<PAGE>
________________________________________________________________________________
________________________________________________________________________________
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 the quarterly period ended: June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
COMMISSION FILE NUMBER:
0-21428
OCCUPATIONAL HEALTH + REHABILITATION INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3464527
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
175 DERBY STREET, SUITE 36
HINGHAM, MASSACHUSETTS 02043
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(617) 741-5175
(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
filing requirements for the past 90 days.
YES [X] NO [_]
The number of shares outstanding of the registrant's Common Stock as of
July 31, 1997 was 1,571,979.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
QUARTERLY REPORT ON FORM 1O-Q
FOR THE QUARTER ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I --- FINANCIAL INFORMATION
PAGE NO.
--------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets............................... 3
Consolidated Statements of Operations..................... 4
Consolidated Statements of Cash Flows..................... 6
Notes to Consolidated Financial Statements................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................. 13
Signatures ............................................................. 14
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
------ -------------- --------------
Current assets: (Unaudited)
<S> <C> <C>
Cash and cash equivalents:
Unrestricted........................................................................ $ 5,267,544 $ 8,615,731
Restricted.......................................................................... 345,320
Accounts receivable, net............................................................... 3,090,163 1,702,415
Prepaid expenses....................................................................... 429,576 398,567
Due from related party................................................................. 195,632 226,328
Other assets........................................................................... 12,401 12,401
------------ ------------
Total current assets.............................................................. 8,995,316 11,300,762
Property and equipment, net.............................................................. 1,552,667 1,119,338
Excess cost of net assets acquired, net.................................................. 4,192,823 2,849,158
Noncompetition agreements, net........................................................... 31,833 71,880
Organization costs, net.................................................................. 55,769 63,052
Deposits................................................................................. 84,984 69,947
Other assets............................................................................. 2,000 2,000
------------ ------------
Total assets...................................................................... $ 14,915,392 $ 15,476,137
============ ============
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY
-------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses.................................................. $ 1,394,920 $ 1,315,394
Current portion of obligations under capital leases.................................... 105,094 107,431
Current maturities of long-term debt................................................... 448,195 425,166
Current portion of obligations under noncompetition agreements......................... 316,938
Due to related party................................................................... 333,015 289,844
------------ ------------
Total current liabilities......................................................... 2,281,224 2,454,773
Long-term debt, less current maturities.................................................. 1,282,799 686,613
Obligations under capital leases......................................................... 60,220 58,715
Other long-term liabilities.............................................................. 25,320
Obligation to issue common stock......................................................... 500,000
------------ ------------
Total liabilities........................................................................ 3,624,243 3,725,421
Minority interest........................................................................ (24,575) (87,630)
Redeemable stock:
Redeemable convertible preferred stock, Series A, $.001 par value ---
$8,500,002 liquidation value, 5,000,000 shares authorized, 1,416,667
shares issued and outstanding......................................................... 8,431,659 8,423,003
------------ ------------
Total redeemable stock............................................................ 8,431,659 8,423,003
Stockholders' equity:
Common stock, $.001 par value -- 10,000,000 shares authorized; issued and
outstanding, 1,571,979 and 1,471,477 shares in 1997 and 1996, respectively........... 1,571 1,471
Additional paid-in capital............................................................. 10,596,049 10,096,149
Accumulated deficit.................................................................... ( 7,713,555) ( 6,682,277)
------------ ------------
Total stockholders' equity............................................................. 2,884,065 3,415,343
------------ ------------
Total liabilities, redeemable stock and stockholders' equity.......................... $ 14,915,392 $ 15,476,137
============ ============
</TABLE>
See Accompanying Notes
3
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Net patient service revenue.................. $ 4,705,542 $ 2,072,414
Management fee income........................ 147,906 41,528
Other (expense) income...................... 2,368 (2,323)
----------- -----------
Total revenue................................ 4,855,816 2,111,619
Operating and administrative expenses........ (5,098,874) (2,309,465)
Depreciation and amortization................ (182,723) (100,096)
Interest expense............................. (68,349) (69,261)
Interest income.............................. 90,087 11,958
Minority interest in net loss of subsidiary.. 35,570 52,553
----------- -----------
Net loss before income taxes................. (368,473) (302,692)
Income taxes................................. 0 0
----------- -----------
Net loss..................................... $ (368,473) $ (302,692)
