<PAGE> 1
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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 SEPTEMBER 30, 1999
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)
(Registrant's telephone number, including area code) (770) 644-6700
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:
<TABLE>
<CAPTION>
Outstanding at
Class 10/31/99
----- --------
<S> <C>
COMMON STOCK, $.001 PAR VALUE 8,782,729 SHARES
</TABLE>
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<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 - September 30, 1999 and
December 31, 1998 (unaudited).
Consolidated Statements of Operations - Three Months
and Nine Months Ended September 30, 1999 and 1998
(unaudited).
Consolidated Statements of Shareholders' Equity -
Nine Months Ended September 30, 1999 (unaudited).
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1999 and 1998 (unaudited).
Notes to Consolidated Financial Statements -
September 30, 1999 (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
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,228,385 $ 10,526,816
Accounts receivable, net of allowance for doubtful
accounts of $3,290,333 and $1,674,404 respectively 5,013,621 7,679,524
Prepaid expenses and other current assets 561,873 555,770
------------ ------------
Total current assets 6,803,879 18,762,110
Purchased software, furniture and equipment, net 1,528,171 1,852,405
Intangible assets, net 18,607,285 7,137,857
Other assets 990,499 104,232
------------ ------------
Total assets $ 27,929,834 $ 27,856,604
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit $ - $ 5,000,000
Accounts payable 2,910,413 1,627,328
Accrued compensation expense 358,857 577,964
Accrued liabilities 4,315,037 7,240,558
Customer deposits 931,097 1,144,557
Unearned revenues 2,183,782 1,870,538
Note payable 3,000,000 -
------------ ------------
Total current liabilities 13,699,186 17,460,945
Accrued liabilities, less current portion 2,249,179 2,671,477
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares authorized;
3,034,530 issued and outstanding 3,035 -
Common stock, $.001 par value; 20,000,000 shares authorized;
8,782,729 and 8,597,729 shares issued and outstanding,
respectively 8,783 8,598
Additional paid-in capital 51,627,680 42,093,040
Accumulated deficit (39,658,029) (34,377,456)
------------ ------------
Total shareholders' equity 11,981,469 7,724,182
------------ ------------
Total liabilities and shareholders' equity $ 27,929,834 $ 27,856,604
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- ---------------------------------
1999 1998 1999 1998
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues:
Software and services $ 3,273,408 $ 6,447,327 $ 11,331,384 $ 25,563,765
Agency support 190,399 1,219,276 3,651,633 5,886,094
Consulting services 1,878,529 1,813,517 5,295,147 5,024,076
----------- ------------ ------------ ------------
Total net revenues 5,342,336 9,480,120 20,278,164 36,473,935
Costs and expenses:
Cost of revenues 4,015,494 6,102,680 12,756,167 19,099,652
Selling, general and administrative 4,321,717 3,179,353 8,893,843 11,111,181
Research and development 826,841 1,935,674 2,708,121 5,325,918
Amortization and depreciation 1,010,758 618,492 2,410,295 1,777,765
Severance and other restructuring charges (1,140,000) 9,578,420 (1,140,000) 9,578,420
----------- ------------ ------------ ------------
Total costs and expenses 9,034,810 21,414,619 25,628,426 46,892,936
----------- ------------ ------------ ------------
loss from operations (3,692,474) (11,934,499) (5,350,262) (10,419,001)
Other income (expense):
Interest expense (45,706) (50,475) (116,541) (74,626)
Interest and other income 23,502 97,538 186,230 304,345
----------- ------------ ------------ ------------
Net loss $(3,714,678) $(11,887,436) $ (5,280,573) $(10,189,282)
=========== ============ ============ ============
Net loss per share $ (0.42) $ (1.39) $ (0.60) $ (1.19)
=========== ============ ============ ============
Weighted average common shares - basic 8,782,729 8,571,282 8,740,559 8,543,770
=========== ============ ============ ============
Net loss per share - diluted $ (0.42) $ (1.39) $ (0.60) $ (1.19)
=========== ============ ============ ============
Weighted average common shares - diluted 8,782,729 8,571,282 8,740,559 8,543,770
=========== ============ ============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 5
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Preferred Paid-in Accumulated Shareholders'
Shares Stock Shares Stock Capital Deficit Equity
--------- ------ --------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 8,597,729 $8,598 $ - $42,093,040 $ (34,377,456) $ 7,724,182
Issuance of $.001 par value common
stock from exercise of stock options 85,000 85 62,815 - 62,900
