SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 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 : 0-19758
Access Health, Inc.
(Exact name of registrant as specified in its charter)
Delaware 68-0163589
(State or other jurisdiction of incorporation or
organization) (I.R.S. Employer Identification No.)
11020 White Rock Road, Rancho Cordova, California 95670
(Address of principal executive offices) (Zip code)
(916) 851-4000
(Registrant's telephone number, including area code)
Access Health Marketing, Inc.
(Former name)
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
Number of shares of Common Stock Outstanding at April 30,
1996: 12,462,596 shares*
This report contains a total of 15 sequentially numbered
pages.
* The number of shares is on a post-split basis. On
January 26, 1996, the Registrant declared a 3-for-2 stock
split which was effected as a stock dividend for all
stockholders of record on February 15, 1996.
Access Health, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share and share amounts)
(Unaudited)
September 30, March 31,
1995 1996
Assets: ---------- ---------
Current assets:
Cash and equivalents $6,523 $35,709
Available-for-sale securities 5,172 5,641
Accounts receivable, net of allowance
for doubtful accounts of $595 ($500 at
September 30, 1995) 5,752 7,253
Prepaid expenses 914 1,202
Other current assets 583 484
--------- ---------
Total current assets 18,944 50,289
Property and equipment, net 6,571 11,681
Purchased intangibles, net of accumulated
amortization of $4,031 ($3,735 at
September 30, 1995) 4,070 3,774
Other assets 1,544 988
--------- ---------
$31,129 $66,732
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,127 $2,063
Accrued payroll and related expenses 1,737 1,876
Other accrued expenses 1,122 3,370
Current portion of long-term debt 292 -
Deferred revenues 2,473 2,817
Deferred income taxes 950 950
--------- ---------
Total current liabilities 8,701 11,076
Long-term debt 398 -
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value- 5,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, $.001 par value-30,000,000
shares authorized, 12,414,036 shares
issued and outstanding (10,217,665 at
September 30, 1995) 7 12
Additional paid-in capital 19,432 49,799
Retained earnings 2,591 5,845
--------- ---------
Total stockholders' equity 22,030 55,656
--------- ---------
$31,129 $66,732
========= =========
See accompanying notes.
Access Health, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
----------------------
1995 1996
-------- --------
Revenues:
Personal health management
services $4,367 $12,153
Health systems services 2,925 2,902
-------- --------
Total revenues 7,292 15,055
Costs and expenses:
Cost of revenues:
Personal health management
services 3,132 6,295
Health systems services 1,897 1,857
Product and other development 424 708
Sales and marketing 830 1,854
General and administrative 755 1,689
--------- ---------
Total costs and expenses 7,038 12,403
--------- ---------
Income from operations 254 2,652
Other income 128 464
--------- ---------
Income before income taxes 382 3,116
Provision for income taxes 145 1,246
--------- ---------
Net income $ 237 $1,870
========= =========
Net income per share $0.02 $ 0.14
========= =========
Shares used in per share
calculations 11,099 13,592
========= =========
See accompanying notes.
Access Health, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Six months ended
March 31,
------------------------
1995 1996
--------- ---------
Revenues:
Personal health management
services $6,593 $21,734
Health systems services 5,635 5,326
--------- ---------
Total revenues 12,228 27,060
Costs and expenses:
Cost of revenues:
Personal health management
services 5,364 11,371
Health systems services 3,567 3,723
Product and other development 798 1,257
Sales and marketing 1,558 3,067
General and administrative 1,454 2,886
--------- ---------
Total costs and expenses 12,741 22,304
--------- ---------
Income (loss) from operations (513) 4,756
Other income 268 666
--------- ---------
Income (loss) before income
taxes (245) 5,422
Provision (credit) for income
taxes (93) 2,168
--------- ---------
Net income (loss) $(152) $3,254
========= =========
Net income (loss) per share $(0.02) $0.25
========= =========
Shares used in per share
calculations 10,020 12,818
========= =========
See accompanying notes.
