SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 OR 15 (d) of
the Securities Exchange Act of 1934
For the quarter ended September 30, 1996
Commission file number 0-21006
INFU-TECH, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3127689
(State of other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
(Address of principal executive offices)
Registrant's telephone number, including area code (201) 567 - 4600
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 short 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
As of November 7, 1996, the Registrant had outstanding 3,214,600 shares of
its $.01 par value Common Stock.
<PAGE>
INFU-TECH, INC.
Index
Page Number
PART I - FINANCIAL INFORMATION:
Item 1 Consolidated Balance Sheets September 30, 1996 (Unaudited)
and June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Operations (Unaudited) for the three months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows (Unaudited) for the three months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . 4
Notes to Unaudited Condensed Consolidated Financial Statements . . . 5
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 6 - 7
PART II - OTHER INFORMATION 8
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
INFU-TECH, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<S> <C> <C>
September 30, June 30,
1996 1996
Assets (Unaudited)
Cash and cash equivalents $1,094 $691
Accounts receivable, net of allowances for
uncollectible accounts of $2,716 and $2,456 6,398 5,669
Inventories 1,878 1,646
Deferred income taxes 822 822
Prepaid expenses and other current assets 236 205
Total current assets 10,428 9,033
Property and equipment, at cost, net of
accumulated depreciation of $354 and $320 309 307
Deferred income taxes 52 52
Other assets 92 92
Total assets $10,881 $9,484
Liabilities and Stockholders' Equity
Accounts payable $3,735 $2,779
Accrued payroll and related expenses 622 403
Other current liabilities 1,133 1,155
Total current liabilities 5,490 4,337
Capital lease obligation 100 99
Deferred income 40 72
Total liabilities 5,630 4,508
Stockholders' equity:
Common stock, $.01 par value; 5,000,000
shares authorized;3,214,600 issued 32 32
Additional paid-in capital 2,930 2,928
Retained earnings 2,362 2,089
Treasury stock, at cost; 39,300 shares (73) (73)
Total stockholders' equity 5,251 4,976
Commitments and contingencies
Total liabilities and stockholders' equity $10,881 $9,484
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
INFU-TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
<TABLE>
(Unaudited)
Three months ended September 30,
<S> <C> <C>
1996 1995
Revenues $6,443 $6,333
Costs and expenses:
Medical and nutritional product 3,080 3,302
Personnel 1,689 1,708
Selling, general and administrative 795 684
Provision for uncollectible accounts 312 334
Management fees to majority shareholder 103 101
Depreciation 35 26
Other income,net (33) (32)
5,981 6,123
Income before income taxes 462 210
Provision for income taxes 189 --
Net income $273 $210
Earnings per share $0.09 $0.07
Weighted average number of shares 3,174,567 3,160,867
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
INFU-TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
(Unaudited)
Three months ended
September 30,
<S> <C> <C>
1996 1995
Operating activities:
Net income $ 273 $ 210
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation expense 35 26
Provision for uncollectible accounts 312 334
Amortization of deferred income (32) (32)
Increase (decrease) from changes in:
Accounts receivable (1,041) (1,149)
Inventories (232) 220
Prepaid expenses and other current (31) 247
Accounts payable 956 243
Accrued payroll and related 219 (35)
Other current liabilities (25) 11
Net cash provided by operating activities 434 75
Investing activities:
Expenditures for property and equipment (9) (7)
Financing activities:
Payment of capital lease obligation (24) (11)
Exercise of option 2 0
Net cash used in financing activities (22) (11)
Net increase in cash and cash equivalents 403 57
Cash and cash equivalents, beginning of the period 691 546
Cash and cash equivalents, end of the period $1,094 $603
Supplemental disclosures of cash flow data:
Income taxes paid $53 $ -
Non cash investing and financing activity:
Property and equipment obtained under capital
lease obligation $ - $ 83
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
INFU-TECH, INC.
(Unaudited)
Notes to Condensed Consolidated Financial Statements
1. The Company
Infu-Tech, Inc. (the "Company") is a provider of clinical services and
products to the non-hospital based health care market. This includes a broad
range of complete home infusion therapy services including total parenteral
nutrition therapy, antibiotic therapy and other therapies to patients at home
and enteral nutrition infusion therapy and other medical services and products
provided primarily to patients in long-term care facilities. The Company is
59% owned by Continental Health Affiliates, Inc. ("CHA"), a public company.
The minority 41% of the Company's equity is publicly traded.
The Company is subject to certain risks and uncertainties as a result of
changes that could occur in the healthcare industry, including medicare and
medicaid reimbursement rates.
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accrual adjustments, considered
necessary for a fair presentation have been included. Operating results for
the three month period ended September 30, 1996, are not necessarily indicative
of the results that may be expected for the year ended June 30, 1997.
These financial statements and notes should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1996.
<PAGE>
INFU-TECH, INC.
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
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto.
Results of Operations
Three Months Ended September 30, 1996 and 1995
Total revenues increased by $110,000, or 2%, from $6,333,000 to $6,443,000
primarily due to a $168,000, or 4%, increase in home infusion division
revenues. This increase is partially attributed to a 11% increase in the
number of patients serviced. Most of the additional home infusion patients
were obtained through successful marketing efforts directed at managed care
companies. These patients are normally serviced under agreements with
significant price discounts or under other arrangements which substantially
reduce prices.
