<PAGE>
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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, 1998
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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
175 DERBY STREET, SUITE 36 02043
HINGHAM, MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(781) 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 such
filing requirements for the past 90 days.
YES [X] NO [ ]
The number of shares outstanding of the registrant's Common Stock as of
August 4, 1998 was 1,478,977.
===============================================================================
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
PART I --- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <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........................ 14
Signatures......................................................... 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
- ------ -------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 2,992 $ 4,180
Accounts receivable, net............................... 4,187 3,207
Notes receivable........................................ 390 210
Prepaid expenses and other assets....................... 418 456
------- -------
Total current assets......................................... 7,987 8,053
Property and equipment, net.................................. 1,524 1,539
Goodwill, net................................................ 4,122 3,985
Notes receivable............................................. 577 707
Other assets................................................. 286 289
------- -------
Total assets............................................ $14,496 $14,573
======= =======
LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses................... $ 2,363 $ 2,073
Current portion of long-term debt....................... 844 663
Current portion of obligations under capital leases..... 107 120
------- -------
Total current liabilities.................................... 3,314 2,856
Long-term debt, less current maturities...................... 871 1,264
Obligations under capital leases............................. 94 122
------- -------
Total liabilities............................................ 4,279 4,242
Minority interest............................................ 312 134
Redeemable stock:
Redeemable, convertible preferred stock, Series A,
$.001 par value -- $8,500,002 liquidation value,
1,666,667 shares authorized, 1,416,667
shares issued and outstanding......................... 8,447 8,440
Stockholders' equity:
Preferred stock, $.001 par value - 3,333,333
shares authorized; none issued and outstanding....... --- ---
Common stock, $.001 par value -- 10,000,000 shares
authorized; 1,579,479 shares issued and 1,478,977
outstanding, in 1998 and 1997, respectively........... 1 1
Additional paid-in capital.............................. 10,619 10,619
Accumulated deficit..................................... (8,662) (8,363)
Less treasury stock, at cost, 100,502 shares............ (500) (500)
------- -------
Total stockholders' equity.............................. 1,458 1,757
------- -------
Total liabilities, redeemable stock and
stockholders' equity................................ $14,496 $14,573
======= =======
</TABLE>
See Accompanying Notes
3
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
--------------------------
1998 1997
---- ----
<S> <C> <C>
Revenue................................................ $ 5,686 $ 4,708
Expenses:
Operating......................................... 4,787 4,278
General and administrative........................ 720 673
Depreciation and amortization..................... 182 183
--------- ----------
5,689 5,134
--------- ----------
(3) (426)
Nonoperating gains (losses):
Interest income................................... 52 90
Interest expense.................................. (48) (68)
Minority interest in net (gain) loss of
subsidiaries.................................... (97) 36
Net loss............................................... $ (96) $ (368)
========= ==========
Net loss available to common shareholders.............. $ (100) $ (372)
========= ==========
Net loss per common share.............................. $ (0.07) $ (0.24)
========= ==========
Weighted average common shares........................ 1,478,977 1,571,979
========= ==========
</TABLE>
See Accompanying Notes
4
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1998 1997
---- ----
<S> <C> <C>
Revenue................................................ $ 10,963 $ 8,056
---------- ----------
Expenses:
Operating......................................... 9,290 7,651
General and administrative........................ 1,428 1,286
Depreciation and amortization..................... 358 336
---------- ----------
11,076 9,271
---------- ----------
(113) (1,215)
Nonoperating gains (losses):
Interest income................................... 99 72
Interest expense.................................. (99) (120)
Minority interest in net (gain) loss of
subsidiaries.................................... (178) 141
---------- ----------
Net loss............................................... $ (291) $ (1,022)
========== ==========
Net loss available to common shareholders.............. $ (299) $ (1,031)
========== ==========
Net loss per common share.............................. $ (0.20) $ (0.66)
