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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): FEBRUARY 19, 1998
PMR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-20488 23-2491707
(Commission File No.) (IRS Employer Identification No.)
501 WASHINGTON STREET, 5TH FLOOR
SAN DIEGO, CALIFORNIA 92103
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 610-4001
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ITEM 5. OTHER EVENTS.
A. PMR hereby incorporates by reference the contents of the news release
announcing the third quarter results and regulatory challenges filed as
Exhibit 99.1 to this report.
B. PMR hereby incorporates by reference the contents of the news release
announcing the signing of the letter of intent filed as Exhibit 99.2 to
this report.
2.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
99.1 News Release dated February 19, 1998.
99.2 News Release dated February 19, 1998.
3.
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SIGNATURE
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.
PMR CORPORATION
Dated: February 24, 1998 By: /s/ Mark P. Clein
--------------------------------
Mark P. Clein
Executive Vice President and
Chief Financial Officer
4.
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INDEX TO EXHIBITS
99.1 News Release dated February 19, 1998.
99.2 News Release dated February 19, 1998.
5.
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EXHIBIT 99.1
[PRM CORPORATION LOGO]
For Immediate Release February 19, 1998
PMR ANOUNCES THIRD QUARTER RESULTS AND RECENT
REGULATORY CHALLENGES
SAN DIEGO, CA -- PMR CORPORATION (NASDAQ NMS - "PMRP"), a leading provider of
disease management services for the Seriously Mentally Ill (SMI), today
announced results for the third quarter ended January 31, 1998.
Revenues for the quarter were $16.5 million versus revenues of $14.2 million for
the same period in the prior fiscal year. Net Income for the quarter was $1.3
million or $.18 per share, compared with net income of $831,000 or $.14 per
share.
Revenues for the nine months ended January 31, 1998 were $50.3 million versus
revenues of $41.5 million for the same period in the prior fiscal year. Net
Income for the nine months ended January 31, 1998 was $3.5 million or $.54 per
share, compared with net income of $2.2 million or $.40 per share.
"We are pleased with these results during our seasonally most challenging
quarter." said Allen Tepper, Chief Executive Officer. "Revenues expanded 16% as
we added three new outpatient programs and one new crisis service for an
existing customer. Revenue growth was offset by a decrease in case rates from
one of the behavioral health organizations in Tennessee. Earnings expanded 60%
due to sustained margin growth versus last year's third quarter. Pre-tax margins
reached a record level of 13.6% and the Company reported its eleventh
consecutive quarter of increased earnings."
The Company has been informed that its largest customer, which represents
approximately 14% of the Company's revenues, has received a letter from an
official of Region IX of the Health Care Financing Administration ("HCFA"),
informing the customer that the customer's partial hospitalization programs
managed by PMR can no longer be considered "provider-based" for Medicare
reimbursement purposes. The letter states that the "provider-based" status for
the customer's programs will be
1.
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removed March 1, 1998. Based on its understanding of HCFA's "provider-based"
policy, the Company believes that Region IX's determination is incorrect. HCFA's
Central Office has agreed to review this determination. To the extent necessary
to conform to HCFA's definition of "provider-based" status, the Company intends
to make reasonable changes within its control to its contract and operations, so
that the programs it manages meet HCFA's definition of "provider-based." In
addition, the Company is investigating an alternative basis for its customer to
receive Medicare reimbursement for services to the extent that the programs
managed by PMR are not deemed to be "provider-based."
The extent of any impact on profitability will be determined by the nature of
any contract restructuring with the provider and HCFA's concurrence with such
restructuring with regard to the "provider-based" designation. In the event that
the "provider-based" determination is not re-established for this customer's
programs or such programs are not otherwise eligible for reimbursement, or if
similar determinations are made to other programs managed by the Company, there
would be a material adverse effect on the Company's revenue and net income.
The Company has also been informed that the outpatient program that it formerly
managed in Dallas, Texas is subject to a civil investigation being conducted by
the U.S. Department of Health and Human Services' Office of Inspector General
and the U.S. Attorney's office in Dallas, Texas (collectively the "Agencies").
The investigation is a result of a HCFA review of partial hospitalization
services rendered to 63 patients at this location. The Dallas program was
operational from January 1996 to February 6, 1998.
A representative of the Agencies has indicated that the investigation is civil
in nature and focuses on eligibility of patients for partial hospitalization
services. The eligibility determinations for participation at the Dallas program
were made by board certified or board eligible psychiatrists. The Company is
cooperating fully with the Agencies and to date, no formal complaint or demand
has been made by the Agencies.