Access Health, Inc.
Condensed Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Equivalents
(In thousands)
(Unaudited)
Six months ended
March 31,
--------------------
1995 1996
-------- --------
Cash flows from operating activities:
Net income (loss) $(152) $3,254
Adjustments to reconcile net
income (loss) to net cash provided
by operations:
Allowance for doubtful accounts (28) (95)
Depreciation and amortization 857 1,477
Changes in:
Accounts receivable (1,651) (1,406)
Prepaid expenses and other
current assets 1,267 (189)
Accounts payable (205) (64)
Accrued payroll and related
expenses 202 139
Other accrued expenses 119 2,248
Deferred revenues 690 344
-------- --------
Net cash provided by operating
activities 1,099 5,708
-------- --------
Cash flows from investing activities:
Purchase of available-for-sale
securities (1,957) (469)
Sale of available-for-sale
securities 2,509 -
Purchase of property and equipment (1,728) (6,291)
Decrease in other assets 454 556
--------- --------
Net cash used by investing
activities (722) (6,204)
--------- --------
Cash flows from financing activities:
Payment of long-term debt (183) (690)
Sale of common stock 259 30,372
--------- --------
Net cash provided by financing
activities 76 29,682
--------- --------
Net increase in cash and
equivalents 453 29,186
Cash and equivalents at beginning
of period 5,674 6,523
--------- --------
Cash and equivalents at end of
period $6,127 $35,709
========= ========
See accompanying notes.
Access Health, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Interim Financial Statements
In the opinion of management the unaudited interim financial
statements reflect all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly
the Company's consolidated financial position at March 31,
1996, consolidated results of operations for the three month
and six month periods ended March 31, 1995 and 1996 and cash
flows for the six month periods ended March 31, 1995 and
1996. Results for the periods ended March 31, 1996 are not
necessarily indicative of the results to be expected for the
entire fiscal year.
Reclassifications
Certain reclassifications have been made to amounts reported
for the prior periods to conform with the March 31, 1996
presentation.
Net Income (Loss) Per Share
The Company's net income (loss) per share is based upon the
weighted average number of shares of common stock
outstanding. Common stock issuable upon the exercise of
stock options and warrants has been included in the
computation, to the extent dilutive, using the treasury
stock method.
Note 2: Secondary Public Offering
The Company completed a secondary public offering of its
common stock during the first quarter of fiscal 1996. A
total of 3.2 million shares were sold at $32 per share of
which one million shares were sold by the Company and 2.2
million shares were sold by the Company's original venture
capital stockholders who are now fully divested. Net
proceeds to the Company from the offering were approximately
$29.5 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations may contain certain forward-
looking statements which involve risks and uncertainties.
The Company's actual results could differ materially from
the results anticipated in these forward-looking statements
as a result of certain factors set forth hereunder and in
the Company's Annual Report as filed on Form 10K.
Liquidity and Capital Resources
The Company completed a secondary public offering of its
common stock during the first quarter of fiscal 1996. A
total of 3.2 million shares were sold at $32 per share of
which one million shares were sold by the Company and 2.2
million shares were sold by the Company's original venture
capital stockholders who are now fully divested. Net
proceeds to the Company from the offering were approximately
$29.5 million.
As of March 31, 1996, the Company held cash and equivalents
and available-for-sale securities totaling $41.4 million
which increased from a balance of $11.7 million as of
September 30, 1995 primarily due to the proceeds received
from the Company's secondary public stock offering as
previously discussed. Cash provided by operations during
the first half of fiscal 1996 was $5.7 million compared with
$1.1 million for the first half of fiscal 1995.
Gross accounts receivable increased $1.4 million during the
first half of fiscal 1996 primarily as result of increased
revenues from PHA contracts.
During the first six months of fiscal 1996 $6.3 million of
furniture and equipment were purchased. The Company expects
to purchase additional capital equipment during the
remaining two quarters of fiscal 1996 to expand its call
centers and systems capacity.
