<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED AUGUST 31, 1996
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 0-19393
MANAGED CARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 36-3338328
State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
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2510 WEST DUNLAP AVENUE
SUITE 300
PHOENIX, ARIZONA 85021
(Address of principal executive offices)
(Zip Code)
602-943-5660
(Registrant's telephone number, including area code)
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
_______ _______
There were 4,364,712 shares of common stock outstanding as of October 10, 1996.
<PAGE> 2
TABLE OF CONTENTS
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Page
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets.......................................................... 3
Consolidated Statements of Operations................................................ 4
Consolidated Statements of Cash Flows................................................. 5
Notes to Unaudited 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..................................................... 11
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2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
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AUGUST 31, MAY 31,
1996 1996
------------ ------------
(UNAUDITED)
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ASSETS
Current Assets:
Cash and cash equivalents, including restricted cash of $3,740,000 and $3,082,000 $ 3,997,000 $ 3,804,000
Short-term investments 2,131,000 3,000,000
Accounts and notes receivable and unbilled services, net 5,564,000 4,353,000
Related party accounts and notes receivable 93,000 91,000
Prepaid expenses and other current assets 994,000 832,000
Deferred taxes, net 169,000 169,000
------------ ------------
Total current assets 12,948,000 12,249,000
Notes receivable 139,000 139,000
Related party notes receivable 2,781,000 2,783,000
Property and equipment, net 4,726,000 4,147,000
Performance bonds 4,190,000 4,078,000
Goodwill, net 3,466,000 3,534,000
Deferred taxes, net 73,000 73,000
Other assets 596,000 596,000
------------ ------------
$ 28,919,000 $ 27,599,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,525,000 $ 379,000
Accrued medical claims 7,470,000 6,331,000
Risk pool payable 1,907,000 1,646,000
Related party risk pool payable 135,000 117,000
Accrued expenses 4,152,000 3,609,000
Loss contract reserve 110,000 510,000
Due to Medicus Systems Corporation 502,000 647,000
Current portion of long-term debt 451,000 1,650,000
------------ ------------
Total current liabilities 17,252,000 14,889,000
Long-term debt 216,000 267,000
Related party long-term debt 249,000 249,000
------------ ------------
Total liabilities 17,717,000 15,405,000
------------ ------------
Commitments - -
Stockholders' Equity:
Voting preferred stock, $1,000 par value
Authorized, issued and outstanding - 6.85 shares 7,000 7,000
Common stock, $0.01 par value
Authorized - 10,000,000 shares
Issued - 4,365,000 shares 44,000 44,000
Capital in excess of par value 14,310,000 14,310,000
Retained earnings (deficit) (3,159,000) (2,167,000)
------------ ------------
Total stockholders' equity 11,202,000 12,194,000
------------ ------------
$ 28,919,000 $ 27,599,000
============ ============
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3
The accompanying notes are an integral part of these statements
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MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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THREE MONTHS ENDED
------------------------------
AUGUST 31, AUGUST 31,
1996 1995
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Revenues $ 17,535,000 $1,856,000
------------ ----------
Direct cost of operations 14,078,000 1,442,000
Marketing, sales and administrative 4,532,000 298,000
------------ ----------
Total costs and expenses 18,610,000 1,740,000
------------ ----------
Operating income (loss) (1,075,000) 116,000
------------ ----------
Interest expense (36,000) -
Interest income 69,000 51,000
------------ ----------
33,000 51,000
------------ ----------
Income (loss) from continuing operations before income
taxes (1,042,000) 167,000
Provision (benefit) for income taxes (50,000) 14,000
------------ ----------
Income (loss) from continuing operations (992,000) 153,000
Discontinued operations, net of taxes - 340,000
------------ ----------
Net income (loss) $ (992,000) $ 493,000
============ ==========
Income (loss) per share:
Continuing operations $ (0.23) $ 0.07
Discontinued operations - 0.16
------------ ----------
$ (0.23) $ 0.23
============ ==========
Weighted Average Common and Common
Equivalent Shares Outstanding 4,365,000 2,149,000