=========== ===========
Net loss available to common stock........... $ (372,341) $ (302,692)
=========== ===========
Net loss per share........................... $ (0.24) $ (0.34)
=========== ===========
Weighted average common shares............... 1,571,979 888,719
=========== ===========
</TABLE>
See Accompanying Notes
4
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Net patient service revenue................... $ 8,052,312 $ 4,009,010
Management fee income......................... 226,303 80,652
Other income.................................. 3,303 266
----------- -----------
Total revenue................................. 8,281,918 4,089,928
Operating and administrative expenses......... (9,162,539) (4,563,070)
Depreciation and amortization................. (334,853) (200,124)
Interest expense.............................. (119,982) (129,267)
Interest income............................... 172,180 11,958
Minority interest in net loss of subsidiary... 141,024 130,354
----------- -----------
Net loss before income taxes.................. (1,022,252) (660,221)
Income taxes.................................. 0 0
----------- -----------
Net loss...................................... $(1,022,252) $ (660,221)
=========== ===========
Net loss available to common stock............ $(1,031,278) $ (660,221)
=========== ===========
Net loss per share............................ $(0.66) $(0.84)
=========== ===========
Weighted average common shares................ 1,569,203 785,053
=========== ===========
</TABLE>
See Accompanying Notes
5
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss......................................... $(1,022,252) $ (660,221)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 334,853 200,124
Amortization of discount..................... 8,062 15,724
Minority interest in net loss of subsidiary.. (141,024) (130,354)
Changes in operating assets and liabilities:.
Accounts receivable........................ (1,387,748) (356,811)
Prepaid expenses and other current assets.. (31,009) 569
Due from related party, net................ 73,867 204,798
Deposits and other noncurrent assets....... (15,037) 7,057
Accounts payable and accrued expenses...... 79,526 (305,038)
Other long term liabilitities.............. 25,016
--------- ----------
Net cash used in operating activities............ (2,100,762) (999,136)
INVESTING ACTIVITIES:
Reduction of restricted cash....................... 345,320
Refund of security deposit......................... (25,320)
Property and equipment additions................... (242,773) (11,874)
Additions to goodwill.............................. (279,972) (180,808)
Cash paid for acquisitions......................... (925,000) 4,500,414
----------- ----------
Net cash (used in) provided by investing
activities....................................... (1,127,745) 4,307,732
FINANCING ACTIVITIES:
Investment costs associated with the sale of
preferred stock.................................. (370)
Proceeds from exercise of stock options............ 688
Proceeds from line of credit and loans payable..... 344,082 500,000
Payments of long-term debt and other long-term
obligations...................................... (479,992) (676,061)
Cash received by partnership....................... 16,600
----------- ----------
Net cash used in financing activities.............. (119,680) (175,373)
----------- ----------
Net (decrease) in cash and cash equivalents........ (3,348,187) 3,133,223
Cash and cash equivalents at beginning of period... 8,615,731 368,959
----------- ----------
Cash and cash equivalents at end of period......... $ 5,267,544 $3,502,182
=========== ==========
</TABLE>
See Accompanying Notes
6
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Occupational
Health + Rehabilitation Inc (the "Company") have been prepared in accordance
with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X pertaining
to interim financial information and disclosures required by generally accepted
accounting principles. The interim financial statements presented herein reflect
all adjustments (consisting of normal recurring adjustments) which, in the
opinion of management, are considered necessary for a fair presentation of the
Company's financial condition as of June 30, 1997 and results of operations for
the three and six months ended June 30, 1997 and 1996. The results of operations
for the six months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for a full year.
2. NET LOSS PER SHARE
Net loss per share of common stock is computed by dividing net loss
available to common stock by the weighted average number of shares of common
stock outstanding during each period presented. The net loss available to common
stock reflects the accretion of preferred stock to its redemption value for the
three months ended June 30, 1997 and for the six months ended June 30, 1997. The
weighted average number of shares outstanding for the three months ended June
30, 1997 and 1996 and for the six months ended June 30, 1997 and 1996 is based
on the number of the Company's shares of common stock and for the three months
ended June 30, 1996 and for the six months ended June 30, 1996 assumes the
retroactive conversion of the Company's Series 1 and Series 2 preferred stock in
connection with the Merger of the Company with Telor Ophthalmic Pharmaceuticals,
Inc. in June 1996. The effect of options and warrants is not considered as it
would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share ("FAS No.128"), which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. FAS No. 128 is not
expected to have a material impact on primary earnings per share for the three
months ended June 30, 1997 and 1996 and for the six months ended June 30, 1997
and 1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Overview
The Company was organized in 1988 to develop ophthalmic pharmaceuticals. In
June 1996, Occupational Health + Rehabilitation Inc ("OH+R") merged with and
into (the "Merger") Telor Ophthalmic Pharmaceuticals, Inc. ("Telor"), with Telor
being the surviving corporation (the "Company"). In connection with the Merger,
the Company changed its name to "Occupational Health + Rehabilitation Inc" and
assumed the business of OH+R. The transaction was accounted for as a "reverse
acquisition" whereby OH+R was deemed to have acquired Telor for financial
reporting purposes. Consistent with the reverse acquisition accounting
treatment, historical financial statements for the Company for periods prior to
the date of the Merger are those of OH+R.
