UNITED STATES
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 September 30, 1996
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to _____________
Commission File No. 34-22090
THE MULTICARE COMPANIES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 22-3152527
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
411 Hackensack Avenue
Hackensack, New Jersey 07601
Address of principal executive offices Zip Code
Registrant's telephone number, including area code (201) 488-8818
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 3, 1996
Common Stock ($.01 Par Value) 29,578,562
<PAGE>
THE MULTICARE COMPANIES, INC.
INDEX
Page
Special Note Regarding Forward-Looking Statements 1-2
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
December 31, 1995 and September 30, 1996 3
Consolidated Statements of Operations
Three and nine months ended September 30, 1995 and 1996 4
Consolidated Statements of Cash Flows
Nine months ended September 30, 1995 and 1996 5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II. OTHER INFORMATION 11
Signatures 12
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q, including information set forth under
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations", constitute "Forward-Looking Statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The
Multicare Companies, Inc. ("Multicare" or the "Company") desires to take
advantage of certain "safe harbor" provisions of the Reform Act and is including
this special note to enable the Company to do so. Forward-looking statements
included in this Form 10-Q, or hereafter included in other publicly available
documents filed with the Securities and Exchange Commission, reports to the
Company's stockholders and other publicly available statements issued or
released by the Company involve known and unknown risks, uncertainties, and
other factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ materially from the future
results, performance (financial or operating) achievements expressed or implied
by such forward-looking statement. The Company believes the following important
factors could cause such a material difference to occur:
1. The Company's ability to grow through the acquisition and development of
long-term care facilities or the acquisition of ancillary businesses.
2. The Company's ability to identify suitable acquisition candidates, to
consummate or complete construction projects, or to profitably operate or
successfully integrate enterprises into the Company's other operations.
3. The occurrence of changes in the mix of payment sources utilized by the
Company's patients to pay for the Company's services.
4. The adoption of cost containment measures by private pay sources such as
commercial insurers and managed care organizations, as well as efforts by
governmental reimbursement sources to impose cost containment measures.
5. Changes in the United States healthcare system, including changes in
reimbursement levels under Medicaid and Medicare, and other changes in
applicable government regulations that might affect the profitability of the
Company.
6. The Company's continued ability to operate in a heavily regulated environment
and to satisfy regulatory authorities, thereby avoiding a number of potentially
adverse consequences, such as the imposition of fines, temporary suspension of
admission of patients, restrictions on the ability to acquire new facilities,
suspension or decertification from Medicaid or Medicare programs, and, in
extreme cases, revocation of a facility's license or the closure of a facility,
including as a result of unauthorized activities by employees.
7. The Company's ability to secure the capital and the related cost of such
capital necessary to fund its future growth through acquisition and development,
as well as internal growth.
8. Changes in certificate of need laws that might increase competition in the
Company's industry, including, particularly, in the states in which the Company
currently operates or anticipates operating in the future.
9. The Company's ability to staff its facilities appropriately with qualified
health care personnel, including in times of shortages of such personnel and to
maintain a satisfactory relationship with labor unions.
10. The continued active involvement of the Company's key management personnel,
including particularly, Moshael J. Straus and Daniel E. Straus, co-chief
executive officers of the Company.
11. The level of competition in the Company's industry, including without
limitation, increased competition from acute care hospitals, providers of
assisted and independent living and providers of home health care and changes in
the regulatory system in the state in which the Company operates that facilitate
such competition.
1
<PAGE>
12. The continued availability of insurance for the inherent risks of liability
in the healthcare industry.
13. Price increases in pharmaceuticals, durable medical equipment and other
items.
14. The Company's reputation for delivering high-quality care and its ability
to attract and retain patients, including patients with relatively high acuity
levels.
15. Changes in general economic conditions, including changes that pressure
governmental reimbursement sources to reduce the amount and scope of healthcare
coverage.
Many of the foregoing factors have been discussed in the Company's prior
SEC filings and other publicly available documents. Had the Reform Act been
effective at an earlier time, this special note would have been included in
earlier SEC filings. The foregoing review of significant factors should not be
construed as exhaustive or as an admission regarding the adequacy of disclosures
previously made by the Company prior to the effective date of the Reform Act.
