SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter Ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-12992
NuMED HOME HEALTH CARE, INC.
(Exact name of small business issuer as specified in its charter)
STATE OF NEVADA 34-1711764
(State or other jurisdiction of (I.R.S. Employe
incorporation or organization) identification No.)
5770 Roosevelt Boulevard, Suite 700, Clearwater, FL 33760
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (813) 524-3227
Indicate by check mark whether the issuer (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. [ X ] Yes
[ ] No
The number of shares outstanding of the Issuer's common stock at $.001 par
value as of August 14, 1997 as 4,943,144 (exclusive of Treasury Shares).
<PAGE>
NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, March 31,
1997 1997
ASSETS
Current assets:
Cash and cash equivalents $322,952 $797,440
Cash deposits securing contractual
arrangements 1,875,000 1,875,000
---------- ----------
2,197,952 2,672,440
Accounts receivable, net of allowance
for doubtful of $364,911 3,554,347 3,545,782
Inventories 22,519 25,126
Prepaids and other current assets 261,194 256,967
----------- -----------
Total current assets 6,036,012 6,500,315
Property and equipment, net of
accumulated depreciation of $260,878
and $248,579, respectively 462,443 389,017
Goodwill, net of amortization of $839,307
and $753,412, respectively 4,340,228 4,426,563
Other intangibles assets, net of
accumulated amortization of
$1,841,944 and $1,796,412,
respectively 303,426 348,958
Other 554,959 551,447
----------- -----------
Total assets $11,697,068 $12,216,300
=========== ===========
LIABILITES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $158,614 $289,844
Accrued salaries and payroll realated 1,272,760 1,421,538
Accrued expenses 162,578 412,517
Estimated amounts due to third party
payors 158,282 158,282
Current portion of notes
payable-acquisitions 636,409 614,331
----------- -----------
Total current liabilities 2,388,643 2,896,512
Long term obligations:
Long term obligations, less current
portion 1,092,883 1,112,807
----------- -----------
Total long term obligations 1,092,883 1,112,807
----------- -----------
Total liabilities 3,481,526 4,009,319
Stockholders' equity:
Preferred stock, authorized 2,000,000,
no shares issued or outstanding 0 0
Common stock, $.001 par value,
authorized 48,000,000 shares,
5,010,219 shares issued 5,010 5,010
Additional paid-in capital 10,679,113 10,679,113
Treasury stock, 67,075 at cost (134,821) (134,821)
Accumulated deficit (2,333,760) (2,342,321)
----------- -----------
Total stockholders' equity 8,215,542 8,206,981
----------- -----------
Total liabilities and stockholders'
equity $11,697,068 $12,216,300
=========== ===========
Note: The balance sheet at March 31, 1997 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to consolidated financial statements
<PAGE>
NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended June 30,
1997 1996
Net Revenues $5,633,693 $6,424,675
Direct expenses 4,243,631 4,868,006
----------- -----------
Gross profit 1,390,062 1,556,669
General and administrative
expenses:
Salaries and benefits 845,831 892,882
Operating expenses 138,463 189,407
Professional fees 33,925 103,018
Legal fees 5,410 103,971
Occupancy expenses 144,228 194,754
Insurance 63,783 76,424
Amortization and depreciation 144,166 152,669
Bad debt expense 0 14,398
----------- -----------
Total general and administrative 1,375,806 1,727,523
----------- -----------
Operating income 14,256 (170,854)
Other revenues (expenses):
Interest income 31,659 32,842
Interest expense (30,624) (12,639)
Other 0 (268)
----------- -----------
Total other revenues (expenses) 1,035 19,935
----------- -----------
Income before income taxes 15,291 (150,919)
Income tax expense 6,730 3,309
----------- -----------
Net income after income taxes $8,561 ($154,228)
=========== ===========
Per share:
Net income after income taxes $0.00 ($0.03)
=========== ===========
Shares used in computing per
share information 4,943,144 4,967,712
See notes to consolidated financial statements
<PAGE>
<TABLE>
NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Three Months Ended June 30, 1997 and Year Ended March 31, 1997
<CAPTION>
Common Stock Additional
Paid-in Accumulated Treasury Stock
Shares Dollars Capital (Deficit) Shares Dollars Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1996 5,010,219 $5,010 $10,708,176 ($464,269) (46,023) ($68,138) $10,180,779
Net (loss) (1,878,052) (1,878,052)
Exercise of options (1,684) 20,000 30,885 29,201
Purchase of treasury shares (100,000) (201,000) (201,000)
Shares issued under
employee stock purchase plan (27,379) 58,948 103,432 76,053
---------- --------- ---------- ---------- ---------- --------- ----------
Balance at
March 31, 1997 5,010,219 5,010 10,679,113 (2,342,321) (67,075) (134,821) 8,206,981
Net income 8,561 8,561
---------- --------- ---------- ---------- ---------- --------- ----------
