Capital expenditures (15,934) (25,054)
Proceeds from sale of land, building and equipment 6,966 0
Lease purchase cost expenditures 43 47
Cash used for the acquisition of peopleCARE (62,152) 0
Cash used for other acquisitions (4,624) 0
Additions to other intangible assets (4,062) (2,402)
Change in other assets (1,639) (1,691)
----------- ----------
Net cash used by investing activities (81,182) (29,095)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 8,834 6,038
Repayment of debt (942) (16,619)
Net proceeds from issuance of common stock 110,271 58,945
Distribution to subsidiary shareholder (50) 0
----------- ----------
Net cash provided by financing activities 118,113 48,364
----------- ----------
Net increase in cash and cash equivalents 11,033 22,358
Cash and cash equivalents at beginning of period 6,522 5,928
----------- ----------
Cash and cash equivalents at end of period $ 17,555 $ 28,286
----------- ----------
----------- ----------
</TABLE>
<PAGE>
HORIZON HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 30, 1994
(unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Horizon Healthcare Corporation and its subsidiaries (collectively the Company)
without audit, 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 condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosure contained in the
consolidated financial statements are adequate to make the information presented
not misleading. In the opinion of management, all adjustments necessary for a
fair presentation of the financial position, results of operations and cash
flows for the periods presented have been made and are of a normal recurring
nature.
These consolidated financial statements should be read in conjunction with the
Company's consolidated financial statements and the notes thereto included in
the Company's 1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission. The results of operations for the interim periods
presented are not necessarily indicative of the results to be expected for the
entire year.
(2) LONG-TERM DEBT
On October 11, 1994, the Company completed a $200 million revolving credit loan
agreement (the Credit Facility) which replaced the then existing $150 million
revolving credit loan agreement. The terms of the Credit Facility agreement are
substantially the same as those of the credit agreement disclosed in the
Company's 1994 Annual Report on Form 10-K, except that certain accounts
receivable of the Company have been pledged as additional security pursuant to
the Credit Facility. The value of this security at November 30, 1994 is
approximately $90 million.
(3) FACILITY ACQUISITIONS
On July 29, 1994, the Company acquired peopleCARE Heritage Group (peopleCARE), a
13 facility long-term care company located in Texas. Consideration given for
the acquisition included the issuance of 449,438 shares of the Company's common
stock, valued at approximately $10 million, assumption of capital lease
obligations of approximately $48.6 million for six facilities, and cash payment
of approximately $56 million for fee simple title to seven facilities. Results
of operations of peopleCARE for the four months ended November 30, 1994 are
included in the Company's Consolidated Statement of Earnings for the period
ended November 30, 1994.
During fiscal year 1994, the Company completed its previously announced merger
with Greenery Rehabilitation Group, Inc. (Greenery) into the Company. Pursuant
to the merger, the Company exchanged approximately 2,050,000 shares of its
common stock, valued at approximately $48 million, and assumed approximately $58
million in debt for all of the outstanding shares of Greenery common stock,
resulting in the recording of goodwill of approximately $35 million. This
merger added the operations of 17 rehabilitation and skilled nursing facilities
and 3 managed facilities to the Company's current operations.
<PAGE>
The Company had other acquisitions during the six months ended November 30, 1994
and 1993, respectively, which in the aggregate were insignificant.
The Company has accounted for these acquisitions using the purchase method. The
following unaudited proforma condensed consolidated statements of earnings
reflects the combined results of operations for the six months ended November
30, 1994 and 1993 as if the peopleCARE and Greenery acquisitions had been
consummated on June 1, 1993.