The Company repaid all long-term debt, including loans and
capital leases, during the first quarter of fiscal 1996.
The Company believes its current capital resources are
adequate to fund cash needs for anticipated operating levels
for at least the next twelve months. The Company also may
use capital resources in connection with business expansion
that may include the acquisition of complementary product
lines or businesses during fiscal 1996 or beyond.
Results of Operations
Revenues. Revenues consist of revenues from personal health
management services and health systems services. Revenues
increased from $7.3 million during the three months ended
March 31, 1995 to $15.1 million during the three months
ended March 31, 1996 and increased from $12.2 million during
the six months ended March 31, 1995 to $ 27.1 million for
the six months ended March 31, 1996.
Revenues from personal health management services increased
from $4.4 million during the second quarter of fiscal 1995
to $12.2 million during the second quarter of fiscal 1996
and from $6.6 million during the first six months of fiscal
1995 to $21.7 during the first six months of fiscal 1996
because the number of members enrolled under the Company's
Personal Health Advisor (PHA) contracts increased during
these periods. As of March 31, 1996, approximately 8.7
million members were enrolled in PHA compared to
approximately 2.4 million members enrolled as of March 31,
1995. Revenue from PHA contracts is recognized ratably in
accordance with contract terms on the basis of per-member
fees.
Revenues from health systems services were $2.9 million
during the second quarter of fiscal 1995 and fiscal 1996 and
decreased from $5.6 million for the first six months of
fiscal 1995 to $5.3 million during the first six months of
fiscal 1996 due to lower licensing and teleservicing
revenues resulting from changes taking place in the hospital
industry and the discontinuation of certain ASK-A-NURSE
teleservices contracts during fiscal 1995. Discontinuation
of additional teleservices contracts is expected during the
remainder of fiscal 1996. The Company expects that revenues
from health systems services will continue to decline as a
percentage of the Company's total revenues and may decline
in absolute dollars.
Cost of revenues. The cost of personal health management
services revenues includes the costs of operating the
Company's services centers, on-going client consultation and
charges for providing PHA member communications services.
The gross margins for personal health management services
were 28.3% during the second quarter of fiscal 1995 and
48.2% during the second quarter of fiscal 1996 and 18.6%
during the first six months of fiscal 1995 compared to 47.7%
during the first six months of fiscal 1996. Gross margin for
personal health management services improved during the
three and six months periods ended March 31, 1996 compared
to the prior year due to economies of scale resulting from
growth in PHA enrollment.
The cost of health systems services revenues includes the
costs of license implementations, operating call processing,
on-going client consultation, annual users' conferences,
advertising materials, and other support services for
ASK-A-NURSE, Cancer HELPLINK, Access Care Management System
("ACMS") and LIFE MATCH licensees. The gross margin
percentages for health system services were 35.1% during the
second quarter of fiscal 1995 and 36.0% during the second
quarter of fiscal 1996 and 36.7% for the first six months of
fiscal 1995 compared to 30.1% for the first six months of
fiscal 1996. Health systems services gross margin declined
from the first half of fiscal 1995 to the first half of
fiscal 1996 due to an increase in the proportion of lower
margin products and services sold during the first quarter
of fiscal 1996.
Product and other development expenses. Product development
expenses totaled $424,000, or 5.8% of revenues, during the
second quarter of fiscal 1995 and $708,000, or 4.7% of
revenues, during the second quarter of fiscal 1996 and were
$798,000, or 6.5% of revenues, for the first six months of
fiscal 1995 compared to $1.3 million, or 4.6% of revenues,
during the first six months of fiscal 1996. These costs
relate to further enhancements of the Company's systems and
clinical protocols. Product and other development expenses
will increase in fiscal 1996 as the Company continues to
make investments in personal health management products and
could also increase as a percentage of revenues.
