<PAGE> 1
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 MARCH 31, 1999
---------------
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.
- --------------------------------------------------------------------------------
(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.)
5350 Poplar Avenue, Suite 900, Memphis, Tennessee 38119
- --------------------------------------------------------------------------------
(Address of principal executive offices)
901-683-7868
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(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 PRECEDING 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 April 30, 1999
- --------------------------------------------------------------------------------
Common Stock, $0.06 par value 9,033,192
<PAGE> 2
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
PART 1 - FINANCIAL INFORMATION
Index to Financial Information: Page
--------
Item 1:
Condensed Consolidated Balance Sheets
as of March 31, 1999 and December 31,
1998 3
Condensed Consolidated Statements of
Operations for the Three Months Ended
March 31, 1999 and 1998 4
Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1999 and 1998 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2:
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Item 3:
Quantitative and Qualitative Disclosures
about Market Risks 11
2
<PAGE> 3
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 3,338,132 3,100,145
Accounts receivable, net of allowances
for contractual adjustments and
doubtful accounts 17,165,073 14,469,802
Prepaid expenses and other assets 3,287,507 2,774,845
------------ -----------
TOTAL CURRENT ASSETS 23,790,712 20,344,792
Equipment, furniture and fixtures 21,422,684 21,577,103
Less: Accumulated depreciation (8,973,401) (8,581,509)
------------ -----------
NET EQUIPMENT, FURNITURE AND FIXTURES 12,449,283 12,995,594
Management service agreements and other
intangible assets, net of accumulated amortization of
$2,603,326 and $2,228,742 in 1999 and 1998,
respectively 35,318,620 34,748,320
Deferred tax asset 1,923,000 1,923,000
Other assets 2,256,042 1,760,668
------------ -----------
TOTAL ASSETS $ 75,737,657 71,772,374
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 8,941,198 7,614,548
Current installments of obligations under capital
leases and long-term debt 2,838,086 1,289,335
------------ -----------
TOTAL CURRENT LIABILITIES 11,779,284 8,903,883
Obligations under capital leases, excluding
current installments 1,623,592 1,746,094
Long-term debt, excluding current
installments 30,403,122 29,724,505
------------ -----------
TOTAL LIABILITIES 43,805,998 40,374,482
Minority Interest 513,493 573,278
Stockholders' equity:
Common stock 540,178 540,178
Treasury stock (138,346) (138,346)
Additional paid-in capital 33,885,354 33,885,353
Accumulated deficit (2,869,020) (3,462,571)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 31,418,166 30,824,614
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 75,737,657 71,772,374
============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Center net revenues $ 13,597,127 12,053,976
Optometric practice services 9,933,345 9,924,083
Other revenues 2,395,161 1,204,416
------------ ------------
TOTAL REVENUES 25,925,633 23.182,475
Center operating expenses 11,299,357 9,831,807
Cost of sales 10,279,669 9,708,822
Provision for doubtful accounts 612,013 286,791
Selling, general, administrative and
development expenses 2,095,294 1,778,568
------------ ------------
EARNINGS FROM OPERATIONS 1,639,300 1,576,487
Non-operating revenue (expenses):
Interest income 21,419 20,627
Interest expense (739,261) (576,305)
------------ ------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST AND INCOME
TAXES 921,458 1,020,809
Minority interest in net income of partnerships (132,907) (104,421)
------------ ------------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 788,551 916,388
Income tax expense (195,000) (343,000)
------------ ------------
NET EARNINGS FROM CONTINUING OPERATIONS 593,551 573,388
------------ ------------
Discontinued operations, net of tax -- (50,312)
------------ ------------
NET EARNINGS $ 593,551 523,076
============ ============
Earnings from continuing operations per common share:
Basic $ 0.07 0.07
============ ============
Diluted $ 0.07 0.06
============ ============
Earning (loss) from discontinued operations:
Basic $ 0.00 (0.01)
============ ============
Diluted $ 0.00 (0.01)
============ ============
Earnings per common share:
Basic $ 0.07 0.06
============ ============
Diluted $ 0.07 0.06
============ ============
Weighted average number of common shares:
Basic 8,962,988 8,714,777
============ ============
Diluted 8,981,098 8,906,424
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 593,551 523,076
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization 837,595 713,994
Deferred taxes 0 250,000
