FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
------------------------------------------
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
ACT
For the transition period from to
---------------------------------
Commission File Number: 0-19283
--------------------------
Omega Health Systems, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3220466
- ------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 Poplar Avenue, Suite 2100, Memphis, Tennessee 38137
---------------------------------------------------------------------------
(Address of principal executive offices)
901-683-7868
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the 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. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
DURING THE PRECEEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
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 October 31, 1996
- ---------------------------------------------------------------------------
Common Stock, $0.06 par value 6,862,788
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART 1 - FINANCIAL INFORMATION
Index to Financial Information: Page
-------
Item 1:
Condensed Consolidated Balance Sheets
as of September 30, 1996 and December 31,
1995 3
Condensed Consolidated Statements of
Operations for the Three Months Ended
September 30, 1996 and 1995 4
Condensed Consolidated Statements of
Operations for the Nine Months Ended
September 30, 1996 and 1995 5
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
September 30, 1996 and 1995 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2:
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
2
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Current Assets:
Cash $ 3,253,771 2,735,556
Accounts receivable, net of allowances
for contractual adjustments and
doubtful accounts of $2,977,057 and
$1,680,052 in 1996 and 1995, respectively 5,497,846 3,785,063
Other receivables 871,076 617,585
Prepaid expenses 520,896 268,964
------------ ------------
Total current assets 10,143,589 7,407,168
Equipment, furniture and fixtures 11,482,560 8,754,219
Accumulated depreciation (5,786,916) (5,145,756)
------------ ------------
Net equipment, furniture and fixtures 5,695,644 3,608,463
Intangible assets from acquisition, net of
amortization of $300,914 and $83,858 in
1996 and 1995, respectively 10,301,674 452,532
Other assets 468,932 272,232
------------ ------------
Total assets $ 26,609,839 11,740,395
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 2,360,595 3,306,203
Claims liability 831,868 1,319,635
Current installments of long-term debt 2,554,405 1,555,406
Current installments of subordinated debt 393,280 0
------------ ------------
Total current liabilities 6,140,148 6,181,244
Long-term debt, excluding current
installments 4,457,310 1,597,904
Subordinated debt, excluding current
installments 1,387,800 0
------------ ------------
Total liabilities 11,985,258 7,779,148
Minority Interest 14,594
Stockholders' equity:
Common stock 408,777 282,369
Preferred stock 753,395 0
Additional paid in capital 21,161,785 12,047,891
Accumulated deficit (7,713,970) (8,369,013)
------------ ------------
Total stockholders' equity 14,609,987 3,961,247
------------ ------------
Total liabilities and stockholders' equity $ 26,609,839 11,740,395
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Ended September 30, 1996 and 1995
(unaudited)
1996 1995
Center net revenues $ 6,683,769 $ 5,148,394
Managed care revenues 3,791,035 2,587,213
Supply and equipment sales 536,364 473,504
Management and other revenues 94,756 171,906
------------ ------------
Total revenues 11,105,924 8,381,017
Center operating expenses 5,666,910 4,495,301
Eye care claims 2,971,293 2,068,487
Cost of sales 352,043 386,700
Provision for doubtful accounts 143,307 99,145
Selling, general, administrative and
development expenses 1,494,037 1,224,141
------------ ------------
Earnings from operations 478,334 107,243
Non-operating revenue (expenses):
Interest expense (125,626) (56,881)
Interest and other revenue 72,255 113,916
------------ ------------
Earnings before minority interest 424,963 164,278
Minority interest in net income of majority-owned
partnership (14,594) 0
Earnings before income taxes 410,369 164,278
Income tax expense 0 0
------------ ------------
Net earnings $ 410,369 $ 164,278
============ ============
Earnings per common share $ 0.06 $ 0.03
============ ============
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995
(unaudited)
1996 1995
Center net revenues $ 17,786,930 $ 14,903,367
Managed care revenues 10,711,575 7,882,669
Supply and equipment sales 1,611,457 1,335,671
Management and other revenues 356,184 560,151
------------ ------------
Total revenues 30,466,146 24,681,858
Center operating expenses 15,313,165 13,259,771
Eye care claims 8,370,930 6,091,804
Cost of sales 1,130,475 1,100,999
Provision for doubtful accounts 321,615 291,168
Selling, general, administrative and
development expenses 4,250,094 3,456,822
------------ ------------
Earnings from operations 1,079,867 481,294
