<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission File Number 33-22011-A
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
---------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Florida 59-2858209
------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
4900 North Habana Ave., Tampa,FL 33614
- - -------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code: (813) 870-4230
--------------
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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at September 30, 1995
Common stock, par value $1.00 per share 429 shares
- - --------------------------------------- ----------
Documents incorporated by reference
NONE
1
<PAGE> 2
TABLE OF CONTENTS
FORM 10-QSB QUARTERLY REPORT - September 30, 1995
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3 - 9
--------------------
Item 2. Management's Discussion and Analysis or
---------------------------------------
Plan of Operation 10 - 12
-----------------
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13 - 15
-----------------
Item 2. Changes in Securities 16
---------------------
Item 3. Defaults Upon Senior Securities 16
-------------------------------
Item 4. Submission of Matters to a Vote of Security
-------------------------------------------
Holders 16
-------
Item 5. Other Information 16
-----------------
Item 6. Exhibits and Reports on Form 8-K 16
--------------------------------
Signatures 17
----------
</TABLE>
2
<PAGE> 3
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 604,342 $ 473,781
Distribution receivable from investment 34,190 39,820
Prepaid expenses 10 8,073
Income tax deposits 13,750 0
Other short-term investments 20,000 20,000
---------- ----------
TOTAL CURRENT ASSETS 672,292 541,674
Equity investments 693,200 674,554
---------- ----------
TOTAL ASSETS $1,365,492 $1,216,228
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 15,427 $ 18,560
Income taxes payable 9,573 19,203
---------- ----------
TOTAL CURRENT LIABILITIES 25,000 37,763
Deferred income taxes 11,982 11,982
---------- ----------
TOTAL LIABILITIES 36,982 49,745
Stockholders' equity:
Common stock, $1 par value, 7,500 shares
authorized, 429 shares issued and
outstanding at September 30, 1995 and
390 shares issued and outstanding at
December 31, 1994 429 390
Additional paid-in capital 681,572 574,382
Retained earnings 646,509 591,711
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,328,510 1,166,483
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,365,492 $1,216,228
========== ==========
</TABLE>
The accompanying notes
are an integral part of these financial statements.
3
<PAGE> 4
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the nine For the nine For the three For the three
months ended months ended months ended months ended
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue:
Equity in net earnings (losses)
of investees $18,646 $175,792 $(1,379) $74,022
Distribution income 95,880 85,490 34,190 27,475
------- -------- ------- -------
Total revenue 114,526 261,282 32,811 101,497
Expenses:
General and administrative 65,620 180,588 14,144 24,845
------- -------- ------- -------
Total expenses 65,620 180,588 14,144 24,845
------- -------- ------- -------
Operating income 48,906 80,694 18,667 76,652
Interest income 15,562 8,110 5,813 3,818
------- -------- ------- -------
Income before income taxes 64,468 88,804 24,480 80,470
Income taxes (9,670) (13,250) (3,672) (12,000)
------- -------- ------- -------
Net income $54,798 $ 75,554 $20,808 $68,470
======= ======== ======= =======
Net income per common share $ 136 $ 207 $ 48 $ 173
======= ======== ======= =======
Weighted average shares outstanding 403.6 364.5 431.2 395.0
======= ======== ======= =======
</TABLE>
The accompanying notes
are an integral part of these financial statements.