<TABLE>
<CAPTION>
Six months ended November 30,
-----------------------------
1994 1993
---- -----
(In thousands, except per share amounts)
<S> <C> <C>
Total operating revenues . . . . . . . . . . . . . $301,922 $259,080
Total operating expenses . . . . . . . . . . . . . 279,239 246,875
-------- --------
Operating income . . . . . . . . . . . . . . . 22,683 12,205
Income taxes . . . . . . . . . . . . . . . . . . . 8,960 4,821
-------- --------
Net earnings . . . . . . . . . . . . . . . . . . . . $ 13,723 $ 7,384
-------- --------
-------- --------
Earnings per common and common equivalent share. . . $ .57 $ .49
-------- --------
-------- --------
Earnings per common share assuming full dilution. . . $ .57 $ .43
-------- --------
-------- --------
</TABLE>
(4) CAPITAL STOCK
In November 1994, the Company completed the sale of 5,000,000 shares of its
common stock, which included the sale of 643,333 shares held by certain
stockholders, through a public offering. The change in the Company's
stockholders' equity for the six months ended November 30, 1994 was as follows:
<TABLE>
<CAPTION>
Common Stock Additional
------------- Paid-In Treasury Retained
Shares Amount Capital Stock Earnings Total
------ ------ -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1994 22,738,073 $22,738 $200,272,997 ($740,333) $29,770,807 $229,326,209
Common stock issued in connection with
purchase of peopleCARE 449,438 449 9,749,435 ____ ____ 9,749,884
Common stock issued in
connection with purchase of Professional
Rehabilitation Services, Inc. 221,606 222 5,999,778 ____ ____ 6,000,000
Common stock issued in connection
with other insignificant acquisitions 250,129 250 6,574,750 ____ ____ 6,575,000
Exercise of stock options, warrants
and issuance of shares under the
employee stock purchase plan 166,279 166 3,746,813 ____ ____ 3,746,979
Common stock offering, net of
issue costs 4,356,667 4,357 106,519,821 ____ ____ 106,524,178
Distribution to subsidiary shareholder ____ ____ ____ ____ (50,000) (50,000)
Net earnings ____ ____ ____ ____ 13,687,295 13,687,295
---------- ------- ------------ --------- ------------ ------------
Balance at November 30, 1994 28,182,192 $28,182 $332,863,594 $(740,333) $43,408,102 $375,559,545
---------- ------- ------------ --------- ------------ ------------
---------- ------- ------------ --------- ------------ ------------
</TABLE>
<PAGE>
(5) SUPPLEMENTARY INFORMATION RELATING TO CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended November 30, 1994, the following are considered non-
cash items for purposes of the consolidated statement of cash flows:
a) The issuance of 449,438 shares of common stock for the purchase of
certain assets net of liabilities of peopleCARE,
b) The issuance of 221,606 shares of common stock for the purchase of
Professional Rehabilitation Services, Inc.,
c) The issuance of 250,129 shares of common stock for other acquisitions
which in the aggregate were insignificant.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading provider of long-term care and specialty health care
services. Such specialty health care services include licensed specialty
hospital services and subacute units, rehabilitation and other therapies,
institutional pharmacy services, Alzheimer's care, non-invasive medical
diagnostic testing services, home respiratory care service and clinical
laboratory services.
The Company's strategic business plan emphasizes operating and expanding its
long-term care and specialty programs and services in regionally concentrated
areas, including the Midwest, Southwest and Northeast. Further, the Company's
strategic business plan also includes the objective of increasing its specialty
health care services as a percent of total operating revenues. The Company is
accomplishing the latter objective through the development of institutional
pharmacies; acquisition and development of therapy companies, home respiratory
care companies and medical diagnostic companies; the conversion and renovation
or acquisition of specialty hospitals; and by offering its broad range of
specialty health care services to third parties. Further, the acquisition of
long-term care facilities in certain geographic areas has enhanced the Company's
expansion of its specialty health care programs and services. Specifically, in
certain geographic areas, the Company's long-term care presence is a platform
from which it can vertically integrate its specialty health care programs and
services.
As a result of the Company's strategic business plan, the Company's operating
revenues have grown over the last three years from $158.9 million in fiscal 1992
to $375.1 million in fiscal 1994. Moreover, specialty health care services
revenues have grown from $35.6 million, or 22% of operating revenues, in fiscal
1992 to $141.7 million, or 38% of operating revenues, in fiscal 1994, and to
$129.3 million, or 44% of operating revenues, for the six months ending
November 30, 1994.
These growth objectives have been, and will continue to be, the basis of the
Company's strategic business plan which has resulted in the growth of net
earnings from $5.0 million in fiscal 1992 to $16.6 million in fiscal 1994, and
$13.7 million for the six months ending November 30, 1994.