Non-operating revenue (expenses):
Interest expense (420,479) (198,991)
Interest and other revenue 185,034 191,164
------------ ------------
Earnings before minority interest 844,422 473,467
Minority interest in net income of majority-owned
partnership (14,594) 0
Earnings before income taxes 829,828 473,467
Income tax expense 0 0
------------ ------------
Net earnings $ 829,828 $ 473,467
============ ============
Earnings per common share $ 0.13 $ 0.10
============ ============
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(unaudited)
1996 1995
Cash flows from operations:
Net earnings $ 829,828 473,467
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 883,639 859,166
Provision for doubtful accounts 321,615 291,168
Minority Interest in partnerships 14,594
(Increase) decrease in:
Receivables (1,196,106) (657,433)
Prepaids and other assets (627,355) (334,368)
Increase (decrease) in:
Accounts payable and accrued expenses (1,011,521) (108,528)
Eye care claims payable (487,767) 692,223
----------- -----------
Net cash provided by (used in)
operating activities (1,273,073) 1,215,695
Cash flows from investing activities:
Capital expenditures (561,559) (1,581,354)
Acquisition of Tallahasse, FL practice (2,077,205) 0
Acquisition of Nashville, TN practice (64,145) 0
Acquisition of Dallas, TX practice (4,872,726) 0
Other (75,000) (64,772)
----------- -----------
Net cash used in investing activities (7,650,635) (1,646,126)
Cash flows from financing activities:
Proceeds from issuance of preferred stock 6,538,413 0
Proceeds from issuance of common stock 2,500 0
Net change in long-term debt 3,119,930 757,959
Net change in subordinated debt (218,920) 0
----------- -----------
Net cash provided by financing
activities 9,441,923 757,959
----------- -----------
Net increase in cash 518,215 327,528
Cash at beginning of period 2,735,556 2,238,782
----------- -----------
Cash at end of period $ 3,253,771 2,566,310
=========== ===========
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the accounting policies in effect as of December 31,
1995, as set forth in the annual consolidated financial statements of Omega
Health Systems, Inc. Certain prior year interim balances have been reclassified
to conform to the 1996 presentation. In the opinion of management, all
adjustments necessary for a fair presentation of the consolidated financial
statements have been included. The results of operations for the nine month
period ended September 30, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
2. Earnings Per Share
Earnings per common share for 1996 and 1995 were computed by dividing the
earnings or losses by the weighted average number of common and common
equivalent shares outstanding during the quarter (5,599,138 and 4,811,318,
respectively) and the nine month period (5,114,445 and 4,800,211, respectively).
3. Acquisitions
On January 2, 1996, the Company completed the acquisition of the stock of Warren
R. Berrie, MD, PC, of Nashville, Tennessee. This acquisition included
substantially all of the assets of the medical practice of Warren R. Berrie, MD.
Simultaneously with the acquisition, the Company entered into a five year
management agreement with Dr. Berrie.
The total consideration for the acquisition of the assets of the Berrie practice
was $650,000, of which $50,000 was paid in cash, with the balance in the form of
a five year subordinated note. The note is due in monthly installments, bears
interest at 7% and is convertible into Omega common stock at a conversion price
of $5.89 per share.
On March 12, 1996, the Company completed the acquisition of the assets of the
ophthalmology practice of Paul R. Garland, MD, of Tallahassee, Florida. In
addition, the Company acquired all of the capital stock of the surgery center
associated with Dr. Garland's practice, Capital Eye Surgery Center, Inc.
Simultaneously with the acquisition, the Company entered into a twenty-five year
management agreement with Dr. Garland's professional corporation.
The total consideration for the Garland transactions was $3.4 million, of which
$2 million was paid in cash, with the balance in the form of a five year
subordinated note. The note is due in monthly installments, bears interest at 7%
and is convertible into Omega common stock at a conversion price of $6.50 per
share.
In connection the Garland acquisition , the Company obtained bridge financing in
the form of a 12% $2.5 million subordinated note. The financing was obtained
from an affiliate of the Company's chairman of the board. The note was repaid
June 12, 1996 with the proceeds of the sale of preferred stock.
On September 10, 1996, the Company completed the acquisition of substantially
all of the net assets of EyeCare and SurgeryCenter of North Texas, P.A. and ECSC
7
<PAGE>
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Retina, P.A., two Dallas, Texas, professional associations which practice
ophthalmology in exchange for 771,429 shares of the Registrant's common stock.
Omega Health Systems of North Texas, Inc. will manage the practices pursuant to
long-term management agreements.