4
<PAGE> 5
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
Sept. 30. 1995 Sept. 30. 1994
-------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 54,798 $ 75,554
Adjustments to reconcile net income
to net cash used in operating activities:
Equity in net earnings of investees (18,646) (175,792)
Distribution income (95,880) (85,490)
Changes in operating assets and
liabilities:
Prepaid expenses 8,063 7,098
Accrued expenses (3,133) (13,143)
Income tax deposits (13,750) 0
Income taxes payable (9,630) 13,250
-------- --------
Net cash used in operating activities (78,178) (178,523)
INVESTING ACTIVITIES
Stock dividend received 0 100,000
Distributions received 101,510 93,520
-------- --------
Net cash provided by investing
activities 101,510 193,520
FINANCING ACTIVITIES
Proceeds from issuance of common stock 119,000 118,220
Redemptions of common stock (11,771) 0
-------- --------
Net cash provided by financing activities 107,229 118,220
-------- --------
Increase in cash and cash equivalents 130,561 133,217
Cash and cash equivalents at beginning
of period 473,781 354,646
-------- --------
Cash and cash equivalents at end of period $604,342 $487,863
======== ========
</TABLE>
The accompanying notes
are an integral part of these financial statements
5
<PAGE> 6
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein have been prepared by St. Joseph's
Physician Associates, Inc. (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly the financial position of the
Company as of September 30, 1995 and December 31, 1994, and the results of its
operation and its cash flows for the three months and nine months ended
September 30, 1995 and 1994.
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
The Company was organized on November 20, 1987 as a Florida corporation. The
Company was organized to establish and operate an association of qualified
physicians for the purpose of engaging directly or indirectly in health care
related ventures.
In February 1989, the Company acquired 2,500 shares of the common stock of St.
Joseph's Physicians-Healthcenter Organization, Inc. (the "PHO") for $20 per
share. The 2,500 shares represent 50% of the outstanding common stock of the
PHO. The remaining 2,500 common shares of the PHO are owned by St. Joseph's
Enterprises, Inc., which also owns 100% of the PHO's 6,250 preferred shares.
The Company earns equity in the net earnings of the PHO at 22.22% of the PHO's
earnings after deducting a 6% cumulative dividend for the 6,250 preferred
shares. St. Joseph's Enterprises, Inc. is an affiliate of, and is controlled
by, St. Joseph's Health Care Center, Inc. The PHO was organized for the
purpose of engaging directly or indirectly in healthcare related ventures.
In June 1989, the Company acquired 4,000 shares of the common stock in
Hospitals' Home Health Care of Hillsborough County, Inc. ("HHC") for $10 per
share. The 4,000 shares represent 50% of the outstanding common stock of HHC,
the remaining 4,000 common shares of HHC are owned by St. Joseph's Ancillary
Services, Inc. which is an affiliate of, and controlled by, St. Joseph's Health
Care Center, Inc. HHC was organized for the purpose of providing medical
services to patients in the home environment.
Equity Investments
The Company accounts for its investments in the PHO and HHC on the equity
method. Accordingly, these investments have been stated in
6
<PAGE> 7
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con't):
Equity Investments (con't)
the accompanying balance sheets at the cost of acquisition plus
the Company's equity in the undistributed earnings/losses since acquisition,
less distributions to the Company. None of the assets or liabilities of the
investments are included in the balance sheets except to the extent of the
Company's interests in the underlying net assets included in equity
investments. The excess of the cost of acquisition of the investment in HHC
over the Company's interest in the underlying net liabilities at the date of
acquisition was $84,264 $(71,101 at September 30, 1995) and is being amortized
as a component of equity in net earnings of investees over forty years. The
Company's net earnings/losses resulting from its proportionate share of the
investees' revenues and expenses are included in the statement of operations.
Other Investments
The Company owns five limited partnership units in St. Joseph's Same-Day
Surgery Center, Ltd. ("SDS"). The investment is held for resale and is
considered short-term in nature. Accordingly, this investment is accounted for
at cost and distributions are recorded as income when declared.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents.
Income Per Common Share
Income per common share is based on the weighted average number of common
shares outstanding during the period.
NOTE 2 - RELATED PARTIES:
The members of the Board of Directors of the Company are also members of the
medical staff of St. Joseph's Hospital, Inc., which is owned by St. Joseph's
Health Care Center, Inc. St. Joseph's Health Care Center, Inc. provides
administrative support to the Company at no charge. See Note 1 for an
understanding of related parties surrounding the equity investments.
Additionally, all limited partner investors in PHO's ventures are investors in
the Company. In addition, all physicians who hold provider contracts with a
subsidiary of the PHO are investors in the Company.