Cost of medical and nutritional products sold to patients and other customers
decreased by $222,000, or 7%, from $3,302,000 in 1995 to $3,080,000 in 1996.
As a percentage of total revenues, medical and nutritional product costs were
48% in 1996 and 52% in 1995. The improvement in the nutritional product costs
as a percentage of sales is attributable to two principal factors. First, the
Company is participating in group purchasing programs that make bulk purchases
more economical and second, the cost of nutritional product for the quarter was
based upon a physical inventory count at September 30, 1996.
Total personnel costs decreased by $19,000, or 1%, from $1,708,000 in 1995 to
$1,689,000 in 1996, primarily as a result of reductions in sales and
administrative personnel.
Selling, general and administrative expenses increased by $111,000, or 16%,
from $684,000 in 1995 to $795,000 in 1996 primarily due to an increase in legal
fees and the engagement of an investor relations firm.
The provision for uncollectible accounts was 5% of revenues in both years.
Management fees to Continental Health Affiliates, Inc. and subsidiaries ("CHA")
of $103,000 in 1996 and $101,000 in 1995 were 1.6% of revenues in both years.
Depreciation expense increased from $26,000 in 1995 to $35,000 in 1996 due to
property and equipment additions.
Other income of $33,000 in 1996 and $32,000 in 1995 consisted of $32,000 of
amortization in both years of a $628,000 payment received by the Company in
1992 as consideration for the Company's releasing the buyer of CHA's former
Home Nursing Division from an agreement not to sell infusion therapy services
and CHA's agreeing not to provide nursing services in California, Arizona or
Tennessee for a period of five years.
The provision for income taxes in 1996 reflects use of a portion of the
Company's net operating loss carryforwards.
<PAGE>
INFU-TECH, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The net income in 1996 was $273,000, or $.09 per share compared to net income
in 1995 of $210,000 or $.07 per share. The improvement in net income was
primarily attributable to a 2% increase in revenues and a 7% decrease in the
cost of medical and nutritional products sold to patients and other customers.
Income before taxes for the quarter ended September 30, 1996 was $462,000
compared to $210,000 for the comparable quarter last year. As the Company has
now utilized its net operating loss carryforwards, a full tax charge in the
current quarter results in net income of $273,000 compared to $210,000 for the
comparable quarter last year.
Liquidity and Capital Resources
As of September 30, 1996, the Company had total assets of $10.9 million and a
net worth of $5.3 million. Its liabilities consisted almost entirely of
accounts payable and other operating obligations. The Company had no
borrowings and its primary capital requirements have been for investment in
working capital, principally accounts receivable and inventories.
At September 30, 1996, the balance in net accounts receivable for Infu-Tech was
13% higher than the balance at June 30, 1996. Infu-Tech's overall outstanding
net accounts receivable has increased from 84 days sales at June 30, 1996 to 91
days sales at September 30, 1996, primarily as a result of a slow down in
payments from Medicare and managed care companies. Medicare payments have been
delayed due to changes in reimbursement policies, while managed care companies
have experienced delays in processing payments due to a higher volume of
claims. As a result, Infu-Tech has experienced increased delays in having its
claims processed as well as an increase in the number of initial claims
rejected.
As of September 30, 1996, the Company's working capital was $4.9 million.
Among the nursing homes with which the Company does business are seven
facilities which are owned or managed by CHA and three facilities which are
owned by companies controlled by CHA s Principal Stockholders. During the
three months ended September 30, 1996, the Company s sales from those
nursing homes totalled $137,000. At September 30, 1996, the Company s accounts
receivable from those nursing homes totalled $1,163,000. The Company owed CHA
$539,000 for unpaid management fees. During the three months ended September
30, 1996, the Company realized revenues of $106,000 or 7%, of the Company s
total contract services revenues, from the sale of products and services to
residents of the seven nursing homes owned or managed by CHA and the three
nursing homes owned by companies controlled by CHA s Principal Stockholders.
<PAGE>
INFU-TECH, INC.
Part II Other Information
Item 1 Legal Proceedings
There are no presently pending material legal proceedings other than
as reported in the Company's Form 10K for the year ended June 30, 1996.
Item 2 Changes in Securities NONE
Item 3 Defaults Upon Senior Securities NONE
Item 4 Submission of Matters to Vote of Security Holders NONE
Item 5 Other Information NONE
Item 6 Exhibits and Reports on Form 8-K NONE
<PAGE>
INFU-TECH, INC.
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.
Infu-Tech, Inc.
Date November 14, 1996 /s/ JACK ROSEN
Jack Rosen
Chairman and Director
(Chief Executive Officer)
Date November 14, 1996 /s/ S. COLIN NEILL
S. Colin Neill
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1094000
<SECURITIES> 0
<RECEIVABLES> 9114000
<ALLOWANCES> 2716000
<INVENTORY> 1878000
<CURRENT-ASSETS> 10428000
<PP&E> 663000
<DEPRECIATION> 354000
<TOTAL-ASSETS> 10881000
<CURRENT-LIABILITIES> 5490000
<BONDS> 0
0
0
<COMMON> 32000
<OTHER-SE> 5219000
<TOTAL-LIABILITY-AND-EQUITY> 10881000
<SALES> 6443000
<TOTAL-REVENUES> 6443000
<CGS> 3080000
<TOTAL-COSTS> 5981000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 312000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 462000
<INCOME-TAX> 189000
<INCOME-CONTINUING> 273000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 273000
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
