FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-18902
Health Risk Management, Inc.
(Exact name of registrant as specified in its charter)
Minnesota 41-1407404
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8000 West 78th Street, Minneapolis, Minnesota 55439
(Address of principal executive offices, Zip Code)
(612) 829-3500
(Registrant's telephone number, including area code)
------------
(Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, par value $.01 per share,
outstanding on February 12, 1998 was 4,513,019.
<PAGE>
HEALTH RISK MANAGEMENT, INC.
INDEX
Part I. Financial Information Page Number
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- at December 31,1997 and
June 30, 1997............................................. 3
Consolidated Statements of Net Income for the three
months ended December 31, 1997 and 1996 and the
six months ended December 31, 1997 and 1996............... 4
Consolidated Statements of Cash Flows for the six months
ended December 31,1997 and 1996........................... 5
Notes to Consolidated Financial Statements.................. 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............8-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................... 12
Signatures ................................................... 13
Exhibit Index .................................................. 14
Exhibit 11 ................................................... 15
<PAGE>
PART I. FINANCIAL INFORMATION
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
December 31
1997 June 30,
(Unaudited) 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,417 $ 5,349
Accounts receivable-net of allowance for doubtful accounts of
$265 and $260 at December 31, 1997 and June 30, 1997, respectively 6,935 5,257
Unbilled receivables 7,250 7,110
Deferred income taxes 325 350
Other 989 989
----------- ------------
Total current assets 20,916 19,055
Computer software and database development costs, net of
amortization of $15,160 and $12,782 at December 31, 1997 and
June 30, 1997, respectively 22,077 20,385
Property and equipment less accumulated depreciation of $12,640
and $11,103 at December 31, 1997 and June 30, 1997, respectively 8,550 9,215
Contract rights, net of amortization of $997 and $914 at December 31,
1997 and June 30, 1997, respectively 813 893
Other assets 2,137 2,175
----------- ------------
$ 54,493 $ 51,723
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,313 $ 1,645
Accrued expenses 3,254 3,018
Unearned revenues 3,849 3,826
Current maturities of notes payable 1,429 1,134
Current portion of capitalized equipment leases 758 854
----------- ------------
Total current liabilities 10,603 10,477
Deferred income taxes 4,433 3,715
Long-term portion of notes payable 3,027 2,166
Long-term portion of capitalized equipment leases 979 1,321
Commitments
Shareholders' equity:
Undesignated shares, $.01 par value, 9,750,000 authorized, none issued
Series A preferred shares, $.01 par value, 300,000 auhtorized, none issued
Common shares, $.01 par value, 20,000,000 shares authorized, 4,505,819
and 4,478,245 shares issued and outstanding at
December 31, 1997 and June 30, 1997, respectively 45 45
Additional paid-in capital 31,135 30,945
Retained earnings 4,271 3,054
----------- ------------
Total shareholders' equity 35,451 34,044
----------- ------------
$ 54,493 $ 51,723
=========== ============
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $ 17,687 $ 15,597 $ 34,381 $ 29,992
Operating expenses:
Cost of services 11,446 9,159 22,348 17,807
Depreciation and amortization,
principally cost of services 2,108 1,851 4,085 3,577
Selling and marketing 1,675 1,948 3,188 3,856
Administration 1,383 1,422 2,703 2,713
----------- ---------- ---------- ---------
Total operating expenses 16,612 14,380 32,324 27,953
----------- ---------- ---------- ---------
Operating income 1,075 1,217 2,057 2,039
Other income (expense):
Interest income 73 31 136 75
Interest expense (106) (116) (227) (262)
----------- ---------- ---------- ---------
Total other income (expense) (33) (85) (91) (187)
----------- ---------- ---------- ---------
Income before income taxes 1,042 1,132 1,966 1,852
Provision for income taxes:
Current 3 6 6 10
Deferred 394 429 743 707
----------- ---------- ---------- ---------
Total income taxes 397 435 749 717
