<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CHECK ONE FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1997
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSACTION PERIOD FROM _________ TO _________.
AMERICAN HOMEPATIENT, INC.
--------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 0-19532 62-1474680
- ------------------------------ ----------- -------------------------------
STATE OR OTHER JURISDICTION OF (COMMISSION (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) FILE NUMBER)
</TABLE>
5200 MARYLAND WAY, SUITE 400, BRENTWOOD, TENNESSEE 37027
--------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(615) 221-8884
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
--------------------------------------------------
(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
----- -----
14,781,064
-----------------------------------------------------------------
(OUTSTANDING SHARES OF THE ISSUER'S COMMON STOCK AS OF MAY 7, 1997)
TOTAL NUMBER OF SEQUENTIALLY
NUMBERED PAGES IS 18
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN HOMEPATIENT, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
ASSETS
December 31, March 31,
1996 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7,299,000 $ 3,025,000
Restricted cash 425,000 50,000
Accounts receivable, less allowance for doubtful accounts of
$18,755,000 and $22,324,000, respectively 79,460,000 92,648,000
Inventories 21,921,000 25,167,000
Prepaid expenses and other assets 1,353,000 2,283,000
Income tax receivable 872,000 --
Deferred tax asset 7,470,000 7,470,000
------------- -------------
Total current assets 118,800,000 130,643,000
------------- -------------
PROPERTY AND EQUIPMENT, at cost 95,254,000 106,967,000
Less accumulated depreciation and amortization (38,384,000) (43,696,000)
------------- -------------
Net property and equipment 56,870,000 63,271,000
------------- -------------
OTHER ASSETS
Excess of cost over fair value of net assets acquired, net 198,193,000 220,255,000
Investment in unconsolidated joint ventures 12,405,000 14,038,000
Deferred costs, net 2,761,000 2,596,000
Other assets 6,582,000 8,841,000
------------- -------------
Total other assets 219,941,000 245,730,000
------------- -------------
$ 395,611,000 $ 439,644,000
============= =============
</TABLE>
(Continued)
2
<PAGE> 3
AMERICAN HOMEPATIENT, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1996 1997
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt and capital leases $ 10,245,000 $ 9,189,000
Trade accounts payable 8,698,000 6,301,000
Income taxes payable -- 762,000
Other payables 775,000 760,000
Accrued expenses:
Payroll and related benefits 6,672,000 4,628,000
Other 8,398,000 7,211,000
------------- -------------
Total current liabilities 34,788,000 28,851,000
------------- -------------
NONCURRENT LIABILITIES
Long-term debt and capital leases, less current portion 139,458,000 182,967,000
Deferred income taxes 4,578,000 4,574,000
Other noncurrent liabilities 1,145,000 1,153,000
------------- -------------
Total noncurrent liabilities 145,181,000 188,694,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; authorized 5,000,000
shares; none issued and outstanding -- --
Common stock, $.01 par value; authorized 35,000,000
shares; issued and outstanding, 14,677,000 and 14,779,000
shares, respectively 147,000 148,000
Paid-in capital 166,780,000 168,598,000
Retained earnings 48,715,000 53,353,000
------------- -------------
Total stockholders' equity 215,642,000 222,099,000
------------- -------------
$ 395,611,000 $ 439,644,000
============= =============
</TABLE>
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these statements.
3
<PAGE> 4
AMERICAN HOMEPATIENT, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------
1996 1997
---- ----
<S> <C> <C>
REVENUES:
Sales and related service revenues $ 24,491,000 $ 39,033,000
Rentals and other revenues 29,432,000 43,807,000
Earnings from joint ventures 1,130,000 1,746,000
------------- -------------
Total revenues 55,053,000 84,586,000
------------- -------------
EXPENSES:
Cost of sales and related services 12,297,000 19,004,000
Operating 27,747,000 43,965,000
General and administrative 3,437,000 3,852,000
Depreciation and amortization 4,945,000 7,229,000
Interest 1,855,000 2,908,000
------------- -------------
Total expenses 50,281,000 76,958,000
------------- -------------
INCOME FROM OPERATIONS BEFORE INCOME TAX 4,772,000 7,628,000
PROVISION FOR INCOME TAXES 1,842,000 2,990,000
------------- -------------
NET INCOME $ 2,930,000 $ 4,638,000
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 11,993,000 15,065,000
INCOME PER SHARE $ 0.24 $ 0.31
============= =============
</TABLE>
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these statements.