Provision for doubtful accounts 612,013 286,791
Minority interest in partnerships 132,907 104,421
Increase in:
Receivables (3,260,968) (3,137,425)
Other receivables (46,316) (182,656)
Prepaids and other assets (527,899) (522,481)
Increase in:
Accounts payable and accrued expenses 1,541,986 1,321,686
----------- -----------
NET CASH USED IN CONTINUING
OPERATING ACTIVITIES (117,131) (642,594)
DISCONTINUED OPERATIONS, NET (695,476) 176,882
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (812,607) (465,712)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (433,370) (208,984)
Acquisition of assets of physician practices (428,210) (1,028,403)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (861,580) (1,237,387)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in long-term debt and capital lease obligations 2,104,866 1,224,149
Distributions to minority interest (192,692) (106,242)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,912,174 1,117,907
----------- -----------
NET INCREASE (DECREASE) IN CASH 237,987 (585,192)
CASH AT BEGINNING OF PERIOD 3,100,145 2,742,444
----------- -----------
CASH AT END OF PERIOD $ 3,338,132 2,157,252
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
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,
1998, 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 1999 presentation. In addition, 1998 information has been
restated to give effect to an adjustment to center net revenues and the
provision for doubtful accounts. 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 three month period ended March
31, 1999 are not necessarily indicative of the results to be expected for the
full year.
The Company has adopted a plan to discontinue operations of its managed eye
care subsidiary, The Eye Health Network, Inc. (EHN). The Company expects to
complete the sale of EHN in the second quarter of 1999. As a result of these
plans, the operations of EHN have been classified as discontinued operations
for each period presented in the accompanying condensed consolidated financial
statements.
2. EARNINGS PER SHARE
Basic and diluted earnings per common share for 1999 and 1998 were computed by
dividing the earnings or losses by the weighted average number of common shares
outstanding during the quarter (8,962,988 and 8,714,777, respectively). Diluted
earnings per common share for 1999 and 1998 were computed by dividing the
earnings by the weighted average number of common shares and common equivalent
shares outstanding during the quarter (8,981,098 and 8,906,424, respectively).
3. ACQUISITIONS
On January 31, 1999, the Company completed the acquisition of the assets of the
ophthalmology practice of George M. Kopf, M.D. of Zanesville, Ohio in exchange
for $430,000 in cash financed under the Company's revolving credit facility with
NationsCredit.
4. REVOLVING CREDIT AGREEMENT
In February 1997, the Company entered into a $15,000,000 Credit Facility with
NationsCredit Commercial Corporation, an affiliate of NationsBank, for the
purpose of refinancing certain existing debt, providing working capital and
financing acquisitions. The Credit Facility was initially a $15 million
committed facility, comprised of a $13 million acquisition facility (the
"Acquisition Facility") and a $2 million working capital facility (the "Working
Capital Facility"). Interest only is due monthly until January 2000, at which
time the borrowings will be due in installments over a four-year period. The
Credit Facility bears interest at a variable rate equal to the 30-day commercial
paper rate quoted in The Wall Street Journal plus 4.25%. In December 1997, the
Credit Facility was amended and restated, increasing the availability to
$30,000,000 and in December 1998 increasing it again to $50,000,000.
5. SEGMENT INFORMATION
The Company's operations have been classified into two business segments: center
operations and optometric practices services. The center operations segment
includes all activity related to managing the ophthalmology practices and
ambulatory surgical centers. The optometric practices services segment includes
the operations of Primary Eyecare Network, Inc. which provides support services
to optometry practices. The other category includes amounts which do not meet
the quantitative thresholds of SFAS No. 131. These amounts are attributable to
the operations of Omega Medical Services, Inc., which provides mobile surgical
and other supplies and services to eye care providers and of Providers Optical,
Inc., a wholesale optical laboratory. The
6
<PAGE> 7
corporate category includes general and administrative expenses associated with
the operation of the Company's corporate office.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. There are no material intersegment
sales and operating income by business segment excludes interest income,
interest expense, and corporate expenses.