============ ==========
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4
The accompanying notes are an integral part of these statements
<PAGE> 5
MANAGED CARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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THREE MONTHS ENDED
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AUGUST 31, AUGUST 31,
1996 1995
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Cash flows from operating activities:
Income (loss) from continuing operations $ (992,000) $ 153,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Bad debt expense 567,000 -
Depreciation and amortization 422,000 16,000
Changes in current assets and current liabilities:
Accounts receivable and unbilled services (1,778,000) (360,000)
Prepaid expenses and other current assets (162,000) (40,000)
Accounts payable 2,146,000 11,000
Accrued medical 1,139,000 -
Risk pool payable 261,000 -
Related party risk pool payable 18,000 -
Accrued expenses 543,000 34,000
Loss contract reserve (400,000) -
----------- -----------
Net cash provided by (used in) operating activities 1,764,000 (186,000)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (933,000) (31,000)
Proceeds from maturity/sale of short-term investments 1,369,000 4,000,000
Increases in assets securing performance bond (112,000) -
Purchases of short-term investments (500,000) -
----------- -----------
Net cash (used in) provided by investing activities (176,000) 3,969,000
----------- -----------
Cash flows from financing activities:
Due to Medicus Systems Corporation (145,000) -
Principal payment on long-term debt (1,250,000) -
Purchase of treasury stock - (533,000)
Reissuance of treasury stock - 467,000
Dividends paid - (192,000)
----------- -----------
Net cash (used in) provided by financing activities (1,395,000) (258,000)
----------- -----------
Net increase in cash and cash equivalents 193,000 3,525,000
Cash and cash equivalents, beginning of period 3,804,000 1,475,000
Cash allocated from discontinued operations - 237,000
----------- -----------
Cash and cash equivalents, end of period $ 3,997,000 $ 5,237,000
=========== ===========
</TABLE>
5
The accompanying notes are an integral part of these statements
<PAGE> 6
MANAGED CARE SOLUTIONS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
In management's opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) considered necessary for a fair statement of the results for the
interim periods presented. The results of operations for the period ended August
31, 1996 are not necessarily indicative of the results to be expected for the
full year. The interim consolidated financial statements should be read in
conjunction with Managed Care Solutions, Inc. ("MCS" or "Company") consolidated
financial statements and notes thereto included in the Company's Form 10-K for
the year ended May 31, 1996.
NOTE 2 - MERGERS
The Company as it presently exists is the result of a spinoff and subsequent
merger transactions which occurred on March 1, 1996. Prior to March 1, 1996 the
Company was named Medicus Systems Corporation (the "Predecessor Corporation").
On March 1, 1996, all of the assets of the Predecessor Corporation, other than
those related to its managed care business, were transferred to a wholly owned
subsidiary of the Predecessor Corporation, and all of the shares of that
company, then named Medicus Systems Corporation, were distributed (the
"Distribution") on a share-for-share basis to stockholders of the Predecessor
Corporation. Immediately after the Distribution, the Company, which then
consisted only of the managed care business of the Predecessor Corporation,
effected a one-for-three reverse stock split. Also on March 1, 1996, immediately
after the reverse stock split, the Company acquired three Arizona corporations
engaged in the managed care business through merger transactions (the "Mergers")
pursuant to which each of the Arizona corporations (Managed Care Solutions,
Inc., now named Managed Care Solutions of Arizona, Inc. ("MCSAZ"), Ventana
Health Systems, Inc. ("Ventana") and Arizona Health Concepts, Inc. ("AHC"))
became wholly owned subsidiaries of the Company, and the Company's name was
changed to Managed Care Solutions, Inc.
NOTE 3 - DISCONTINUED OPERATIONS
The software and related lines of business of the Predecessor Corporation that
were separated as of March 1, 1996 are reported as discontinued operations.
Prior years' operating results have also been reclassified to segregate the
discontinued operations. Revenues from discontinued operations were $8,481,000
for the three months ended August 31, 1995.
NOTE 4 - EARNINGS PER SHARE
Income (loss) per common share have been computed by dividing net income (loss)
by the weighted average common equivalent shares outstanding during the period.