Issuance of $.001 par value common
stock related to acquisitions 100,000 100 162,400 - 162,500
Issuance of $.001 par value preferred 3,034,530 3,035 9,309,425 9,312,460
stock related to acquisitions
Net income - - - - - (5,280,573) (5,280,573)
--------- ------ --------- ------- ----------- ------------- ------------
Balance at September 30, 1999 8,782,729 $8,783 3,034,530 $ 3,035 $51,627,680 $ (39,658,029) $ 11,981,469
========= ====== ========= ======= =========== ============= ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 6
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,280,573) $(10,189,282)
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH USED IN OPERATING ACTIVITIES:
Provision for doubtful accounts 2,789,642 636,208
Amortization and depreciation 2,413,423 1,777,765
Write-off of excess furniture & fixtures - 36,997
Write-off of capitalized software - 2,005,790
CHANGES IN ASSETS AND LIABILITIES, NET OF ACQUISITIONS:
Accounts receivable 428,344 (1,172,435)
Prepaid expenses and other current assets 67,796 222,164
Other assets (899,787) (1,530,015)
Accounts payable 955,429 360,812
Accrued compensation expense (228,294) 167,047
Accrued liabilities (3,669,443) 5,878,136
Customer deposits (213,460) (530,045)
Unearned revenues 150,730 259,337
------------ ------------
Net cash provided by (used in) operating activities (3,486,193) (2,077,521)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of acquired companies, net of cash acquired (2,130,577) (405,191)
Purchase of software, furniture and equipment (236,616) (377,994)
Increase in other intangible assets - (71,046)
------------ ------------
Net cash used in investing activities (2,367,193) (854,231)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payment on) notes payable (3,500,000) 4,226,401
Payments on capital lease obligations (7,945) (45,293)
Payments of related party notes - (980)
Proceeds from exercise of stock options and warrants 62,900 109,470
------------ ------------
Net cash provided by (used in) financing activities (3,445,045) 4,289,598
------------ ------------
Net change in cash and cash equivalents (9,298,431) 1,357,846
Cash and cash equivalents, beginning of period 10,526,816 8,266,860
------------ ------------
Cash and cash equivalents, end of period $ 1,228,385 $ 9,624,706
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 7
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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, 1999.
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, 1998 appearing in the Company's Annual Report on Form 10-K.
Certain prior period amounts have been reclassified to conform to the 1999
financial statement presentation.
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 several
comprehensive and flexible software solutions, each of which provide a core
platform of software applications and which incorporate selected specialized
modules based on customer demand. These software solutions are designed to
enable customers to generate and utilize comprehensive financial, operational
and clinical information. In addition to its software solutions and related
software support services, 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.
NOTE 2 - MAJOR CUSTOMERS
For the three months and nine months ended September 30, 1999 affiliates of
Columbia/HCA Healthcare Corporation accounted for approximately 0.1% and 14.5%,
respectively, of the Company's total net revenue. Columbia/HCA terminated its
outsourcing contracts with the Company in December 1998 and paid a settlement
fee of $7.0 million of which $2.2 million was recognized as revenue for services
provided during the first quarter of 1999. Without these revenues the Company
would have had a loss for the first quarter of 1999.
<PAGE> 8
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
NOTE 3 - SEGMENT RESULTS
The Company has three reportable segments: product related, outsourcing and
consulting. The Company's product related segment sells comprehensive and
flexible software solutions and services to enable home health care providers to
more effectively operate their businesses and compete in the managed care
environment. The outsourcing segment provides day-to-day personnel outsourcing
for certain critical customer operational functions. The consulting segment
assists home health care providers in addressing the challenges of reducing
costs, maintaining quality, streamlining operations and re-engineering
organizational structures.
The Company evaluates performance and allocates resources based on profit or
loss from operations before income taxes, not including gains and losses on the
Company's investment portfolio. The accounting policies of the reportable
segments are the same as those used for the consolidated financial statements.
