<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter ended November 30, 1995 Commission file No. 0-16964
--------------- -------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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CANCER TREATMENT HOLDINGS, INC.
- ----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 87-0410907
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4491 South State Road Seven, Suite 200, Fort Lauderdale, Florida, 33314
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(Address of principal executive offices)
(305) 321-9555
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. Yes x .
No . ------
-----
The number of shares outstanding of each of the issuer's classes of common
equity, as of December 29, 1995 was: 3,495,765
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CANCER TREATMENT HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION> PAGE
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<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets
as of November 30, 1995 and May 31, 1995 2
Consolidated Statements of Operations
for the Three Month and Six Month Periods
Ended November 30, 1995 and 1994 3
Consolidated Statements of Cash Flows
for the Six Months Ended
November 30, 1995 and 1994 4
Notes to Consolidated Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 6
PART II -OTHER INFORMATION
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 8
ITEM 7. EXHIBITS AND REPORTS ON FORM 8-K 8
SIGNATURES 9
</TABLE>
<PAGE> 3
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> ASSETS
November 30, May 31,
1995 1995
(Unaudited)
<S> <C> <C>
Cash $ 208,473 $1,366,141
Accounts receivable, net of allowance for doubtful
accounts of $135,411 and $145,604 2,463,559 1,929,785
Notes receivable net of discount of
$101,378 and $107,465, respectively 331,954 325,867
Receivables from related parties 560,967 445,578
Other current assets 420,209 525,483
----------- ----------
Total current assets 3,985,162 4,592,854
Long-term notes receivable, net of discount of
$214,937 and $264,522, respectively 1,446,177 1,613,258
Property and equipment, net 917,789 784,974
Investments in partnerships and ventures 813,935 586,989
Intangible assets, net 1,001,648 993,638
Other assets 120,453 123,132
----------- ----------
Total assets $8,285,164 $8,694,845
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 564,526 $ 191,700
Accounts payable and accrued expenses 902,544 1,005,622
Due to Medicare - 826,319
----------- ----------
Total current liabilities 1,467,070 2,023,641
Long-term debt 167,494 180,085
Deferred income taxes 234,711 234,000
Minority interest 21,753 21,753
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Total liabilities 1,891,028 2,459,479
----------- ----------
Commitments and contingencies (note 2)
Stockholders' equity:
Common stock; $.003 par value, 50,000,000
shares authorized, 3,495,765 shares issued 10,487 10,487
Capital in excess of par value 5,163,105 5,163,105
Retained earnings 1,500,625 1,341,855
----------- ----------
6,674,217 6,515,447
Treasury stock; 159,284 shares, at cost (280,081) (280,081)
----------- ----------
Total stockholders' equity 6,394,136 6,235,366
----------- ----------
Total liabilities and stockholders' equity $8,285,164 $8,694,845
=========== ==========
</TABLE>
2
<PAGE> 4
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Patient Service Revenues $2,339,628 $2,291,063 $4,797,248 $4,889,204
Other revenues 381,814 364,094 776,453 560,124
---------- ---------- ---------- ----------
Total Revenues 2,721,442 2,655,157 5,573,701 5,449,328
Operating expenses:
Professional care of patients 2,106,979 1,935,379 4,319,891 3,942,886
General and administrative 233,029 355,473 473,774 641,927
Direct costs of clinical supplies 113,776 71,576 237,712 154,138
Interest expense 27,838 5,187 53,129 16,054
Depreciation and amortization 94,142 48,439 173,224 159,633
---------- ---------- ---------- ----------
Total Expenses 2,575,764 2,416,054 5,257,730 4,914,638
---------- ---------- ---------- ----------
Income before loss in earnings of
partnerships, gain on sale of centers,
minority interest and income taxes 145,678 239,103 315,971 534,690
(Loss) gain in earnings of partnerships (29,443) 15,693 (42,201) 5,897
Gain on sale of centers - - - 349,207
Minority interest - (45,487) - (131,275)
---------- ---------- ---------- ----------
Income before provision for income taxes 116,235 209,309 273,770 758,519
Provision for income taxes (50,000) (70,000) (115,000) (236,000)
---------- ---------- ---------- ----------
Net income $ 66,235 $ 139,309 $ 158,770 $ 522,519
========== ========== ========== ==========
Per share data:
Net income per share $ .02 $ .04 $ .05 $ .15
========== ========== ========== ==========
Weighted average number of shares
outstanding 3,495,765 3,395,765 3,495,765 3,395,765
========== ========== ========== ==========
</TABLE>
3
<PAGE> 5
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended November 30, 1995, and 1994
Unaudited
---------
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 158,770 $ 522,519
Adjustments to reconcile net income to net cash ----------- -----------