2
<PAGE>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
<CAPTION>
December 31, September 30,
1995 1996
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,921 1,893
Accounts receivable, net 86,168 100,819
Prepaid expenses and other current assets 8,181 14,038
Deferred taxes 3,353 3,510
_______ _______
Total current assets 101,623 120,260
_______ _______
Property, plant and equipment, net 286,767 398,179
Goodwill, net 59,610 115,508
Debt issuance costs, net 4,738 5,370
Other assets 18,220 19,779
_______ _______
$ 470,958 659,096
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 13,619 11,463
Accrued liabilities 30,850 38,631
Current portion of long-term debt and
capitalized lease obligations 1,612 1,031
______ ______
Total current liabilities 46,081 51,125
______ ______
Long-term debt and capitalized
lease obligations 281,470 426,952
Deferred taxes 24,200 42,387
Contingent stock purchase commitment 5,312 ---
Stockholders' equity:
Preferred stock, par value $.01,
7,000,000 shares authorized, none issued --- ---
Common stock, par value $.01, 70,000,000
shares authorized; 17,680,932 and
26,566,086 issued and outstanding in
1995 and 1996, respectively 177 266
Additional paid-in-capital 75,419 81,241
Retained earnings 38,299 57,125
_______ _______
Total stockholders' equity 113,895 138,632
_______ _______
$ 470,958 659,096
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited) (Unaudited)
(In thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Net revenues $ 90,948 134,944 258,253 386,890
Expenses:
Operating expenses 69,534 104,130 197,230 300,368
Corporate, general and administrative 4,451 6,214 12,713 18,627
Depreciation and amortization 3,520 5,841 9,865 16,048
______ _______ _______ _______
Total expenses 77,505 116,185 219,808 335,043
______ _______ _______ _______
Income from operations 13,443 18,759 38,445 51,847
Other income (expense):
Investment income 824 212 1,749 425
Interest expense (4,879) (7,075) (14,000) (19,372)
______ _______ _______ _______
Total other income (expense) (4,055) (6,863) (12,251) (18,947)
Income before income taxes
and extraordinary item 9,388 11,896 26,194 32,900
Income tax expense 3,608 4,478 10,056 12,505
______ _______ _______ _______
Income before extraordinary item 5,780 7,418 16,138 20,395
Extraordinary item - loss on
extinguishment of debt,
net of tax benefit --- --- --- 1,481
______ _______ _______ _______
Net income $ 5,780 7,418 16,138 18,914
Income per common and common
equivalent share data:
Income before extraordinary item $ .22 .27 .61 .74
Net income $ .22 .27 .61 .69
Weighted average number of common
and common equivalent shares
outstanding 26,515 27,606 26,511 27,506
Income per common share
assuming full dilution:
Income before extraordinary item $ .22 .26 .61 .71
Net income $ .22 .26 .61 .67
Weighted average number of common
shares outstanding assuming
full dilution 26,515 32,774 26,511 32,748
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<CAPTION
Nine months ended
September 30,
1995 1996
[S] [C] [C]
Cash flows from operating activities:
Net cash (used in) provided by operating activities $ (2,462) 18,997
Cash flows from investing activities:
Assets and operations acquired (12,951) (122,940)
Capital expenditures (25,900) (49,510)
Other assets (2,907) (2,207)
Net marketable securities (purchased) sold (9,780) 202
Proceeds from sale-leaseback 12,522 ---
________ ________
Net cash used in investing activities (39,016) (174,455)
________ ________
Cash flows from financing activities:
Proceeds from exercise of stock
options and issuance of stock 183 511
Proceeds from long-term debt 191,254 218,200
Payments of long-term debt and
capitalized lease obligations (114,967) (62,874)
Debt issuance costs (3,497) (2,407)
________ ________
Net cash provided by financing activities 72,973 153,430
Increase (decrease) in cash and cash equivalents 31,495 (2,028)
________ ________
Cash and cash equivalents at beginning of period 8,009 3,921
________ ________
Cash and cash equivalents at end of period $ 39,504 1,893
[/TABLE]
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE MULTICARE COMPANIES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
(In thousands, except per share data)
(1) Organization and Basis of Presentation
The Multicare Companies, Inc. and Subsidiaries (Multicare or the Company) own,
operate and manage skilled nursing facilities which provide long-term care and
specialty medical services in selected geographic regions within the eastern and
midwestern United States. In addition, the Company operates institutional
pharmacies, medical supply companies, outpatient rehabilitation centers and
other ancillary healthcare businesses.