Also on September 10, 1996, a subsidiary of the Company, and SurgEyeCare, Inc.
entered into a partnership agreement to form SurgEyeCare General Partnership
(the "Partnership"). Under the terms of the partnership agreement, the Company
contributed $4,550,000 cash to the Partnership and SurgEyeCare, Inc. contributed
assets with an agreed value of $6,100,000. After the initial capital
contributions, the Partnership distributed $4,476,438 in cash to SurgEyeCare,
Inc. After these transactions, the owns Company owns a 75% interest in the
Partnership and SurgEyeCare, Inc. owns a 25% interest. Under the terms of the
partnership agreement, the subsidiary of the Company is designated as managing
partner.
The Company financed the contribution to the Partnership, in part, with the
proceeds of a $3,280,000 acquisition term loan from a commercial bank. The loan
bears interest at the bank's prime rate plus 50 basis points and is due in 48
monthly installments of principal and interest.
The following sets forth certain pro forma financial information for the nine
months ended September 30, 1996 and 1995 as if the Tallahassee and Dallas
transactions had been completed as of January 1, 1996 and January 1, 1995:
1996 1995
Revenues $35,088,000 30,651,000
Net earnings 1,260,000 1,094,000
Net earnings per common share .22 .20
4. Issuance of Preferred Stock
On May 17, 1996, the Company completed the sale of $7,290,000 in convertible
preferred stock. Subject to certain limitations, the preferred stock is
convertible into common stock at an exercise price equal to the lesser of $5.75
or 85% of the average bid price of the common stock at the time of conversion.
The preferred stock has a dividend rate of 8%, which is paid in the form of
common stock at the time of conversion. The preferred stock automatically
converts at the end of three years if not already converted. In addition, the
investors received warrants to purchase approximately 634,000 additional shares
at an exercise price of $5.75.
The net proceeds were approximately $6.55 million and were used to repay the
bridge financing incurred in the Tallahassee practice acquisition, to finance a
portion of the cost of the Dallas transaction and for working capital.
5. Contingencies
Omega is engaged in the business of providing support and management services to
the eye care profession, which subjects it to intense federal and state
regulation. Both state and federal laws prohibit fee splitting and other forms
of compensation based on patient referral. These regulations may, in the future,
be amended or interpreted in such a fashion as to adversely affect the business
of Omega.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the quarter ended September 30, 1996 increased $2,725,000 or 33%
over revenues for the corresponding period of the prior year. Total revenues for
the nine months ended September 30, 1996 increased $5,784,000 or 23% over the
same period in 1995.
Center net revenues increased $1,536,000 or 30% for the quarter and $2,884,000
or 19% for the nine months compared to the same periods in 1995. This increase
came in spite of reductions in Medicare reimbursement for many procedures
performed by ophthalmologists, which took effect January 1, 1996. In addition,
the Company's center operations were negatively affected by weather-related
closings in the first quarter of 1996. The increase resulted from the addition
of the practice in Tallahassee, Florida purchased late in the first quarter of
1996 and the Dalllas, Texas practice added in September 1996 as well as
increases in revenues of practices managed in both 1995 and 1996 ("same stores"
of 4% for the quarter and 6% for the nine months. Center operating expenses rose
27% or $1.198,000 for the quarter and 16% or $2,080,000 for the nine months. The
increase in center operating expenses reflected, in part, the facility
expansions made by the centers in Nashville and Omaha in 1995, as well as the
addition of the practice in Tallahassee and Dallas practices. Costs have risen
at a lower rate than revenues despite the significant volume increases that have
produced the "same stores" revenue growth in a declining reimbursement
environment.
The Company's managed care operations continued to experience growth with
revenue increases of 47% or $1,204,000 for the quarter and 36% or $2,829,000 for
the nine months ended September 30, 1996. Claims expense also increased 44%
during the quarter and 37% for the nine months.
Supply and equipment sales increased $62,000 or 13% for the quarter and $275,000
or 21% for the nine months ended September 30, 1996 over the same periods of
1995. These increase reflects the introduction of the mobile surgical program in
the latter part of 1995. In addition, a higher proportion of supply and
equipment sales relate to the mobile surgical program in 1996, partially
resulting in the higher margins realized in 1996.
Selling , general and administrative expenses increased approximately 22% for
the quarter and 23% for the six months ended June 30, 1996 compared to the same
periods of 1995. This increase reflects the expansion of operations at the Eye
Health Network, the establishment of VisionAmerica Laser Centers as a new
subsidiary in the first quarter of 1995 and development costs as the Company
began to expand its acquisition program.
Interest expense increased $69,000 during the quarter and $221,000 for the nine
months ended September 30, 1996 compared to the same periods of 1995. This
increase reflects the lease financing entered into to finance equipment
additions in 1995 and the subordinated and bank financing incurred in 1996 in
connection with acquisitions.