----------- ---------- ---------- ---------
Net income $ 645 $ 697 $ 1,217 $ 1,135
=========== ========== ========== =========
Net income per common share:
Basic $ 0.14 $ 0.17 $ 0.27 $ 0.27
=========== ========== ========== =========
Diluted $ 0.14 $ 0.16 $ 0.26 $ 0.26
=========== ========== ========== =========
Weighted average number of
common and common equivalent
shares outstanding:
Basic 4,502 4,222 4,499 4,202
=========== ========== ========== =========
Diluted 4,639 4,431 4,638 4,393
=========== ========== ========== =========
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,217 $ 1,135
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,537 1,323
Amortization 2,548 2,254
Provision for deferred income tax 743 707
Changes in operating assets and liabilities:
Accounts receivable (1,678) 1,286
Unbilled receivables (140) (2,704)
Other assets (52) (530)
Accounts payable (271) (474)
Accrued expenses 236 253
Unearned revenues 23 555
---------- -----------
Net cash provided by operating activities 4,163 3,805
Cash flows from investing activities:
Acquisitions of assets, net of cash acquired -- (139)
Property and equipment, net of disposals (933) (1,294)
Capitalized software and database development costs (4,070) (3,188)
---------- -----------
Net cash used in investing activities (5,003) (4,621)
Cash flows from financing activities:
Proceeds from notes payable 1,750 1,275
Principal payments on notes payable (594) (610)
Principal payments on capital leases (438) (516)
Issuance of common shares 190 311
---------- -----------
Net cash provided in financing activities 908 460
Increase (decrease) in cash 68 (356)
Cash and cash equivalents at beginning of period 5,349 3,347
---------- -----------
Cash and cash equivalents at end of period $ 5,417 $ 2,991
========== ===========
Supplemental disclosures:
Interest paid $ 227 $ 262
Income taxes paid 11 11
</TABLE>
<PAGE>
HEALTH RISK MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited interim consolidated financial statements herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and under the presumption that users of
the interim financial information have either read or have access to the
audited consolidated financial statements for the latest fiscal year ended
June 30, 1997. Accordingly, footnote disclosures which would substantially
duplicate the disclosures contained in the June 30, 1997 audited
consolidated financial statements have been omitted from these interim
consolidated financial statements. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These interim
consolidated financial statements should be read in conjunction with the
annual consolidated financial statements and the notes thereto.
2. Computer software costs
<TABLE>
<CAPTION>
December 31,
1997 June 30,
(Unaudited) 1997
(in thousands)
<S> <C> <C>
Computer software costs consist of the following:
Computer Software (AutoPILOT(TM))
Cost $ 14,743 $ 12,932
Less accumulated amortization 6,181 5,177
------------- ---------------
Net book value 8,562 7,755
Claim Administration Software
Cost 8,209 7,601
Less accumulated amortization 3,295 2,913
------------- ---------------
Net book value 4,914 4,688
Guidelines, Protocols and Medical Analysis Software
Cost 14,285 12,634
Less accumulated amortization 5,684 4,692
-------------- ---------------
Net book value 8,601 7,942
-------------- ---------------
Computer Software and Database Development Costs $ 22,077 $ 20,385
============= ==============
Amortization of these costs was as follows for the six month period ended December 31, 1997 and the year ended June 30,
1997:
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
December 31, 1997 Year Ended
(Unaudited) June 30, 1997
(in thousands)
<S> <C> <C>
Computer Software (AutoPILOT(TM)) $ 1,004 $ 1,791
Claim Administration Software 382 735
Guidelines, Protocols and Medical Analysis Software 992 1,617
--------------- -----------------
Amortization Expense $ 2,378 $ 4,143
============= ===============
</TABLE>
<PAGE>
3. Earnings per share
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement No. 128, "Earnings Per Share." Statement 128 replaced
the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of
options. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary,
restated to conform to the Statement 128 requirements.