used in operating activities:
Accretion of discount on notes receivable (55,672) (19,202)
Gain on sale of assets - (349,207)
Depreciation and amortization 173,224 159,633
Equity in earnings of unconsolidated partnerships 42,201 (113,250)
Minority interest - 65,592
Change in operating assets and liabilities, net of
acquisitions and dispositions:
Accounts receivable (533,774) (448,391)
Other assets, net 6,338 (27,101)
Accounts payable and accrued expenses (103,078) (1,051,545)
Income taxes payable 115,000 236,000
Due to Medicare (826,319) 804,097
----------- -----------
Total adjustments (1,182,080) (743,374)
----------- -----------
Net cash used in operating activities (1,023,310) (220,855)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of centers, net of transaction costs - 838,264
Collections of notes receivable 216,666 72,222
Advances to related parties (115,389) (239,290)
Investments in Partnerships and ventures (369,147) (61,343)
Acquisition of property and equipment (226,723) (37,081)
----------- -----------
Net cash (used in) provided by investing activities (494,593) 572,772
----------- -----------
Cash flows from financing activities:
Principal payments on debt (379,765) (235,002)
Short-term borrowings 740,000 -
----------- -----------
Net cash provided by (used in) financing activities 360,235 (235,002)
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Net (decrease) increase in cash (1,157,668) 116,915
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Cash at beginning of period 1,366,141 527,505
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Cash at end of period 208,473 644,420
=========== ===========
Supplemental disclosures:
Interest paid $ 44,752 $ 7,302
Income taxes paid $ 50,000 -
</TABLE>
Non-cash financing and investing activities:
In August 1994, the Company completed the sale of substantially all of the
assets of two of its radiation therapy centers (CTI of West Broward, Inc.
and Boca Raton Radiotherapy Associates, Ltd.) to an unrelated third party.
The Company received $900,000 in cash and $2,600,000 in a subordinated
promissory note which bears interest at prime and which the Company has
recorded net of a discount of $448,803. The sale resulted in a gain of
$349,207. The remaining assets sold and liabilities assumed in the
transaction were as follows:
Property, plant and equipment $(2,406,027)
Intangible assets, net (847,800)
Other assets (33,470)
Minority interest 257,167
Long-term debt 758,312
4
<PAGE> 6
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS (continued)
Notes to Consolidated Financial Statements
1. Preparation of Financial Statements:
The accompanying unaudited consolidated financial statements for
Cancer Treatment Holdings, Inc. and its subsidiaries (the
"Company") have been prepared in accordance with the
instructions of SEC Form 10-QSB and therefore do not include all
information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles. The
financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
latest SEC Form 10-KSB for the year ended May 31, 1995. In the
opinion of management, the unaudited consolidated financial
statements contain all adjustments which are of a normal,
recurring nature for a fair statement of the results of
operations for such interim periods presented. The results of
operations for the six months ended November 30, 1995, are not
necessarily indicative of the results which may be expected for
the entire fiscal year. The May 31, 1995, consolidated balance
sheet was derived from audited financial statements but does not
include all disclosures required by generally accepted
accounting principles.
2. Contingencies
As a general partner, the Company is jointly and severally liable for
the liabilities concerning the actions of Palm Beach Radiotherapy
Associates, Ltd. ("Palm Beach") and has guaranteed certain liabilities
of this Partnership amounting to $528,000 at November 30, 1995. In
this connection, the Company could be held responsible for any and all
liabilities arising from the actions of Palm Beach. The Company and
the other partner of Palm Beach have executed demand promissory notes
payable to Palm Beach which have been assigned as collateral to
certain creditors of those Partnerships.
3. Sale of Radiation Therapy Centers
On August 26, 1994, the Company sold substantially all of the assets
of CTI of West Broward, Inc. and Boca Raton Radiotherapy Associates,
Ltd. (the "Centers") for $3,500,000 consisting of $900,000 cash and
$2,600,000 in a subordinated promissory note which bears interest at
prime and is payable in monthly installments over six years. The
Company recorded the note net of a discount of 14%, or $448,803, based
on, among other factors, the Company's incremental borrowing rate and
the credit risk of the buyer. The net gain on the sale amounted to
$349,207. Concurrent with the sale, the Company entered into a
12-year management and billing and collection agreement under which
the Company will receive 9.5% of annual net collected revenues and a
six-year consulting agreement whereby the Company will receive $16,500
per month for consulting services.
