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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.20549
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FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
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.
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(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)
RIDGE HILL
YONKERS, NEW YORK 10710
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 964-6700
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 AUGUST 14, 2000
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Common stock, par value $.01 per share 4,989,503 Shares
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PART I. FINANCIAL INFORMATION
PAGE NO.
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at
June 30 and March 31, 2000.........................................3
Condensed Consolidated Statements of Operations and
Comprehensive Gain for the three months ended
June 30, 2000 and 1999.............................................4
Condensed Consolidated Statements of Cash Flows for the
three months ended June 30, 2000 and 1999..........................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................6-7
Item 3. Quantitative and Qualitative Disclosures About
Market Risk Not Applicable.........................................7
SIGNATURES..................................................................8
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ACCUHEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
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<S> <C> <C>
ASSETS
Current Assets:
Cash .................................................................. $ 2 6
Accounts receivable, net ............................................. 9,993 11,676
Inventories ........................................................... 354 579
Prepaid expenses and other current assets ............................. 165 156
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Total Current Assets .................................................. 10,514 12,417
Revenue producing equipment, net ........................................... 558 558
Fixed assets, net .......................................................... 1,128 1,191
Other ...................................................................... 185 184
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Total Assets .......................................................... $ 12,385 $ 14,350
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LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
Current Liabilities:
Notes payable - revolving credit facility ............................. $ 6,867 $ 7,545
Current portion of notes payable - other .............................. 1,396 1,400
Current portion of notes payable-term loan ............................ 575 192
Accounts payable ...................................................... 3,537 3,714
Accrued expenses and other current liabilities ........................ 3,439 3,030
Current portion of other capital lease obligations ................... 337 333
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Total Current Liabilities ............................................... 16,151 16,214
12% Subordinated Debentures ................................................ 6,250 6,250
Notes payable - term loan .................................................. -- 462
Notes payable - other, less current portion ................................ 3,187 3,287
Other capital lease obligations, less current portion ...................... 93 141
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Total Liabilities ....................................................... 25,681 26,354
Stockholders' Deficiency:
Preferred Stock, $.01 par value: authorized 3,650,000
shares; no shares issued and outstanding...............................
Preferred stock, $.01par value;6% cumulative convertible, $223
liquidation preference, authorized 1,350,000 shares; issued and ....... 1 1
outstanding 105,000 shares
Common stock $0.1 par value; authorized 15,000,000 shares; 5,297,507,
and 5,268,709 shares issued and outstanding, respectively ............. 52 52
Additional paid-in capital .............................................. 7,628 7,628
Accumulated deficit ..................................................... (20,353) (19,061)
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(12,672) (11,380)
Less treasury stock (308,004 shares) at cost ............................ (624) (624)
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Total Stockholders' Deficiency ............................................. (13,296) (12,004)
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Total Liabilities and Stockholders' Deficiency ............................. $ 12,385 $ 14,350
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</TABLE>
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ACCUHEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE GAIN
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
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2000 1999
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<S> <C> <C>
Net sales ............................................. $ 5,257 $ 8,947
Cost of goods sold .................................... 3,635 5,622
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Gross Profit .......................................... 1,622 3,325
Selling, general and administrative expenses .......... 2,420 3,027
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Operating income (loss) ............................... (798) 298
Interest expense ...................................... 494 487
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Net income (loss) ..................................... $ (1,292) $ (189)
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Net income (loss) per common share applicable to
common shareholders:
Basic ............................................. $ (.26) $ (.04)
Diluted ........................................... $ (.26) $ (.04)
Weighted number of common shares and
equivalents outstanding:
Basic ............................................. 4,970,304 5,130,588
Diluted ........................................... 4,970,304 5,130,558
Net income (loss) ................................. $ (1,292) $ (189)
Other comprehensive income, net of tax: unrealized
gain on marketable securities, net .................... -- 4
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Total comprehensive income (loss) ..................... $ (1,292) $ (185)
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</TABLE>
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ACCUHEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