Due to the preliminary nature of the investigation, the Company is unable to
predict the ultimate outcome of the investigation, or the material impact, if
any, on the Company's business, financial condition or results of operations.
The Company plans a conference call for tomorrow, Friday February 20, at 9:00 am
EST to discuss these events and other issues of interest. Participants please
call 1-800-289-0436, reservation number 436374.
PMR is a leader in the development and management of programs and services for
individuals with a serious mental illness. PMR currently manages 54 programs in
13 states in both fee-for-service and managed care environments, principally
focused on the public sector market.
This press release contains forward looking statements that involve risks and
uncertainties, including the risk that the Company will not be able to make
changes to
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its contract and operations to meet HCFA's definition of "provider-based"
designation or find an alternative basis for reimbursement; and the risks and
uncertainties set forth in the Company's periodic reports and other filings with
the Securities and Exchange Commission. Forward looking statements reflect the
Company's current views with respect to future events. Actual results may vary
materially and adversely from those anticipated, believed, estimated, or
otherwise indicated.
###
CONTACT:
PMR Corporation: 619-610-4001
Mark Clein, Executive V.P./CFO
3.
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PMR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
-------------------------------- --------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 16,522,304 $ 14,190,480 $ 50,259,598 $ 41,512,062
Expenses:
Operating expenses 11,541,613 10,343,441 35,518,340 30,601,881
Marketing, general and 2,188,307 1,464,523 6,618,429 4,495,776
administrative
Provision for bad debts 769,725 851,617 2,191,486 2,246,698
Depreciation and amortization 293,372 167,271 764,641 517,030
Interest - Net (521,536) (45,492) (698,079) (130,022)
------------ ------------ ------------ ------------
14,271,481 12,781,360 44,394,817 37,731,363
------------ ------------ ------------ ------------
Income before income taxes 2,250,823 1,409,120 5,864,781 3,780,699
Income tax expense 923,279 578,000 2,405,000 1,550,000
------------ ------------ ------------ ------------
Net income 1,327,544 831,120 3,459,781 2,230,699
Less dividends on:
Series C convertible preferred -- -- -- 17,342
stock
------------ ------------ ------------ ------------
Net income for common stock $ 1,327,544 $ 831,120 $ 3,459,781 $ 2,213,357
============ ============ ============ ============
Earnings per common share
Basic $ 0.19 $ 0.17 $ 0.60 $ 0.48
------------ ------------ ------------ ------------
Diluted $ 0.18 $ 0.14 $ 0.54 $ 0.40
============ ============ ============ ============
Shares used in computing earnings
per share
Basic 6,919,204 4,960,361 5,765,758 4,644,762
------------ ------------ ------------ ------------
Diluted 7,544,509 5,818,032 6,453,494 5,607,760
============ ============ ============ ============
</TABLE>
4.
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EXHIBIT 99.2
[PMR LOGO]
For Immediate Release February 19, 1998
PMR ANNOUNCES LETTER OF INTENT FOR ACQUISITION
SAN DIEGO, CA -- PMR CORPORATION (NASDAQ NMS - "PMRP"), a leading provider of
disease management services for the Seriously Mentally Ill (SMI), today
announced that a letter of intent has been signed to acquire the provider
division of American Psych Systems ("APS"). This division includes five partial
hospitalization programs, two hospital management contracts and other outpatient
services in New York and Ohio. Total revenues for the division are approximately
$6.5 million.
"The provider division of APS is an excellent addition to PMR's program
offerings," said Allen Tepper, CEO. "These programs have an excellent clinical
reputation, place us in new markets, add new programatic tracks and add
diversification to our payor mix."
The Company expects to complete the transaction in its fourth fiscal quarter and
anticipates that the transaction will contribute to earnings per share in the
fiscal year beginning May 1, 1998.
The Company plans a conference call for tomorrow, Friday February 20, at 9:00 am
EST to discuss this event and other issues of interest. Participants please call
1-800-289-0436, reservation number 436374.
PMR is a leader in the development and management of programs and services for
individuals with a serious mental illness. PMR currently manages 54 programs in
13 states in both fee-for-service and managed care environments, principally
focused on the public sector market.
This press release contains forward looking statements that involve risks and
uncertainties, including the risk that the Company will not successfully
complete the acquisition of the provider division of APS or that the acquisition
will not contribute to earnings per share in fiscal year 1999. Forward looking
statements reflect the Company's current views with respect to future events.
Actual results may vary materially and adversely from those anticipated,
believed, estimated, or otherwise indicated.
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1.
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CONTACT:
PMR Corporation: 619-610-4001
Mark Clein, Executive V.P./CFO
2.