4. Reclassifications
Certain amounts have been reclassified in the financial statements for
the six-month period ended November 30, 1994, to conform to the
presentation in the financial statements for the six-month period
ended November 30, 1995.
5
<PAGE> 7
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1995
1. Results Of Operations
Comparison of the Six Months Ended November 30, 1995, to the Six
Months Ended November 30, 1994
Revenues for the six-month period ended November 30, 1995, increased
$125,000 over the six-month period ended November 30, 1994, from
$5,449,000 in 1994 to $5,574,000 in 1995. This increase was
principally attributable to an increase in revenues from the billing
and collection and management contracts with the buyers of the Coral
Springs, Boca and Tampa centers.
For the six months ended November 30, 1995 and 1994, revenues were
derived from the following payor sources:
<TABLE>
<CAPTION>
1995 1994
Amount % Amount %
---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Medicare $3,987,000 71.6 $3,726,000 68.4
Health Maintenance Organizations - - 356,000 6.5
Commercial Insurance 483,000 8.6 652,000 12.0
Other (primarily Medicaid) 327,000 5.8 155,000 2.8
---------- ----- ---------- -----
Net patient service revenue 4,797,000 86.0 4,889,000 89.7
Billing/Collection and Management Fees 589,000 10.7 451,000 8.3
Other Miscellaneous Revenues 188,000 3.3 109,000 2.0
---------- ----- ---------- -----
$5,574,000 100.0 $5,449,000 100.0
========== ===== ========== =====
</TABLE>
Changes in the current mix of payors, specifically those which
would result in a decrease in the percentage of revenues from
Medicare or third-party payors, may adversely effect the Company's
future results of operations.
Patient service revenues are derived from the operations of
the home health division and the Company's radiation therapy
center in Mississippi and, for the first quarter of fiscal
1995, the Coral Springs and Boca radiation therapy centers,
which were sold at the end of the first quarter of fiscal
1995. Patient service revenues in total decreased $92,000
from $4,889,000 in 1994 to $4,797,000 in 1995. Revenues from
the home health division which are included in patient
service revenues increased $723,000 from $3,966,000 in 1994
to $4,689,000 in 1995. Med Tech participates in the Medicare
program under which services are rendered to Medicare program
beneficiaries and are reimbursed based on cost-reimbursement
principles. The increase in revenues is primarily the
result of an increase in the reimbursement rate of Med Tech
and Leader. Over 90% of Med Tech's current business is with
Medicare beneficiaries. Radiation therapy revenues which are
also included in patient service revenues decreased $699,000
from $807,000 in 1994 to $108,000 in 1995. The decrease was
attributable to the sale of the Centers.
Other revenues, which consist principally of
management/consulting and billing and collection revenues
and interest income, increased $216,000 from $560,000 in 1994
to $776,000 in 1995. This increase is primarily attributed
to revenues from the management/consulting and billing and
collection contracts with the buyers of the Coral Springs,
Boca and Tampa centers. Interest income increased $84,000
during 1995 as a result of the interest income recognized
from the notes receivable from the buyers of the Centers.
Operating expenses for the six-month period ended November 30,
1995, increased $343,000, or 7.0% over the six-month period ended
November 30, 1994, from $4,915,000 in 1994 to $5,258,000 in 1995.
This increase was primarily attributable to the following:
6
<PAGE> 8
Professional care of patients expenses increased $377,000 from $3,943,000
in 1994 to $4,320,000 in 1995 as a result of the increase in revenues in
the home health division, offset by a decrease in the expenses of the
sold Radiation Centers.
General and administrative expenses decreased $168,000 from $642,000 in
1994 to $474,000 in 1995. This decrease is primarily attributed to the
increase in revenues of Med Tech which resulted in the Company allocating
more general and administrative expenses to Med Tech which operates on a
Medicare cost-reimbursement basis. These allocated expenses are
included in "professional care of patients" expense in the Company's
Statement of Operations.
Direct costs of clinical supplies increased $84,000 from $154,000 in 1994
to $238,000 in 1995. This increase was the result of the increase in
revenues of Leader.
