<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------------
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 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: 0-22162
------------------------------------
SIMIONE CENTRAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3209241
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6600 POWERS FERRY ROAD 30339
ATLANTA, GEORGIA (zip code)
(Address of principal
executive offices)
(770) 644-6500
------------------------------------
(Registrant's telephone number, including area code)
N/A
------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 registrant's
classes of common stock, as of the latest practicable date:
Outstanding at
Class April 30, 1997
Common Stock, $.001 par value 12,022,234 shares
<PAGE> 2
SIMIONE CENTRAL HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - December 31, 1996 and March 31, 1997
(unaudited).
Consolidated Statements of Operations - Three Months Ended March 31,
1996 and 1997 (unaudited).
Consolidated Statements of Shareholders' Equity - For the Three
Months Ended March 31, 1997 (unaudited).
Consolidated Statements of Cash Flows - Three Months Ended March 31,
1996 and 1997 (unaudited).
Notes to Consolidated Financial Statements - March 31, 1997
(unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
------------ ------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,384,728 $ 2,532,923
Restricted cash -- 1,000,000
Accounts receivable, net of allowance for doubtful
accounts of $1,063,014 and $1,114,937, respectively 5,651,415 6,842,444
Prepaid expenses and other current assets 870,729 583,636
------------ ------------
Total current assets 9,906,872 10,959,003
Purchased software, furniture and equipment, net 1,867,996 1,787,101
Intangible assets, net 5,922,755 5,679,334
Restricted cash at December 31, 1996 and other assets 1,078,056 107,069
------------ ------------
Total assets $ 18,775,679 $ 18,532,507
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ -- $ 2,500,000
Accounts payable 3,199,353 2,167,231
Accrued compensation expense 666,650 944,821
Accrued liabilities 3,251,636 2,920,426
Customer deposits 1,679,565 1,548,295
Unearned revenues 2,006,044 2,374,496
Current portion of capital lease obligations 306,466 301,651
------------ ------------
Total current liabilities 11,109,714 12,756,920
Notes payable and capital lease obligations, less current portion 2,986,267 406,214
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued or outstanding -- --
Common stock, 20,000,000 $.001 par shares authorized;
11,904,333 and 11,972,234 shares issued and outstanding,
respectively 11,904 11,972
Additional paid-in capital 23,210,098 23,256,571
Stock subscription receivable (850,000) (850,000)
Accumulated deficit (17,692,304) (17,049,170)
------------ ------------
Total shareholders' equity 4,679,698 5,369,373
------------ ------------
Total liabilities and shareholders' equity $ 18,775,679 $ 18,532,507
============ ============
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 4
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1996 1997
----------- ------------
(unaudited)
<S> <C> <C>
Net revenues:
Information services $ 3,361,878 $ 4,700,969
Systems -- 981,473
Support and consulting services 1,804,225 5,745,479
----------- ------------
Total net revenues 5,166,103 11,427,921
Costs and expenses:
Cost of information services 1,812,488 3,066,551
Cost of systems -- 343,443
Cost of support and consulting services 1,406,838 2,068,597
Selling, general and administrative 1,137,794 3,293,405
Research and development 1,113,840 1,539,478
Amortization and depreciation 104,535 424,472
----------- ------------
Total costs and expenses 5,575,495 10,735,946
----------- ------------
Income (loss) from operations (409,392) 691,975
Other income (expense):
Interest expense (3,900) (76,753)
Interest and other income 18,491 27,912
----------- ------------
Net income (loss) $ (394,801) $ 643,134
=========== ============
Net income (loss) per share $ (0.06) $ 0.04
=========== ============
Weighted average common and
common equivalent shares 6,568,363 14,727,515
=========== ============
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 5
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
For the Three Months Ended March 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Additional Stock
Common Paid-in Subscription Accumulated
Shares Stock Capital Receivable Deficit
---------- ------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 11,904,333 $11,904 $23,210,098 $(850,000) $(17,692,304)
Issuance of 67,901 shares of
$.001 par value common stock
from exercise of stock options 67,901 68 46,473 -- --
Net income -- -- -- -- 643,134
---------- ------- ----------- --------- ------------
Balance at March 31, 1997 11,972,234 $11,972 $23,256,571 $(850,000) $(17,049,170)
========== ======= =========== ========= ============
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 6
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------
1996 1997
----------- -----------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (394,801) $ 643,134
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH USED IN OPERATING ACTIVITIES:
Provision for doubtful accounts 15,104 269,748
Amortization and depreciation 104,535 424,472
Loss on sale of assets -- 1,734
Changes in assets and liabilities:
Accounts receivable (2,082,473) (1,434,085)
Prepaid expenses and other current assets (144,855) 287,093
Other assets -- (29,013)
Accounts payable 1,121,639 (1,032,122)
Accrued compensation expense 289,045 278,171
Accrued liabilities 46,080 (302,508)
Customer deposits -- (131,270)
Unearned revenues 199,706 368,452
----------- -----------
Net cash used in operating activities (846,020) (656,194)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of consulting division of Simione & Simione (2,000,000) --
Purchase of software, furniture and equipment (11,504) (130,225)
Increase in restricted cash (1,000,000) --
Purchase of intangible assets (44,124) --
----------- -----------
Net cash used in investing activities (3,055,628) (130,225)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from former parent company 4,000,000 --
Proceeds from notes payable 625,000 200
Cash expenses for issuance of common stock (5,548) --
Advances from former parent company 12,121 --
Principal payments on capital lease obligations -- (83,425)
Payments of related party notes -- (28,702)
Proceeds from exercise of stock options and warrants -- 46,541
----------- -----------
Net cash provided by (used in) financing activities 4,631,573 (65,386)
----------- -----------
Net (decrease) increase in cash and cash equivalents 729,925 (851,805)
Cash and cash equivalents, beginning of period 323,023 3,384,728
----------- -----------
Cash and cash equivalents, end of period $ 1,052,948 $ 2,532,923
=========== ===========
Supplemental disclosure of non-cash investing activities
Software, furniture and equipment obtained through capital leases $ -- $ 12,180
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 7
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments (which consist of
normal recurring adjustments) considered necessary for a fair presentation have
been included. Interim results are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
Certain financial information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto as of December 31, 1996, appearing in the Company's Annual Report on
Form 10-K.