The Company is a physician practice management company specializing in
occupational health care. The Company develops and operates multidisciplinary
outpatient healthcare centers and provides on-site services to employers for the
prevention, treatment and management of work-related injuries and illnesses. The
Company operates the centers under management and submanagement agreements with
independently organized professional corporations or licensed satellite clinics
that practice exclusively through such centers.
The Company's operations have been funded primarily through venture capital
investments and the Merger. The Company's growth has resulted predominately from
the formation of joint ventures, acquisitions and development of businesses
principally engaged in occupational health care.
The following table sets forth, for the periods indicated, the relative
percentages which certain items in the Company's consolidated statements of
operations bear to total revenue. The following information should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in this report. Historical results and percentage
relationships are not necessarily indicative of the results that may be expected
for any future period.
<TABLE>
<CAPTION>
Three Months Ended
------------------
June 30,
--------
1997 1996
---- ----
<S> <C> <C>
Total revenue................................................. 100.0% 100.0%
Operating and administrative expenses......................... (105.0) (109.4)
Depreciation and amortization................................. (3.8) (4.7)
Interest expense.............................................. (1.4) (3.3)
Interest income............................................... 1.9 0.6
Minority interest in net loss of subsidiary................... 0.7 2.5
------ ------
Net loss before income taxes.................................. (7.6) (14.3)
Income taxes.................................................. 0.0 0.0
------ ------
Net loss...................................................... (7.6)% (14.3)%
====== ======
Six Months Ended
----------------
June 30,
--------
1997 1996
---- ----
Total revenue................................................. 100.0% 100.0%
Operating and administrative expenses......................... (110.6) (111.6)
Depreciation and amortization................................. (4.0) (4.9)
Interest expense.............................................. (1.5) (3.2)
Interest income............................................... 2.1 0.3
Minority interest in net loss of subsidiary................... 1.7 3.2
------ ------
Net loss before income taxes.................................. (12.3) (16.2)
Income taxes.................................................. 0.0 0.0
------ ------
Net loss...................................................... (12.3)% (16.2)%
====== ======
</TABLE>
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
- -----------------------------------------
Revenue
Total revenue increased 130.0% to approximately $4,856,000 in the three
months ended June 30, 1997 from approximately $2,112,000 in the same three-month
period in 1996. Net patient service revenue increased 127.1% to approximately
$4,706,000 for the three months ended June 30,1997 from approximately $2,072,000
in the comparable period in 1996. Of the approximately $2,633,000 increase in
net patient service revenue during the three-month period ended June 30, 1997
compared to the same period in 1996, approximately $1,022,000 (38.8%) was
attributable to centers owned at the end of 1996 and $1,612,000 (61.2%) was
attributable to centers acquired in 1997.
Operating and Administrative Expenses
Operating and administrative expenses increased 120.8% to approximately
$5,099,000 in the three months ended June 30, 1997 from approximately $2,309,000
in the same three months in 1996. This increase was principally due to the
acquisition and development of additional centers. In addition, during 1996, as
a function of its acquisition and development plans, the Company added several
key corporate executives which it believes will facilitate managing and
developing the growth of the business. As a percentage of total revenues,
operating and administrative expenses were 105.0% for the three months ended
June 30, 1997 and 109.4% for the same period in 1996. The Company believes that
as additional acquisitions are completed, further leveraging of existing
management will occur, and, as a result, operating and other administrative
costs will decline as a percentage of total revenue.
Depreciation and Amortization
Depreciation and amortization expense increased 82.6% to approximately
$183,000 in the three months ended June 30, 1997 from approximately $100,000 in
the same three-month period in 1996. The increase occurred primarily as a result
of the Company having additional growth through center development and
acquisitions. As a percentage of total revenues, depreciation and amortization
was 3.8% in the second quarter of 1997 versus 4.7% in the second quarter of
1996.