4
<PAGE> 5
AMERICAN HOMEPATIENT, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------
1996 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from operations $ 2,930,000 $ 4,638,000
Adjustments to reconcile net income from operations
to net cash provided from operating activities:
Depreciation and amortization 4,945,000 7,229,000
Equity in earnings of unconsolidated joint ventures (661,000) (938,000)
Minority interest 30,000 49,000
Change in assets and liabilities, net of effects
from acquisitions:
Receivables, net (4,303,000) (8,249,000)
Restricted cash -- 375,000
Inventories 452,000 (487,000)
Prepaid expenses and other (916,000) (901,000)
Income taxes payable 1,608,000 1,804,000
Trade accounts payable, accrued expenses
and other current liabilities (3,658,000) (6,810,000)
Other assets (66,000) (508,000)
------------- -------------
Net cash provided from (used in) operating activities 361,000 (3,798,000)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (18,402,000) (29,426,000)
Additions to property and equipment, net (4,932,000) (7,704,000)
Distributions from (advances to)
unconsolidated joint ventures, net (902,000) (695,000)
Distributions to minority interest owners -- (41,000)
------------- -------------
Net cash used in investing activities (24,236,000) (37,866,000)
------------- -------------
</TABLE>
(Continued)
5
<PAGE> 6
AMERICAN HOMEPATIENT, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------
1996 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt and capital leases (1,308,000) (3,176,000)
Proceeds from issuance of debt 27,300,000 39,600,000
Proceeds from exercise of stock options 1,291,000 995,000
Deferred financing costs (62,000) (29,000)
------------- -------------
Net cash provided from financing activities 27,221,000 37,390,000
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,346,000 (4,274,000)
CASH AND CASH EQUIVALENTS, beginning of period 4,224,000 7,299,000
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 7,570,000 $ 3,025,000
============= =============
SUPPLEMENTAL INFORMATION:
Cash payments of interest $ 1,914,000 $ 2,777,000
============= =============
Cash payments of income taxes $ 461,000 $ 1,786,000
============= =============
</TABLE>
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these statements.
6
<PAGE> 7
AMERICAN HOMEPATIENT, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
1. ORGANIZATION AND BACKGROUND:
The registrant is a health care services company engaged in the
provision of home health care services. The Company's home health care
services consist primarily of the provision of respiratory and infusion
therapies and the rental and sale of home medical equipment and home
health care supplies. For the three months ended March 31, 1997, such
services represented 48%, 18% and 34%, respectively, of net revenues. As
of March 31, 1997, the Company provided these services to patients
primarily in the home through 312 centers in Alabama, Arizona, Arkansas,
Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Iowa,
Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina,
Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas,
Virginia, West Virginia and Wisconsin.
2. NET INCOME PER SHARE:
Net income per share is based on the weighted average number of the
Company's common and common equivalent shares outstanding or subscribed
which pertain to the respective operations included in each period.
Common stock equivalents result from stock options issued to management,
employees, and directors as well as from warrants to acquire common
shares issued by the Company, and are determined using the treasury
stock method.
Statement of Financial Accounting Standards No. 128, "Earnings per
Share", ("SFAS 128"), has been issued effective for fiscal periods
ending after December 15, 1997. SFAS No. 128 establishes standards for
computing and presenting earnings per share. The Company is required to
adopt the provisions of SFAS No. 128 in the fourth quarter of 1997.
Under the standards established by SFAS 128, earnings per share is
measured at two levels: basic earnings per share and diluted earnings
per share. Basic earnings per share is computed by dividing net income
by the weighted average number of common shares outstanding during the
year. Diluted earnings per share is computed by dividing net income by
the weighted average number of common shares after considering the
additional dilution related to preferred stock, convertible debt,
options and warrants.