4. Segment Reporting
In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments
of an Enterprise and Related Information" (SFAS No. 131) which is
effective for fiscal years beginning after December 15, 1997.
Accordingly, the Company plans to adopt SFAS No. 131 in the fiscal year
ending June 30, 1999. SFAS No. 131 requires that a publicly-held
company report financial and descriptive information about its
operating segments in financial statements issued to shareholders for
interim and annual periods. SFAS No. 131 also requires additional
disclosures with respect to products and services, geographic areas of
operation, and major customers. While the Company has reported under
SFAS No. 14 that it is engaged in only one industry segment, namely,
managed healthcare services, it has not yet determined the segment or
other disclosure impacts of SFAS No. 131. Since SFAS No. 131 deals only
with footnote disclosures, it will not have any impact on the
consolidated financial results or financial condition of the Company.
5. Comprehensive Income
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income" (SFAS No. 130) which is effective for fiscal years beginning
after December 15, 1997. Accordingly, the Company plans to adopt SFAS
No. 130 in the fiscal year ending June 30, 1999. SFAS No. 130
establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. The adoption of SFAS No. 130 is not expected to have a
significant impact on the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
A majority of the Company's revenues consist of fees for services
provided under contracts obligating clients to pay a fixed monthly charge for
each covered employee based on anticipated case volume experience, a percentage
of savings, a transaction or case fee, or on an hourly basis. In addition, each
new client is typically charged a one-time set-up fee to cover the related
set-up costs incurred by the Company. Such revenue is recognized as services
rendered under each contract.
The Company's expenses are comprised of its cost of services
(consisting primarily of compensation of personnel, including nurses and
physicians, telephone expenses, rent, costs related to the Company's computer
operations, costs related to customer service, and costs related to development
of new services), selling and marketing expenses (including sales commissions,
advertising, and costs of marketing, sales and account management personnel),
general and administration expenses (including bad debts and compensation of
personnel in the corporate, finance, human resources, and general administration
departments) and depreciation and amortization (including capitalized leased
equipment, software costs, and deferred contract costs).
Results of Operations
The following table sets forth certain consolidated financial data as a
percentage of total revenue for the three months and the six months ended
December 31, 1997 and 1996 and the fiscal year ended June 30, 1997.
<TABLE>
<CAPTION>
Three Months Six Months Year
Ended Ended Ended
December 31, December 31, June 30,
-----------------------------------------------------------------------------------
1997 1996 1997 1996 1997
-------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
======== ======= ======= ======= ========
Operating expenses:
Cost of services 64.7% 58.7% 65.0% 59.4% 60.0%
Depreciation and amortization,
principally cost of services 11.9% 11.9% 11.9% 11.9% 12.2%
Selling and marketing 9.5% 12.5% 9.3% 12.9% 11.7%
Administration 7.8% 9.1% 7.8% 9.0% 9.1%
Merger costs 0.0% 0.0% 0.0% 0.0% 0.6%
-------- ------- ------- ------ ------
Total operating expenses: 93.9% 92.2% 94.0% 93.2% 93.6%
-------- ------- ------- ------ ------
Income from operations 6.1% 7.8% 6.0% 6.8% 6.4%
Other income (expense):
Interest income 0.4% 0.2% 0.4% 0.3% 0.3%
Interest expense (0.6)% (0.7)% (0.7)% (0.9)% (0.9)%
-------- ------- ------- ------ -----
Total other income (expense) (0.2)% (0.5)% (0.3)% (0.6)% (0.6)%
Income before taxes 5.9% 7.3% 5.7% 6.2% 5.8%
Income taxes (2.3)% (2.8)% (2.2)% (2.4)% (2.2)%
-------- ------- ------- ------ ------
Net income 3.6% 4.5% 3.5% 3.8% 3.6%
======== ======= ======= ====== ======
</TABLE>
<PAGE>
Revenues: Revenues for the three months and the six months ended
December 31, 1997 increased $2,090,000 (13%) and $4,389,000 (15%), respectively,
over the corresponding periods of the prior year. This increase is primarily
attributable to net increases in the number of clients and covered participants
enrolled in the Company's healthcare management services and sales of additional
services to existing clients.