Common stock equivalents include shares issuable on the exercise of stock
options and warrants when dilutive, using the treasury stock method from date of
grant. Average shares outstanding and all per share amounts included in the
financial statements and notes thereto have been adjusted retroactively to
reflect the one-for-three reverse stock split effective March 1, 1996.
6
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NOTE 5 - RESTRICTIONS ON FUND TRANSFERS
Certain of the Company's operating subsidiaries are subject to state regulations
which require compliance with certain net worth, reserve and deposit
requirements. To the extent the operating subsidiaries must comply with these
regulations, they may not have the financial flexibility to transfer funds to
the parent organization, MCS. MCS' proportionate share of net assets (after
inter-company eliminations) which, at August 31, 1996, may not be transferred to
MCS by subsidiaries in the form of loans, advances or cash dividends without the
consent of a third party is referred to as "Restricted Net Assets". Total
Restricted Net Assets of these operating subsidiaries was $9,472,000 at August
31, 1996, with deposit and reserve requirements (performance bonds) representing
$2,169,000 of the Restricted Net Assets and net worth requirements, in excess of
deposit and reserve requirements, representing the remaining $7,303,000.
NOTE 6 - SUBSEQUENT EVENTS AND LIQUIDITY
The Company experienced a loss from continuing operations in the three-month
period ended August 31, 1996. Additionally, the Company has negative working
capital of $4,304,000 at August 31, 1996. In an effort to improve its operating
results in the three-month period ended August 31, 1996, the Company reduced its
total workforce by approximately 10%. In addition, the Company has implemented
stringent controls over other expenses. In August 1996, the Company
consolidated its AHC operations by closing two satellite offices in Arizona. The
Company is also planning to relocate its corporate headquarters in an effort to
reduce rent expense and more efficiently utilize the space available.
On October 2, 1996, the Company signed an agreement with Blue Cross and Blue
Shield of Texas, Inc. ("BCBSTX") whereby BCBSTX invested $3,000,000 in the
Company in the form of a convertible secured loan. The loan has an original term
of three years with a renewal option for an additional two years if certain
conditions are met. The loan is initially secured by all of the assets of the
Company. Eligible assets must be maintained pursuant to the pledge agreement
equal to at least 150% of the outstanding balance. The Company can have
collateral released from the pledge with the consent of BCBSTX. The loan bears
interest at a rate of 8% per annum. Principal and interest are payable at the
end of the initial three-year term, and, thereafter, at the end of each annual
extension. The loan is convertible into the Company's common stock at a
conversion price of $3.85 per share. BCBSTX also received a warrant to purchase
100,000 shares of the Company's common stock at an exercise price of $4.45 per
share and has the right of first refusal to participate as an equity partner in
future MCS funding requirements.
In a separate transaction, a trust controlled by William Brown, a director of
MCS, invested $300,000 in the Company through a convertible unsecured loan and
received a warrant to purchase 10,000 shares of MCS common stock. The interest
rate, term, conversion price and warrant exercise price are the same for Mr.
Brown's trust as for BCBSTX, except that interest on the loan is payable
monthly.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion pertains to the managed care business and continuing
operations of the Company. The other business activities, which had been
conducted by the Predecessor Corporation prior to the distribution on March 1,
1996, are separately identified as discontinued operations. Results presented
consist of the Company's managed care business consolidated with the operations
of all three wholly owned subsidiaries (MCSAZ, Ventana and AHC) for the
reporting period since March 1, 1996.
Revenues increased from $1,856,000 for the three months ended August 31, 1995 to
$17,535,000 the comparable period in fiscal 1997, principally as a result of the
Mergers. Revenues for the three months ended August 31, 1996 consisted of
$5,283,000 from fees received for management of health plans not owned by the
Company and $12,252,000 from capitation revenue received by Ventana and AHC.
Management fee revenue increased 185% for the three months ended August 31, 1996
over the comparable period in the prior year due to an increase in rates and
services provided on contracts in existence at June 1, 1995 (11% of the
increase), the addition of new contracts (29% of the increase) and revenues
generated by contracts managed by MCSAZ since the effective date of the Mergers
(60% of the increase).