On October 8, 1996, InfoMed Holdings, Inc. ("IMHI") and Central Health
Management Services, Inc. ("CHMS") merged in a transaction accounted for as a
reverse acquisition for financial reporting purposes. In connection with the
acquisition, IMHI issued 7,916,712 shares of its common stock in exchange for
all the outstanding common stock of CHMS, and thereby, the former shareholders
of CHMS acquired control of IMHI. As a result, CHMS is considered the acquiring
company; hence, the historical financial statements of CHMS became the
historical financial statements of IMHI and include the results of operations
of IMHI only from the effective acquisition date. On December 19, 1996, IMHI
changed its name to Simione Central Holdings, Inc. (the "Company").
DESCRIPTION OF BUSINESS
The Company is a leading provider of integrated systems and services designed
to enable home health care providers to more effectively operate their
businesses and compete in a managed care environment. The Company offers two
systems which provide a core platform of software applications and can also
incorporate specialized selected modules to enable customers to generate and
utilize comprehensive financial, operational and clinical information. The
Company's Shared Resource Solution offers customers an outsourcing opportunity
which incorporates the Company's proprietary NAHC IS system software. Under
this arrangement, the Company operates a data center which stores customer data
and allows them real-time, secure access through a wide area communications
network. The Company's In-House Solution, STAT 2, offers similar
functionality, but is licensed to customers for use on their own computer
systems. In addition to these two system solutions, the Company's home health
care consulting services assist providers in addressing the challenges of
reducing costs, maintaining quality, streamlining operations and re-engineering
organizational structures. The Company also provides comprehensive agency
support services which include administrative, billing and collection,
training, reimbursement and financial management services, among others.
<PAGE> 8
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 2 - ACQUISITION
On October 8, 1996, IMHI merged with CHMS. In connection with the merger, each
issued and outstanding share of CHMS common stock was converted into and
exchanged for the right to receive .22021 shares of IMHI common stock as of the
effective date. All share amounts have been retroactively restated giving
effect to the .22021 exchange ratio of CHMS shares for IMHI shares.
The merger was accounted for as a reverse acquisition for financial reporting
purposes. CHMS is considered the acquiring company; hence, the historical
financial statements of CHMS became the historical financial statements of IMHI
and include the results of operations of IMHI only from the effective
acquisition date. CHMS had been on a December 31 fiscal year end, and
therefore, the fiscal year end of IMHI was changed from June 30 to December 31.
Unaudited pro forma information giving effect to the acquisition as if it took
place on January 1, 1996 follows:
<TABLE>
<CAPTION>
Three Months Ended March 31, 1996
---------------------------------
<S> <C>
Net revenues $ 8,135,000
Net loss $(12,883,000)
Net loss per share $ (1.23)
Weighted average common shares 10,465,066
</TABLE>
The 1996 pro forma net loss includes pro forma adjustments for a $12,574,000
charge to operations for purchased in-process research and development costs,
and a net charge of $149,000 for additional amortization expense related to the
allocation of purchase price to intangible assets and for decreased
depreciation expense related to a reduction in value of fixed assets acquired.
This pro forma information does not purport to be indicative of the results
that actually would have occurred if the acquisition had been effective on the
date indicated.
<PAGE> 9
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 3 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
At March 31, 1997, a wholly-owned subsidiary of the Company has line of credit
agreements with a bank which provide for aggregate borrowing of $2,500,000 and,
as renewed, expire on January 17, 1998. Borrowings of $1,000,000 under these
agreements bear interest at 8.72% and borrowings of $1,500,000 bear interest at
the bank's prime rate. Borrowings under these agreements aggregated $2,500,000
at March 31, 1997, and are secured by a certificate of deposit of $1,000,000,
the subsidiary's accounts receivable, and certain other assets. Additionally,
borrowings under these agreements aggregating $1,500,000 are personally
guaranteed by a major shareholder and executive officer of the Company.
As a result of the January 17, 1998 expiration date on the line of credit
agreements, the line of credit agreements and the related certificate of
deposit were presented as long-term liabilities and a long-term asset at
December 31, 1996 and as current liabilities and a current asset at March 31,
1997.
The Company has lease agreements with a related party (see Note 7) for certain
office and computer equipment and furniture with approximate aggregate cost and
net book value of $669,000 and $552,000, respectively, as of March 31, 1997.
Additionally, the Company has other equipment under capital leases with
approximate aggregate cost and net book value of $139,000 and $104,000,
respectively, at March 31, 1997. Amortization of these assets is included in
the Company's depreciation expense and amounted to approximately $71,000 for
the three months ended March 31, 1997.
NOTE 4 - INCOME TAXES
At December 31, 1996, the Company had approximately $5,975,000 of net operating
losses ("NOL") for income tax purposes available to offset future taxable
income. Such losses expire $3,159,000 in 2010 and $2,816,000 in 2011 and may
be subject to certain limitations for changes in ownership. For the three
months ended March 31, 1997, the Company has applied a portion of this NOL
against income tax expense for financial reporting purposes. A valuation
allowance reducing net deferred tax assets recognized to zero has been recorded
based on management's assessment that it is not "more likely than not" that the
assets are realizable as of March 31, 1997.
<PAGE> 10
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 5 - SHAREHOLDERS' EQUITY
On March 26, 1997, the Company's Board of Directors approved the Omnibus
Equity-Based Incentive Plan (the "Incentive Plan") and the 1997 Non-Qualified
Formula Stock Option Plan (the "Director Plan"), both of which are subject to
shareholder approval. The Company has reserved 500,000 and 50,000 shares of
common stock for future issuance under the Incentive Plan and Director Plan,
respectively.
In addition, the Company has established two stock option plans, the 1994
Incentive Stock Option and Non-Qualified Stock Option Plan (the "1994 Plan")
and the 1996 Stock Option Plan (the "1996 Plan"), under which the Company is
authorized to grant options to purchase an aggregate of 1,257,008 shares of
common stock. Options granted under these plans must have an exercise price
not less than the fair market value at the date of grant. In addition to
options granted under the 1994 Plan and 1996 Plan, the Company has granted
non-plan options to certain related parties. Such non-plan options were
granted with exercise prices equal to fair market value on the date of grant.