Summarized financial information by business segment for three months ended
March 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenues:
Center operations $ 14,063,865 12,410,461
Optometric practice services 9,933,345 9,924,083
Other 1,928,423 847,931
------------ ----------
Total segments 25,925,633 23,182,475
Corporate --
------------ ----------
Total revenues $ 25,925,633 23,182,475
============ ==========
Earnings:
Center operations $ 2,275,131 2,409,829
Optometric practice services 179,941 245,063
Other 115,764 92,911
------------ ----------
Total segments 2,570,836 2,747,803
Corporate (910,117 (1,150,689)
Net interest expense 739,261 576,305
Minority interest 132,907 104,421
Income tax expense 195,000 343,000
------------ ----------
Total earnings from continuing
operations $ 593,551 573,388
============ ==========
Depreciation and amortization:
Center operations $ 666,010 568,358
Optometric practice services 20,544 19,960
Other 45,989 63,345
------------ ----------
Total segments 732,543 651,663
Corporate 105,052 62,331
------------ ----------
Total depreciation and
amortization $ 837,595 713,994
============ ==========
Capital additions:
Center operations $ 271,961 136,964
Optometric practice services 1,009 836
Other 79,489 13,644
------------ ----------
Total segments 352,459 151,444
Corporate 75,751 57,540
------------ ----------
Total capital additions $ 428,210 208,984
============ ==========
Identifiable assets:
Center operations $ 57,295,319 48,304,228
Optometric practice services 7,681,317 7,063,643
Other 5,830,661 2,893,451
------------ ----------
Total segments 70,807,297 58,261,322
Corporate $ 4,930,360 4,596,845
------------ ----------
Total assets 75,737,657 62,858,167
============ ==========
</TABLE>
7
<PAGE> 8
6. CONTINGENCIES
The Company 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.
The Company maintains professional liability coverage on a claims made basis for
its centers, employees, and independent contractors, including center directors,
with minimum requirements of $3,000,000 per occurrence and $3,000,000 annually.
The Company also maintains general liability coverage. Additionally, the
physicians associated with the Company maintain professional liability coverage.
Providing support associated with health care services may give rise to claims
from patients or others for damages. The Company has been named in certain
professional liability claims. The Company believes that the ultimate resolution
of these matters will not have a significant effect on the Company's financial
position or results of operations. To the extent that any claims-made coverage
is not renewed or replaced with equivalent insurance, claims based on
occurrences during the term of such coverage, but reported subsequently, would
be uninsured. Management anticipates that the claims-made coverage currently in
place will be renewed or replaced with equivalent insurance as the term of such
coverage expires.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
Three Months
Ended March 31
1999 1998
------ ------
<S> <C> <C>
Revenues
Center net revenues 52.5% 52.0
Optometric practice services 38.3 42.8
Other revenues 9.2 5.2
------ ------
Total revenues 100.0 100.0
Center operating expenses 43.6 42.4
Selling, general and administrative expenses 8.1 7.7
Cost of sales 39.6 41.9
Provision for doubtful accounts 2.4 1.2
------ ------
Earnings from operations 6.3% 6.8%
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Total Revenues. Total revenues increased from $23,182,000 for the three
months ended March 31, 1998 to $25,926,000 for the three months ended March 31,
1999, an increase of $2,744,000 or 11.8%.
Center net revenues increased from $12,054,000 for the 1998
period to $13,597,000 for the 1999 period, an increase of $1,543,000,
or 12.8%. The increase resulted primarily from the additions of Centers
in Orlando, Florida; New Orleans, Louisiana; and Zanesville, Ohio
during the 1999 period as well as the addition of an ASC in the Orlando
Center and an increase in same center revenues.
Optometric practice service revenues increased from $9,924,000
for the three months ended March 31, 1998 to $9,933,000 for the 1999
period, an increase of $9,000 or 0.1%. Optometric practice services
provides products and services to independent optometrists, including
purchasing, education, training, management, and publications.