Balance at June 30, 1997 5,010,219 $5,010 $10,679,113 ($2,333,760) (67,075) ($134,821) $8,215,542
========== ========= ========== ========== ========== ========= ==========
</TABLE>
<PAGE>
NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
Three Months Ended June 30,
1997 1996
Cash flows from operating activities
Net Income (loss) $8,561 ($154,228)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 144,167 152,669
Cash deposits securing
contractual arrangements 0 0
Loss on sale of marketable
securities 0 0
Loss on sale or disposal of
property, plant and equipment 0 268
(Decrease) increase in cash due
to net changes in operating
assets and liabilities:
Accounts receivable - trade (8,565) (65,743)
Prepaid expenses and other
assets (1,620) (40,979)
Deferred charges or other
long term assets (3,512) (125)
Accounts payable and
accrued expenses (529,947) (170,839)
--------- ---------
Net cash provided by (used in )
operating activities (390,916) (278,977)
Cash flows from investing activities
(Purchase of property and equipment,
net (85,726) (6,272)
Exercise of options 0 0
Note Receivable 0 106,966
--------- ---------
Net cash (used in) investing
activities (85,726) 112,895
Cash flows from financing activities
Proceeds from short/long-term
borrowings 55,000 0
Payments of short/long term
borrowings (52,846) (68,012)
--------- ---------
Net cash (used in) provided by
financing activities 2,154 (68,012)
--------- ---------
Increase (Decrease) in cash and cash
equivalents (474,488) (234,094)
Cash and cash equivalents at
beginning of year 797,440 1,494,860
---------- ---------
Cash and cash equivalents at end of
period $322,952 $1,260,766
========= =========
See notes to consolidated financial statements
<PAGE>
NuMED Home Health Care Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1997
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year
ending March 31, 1998 for further information, refer to the consolidated
financial statements and footnotes included in the Company's and
Subsidiaries' Form 10-KSB for the year ended March 31, 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Net Revenues for the three months ended June 30, 1997, decreased
by 12% or $791,000 over the same period one year ago. The revenues in the
rehabilitation division, NuMED Rehabilitation, Inc. ("NuMED Rehab"),
decreased $1.1 million or 38% compared to the same period last year as
transition to an in-house therapy program is conducted by a major client.
The Home Health division has partially offset this revenue decline with a
9% or $324,000 increase in net revenues as this division continues to
maintain a steady growth pattern. The revenue mix between the two
divisions has shifted with the Home Health division increasing to 67% of
the total revenues compared to 55% for the same period last year.
Direct expenses as a percentage of net revenue improved to 75% of net
revenues compared to 76% for the same period one year ago. Declines in
NuMED Rehab revenue volume negatively impacted the cost of sales as the
reductions in fixed labor cost lag behind the reduction in revenue.
Direct expenses for NuMED Rehab increased to 84% as compared to 81% for
the same period last year. Conversely, as the Home Health division
continues its growth, costs of sales have improved by 1% to 71% compared
to 72% for the same period last year.
Gross Profit as a percentage of net revenue for the three month period
ending June 30, 1996, increased to 25% as compared to 24% for the same
period a year ago.
General and Administrative expenses for the three months ended June 30,
1997, decreased 20% to $1,376,000 or 24% of net revenue from $1,728,000 or
27% of net revenue for the same period one year ago. The favorable
decrease of $352,000 is attributable to the economies of consolidating the
financial and administrative operations to Clearwater, FL and not having
to incur legal and professional fees of $145,000 that inflated the general
and administrative costs last year in connection with the defense of class
action litigation and the proposed acquisition of the Company by CCF
Health Care Ventures, Inc.
As a result of the foregoing, the Company experienced a net profit of
$9,000 for the three months ended June 30, 1997, as compared to net loss
of $154,000 for the same period one year ago.
Liquidity and Capital Resources
The Company's working capital and current ratio remained steady at
$3,647,000 and 2.5, respectively, as of June 30, 1997, as compared to
$3,604,000 and 2.2, respectively, as of March 31, 1997. Cash decreased
$474,000 for the three months ended June 30, 1997, as compared to March
31, 1997. The decrease in cash was primarily attributable to the
liquidation of short term payables including severance and vacation
compensation that was accrued as of March 31, 1997, for terminated
employees but paid during the first quarter of fiscal 1998. In addition,
the strategic effort to automate the management information systems
continued with new software and hardware purchases.