A summary of the Company's stock option activity for the three months ended
March 31, 1997 follows:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
OF EXERCISE
OPTIONS PRICE
------------------------
<S> <C> <C>
Outstanding at December 31, 1996 2,813,308 $2.29
Granted 154,000 5.87
Exercised (67,901) 0.69
-----------
Outstanding at March 31, 1997 2,899,407 $2.53
===========
</TABLE>
The following table summarizes information about options outstanding at March
31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------- -----------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
- ------------ ----------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$0.37-$ 1.13 774,166 4.8 $0.69 774,166 $ 0.69
1.50 - 2.63 1,131,241 8.7 1.95 713,950 1.63
3.13 - 7.00 994,000 8.6 4.63 365,000 3.31
----------- ---------
2,899,407 7.7 $2.53 1,853,116 $ 1.57
=========== =========
</TABLE>
<PAGE> 11
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 5 - SHAREHOLDERS' EQUITY (CONTINUED)
Pro forma information regarding net income (loss) and net income (loss) per
share is required by SFAS No. 123 as if the Company had accounted for employee
stock option grants under the fair value method of SFAS No. 123. The fair
value of options was estimated at the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions for the
three months ended March 31, 1997: risk-free interest rates of 6%; no
dividends; a volatility factor of the expected market price of the Company's
common stock of 0.6; and a weighted-average expected life of the options of 5
years. In addition, options assumed in the purchase of IMHI have been included
in the fair value estimates as if the options assumed were granted by the
Company on the purchase date and using an assumed exercise price of the value
of IMHI shares issued in the acquisition. The weighted average fair value of
options granted during the three months ended March 31, 1996 and 1997 was $0.36
and $3.35, respectively.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For the purposes of SFAS No. 123 pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The Company's pro forma net income (loss) for SFAS No. 123 purposes for the
three months ended March 31, 1996 and 1997 was approximately $(600,000) and
$500,000, respectively. The Company's pro forma net income (loss) per share for
SFAS No. 123 purposes for the three months ended March 31, 1996 and 1997 was
$(0.09) and $0.04, respectively.
At March 31, 1997, the Company had outstanding warrants to purchase shares of
the Company's common stock as follows:
<TABLE>
<CAPTION>
COMMON EXERCISE EXPIRATION
SHARES PRICE DATE
- ---------------------------------------
<S> <C> <C>
1,000,000 $0.50 February 24, 2005
155,038 3.11 October 8, 1999
20,000 5.63 -
- ---------
1,175,038
=========
</TABLE>
All outstanding warrants are exercisable. On April 9, 1997, the warrant to
purchase 155,038 shares was reduced to 103,358 shares.
At March 31, 1997, the Company has reserved 4,616,212 shares of common stock
for future issuance upon exercise of warrants and options to purchase common
stock.
<PAGE> 12
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 6 - MAJOR CUSTOMERS AND TRANSACTIONS WITH FORMER PARENT COMPANY
For the three months ended March 31, 1997, affiliates of the Columbia/HCA
Healthcare Corporation accounted for approximately 53.8% of the Company's total
net revenue and for 31.4% of net accounts receivable at March 31, 1997.
Through October 31, 1996, the Company derived revenue from charges for the
services provided to the home health care agencies wholly-owned by the
Company's former parent, Central Health Holding Company, Inc. ("CHHC"). The
charges were recorded, for purposes of these consolidated financial statements,
in an amount equal to the cost of the services being provided and therefore
generated no operating profit. Cost-based revenues from CHHC of $3,562,000, or
69.0% of total net revenues, were recognized for the three months ended March
31, 1996. In addition, CHHC charged the Company a management fee for certain
services provided to the Company based on the allocated direct cost of the
various services provided. Management fees in the amount of $58,000 were
incurred for the three months ended March 31, 1996.
NOTE 7 - RELATED PARTY TRANSACTIONS
Gateway LLC, a company owned in part by a member of the Company's Board of
Directors, leases an office facility to the Company under the terms of an
agreement, which expires January 1, 2001. Rent expense and related operating
expenses paid to Gateway LLC were $84,000 for the three months ended
March 31, 1997.
A major shareholder and executive officer along with certain other executive
officers of the Company are shareholders of National Leasing, Inc.
("National"). The Company has entered into various three-year capital leases
for furniture and equipment with National. Total payments to National under
these lease agreements were $78,000 for the three months ended March
31, 1997.
A shareholder and executive officer of the Company is a partner in an entity
that leases an office facility to the Company on a month-to-month basis for
$6,500 per month through April 1996 and $10,800 per month thereafter. Rent
expense and related operating expenses paid to this entity were $19,000 and
$32,000 for the three months ended March 31, 1996 and 1997, respectively.
The Company has consulting agreements with two entities in which certain
directors of the Company have ownership interests. Aggregate monthly consulting
fees paid to these two entities were approximately $50,000 for the three months
ended March 31, 1997.
<PAGE> 13
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 8 - RECENTLY ADOPTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued a new
accounting pronouncement, SFAS No. 128, "Earnings per Share", which will change
the current method of computing earnings per share. The new standard requires
presentation of "basic earnings per share" and "diluted earnings per share"
amounts, as defined. SFAS No. 128 will be effective for the Company's quarter
and year ending December 31, 1997, and upon adoption, all prior-period earnings
per share data presented shall be restated to conform with the provisions of
the new pronouncement. Application earlier than the Company's quarter ending
December 31, 1997 is not permitted. The restated basic and diluted earnings or
loss per share to be reported upon adoption of SFAS No. 128 will not differ
from amounts reported under existing accounting rules for all periods reported
by the Company through December 31, 1996. The Company has not evaluated the
impact of SFAS No. 128, if any, on the amounts reported as of March 31, 1996.
The Company has not evaluated the impact of SFAS No. 128, if any, on the amounts
reported as of March 31, 1997.
NOTE 9 - SUBSEQUENT EVENTS
On April 21, 1997, the Company filed a Registration Statement with the
Securities and Exchange Commission on Form S-1. In conjunction with the
Registration Statement, the Company has proposed a one-for-two reverse stock
split of the Company's outstanding common stock which is subject to shareholder
approval and would be effected on the date of the effectiveness of the
Registration Statement. The Company is proposing in the Registration
Statement to offer for sale 1,950,000 (post-reverse split) shares of its common
stock and which would also provide for the sale of 850,000 (post-reverse split)
shares owned by a shareholder. The Company will not receive any of the proceeds
from the sale of shares by the selling shareholder.
Except for the share amounts mentioned in the preceding paragraph, all share
and per share amounts included in these financial statements have not been
restated to reflect the proposed reverse stock split for the periods presented.
In addition, on May 1, 1997, the Company redeemed its $1 million certificate of
deposit to pay the borrowings outstanding under its $1 million line of credit.
The line of credit was secured by the certificate of deposit which was reported
as restricted cash.
<PAGE> 14
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended, and are
subject to the safe harbor created by such sections. When used in this report,
the words "believe", "anticipate", "estimate", "expect", and similar
expressions are intended to identify forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. The Company's actual results may differ significantly
from the results discussed in such forward-looking statements. When
appropriate, certain factors that could cause results to differ materially from
those projected in the forward-looking statements are enumerated. This
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company's consolidated
financial statements and the notes thereto.