Other revenues increased from $1,204,000 for the 1998 period to
$2,395,000 for the 1999 period, an increase of $1,191,000 or 98.9%. The
increase resulted primarily from higher margin mobile surgical revenues
and optical lab sales.
Center Operating Expenses. Center operating expenses increased from
$9,832,000 for the three months ended March 31, 1998 to $11,299,000 for the
three months ended March 31, 1999, an increase of $1,467,000 or 14.9%. The
increase reflected the additions of the practices in Orlando, New Orleans, and
Zanesville as well as same-center operating expense during the 1999 period. The
Company is engaged in a project to upgrade its information technology
infrastructure at each center location. This project had the effect of
increasing center operating expense in the short-term. Depreciation and
amortization included in center operating expenses increased approximately
$108,000, partially as a result of the adoption of shorter amortization periods
for management service agreements, effective April 1, 1998. As a percentage of
center net revenues, center operating expenses increased from 81.6% in the 1998
period to 83.1% in the 1999 period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $1,779,000 for the three months ended
March 31, 1998 to $2,095,000 for the three months ended March 31, 1999, an
increase of $316,000, or 17.8%. As a percentage of total revenues, selling,
general, and administrative expenses increased from 7.7% in the 1998 period to
8.1% in the 1999 period.
9
<PAGE> 10
Cost of Sales. Cost of sales increased from $9,709,000 for the three
months ended March 31, 1998 to $10,280,000 for the three months ended March 31,
1999, an increase of $571,000, or 5,9%. As a percentage of total revenues, cost
of sales decreased from 41.9% in the 1998 period to 39.6% in the 1999 period.
Provision for Doubtful Accounts. Provision for doubtful accounts
increased from $286,000 for the three months ended March 31, 1998 to $612,000
for the three months ended March 31, 1999, an increase of $326,000, or 114.0%.
As a percentage of total revenues, provision for doubtful accounts increased
from 1.2% in the 1998 period to 2.4% in the 1999 period.
Interest Income (Expense), Net. Interest expense increased from
$556,000 for the three months ended March 31, 1998 to $718,000 for the three
months ended March 31, 1999, an increase of $162,000, or 29.14%. This increase
related to the increase in borrowings in late 1998 and the 1999 period used to
finance acquisitions.
Earnings from Continuing Operations before Income Taxes. Earnings from
continuing operations before income taxes decreased from $916,000 for the three
months ended March 31, 1998 to $789,000 for the three months ended March 31,
1999, a decrease of $128,000 or 13.9%.
Income Tax Expense. Income tax expense declined from $343,000 for the
three months ended March 31, 1998 to $195,000 for the three months ended March
31, 1999, a decrease of $148,000 or 43.1%. This decrease results partially from
a lower estimated annual effective tax rate for 1999, due to the utilization of
net operating loss carryforwards.
Net Earnings from Continuing Operations. Net earnings from continuing
operations increased marginally from $573,000 for the three months ended March
31, 1998 to $594,000 for the three months ended March 31, 1999, an increase of
$20,000 or 3.6%.
ACQUISITIONS
On January 31, 1999, the Company completed the acquisition of the assets of the
ophthalmology practice of George M. Kopf, M.D. of Zanesville, Ohio in exchange
for $430,000 in cash financed under the Company's revolving credit facility with
NationsCredit.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1999, the Company used $117,000 of cash in
continuing operating activities and $695,000 in discontinued operating
activities. The Company used $862,000 in investing activities and generated
$1,912,000 in financing activities.
Cash flows from operations included significant adjustments for depreciation and
amortization ($838,000) as well as provision for doubtful accounts ($612,000).
Investing activities during the period included $433,000 in capital expenditures
for equipment as well as acquisitions of the assets of an ophthalmic practice in
Ohio. Financing activities included an increase in debt and distributions to
minority interest.
As of March 31, 1999, the Company has approximately $20 million available on its
$50 million revolving credit facility.
10
<PAGE> 11
YEAR 2000
The year 2000 computer issue is caused by computer programs being
written using two digits to identify the applicable year rather than four. Since
most application software only contains the two digits, may systems will
identify January 1, 2000 as January 1, 1900, which could result in malfunctions
involving dates. There can be no guarantee that the systems of other companies
on which the Company relies will be in compliance.