The revenues, operating losses and assets of the Company by business segment are
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenue
Product related $3,273,000 $4,695,000 $11,331,000 $18,451,000
Outsourcing 190,000 2,972,000 3,652,000 12,999,000
Consulting 1,879,000 1,813,000 5,295,000 5,024,000
---------- ---------- ----------- -----------
Total $5,342,000 $9,480,000 $20,278,000 $36,474,000
========== ========== =========== ===========
Cost of revenues
Product related $2,288,000 $3,554,000 $ 6,982,000 $11,795,000
Outsourcing 367,000 1,090,000 1,750,000 3,255,000
Consulting 1,360,000 1,459,000 4,024,000 4,050,000
---------- ---------- ----------- -----------
Total $4,015,000 $6,103,000 $12,756,000 $19,100,000
========== ========== =========== ===========
Research and development
Product related $ 827,000 $1,936,000 $ 2,708,000 $ 5,326,000
========== ========== =========== ===========
Depreciation and amortization
Product related $ 828,000 $ 440,000 $ 1,837,000 $ 1,302,000
Outsourcing 34,000 47,000 127,000 131,000
Consulting 97,000 106,000 289,000 284,000
Unallocated amounts
Corporate overhead 51,000 25,000 157,000 60,000
---------- ---------- ----------- -----------
Total $1,010,000 $ 618,000 $ 2,410,000 $ 1,777,000
========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1999 1998
---- ----
<S> <C> <C>
Assets
Product/outsourcing related $22,119,000 $11,894,000
Consulting 4,595,000 4,713,000
Unallocated corporate assets
net of elimination's 1,216,000 11,250,000
----------- -----------
Total $27,930,000 $27,857,000
=========== ===========
</TABLE>
<PAGE> 9
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
NOTE 4 - INTANGIBLE ASSETS
Intangible assets at September 30, 1999 consisted of the following:
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK AMORTIZATION
COST AMORTIZATION VALUE PERIOD
---- ------------ ----- ------
<S> <C> <C> <C> <C>
Developed technology $14,065,218 $(2,362,080) $11,703,138 4 - 5 years
Goodwill 5,964,288 (1,213,703) 4,750,585 9 - 10 years
Trade name 1,142,000 ( 311,464) 830,536 11 years
Other 1,868,723 ( 545,697) 1,323,026 6 - 10 years
----------- ----------- -----------
Total $23,040,229 $(4,432,944) $18,607,285
=========== =========== ===========
</TABLE>
NOTE 5 - RESTRUCTURING CHARGES
As a result of the change in the home care business environment resulting from
the interim payment system ("IPS") which lowered the cost per visit limitations
and created restrictions on the amount of cost reimbursement per Medicare
beneficiary, the termination of the Columbia/HCA contracts, and the decision to
eliminate certain legacy development projects including the AS400 effort, the
Company incurred severance and certain other restructuring costs totaling $11.6
million in 1998. In December of 1998, Columbia/HCA terminated its contracts with
the Company and paid a settlement fee of $7.0 million of which $4.0 million
reduced the restructuring charges incurred in 1998. The reduction of $1.1
million of excess capacity charges results from the subleasing of excess space
in the Company's headquarters office in Atlanta. The following table presents a
roll forward of the one time charges incurred by the Company.
<TABLE>
<CAPTION>
Balance Balance
December 31, September 30,
1998 Additions Reductions Usage 1999
---- --------- ---------- ----- ----
<S> <C> <C> <C> <C> <C>
Excess capacity $ 5,203,049 $ -- $1,140,000 $ 476,579 $ 3,586,470
Severance 1,332,596 -- -- 939,777 392,819
----------- --------- ---------- ----------- -----------
Total restructuring costs $ 6,535,645 $ -- $1,140,000 $ 1,416,356 $ 3,979,289
========= ========== ===========
Accrued liability less
current portion (3,864,168) (1,878,044)
----------- -----------
Accrued liability, long term $ 2,671,477 $ 2,101,245
=========== ===========
</TABLE>
NOTE 6 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted shares:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average - basic 8,782,729 8,571,282 8,740,559 8,543,770
Common stock equivalents -- -- -- --
--------- --------- --------- --------
Weighted average - diluted 8,782,729 8,571,282 8,740,559 8,543,770
========= ========= ========= =========
</TABLE>
<PAGE> 10
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
NOTE 7 - INCOME TAXES
At December 31, 1998, the Company had approximately $10.6 million of net
operating losses ("NOL") for income tax purposes available to offset future
taxable income. Such losses expire at various dates through 2013, if not
utilized, and may be subject to certain limitations for changes in ownership. 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 September 30, 1999.