The financial information as of September 30, 1996 and for the three and nine
months ended September 30, 1995 and 1996, is unaudited and has been prepared in
conformity with the accounting principles and practices as reflected in the
Company's audited annual financial statements. The unaudited financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position as of September
30, 1996 and the operating results and cash flows for the three and nine months
ended September 30, 1995 and 1996. Results for interim periods are not
necessarily indicative of those to be expected for the year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto incorporated in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
All significant intercompany transactions and accounts of the Company have been
eliminated.
(2) Commitments and Contingencies
A significant portion of the Company's net revenues and accounts receivable
are due from services reimbursable under the Medicaid and the Medicare programs.
There are numerous legislative and executive initiatives at the federal and
state levels for comprehensive reforms affecting the payment for and
availability of healthcare services. The Company is unable to predict the
impact of healthcare reform proposals on the Company; however, it is possible
that such proposals could have a material adverse effect on the Company. Any
changes in reimbursement levels under Medicaid and Medicare and any changes in
applicable government regulations could significantly affect the profitability
of the Company. Various cost containment measures adopted by governmental pay
sources have begun to limit the scope and amount of reimbursable healthcare
expenses. Additional measures, including measures that have already been
proposed in states in which the Company operates, may be adopted in the future
as federal and state governments attempt to control escalating healthcare costs.
There can be no assurance that currently proposed or future healthcare
legislation or other changes in the administration or interpretation of
governmental healthcare programs will not have a material adverse effect on the
Company. In particular, changes to the Medicare reimbursement program that have
recently been proposed could materially adversely affect the Company's revenues
derived from ancillary services.
The Company is from time to time subject to claims and suits arising in the
ordinary course of business. In the opinion of management, the ultimate reso
lution of pending legal proceedings will not have a material effect on the
Company's financial statements.
6
<PAGE>
(3) Capital Stock and Net Income Per Share
In May 1996, the Company effected a three-for two stock split in the form of a
50% stock dividend. In 1996, stockholders' equity has been restated to give
recognition to the stock split by reclassifying from retained earnings to
common stock the par value of the additional shares arising from the stock
split. In addition, all references to average number of shares outstanding and
per share amounts have been restated to reflect the stock split. The
computation of primary earnings per share is based on the weighted average
number of outstanding shares during the period and includes when their effect is
dilutive, common stock equivalents consisting of certain shares subject to stock
options. Fully diluted earnings per share additionally assumes the conversion
of the Company's Convertible Subordinated Debentures.
Net income used in the computation of fully diluted earnings per share was
determined on the assumption that the convertible debentures were converted on
January 1, 1995 and net income was adjusted for the amounts representing
interest and amortization of debt issuance costs, net of tax effect.
In October 1996, the Company completed a public offering of 3,000 shares of its
common stock with net proceeds of approximately $52,000. The proceeds were used
to repay a portion of outstanding bank indebtedness which was incurred to
finance certain of the Company's acquisitions.
(4) Acquisitions
In December 1995, the Company completed the acquisition of Glenmark Associates,
Inc. (Glenmark). The Company acquired the outstanding capital stock of Glenmark
for approximately $32,000 including transaction costs, repaid approximately
$24,200 of debt, and assumed historical debt of approximately $24,700. Total
goodwill approximated $26,000.
In February 1996, the Company completed the acquisition of Concord Health Group,
Inc. (Concord). The Company acquired the outstanding capital stock and warrants
of Concord for approximately $75,000 including transaction costs, repaid
approximately $41,000 of debt, and assumed historical debt of approximately
$4,000. Total goodwill approximated $56,000.