7
<PAGE> 8
NOTE 2 - RELATED PARTIES (con't):
On October 1, 1991, the Company hired an executive director to provide and
facilitate the efficient operations of the Company. The executive director is
a member of the Company's Board of Directors. Under the terms of the funding
agreement dated October 1, 1991, the PHO has agreed to reimburse the Company
for compensation paid to the Executive Director up to the limits set forth in
the Executive Director Agreement. Both agreements are for one year renewable
terms. For the nine months and three months ended September 30, 1995 and
September 30, 1994, $30,000 and $10,000 of compensation and reimbursement have
been paid or accrued. The Company was recently notified that the funding
agreement dated October 1, 1991 has been terminated effective January 1, 1996.
8
<PAGE> 9
NOTE 3 - EQUITY INVESTMENTS:
A summary of the changes in equity investments is presented below:
<TABLE>
<CAPTION>
HHC PHO Total
-------- -------- --------
<S> <C> <C> <C>
Balance at December 31, 1994 $543,425 $131,129 $674,554
Equity in net earnings(losses) of investees 53,309 (34,663) 18,646
-------- -------- --------
Balance at September 30, 1995 $596,734 $96,466 $693,200
======== ======== ========
</TABLE>
The condensed balance sheet and statement of operation of the equity
investments are as follows:
<TABLE>
<CAPTION>
Balance Sheets September 30, 1995 December 31, 1994
- - -------------- ----------------------- ---------------------
HHC PHO HHC PHO
---------- -------- ---------- --------
(unaudited)
<S> <C> <C> <C> <C>
Assets:
Currents assets $1,667,347 $370,049 $1,786,335 $606,735
Non-current assets 10,295 152,884 13,531 213,059
---------- -------- ---------- --------
Total assets $1,677,642 $522,933 $1,799,866 $819,794
========== ======== ========== ========
Liabilities and stockholders'
equity:
Current liabilities $ 351,460 $ 57,774 $ 586,189 $226,122
Long term liabilities 272,189 0 272,189 0
Stockholders equity 1,053,993 465,159 941,488 593,672
---------- -------- ---------- --------
$1,677,642 $522,933 $1,799,866 $819,794
========== ======== ========== ========
</TABLE>
Statement of Operations - HHC
- - -----------------------------
<TABLE>
<CAPTION>
For the 9 Months Ended For the 3 Months Ended
----------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
----------------------- ----------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $1,295,330 $1,631,765 $396,997 $588,248
Expense 1,185,554 1,360,877 379,192 505,002
---------- ---------- -------- --------
Net Income $ 109,776 $ 270,888 $ 17,805 $ 83,246
========== ========== ======== ========
</TABLE>
Statement of Operations - PHO
- - -----------------------------
<TABLE>
<CAPTION>
For the 9 Months Ended For the 3 Months Ended
---------------------- ----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
--------- -------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 112,180 $416,342 $ 35,593 $296,766
Expenses 256,401 216,199 75,633 144,788
--------- -------- -------- --------
Net Income(Loss) $(144,221) $200,143 $(40,040) $151,978
========= ======== ======== ========
</TABLE>
9
<PAGE> 10
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
September 30, 1995
Liquidity
Cash resources of the Company have increased by $130,561 during the first nine
months of 1995 as a result of quarterly distributions totaling $101,510
received with respect to the five limited partnership units in St. Joseph's
Same-Day Surgery Center, Ltd. ("SDS"), proceeds of $119,000 received from the
sale of additional common stock, and a decrease in expenditures for consulting
services related to the evaluation of new ventures. A slightly larger increase
in cash resources was realized for the same period in 1994 as a result of the
positive net effect of a $100,000 cash inflow from a stock dividend
distribution received from Hospitals' Home Health Care of Hillsborough County,
Inc. ("HHC") which was offset in significant respect by an increased level of
expenditures for consulting services. A comparable stock dividend has not been
declared in 1995 and is not anticipated.