The following pro forma amounts present the basic earnings per share and
diluted earnings per share as if the Company had adopted SFAS 128 for
the quarters presented:
<TABLE>
<CAPTION>
(Unaudited Pro Forma)
----------------------------
Three Months Ended March 31,
----------------------------
1996 1997
---- ----
<S> <C> <C>
BASIC EARNINGS PER SHARE $0.25 $0.31
----- -----
DILUTED EARNINGS PER SHARE $0.24 $0.31
----- -----
</TABLE>
7
<PAGE> 8
3. BASIS OF FINANCIAL STATEMENTS:
The interim condensed consolidated financial statements of the Company
for the three months ended March 31, 1997 and 1996 included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. 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. In the opinion of management of the Company, the
accompanying unaudited interim consolidated financial statements reflect
all adjustments (consisting of only normally recurring accruals)
necessary to present fairly the financial position at March 31, 1997 and
the results of operations and the cash flows for the three months ended
March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997 and
1996 are not necessarily indicative of the operating results for the
entire respective years. These interim consolidated financial statements
should be read in conjunction with the audited financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
8
<PAGE> 9
4. ACQUISITIONS:
During 1997 and effective through March 31, 1997, the Company acquired
10 home health care companies for total consideration of approximately
$24.0 million, including cash, satisfaction of certain liabilities, and
notes payable issued to sellers with combined annualized revenue of
approximately $22.0 million.
Since January 1, 1996 and effective through March 31, 1997, American
HomePatient has acquired 50 home health care companies.
The terms of the 1996 and 1997 acquisitions, including the consideration
paid, were the result of arm's-length negotiations. The acquisitions
were funded via a combination of cash from Company reserves,
seller-financed notes, and draws on the Company's Bank Credit Facility
(see below).
On May 1, 1996, the Company entered into a Second Amended and Restated
Bank Credit Facility ("Bank Credit Facility") to increase commitments
thereunder to $225.0 million. This Facility includes a $100.0
million five-year term loan and a $125.0 million five-year revolving
line of credit. The various financial and operating covenants are
substantially similar to those under the first amended and restated
Bank Credit Facility. Borrowings under the Bank Credit Facility may be
used for acquisitions and other general corporate purposes, subject to
the terms and conditions of the respective credit and security
agreements. Most of the Company's operating assets have been pledged as
security for borrowings under the Bank Credit Facility. The Bank Credit
Facility contains various financial covenants, the most restrictive of
which relate to measurements of shareholders' equity, leverage ratios,
and interest coverage ratios.
9
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RISK FACTORS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company hereby values
reference to items set forth under the heading "Risk Factors" in the
Company's Registration Statement on Form S-2, as amended (Registration
No. 33-89568). Such cautionary statements identify important facts that
could cause the Company's actual results to differ materially from
those projected in forward looking statements made by or on behalf of
the Company in this or any other section of this Form 10-Q.
GENERAL
The Company's home health care services consist primarily of the
provision of home respiratory therapy, the provision of home infusion
therapy and the rental and sale of home medical equipment and supplies.
These services and products are paid for primarily by Medicare, Medicaid
and other third-party payors. The following table sets forth the
percentage of the Company's net revenues represented by each line of
business for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1997
<S> <C> <C>
Home respiratory therapy services 52% 48%
Home infusion therapy services 19 18
Home medical equipment and medical supplies 29 34
---- ----
Total 100% 100%
==== ====
</TABLE>
The Company reports its net revenues as follows: (i) sales and related
services; (ii) rentals and other; and (iii) earnings from hospital joint
ventures. Sales and related services revenues are derived from the
provision of infusion therapies, the sale of home health care equipment
and supplies, the sale of aerosol and respiratory therapy equipment and
supplies and services related to the delivery of these products. Rentals
and other revenues are derived from the rental of home health care
equipment, enteral pumps and equipment related to the provision of
respiratory therapies. Because the Company's hospital joint ventures are
not consolidated for financial statement reporting purposes, earnings
from hospital joint ventures represent the Company's equity in earnings
and management and administrative fees for unconsolidated hospital joint
ventures. Cost of sales and related services includes the cost of
equipment, drugs and related supplies sold to patients. Operating
expenses include center labor costs, delivery expenses, occupancy costs,
costs related to rentals other than depreciation, billing center costs,
other operating costs and provision for doubtful accounts. General and
administrative expenses include corporate and area management expenses
and costs.
Since its inception, the Company has experienced substantial growth.
This growth is primarily attributable to the Company's pursuit of an
acquisition strategy targeting successful, operating home health care
businesses, through both 100% ownership and joint venture partnerships.