The following unaudited pro forma financial information gives effect to the
acquisitions of Glenmark and Concord as if such transactions occurred on January
1, 1995:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
<S> <C> <C>
Net revenues $ 339,232 394,980
Income before extraordinary item 14,877 19,876
Net income 14,548 18,395
Income before extraordinary
item per common and common
equivalent share .56 .72
Net income per common and common
equivalent share .55 .67
Income before extraordinary item
per share assuming full dilution .56 .70
Net income per share assuming
full dilution .55 .65
</TABLE>
In June 1996, the Company signed a definitive agreement to acquire The ADS
Group, a privately held long-term care company. The ADS Group is controlled by
Alan D. Solomont who is a member of the Company's Board of Directors. Under the
terms of the agreement, Multicare will pay approximately $62,100, assume or
repay approximately $27,000 in debt and issue 554,973 shares of its common stock
for ADS. The closing will occur upon receipt of all required regulatory
consents and licenses, the approval of ADS' shareholders, the satisfactory
completion of Multicare's due diligence, the completion of schedules, and the
receipt of consent of Multicare's lender. The transaction is expected to be
completed during the fourth quarter of 1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERTATIONS
GENERAL
The Company has experienced significant growth, primarily through acquisitions
of long-term care facilities and ancillary businesses and increased utilization
of specialty medical services. It is the Company's strategy to expand through
construction and development of new facilities and selective acquisitions with
geographically concentrated operations. Summarized below are the recent
significant acquisitions completed in 1995 and 1996:
- - In December 1995, the Company acquired the outstanding capital stock of
Glenmark Associates, Inc., a long-term care provider through 21 facilities and
several ancillary businesses with approximately 1,700 beds, located mainly in
West Virginia.
- - In February 1996, the Company acquired the outstanding capital stock of
Concord Health Group, Inc., a long-term care provider through 15 long-term care
facilities with approximately 2,600 beds and ancillary businesses in
Pennsylvania.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SETPEMBER 30, 1995
Net Revenues. Net revenues increased $44.0 million or 48.4% to $134.9 million
for the three months ended September 30, 1996 from $90.9 million for the
comparable period in 1995. This increase was primarily due to the inclusion of
revenues for the Company's recent acquisitions. Net revenues, excluding recent
acquisitions, increased by 11.7% as a result of higher payor rates, development
and opening of additional beds at new facilities, and growth in specialty
medical service revenues. Specialty medical service revenues amounted to $53.1
million in the third quarter of 1996 compared to $37.5 million in the comparable
period of 1995. The Company's quality mix of non-Medicaid patient revenues was
64% in the third quarter of 1996 compared to 68% in the similar period last
year. The 1996 percentages reflect the impact of certain recent acquisitions
which have historically generated lower revenues in these areas.
Operating Expenses. Operating expenses increased $34.6 million or 49.8% to
$104.1 million for the three months ended September 30, 1996 from $69.5 million
for the comparable period in 1995. Salaries, wages and benefits increased to
$65.7 million for the three months ended September 30, 1996 from $43.6 million
for the comparable period in 1995, an increase of $22.1 million or 50.7%. Of
this increase, $16.9 million was due to inclusion of results for the recent
acquisitions. The remainder of the increase was due to the expanded utilization
of salaried therapists and nursing staffing levels to support higher usage of
specialty medical services, in addition to cost of living increases. Other
operating expenses increased to $38.4 million for the three months ended
September 30, 1996 from $25.9 million for the comparable period in 1995, an
increase of $12.5 million or 48.3%. Other operating expenses include
independent contractor fees for therapy, dietary supplies and food, rent,
utilities, facility maintenance and housekeeping. The increase in these
expenses was due principally to the inclusion of the recent acquisitions.
Corporate, General and Administrative. Corporate, general and administrative
expenses remained level at 4.6% and 4.9% of net revenues in the third quarters
of 1996 and 1995, respectively. The expenses include resources devoted to
operations, finance, accounting, legal, and information systems in order to
support the Company.
Depreciation and amortization. Depreciation and amortization increased to $5.8
million in the three months ended September 30, 1996 from $3.5 million in the
same period of 1995, an increase of $2.3 million. The increase was primarily
due to the inclusion of depreciation and amortization for the recently acquired
facilities.
Interest Expense. Interest expense increased to $7.1 million in 1996 from $4.9
million in 1995, an increase of $2.2 million. This increase was due principally
to higher borrowing levels on the Company's various credit agreements.