The most significant new contract revenue growth occurred as a result of a
contract that commenced December 1995 with Colorado Access to administer its
Medicaid and indigent acute care program. At the same time, the Company
incurred significant operating losses attributable to the Colorado Access
contract in the third and fourth quarters of fiscal 1996 as a result of a rate
reduction and start-up expenses. The contract included a significant rate
reduction when membership reached the 40,000 membership level. Colorado Access
achieved a 42,000 membership level in its third month of operation. It was
originally estimated that the program would not reach this membership level for
two years, at which time the cost to administer this program would have
decreased significantly.
After unsuccessful attempts to negotiate a rate increase, the Company notified
Colorado Access in July 1996 that it was terminating the contract. It was
mutually agreed that the Company would assist in a timely transfer of management
operations to Colorado Access. In return, Colorado Access agreed that the
Company would incur no further losses on this contract from the notice date
until the transfer is completed, which is anticipated to occur by October 31,
1996.
Ventana is the Company's long term care Medicaid HMO that provided services in
eight Arizona counties under a contract that expired September 30, 1996. In July
1996, Ventana was awarded a five year contract for seven counties, which
commenced October 1, 1996.
AHC, the Company's acute care Medicaid HMO in Arizona, is operating under a
three-year contract (October 1994 through September 1997) that had intense
pricing competition during the bidding process. The agreed upon rates have
resulted in AHC, as well as several other HMO plans participating in this
program, incurring operating losses. Arizona Health Care Cost Containment
System Administration ("AHCCCSA") has increased capitation rates for the
third year of the contract by approximately 5%, which began October 1, 1996.
However, AHCCCSA also increased hospital rates in counties served by AHC by
approximately 7%. The Company is unable to determine, at this time, whether
these rate changes, combined with planned improvements in medical expense
costs currently anticipated, will reduce or eliminate operating losses at
AHC or the extent of any such improvements in results.
8
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In conjunction with the acquisition of AHC, the Company recorded a loss contract
reserve of $542,000, including anticipated contract losses of $440,000 for the
period June 1, 1996 to September 30, 1996. Subsequent to the effective date of
the Mergers, the Company has charged operating losses incurred against this
reserve. As a result, these contract losses are not fully reflected in the
Company's operating results for the periods presented.
During the three-month period ended August 31, 1996, AHC generated revenues of
$6,002,000, and at August 31, 1996, AHC had a net deficit of $1,591,000. The
Company, under this contract is obligated to fund this deficit or find other
alternatives acceptable to AHCCCSA by November 27, 1996. There can be no
assurance at this time that the Company will provide such funds or find other
alternatives acceptable to AHCCCSA.
AHC has been notified by one of its subcontractors that the subcontractor is
significantly behind in paying claims received from providers for services
rendered to AHC members. The subcontractor currently owes approximately
$1,600,000 for such claims and contends that, in spite of a lack of cash, it
will be able to satisfy all related obligations. In the event this subcontractor
cannot fulfill these obligations, AHC could be held liable for payment. AHC is
aggressively pursuing payment of these claims by the subcontractor.
Direct cost of operations increased to $14,078,000 for the three-month period
ended August 31, 1996 from $1,442,000 for the comparable period in fiscal 1996.
Direct cost of operations for the three-month period ended August 31, 1996
consisted of $2,914,000 related to fees generated from management of health
plans not owned by the Company and $11,164,000 from Ventana and AHC. The direct
cost of operations to manage plans as a percentage of related revenue increased
from 78% for the three-month period ended August 31, 1995 to 82% for the
comparable period in fiscal 1997 primarily as a result of the Colorado Access
contract.
The direct costs of Ventana and AHC, respectively, as a percentage of related
revenue for the period from the date of acquisition to August 31, 1996 were 88%
and 98%.
Marketing, sales and administrative expenses increased from $298,000 for the
three-month period ended August 31, 1995 to $4,532,000 for the comparable period
in fiscal 1997. This increase is primarily the result of the additional
marketing, sales and administrative activities of MCSAZ, Ventana and AHC
subsequent to the effective date of the Mergers.
Interest income for the three-month period ended August 31, 1996 was $69,000,
which is primarily related to investments held by Ventana and AHC subsequent to
the effective date of the Merger. For the comparable period in fiscal 1996,
interest income was $51,000 related to short-term investments of the Company.