Acquisitions
On January 2, 1996, the Company completed the acquisition of the stock of Warren
R. Berrie, MD, PC, of Nashville, Tennessee. This acquisition included
substantially all of the assets of the medical practice of Warren R. Berrie, MD.
Simultaneously with the acquisition, the Company entered into a five year
management agreement with Dr. Berrie.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
The total consideration for the acquisition of the assets of the Berrie practice
was $650,000, of which $50,000 was paid in cash, with the balance in the form of
a five year subordinated note. The note is due in monthly installments, bears
interest at 7% and is convertible into Omega common stock at a conversion price
of $5.89 per share.
On March 12, 1996, the Company completed the acquisition of the assets of the
ophthalmology practice of Paul R. Garland, MD, of Tallahassee, Florida. In
addition, the Company acquired all of the capital stock of the surgery center
associated with Dr. Garland's practice, Capital Eye Surgery Center, Inc.
Simultaneously with the acquisition, the Company entered into a twenty-five year
management agreement with Dr. Garland's professional corporation.
The total consideration for the Garland transactions was $3.4 million, of which
$2 million was paid in cash, with the balance in the form of a five year
subordinated note. The note is due in monthly installments, bears interest at 7%
and is convertible into Omega common stock at a conversion price of $6.50 per
share.
In connection with the Garland acquisition, the Company obtained bridge
financing in the form of a 12% $2.5 million subordinated note. The financing was
obtained from an affiliate of the Company's chairman of the board. The note was
repaid on June 12, 1996 with proceeds from the sale of convertible preferred
stock.
On September 10, 1996, the Company completed the acquisition of substantially
all of the net assets of EyeCare and SurgeryCenter of North Texas, P.A. and ECSC
Retina, P.A., two Dallas, Texas, professional associations which practice
ophthalmology in exchange for 771,429 shares of the Registrant's common stock.
Omega Health Systems of North Texas, Inc. will manage the practices pursuant to
long-term management agreements.
Also on September 10, 1996, a subsidiary of the Company, and SurgEyeCare, Inc.
entered into a partnership agreement to form SurgEyeCare General Partnership
(the "Partnership"). Under the terms of the partnership agreement, the Company
contributed $4,550,000 cash to the Partnership and SurgEyeCare, Inc. contributed
assets with an agreed value of $6,100,000. After the initial capital
contributions, the Partnership distributed $4,476,438 in cash to SurgEyeCare,
Inc. After these transactions, the owns Company owns a 75% interest in the
Partnership and SurgEyeCare, Inc. owns a 25% interest. Under the terms of the
partnership agreement, the subsidiary of the Company is designated as managing
partner.
Liquidity, Cash Flow and Capital Resources
For the nine months ended September 30, 1996, the Company used $1,273,000 in
cash in operating activities and $7,651,000 in investing activities. The Company
generated $9,442,000 in cash from financing activities.
Cash flows from operations included significant adjustments for depreciation and
amortization ($883,000) and provision for doubtful accounts ($322,000). Cash
flows from operations were negatively affected by the working capital
requirements associated with the three practice asset acquisitions completed
during the nine months. Investing activities during the period included capital
expenditures for equipment of $562,000 and the acquisition of the assets of
ophthalmic practices in Nashville, Tallahassee and Dallas.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
Financing activities consisted of debt reduction, the proceeds of an acquisition
term loan and the issuance of convertible preferred stock.
On May 17, the sale of $7,290,000 in convertible preferred stock was completed.
Subject to certain limitations, the preferred stock is convertible into common
stock at an exercise price equal to the lesser of $5.75 or 85% of the average
bid price of the common stock at the time of conversion. The preferred stock has
a dividend rate of 8%, which is paid in stock at the time of conversion. In
addition, the investors received warrants to purchase an additional 634,000
shares at an exercise price of $5.75. The net proceeds were approximately $6.5
million and were used to repay the bridge financing incurred in the Tallahassee
practice acquisition, to finance a portion of the cost of the Dallas transaction
and for working capital. As of September 30, 1996, approximately 90% of the
preferred stock had been converted into common stock.
The Company financed the contribution to the Partnership, in part, with the
proceeds of a $3,280,000 acquisition term loan from a commercial bank. The loan
bears interest at the bank's prime rate plus 50 basis points and is due in 48
monthly installments of principal and interest.