On May 26, 1995, St. Joseph's Health Network, Inc. ("SJHN"), a 100%-owned
subsidiary of the St. Joseph's Physicians-Healthcenter Organization, Inc. (the
"PHO"), was incorporated. SJHN, a physician-hospital organization, will
negotiate at-risk products with managed care organizations on behalf of its
membership to provide high quality, competitively priced health care services
for persons residing or employed in the Tampa area. It is anticipated that
within the next six months, the Company will assist the PHO in the initial
capitalization of this new organization. The amount of such funding has not
been determined at this time, however, the Company's contribution to such
funding will be determined taking into account the Company's available
liquidity and its other anticipated cash needs. Additional capitalization for
SJHN is expected to be received from other sources, as well. Such funding may
be in the form of membership fees, additional equity, and/or borrowings.
On September 30, 1995, a $34,190 distribution with respect to the five SDS
limited partnership units was declared and will be received during the fourth
quarter of 1995.
During the fourth quarter of 1995, the Company was notified that the agreement
to fund $3,333 per month from the PHO to the Company has been terminated
effective January 1, 1996. The Executive Director position will continue to be
funded on an ongoing basis
10
<PAGE> 11
through the Company's working capital.
Management believes that current cash reserves, additional distributions with
respect to the five SDS limited partnership units, as well as, the proceeds of
additional sales of its common stock will provide adequate short-term funding
of the Company's on-going operations. However, because of the PHO's decision
to no longer fund the Executive Director's compensation and the Company's
decision to use its other cash flows to keep the employment arrangement with
the Executive Director in force and effect, it is possible that the Company
will not be in a position to fund some of the new projects that may arise in
the future.
Capital Resources
From time to time, the Company may find it appropriate to pursue additional
private offerings of its common stock. On June 30, 1995, the Company completed
a private offering in which subscriptions for 43 shares of common stock at
$3,000 per share were received. Although there can be no assurance, the
Company does not anticipate substantial difficulty in raising additional funds,
should the need arise.
Results of Operations
Equity in net earnings of investees is the result of the Company's investment
in the PHO and HHC. As a result of a decrease in the profitability of HHC and
the PHO, the equity in net earnings during the three months and nine months
ended September 30, 1995 has decreased compared to the first nine months of
1994 and the third quarter of 1994. This decrease is principally a result of
(1) the effect of legislation prohibiting physicians with an investment
interest in HHC from making referrals for laboratory, rehabilitation, and other
services, (2) the divestiture by the PHO in 1994 of its 4% ownership interest
in St. Joseph's Diagnostic Center, Ltd., and (3) significant expenditures
incurred by the PHO during the first nine months of 1995 for the evaluation and
implementation of new ventures.
The Company owns five SDS limited partnership units and receives quarterly
distributions on such units. Distribution income for the third quarter and the
first nine months of 1995 was slightly higher than the same periods in 1994.
These distributions were calculated by taking into account anticipated
operating cash needs of the partnership with the intent of maintaining
appropriate reserves.
Interest earnings represent interest on bank deposits. The increase between
1995 and 1994 is due to increased cash balances and an increase in interest
rates.
11
<PAGE> 12
General and administrative expenses decreased significantly as a result of a
decrease in expenditures for consulting services relating to the evaluation of
new ventures and for legal expenses for legislative activities. It is
anticipated that over the near term general and administrative expenses will
continue to be incurred at comparable levels.
During the third quarter of 1995, the Company had net income of $20,808.
Therefore, the income per common share was $48 for the third quarter of 1995.
The net income per common share for the same quarter last year was reported as
$173 per share. The income per common share for the first nine months of 1995
was $136 compared to $207 for the same period in 1994. The decrease in the net
income per common share for the third quarter of 1995 and the first nine months
of 1995 was due to a lower net income and a greater number of shares
outstanding.
Several new laws and regulations affecting the healthcare business were adopted
at both the state and federal levels during 1992, 1993, and 1994. Additional
healthcare reform legislation is being considered at both the State and federal
levels. All of the legislation and regulations, including those that have been
enacted and, if enacted, those that are in the process of being considered,
could have a significant adverse impact on the Company, its related
investments, and the stockholders of the Company.