Following is the approximate breakout of revenue by class of similar
service categories:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, Change December 31, Change
------------- -------------- ----------------- --------------
1997 1996 Amount % 1997 1996 Amount %
----- ----- ------ ---- ----- ---- ------ --
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Care review and
case management $ 7,929 $ 6,130 $ 1,799 29% $ 15,544 $ 11,891 $ 3,653 31%
Price control 989 1,124 (135) (12)% 1,848 2,240 (392) (18)%
Claim administration
services 6,724 6,243 481 8% 13,010 11,973 1,037 9%
Information
management 2,045 2,100 (55) (3)% 3,979 3,888 91 2%
--------- ------ ------- --- -------- -------- ------- ----
$ 17,687 $ 15,597 $ 2,090 13% $ 34,381 $ 29,992 $4,389 15%
========= ======== ======= === ======== ======== ====== ====
</TABLE>
There are variations in revenue by class because clients purchasing
services may choose all or a portion of these services, and this varies from
client to client and period to period.
Revenues for care review and case management services increased 29%, or
$1,799,000, from the second quarter of fiscal 1997 to fiscal 1998 (from
$6,130,000 to $7,929,000), and increased 31%, or $3,653,000, from the first six
months of fiscal 1997 to fiscal 1998 (from $11,891,000 to $15,544,000). The
increase in fiscal 1998 was mainly the result of added revenues in the HMO area.
Revenues for price control services decreased 12%, or $135,000, from
the second quarter of fiscal 1997 to fiscal 1998 (from $1,124,000 to $989,000),
and decreased 18%, or $392,000, from the first six months of fiscal 1997 to
fiscal 1998 (from $2,240,000 to $1,848,000). The decrease in fiscal 1998 was
mainly the result of a decrease in the customer base using the negotiation and
bill review services.
Claim administration services revenues increased 8%, or $481,000, from
the second quarter of fiscal 1997 to fiscal 1998 (from $6,243,000 to
$6,724,000), and increased 9%, or $1,037,000 from the first six months of fiscal
1997 to fiscal 1998 (from $11,973,000 to $13,010,000) because of increased
interest in HRM's comprehensive service.
Information management revenues decreased 3%, or $55,000, from the
second quarter of fiscal 1997 to fiscal 1998 (from $2,100,000 to $2,045,000),
and increased 2%, or $91,000, from the first six months of fiscal 1997 to fiscal
1998 (from $3,888,000 to $3,979,000).
Cost of Services: Cost of services increased 25% from the second
quarter of fiscal 1997 to fiscal 1998 (from $9,159,000 to $11,446,000) and
increased as a percentage of revenues from 59% to 65%. Cost of services
increased 25% from the first six months of fiscal 1997 to fiscal 1998 (from
$17,807,000 to $22,348,000) and increased as a percentage of revenues from 59%
to 65%. The higher cost of services percentage was due to the Company's large
HMO client's expansion of membership and services. Also, the second quarter cost
of service includes costs for expansion of business with a large HMO in the
third quarter of fiscal 1998, which is expected to add significantly to the
Company's revenue.
<PAGE>
Depreciation and Amortization: Depreciation and amortization expenses
increased 14% from the second quarter of fiscal 1997 to fiscal 1998 (from
$1,851,000 to $2,108,000), and remained unchanged as a percentage of revenues at
12%. Depreciation and amortization expenses increased 14% from the first six
months of fiscal 1997 to fiscal 1998 (from $3,577,000 to $4,085,000), but
remained unchanged as a percentage of revenues at 12%. The increase was
primarily the result of depreciation on additional computer, telephone and
office equipment, and amortization of additional software and contract costs.
Approximately 92% of depreciation and amortization expenses are related to cost
of services.