8
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
Net Revenues. Net revenues increased $128.6 million or 49.8% to $386.9 million
for the nine months ended September 30, 1996 from $258.3 million for the
comparable period in 1995. This increase was primarily due to the inclusion of
revenues for the Company's recent acquisitions. Net revenues, excluding recent
acquistions, increased by 13.9% as a result of higher payor rates, development
and opening of additional beds at new facilities, and growth in specialty
medical services. Specialty medical service revenues increased to $150.8
million in the first nine months of 1996 compared to $104.8 million in the same
period of 1995. The Company's quality mix of non-Medicaid patient revenues was
64% in the first nine months of 1996 compared to 68% in the similar period last
year. The 1996 percentages reflect the impact of certain recent acquisitions
which have historically generated lower revenues in these areas.
Operating Expenses. Operating expenses increased $103.2 million or 52.3% to
$300.4 million for the nine months ended September 30, 1996 from $197.2 million
for the comparable period in 1995. Salaries, wages and benefits increased to
$189.1 million for the nine months ended September 30, 1996 from $124.0 million
for the comparable period in 1995, an increase of $65.1 million or 52.5%. Of
this increase, $46.3 million was due to the Company's recent acquisitions. The
remainder of the increase was due to the expanded utilization of salaried
therapists and nursing staffing levels to support higher usage of specialty
medical services, in addition to cost of living increases. Other operating
expenses increased to $111.3 million for the nine months ended September 30,
1996 from $73.2 million for the comparable period in 1995, an increase of $38.1
million or 52.0%. Other operating expenses include independent contractor fees
for therapy, dietary supplies and food, rent, utilities, facility maintenance
and housekeeping. The increase in these expenses was due principally to the
inclusion of the recent acquisitions.
Corporate, General and Administrative. Corporate, general and administrative
expense remained level at 4.8% and 4.9% of net revenues in the first nine months
of 1996 and 1995, respectively. These expenses include resources devoted to
operations, finance, accounting, and information systems in order to support the
company.
Depreciation and Amortization. Depreciation and amortization increased to $16.0
million in the first nine months of 1996 from $9.9 million in the same period of
1995, an increase of $6.1 million. The increase was primarily due to the
inclusion of depreciation and amortization for the facilities recently acquired.
Interest Expense. Interest expense increased to $19.4 million in the nine
months ended September 30, 1996 from $14.0 million in the same period of 1995,
an increase of $5.4 million. This increase was due primarily to higher
borrowing levels on the Company's credit agreement and interest associated with
the Company's Convertible Debentures.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains working capital from operating cash flows and lines of
credit that are adequate for continuing operations, debt payments, and
anticipated capital expenditures.
At September 30, 1996, the Company had working capital of $69.1 million,
compared to $55.5 million at December 31, 1995.
In June 1996, the Company signed a definitive agreement to acquire The ADS
Group, a privately held long-term care company. Under the terms of the
agreement, Multicare will pay approximately $62.1 million, assume or repay
approximately $27.0 million in debt and issue 554,973 shares of its common stock
for ADS. The closing will occur upon the receipt of all required regulatory
consents and licenses, the approval by ADS' shareholders, the satisfactory
completion of Multicare's due diligence, the completion of schedules, and the
receipt of consent of Multicare's lender. The transaction is expected to be
completed during the fourth quarter of 1996.
Net accounts receivable were $100.8 million at September 30, 1996, compared to
$86.2 million at December 31, 1995. This increase is primarily attributable to
the recent acquisitions, the utilization of specialty medical services for
higher acuity level patients, and the timing of third-party interim and
settlement payments. The allowance for doubtful accounts represents
approximately 8% and 6% of gross accounts receivable at September 30, 1996 and
December 31, 1995, respectively. Legislative and regulatory action and
government budgetary constraints could change the timing of payments and
reimbursement rates of the Medicare and Medicaid programs in the future. These
changes could have a material adverse effect on the Company's future operating
results and cash flows.