12
<PAGE> 13
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Limiting Fee Schedule Litigation
On July 10, 1992, the Company joined several other entities in filing a lawsuit
in state court against the State of Florida seeking a declaratory judgment on
the constitutionality of the limiting fee schedule on entities that provide
specified "designated health services" that was included in the Patient
Self-Referral Act of 1992 passed by the Florida Legislature in March 1992 and
requesting that an injunction be granted to stop the enforcement of the
limiting fee schedule. The fee limits originally were scheduled to take effect
on July 1, 1992, but enforcement was temporarily restrained by an order of the
United States District Court for the Northern District of Florida in a separate
lawsuit filed by unrelated parties. The state court action was filed as a
protective measure, in case the federal court in the separate lawsuit (which
agreed to hear the case and rule quickly) upheld the constitutionality of the
fee limits. The state court action was one of several (the others being filed
by unrelated parties) that were filed in the Circuit Court of the Second
Judicial Circuit, Leon County, Florida, all of which cases were consolidated
under the name Physical Therapy Rehabilitation Center of Coral Springs, Inc. v.
State of Florida (the "State Case"). Shortly after the lawsuit in which the
Company is a party was filed, the United States District Court for the Northern
District of Florida, in a separate action (the "Federal Case"), struck down the
fee limits as unconstitutional, under the United States Constitution, and
entered an injunction against enforcement. The state court hearing the State
Case then entered a temporary injunction against enforcement, based upon the
injunction entered in the Federal Case.
The injunction entered in the Federal Case was appealed to the United States
Eleventh Circuit Court of Appeals, and, on February 15, 1994, the Eleventh
Circuit Court of Appeals reversed the trial court, upholding the
constitutionality of the fee limits. A motion for reconsideration was filed
with the Eleventh Circuit Court of Appeals, and that motion was denied in April
1994. Subsequently, a petition of certiorari was filed with the United States
Supreme Court, but no ruling has yet been made on the certiorari petition. The
Eleventh Circuit Court of Appeals agreed to allow the federal injunction to
remain in place until the United States Supreme Court either denies the
certiorari petition or renders a decision.
In the meantime, as a result of the Eleventh Circuit Court of
13
<PAGE> 14
Appeals' reversal of the federal trial court, the Florida Agency For Health
Care Administration ("AHCA") decided to actively pursue the State Case. AHCA
went back to the state trial court and argued that (1) there is no independent
basis for the state temporary injunction and (2) in any event, the state
temporary injunction should not be entered unless every party who would be
protected by the injunction files a bond with the state trial court. On June
23, 1994, the trial court ruled that its temporary injunction would stay in
place, but anyone wanting the protection of the injunction would need to post a
$1,000 bond. AHCA was not pleased with these decisions, and it filed an appeal
with the Florida First District Court of Appeals on July 18, 1994.
The state trial court continued to review various motions that were filed by
the plaintiffs, and, on July 7, 1994, the state trial court declared the
limiting fee schedule unconstitutional, under the Florida Constitution, for
providers of the "designated health services" specified in the Patient
Self-Referral Act of 1992 (other than providers of radiation therapy services).
AHCA filed an appeal of this decision with the Florida First District Court of
Appeals on August 8, 1994. The Florida First District Court of Appeals has
ruled that, because the state trial court's original June 23, 1994 order was
already subject to appeal, the trial court did not have jurisdiction to enter
its July 7, 1994 ruling on unconstitutionality. As a result, all that remained
for review by the Florida First District Court of Appeals was the state trial
court's June 23, 1994 ruling.
In the meantime, on February 13, 1995, in a case known as Kagan v. State of
Florida, the Circuit Court of the Second Judicial Circuit, Leon County,
Florida, again ruled that the limiting fee schedule is unconstitutional, under
the Florida Constitution, for providers of diagnostic imaging services. This
case was appealed by AHCA to the Florida First District Court of Appeals on
March 9, 1995.