To address the year 2000 issue, the Company has established a task
force including representatives of top management, management information
systems representatives, equipment purchasing and maintenance personnel and the
accounting department. The task force has been assigned responsibility for
developing and implementing the Company's year 2000 activities. The Company's
audit and compliance committee monitors the task force's activities.
The Company is continuing its efforts to address operational concerns
raised by the year 2000 issue. The principal areas of concern include ensuring
that the systems used in practice management, managed care administration and
accounting are year 2000 compliant, addressing issues related to "imbedded
systems" in equipment, including medical equipment, and assessing and addressing
the potential impact of year 2000 problems with other entities with which the
Company has business relationships.
The Company is in the process of upgrading all of its internal systems,
including practice management, managed care administration and accounting. This
is a complex project with may aspects, but addressing the year 2000 issue is a
part of the project. The overall cost of this systems project will be in excess
of $1 million, but a relatively small part is exclusively related to the Year
2000 issue. The Company expects its systems to be fully compliant in the third
quarter of 1999.
The Company is continuing to inventory equipment which has imbedded
systems which may be affected by the year 2000 issue and contacting the
appropriate vendors to ascertain risks and solutions. This project is
substantially complete. The cost of this project is not expected to be material
to the Company's financial statements at this time.
The Company is also corresponding with other entities with which it has
business relationships to assess their progress in addressing the year 2000
issue for the purpose of assessing the risks to the Company which may result
from this problem.
Based on the Company's progress to date and the status of its upgrade
activities, the Company believes that its greatest risk related to the year 2000
problem lies in its outside relationships, especially third party payors on
which the Company relies for much of its Center revenues. The Company is
continuing to monitor the progress of these payors, especially the Health Care
Financing Administration and Medicare fiscal intermediaries, in developing year
2000 compliance. A significant failure of these groups in maintaining payments
would have a material adverse impact on the Company.
Although the cost to bring systems and equipment into compliance has
not been and is not expected to be material to the Company's consolidated
financial statements, failure to comply and/or failure of other entities with
which the Company transacts business to comply could have a material adverse
effect on the Company's business and financial results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There were no material changes during the quarter in the information
about market risks included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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 (for SEC Use Only)
(b) Reports on Form 8-K:
None.
12
<PAGE> 13
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
May 14, 1999 By /s/ Ronald L. Edmonds
------------------------------------------
Ronald L. Edmonds
Executive Vice President and
Chief Financial Officer
13
<PAGE> 1
EXHIBIT 11
OMEGA HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Basic:
Net earnings from continuing operations $ 593,551 $ 573,388
Shares:
Weighted average number of shares outstanding 8,962,988 8,714,777
---------- ----------
Basic earnings per common share and common equivalent share:
Net earnings $ 0.07 $ 0.07
========== ==========
Diluted:
Net earnings from continuing operations $ 593,551 573,388
Shares:
Weighted average number of shares outstanding 8,962,988 8,714,777
Assuming exercise of warrants and options, net
of number of shares which could have been
purchased with the exercise of such options
(using average market price) 18,110 191,647
---------- ----------
Weighted average number of shares, adjusted 8,981,098 8,906,424
---------- ----------
Diluted earnings per common share and common equivalent share:
Net earnings $ 0.07 $ 0.06
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,338
<SECURITIES> 0
<RECEIVABLES> 17,165
<ALLOWANCES> 3,152
<INVENTORY> 0
<CURRENT-ASSETS> 23,791
<PP&E> 21,423
<DEPRECIATION> 8,973
<TOTAL-ASSETS> 75,738
<CURRENT-LIABILITIES> 13,318
<BONDS> 0
0
0
<COMMON> 540
<OTHER-SE> 30,878
<TOTAL-LIABILITY-AND-EQUITY> 75,738
<SALES> 25,926
<TOTAL-REVENUES> 25,926
<CGS> 10,280
<TOTAL-COSTS> 24,287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 612
<INTEREST-EXPENSE> 739
<INCOME-PRETAX> 789
<INCOME-TAX> 195
<INCOME-CONTINUING> 594
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 594
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