========== ==========
Weighted average common shares......................... 1,478,977 1,569,203
========== ==========
</TABLE>
See Accompanying Notes
5
<PAGE>
OCCUPATIONAL HEALTH + REHABILITATION INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................... $ (291) $ (1,022)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.................... 358 334
Amortization of discount......................... 8
Minority interest in net gain (loss) of
subsidiary.................................... 178 (141)
Changes in operating assets and liabilities:
Accounts receivable.......................... (980) (1,388)
Prepaid expenses and other current assets.... 24 (31)
Notes receivable............................. (50)
Due from related party, net.................. 74
Deposits and other noncurrent assets......... 4 (15)
Accounts payable and accrued expenses
and other long-term liabilities........... 288 79
------- -------
Net cash used by operating activities.................. (469) (2,102)
INVESTING ACTIVITIES:
Release of restricted cash............................. 345
Cash paid for intangibles.............................. (76) (280)
Refund of security deposit............................. (25)
Property and equipment additions....................... (136) (243)
Cash paid for acquisitions............................. (129) (925)
------- -------
Net cash used by investing activities.................. (341) (1,128)
FINANCING ACTIVITIES:
Payments of long-term debt............................. (312) (480)
Payments of capital lease obligations.................. (66)
Proceeds from line of credit and loans payable......... 344
Cash received by partnership........................... 16
------- -------
Net cash used by financing activities.................. (378) (120)
------- -------
Net decrease in cash and cash equivalents.............. (1,188) (3,350)
Cash and cash equivalents at beginning of period....... 4,180 8,618
------- -------
Cash and cash equivalents at end of period............. $ 2,992 $ 5,268
======= =======
</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, 1998 and results of operations for the three
and six months ended June 30, 1998 and 1997. The results of operations for the
six months ended June 30, 1998 are not necessarily indicative of the results
that may be expected for a full year.
2. NET LOSS PER COMMON SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. There was no effect on previously reported net loss per common share
amounts due to the adoption of Statement 128. For the six months ended June 30,
1998, for purposes of the net loss per common share calculation, the net loss
has been increased by $ 8,000 of preferred stock accretion. The effect of
options, warrants, convertible preferred stock and a convertible note payable is
not considered as it would be anti-dilutive for the periods presented.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company specializes in occupational health care throughout the
Northeastern United States. 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
professional corporations that practice exclusively through such centers.
Additionally, the Company has entered into joint ventures with hospital related
organizations to provide management and related services to the centers
established by the joint ventures.
The Company is the surviving corporation of a merger (the "Merger") of
Occupational Health + Rehabilitation Inc ("OH+R") into Telor Ophthalmic
Pharmaceuticals, Inc ("Telor"). Pursuant to the Merger, the ophthalmic
pharmaceutical business of Telor ceased, and the business of the Company was
changed to the business of OH+R.
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 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, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue........................................ 100% 100% 100% 100%
Operating expenses............................. (84.2) (90.9) (84.7) (95.0)
General and administrative expenses............ (12.7) (14.3) (13.0) (16.0)
Depreciation and amortization expense.......... (3.2) (3.9) (3.3) (4.1)
Interest income................................ 0.9 1.9 0.9 2.1
Interest expense............................... (0.8) (1.4) (0.9) (1.5)
Minority interest in net (gain) loss of
subsidiary................................... (1.7) 0.8 (1.6) 1.8
--------------------------------------------------------
Net loss....................................... (1.7)% (7.8)% (2.6)% (12.7)%
========================================================
</TABLE>
8
<PAGE>
RESULTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS)
- ---------------------
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
- -----------------------------------------
Revenue
Revenue increased 20.8% to approximately $5,686 in the three months ended June
30, 1998 from approximately $4,708 in the three months ended June 30, 1997. Of
the approximately $978 increase in revenue in the three months ended June 30,
1998 compared to the three months ended June 30, 1997, approximately $1,239
related to centers acquired subsequent to June 30, 1997 and the remaining $425
related to additional volume at existing centers. These amounts were offset by
$686 of revenue which related primarily to the Company's share of a partnership
in which the Company sold its interest on December 31, 1997.