2. Liquidity and Capital Resources:
As of November 30, 1995, the Company had working capital, including cash
of $2,518,000, as compared to working capital of $2,569,000 at May 31,
1995.
During the six-month period ended November 30, 1995, cash decreased
$1,158,000. The principal components of the decrease in cash are as
follows:
Cash used in operating activities amounted to $1,023,000 in 1995,
compared to cash used in operating activities of $221,000 in 1994.
The increase is primarily attributed to payments to Medicare of
$826,000 and an increase in accounts receivable. The Company's
current ratio (current assets over current liabilities) was 2.72 for
1995 and 2.27 for 1994.
Cash used in investing activities was $495,000 in 1995, compared to
cash provided by investing activities of $573,000 in 1994. The 1994
amount included $838,000 in cash received from the sale of the
Centers.
Cash provided by financing activities was $360,000 in 1995, compared
to cash used in financing activities of $235,000 in 1994. The 1995
amount included $740,000 in short-term borrowings.
Under the terms related to the sale of the Centers, the Company will
receive approximately $50,000 per month due under the note from the buyer
of the Coral Springs and Boca Raton Radiation Centers over the next six
years, $16,500 per month in consulting fees over the next six years, and
payments of 9.5% of the net monthly revenues collected by the buyer which
the Company believes will average approximately $25,000 to $30,000 per
month over the next twelve years there can be no assurance that the
Company will actually receive this amount. As a result of the sale of
the Company's interest in the Tampa radiation therapy center, the Company
will receive $150,000 per year over the next 9 years in consulting fees.
Except for those items discussed above, and in the Company's latest Form
10-KSB for the year ended May 31, 1995, there are no existing material
sources of liquidity available to the Company or material commitments for
capital expenditures. There are no material trends, favorable or
unfavorable, in the Company's capital resources. Management is unaware,
except for those items discussed above, of any trends, demands,
commitments, events or uncertainties that will result in or that are
reasonably likely to result in the Company's liquidity increasing or
decreasing in any material way.
7
CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
<PAGE> 9
Item 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
a) The Annual Meeting of Shareholders of the Company was held on
November 16, 1995.
b) The name of each director elected at the Annual Meeting is Jack
W. Buechner and John P. Rosenthal. The name of each other
director whose term of office as a director continued after the
meeting is Salvatore P. Russo, Ph.D., John C. Mull, M.D., and
Ullrich Klamm, Ph.D.
c) The following information is provided with respect to each
matter voted upon at the Annual Meeting:
(i) Election of Directors
Votes Cast For Votes Cast Against Abstentions
-------------- ------------------ -----------
Jack W. Buechner 2,195,083 14,634 0
John P. Rosenthal 2,195,083 14,634 0
(ii) Reappointment of Cooper's
& Lybrand as the Company's
independent auditors for the
fiscal year ending May 31,
1996
Votes Cast For Votes Cast Against Abstentions
-------------- ------------------ -----------
2,198,142 3,375 8,200
d) Not applicable.
Item 7. EXHIBITS AND REPORTS ON FORM 8-K
a) There were no reports on Form 8-K filed during the three months
ended November 30, 1995.
b) Exhibit 27: Financial Data Schedule
8
<PAGE> 10
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, thereunto duly authorized.
CANCER TREATMENT HOLDINGS, INC.
-------------------------------
(Registrant)
January 12, 1996 by: /s/ Louis W. Boisvert, III
---------------------------
Louis W. Boisvert, III
Vice President of Finance and
Chief Financial Officer
(Principal Accounting Officer and Duly
Authorized Officer)
9
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CANCER TREATMENT HOLDINGS, INC. FOR THE SIX MONTHS
ENDED NOVEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 208
<SECURITIES> 0
<RECEIVABLES> 3,356
<ALLOWANCES> 135
<INVENTORY> 0
<CURRENT-ASSETS> 3,985
<PP&E> 1,361
<DEPRECIATION> 443
<TOTAL-ASSETS> 8,285
<CURRENT-LIABILITIES> 1,467
<BONDS> 0
<COMMON> 10
0
0
<OTHER-SE> 6,384
<TOTAL-LIABILITY-AND-EQUITY> 8,285
<SALES> 5,574
<TOTAL-REVENUES> 5,574
<CGS> 237
<TOTAL-COSTS> 5,258
<OTHER-EXPENSES> 42
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53
<INCOME-PRETAX> 274
<INCOME-TAX> 115
<INCOME-CONTINUING> 274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 159
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