OVERVIEW
The Company is a leading provider of integrated systems and services designed
to enable home health care providers to more effectively operate their
businesses and compete in a managed care environment. The Company offers two
systems which provide a core platform of software applications and can also
incorporate selected specialized modules to enable customers to generate and
utilize comprehensive financial, operational and clinical information. The
Company's Shared Resource Solution offers customers an outsourcing opportunity
which incorporates the Company's proprietary NAHC IS system software. Under
this arrangement, the Company operates a data center which stores customer data
and allows them real-time, secure access through a wide area communications
network. The Company's In-House Solution, STAT 2, offers similar
functionality, but is licensed to customers for use on their own computer
systems. In addition to these two systems solutions, the Company's home health
care consulting services assist providers in addressing the challenges of
reducing costs, maintaining quality, streamlining operations and re-engineering
organizational structures. The Company also provides comprehensive agency
support services which include administrative, billing and collection,
training, reimbursement, and financial management services, among others.
The Company enters into multi-year contracts (generally 3 to 5 years) with its
customers in connection with its Shared Resource Solution and its provision of
agency support services. In general, these contracts provide for the payment
of monthly fees based on the number of billed home care visits made by the
customers. Revenues derived under these contracts are recognized monthly as
the related services are rendered and typically range from several hundred
thousand dollars to several million dollars per year. The loss of any of these
contracts could have a material adverse impact on the Company's business,
financial position and results of operations.
The Company sells its In-House Solution, STAT 2, pursuant to non-exclusive
license agreements which provide for the payment of a one-time license fee. In
accordance with SOP 91-1, these revenues are recognized when products are
delivered and collectibility of fees is probable, provided that no significant
obligations remain under the contract. Revenues derived from the sale of
software products requiring significant modification or customization are
recognized based upon the percentage of completion method. The price of the
Company's In-House Solution varies depending on the number of software modules
licensed and the number of users accessing the system and can range from thirty
thousand dollars to a few million dollars. The Company generally requires
payment of a deposit upon the signing of a customer order as well as certain
additional payments prior to delivery. As a result, the Company's balance
sheet reflects significant customer deposits.
<PAGE> 15
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW (CONTINUED)
Third party software and computer hardware revenues are recognized when the
related products are shipped. Software support agreements are generally
renewable for one year periods, and revenue derived from such agreements is
recognized ratably over the period of the agreements. The Company has
historically maintained high renewal rates with respect to its software support
agreements. The Company charges for software implementation, training and
technical consulting services as well as management consulting services on an
hourly or daily basis. The price of such services varies depending on the
level and expertise of the related professionals. The revenues are recognized
as the related services are performed.
The Company typically experiences long sales cycles for information systems and
agency support services, which may extend up to one year. In addition, the
implementation period related to its information systems can range from three
months to one year.
The Company defines recurring revenues as revenues derived under multi-year
contracts in addition to annual software support agreements. These revenues
were approximately $400,000, or 8.5% of total net revenues, for the three
months ended March 31, 1996, and $8.1 million, or 70.6% of total net revenues,
for the three months ended March 31, 1997.
For the three months ended March 31, 1996, 69.0% of the Company's total net
revenues were derived from contracts with home health care agencies
wholly-owned by the Company's former parent, Central Health Holding Company,
Inc. ("CHHC"). These contracts were terminated October 31, 1996, in connection
with the sale of CHHC to Columbia/HCA Healthcare Corporation ("Columbia/HCA").
Revenues derived from these contracts were recorded in an amount equal to the
costs of the services provided, and, as a result, the Company recognized no
operating profit under these contracts. Subsequent to the sale of CHHC to
Columbia/HCA, affiliates of Columbia/HCA entered into multi-year contracts with
the Company to provide its Shared Resource Solution as well as agency support
services to certain of the home health care agencies formerly owned by CHHC.
The Company believes that its current contracts with the Columbia/HCA
affiliates were negotiated on an arms-length basis. The historical results of
operations attributable to the terminated CHHC contracts may not therefore be
indicative of future results of operations. For the three months ended March
31, 1997, the Company derived 53.8% of its total net revenues from affiliates
of Columbia/HCA. The loss of any of the Columbia/HCA contracts could have a
material adverse impact on the Company's business, financial position and
results of operations.
The Company believes that continued development and enhancement of its software
systems is critical to its future success, and anticipates that the total
amount of research and development expense will continue to increase, but
should decrease as a percentage of total net revenues as the Company grows its
revenues. Costs incurred to establish the technological feasibility of
computer software products are expensed as incurred. The Company's policy is
to capitalize costs incurred between the point of establishing technological
feasibility and general release only when such costs are material. As of March
31, 1997, the Company's capitalized computer software development costs were
approximately $38,000.
<PAGE> 16
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BACKLOG
The Company had backlog associated with its In-House Solution of approximately
$4.8 million on March 31, 1997. Backlog consists of the unrecognized portion
of contractually committed software license fees, hardware, estimated
installation fees and professional services. The length of time required to
complete an implementation depends on many factors outside the control of the
Company, including the state of the customer's existing information systems and
the customer's ability to commit the personnel and other resources necessary to
complete the implementation process. As a result, the Company may be unable to
predict accurately the amount of revenue it will recognize in any period and
therefore can make no assurances that the amounts in backlog will be recognized
in the next twelve months.
The Company enters into multi-year contracts with its customers in connection
with its Shared Resource Solution. In general, these contracts provide for the
payment of monthly fees based on the number of billed home care visits made by
the customer. Accordingly, the Company does not maintain a backlog with
respect to its Shared Resource Solution.
RESULTS OF OPERATIONS
Net Revenues. Total net revenues for the three months ended March 31, 1997
increased $6.3 million, or 121.2%, to $11.4 million as compared to the three
months ended March 31, 1996. This increase includes $3.2 million attributable
to the business acquired in the InfoMed Holdings, Inc. ("IMHI") acquisition
which was completed in October 1996, $5.8 million from new contracts with
affiliates of Columbia/HCA and a decrease of $3.6 million resulting from the
termination of contracts with home health care agencies wholly-owned by
CHHC.
Net revenues from information services include revenues from the Company's
Shared Resource Solution, software support, implementation, training, and
technical consulting services. These revenues increased $1.3 million, or
39.8%, to $4.7 million for the three months ended March 31, 1997 as compared to
the three months ended March 31, 1996. This increase includes $2.2 million
attributable to the business acquired in the IMHI acquisition, $1.6 million in
new contracts with affiliates of Columbia/HCA, approximately $400,000
attributable to other new customers, and a decrease of $3.1 million resulting
from the termination of contracts with CHHC.