Sales and marketing expenses. Sales and marketing expenses
were $830,000, or 11.4% of revenues, and $1.9 million, or
12.3% of revenues, during the second quarter of fiscal 1995
and 1996, respectively, and were $1.6 million, or 12.7% of
revenues, and $3.1 million, or 11.3% of revenues, during the
first half of fiscal 1995 and 1996, respectively. Sales and
marketing expenses increased as a result of the
strengthening of the marketing and advertising program and
the addition of sales resources to focus on new markets.
Sales and marketing expenses may increase in fiscal 1996 as
the Company continues to pursue its strategy of building
brand awareness for its personal health management products
and could increase significantly as the Company enters the
direct to consumer market.
General and administrative expenses. General and
administrative expenses were $755,000, or 10.4% of revenues,
and $1.7 million, or 11.2% of revenues, during the second
quarter of fiscal 1995 and 1996, respectively, and totaled
$1.5 million, or 11.9% of revenues and $2.9 million, or
10.7% of revenues, during the first half of fiscal 1995 and
1996, respectively. The increase from fiscal 1995 to fiscal
1996 reflects stepped costs associated with building the
infrastructure necessary to manage a larger and rapidly
growing company and professional fees related to evaluating
and negotiating strategic investment opportunities.
Income (loss) from operations. Operating income increased
from $254,000 during the second quarter of fiscal 1995 to
$2.7 million during the second quarter of fiscal 1996 and
from a loss of $(513,000) to income of $4.8 million during
the first half of fiscal 1995 and fiscal 1996, respectively.
The improvement is attributable to the factors and trends
described in the preceding paragraphs.
Other income. The Company generates interest and other
income from cash balances and available-for-sale securities.
Interest and other income increased from $128,000 to
$464,000 in the second quarter of fiscal 1995 and 1996,
respectively, and from $268,000 to $666,000 during the first
half of fiscal 1995 and 1996, respectively, primarily as a
result of increases in income earned on cash proceeds
received during the first quarter from a secondary stock
offering (see Liquidity and Capital Resources).
Effects of inflation and changing prices. Inflation and
changing prices have not had a material effect on the
Company's operations and, at current levels, are not
expected to in future years.
Factors That May Affect Future Operating Performance
Ability to Secure Additional Contracts and Expand and Retain
Existing Contracts. The Company's ability to increase
revenues and profitability is largely dependent on the
Company's ability to secure additional PHA contracts and to
retain and expand existing PHA contracts. The Company's
operating results are also dependent on its success in
retaining and renewing its health system services contracts.
The Company could be adversely affected by the termination
or non-renewal of any of the Company's contracts, or by
renegotiation of the terms of contracts, particularly if the
affected contracts cover a large number of members or
represent a significant portion of the Company's health
systems services revenue. In June 1995, the Company
renegotiated a PHA contract which reduced the number of
members and during fiscal 1995 renegotiated two health
systems services contracts. Any factors adversely affecting
the market for the PHA product or the health system services
products, including factors outside of the Company's
control, such as adverse publicity or government regulatory
action, would have a material adverse effect on the Company.
Dependence on Principal Customers. The Company's PHA
contracts cover members ranging from approximately 3,000
members to 2.0 million members per contract and include one
contract for 2.0 million members, one contract for 1.6
million members and three contracts for 1.0 million members
each. In the first six months of fiscal 1996, the Company's
three largest customers accounted for approximately 18.1%,
14.3%, and 9.2% of the Company's total revenues and the
Company's top five customers, in the aggregate, accounted
for approximately 57.2% of the Company's total revenues.
After an initial term of approximately one to four years,
contracts generally can be terminated upon 60 to 180 days
notice to the Company. Two of the three largest contracts
are up for renewal in fiscal 1997, and the third in fiscal
1998. The Company's contracts could also be subject to early
termination by its customers if the Company were not in
compliance with any applicable government regulation. The
termination, non-renewal or renegotiation of any of such
agreements could have a material adverse effect on the
Company's operating results. See "Government Regulation."