NOTE 8 - RECENTLY ADOPTED ACCOUNTING STANDARDS
In 1998, the Financial Accounting Standards Board issued SFAS No. 133 ("SFAS No.
133"), "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 is effective for the Company's fiscal year ending December 31, 2000. The
Company's management does not believe that the adoption of SFAS No. 133 will
have a material impact on the Company's position or results of operations.
NOTE 9 - ACQUISITIONS
Effective March 26, 1999, the Company purchased substantially all the assets of
Tropical Software Services ("Tropical"), a Windows based Home Medical Equipment
(HME) Management System. The acquisition was accounted for using the purchase
method for financial reporting purposes. The purchase price of approximately
$1,963,000 has been allocated to the assets acquired and liabilities assumed
including $1,951,000 of purchased technology. Purchased technology is being
amortized over an estimated three years useful life.
Effective August 3, 1999, the Company acquired Outcomes Planner(TM), a clinical
documentation package that meets both OASIS and ORYX requirements. The Outcomes
Planner(TM) system is a clinical pathway and care plan solution that defines
and measures outcomes on each visit or patient encounter as it relates to
Disease State and episode of care. The Company is integrating the content of
Outcomes Planner(TM) into its other products to enhance the products' ability
to manage patient outcomes and meet the regulatory reporting requirements of
the Company's customers.
Effective on August 6, 1999 the Company acquired 100% of the common stock of
CareCentric Solutions, an emerging provider of point-of-care systems in the home
healthcare information systems marketplace, for approximately 3.0 million shares
of newly issued preferred stock of Simione Central. Such purchase price is
subject to adjustments based on various factors including the market price of
the Company's common stock during the fourth quarter of 2000. The preferred
stock will be converted into common stock of the Company only upon approval of
its shareholders. In connection with the CareCentric merger, the Company assumed
a loan from a bank with an outstanding balance of $1.5 million. In September
1999, the loan with the bank was retired through the use of the proceeds of
loans advanced by Mestek Inc. (see note 11). Allocation of the CareCentric
Solutions purchase price of approximately $12.0 million resulted in the
recognition of approximately $10.7 million of intangible assets of which $9.1
million was developed software and $1.6 million was goodwill.
NOTE 10 - LINE OF CREDIT
In September 1999 the Company obtained a $5.0 million commercial line of credit.
The line of credit became operational in October 1999. The terms of the line
require certain aging of accounts receivable and certain operating results for
future periods in order to maintain the availability of the line for future use.
In October 1999 availability under the line averaged $1.4 million and advances
under the line to the Company averaged $0.5 million.
<PAGE> 11
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
NOTE 11 - MERGER
On May 26, 1999, the Company entered into a definitive agreement to merge with
MCS, Inc., a wholly owned subsidiary of Mestek. For every share of outstanding
Mestek common stock, the Company agreed to issue approximately .85 shares of its
common stock to Mestek in the exchange. MCS is a leading provider of information
systems and services to the home healthcare industry with approximately $16.6
million (unaudited) in revenue and $1.4 million (unaudited) in net income in
1998. MCS markets its product under the MestaMed name. It has approximately 570
active customers.
In September 1999, the Board of Directors of Mestek resolved to distribute all
of the capital stock of MCS to the Mestek stockholders, on a pro rata basis,
prior to the Merger of MCS into the Company. Also in September 1999, the Board
of Directors of Mestek resolved to invest $3.0 million into the Company in the
form of a loan note. Under the terms of the note, Mestek is a subordinate
creditor to the bank holding the commercial line of credit. The terms of the
note also provide for interest accrual at prime plus 2.0% per annum. If the
merger is completed, the interest will be abated and Mestek will invest another
$3.0 million into the Company. The total investment of $6.0 million by Mestek
will then be converted from a note to 5.6 million shares of Series B Preferred
stock carrying a coupon rate of 9.0%. The Series B Preferred stock will carry
two votes per share. In connection with the purchase of the Preferred Stock,
Mestek will receive warrants to purchase 2.0 million shares of Common stock of
the Company and an option to purchase up to 1,935,568 shares of Common stock of
the Company which is exercisable only to the extent existing options, warrants
or conversion rights are exercised.