RESULTS OF OPERATIONS
The following table sets forth certain statement of earnings data expressed as a
percentage of total operating revenues:
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
November 30, November 30,
------------ ------------
1994 1993 1994 1993
---- ---- ---- -----
<S> <C> <C> <C> <C>
Total operating revenues . . . . . 100.0% 100.0% 100.0% 100.0%
---------- ---------- ---------- ----------
Total routine expenses (1) . . . . 78.4 80.3 78.5 80.8
Total property expenses (2). . . . 14.0 12.5 13.8 12.5
---------- ---------- ---------- ----------
Total operating expenses. . . 92.4 92.8 92.3 93.3
---------- ---------- ---------- ----------
Earnings from operations . . . . . 7.6 7.2 7.7 6.7
Income taxes . . . . . . . . . . . 3.0 2.8 3.0 2.6
---------- ---------- ---------- ----------
Net earnings. . . . . . . . . 4.6% 4.4% 4.7% 4.1%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
<FN>
___________
(1) Includes the cost of nursing services, all other direct service costs and
general and administrative costs.
(2) Includes facility leases, interest, depreciation, amortization and other
property related costs.
</TABLE>
<PAGE>
The following table sets forth a summary of the Company's total operating
revenues by type of service and the percentage of total operating revenues that
each such service represented for each period indicated:
<TABLE>
<CAPTION>
Three months ended Six months ended
November 30, November 30,
------------ ------------
(In thousands, except for statistical data)
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term care
services . . . . . . . . $ 84,681 54% $51,299 65% $158,150 54% $101,888 66%
Specialty health care
services (1) . . . . . . . 67,921 44% 26,067 33% 129,284 44% 49,382 32%
Other operating
revenues (2) . . . . . . . 2,628 2% 1,565 2% 5,500 2% 2,628 2%
---------- ----- --------- ----- ---------- ----- ----------- ------
Total operating revenues . . $155,230 100% $78,931 100% $292,934 100% $ 153,898 100%
---------- ----- --------- ----- ---------- ----- ----------- -----
---------- ----- --------- ----- ---------- ----- ----------- -----
<FN>
___________
(1) Includes revenues derived from subacute care, rehabilitation and other
therapies, institutional pharmacy operations, Alzheimer's care,
non-invasive medical diagnostic testing services, home respiratory care
services, clinical laboratory services and sleep diagnostic services.
(2) Includes revenues derived from management fees, interest income, rental
income and other miscellaneous services.
</TABLE>
The following table sets forth the number of facilities operated by the Company
at the end of each period indicated, the aggregate number of licensed beds
contained in such facilities and average occupancy of such beds during the
periods indicated:
<TABLE>
<CAPTION>
November 30,
------------
1994 1993
---- ----
<S> <C> <C>
Number of facilities (end of period) (1). . . . . . . . 133 85
Number of licensed beds (end of period) (2) . . . . . . 15,648 9,083
Average occupancy (3) . . . . . . . . . . . . . . . . . 91% 90%
<FN>
___________
(1) Includes the Company's long-term care facilities and specialty hospitals,
in the latter case including those located within discrete areas of
long-term care facilities.
(2) "Licensed beds" refers to the number of beds for which a license has been
issued, which may vary in some instances from beds available for use.
(3) Average occupancy is computed by dividing the total bed days occupied by
the total licensed bed days available for the last month of the period
indicated.
</TABLE>
<PAGE>
SIX MONTHS ENDED NOVEMBER 30, 1994 COMPARED TO SIX MONTHS ENDED NOVEMBER 30,1993
Total operating revenues increased approximately $139.0 million or 90% for the
six months ended November 30, 1994, as compared to the comparable period of the
prior year and approximately $76.3 million or 97% for the three months ended
November 30, 1994, as compared to the comparable period of the prior year.