Oral argument in the State Case originally was scheduled before the Florida
First District Court of Appeals on June 29, 1995. However, the Court cancelled
the oral argument and, instead, scheduled an attorneys' conference to determine
how best to resolve the multiple appeals relating to the State Case and the
Kagan decision. As a result of the attorneys' conference, the First District
Court of Appeals entered a new order that (1) allowed the state trial court to
enter a new order in the State Case (replacing the original July 7, 1994
decision) declaring the limiting fee schedule unconstitutional under the
Florida Constitution, and (2) consolidated all of the appeals into one case.
The First District Court of Appeals now will simultaneously consider all of the
substantive challenges to the limiting fee schedule. The issues in the appeal
will be (1) whether the limiting fee schedule is unconstitutional under the
Florida Constitution, (2) whether the limiting fee schedule is an unlawful
14
<PAGE> 15
delegation of legislative authority, and (3) if the limiting fee schedule is
deemed constitutional and not an unlawful delegation of legislative authority,
then whether the state trial court's June 23, 1994 ruling should be modified or
dissolved. The Florida First District Court of Appeals has instructed the
parties to prepare additional briefs on the case. To date, oral argument in
this case has not been held.
Declaratory Statement Action With Respect to HHC
The language of the Patient Self-Referral Act of 1992 is ambiguous in many
respects. One such ambiguity can be found in the definition of an "investor,"
which relates to whether a stockholder in the Company is deemed indirectly to
be an "investor" in SDS or HHC. A provision of the Patient Self-Referral Act
of 1992 allows a person or an entity that could be affected by the prohibitions
included in the Patient Self-Referral Act of 1992 to request that AHCA, or the
applicable professional board under the Florida Department of Business and
Professional Regulation, issue a declaratory statement defining how the
applicable state agency interprets an ambiguous provision of the Patient
Self-Referral Act of 1992. Using this procedure, a Petition for Declaratory
Statement was filed by Charles E. Cernuda, M.D. and the Company (the
"Declaratory Statement Action"), seeking an interpretation from the Board of
Medicine of the Department of Business and Professional Regulation (the
"Board") on whether a stockholder in the Company is deemed to indirectly be an
"investor" in HHC, thereby prohibiting the stockholder in the Company from
referring a patient to HHC for physical therapy services, occupational and
speech therapy services or clinical laboratory services that are rendered as an
incident to other home health services provided by HHC.
In a Final Order issued on March 16, 1995, the Board of Medicine ruled that the
definition of "investor" should be broadly interpreted and concluded that each
stockholder's investment interest in the Company results in such stockholder
also being an "investor" in HHC (by virtue of the Company's ownership of 50% of
the outstanding stock of HHC). Accordingly, the Board concluded that the
stockholders of the Company are subject to the absolute prohibition for
referrals to HHC for the "designated health services" that are specified in the
Patient Self-Referral Act of 1992.
To the knowledge of the Company's management, there are no other material
pending legal proceedings, other than ordinary routine litigation incidental to
the business of the Company or the businesses in which the Company has
ownership interests, to which the Company, or any business in which the Company
has an ownership interest, is a party, or of which, any of their property is
the subject.
15
<PAGE> 16
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27 - Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K
None
16
<PAGE> 17
SIGNATURES
November 10, 1995
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.
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
---------------------------------------
(Registrant)
Date: November 10, 1995 /s/ Norman Castellano, M.D.
--------------------------------------
Norman Castellano, M.D., President
St. Joseph's Physician Associates, Inc.
Date: November 10, 1995 /s/ Andrew G. Boyer, M.D.
-------------------------------------
Andrew G. Boyer, M.D., Treasurer and
Principal Financial Officer
St. Joseph's Physician Associates, Inc.
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ST. JOSEPH'S
PHYSICIAN ASSOCIATES, INC. 9/30/95 BALANCE SHEET AND INCOME STATEMENT FOR THE
NINE MONTH PERIOD ENDED 9-30-95, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 604,342
<SECURITIES> 0
<RECEIVABLES> 34,190
<ALLOWANCES> 0
<INVENTORY> 0
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0
0
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</TABLE>