The proposed merger with MCS is subject to approval by the Common shareholders
of the Company. If approved, the proposed merger and shareholder investment in
the Company by Mestek is expected to be completed before the end of January
2000.
NOTE 12 - SUBSEQUENT EVENT
In November, 1999 the Company received commitment of $1.6 million of new loans
from certain shareholders and Mestek, the parent company of MCS ($750,000 from
shareholders of the Company and $850,000 from Mestek). The loans were obtained
to provide additional funding for the Company's operations and have maturity
terms ranging from a minimum of 9 months to a maximum of 36 months. The
shareholder loans of $750,000 are not secured and include an interest rate of
9.0%. The $850,000 Mestek loan has an 11.0% interest rate and is secured by the
assets of the Company. Additionally, Mestek has the option to convert the loan
to preferred stock on or after the MCS merger.
<PAGE> 12
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,
including the "risk factors" set forth in the Company's registration statement
form S-1 (file no. 333-25551) 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 several
comprehensive and flexible software solutions, each of which provide a core
platform of software applications and which incorporate selected specialized
modules based on customer demand. These software solutions are designed to
enable customers to generate and utilize comprehensive financial, operational
and clinical information. In addition to its software solutions and related
software support services, 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 provision of outsourcing services. In
general, these contracts provide for the payment of monthly fees based on the
number of billed home care visits made by the customer. 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. As a result, the loss of any of these contracts could have a material
adverse impact on the Company's business, financial condition and results of
operations.
The Company sells its software pursuant to non-exclusive license
agreements that provide for the payment of a one-time license fee. In accordance
with SOP 97-2, these revenues are recognized when products are delivered and the
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 software varies
depending on the number of software modules licensed and the number of users
accessing the system and can range from ten 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.
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. These revenues are recognized as the
related services are performed.
<PAGE> 13
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW (CONTINUED).
The Company defines recurring revenues as revenues derived under
multi-year contracts in addition to annual software support agreements. These
revenues were approximately $2.2 million, or 41.8% of total net revenues and
$6.8 million, or 33.7% of total net revenues, for the three months and nine
months ended September 30, 1999, respectively and $2.2 million, or 23.0% of
total net revenues and $6.3 million, or 17.3% of total net revenues for the
three months and nine months ended September 30, 1998, respectively.
For the three months and nine months ended September 30, 1999, the
Company derived 0.1% and 14.5%, respectively of its total net revenues from
contracts with affiliates of Columbia/HCA. For the three months and nine months
ended September 30, 1998, the Company derived 28.3% and 33.9%, respectively of
its total net revenues from contracts with affiliates of Columbia/HCA. The
contracts with Columbia/HCA were terminated on December 1, 1998 and a settlement
of $7.0 million was agreed to by both parties for the early termination of the
contracts and for specific wind down of activities to be performed by the
Company through March 31, 1999. Included in the first quarter of 1999 are
revenues totaling $2.2 million from the wind down of some Columbia/HCA
agreements. Without these revenues, the Company would have had a loss for the
first quarter of 1999.
The Company believes that continued enhancement of its software systems
is critical to its future success, and anticipates that investment in existing
and new products will continue as needed to support the Company's product
strategies. 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. For the three
months and nine months ended September 30, 1999, the Company capitalized
$255,000 and $765,000, respectively, and for the three months and nine months
ended September 30, 1998, the Company capitalized $167,000 and $1.4 million,
respectively, of computer software development costs. Also in the 3rd quarter of
1998 the Company wrote off $2.0 million of previously capitalized computer
software development cost where certain development segments were abandoned.
YEAR 2000 ISSUES
Introduction. Year 2000 issues arise because many computer software and
hardware systems use only two digits to represent the year. As a result, these
systems may not process dates beyond 1999, which may cause errors in information
or system failures. Therefore, some computer software and hardware will need to
be modified prior to the Year 2000 in order to remain functional.