9
<PAGE>
There are numerous legislative and executive initiatives at the federal and
state levels for comprehensive reforms affecting the payment for and
availability of healthcare services. The Company is unable to predict the
impact of healthcare reform proposals on the Company; however, it is possible
that such proposals could have a material adverse effect on the Company. Any
changes in reimbursement levels under Medicaid and Medicare and any changes in
applicable government regulations could significantly affect the profitability
of the Company. Various cost containment measures adopted by governmental pay
sources have begun to limit the scope and amount of reimbursable healthcare
expenses. Additional measures, including measures that have already been
proposed in states in which the Company operates, may be adopted in the future
as federal and state governments attempt to control escalating healthcare costs.
There can be no assurance that currently proposed or future healthcare
legislation or other changes in the administration or interpretation of
governmental healthcare programs will not have a material adverse effect on the
Company. In particular, changes to the Medicare reimbursement program that have
recently been proposed could materially adversely affect the Company's revenues
derived from ancillary services.
In October 1996, the Company completed a public offering of 3 million shares
of its common stock with net proceeds of approximately $52.0 million. The
proceeds were used to repay a portion of outstanding bank indebtedness which was
incurred to finance certain of the Company's acquisitions.
The Company plans to continue its growth oriented strategy for the foreseeable
future. The Company anticipates using operating cash flows, bank credit
facilities, leasing arrangements, and the sale of additional debt or equity
securities to finance its growth. The Company estimates its capital
requirements for the construction of new facilities and the expansion and
renovation of existing facilities to approximate $50 million over the next
twelve months based on existing construction commitments and plans.
10
<PAGE>
PART II-OTHER INFORMATION
ITEM 6.(a) Exhibits.
Exhibit No.
11 Statement re computation of per share earnings
27 Financial Data Schedule
(b) Reports on Form 8-K.
On October 22, 1996 the Company filed a Current Report on Form 8-K
reporting a press release dated October 17, 1996 announcing the
Company's third quarter results.
11
<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.
The Multicare Companies, Inc.
STEPHEN R. BAKER
By:
Stephen R. Baker
Executive Vice President
and Chief Financial Officer
November 14, 1996
12
<TABLE>
The Multicare Companies, Inc.
Computation of earnings per share
September 30, 1996
(Unaudited)
(in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30, 1996 September 30, 1996
<S> <C> <C>
Income per common and common
equivalent share:
Income before extraordinary item $ 7,418 20,395
Net Income $ 7,418 18,914
Weighted average number of common
and common equivalent shares outstanding 27,606 27,506
Income before extraordinary item per common
and common equivalent share $ .27 .74
Net income per common and common
equivalent share $ .27 .69
Income per common and common
equivalent share assuming full dilution:
Income before extraordinary item $ 7,418 20,395
Net income $ 7,418 18,914
Adjustments to income:
Interest expense and amortization of debt
issuance costs relating to convertible
debt, net of tax $ 982 2,973
Adjusted net income $ 8,400 21,887
Weighted average number of common and
common equivalent shares outstanding 27,798 27,772
Convertible debt shares 4,976 4,976
Adjusted shares 32,774 32,748
Income before extraordinary item per
common share assuming full dilution $ .26 .71
Net income per common share assuming
full dilution $ .26 .67
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MULTICARE
COMPANIES, INC. FORM 10-Q QUARTERLY REPORT FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,893
<SECURITIES> 0
<RECEIVABLES> 100,819
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 120,260
<PP&E> 398,179
<DEPRECIATION> 0
<TOTAL-ASSETS> 659,096
<CURRENT-LIABILITIES> 51,125
<BONDS> 426,952
0
0
<COMMON> 266
<OTHER-SE> 138,366
<TOTAL-LIABILITY-AND-EQUITY> 659,096
<SALES> 0
<TOTAL-REVENUES> 386,890
<CGS> 0
<TOTAL-COSTS> 300,368
<OTHER-EXPENSES> 16,048
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,372
<INCOME-PRETAX> 32,900
<INCOME-TAX> 12,505
<INCOME-CONTINUING> 20,395
<DISCONTINUED> 0
<EXTRAORDINARY> 1,481
<CHANGES> 0
<NET-INCOME> 18,914
<EPS-PRIMARY> .69
<EPS-DILUTED> .67
</TABLE>