Since the Company's initial public offering in November 1991, the
Company has expanded operations from 24 home health care centers in four
states to 312 home health care centers in 32 states as of March 31,
1997. The Company acquired 40 home health care companies during 1996 and
10 companies during the three months ended March 31, 1997. The Company
continues its integration of recently acquired home health care centers.
The Company's experience and management expertise is applied wherever
possible to improve the operating efficiency of the new centers. Quality
methods and ideas from the acquired centers become part of the systems
and procedures of the combined Company. Profitable services
10
<PAGE> 11
that were not formerly provided are being added where such
opportunities exist. As the Company grows, economies of scale are
realized in purchasing goods and services used in the Company's business
and, to some extent, its management of overhead expenses.
MEDICARE REIMBURSEMENT FOR OXYGEN THERAPY SERVICES
In the fall of 1995, Congress proposed reductions in the Medicare
reimbursement rate for home oxygen therapy service and equipment, which
legislation was vetoed by President Clinton. Despite the presidential
veto, Congress continues to consider legislation affecting reimbursement
of these items, and President Clinton's proposed budget for 1998
includes a provision that would require Medicare to obtain competitive
bidding for all clinical laboratory services, home medical equipment
(including home oxygen) and orthotics. Consequently, Medicare
reimbursement rates for oxygen services and equipment could be reduced.
The Company cannot be certain of the timing or level of reductions for
Medicare oxygen reimbursement, if any. Any such reductions could have
a material adverse effect on the operating results and cash flows of
the Company.
RESULTS OF OPERATIONS
The following table and discussion set forth, for the periods indicated,
the percentage of net revenues represented by the respective financial
items:
PERCENTAGE OF NET REVENUES
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1997
---- ----
<S> <C> <C>
Net revenues 100.0% 100.0%
Costs and expenses:
Cost of sales and related services 22.3 22.5
Operating expenses 50.4 52.0
General and administrative 6.2 4.6
Depreciation and amortization 9.0 8.5
Interest 3.4 3.4
------ ------
Total costs and expenses 91.3% 91.0%
------ ------
Income from operations before income taxes 8.7% 9.0%
====== ======
</TABLE>
The operations of acquired centers are included in the operations of the
Company from the effective date of each acquisition. Because of the
substantial acquisition activity, the comparison of the results of
operations between 1997 and 1996 is materially impacted by the
operations of these acquired businesses. For comparative purposes, the
Company separates operations into "same-store" and "acquisitions." An
acquired center becomes "same-store" beginning with its thirteenth month
of operations as part of the Company.
11
<PAGE> 12
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1996
NET REVENUES. Net revenues increased from $55.1 million for the quarter
ended March 31, 1996 to $84.6 million for the same period in 1997, an
increase of $29.5 million, or 54%. Same-store net revenues, including
net revenues of same-store hospital joint ventures managed by the
Company and accounted for under the equity method, increased 9%. Net
revenues of same-store hospital joint ventures contributed 3% to this
total same-store net revenue growth rate. Following is a discussion of
the components of net revenues:
Sales and Related Services Revenues. Sales and related services
revenues increased from $24.5 million for the quarter ended March
31, 1996 to $39.0 million for the same period in 1997, an increase
of $14.5 million, or 59%. This increase is primarily attributable
to the acquisition of home health care businesses.
Rentals and Other Revenue. Rentals and other revenues increased
from $29.4 million for the quarter ended March 31, 1996 to $43.8
million for the same period in 1997, an increase of $14.4 million,
or 49%. This increase is primarily attributable to the acquisition
of home health care businesses.
Earnings from Hospital Joint Ventures. Earnings from hospital joint
ventures increased from $1.1 million for the quarter ended March
31, 1996 to $1.7 million for the same period in 1997, an increase
of $600,000, or 55%. Of this increase, $512,000 was attributable to
net growth in the Company's existing hospital joint ventures.
COST OF SALES AND RELATED SERVICES. Cost of sales and related services
increased from $12.3 million for the quarter ended March 31, 1996 to
$19.0 million for the same period in 1997, an increase of $6.7 million,
or 54%. As a percentage of sales and related services revenues, cost of
sales and related services decreased from 50% to 49%. This decrease is
attributable to favorable pricing the Company has been able to negotiate
with certain product vendors offset in part by a change in the mix of
sales and related services revenues attributable primarily to the
acquired home health care businesses.