Operating, General and Administrative Expenses
Operating expenses increased 11.9% to approximately $4,787 in the three
months ended June 30, 1998 from approximately $4,278 in the three months ended
June 30, 1997. This increase was principally due to the acquisition and
development of additional centers. As a percentage of revenue, operating
expenses declined to 84.2 % in the three months ended June 30, 1998 as compared
to 90.9 % in the three months ended June 30, 1997. The centers, in the
aggregate, continued to achieve profitability before general and
administrative expenses during the second quarter of 1998 as individual centers
reached critical mass in terms of volume.
General and administrative expenses increased 7.0 % to approximately $720 in
the three months ended June 30, 1998 from $673 in the three months ended June
30, 1997. The increase was the result of the Company's expanding its corporate
staff to support the growth in the centers and to support additional business
lines. As a percentage of revenue, general and administrative expenses
decreased to 12.7% in the three months ended June 30, 1998 as compared to 14.3%
in the three months ended June 30, 1997. The Company believes that as
additional acquisitions are completed, leveraging of existing management will
occur.
Interest Income
Interest income is generated primarily from cash invested in highly liquid
funds with a maturity of three months or less. Interest income decreased 42.2 %
to approximately $52 in the three months ended June 30, 1998 from $90 in the
three months ended June 30, 1997. The decrease was related to the Company having
less cash available to invest in the three months ended June 30, 1998 compared
to the three months ended June 30, 1997 since the Company has continued to
utilize cash during 1998 for acquisitions and other general corporate needs.
Minority Interest
Minority interest represents the share of (profits) and losses of minority
investors in certain joint ventures with the Company. In the three months ended
June 30, 1998, the minority interest in net gains of subsidiaries was $(97 )
compared to the minority interest in net losses of subsidiaries equaling $ 36
in the three months ended June 30, 1997. For the second quarter of 1998, the
financial performance of the joint venture centers continued to improve over the
prior year.
9
<PAGE>
RESULTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS)
- ---------------------
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
- ---------------------------------------
Revenue
Revenue increased 36.1% to approximately $10,963 in the six months ended June
30, 1998 from approximately $8,056 in the six months ended June 30, 1997. Of
the approximately $2,907 increase in revenue in the six months ended June 30,
1998 compared to the six months ended June 30, 1997, approximately $1,628 was
attributable to the incremental increase of revenue of centers that were
acquired or became part of a joint venture during the six months ended June 30,
1997, $2,216 related to centers acquired subsequent to June 30, 1997 and the
remaining $355 related to additional volume at existing centers. These amounts
were offset by $1,292 of revenue which related primarily to the Company's share
of a partnership in which the Company sold its interest on December 31, 1997.
Operating, General and Administrative Expenses
Operating expenses increased 21.4% to approximately $9,290 in the six months
ended June 30, 1998 from approximately $7,651 in the six months ended June 30,
1997. This increase was principally due to the acquisition and development of
additional centers. As a percentage of revenue, operating expenses declined to
84.7 % in the six months ended June 30, 1998 as compared to 95.0% in the six
months ended June 30, 1997. The centers, in the aggregate, improved their
profitability during the six months ended 1998 versus the six months ended 1997
as individual centers began to reach critical mass in terms of volume.
General and administrative expenses increased 11.0% to approximately $1,428
in the six months ended June 30, 1998 from $1,286 in the six months ended June
30, 1997. The increase was the result of the Company's expanding its corporate
staff to support the growth in the centers and to support additional business
lines. As a percentage of revenue, general and administrative expenses
decreased to 13.0% in the six months ended June 30, 1998 as compared to 16.0% in
the six months ended June 30, 1997. The Company believes that as additional
acquisitions are completed, leveraging of existing management will occur.
Depreciation and Amortization
Depreciation and amortization expense increased 7.2% to approximately $358 in
the six months ended June 30, 1998 from approximately $334 in the six months
ended June 30, 1997. The increase occurred primarily as a result of the
Company's having additional growth through center development and acquisitions.
As a percentage of revenue, depreciation and amortization was 3.3% in the six
months ended June 30, 1998 compared to 4.1% in the six months ended June 30,
1997.
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 decreased 42.4%
to approximately $99 in the six months ended June 30, 1998 from $172 in the six
months ended June 30, 1997. The decrease was related to the Company having less
cash available to invest in the six months ended June 30, 1998 compared to the
six months ended June 30, 1997 since the Company has continued to utilize cash
during 1998 for acquisitions and other general corporate needs.