The Company anticipates continuing an aggressive acquisition program which will
require additional capital resources in the form of either debt or equity.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting on August 2, 1996. At the
meeting, two directors, Donald A. Hood, O.D. and John D. Hunkeler,
M.D. and were re-elected to three year terms on the board of
directors, by votes of 3,071,312 for, none against and 7,157
abstaining. Other members of the board of directors who continue to
serve are Andrew W. Miller, Ronald L. Edmonds, Thomas P. Lewis,
Gerald E. Meltzer, M.D. and Herman L. Tacker, O.D.. John D.
Hunkeler, M.D. submitted his resignation from the board of directors
on October 28, 1996.
At the meeting, shareholders also approved an amendment to the
Company's Certificate of Incorporation increasing the number of
authorized shares to 25 million (25,000,000), by votes of 2,922,272
for, 64,107 against and 92,090 abstaining, approved the amendment to
the 1995 Incentive and Non-qualified Stock Option Plan by increasing
the number of shares reserved for issuance by 200,000, by votes of
3,013,359 for, 25,603 against and 39,507 abstaining, and ratified
the authorization of the Audit Committee of the Board of Directors
to select the Company's independent auditors for 1996, by votes of
3,051,710 for, 2,094 against and 24,665 abstaining.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(11) Statement re: computation of per share earnings.
(27) Financial Data Schedule (Electronic filing only)
(b) Reports on Form 8-K:
The Company filed a current report on Form 8-K on September 25,
1996. The Form 8-K reported Item 1 Acquisition or Disposition of
Assets in connection with the acquisition of substantially all of
the assets of EyeCare and SurgeryCenter of North Texas, P.A. and
the formation of SurgEyeCare General Partnership.
12
<PAGE>
SIGNATURES
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.
OMEGA HEALTH SYSTEMS, INC.
-----------------------------------------
Registrant
November 13, 1996 By \s\ Ronald L. Edmonds
----------------------------------------------
Ronald L. Edmonds
Senior Vice President and
Chief Financial Officer
13
<TABLE>
<CAPTION>
EXHIBIT 11
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary (for Statement of Operations):
Net earnings $ 410,369 164,278 829,828 473,467
Preferred stock dividends 101,885 0 174,785 0
---------- ---------- ---------- ----------
Net earnings to common shareholders 308,484 164,278 655,043 473,467
Shares:
Weighted average number of shares outstanding 5,420,710 4,698,803 4,952,682 4,690,476
Assuming exercise of warrants and options,
net
of number of shares which could have been
purchased with the exercise of such options
(using average price for the 178,428 112,515 161,763 109,735
period)
---------- ---------- ---------- ----------
Weighted average number of shares, adjusted 5,599,138 4,811,318 5,114,445 4,800,211
---------- ---------- ---------- ----------
Primary earnings per common share
and common equivalent share:
Net earnings (loss) $ 0.06 0.03 $ 0.13 0.10
========== ========== ========== ==========
Assuming full dilution (for Statement of Operations):
Net earnings $ 410,369 164,278 829,828 473,467
Preferred stock dividends 101,885 0 174,785 0
---------- ---------- ---------- ----------
Net earnings to common shareholders 308,484 164,278 655,043 473,467
Shares:
Weighted average number of shares outstanding 5,420,710 4,698,803 4,952,682 4,690,476
Assuming exercise of warrants and options,
net
of number of shares which could have been
purchased with the exercise of such options
(using closing market price) 183,837 137,692 183,712 137,637
---------- ---------- ---------- ----------
Weighted average number of shares, adjusted 5,604,547 4,836,495 5,136,394 4,828,113
---------- ---------- ---------- ----------
Primary earnings per common share
and common equivalent share:
Net earnings (loss) $0.06 (a) 0.03 (a) $0.13 (a) 0.10 (a)
========== ========== ========== ==========
(a) This calculation is submitted in accordance with Regulation S-B item 601(b)(11) although not
required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution
of less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF OMEGA HEALTH SYSTEMS, INC., FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,254
<SECURITIES> 0
<RECEIVABLES> 8,525
<ALLOWANCES> 2,977
<INVENTORY> 0
<CURRENT-ASSETS> 10,144
<PP&E> 11,483
<DEPRECIATION> 5,787
<TOTAL-ASSETS> 26,610
<CURRENT-LIABILITIES> 3,192
<BONDS> 0
0
753
<COMMON> 409
<OTHER-SE> 13,448
<TOTAL-LIABILITY-AND-EQUITY> 14,610
<SALES> 30,466
<TOTAL-REVENUES> 30,466
<CGS> 1,130
<TOTAL-COSTS> 29,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 322
<INTEREST-EXPENSE> 420
<INCOME-PRETAX> 830
<INCOME-TAX> 0
<INCOME-CONTINUING> 830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 830
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