OPERATING EXPENSES. Operating expenses increased from $27.7 million for
the quarter ended March 31, 1996 to $44.0 million for the same period in
1997, an increase of $16.3 million, or 59%. This increase was primarily
attributable to increased costs associated with acquisitions.
As a percentage of net revenues, operating expenses increased from
50.4% to 52.0%. This increase was attributable to the inclusion of
certain expenses which were classified as general and administrative
expenses for the quarter ended March 31, 1996 but were classified as
operating expenses for the quarter ended March 31, 1997. As a percent
of net revenue, combined operating and general and administrative
expenses remained constant at 56.6%.
GENERAL AND ADMINISTRATIVE. General and administrative expenses
increased from $3.4 million for the quarter ended March 31, 1996 to $3.9
million for the same period in 1997, an increase of $500,000, or 15%.
This increase was primarily attributable to increases in expenses
associated with the acquired home health care businesses and to
increases in
12
<PAGE> 13
corporate office general and administrative expenses. As a
percentage of net revenues, general and administrative expenses have
decreased from 6.2% to 4.6%. This decrease was attributable to the
exclusion of certain expenses which were classified as general and
administrative for the quarter ended March 31, 1996 but were classified
as operating expenses for the quarter ended March 31, 1997. As a
percentage of net revenue, combined operating and general and
administrative expenses remained constant at 56.6%.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased from $4.9 million for the quarter ended March 31, 1996 to $7.2
million for the same period in 1997, an increase of $2.3 million or
47%. This increase in depreciation and amortization expenses is
primarily attributable to the acquired home health care businesses.
INTEREST. Interest expense increased from $1.9 million for the quarter
ended March 31, 1996 to $2.9 million for the same period in 1997, an
increase of $1.0 million or 53%. The increase was primarily due to
interest expense associated with increased borrowings used to fund
acquisitions of home health care businesses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company's working capital was $101.8 million and
the current ratio was 4.5x as compared to working capital of $84.0
million and a current ratio of 3.4x at December 31, 1996. The Company
had current maturities of long-term debt and capital leases of
approximately $9.2 million at March 31, 1997.
The Company's future liquidity will continue to be dependent upon the
relative amounts of current assets (principally cash, accounts
receivable and inventories) and current liabilities (principally
accounts payable, and accrued expenses). In that regard, accounts
receivable can have a significant impact on the Company's liquidity.
Accounts receivable are generally outstanding for longer periods of time
in the health care industry than many other industries because of
requirements to provide third party payors with additional information
subsequent to billing and the time required by such payors to process
claims. Certain accounts receivable frequently are outstanding for more
than 90 days, particularly where the account receivable relates to
services for a patient (i) receiving a new medical therapy or (ii)
covered by Medicare or Medicaid. Net patient accounts receivable were
$76.1 million and $87.5 million at December 31, 1996 and March 31, 1997,
respectively. This increase was primarily attributable to the
acquisition of home health care businesses in the first quarter of 1997.
This represented an average of approximately 93 and 96 days' sales in
accounts receivable at December 31, 1996 and March 31, 1997,
respectively.
Net cash provided from operating activities was $361,000 and net cash
used in operating activities was $3.8 million for the three months ended
March 31, 1996 and 1997, respectively. These amounts primarily represent
net income plus depreciation and amortization and provisions for
doubtful accounts and changes in the various components of working
capital. Net cash used in investing activities was $24.2 million and
$37.9 million for the three months ended March 31, 1996 and 1997,
respectively. These amounts primarily represent acquisitions of home
health care businesses and property and equipment additions. Net cash
provided from financing activities was $27.2 million and $37.4 million
for the three months ended March 31, 1996 and 1997, respectively. These
amounts primarily represent
13
<PAGE> 14
proceeds from the issuance of long-term debt, the issuance of common
stock due to stock option exercises, and principal repayments on debt.
The Company has budgeted capital expenditures of approximately $29.0
million for 1997 primarily for purchases of home health care rental
equipment and routine capital purchases at its regional and corporate
offices. Through March 31, 1997, $7.7 million of capital expenditures
had been incurred.