Net revenues from system sales of $1 million for the three months ended March
31, 1997 were comprised of revenue from software licenses and computer hardware
sales and were attributable entirely to the business acquired in the IMHI
acquisition.
Net revenues from support and consulting services include revenues from
management consulting and agency support services. These revenues increased
$3.9 million, or 218.4%, to $5.7 million for the three months ended March 31,
1997 as compared to the three months ended March 31, 1996. This increase
includes $4.2 million in new contracts with affiliates of Columbia/HCA,
approximately $400,000 in increased management consulting revenues, and a
decrease of approximately $500,000 resulting from the termination of contracts
with CHHC.
<PAGE> 17
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Cost of Revenues. Total costs of revenues increased $2.3 million, or 70.2%, to
$5.5 million for the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996. The increase includes $1 million in costs
attributable to the business acquired in the IMHI acquisition and the remainder
primarily relates to increases in personnel. As a percentage of total net
revenues, total costs of revenues decreased to 47.9% for the three months
ended March 31, 1997 from 62.3% for the three months ended March 31, 1996. This
reduction as a percentage of total net revenues is principally due to the
higher margins related to the business acquired in the IMHI acquisition, and
increased margins on business derived from new customers.
Cost of information services increased $1.3 million, or 69.2%, to $3.1
million for the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996. This dollar increase includes approximately
$700,000 in costs attributable to the business acquired in the IMHI
acquisition and approximately $500,000 in costs due to increases in both
implementation and training personnel to support new business. As a percentage
of information services revenues, these costs increased to 65.2% for the three
months ended March 31, 1997 from 53.9% for the three months ended March 31,
1996, primarily due to termination of contracts with CHHC.
Cost of system sales was approximately $300,000 for the three months ended
March 31, 1997 and was attributable entirely to the business acquired in the
IMHI acquisition. Such costs relate principally to third party software and
equipment.
Cost of support and consulting services increased approximately $700,000, or
47.0%, to $2.1 million for the three months ended March 31, 1997 as compared to
the three months ended March 31, 1996. This increase in cost relates to
additional personnel required to support new contracts. As a percentage of
support and consulting services revenue, these costs decreased to 36.0% for the
three months ended March 31, 1997 from 78.0% for the three months ended March
31, 1996. The reduction in costs as a percentage of support and consulting
services revenue principally results from increased margins on business derived
from new customers.
Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended March 31, 1997 increased
$2.2 million to $3.3 million as compared to the three months ended March 31,
1996. This increase includes $1.2 million in costs attributable to the
business acquired in the IMHI acquisition and the remainder principally relates
to increased administrative personnel to support growth. As a percentage of
total net revenues, selling, general and administrative expenses were 28.8% for
the three months ended March 31, 1997 compared with 22.0% for the three months
ended March 31, 1996. The Company believes that selling, general and
administrative expenses should decrease as a percentage of total net revenues
assuming that the Company's revenues continue to increase.
Research and Development Expenses. Research and development expenses increased
approximately $400,000, or 38.2%, to $1.5 million for the three months ended
March 31, 1997, as compared to the three months ended March 31, 1996. The
increase is principally attributable to the business acquired in the IMHI
acquisition. As a percentage of total net revenues, these expenses decreased
to 13.5% for the three months ended March 31, 1997, from 21.6% for the three
months ended March 31, 1996. This percentage decrease reflects the increase in
total net revenues compared to a relatively constant level of dollar expenses.
The Company anticipates that the total dollar amount of research and
development expense will continue to increase although such expenses should not
increase as a percentage of total net revenues assuming that the Company's
revenues continue to increase.
Amortization and Depreciation. Total depreciation and amortization expense for
the three months ended March 31, 1997 increased by approximately $300,000 to
approximately $400,000 as compared to the three months ended March 31, 1996.
This increase includes approximately $200,000 of amortization expense related
to the $4.2 million of intangible assets recorded in the IMHI acquisition, and
the remainder relates to increased depreciation expense.
<PAGE> 18
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Other Income (Expense). Interest expense for the three months ended March 31,
1997 and 1996 relates to borrowings under the Company's line of credit
agreements. Interest and other income for the three months ended March 31,
1997 and 1996 consists principally of interest income related to the Company's
short-term cash and restricted cash investments.
Income Taxes. At December 31, 1996, the Company had net operating losses
("NOL") carryforwards for federal and state income tax purposes of $6.0
million, which expire at various dates through 2011, if not utilized. The
Company also has research and development and alternative minimum tax credits
("tax credits") of approximately $96,000 available to reduce future income tax
liabilities. The Tax Reform Act of 1986, as amended, contains provisions that
limit the NOL and tax credit carryforwards available to be used in any given
year when certain events occur, including additional sales of equity securities
and other changes in ownership. As a result, certain of the NOL and tax credit
carryforwards may be limited as to their utilization in any year. The Company
has concluded that it is more likely than not that these NOLs and tax credit
carryforwards will not be utilized based on a weighing of evidence at March 31,
1997, and as a result, a 100% deferred tax valuation allowance has been
recorded against these assets. Approximately $500,000 of the total deferred
tax asset relates to the IMHI acquisition and, if and when realized, will
result in a credit to intangible assets recorded in the acquisition. For the
three months ended March 31, 1997, the Company has applied a portion of the NOL
against income tax expense for financial reporting purposes.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1997, the Company's cash and cash
equivalents decreased by approximately $900,000. The decrease was primarily
due to an increase in net accounts receivable of $1.2 million, a decrease in
accounts payable, accrued compensation expense and accrued liabilities of $1.1
million, which were offset by increased operating cash flows of $1.0 million.
The Company had a working capital deficit of $1.8 million at March 31, 1997.
Working capital was negatively impacted by a net of $1.5 million as a result of
reclassifying from long-term to current the amounts outstanding under the
Company's line of credit agreements and related restricted cash. Additionally,
the working capital deficit includes $1.5 million of customer deposits and $2.4
million of unearned income which will not require cash payment by the Company.
The Company believes that its available cash, cash equivalents and cash to be
generated from its future results of operations will be sufficient to meet the
Company's operating requirements, assuming no change in the operation of the
Company's business, for at least the next twelve months. While the Company
continually evaluates potential acquisitions, the Company has no present
agreements or commitments with respect to any acquisitions, nor are
negotiations regarding any acquisitions currently ongoing.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued a new
accounting pronouncement, SFAS No. 128, "Earnings per Share," which will change
the current method of computing earnings per share. The new standard requires
presentation of "basic earnings per share" and "diluted earnings per share"
amounts, as defined. SFAS No. 128 will be effective for the Company's quarter
and year ending December 31, 1997, and, upon adoption, all prior period
earnings per share data presented shall be restated to conform with the
provisions of the new pronouncement. Application earlier than the Company's
quarter ending December 31, 1997, is not permitted. The restated basic and
diluted earnings or loss per share to be reported upon adoption of SFAS No. 128
will not differ from amounts reported under existing accounting rules for all
periods reported by the Company through December 31, 1996. The Company has not
evaluated the impact of SFAS No. 128, if any, on the amounts reported as of
March 31, 1997.