During the second and third quarter of fiscal 1997, NuMED paid a total
of $899,000 to a major rehab client, representing disallowed Medicare costs
for the client's fiscal years ending June 30, 1995, and June 30, 1996. The
Company is optimistic that some of the disallowed costs will be recovered
in the appeal process. The Company has reached an agreement with its
client that the appeal of 1995 disallowed costs will not be pursued.
However, the Company intends to vigorously pursue all avenues of appeal to
recover disallowed costs for 1996. There is no guarantee that
intermediary negotiations or the appeals process will result in a
favorable determination. An adverse decision during negotiations with the
fiscal intermediary or in the appeal process could preclude recovery on
amounts previously paid to this customer.
The Company has a line of credit in the amount of $1.5 million.
Interest on this line accrues at a rate equal to the lender's certificate
of deposit rate plus 175 basis points. The line of credit is secured by a
$1.5 million certificate of deposit. The outstanding balance is due and
payable no later May 15, 1998. $1,025,000 is presently outstanding.
The Company also has three additional lines of credit totaling $575,000
of which $98,000 was available as of June 30, 1997. These lines are secured
by $375,000 in certificates of deposit and account receivables. Interest
rates are tied to 50 to 200 basis points above the current certificate of
deposit rates or the bank's prime interest rate.
The Company's net income has been and will continue to be impacted
significantly by the non-cash charge of amortization expense of goodwill
and intangible assets of the Company. At June 30, 1997, net goodwill and
intangible assets of the Company were $4.6 million. The amortization of
goodwill and intangible assets in the future will decrease net income or
increase any net loss.
The Company continues to implement a management information system for
its entire operation. Approximately $250,000 was incurred last fiscal year
in software and hardware cost. Through the first quarter ended June 30,1997,
the Company has acquired $86,000 in capital with emphasis on NuMED Rehab.
On August 14, 1997, the company signed a loan agreement for a maximum
of $5,000,000 secured by company accounts receivable. The Company will
repay all debt. Certificates of Deposits (CD's) securing loan covenants will
be released in the amount of $1.875 million to provide additional working
capital and liquidity.
The Company believes that its current cash reserves, projected cash
flow and the funds available under its credit facilities will allow the
Company to continue to meet its expected capital and operating expenses and
working capital needs for at least the next 12 months.
Part II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On January 31, 1996, Robin Fernhoff, individually and on behalf of all
others similarly situated filed a class action in the United States
District Court for the Middle District of Florida, Tampa Division against
NuMED Home Health Care, Inc., Jugal K. Taneja and A.T. Brod & Co., Inc.
(Case No. 96-200-CIV-T-21C). The plaintiff alleged that failure to
disclose the net capital position of A.T. Brod & Co., Inc. caused the
disclosure in the Company's prospectus dated February 8, 1995, to be
materially misleading. The plaintiff also alleged violations of Section
11 and 12 (2) of the Securities Act of 1933, 15 U.S.C. Sections 77k and
77l respectively, and sought damages on behalf of the class.
In response to the complaint, the Company filed its answer and a
corresponding motion to dismiss. On July 25, 1996, the United States
District Court for the Middle District of Florida, Tampa Division, granted
the Company's motion dismissing the complaint in its entirety. While the
Court granted Plaintiff leave to amend the complaint, the Court indicated
its concern for Plaintiff's ability to overcome the complaint's
substantial deficiencies. Management believes that the action is
frivolous and without merit and intends to vigorously contest any restated
allegations.
Items 2 through 4. - Not applicable
Item 5. OTHER INFORMATION Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. There are no exhibits filed with this report
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the quarter ended June 30, 1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NuMED Home Health Care, Inc.
Date: August 14, 1997 By: /s/Jugal K. Taneja
Jugal K. Taneja
Chairman of the Board,
Chief Executive Officer
Date: August 14, 1997 By: /s/ Wayne T. Mori
Wayne T. Mori
Corporate Controller
Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 2198
<SECURITIES> 0
<RECEIVABLES> 3919
<ALLOWANCES> 365
<INVENTORY> 22
<CURRENT-ASSETS> 6036
<PP&E> 723
<DEPRECIATION> 260
<TOTAL-ASSETS> 11697
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<BONDS> 1093
0
0
<COMMON> 5
<OTHER-SE> 8211
<TOTAL-LIABILITY-AND-EQUITY> 11697
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<TOTAL-REVENUES> 5634
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<TOTAL-COSTS> 4244
<OTHER-EXPENSES> 1376
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