SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q/A
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(Amendment No. 1)
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 0R 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
COMMISSION FILE NUMBER 0-17292
ACCUHEALTH, INC.
(Exact name of registrant as specified in its charter)
New York 13-3176233
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1575 Bronx River Avenue
Bronx, New York 10460
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (718) 518-9511
Indicate by check mark [X] whether the registrant 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. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at November 13, 1998
Common stock, par value $.01 per share 3,644,498 Shares
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This report hereby amends Item 2 of Part I of Accuhealth, Inc.'s (the "Company"
or the "Registrant") quarterly report on Form 10-Q for the period ended
September 30, 1998 by adding the following information concerning Year 2000
issues:
Year 2000 Readiness
The Company has completed its assessment of its computer systems and facilities
that could be affected by the "Year 2000 problem" and has developed a plan to
resolve the issue. The Year 2000 problem arose because many existing computer
programs use only the last two digits to refer to a year. Therefore, these
computer programs do not properly recognize a year that begins with "20" instead
of the familiar "19." If not corrected, many computer applications could fail or
create erroneous results.
The Company is implementing its Year 2000 compliance program as part of a plan
to replace and upgrade its information technology systems (the "Upgrade
Program"). The Upgrade Program was initiated to replace information systems of
certain subsidiaries of the Company acquired by merger, to fully integrate those
systems with the Company's information technology systems, and to update the
Company's information technology systems. The Company has divided the Upgrade
Program into the following phases: assessment, planning, remediation and
testing. The Company is currently approximately 15% complete with the Upgrade
Program and anticipates being complete with all phases of the Upgrade Program,
including Year 2000 compliance, by the fourth quarter of 1999. Although the
Company believes that it will complete the Upgrade Program by the fourth quarter
of 1999, there can be no assurance that such remediation will be completed or
that the Company's operations will not be disrupted to some degree.
The Company currently expects the Upgrade Program to be completed in a time
frame to avoid any material adverse effect on operations. As of September 30,
1998, the Company had incurred approximately $70,000 to $90,000 of expenses in
connection with the Upgrade Program. The Company expects to incur additional
expenses of approximately $400,000 to complete the implementation of the Upgrade
Program. The Company would have implemented the Upgrade Program irrespective of
the Year 2000 problem, and although the Company expects that the implementation
of the Upgrade Program will achieve Year 2000 compliance, the Company cannot
separately assess the expenses relating to Year 2000 compliance. The Company's
inability to complete Year 2000 compliance on a timely basis or the inability of
other companies with which the Company does business to complete their Year 2000
modifications on a timely basis could adversely affect the Company's operations.
The Company is in the early stages of initiating communications with its major
vendors to identify and, to the extent possible, to resolve issues involving the
Year 2000 Problem. The Company is attempting to mitigate its risk with respect
to the failure of such vendors to be Year 2000 compliant by, among other things,
obtaining Year 2000 compliance certifications or written assurances from its
material vendors. However, the Company has limited or no control over the
actions of these suppliers. Thus, while the Company expects that it will be able
to resolve any significant Year 2000 problems with these systems, there can be
no assurance that these suppliers will resolve any or all Year 2000 Problems
with these systems before the occurrence of a material disruption to the
business of the Company or any of its customers. Any failure of these suppliers
to resolve Year 2000 Problems with their systems in a timely manner could have a
material adverse effect on the Company's business, financial condition, and
results of operation.
Management believes that the most significant risk to the Company from the Year
2000 Problem is the effect such issues may have on third party payors, such as
Medicare. News reports have indicated that various agencies of the federal
government may have difficulty becoming Year 2000 compliant before the Year
2000. The Company has not yet undertaken to quantify the effects of such
noncompliance or to determine whether such quantification is even possible. The
Company is in the early stages of initiating communications with its third party
payors to identify and, to the extent possible, to resolve issues involving the
Year 2000 problem. However, the Company has limited or no control over the
actions of these third party payors. Thus, while the Company expects that it
will be able to resolve any significant Year 2000 problems with these payors,
there can be no assurance that these payors will resolve any or all Year 2000
problems with their systems before the occurrence of a material disruption to
the business of the Company. Any failure of these third party payors to resolve
Year 2000 problems with their systems in a timely manner could have a material
adverse effect on the Company's business, financial condition, and results of
operation.
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The Company is in the process of generating a Year 2000 contingency plan in the
event compliance is not achieved. In connection therewith, the Company expects
to identify reasonably likely scenarios which could arise in the event of the
Company's Year 2000 noncompliance. Once these scenarios have been identified,
the Company will develop plans in an attempt to reduce the impact of these
noncompliance scenarios on the Company and its core functions. The Company
expects to be substantially complete with this contingency plan by the third
quarter of 1999. However, there can be no assurance that this contingency plan
will be completed on a timely basis or that such a plan will protect the Company
from experiencing a material adverse effect on its financial condition or
results of operations.
Potential consequences of the Company's failure to timely resolve its Year 2000
issues could include, among others, (i) the inability to accurately and timely
process claims, respond to third party payor inquiries about claims, enroll
customers, bill third party payors, collect receivables, pay vendors, record and
disclose accurate data and perform other core functions, (ii) increased scrutiny
by regulators and breach of contractual obligations, and (iii) litigations in
connection therewith.
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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 there unto duly authorized.
ACCUHEALTH, INC.
Date: February 22, 1999 By: /s/ GLENN C. DAVIS
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Glenn C. Davis
President and Chief Executive Officer
Date: February 22, 1999 By: /s/ PRISCO DEMERCURIO
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Prisco DeMercurio
Chief Financial Officer
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