Selling and Marketing: Selling and marketing expenses decreased 14%
from the second quarter of fiscal 1997 to fiscal 1998 (from $1,948,000 to
$1,675,000) and decreased as a percentage of revenues from 12% to 10%. Selling
and marketing expenses decreased 17% from the first six months of fiscal 1997 to
fiscal 1998 (from $3,856,000 to $3,188,000) and decreased as a percentage of
revenues from 13% to 9%. The decrease in fiscal 1998 was due primarily to
decreased marketing, sales and account management personnel, sales commissions
and travel expenses because of personnel lost as a result of the attempted 1997
merger.
Administration: Administration expenses decreased 3% from the second
quarter of fiscal 1997 to fiscal 1998 (from $1,422,000 to $1,383,000) and
decreased as a percentage of revenues from 9% to 8%. Administration expenses
remained essentially unchanged from the first six months of fiscal 1997 to
fiscal 1998 (from $2,713,000 to $2,703,000) but decreased as a percentage of
revenue from 9% to 8%. The decrease in fiscal 1998 was due primarily to
decreased staff and other expenses, including salaries, bad debts, training and
insurance.
Interest: Interest income was $31,000 and $73,000 for the second
quarter of fiscal 1997 and fiscal 1998, respectively, and increased as a
percentage of revenues from 0.2% to 0.4%. Interest income was $75,000 and
$136,000 for the first six months of fiscal 1997 and fiscal 1998, respectively,
and increased as a percentage of revenues from 0.3% to 0.4%. Interest income
varies with funds available to be invested in short-term investments.
Interest expense decreased 9% from the second quarter of fiscal 1997 to
fiscal 1998 (from $116,000 to $106,000) and decreased as a percentage of
revenues from 0.7% to 0.6%. Interest expense decreased 13% from the first six
months of fiscal 1997 to fiscal 1998 (from $262,000 to $227,000) and decreased
as a percentage of revenues from 0.9% to 0.7%. Interest expense was impacted in
fiscal 1998 by lower interest rates and lower average principal balances
outstanding.
Income Taxes: Income taxes decreased in the second quarter of fiscal
1997 from fiscal 1998 by $38,000, and increased in the first six months of
fiscal 1997 from fiscal 1998 by $32,000. The decreases are due to lower income
before income taxes. It is expected that the fiscal year 1998 effective tax rate
will approximate the 39% rate of fiscal 1997.
Liquidity and Capital Resources
The Company's cash flow from operations was $4,163,000 and $3,805,000
for the first six months of fiscal 1997 and 1998, respectively. Cash flow from
operating activities was greater than net income because non-cash charges such
as depreciation, amortization and the provision for deferred income taxes
exceeded the net changes in operating assets and liabilities for the first six
months of fiscal 1997 and fiscal 1998. Cash has been used to invest in software
and program enhancements ($3,188,000 and $4,070,000 in the first six months of
fiscal 1997 and fiscal 1998, respectively). In addition, the Company acquired
property and equipment of $1,433,000 and $933,000 for the first six months of
fiscal 1997 and 1998, respectively. The Company expects to continue its
expansion and will acquire property and equipment, enhance software and
products, and develop products.
The Company had a net operating loss carryforward for income tax
purposes in excess of $14,100,000 as of June 30, 1997, which can be used to
reduce the cash flow necessary to pay taxes.
<PAGE>
The Company's cash position at December 31, 1997 was $5,417,000 as compared
to $5,349,000 at June 30, 1997. The Company also used approximately $1,126,000
and $1,032,000 for the first six months of fiscal 1997 and 1998, respectively,
to repay principal on notes payable and capital leases, and the Company borrowed
on its line of credit $1,275,000 and $1,750,000 in fiscal 1997 and fiscal 1998,
respectively. The Company received $311,000 and $190,000 during the first six
months of fiscal 1997 and fiscal 1998, respectively, from stock option exercises
for common stock. The Company's current ratio was approximately 1.9 and 1.8 at
December 31, 1997 and June 30, 1997, respectively. The Company's working capital
was $10,313,000 and $8,578,000 at December 31, 1997 and June 30, 1997,
respectively.