Uncertainty of Future Operating Results. During fiscal 1993
and 1994 the Company incurred significant expenses related
to the start-up of its PHA product, including the hiring and
training of personnel and the expansion of infrastructure
and sales and marketing programs. Because revenues from PHA
were not sufficient to cover these start-up expenses,
operating losses were sustained in fiscal 1994 and the first
quarter of fiscal 1995. The Company returned to
profitability in the second quarter of fiscal 1995 and
achieved increased profitability in each quarter thereafter
as additional members were enrolled in PHA. There can be no
assurance that the Company's revenues and profitability will
continue to increase during fiscal 1996. In addition, the
Company may incur significantly increased sales, marketing
and promotional expenses during fiscal 1996, and may devote
additional resources to the further development of PHA or
other new products. To the extent that the Company incurs
increased expenses, the Company's operating results will be
adversely affected unless revenues and operating margins
increase sufficiently to offset such expenditures. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Competition. The market for the Company's products and
services is highly competitive. There are a number of
competitors that offer products or services that compete
with some or all of those offered by the Company. Existing
and potential clients may also evaluate the Company's
products or services against internally developed programs.
Increased competition could result in pricing pressure and
margin erosion. In its existing business and as the Company
offers new products or services, or enters new markets, it
may face increased competition from competitors, some of
which may have substantially greater financial, marketing
and technical resources than the Company. There can be no
assurance that the Company will continue to compete
successfully.
Changing Health Care Market and New Product Development.
The health care industry has undergone significant changes
in recent years, and changes are expected to continue.
Containing health care costs has become a national priority.
As a result, the health care industry has become
increasingly dominated by managed health care plans, causing
cost containment pressure to rise. To address these changes,
the Company shifted its business focus in 1993 to payors
from providers and developed its personal health management
services. There is no assurance that the Company's existing
products and services will achieve continued success or that
its new products and services will succeed. There also can
be no assurance that continued industry change will not
adversely affect the Company's ability to compete. Continued
change may cause the Company to incur significant product
development and marketing expenses. The Company's future
success will depend on the Company's ability to adapt to the
changing needs of the health care industry.
Call Center Operations. The Company maintains member
service and data centers ("call centers") in Rancho Cordova,
California; Chicago, Illinois; and Phoenix, Arizona. The
Company's operations depend on the adequate functioning of
the computer and telephone systems in its call centers.
Although the Company has taken precautions to provide for
power, computer, and telephone systems redundancy, there can
be no assurance that a fire or other disaster affecting the
centers or an equipment failure would not disable the
Company's systems for a significant period of time. Any
significant damage to the Company's facilities or an
equipment failure could have a material adverse effect on
the Company's results of operations.
Proprietary Rights. The Company regards its software,
clinical nursing assessment protocols and marketing and
program operation materials as proprietary and attempts to
protect its intellectual property with copyrights,
trademarks, trade secret laws and restrictions on
disclosure, copying and transferring title. Despite the
Company's precautions, it may be possible for unauthorized
third parties to copy aspects of the Company's products or
to obtain and use information that the Company regards as
proprietary. The Company has no patents and existing
copyright laws afford only limited practical protection. In
addition, the laws of some foreign countries do not protect
the Company's proprietary rights to the same extent as do
the laws of the United States, which could be a factor if
the Company expands into markets outside the United States.
Future Acquisitions. The Company intends to evaluate
acquisitions of complementary product lines and businesses
as part of its business strategy. Future acquisitions by the
Company may result in potentially dilutive issuances of
equity securities, the use of the Company's cash resources,
the incurrence of additional debt and increased goodwill,
intangible assets and amortization expense which could
negatively impact the Company's profitability. In addition,
acquisitions involve numerous risks, including difficulties
in the assimilation of the operations and products of the
acquired companies, the diversion of management's attention
from other business concerns, risks of entering markets in
which the Company has no or limited direct prior experience,
and the potential loss of key employees of the acquired
company.