Operational factors which contributed to the increase in operating revenues are
summarized as follows:
a. The Company operated 40 more long-term care facilities with an
aggregate of 5,389 beds during the six months ended November 30, 1994
than it did for the comparable period of the prior year. Revenues
from such acquisitions represent an increase of approximately 77%
over the comparable period of the prior year.
b. The Company operated 15 specialty hospitals and specialty centers and
15 subacute care units with an aggregate of 1,389 beds during the six
months ended November 30, 1994, as compared to seven specialty
hospitals and five subacute care units with an aggregate of 213 beds
during the comparable period of the prior year.
c. The Company expanded its institutional pharmacy services to long-term
care facilities through its wholly owned subsidiary, National
Institutional Pharmacy Services, Inc. (NIPSI). Approximately 34,700
long-term care beds are now served by NIPSI as compared to
approximately 26,200 beds during the comparable period of the prior
year.
d. The Company received higher Medicare and Medicaid reimbursement rates
and increased its private pay rates charged. Overall the Company's
rate per patient day increased approximately 8.6% during the six
months ended November 30, 1994 as compared to the comparable period of
the prior year. This represents revenue growth of approximately 5.5%
over the comparable period of the prior year.
e. The Company continued its expansion of rehabilitation therapy services
through its subsidiaries in Ohio, Nevada, Texas, Connecticut and
Colorado as well as the acquisition of another subsidiary in Missouri.
f. The Company continued its expansion of its clinical laboratory
services in Texas.
g. The Company began providing medical diagnostic services through
subsidiaries in New Mexico, Texas and Georgia.
h. The Company began providing home respiratory care services and
supplies through its subsidiaries in Texas, Oklahoma, Arkansas and
Louisiana.
Routine service expenses increased approximately $105.5 million or 85% for the
six months ended November 30, 1994, over the comparable period of the prior
year. This increase is due primarily to the increase in the number of long-term
care centers, specialty hospitals and subacute care units operated by the
Company, as well as the costs associated with the expansion of specialty
services programs.
Facility lease expense, depreciation and amortization and other property costs
increased approximately 91% for the same period. This increase is directly
related to the increased number of facilities operated. Interest expense
increased approximately 222% during this period. This increase is related to
financing mechanisms used by the Company in its acquisition of long-term care
centers and expansion of specialty services and programs. These financing
mechanisms include assumption of certain bonds, draws under the Company's
revolving line of credit, capital lease arrangements and mortgage debt.
Routine service expense, facility lease expense, depreciation and amortization
and other property expense, and interest expense increased approximately 92%,
95%, and 258%, respectively for the three months ended November 30, 1994 over
the comparable period of the prior year. These increases are directly related
to the increased number of facilities operated by the Company and the Company's
expansion of its specialty services and programs.
<PAGE>
As a result of the foregoing factors, net earnings increased to $13.7 million or
$.57 per share and $7.1 million or $.29 per share for the six months and three
months ended November 30, 1994, respectively. This compares to net earnings of
$6.3 million or $.43 per share and $3.5 million or $.22 per share for the six
months and three months ended November 30, 1993, respectively.
LIQUIDITY AND CAPITAL RESOURCES
OPERATION. At November 30, 1994, the Company's working capital was $116.2
million including cash and cash equivalents of $17.6 million, as compared to
working capital of $58.6 million at May 31, 1994 including cash and cash
equivalents of $6.5 million. During the six months ended November 30, 1994, the
Company used $25.9 million in net cash in its operations. During the first six
months of fiscal 1995, patient care and settlement receivables increased by
$30.2 million, substantially all of which represents increases generated by
existing facilities or by new facilities after the date of acquisition.
EXPANSION PROGRAM. The net cash used by the Company's investing activities was
$81.2 million for the six months ended November 30, 1994. The primary uses of
cash from investment activities has been capital expenditures, and the
acquisition of peopleCARE during the first quarter of fiscal 1995. The
principal purpose of capital expenditures during this period has been to fund
the Company's internal and external expansion program. During the six months
ended November 30, 1994, the Company's capital expenditures were $15.9 million.
The amount expended during the six months ended November 30, 1994 included
approximately $5.9 million of routine capital improvements and the balance is
attributable to facility acquisitions and additions at sites acquired for
specialty hospitals, laboratory and pharmacy equipment, and computer equipment.