The Company believes that its cash and cash flow from operations, together
with credit facilities which the Company has obtained, will be sufficient to
finance the Company's anticipated, normal expansion in fiscal 1998. The Company
has a commitment of a revolving credit facility expiring January 31, 1999 under
which the Company may borrow up to $10,000,000 of additional debt, $5,000,000 as
a revolving credit facility maturing January 31, 1999 and $5,000,000 as a term
loan facility which may mature up to 60 months subsequent to the advance date.
The revolving credit and term loan facilities are secured by liens on the assets
of the Company.
Forward Looking Statements
Forward looking statements in this report reflected as expectations, plans,
prospects or future estimates are subject to the risks and the uncertain- ties
present in the Company's business and the competitive health care market- place
where clients and vendors commonly experience mergers or acquisitions,
reconciliations, volume fluctuations, participant enrollment fluctuations,
changes in member mix or utilization levels, fixed price contracts, contract
disputes, contract modificiations, contract renewals and non-renewals, various
business reasons for delaying contract closings, and the operational challenges
of matching case volume with optimum staffing, having fully trained staff,
having computer and telephonic supported operations, and managing turnover of
key employees and outsourced services to performance standards. While
occurrences of these risks, and others periodically detailed in the Company's
other SEC reports, cannot be predicted exactly, such occurrences can be expected
to have an impact on the Company's anticipated level of revenue growth or
profitability.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 -- Computation of Earnings Per Common Share
Exhibit 27 -- Financial Data Schedule (filed in electronic
format only)
(b) During the three months ended December 31, 1997, there was no
report filed on Form 8-K.
<PAGE>
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 thereunto duly authorized.
Health Risk Management, Inc.
Dated: February 25, 1998 By / s / GARY T. McILROY, M.D.
Gary T. McIlroy, M.D.
Chief Executive Officer
Dated: February 25, 1998 By / s / THOMAS P. CLARK
Thomas P. Clark
Chief Financial Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBIT INDEX
to
FORM 10-Q
For Quarter Ended December 31, 1997
HEALTH RISK MANAGEMENT, INC.
(SEC File No. 0-18902)
Exhibit
Number Exhibit Description
11 Computation of Earnings Per Share
27 Financial Data Schedule
(filed in electronic format only)
EXHIBIT 11
HEALTH RISK MANAGEMENT, INC.
COMPUTATION OF EARNINGS PER SHARE (EPS)
(Unaudited)
<TABLE>
<CAPTION>
Basic EPS Diluted EPS
-----------------------------------------------------------------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
------------------ --------------- --------------- ----------------
1997 1996 1997 1996 1997 1996 1997 1996
------- ------- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
(in thousands)
Earnings for period
indicated $ 645 $ 697 $ 1,217 $ 1,135 $ 645 $ 697 $ 1,217 $ 1,135
======= ====== ======= ======= ====== ====== ======= =======
Number of Shares:
Weighted average
number of shares
of common stock
outstanding 4,502,293 4,221,669 4,499,015 4,202,391 4,502,293 4,221,669 4,499,015 4,202,391
Weighted average
number of shares
of common stock
equivalents -- -- -- -- 112,530 169,421 115,324 156,208
--------- --------- --------- -------- -------- --------- --------- --------
Number of shares
included in per
share computation
for the period
indicated 4,502,293 4,221,669 4,499,015 4,202,391 4,614,823 4,391,090 4,614,339 4,358,599
========== ========= ========= ========= ========= ========= ========= =========
$ 0.14 $ 0.17 $ 0.27 $ 0.27 $ 0.14 $ 0.16 $ 0.26 $ 0.26
========== ========= ========= ========= ========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FROM THE REGISTRANTS FORM 10Q FOR THE QUARTER ENDED
12-31-97 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 5,417
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0
0
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</TABLE>