The income tax benefit for the three months ended August 31, 1996 is the result
of the Company carrying back the losses generated by the parent entity against
income generated in prior periods. The current subsidiaries' losses can only be
utilized against taxable income of the consolidated group subsequent to the
effective date of the Mergers. A tax valuation allowance has been provided
against any such losses recognized in the current fiscal year quarter as their
realizability is not certain. The variation in the tax rate between the three
months ended August 31, 1996 and the comparable prior year period is primarily
due to nondeductible goodwill amortization and the valuation allowance for the
net operating losses of the subsidiaries.
Income (loss) from continuing operations was ($992,000) for the three-month
period ended August 31, 1996 versus $153,000 for the comparable period in fiscal
1996. The primary reasons for the change in profitability were costs related to
terminating contracts in Colorado, Illinois, and Missouri and cost associated
with terminated employees as part of the workforce reduction effort in July
1996.
9
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LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended August 31, 1996, the Company's cash and cash
equivalents increased $193,000 to $3,997,000 at August 31, 1996, including an
increase in restricted cash of $658,000. Operating activity provided $1,764,000
for the three-month period ended August 31 1996 versus using $186,000 for the
comparable period in fiscal 1996. The primary cause for the change was the
growth in current liabilities partially offset by the loss from continuing
operations and growth in accounts receivable.
Investing activities used $176,000 for the three-month period ended August 31,
1996 versus providing $3,969,000 for the comparable period in fiscal 1996.
Sources of cash consisted of proceeds from the maturity of investments. Cash was
used to purchase $933,000 of property and equipment primarily for the Michigan,
Indiana and Colorado contracts.
Financing activities used $1,395,000 for the three-month period ended August 31,
1996 versus $258,000 for the comparable period in fiscal 1996. Principal payment
on long-term debt in fiscal 1997 was the primary use of funds, while treasury
stock activity and dividend payments were the primary use of funds for the
comparable period in fiscal 1996.
Certain of the Company's operating subsidiaries are subject to state regulations
which require compliance with certain net worth, reserve and deposit
requirements. To the extent the operating subsidiaries must comply with these
regulations, they may not have the financial flexibility to transfer funds to
MCS. MCS' proportionate share of net assets (after inter-company eliminations)
which, at August 31, 1996, may not be transferred to MCS by subsidiaries in the
form of loans, advances or cash dividends without the consent of a third party
is referred to as "Restricted Net Assets". Total Restricted Net Assets of these
operating subsidiaries was $9,472,000 at August 31, 1996, with deposit and
reserve requirements (performance bonds) representing $2,169,000 of the
Restricted Net Assets and net worth requirements, in excess of deposit and
reserve requirements, representing the remaining $7,303,000. Ventana provided
funds to MCS under loan agreements totaling $2,361,000 at August 31, 1996. All
such agreements were pre-approved as required by AHCCCSA.
The Company experienced a loss from continuing operations in the three-month
period ended August 31, 1996. Additionally, the Company has negative working
capital of $4,304,000 at August 31, 1996. In an effort to improve its operating
results in the three-month period ended August 31, 1996, the Company reduced its
total workforce by approximately 10%, which is expected to result in an
estimated annual savings of $1,700,000. In addition, the Company has implemented
stringent controls over other expenses. In August, the Company consolidated its
AHC operations by closing two satellite offices in Arizona. The closure of these
two offices is expected to result in estimated savings of $240,000 annually and,
by bringing these operations into one facility, is also expected to improve
controls over medical expenses. There can be no assurance as to the amount of
savings which will actually result from the actions described above.
The Company is planning to relocate its corporate headquarters elsewhere in the
Phoenix area where it can reduce rent expense, as well as more efficiently
utilize the space available. The Company's existing leases on its corporate
headquarters will expire in January 1997.
10
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On October 2, 1996, the Company signed an agreement with BCBSTX whereby BCBSTX
invested $3,000,000 in the Company in the form of a convertible secured loan.