The Company's expansion program requires funds (i) to acquire assets and to
expand and improve existing and newly acquired facilities, (ii) to discharge
debt obligations assumed or otherwise acquired in connection with the
acquisitions of facilities and properties; and (iii) to finance the increase in
patient care and other accounts receivable resulting from the acquisitions
effected pursuant to the Company's expansion program. The funds necessary to
meet these capital expenditures and debt repayment obligations have been
provided principally by the Company's financing activities. Proceeds from the
issuance of Company debt of approximately $115.8 million (principally draws on
the Company's Credit Facility), net of debt repayments of approximately $107.9
million (principally repayments on the Company's Credit Facility), amounted to a
net increase in debt of $7.9 million for the six months ended November 30, 1994.
Proceeds from issuance of the Company's common stock were approximately $110.3
million for this same period. Proceeds from the issuance of the Company's
common stock offering in November 1994 were used primarily to repay borrowings
under the Company's Credit Facility and to finance the increase in patient care
receivables and other operating assets during the period.
SOURCES. At November 30, 1994, the aggregate revolving credit commitment under
the Credit Facility was, subject to reduction through application of certain
financial ratios, $200 million, of which the Company has borrowed $51.25
million. At that date, the remaining credit available to the Company under the
Credit Facility was $137.9 million.
To the extent that the Company's operations and expansion program require cash
expenditures in excess of the amounts available to it under the Credit Facility,
management of the Company believes that the Company can obtain the necessary
funds through other financing activities, including the issuance and sale of
debt and equity securities in public and private markets.
RECENT REIMBURSEMENT POLICY CHANGES
In the recently enacted Federal Budget Deficit Reduction Bill (the "Budget
Agreement"), various reimbursement rules and regulations were adopted by the
federal government which pertain to the Company. The Company has analyzed these
and other reimbursement rules and regulations and does not believe they will
have a material adverse impact on future operating results. The Budget
Agreement also contained a number of changes affecting corporate income tax.
The changes contained in the Budget Agreement resulted in the Company's
effective tax rate increasing approximately 1% in the first two quarters of
fiscal 1994.
<PAGE>
HORIZON HEALTHCARE CORPORATION
PART II - Other Information
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders, held September 12, 1994,
the following actions were taken:
a. The stockholders approved the proposal to amend the Restated
Certificate of Incorporation to increase the number of authorized
shares of the Company's common stock, $.001 par value, from 30,000,000
to 150,000,000 by the following vote:
For 15,939,701
Against 3,844,524
Abstentions 71,480
Broker Non-Votes 0
b. The stockholders approved the proposal to amend further the Restated
Certificate of Incorporation to (i) change the method by which newly
increased directorships resulting from any increase in the number of
directors and from certain vacancies may be filled, (ii) provide for
the election of one Class 1 director and one Class 2 director at the
Annual Meeting to fill current vacancies in such positions and (iii)
provide that the directors of the Company at July 27, 1994, together
with the Board's nominees for director elected at the Annual Meeting,
shall be Continuing Directors for the purposes of Article X of the
Restated Certificate of Incorporation by the following vote:
For 16,390,138
Against 3,385,667
Abstentions 79,500
Broker Non-Votes 400
c. The stockholders elected the following nominees as directors by the
following vote:
<TABLE>
<CAPTION>
Nominee Elected Class of Director For Withheld
- --------------- ----------------- --- --------
<S> <C> <C> <C>
Klemett L. Belt, Jr. Class I Director 19,484,906 370,799
Charles H. Gonzales Class I Director 19,367,001 488,704
Barry M. Portnoy Class I Director 19,483,428 372,277
Gerard M. Martin Class II Director 19,484,489 372,216
</TABLE>
Class I directors will serve until the 1997 Annual Meeting of
Stockholders. Class II directors will serve until the 1995 Annual
Meeting.
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10.1 Amended and Restated Revolving Credit Loan
Agreement, dated March 16, 1995, by and
between Horizon Healthcare Corporation, The
Boatmen's National Bank of St. Louis, as Agent,
and the Lenders named therein (excluding all
exhibits thereto except Exhibits 1.1 and 2).
11. Statement Re Computation of Per Share Earnings
27. Financial Statement Schedule
b. Reports on Form 8-K
A report on Form 8-K was filed on September 16, 1994 under "Item 5.