<PAGE> 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Company nor any of its subsidiaries is currently a party
to nor is any of their property the subject of any legal proceedings which
would be material to the business or financial condition of the Company on
a consolidated basis.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following Exhibits are filed as part of this Quarterly Report on
Form 10-Q:
Exhibit No. Description
3.1 Certificate of Incorporation of the Company
(Incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-4
(Registration Number 33-57150) as filed with the
Securities and Exchange Commission).
3.2 Amendment to the Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.2 of
the Company's Registration Statement on Form S-4
(Registration Number 33-57150) as filed with the
Securities and Exchange Commission).
3.3 Amended and Restated Bylaws of the Company
3.4 Certificate of Ownership Merging Simione Central
Holdings, Inc. into InfoMed Holdings, Inc.
(Incorporated by reference to Exhibit 3.5 of the
Company's Form 10-K for the fiscal year ended December
31, 1996 as filed with the Securities and Exchange
Commission).
10.1 Simione Central Holdings, Inc. Section 125 Plan
effective date January 1, 1997 sponsored by the Company
(Incorporated by reference to Exhibit 10.11 of the
Company's Form 10-K for the fiscal year ended December
31, 1996 as filed with the Securities and Exchange
Commission).
10.2 Simione Central Holdings, Inc. Omnibus Equity-based
Incentive Plan (Incorporated by reference to Exhibit
10.17 of the Company's Registration Statement on Form
S-1 (Registered Number 333-25551) as filed with the
Securities and Exchange Commission).
10.3 Simione Central Holdings, Inc. 1997 Nonqualified
Formula Stock Option Plan (Incorporated by reference to
Exhibit 10.18 of the Company's Registration Statement
on Form S-1 (Registration Number 333-25551) as filed
with the Securities and Exchange Commission).
11.1 Computation of Earnings per Share.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated January
27, 1997, announcing that Company had appointed Ernst & Young
LLP as the Company's independent accountants for the fiscal
year ended December 31, 1996 and replaced Arthur Andersen LLP.
<PAGE> 20
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.
SIMIONE CENTRAL HOLDINGS, INC.
Dated: May 15, 1997 By: /s/ James R. Henderson
----------------------
JAMES R. HENDERSON
Chief Executive Officer and President
Dated: May 15, 1997 By: /s/ Lori N. Siegel
----------------------
LORI N. SIEGEL
Chief Financial Officer
<PAGE> 1
EXHBIT 3.3
AMENDED AND RESTATED
BYLAWS OF
SIMIONE CENTRAL HOLDINGS, INC.
(FORMERLY KNOWN AS INFOMED HOLDINGS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting. An annual meeting of stockholders
shall be held for the election of directors at such date, time and place,
either within or without the State of Delaware, as may be designated by
resolution of the Board of Directors from time to time. Any other proper
business may be transacted at the annual meeting.
Section 1.2 Special Meetings. Special meetings of stockholders
for any purpose or purposes may be called at any time by the Board of Directors
or the President. Special meetings may not be called by any other person or
persons.
Section 1.3 Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, the written
notice of any meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on
the records of the Corporation.
Section 1.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting which the adjournment is taken.
At the adjourned meeting, the Corporation may transact any business that might
have been transacted at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.5 Quorum. At each meeting of stockholders, except
where otherwise provided by law or the certificate of incorporation or these
bylaws, the holders of a majority of the outstanding shares of stock entitled
to vote at the meeting, present in person or by proxy, shall constitute a
quorum. In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided in
Section 1.4 of these bylaws until a quorum is present.
Section 1.6 Organization. Meetings of stockholders shall be
presided over by the person designated by the Board of Directors. The
Secretary shall act as secretary of the
<PAGE> 2
meeting, but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 1.7 Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
the stockholder that has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders may authorize another
person or persons to act for him by proxy, but no such proxy shall be voted or
acted upon after three years after its date, unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke
any proxy that is not irrevocable by attending the meeting and voting in person
or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the Corporation.
Voting at meetings of stockholders need not be by written ballot and need not
be conducted by inspectors unless the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at such meeting shall so determine. At all meetings of stockholders for
the election of directors, a plurality of the votes cast shall be sufficient to
elect directors, unless otherwise provided in the certificate of incorporation.
All other elections and questions shall, unless otherwise provided by law or by
the certificate of incorporation or these bylaws, be decided by the vote of
holders of a majority of the outstanding shares of stock entitled to vote
thereon present in person or by proxy at the meeting, provided that (except as
otherwise required by law or by the certificate of incorporation) the Board of
Directors may require a larger vote upon any election or question.
Section 1.8 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or express consent to corporate action in writing without a meeting,
the Board of Directors may fix a record date, which shall not preclude the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. The record date for determining stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, shall not
be more than sixty nor less than ten days before the date of such meeting. If
no record date is fixed, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
The record date to determine the stockholders entitled to consent to
corporate action in writing without a meeting shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by the General Corporation Law of Delaware,
shall be the first date on
2
<PAGE> 3
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by the General Corporation
Law of Delaware, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
Section 1.9 List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 1.10 Action by Consent of Stockholders. Unless otherwise
restricted by the Certificate of Incorporation, any action required or
permitted to be taken at any annual or special meeting of the stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding stock having not less that the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
3
<PAGE> 4
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number; Qualifications. The number of directors
shall be determined from time to time by resolution of the Board of Directors.
Directors need not be stockholders.
Section 2.2 Elections; Resignation; Removal; Vacancies. The
Board of Directors shall initially consist of the persons elected as such by
the incorporator. At the first annual meeting of stockholders and each annual
meeting thereafter, the stockholders shall elect Directors to replace those
Directors whose terms then expire. Any Director may resign at any time upon
written notice to the Corporation. Stockholders may remove Directors with or
without cause. Any vacancy occurring in the Board of Directors for any cause
may be filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum, or by a plurality of the votes
cast at a meeting of stockholders, and each Director so elected shall hold
office until the expiration of the term of office of the Director whom he has
replaced.
Section 2.3 Regulate Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware
and at such time as the Board of Directors may from time to time determine, and
if so determined, notice of the meeting shall be given.