Interest Expense
Interest expense decreased 1.3% to approximately $68,000 in three months
ended June 30, 1997 from approximately $69,000 in the same three-month period in
1996. The decrease from 1996 to 1997 was due to the termination of an agreement
to sell receivables in January 1997. Additionally, the Company paid down certain
debt. As a percentage of total revenues, interest expense was 1.4% in the second
quarter of 1997, and 3.3% in the same quarter of 1996.
Interest Income
Interest income is generated primarily from cash invested in highly liquid
funds with a maturity of three months or less. Interest income increased 653.4%
to approximately $90,000 in the quarter ended June 30, 1997 from $12,000 in the
same quarter of 1996. The increase was related to funds received through the
Merger and from the sale of preferred stock through a private placement.
9
<PAGE>
Minority Interest
Minority interest represents the share of profits and losses of certain
investors in certain joint ventures with the Company. For the three months ended
June 30, 1997, the minority interest in net profits/losses of subsidiaries
decreased by 32.3% to approximately $36,000 from approximately $53,000 in the
same three- month period in 1996. This decrease is due to the Company's
ownership interest in new joint ventures, entered into in 1997, generating
profits.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
- ---------------------------------------
Revenue
Total revenue increased 102.5% to approximately $8,282,000 in the six
months ended June 30, 1997 from approximately $4,090,000 in the same six-month
period in 1996. Net patient service revenue increased 100.9% to approximately
$8,052,000 for the six months ended June 30, 1997 from approximately $4,009,000
in the comparable period in 1996. Of the approximately $4,043,000 increase in
net patient service revenue during the six-month period ended June 30, 1997
compared to the same period in 1996, approximately $1,850,000 (45.8%) was
attributable to centers owned at the end of 1996 and $2,193,000 (54.2%) was
attributable to centers acquired in 1997.
Operating and Administrative Expenses
Operating and administrative expenses increased 100.8% to approximately
$9,163,000 in the six months ended June 30, 1997 from approximately $4,563,000
in the same six months in 1996. This increase was principally due to the
acquisition and development of additional centers. In addition, during 1996, as
a function of its acquisition and development plans, the Company added several
key corporate executives which it believes will facilitate managing and
developing the growth of the business. As a percentage of total revenues,
operating and administrative expenses were 110.6% for the six months ended June
30, 1997 and 111.6% for the same period in 1996. The Company believes that as
additional acquisitions are completed, further leveraging of existing management
will occur, and, as a result, operating and other administrative costs will
decline as a percentage of total revenue.
Depreciation and Amortization
Depreciation and amortization expense increased 67.3% to approximately
$335,000 in the six months ended June 30, 1997 from approximately $200,000 in
the same six-month period in 1996. The increase occurred primarily as a result
of the Company having additional growth through center development and
acquisitions. As a percentage of total revenues, depreciation and amortization
was 4.0% in the first half of 1997 versus 4.9% in the first half of 1996.
Interest Expense
Interest expense decreased 7.2% to approximately $120,000 in six months
ended June 30, 1997 from approximately $129,000 in the same six-month period in
1996. The decrease from 1996 to 1997 was due to the termination of an agreement
to sell receivables in January 1997. Additionally, the Company paid down certain
debt. As a percentage of total revenues, interest expense was 1.5% in the first
half of 1997, and 3.2% in the same period of 1996.
10
<PAGE>
Interest Income
Interest income is generated primarily from cash invested in highly liquid
funds with a maturity of three months or less. Interest income increased to
approximately $172,000 in the six months ended June 30, 1997 from $12,000 in the
first half of 1996. The increase was related to funds received through the
Merger and from the sale of preferred stock through a private placement.
Minority Interest
Minority interest represents the share of profit and losses of certain
investors in certain joint ventures with the Company. For the six months ended
June 30, 1997, the minority interest in net profit/losses of subsidiaries
increased by 8.2% to approximately $141,000 from approximately $130,000 in the
same six- month period in 1996. This increase is due to losses incurred by
certain joint ventures offset by profits generated through the Company's
ownership interest in new joint ventures entered into in 1997.