Minority Interest
Minority interest represents the share of (profits) and losses of minority
investors in certain joint ventures with the Company. In the six months ended
June 30, 1998, the minority interest in net gains of subsidiaries was $(178)
compared to the minority interest in net losses of subsidiaries equaling $141
in the six months ended June 30, 1997. For the first six months of 1998, the
financial performance of the joint venture centers continued to improve over the
prior year.
Seasonality
The Company is subject to the natural seasonal swing that impacts the various
employers and employees it serves. 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, 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. At June 30, 1998, the Company had $4,673 in working capital, a
decrease of $524 from December 31, 1997. The Company has utilized its funds in
its expansion effort and for working capital. The Company's principal sources
of liquidity as of June 30, 1998 consisted of (i) cash and cash equivalents
aggregating approximately $2,992 and (ii) current accounts and notes receivable
of approximately $4,577.
11
<PAGE>
Net cash used by operating activities by the Company during the six months
ended June 30, 1998 was approximately $469 as compared to approximately $2,102
for the six months ended June 30, 1997. During these periods, the primary uses
of cash were the funding of working capital in centers in early stages of
development or centers that were recently acquired and to fund Company operating
losses. The improvement in net cash used by operating activities is primarily
due to the improved financial performance of the Company's centers.
The Company's investing activities for the six months ended June 30, 1998 used
cash of $341 compared to $1,128 for the six months ended June 30, 1997. In 1998,
these activities included the purchase of a physician and physical therapy
practice and the payment of $205 in additional purchase price in accordance with
the terms negotiated in connection with certain prior acquisitions. For the six
months ended June 30, 1997, the Company paid $1,205 for the purchase of several
physician practices and the investments in two joint ventures. The Company has
an equity interest equal to or in excess of 51% in all joint ventures.
Additional investing activities included the use of $136 and $243 for fixed
asset additions in the six months ended June 30, 1998 and 1997, respectively.
Fixed asset additions for the six months ended June 30, 1998 related primarily
to computer hardware and software.
Finally, in the six months ended June 30, 1998 and 1997, the Company utilized
$378 and $480, respectively, towards the payment of long-term debt and other
long-term obligations. The Company expects that its principal use of funds in
the near future will be in connection with acquisitions, the formation of joint
venture entities and the establishment of management agreements, working capital
requirements, debt repayments and purchases of property and equipment. During
November of 1997, the Company entered into a financing arrangement with
BankBoston, N.A. whereby it has access to two separate credit facilities. The
first credit facility provides the Company with $2.5 million for working capital
and acquisition needs. The second facility provides up to $4.5 million to be
utilized by the Company's existing and future joint ventures. As of June 30,
1998, the Company's borrowings under the second facility amount to approximately
$287. The borrowing base of the joint venture credit facility is eighty-five
percent (85%) of the joint ventures' accounts receivable less than 120 days old.
Both facilities expire on September 30, 1999. The Company expects that the cash
received as the result of the Merger, the sale of 1,416,667 shares of its Series
A Convertible Preferred Stock, the credit facilities, and cash generated from
operations will be adequate to provide working capital requirements and to fund
debt repayments and to finance any necessary capital expenditures through
December 31, 1998. However, the Company believes that the level of financial
resources available to it is an important competitive factor. The Company will
consider raising additional capital on an on-going basis as market factors and
its needs suggest since additional capital may be necessary to fund acquisitions
by the Company.
Impact of Year 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "Year 2000" problem
is pervasive and complex, as virtually every computer operation will be affected
in the same way by the rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or cause a system to fail.
The Company is utilizing both internal and external resources to identify,
correct or reprogram, and test its systems for Year 2000 compliance. It is
currently anticipated that all reprogramming efforts will be completed by
December 31, 1998, allowing adequate time for testing. A preliminary assessment
has indicated that some of the Company's older personal computers and ancillary
software programs may not
12
<PAGE>
be Year 2000 compatible. The Company intends to either replace or modify these
computers and programs. The cost of this replacement is not expected to be
material as the shelf life of the Company's personal computers is 3 to 5 years,
and as a result historically each year approximately 25% of all personal
computers are replaced or upgraded. All personal computers purchased in 1997 and
through June 30, 1998 are Year 2000 compatible.