Section 2.4 Special Meeting. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the President, or by any member of the Board of
Directors. Reasonable notice thereof shall be given by the person or persons
calling the meeting, not later than the second day before the date of the
special meeting.
Section 2.5 Telephonic Meetings Permitted. Members of the Board
of Directors, or any committee designated by the Board, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
bylaw shall constitute presence in person at such meeting.
Section 2.6 Quorum; Vote Required for Action. At all meetings of
the Board of Directors a majority of the whole Board shall constitute a quorum
for the transaction of business. Except in cases in which the certificate of
incorporation or these bylaws otherwise provide, the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.7 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in his absence
by a chairman chosen at the meeting. The Secretary shall act as secretary of
the meeting, but in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
4
<PAGE> 5
Section 2.8 Informal Action by Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES
Section 3.1 Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member
of the committee, the member or members present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have power or authority to amend the
certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in Section 151(a)
of the General Corporation Law of Delaware, fix the designation and any of the
preferences or rights of the shares), adopt an agreement of merger or
consolidation, recommend to the stockholders the sale, lease or exchange of all
or substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation of dissolution,
or amend these bylaws; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Section 3.2 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these bylaws.
5
<PAGE> 6
ARTICLE IV
OFFICERS
Section 4.1 Generally. The officers of the Corporation shall be
a Chairman, one or more Vice Chairmen, a Chief Executive Officer, a Chief
Operating Officer, a Chief Financial Officer, a President, one or more Vice
Presidents, a Secretary and a Treasurer, and such additional officers, if any,
as shall be elected by the Board of Directors pursuant to the provisions of
Section 4.11 of this Article IV. The Chairman, one or more Vice Chairmen, the
Chief Executive Officer, the Chief Operating Officer, the President, one or
more Vice Presidents, the Secretary and the Treasurer, shall be elected by the
Board of Directors at its first meeting after each annual meeting of the
stockholders. The failure to hold such election shall not of itself terminate
the term of office of any officer. Any number of offices may be held
simultaneously by the same person except that the person serving as Chief
Financial Officer may not serve simultaneously as the Chief Executive Officer.
The Chairman and any Vice Chairman shall be Directors of the Corporation. All
other officers may, but need not, the Directors. Any officer may resign at any
time upon written notice to the Corporation.
Any officers, agents and employees shall be subject to removal, with
or without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his contract rights, if
any. The election or appointment of an officer shall not of itself create
contract rights. All agents and employees other than officers elected by the
Board of Directors shall also be subject to removal, with or without cause, at
any time by the officers appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the
Corporation as set forth in these bylaws, the officers shall have such
authority and shall perform such duties as from time to time may be determined
by the Board of Directors
Section 4.2 Powers and Duties of the Chairman. The Chairman
shall preside at all meetings of the stockholders and of the Board of Directors
at which he shall be present and shall have such other duties as may from time
to time be assigned by these bylaws or by the Board of Directors.
Section 4.3 Powers and Duties of the Vice Chairman. The Vice
Chairman or Chairman shall have such powers to perform such duties as may from
time to time be assigned by the Board of Directors or the Chairman. In the
absence of the Chairman, the Vice Chairman (or if more than one, one of the
Vice Chairmen as designated by the Board of Directors) shall preside at all
meetings of the stockholders and the Board of Directors at which he shall be
present.
6
<PAGE> 7
Section 4.4 Powers and Duties of the Chief Execute Officer. The
Chief Executive Officer shall be the chief executive officer of the Corporation
and, subject to the control of the Board of Directors, shall have general
charge and control of all its business and affairs and shall perform all duties
incident to the office of the Chief Executive Officer; he may sign and execute,
in the name of the Corporation, all authorized deeds, mortgages, bonds, notes
and other evidence of indebtedness, contracts or other instruments, except in
cases in which the signing and execution thereof shall have been expressly
excluded from the Chief Executive Officer and delegated to some other officer
or agent of the Corporation by the Board of Directors. In the absence or
disability of the Chairman and all Vice Chairmen, the Chief Executive Officer
shall preside at all meetings of the stockholders and shall have such other
powers and perform such other duties as may from time to time be assigned by
him by these bylaws or by the Board of Directors.
Section 4.5 Powers and Duties of the Chief Operating Officer.
The Chief Operating Officer shall be the principal operating officer of the
Corporation with authority as such, and at the request of the Chief Executive
Officer or in his absence or disability to act, shall perform the duties and
exercise the functions of the Chief Executive Officer, and when so acting shall
have such other powers and perform such other duties as may from time to time
be assigned to him by the Board of Directors or Chief Executive Officer.
Section 4.6 Powers and Duties of the Chief Financial Officer.
The Chief Financial Officer shall be the chief accounting officer of the
Corporation; he shall see that the books of account and other accounting
records of the Corporation are kept in proper form and accurately; and, in
general, he shall perform all the duties incident to the office of Chief
Financial Officer of the Corporation and such other duties as may from time to
time be assigned to him by the Board of Directors or the Chief Executive
Officer.
Section 4.7 Powers and Duties of the President. The President
shall act as a general executive officer of the Corporation and shall have such
other powers and perform such other duties as may from time to time be assigned
to him by these bylaws or by the Board of Directors or by the Chief Executive
Officer.
Section 4.8 Powers and Duties of the Vice President. Each Vice
President shall perform all duties incident to the office of Vice President and
shall have such other powers and perform such other duties as may from time to
time be assigned to him by these bylaws or by the Board of Directors or the
Chief Executive Officer.
Section 4.9 Powers and Duties of the Secretary. The Secretary
shall keep the minutes of any meetings of the Board of Directors and the
minutes of all meetings of the stockholders in books provided for that purpose;
he shall attend to the giving or serving of all notices of the Corporation; he
shall have custody of the corporate seal of the Corporation and shall affix the
same to such documents and other papers as the Board of Directors or the Chief
Executive Officer shall authorize and direct; he shall have charge of the stock
certificate books, transfer books and stock ledgers and such other books and
papers as the Board of Directors or the Chief Executive Officer shall direct,
all of which shall at all reasonable times be open to the examination of any
Director, upon application, at the office of the Corporation during business
7
<PAGE> 8
hours; he shall be the custodian of the general books and records of the
Corporation maintained in the ordinary course of business or otherwise; and he
shall perform all duties incident to the office of Secretary and shall also
have such other powers and shall perform such other duties as may from time to
time be assigned to him by these bylaws or the Board of Directors or the Chief
Executive Officer.