Other Events" disclosing the declaration of the Company's preferred
share purchase right dividend. In addition, a report on Form
8-K/A was filed on October 10, 1994 under "Item 2. Acquisition or
Disposition of Assets" which updated the previously filed Form 8-K
regarding the acquisition of peopleCARE Heritage Group (peopleCARE).
Audited financial statements of peopleCARE as of and for the years
ended December 31, 1993 and 1992, unaudited interim financial
statements of peopleCARE as of and for the four months ended April 30,
1994 and 1993, and unaudited proforma condensed consolidated financial
statements of the Company as of and for the year ended May 31, 1994
were filed with the Form 8-K/A.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
HORIZON HEALTHCARE CORPORATION
Date: June 2, 1995 By /s/ Ernest A. Schofield
---------------------------
Ernest A. Schofield
Chief Financial Officer and
Senior Vice President
*Ernest A. Schofield is signing in the dual capacities as Chief Financial
Officer and as a duly authorized officer of the Company.
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description of Exhibits Page
- ------- ----------------------- ------------
10.1 Amended and Restated Revolving Credit Loan
Agreement, dated March 16, 1995, by and
between Horizon Healthcare Corporation, The
Boatmen's National Bank of St. Louis, as Agent,
and the Lenders named therein (excluding all
exhibits thereto except Exhibits 1.1 and 2).
11. Statement Re Computation of Per Share Earnings
27. Financial Statement Schedule
<PAGE>
HORIZON HEALTHCARE CORPORATION
EXHIBIT 11.1
STATEMENT RE COMPUATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE EARNINGS)
Common and Common Equivalents:
<TABLE>
<CAPTION>
Three months ended Six months ended
November 30, November 30,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Earnings $ 7,105 $ 3,500 $ 13,687 $ 6,316
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Applicable Common Shares:
Weighted average outstanding
shares during the period 23,868 12,934 23,411 12,133
Weighted average shares
issuable upon exercise of
common stock equivalents
outstanding (principally stock
options and warrants using the
treasury stock method) 724 599 704 569
---------- ---------- ---------- ----------
Total 24,592 13,533 24,115 12,702
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET EARNINGS PER SHARE $ 0.29 $ 0.26 $ 0.57 $ 0.49
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
HORIZON HEALTHCARE CORPORATION
EXHIBIT 11.1
STATEMENT RE COMPUATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE EARNINGS)
Assuming Full Dilution:
<TABLE>
<CAPTION>
Three months ended Six months ended
November 30, November 30,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Earnings $ 7,105 $ 3,500 $ 13,687 $ 6,316
Interest on subordinated convertible
notes, net of income taxes 0 553 0 1,120
---------- ---------- ---------- ----------
Earnings used for computation of
per share earnings $ 7,105 $ 4,053 $ 13,687 $ 7,436
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Applicable Common Shares:
Weighted average outstanding
shares during the period 23,868 12,934 23,411 12,133
Weighted average shares
issuable upon exercise of
common stock equivalents
outstanding (principally stock
options and warrants using the
treasury stock method and
subordinated convertible notes in 1993) 724 5,163 704 5,112
---------- ---------- ---------- ----------
Total 24,592 18,097 24,115 17,245
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET EARNINGS PER SHARE $ 0.29 $ 0.22 $ 0.57 $ 0.43
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the November 30, 1994
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-1-1994
<PERIOD-END> NOV-30-1994
<CASH> 17,555
<SECURITIES> 0
<RECEIVABLES> 128,935
<ALLOWANCES> (8,576)
<INVENTORY> 6,983
<CURRENT-ASSETS> 171,683
<PP&E> 330,856
<DEPRECIATION> 17,983
<TOTAL-ASSETS> 614,209
<CURRENT-LIABILITIES> 55,481
<BONDS> 163,550
<COMMON> 28
0
0
<OTHER-SE> 375,532
<TOTAL-LIABILITY-AND-EQUITY> 614,209
<SALES> 0
<TOTAL-REVENUES> 292,933
<CGS> 0
<TOTAL-COSTS> 270,296
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (171)
<INTEREST-EXPENSE> 8,895
<INCOME-PRETAX> 22,657
<INCOME-TAX> 8,950
<INCOME-CONTINUING> 13,687
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,687
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