Key Employees and Management of Change. The Company's
success depends on a limited number of key management
employees, none of whom is subject to post-employment
non-competition restrictions. The loss of the services of
one or more of these employees could have a material adverse
effect on the Company. The Company believes that its
continued success also will depend in large part on its
ability to attract and retain highly-skilled management,
marketing, sales and nursing personnel. Competition for such
personnel is intense, and there can be no assurance that the
Company will be successful in attracting and retaining such
personnel as necessary. Furthermore, the Company's ability
to manage change and growth successfully will require the
Company to continue to improve its management expertise as
well as its financial systems and controls.
Volatility of Stock Price. The Company believes that
factors such as announcements of developments related to the
Company's business, including the signing or loss of a major
contract, changes in market analyst estimates and
recommendations for the Company's Common Stock, changes in
government regulation and general conditions in the health
care industry and the economy could cause the price of the
Company's Common Stock to fluctuate, perhaps substantially.
In addition, in recent years stock prices have experienced
significant price fluctuations.
Government Regulation. The health care industry is subject
to extensive and evolving government regulation at both the
Federal and state levels relating to many aspects of the
Company's and its clients' businesses in use of the
Company's programs, including the provision of health care
services, teleservicing, health care referral programs, and
health maintenance organizations and other similar plans.
These statutes and regulations in many cases predate the
development of telephone-based health care information and
other interstate transmission and communication of medical
information and services. The literal language of certain of
these statutes and regulations governing the provision of
health care services, including the practice of nursing and
the practice of medicine, could be construed by regulatory
authorities to apply to certain of the Company's activities,
including without limitation teleservicing activities which
use California, Illinois and Arizona registered nurses to
provide out-of-state personal health management services
such as nursing assessments and information regarding
appropriate sources of care and treatment time frames. These
statutes and regulations could also apply to certain
activities of the Company's health service customers when
operating the Company's programs. The Company has not been
made, nor is it aware that any of its clients with respect
to operation of the Company's programs, or its nurse
employees or any other organization providing out-of-state
teleservicing have ever been made, the subject of such
requirements by a regulatory authority. In addition, the
literal language of the statutes and regulations governing
health maintenance organizations and other plans that
provide or arrange for the provision of health care services
for a prepaid or periodic charge could be construed by
regulatory authorities to apply to certain activities of the
Company that are provided on a per-member, per-month basis.
The Company has not been made, nor is it aware that any
other company providing out-of-state teleservicing has ever
been made, the subject of such requirements by a regulatory
authority. However, if regulators seek to enforce any of the
foregoing statutory and regulatory requirements, the
Company, its employees and/or its clients could be required
to obtain additional licenses or registrations, to modify or
curtail the operation of the Company's programs, to modify
the method of payment for the Company's programs, or to pay
fines or incur other penalties.
The payment of remuneration to induce the referral of health
care business has been a subject of increasing governmental
and regulatory focus in recent years. Section 1128B(b) of
the Social Security Act (sometimes referred to as the
"Federal anti-kickback statute") provides criminal penalties
for individuals or entities that knowingly and willfully
offer, pay, solicit or receive remuneration in order to
induce referrals for items or services for which payment may
be made under the Medicare and Medicaid programs and certain
other government-funded programs. The Social Security Act
provides authority to the Office of the Inspector General
through civil proceedings to exclude an individual or entity
from participation in the Medicare and state health programs
if it is determined any such party has violated Section
1128B(b) of the Social Security Act. Regulations have been
promulgated specifying certain payment practices which will
not be subject to criminal prosecution or civil exclusion.
These regulations, commonly referred to as the "safe harbor"
regulations, do not expand the scope of the Federal
anti-kickback statute, and the fact that a business
arrangement does not fit within a safe harbor does not mean
the business arrangement violates the Federal anti-kickback
statute. The Company's programs do not meet the requirements
of the safe harbor for referral services. A number of states
in which the Company operates have anti-kickback statutes
similar to the Federal statute as well as statutory and
regulatory requirements governing referral agencies and
regulating franchising and business opportunity ventures. In
addition, the Federal government and a number of states have
enacted statutes which contain outright prohibitions on
referrals for specified services which are made by referring
providers who have an ownership interest in, or compensation
arrangement with, the entity to which the referral is made.