Section 4.10 Powers and Duties of the Treasurer. The Treasurer
shall have custody of, and when proper shall pay out, disburse or otherwise
dispose of, all funds and securities of the Corporation which may have come
into this hands; he may endorse on behalf of the Corporation for collection
checks, notes and other obligations and shall deposit the same to the credit of
the Corporation in such bank or depository or depositaries as the Board of
Directors may designate; he shall sign all receipts and vouchers for payments
made to the Corporation kept for the purpose full and accurate accounts of all
moneys received or paid or otherwise disposed of by him and whenever required
by the Board of Directors or the Chief Executive Officer shall render
statements of such accounts; and he shall perform all duties incident to the
office of Treasurer and shall also have such other powers and shall perform
such other duties as may from time to time be assigned to him by these bylaws
or by the Board of Directors or the Chief Executive Officer.
Section 4.11 Additional Officers. The Board of Directors may from
time to time elect such other officers (who may but need not be Directors),
including Controllers, Assistant Treasurers, Assistant Secretaries and
Assistant Financial Officers, as the Board may deem advisable and such officers
shall have such authority and shall perform such duties as may from time to
time be assigned to them by the Board of Directors or the Chief Executive
Officer.
The Board of Directors may from time to time by resolution delegate to
any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
Section 4.12 Giving of Bond by Officers. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish
bonds to the Corporation for the faithful performance of their duties, in such
amounts and with such conditions and security as the Board shall require.
Section 4.13 Voting Upon Stocks. Unless otherwise ordered by the
Board of Directors, the Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer, the President or any Vice President shall have
full power and authority on behalf of the Corporation to attend and to act and
to vote, or in the name of the Corporation to execute proxies to vote, at any
meetings of stockholders of any corporation in which the Corporation may hold
stock, and at any such meetings shall possess and may exercise, in person or by
proxy, any and all rights, powers and privileges incident to the ownership of
such stock. The Board of Directors may from time to time, by resolution,
confer like powers upon any other person or persons.
8
<PAGE> 9
Section 4.14 Compensation of Officers. The officers of the
Corporation shall be entitled to receive such compensation for their services
as shall from time to time be determined by the Board of Directors.
ARTICLE V
STOCK
Section 5.1 Certificates. Every holder of stock shall be
entitled to have a certificate representing the number of shares owned by him
in the Corporation signed by or in the name of the Corporation by the Chief
Executive Officer, the President or a Vice President, and by the Treasurer or
the Secretary of the Corporation. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certification shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Section 5.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate issued by it that is alleged to have been
lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of such
certification or the issuance of the new certificate.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Fiscal Year. The fiscal year of the Corporation
shall be determined by resolution of the Board of Directors.
Section 6.2 Waiver of Notice of Meeting of Stockholders,
Directors and Committees. Any written waiver of notice, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 6.3 Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its
9
<PAGE> 10
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely because the director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorized the contract or transaction or solely because his or their votes are
counted for such purpose, if: (i) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (2) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair as to the Corporation as of the time
it is authorized, approved or ratified, by the Board of Directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section 6.4 Form of Records. All records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 6.5 Amendment of bylaws. These bylaws may be altered or
repealed, and new bylaws made, by the Board of Directors. The stockholders may
make additional bylaws and may alter and repeal any bylaws whether adopted by
them or otherwise.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 7.1 Right to Indemnification The Corporation hereby
indemnifies each officer and director of the Corporation (including the heirs,
executors, administrators, or estate of the officer or director) to the fullest
extent permitted or authorized by current or future legislation or by current
or future judicial or administrative decision (but, in the case of any future
legislation or decision, only to the extent that it permits the Corporation to
provide broader indemnification rights than permitted prior to the legislation
or decision), against all fines, liabilities, costs and expenses, including
attorneys' fees, asserted against the officer or director or incurred by him in
his capacity as a director or officer, or arising out of his status as a
director or officer. The foregoing right of indemnification shall not be
exclusive of other rights to which those seeking indemnification may be
entitled. The Corporation may maintain insurance, at its expense, to protect
itself and all officers and directors against fines, liabilities, costs and
expenses, whether or not the Corporation would have the legal power to
indemnify them directly against such liability.
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<PAGE> 11
Section 7.2 Advances. Costs, charges and expenses (including
attorneys' fees) incurred by an officer or director in defending a civil or
criminal suit, action or proceeding shall be paid by the Corporation in advance
of the final disposition of the suit, action or proceeding, provided that the
officer or director shall provide an undertaking to repay all amounts advanced
if it is ultimately determined that the officer or director is not entitled to
be indemnified by the Corporation as authorized by this Article or as
authorized by current or future legislation (but, with respect to future
legislation, only to the extent that it provides conditions less burdensome
than those previously provided).
Section 7.3 Savings Clause. If this Article VII or any portion
of it is invalidated on any ground by a court of competent jurisdiction, the
Corporation nevertheless indemnifies each officer and director of the
Corporation to the fullest extent permitted by all portions of this Article VII
that have not been invalidated and to the fullest extent permitted by law.
/s/ James A. Tramonte
-------------------------
Secretary
11
<PAGE> 1
EXHIBIT 11.1
SIMIONE CENTRAL HOLDINGS, INC.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1996 1997
----------- -----------
(unaudited)
<S> <C> <C>
PRIMARY EARNINGS (LOSS) PER SHARE:
Net income (loss) available to common stockholders $ (394,801) $ 643,134
=========== ===========
Weighted average shares outstanding 6,568,363 11,954,306
Add additional shares issuable upon exercise of
common stock options and warrants -- 2,773,209
----------- -----------
Adjusted weighted average shares outstanding 6,568,363 14,727,515
=========== ===========
Net income (loss) per share $ (0.06) $ 0.04
=========== ===========
</TABLE>
Fully diluted earnings (loss) per share is not presented because fully diluted
earnings (loss) per share amounts do not differ significantly from primary
earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMIONE CENTRAL HOLDINGS, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,532,923
<SECURITIES> 0
<RECEIVABLES> 7,957,381
<ALLOWANCES> 1,114,937
<INVENTORY> 0
<CURRENT-ASSETS> 583,636
<PP&E> 1,787,101
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,532,507
<CURRENT-LIABILITIES> 12,756,920
<BONDS> 0
0
0
<COMMON> 11,972
<OTHER-SE> 5,357,401
<TOTAL-LIABILITY-AND-EQUITY> 18,532,507
<SALES> 0
<TOTAL-REVENUES> 11,427,921
<CGS> 0
<TOTAL-COSTS> 5,478,591
<OTHER-EXPENSES> 5,257,355
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,841
<INCOME-PRETAX> 643,134
<INCOME-TAX> 0
<INCOME-CONTINUING> 643,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 643,134
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