State of Readiness. The Company is assessing both the readiness of its
internal computer systems and the compliance of its software and computer
products licensed and sold to customers for handling Year 2000 issues. The
Company has appointed a Year 2000 Project Manager and has established a Task
Force to evaluate the Company's products and services, business operations, and
relationships with customers and business partners. The mission of the Task
Force is to actively prepare the Company's systems and assist the Company's
customers for Year 2000 issues, as well as prepare contingency plans for the
potential compromise in the performance of critical systems and services. The
Company expects to implement successfully the systems and programming changes
necessary to address the Year 2000 issues of its major software products. Both
the STAT2 product and the DME6.3 product are now Year 2000 compliant. The
Company is also assessing and addressing the possible effects on the Company's
operations of the Year 2000 readiness of key vendors and 3rd party software
providers. The Company's reliance on vendors and 3rd party software providers,
and therefore, on the proper functioning of their information systems and
software, means that their failure to address Year 2000 issues could have a
material impact on the Company's operations and financial results. The Company
is contacting such vendors and suppliers and while it has not discovered any
material Year 2000 issues yet, the Company can not guarantee the performance or
representations of such entities.
<PAGE> 14
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
YEAR 2000 ISSUES (CONTINUED)
Costs. The Company has incurred costs of approximately $800,000 in
addressing Year 2000 issues, consisting primarily of programming expenses and
replacing technology which was not Year 2000 compliant. The Company does not
believe that the remaining costs of achieving Year 2000 readiness will have a
material effect on the Company's results of operations or financial condition.
Risks. The Company has not currently identified any critical assets
under its control that present a material risk of not being Year 2000 compliant
in a timely manner, or for which an acceptable alternative cannot be
implemented. As testing continues, however, it is possible that certain assets
could be identified that present a material risk of Year 2000 interruption and
it is possible that key suppliers or vendors could suffer such interruptions.
Any of such interruptions or the failure of the Company to make its software
products Year 2000 compliant could have a material adverse effect on the
Company's results of operations or financial condition.
Contingency Plans. The Year 2000 Task Force has developed various
contingency plans for Year 2000 failures. These contingency plans will be
modified as the risk of potential Year 2000 issues continue to be addressed.
BACKLOG
The Company had backlog associated with its software of approximately
$1.6 million and $5.2 million on September 30, 1999 and 1998, respectively.
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.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Net Revenues. Total net revenues for the three months ended September 30, 1999
decreased $4.2 million, or 43.7%, to $5.3 million as compared to $9.5 million
for the three months ended September 30, 1998. This decrease includes $2.7
million attributable to the termination of the Columbia/HCA contracts and $0.8
million attributable to a decrease in new software sales and related services.
Cost of Revenues. Total cost of revenues decreased $2.1 million, or 34.2%, to
$4.0 million for the three months ended September 30, 1999 as compared to $6.1
million for the three months ended September 30, 1998. This decrease is
principally the result of a reduction in costs associated with the decrease in
new software sales and related services. As a percentage of total net revenues,
total costs of revenues increased to 75.2% for the three months ended September
30, 1999 from 64.4% for the three months ended September 30, 1998. The increase
as a percentage of total net revenues is principally due to the decrease in
total net revenues and certain employee support costs associated with the
Columbia/HCA contracts which were incurred until May and June 1999.
Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended September 30, 1999 increased
$1.1 million to $4.3 million as compared to $3.2 million for the three months
ended September 30, 1998. This increase is principally attributable to
additional bad debt reserve of $1.8 million and additional administrative costs
related to the CareCentric transaction. The increase was partially off set by
the restructuring of the Company in late 1998. The restructuring was a result of
the change in the home care business environment resulting from IPS, and the
termination of the Columbia/HCA contracts, coupled with the decision to
eliminate certain legacy development projects. As a percentage of total net
revenues, selling, general and administrative
<PAGE> 15
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(CONTINUED)
expenses were 80.9% for the three months ended September 30, 1999 compared with
33.5% for the three months ended September 30, 1998.
Research and Development Expenses. Research and development expenses for the
three months ended September 30, 1999 decreased $1.1 million or 57.3% to $0.8
million, as compared to $1.9 million for the three months ended September 30,
1998. The decrease in expenses is principally due to the abandonment of certain
legacy development projects in late 1998. As a percentage of total net revenues,
these expenses decreased to 15.5% for the three months ended September 30, 1999,
from 20.4% for the three months ended September 30, 1998.
Amortization and Depreciation. Depreciation and amortization expense for the
three months ended September 30, 1999 increased $392,000, or 63.4%, to
$1,011,000 as compared to $618,000 for the three months ended September 30,
1998. This increase is principally due to the amortization of goodwill resulting
from the Tropical acquisition in March 1999 and the CareCentric merger in August
1999.