The Company's principal capital requirements are for acquisitions of
additional home health care companies and expansion of the services
provided through its existing home health care centers. The Company has
financed and intends to continue to finance these requirements, its net
revenue growth, and working capital needs with net cash provided by
operations and with borrowings under the Bank Credit Facility. On May 1,
1996, the Company amended and restated the Bank Credit Facility to
increase commitments thereunder to $225.0 million. The Bank Credit
Facility includes a $100.0 million five-year term loan and a $125.0
million five-year revolving line of credit. Borrowings under the Bank
Credit Facility may be used to finance acquisitions and for other
general corporate purposes, subject to the terms and conditions of the
credit and security agreements. Most of the Company's operating assets
have been pledged as security for borrowings under the Bank Credit
Facility. Interest is payable on borrowings under the Bank Credit
Facility, at the election of the Company, at either a "Base Lending
Rate" or an "Adjusted Eurodollar Rate" (each as defined in the Bank
Credit Facility), plus a margin from 0% to 1.00% and from 0.5% to 2.00%,
respectively. The Company's ability to borrow under the Bank Credit
Facility terminates on May 1, 2001, subject to exceptions set forth
therein. As of March 31, 1997 the weighted average borrowing rate was
6.78%. A commitment fee of up to .375% per annum (.25% as of March 31,
1997) is payable by the Company on the undrawn balance. The interest
rate and commitment fee vary depending on the Company's ratio of total
debt to adjusted pro forma earnings before interest, taxes, depreciation
and amortization, as such ratio is defined in the Bank Credit Facility.
The Bank Credit Facility contains various financial covenants, the most
restrictive of which relate to measurements of stockholders' equity,
leverage ratios and interest coverage ratios. The Bank Credit Facility
also contains certain covenants which, among other things, impose
certain limitations or prohibitions on the Company with respect to the
incurrence of certain indebtedness, the creation of security interest on
the assets of the Company, the payment of dividends on and the
redemption or repurchase of securities of the Company, investments,
acquisitions, investments in joint ventures, capital expenditures and
sales of Company assets. The Company must generally obtain bank consent
for any single acquisition with an aggregate purchase price of $20.0
million or more, and any acquisition which, when combined with all
acquisitions completed in the prior 12 months, exceeds $80.0 million and
certain other transactions. The Company was in compliance with these
covenants at March 31, 1997.
14
<PAGE> 15
IMPLEMENTATION OF FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("SFAS 128") has been issued effective for fiscal periods ending
after December 15, 1997. SFAS 128 establishes standards for computing
and presenting earnings per share. The Company is required to adopt the
provisions of SFAS 128 in the fourth quarter of 1997 and does not expect
adoption thereof to have a material effect on the Company's financial
position or results of operations.
Summary
Management believes that available cash, the funding available under the
Bank Credit Facility and any expansion thereto, and funds generated from
operations will be sufficient for the Company to satisfy its capital
expenditures, acquisition activities, working capital and debt
requirements for the next twelve months.
15
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits. The exhibits filed as part of this Report are listed on
the Index to Exhibits immediately following the signature page.
(B) Reports on Form 8-K. None.
16
<PAGE> 17
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.
AMERICAN HOMEPATIENT, INC.
May 14, 1997 By: /s/Mary Ellen Rodgers
----------------------------------------------
Mary Ellen Rodgers
Chief Financial Officer and An Officer Duly
Authorized to Sign on Behalf of the registrant
17
<PAGE> 18
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
27 Financial Data Schedule (for SEC use only)
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN HOMEPATIENT, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,025,000
<SECURITIES> 0
<RECEIVABLES> 114,972,000
<ALLOWANCES> 22,324,000
<INVENTORY> 25,167,000
<CURRENT-ASSETS> 130,643,000
<PP&E> 106,967,000
<DEPRECIATION> 43,696,000
<TOTAL-ASSETS> 439,644,000
<CURRENT-LIABILITIES> 28,851,000
<BONDS> 192,156,000
0
0
<COMMON> 148,000
<OTHER-SE> 221,951,000
<TOTAL-LIABILITY-AND-EQUITY> 439,644,000
<SALES> 39,033,000
<TOTAL-REVENUES> 84,586,000
<CGS> 19,004,000
<TOTAL-COSTS> 19,004,000
<OTHER-EXPENSES> 55,046,000
<LOSS-PROVISION> 3,486,000
<INTEREST-EXPENSE> 2,908,000
<INCOME-PRETAX> 7,628,000
<INCOME-TAX> 2,990,000
<INCOME-CONTINUING> 4,638,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,638,000
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0
</TABLE>