If the Company or the use of its products and services were
to be found in violation of such statutes, the Company or
its clients could be required to modify or curtail the
operation of the Company's programs, or to pay fines or
incur other penalties, and the Company's clients could be
excluded from participation in the Medicare and Medicaid
programs and could be precluded from charging fees and
obtaining reimbursement for specified services.
There can be no assurance that the Company or the use of its
products and services will not be subject to review or
challenge by government regulators under any of the
foregoing statutes and regulations that apply to health care
services and products. In addition, additional laws and
regulations could be enacted in the future that would
regulate the Company or the use of its products and
services. Any government investigative or enforcement
actions with respect to the Company or the use of its
products or services could generate adverse publicity
irrespective of the final outcome, and could have a material
adverse effect on the Company.
Risk Management. In recent years, participants in the
health care industry, including physicians, nurses and other
health care professionals, have been subject to an
increasing number of lawsuits alleging malpractice, product
liability and related legal theories, many of which involve
large claims and significant defense costs. Due to the
nature of its business, the Company could become involved in
litigation regarding the telephone information given by its
registered nurses or those of its licensees with the risk of
adverse publicity, significant defense costs and substantial
damage awards. The Company has established policies and
procedures that limit the information provided by its
registered nurses to that contained in its protocols and in
other approved reference sources. In connection with its
teleservices operations, the Company has a quality assurance
program that includes real-time audits of calls and post
call reviews to monitor compliance with established policies
and procedures. Generally clients review and approve the
Company's protocols and guidelines prior to program
implementation and do not modify them without medical
approval. To date, the Company has not been the subject of
any claim involving either its clinical assessment systems,
the operation of its teleservicing centers or the operation
by hospital clients of on-site call centers. However, there
can be no assurance that claims will not be brought against
the Company. Even if such claims ultimately prove to be
without merit, defending against them can be time consuming
and expensive, and any adverse publicity associated with
such claims could have a material adverse effect on the
Company.
Intellectual Property. The Company regards its software,
clinical nursing assessment protocols and marketing and
program operation materials as proprietary and attempts to
protect its intellectual property with copyrights,
trademarks, trade secret laws and restrictions on
disclosure, copying and transferring title. Despite these
precautions, it may be possible for unauthorized third
parties to copy aspects of the Company's products or to
obtain and use information that the Company regards as
proprietary. The Company has no patents, and existing
copyright laws afford only limited practical protection. In
addition, the laws of some foreign countries do not protect
the Company's proprietary rights to the same extent as do
the laws of the United States, which could be a factor if
the Company expands into markets outside the United States.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
none
b) There have been no reports on Form 8-K filed
during the quarter
ended March 31, 1996.
Signature
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.
ACCESS HEALTH, INC.
Date: May 13, 1996 /s/ John V. Crisan
John V. Crisan
Senior Vice President and Chief
Financial Officer (principal
financialofficer of Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at March 31, 1996 (Unaudited) and the
Condensed Consolidated Statement of Operations for the Six Months Ended March
31, 1996 (Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 35,709
<SECURITIES> 5,641
<RECEIVABLES> 7,848
<ALLOWANCES> 595
<INVENTORY> 0
<CURRENT-ASSETS> 50,289
<PP&E> 16,086
<DEPRECIATION> 4,405
<TOTAL-ASSETS> 66,732
<CURRENT-LIABILITIES> 11,076
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 55,644
<TOTAL-LIABILITY-AND-EQUITY> 66,732
<SALES> 27,060
<TOTAL-REVENUES> 27,060
<CGS> 15,094
<TOTAL-COSTS> 15,094
<OTHER-EXPENSES> 7,210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (666)
<INCOME-PRETAX> 5,422
<INCOME-TAX> 2,168
<INCOME-CONTINUING> 3,254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,254
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