SEASONALITY
The Company is subject to the natural seasonal swing that impacts the
various employers and employees it services. Although the Company hopes that as
it continues its growth and development efforts it may be able to anticipate the
effect of these swings and provide services aimed to ameliorate this impact,
there can be no assurance that it can completely alleviate the effects of
seasonality. Historically, the Company has noticed these impacts in portions of
the first and fourth quarters. Traditionally, net revenues are lower during
these periods since patient visits decrease due to the occurrence of plant
closings, vacations, holidays, a reduction in new employee hirings and the
impact of severe weather conditions in the Northeast. These activities also
cause a decrease in drug and alcohol testings, medical monitoring services and
pre-hire examinations. The Company has also noticed similar impacts during the
summer months, but typically to a lesser degree than during the first and fourth
quarters.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's funding requirements have been met through a
combination of issuances of capital stock, long-term debt and other commitments,
the utilization of capital leases and loans to finance equipment purchases, the
sale of certain accounts receivable and the creation of minority interests. Net
proceeds from the sale of capital stock have totaled approximately $14 million,
including the Company's private placement of its Series A Convertible Preferred
Stock on November 6, 1996. The proceeds from the sale of this preferred stock
provided the Company with cash proceeds of approximately $8.4 million, net of
expenses. The Company intends to use the funds in its expansion effort and for
working capital. The Company's principal sources of liquidity as of June 30,
1997 consisted of (i) cash and cash equivalents aggregating approximately $5.3
million and (ii) accounts receivable of approximately $3.1 million.
Net cash used in operating activities by the Company during the six months
ended June 30, 1997 was approximately $2,101,000 as compared to approximately
$999,000 for the comparable period in 1996. The primary uses of cash during the
six months ended June 30, 1997 were the funding of working capital in centers
that were acquired in 1996 and 1997 and for certain centers where an accounts
receivable financing agreement was terminated. Additional cash was used to fund
Company operating losses for certain centers for the six months ended June 30,
1996 and 1997. These operating losses were offset by non-cash expenses, such as
depreciation and amortization, and by fluctuations in working capital during the
periods ended June 30, 1997 and 1996. Working capital fluctuations have been
primarily from increases in accounts receivable and other current assets offset
by increases in accounts payable and accrued expenses.
11
<PAGE>
The Company's investing activities for the six months ended June 30, 1997
included the purchase of two physician practices with an aggregate cash outlay
of $725,000. The Company also invested $200,000 in two joint ventures. The
Company has an equity interest equal to or in excess of 51% in both joint
ventures. Additional investing activities included the use of $280,000 and
$181,000 in the periods ended June 30, 1997 and 1996, respectively, for costs in
excess of purchase price for certain acquisitions. Fixed asset additions
amounted to $243,000 for the period ended June 30, 1997 compared to $12,000 for
the same period in 1996. During the six months ended June 30, 1997,
approximately $320,000 of cash that had been pledged for certain letters of
credit was released. In addition, a security deposit of $25,000 in connection
with a certain sublease agreement was returned.
For the six months ended June 30, 1997, the Company received approximately
$344,000 from interest bearing working capital loans from joint venture partners
and approximately $17,000 through a partnership contribution. For the six months
ended June 30, 1997, the Company used funds of approximately $480,000 for the
payment of long-term debt and other long-term obligations, compared to
approximately $676,000 for the same period in 1996.
The Company expects that its principal use of funds in the near future will
be in connection with acquisitions and the formation of joint venture entities,
working capital requirements, debt repayments and purchases of property and
equipment. The Company expects that the cash received as the result of the
Merger, proceeds received upon the sale of 1,416,667 shares of its Series A
Convertible Preferred Stock, and cash generated from operations will be adequate
to provide working capital requirements and to fund debt maturities and to
finance any necessary capital expenditures through December 31, 1997. However,
the Company believes that the level of financial resources available to it is an
important competitive factor and may seek additional financing prior to the end
of that period. The Company will consider raising additional capital on an on-
going basis as market factors and its needs suggest, which additional capital
may be necessary to fund acquisitions by the Company.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in the Quarterly Report on Form 10-Q, including in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act, which statements
are intended to be subject to the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking statements are
based on management's current expectations and are subject to many risks and
uncertainties, which could cause actual results to differ materially from such
statements. Such statements include statements regarding the Company's objective
to develop a comprehensive regional network of occupational healthcare centers
providing integrated services through multi-disciplinary teams. Among the risks
and uncertainties that will affect the Company's actual results in achieving
this objective are locating and identifying suitable acquisition candidates, the
ability to consummate acquisitions on favorable terms, the success of such
acquisitions, if completed, the cost and delays inherent in managing growth, the
ability to attract and retain qualified professionals and other employees to
expand and complement the Company's services, the availability of sufficient
financing and the attractiveness of the Company's capital stock to finance
acquisitions, strategies pursued by competitors, the restrictions imposed by
government regulation, changes in the industry resulting from changes in
workers' compensation laws and regulations and in the healthcare environment
generally and other risks described in the Quarterly Report on Form 10-Q and
this Company's other filings with the Securities and Exchange Commission.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
PART 11 - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
11.01 Statement re Computation of Per Share Earnings.*
27.01 Financial Data Schedule.*
*Filed herewith
The Company agrees to furnish to the Commission a copy of any instrument
evidencing long-term debt which is not otherwise required to be filed.
B. REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1997.
13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
OCCUPATIONAL HEALTH + REHABILITATION INC
By: /s/ John C. Garbarino
-------------------------------------
John C. Garbarino
President and Chief Executive Officer
(principal executive officer)
By: /s/ Richard P. Quinlan
-------------------------------------
Richard P. Quinlan
Chief Financial Officer, Treasurer,
Secretary and General Counsel
(principal financial officer)
Date: _________ __, 1997
14
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
NO. DESCRIPTION
--- -----------
11.01 Statement re Computation of Per Share Earnings.
27.01 Financial Data Schedule.
<PAGE>
EXHIBIT NO. 11.01
OCCUPATIONAL HEALTH + REHABILITATION INC
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended June 30 Year-to-Date June 30
--------------------------------------------------------
1997 1996 1997 1996
--------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Weighted average common stock outstanding during
the period.................................................. 1,571,979 888,719 1,569,203 785,053
---------- ---------- ----------- -----------
Total......................................................... 1,571,979 888,719 1,569,203 785,053
========== ========== =========== ===========
Net loss........................................................ $ (368,473) $ (302,692) $(1,022,252) $ (660,221)
Less: Accretion of preferred stock redemption
value......................................................... (3,868) 0 (9,026) 0
---------- ---------- ----------- -----------
Net loss available to common stock............................ $ (372,341) $ (302,692) $(1,031,278) $ (660,221)
========== ========== =========== ===========
Net loss per share............................................ $ (0.24) $ (0.34) $ (0.66) $ (0.84)
========== ========== =========== ===========
FULLY DILUTED
Weighted average common stock outstanding during
the period.................................................. 1,571,979 888,719 1,569,203 785,053
Plus: Incremental shares from assumed conversions
Series A preferred stock.................................... 1,416,667 0 1,416,667 0
Convertible subordinated debt............................... 25,000 0 16,436 0
---------- ---------- ----------- -----------
Adjusted weighted average shares.............................. 3,013,646 888,719 3,002,306 785,053
========== ========== =========== ===========
Net loss.................................................... $(372,341) $ (302,692) $(1,031,278) $ 660,221)
Interest expense on convertible subordinated debt............. 3,125 0 4,167 0
---------- ---------- ----------- -----------
Adjusted net loss available to common stock................... $ (369,216) $ (302,692) $(1,027,111) $(660,221)
========== ========== =========== ===========
Loss per share - fully diluted................................ $ (0.12) $ (0.34) $ (0.34) $ (0.84)
NOTES: THE EFFECT OF OPTIONS AND WARRANTS IS NOT CONSIDERED AS IT WOULD BE ANTIDILUTIVE.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 5,267,544 8,961,051
<SECURITIES> 0 0
<RECEIVABLES> 3,090,163 1,702,415
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,995,316 11,300,762
<PP&E> 2,281,920 1,992,155
<DEPRECIATION> 729,253 872,817
<TOTAL-ASSETS> 14,915,392 15,476,137
<CURRENT-LIABILITIES> 2,281,224 2,454,773
<BONDS> 0 0
0 0
0 0
<COMMON> 1,571 1,471
<OTHER-SE> 19,081,682 18,519,152
<TOTAL-LIABILITY-AND-EQUITY> 14,915,392 15,476,137
<SALES> 8,052,312 4,009,010
<TOTAL-REVENUES> 8,281,918 4,089,928
<CGS> 9,162,539 4,563,070
<TOTAL-COSTS> 9,162,539 4,563,070
<OTHER-EXPENSES> (141,024) (130,354)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 172,180 129,267
<INCOME-PRETAX> (1,022,252) (660,221)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,022,252) (660,221)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,022,252) (660,221)
<EPS-PRIMARY> (.66) (.84)
<EPS-DILUTED> (.34) (.84)
</TABLE>