The Company is also obtaining confirmations from the Company's primary vendors
that plans are being developed or are already in place to address processing of
transactions in the Year 2000. However, there can be no assurance that the
systems of other companies on which the Company's systems rely also will be
converted in a timely fashion or that any such failure to convert by another
company would not have an adverse effect on the Company's systems. Management
is in the process of completing its assessment of the Year 2000 compliance
costs. However, based on currently available information (excluding the
possible impact of vendor systems which management currently is not in a
position to evaluate) as noted above, and subject to continued investigation of
this issue, management does not believe that these costs will have a material
effect on the Company's earnings at this time.
INFLATION
The Company does not believe that inflation had a significant impact on its
results of operations during the last three years. Further, inflation is not
expected to adversely affect the Company in the future unless it increases
substantially, and the Company is unable to pass through the increases in its
billings and collections.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this 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
21E of the Securities 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 this Quarterly Report on Form 10-Q and this
Company's other filings with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
13
<PAGE>
PART II - 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
B. REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
14
<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: August 7, 1998
15
<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
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE - BASIC
Weighted average common stock outstanding
during the period................................ 1,478,977 1,571,979 1,478,977 1,569,203
========== ========== ========== ==========
Net Loss............................................ $ (96) $ (368) $ (291) $ (1,022)
Less: Accretion of preferred stock redemption
Value........................................... (4) (4) (8) (9)
---------- ---------- ---------- ----------
Net loss available to common stock.................... $ (100) $ (372) $ (299) $ (1,031)
========== ========== ========== =========
Net loss per share - basic............................ $ (0.07) $ (0.24) $ (0.20) $ (0.66)
========== ========== ========== ==========
EARNINGS PER COMMON SHARE - DILUTED
Weighted average common stock outstanding
during the period............................... 1,478,977 1,571,979 1,478,977 1,569,203
Plus: Incremental shares from assumed conversions
Series A preferred stock........................ 1,416,667 1,416,667 1,416,667 1,416,667
Convertible subordinated debt................... 25,000 25,000 25,000 16,436
---------- ---------- ---------- ----------
Adjusted weighted average shares...................... 2,920,644 3,013,646 2,920,644 3,002,306
========== ========== ========== ==========
Net loss.............................................. $ (96) $ (372) $ (291) $ (1,031)
Plus: Interest expense on convertible subordinated debt... 3 3 6 4
Less: Accretion on preferred stock redemption value....... (4) (8)
---------- ---------- ---------- ----------
Net loss available to common stock....................... $ (97) $ (369) $ (293) $ (1,027)
========== ========== ========== ==========
Net loss per share - diluted.............................. $ (0.03) $ (0.12) $ (0.10) $ (0.34)
========== ========== ========== ==========
</TABLE>
NOTES: THE EFFECT OF OPTIONS AND WARRANTS IS NOT CONSIDERED AS IT WOULD BE
ANTIDILUTIVE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 2,992 4,180
<SECURITIES> 0 0
<RECEIVABLES> 4,187 3,207
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 7,987 8,053
<PP&E> 2,546 2,359
<DEPRECIATION> (1,022) (820)
<TOTAL-ASSETS> 14,496 14,573
<CURRENT-LIABILITIES> 3,314 2,856
<BONDS> 0 0
8,447 8,440
0 0
<COMMON> 1 1
<OTHER-SE> 1,457 1,756
<TOTAL-LIABILITY-AND-EQUITY> 14,496 14,573
<SALES> 10,963 8,056
<TOTAL-REVENUES> 10,963 8,056
<CGS> 0 0
<TOTAL-COSTS> 9,290 7,651
<OTHER-EXPENSES> 1,786 1,620
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 99 120
<INCOME-PRETAX> (291) (1,022)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (291) (1,022)
<EPS-PRIMARY> (0.20) (0.66)
<EPS-DILUTED> (0.10) (0.34)
</TABLE>