The loan has an original term of three years with a renewal option for an
additional two years if certain conditions are met. The loan is initially
secured by all of the assets of the Company. Eligible assets must be maintained
pursuant to the pledge agreement equal to at least 150% of the outstanding
balance. The Company can have collateral released from the pledge with the
consent of BCBSTX. The loan bears interest at a rate of 8% per annum. Principal
and interest are payable at the end of the initial three-year term, and,
thereafter, at the end of each annual extension. The loan is convertible into
the Company's common stock at a conversion price of $3.85 per share. BCBSTX also
received a warrant to purchase 100,000 shares of the Company's common stock at
an exercise price of $4.45 per share and has the right of first refusal to
participate as an equity partner in future MCS funding requirements.
In a separate transaction, a trust controlled by William Brown, a director of
MCS, invested $300,000 in the Company through a convertible unsecured loan and
received a warrant to purchase 10,000 shares of MCS common stock. The interest
rate, term, conversion price and warrant exercise price are the same for Mr.
Brown's trust as for BCBSTX, except that interest on the loan is payable
monthly.
In April 1996, the Company entered into an agreement with Community Health
Care, Inc. (CHCI) pursuant to which the Company became a 49% owner in Choice, a
new HMO being developed in Illinois. The Company had undertaken to develop the
HMO, provide the capital to purchase equipment for the plan and provide the
equity capital necessary to apply for the HMO license. The equity capital
requirement was met in April when the Company loaned Choice $2,000,000 in the
form of a seven year note. These funds are being held in an escrow account,
pursuant to an escrow agreement that provides for the return of the $2,000,000
to MCS if the HMO license is not awarded by October 31, 1996. It is the
Company's opinion that existing capitation and hospital rates will not allow
this plan to be financially viable. Therefore, the Company has notified Choice
that Choice should be dissolved, the Company's relationship with Choice
terminated and the $2,000,000 loan repaid. Choice is currently reviewing its
options. There can be no assurance as to when, or if, the loan will be repaid.
In June 1996, the Company formed a limited liability corporation with Benova,
Inc., a privately held for-profit company located in Portland, Oregon that
provides benefits enrollment services. The limited liability corporation, known
as Benova Managed Care Solutions (BMCS) has submitted a bid to the State of New
York to administer enrollment broker, member education and information services
to over one million Medicaid recipients to be enrolled into managed care plans.
The Company will own 65% of BMCS and is required to provide initial
capitalization estimated to be $1,500,000 for capital equipment and working
capital. There can be no assurance at this time that the Company will be able to
provide such funds. BMCS is one of two finalists bidding on the Contract which
is expected to be awarded before the end of calendar 1996.
The Company believes that, based on its current projections and the completion
of the BCBSTX transaction, its cash and capital resources should be sufficient
to meet its financial requirements in fiscal 1997. The Company will continue its
effort to increase revenues, renegotiate existing agreements and minimize
operating costs. However, the Company can make no assurances that it will meet
its current projections.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
(27) Financial Data Schedule
(b)Reports on Form 8-K
None
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MANAGED CARE SOLUTIONS, INC.
By: /s/ James A. Burns
_____________________________________________________
James A. Burns, President and Chief Executive Officer
By: /s/ Michael J. Kennedy
_____________________________________________________
Michael J. Kennedy, Chief Financial Officer
Dated: October 15, 1996
12
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-1-1996
<PERIOD-END> AUG-31-1996
<EXCHANGE-RATE> 1
<CASH> 3,997,000
<SECURITIES> 2,131,000
<RECEIVABLES> 6,724,000
<ALLOWANCES> 1,160,000
<INVENTORY> 0
<CURRENT-ASSETS> 12,948,000
<PP&E> 5,603,000
<DEPRECIATION> 877,000
<TOTAL-ASSETS> 28,919,000
<CURRENT-LIABILITIES> 17,252,000
<BONDS> 465,000
0
7,000
<COMMON> 44,000
<OTHER-SE> 11,151,000
<TOTAL-LIABILITY-AND-EQUITY> 28,919,000
<SALES> 17,535,000
<TOTAL-REVENUES> 17,535,000
<CGS> 0
<TOTAL-COSTS> 14,078,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,000
<INCOME-PRETAX> (1,042,000)
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</TABLE>