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2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ........................................... $ (1,292) (189)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................... 63 178
Changes in operating assets and liabilities:
Accounts receivable .................................... 1,683 (563)
Inventories ............................................ 225 (615)
Prepaid expenses and other current assets .............. (9) (2)
Other assets ........................................... (1) (2)
Accounts payable ....................................... (177) 84
Accrued expenses and other current liabilities ......... 409 (320)
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Cash provided by (used in) operating activities ............. 909 (1,430)
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INVESTING ACTIVITIES
Purchase of fixed assets .................................... -- (285)
Purchase of marketable securities ........................... --
Proceeds from sales of marketable securities ................ -- 720
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Cash provided by (used in) investing activities ............. -- 435
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FINANCING ACTIVITIES
Proceeds from note payable - revolving credit facility,net .. (678) 1,631
Repayment of notes payable-term loan ........................ (79) --
Repayment of notes payable-other,net ........................ (104)
Payments on other capital lease obligations ................. (44)
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Cash provided by financing activities ....................... (905) 1,419
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Net increase (decrease) in cash ............................. (4) 424
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Cash at beginning of period ................................. 6 85
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Cash at end of period ....................................... $ 2 $ 509
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid ............................................... $ 259 $ 296
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NONCASH INVESTING AND FINANCING ACTIVITIES:
Accrued dividends and accretion on redeemable preferred stock $ 6 $ 6
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This Management's Discussion and Analysis should be read in conjunction with the
condensed consolidated financial statements of the Company included elsewhere in
this Form 10-Q.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
NET REVENUES. Net revenues decreased approximately $ 3.7 million or 41% from the
comparable 1999 quarter to approximately $5.3 million for the three months ended
June 30,2000. The decrease was primarily the result of decreases in the
Company's infusion therapy revenues, decreases in the sale and rental of durable
medical equipment (DME) and decreases in the institutional pharmacy business.
The sale of the DME business in May 2000 and the ceasing of doing business with
companies who were not paying according to terms in the institutional pharmacy
and infusion therapy businesses were the primary reasons for the decrease in
revenues.
GROSS PROFIT. Gross profit for the three months ended June 30, 2000 and 1999 was
approximately $1.6 million and $3.3 million, respectively, representing
approximately 31% of net sales for the three months ended June 30, 2000 as
compared to 37% for the comparable prior year period. Gross profit decreased
primarily due to the mix of revenues. The Company experienced a greater
percentage of revenues from its institutional pharmacy business, which generates
lower gross margin as compared to the other lines of business. Further,
decreased revenues from the durable medical equipment, which generates the
Company's highest gross margin, also contributed to the decline in overall gross
profit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $2.4million and $3 million or
approximately 46% and 34% of net sales for the three months ended June 30, 2000
and 1999, respectively. The decrease was primarily due to decreases in
compensation ($600,000).
INTEREST EXPENSE. Interest increased by $7,000 for the three months ended June
30,2000, to approximately $494,000. This increase was due to additional interest
on the $6,250,000, 12% Subordinated Debentures resulting from interest accrued
on unpaid interest per the terms of the agreement offset by decreased net
borrowings under our revolving line of credit.
PROVISION FOR INCOME TAXES. No provision of income taxes has been reflected due
to the Company's federal and state net operating loss credits.
FINANCIAL CONDITION
As of June 30,2000, the Company had negative working capital of approximately $
5,638,000.
The Company's cash used in financing activities of approximately $905,000 was
primarily attributable to repayments of $678,000 under the Company's revolving
credit facility and $79,000 on the term loan.
Accounts receivable includes amounts due from third party customers, primarily
governmental agencies (Medicare and Medicaid). At June 30, 2000 gross Medicare
and Medicaid receivables aggregated approximately $3.8 million.
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In addition to the continuing losses, the Company operates under cash flow
pressure due to difficulty in collecting its accounts receivable. The need for
additional capital is critical to the ongoing operations of the Company. The
Company's lender under the revolving loan has notified the Company that is may
not continue to fund the Company after September 15, 2000 unless additional
capital is committed to the Company. Management is exploring financing
alternatives with its suppliers and investors.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information in Items 1 and 2 of Part I
of this Form 10-Q includes information that is forward looking, such as the
Company's plans to convert accounts payable to notes payable. The matters
referred to in forward-looking statements could be affected by the risks and
uncertainties involved in the Company's business. These risks and uncertainties
include, but are not limited to; the effect of economic and market conditions,
the impact of the cost containment efforts, the sale or termination of product
lines, the ability to obtain a cash infusion and the Company's ability to obtain
and maintain required licenses. Subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements in this
paragraph and elsewhere in this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ACCUHEALTH, INC.
Date: August 17, 2000 /s/ GLENN C. DAVIS
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Glenn C. Davis as
President and Chief Executive Officer
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