Other Income (Expense). Interest expense for the three months ended September
30, 1999 and 1998 relates to borrowings under the Company's line of credit
agreement and capital lease obligations. Interest and other income for the three
months ended September 30, 1999 and 1998 consists principally of interest income
related to the Company's short-term cash investments and has decreased due to
the decrease in cash and cash equivalents.
Severance and other restructuring charges Severance and other restructuring
charges were recorded was a credit of $1.1 million for the three months ended
September 30, 1999 compared to a charge of $9.6 million for the three months
ended September 30, 1998. The $1.1 million credit resulted from the reversal of
restructuring charge related to excess office space when a portion of the
Company's leased premises was sublet. The $9.6 million charge was recorded in
September of 1998 as a result of changes in the home care business environment
resulting from IPS coupled with the decision to eliminate certain legacy
development projects including the AS400 effort. These expenses include a $2
million write-off of capitalized software and the remainder primarily relates to
severance costs from a reduction in force, costs to terminate contracts with
third party vendors and costs related to excess capacity.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Net Revenues. Total net revenues for the nine months ended September 30, 1999
decreased $16.2 million, or 44.4%, to $20.3 million as compared to $36.5 million
for the nine months ended September 30, 1998. This decrease includes $9.6
million attributable to reduced revenues from the loss of the Columbia/HCA
contracts and $5.3 million attributable to a decrease in new software sales and
related services.
Cost of Revenues. Total cost of revenues decreased $6.3 million, or 33.2%, to
$12.8 million for the nine months ended September 30, 1999 as compared to $19.1
million for the nine months ended September 30, 1998. This decrease is
principally the result of a reduction in costs associated with the decrease in
new software sales and related services. As a percentage of total net revenues,
total costs of revenues increased to 62.9% for the nine months ended September
30, 1999 from 52.4% for the nine months ended September 30, 1998. The increase
as a percentage of total net revenues is principally due to the decrease in
total net revenues and certain employee support costs associated with the
Columbia/HCA contracts which were incurred until May and June 1999.
Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the nine months ended September 30, 1999 decreased
$2.2 million to $8.9 million as compared to $11.1 million for the nine months
ended September 30, 1998. This decrease is principally attributable to the
restructuring of the Company in late 1998. The restructuring was a result of the
change in the home care business environment resulting from IPS, and the
termination of the Columbia/HCA contracts, coupled with the decision to
eliminate certain legacy development projects. The decrease was partially offset
by the
<PAGE> 16
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
SEPTEMBER 30, 1998 (CONTINUED)
increase for bad debt in the third quarter of $1.8 Million. As a percentage of
total net revenues, selling, general and administrative expenses were 43.9% for
the nine months ended September 30, 1999 compared with 30.5% for the nine months
ended September 30, 1998.
Research and Development Expenses. Research and development expenses for the
nine months ended September 30, 1999 decreased $2.6 million, or 48.5% to $2.7
million, as compared to $5.3 million for the nine months ended September 30,
1998. The decrease in expenses is principally due to the abandonment of certain
legacy development projects in late 1998. As a percentage of total net revenues,
these expenses were 13.5% for the nine months ended September 30, 1999 compared
with 14.6% for the nine months ended September 30, 1998.
Amortization and Depreciation. Depreciation and amortization expense for the
nine months ended September 30, 1999 increased $633,000, or 35.6%, to $2.4
million as compared to $1.8 million for the nine months ended September 30,
1998. This increase is principally due to the amortization of goodwill resulting
from the Tropical acquisition in March 1999 and the CareCentric merger in August
1999.
Other Income (Expense). Interest expense for the nine months ended September 30,
1999 and 1998 relates to borrowings under the Company's line of credit agreement
and capital lease obligations. Interest and other income for the nine months
ended September 30, 1999 and 1998 consists principally of interest income
related to the Company's short-term cash investments and decreased $118,000.
Income Taxes. At December 31, 1998, the Company had net operating loss ("NOL")
carryforwards for federal and state income tax purposes of $10.6 million, which
expire at various dates through 2013, if not utilized. The Company also has
research and development and alternative minimum tax credits ("tax credits") of
approximately $90,000 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
realized based on a weighing of evidence at September 30, 1999, and as a result,
a 100% deferred tax valuation allowance has been recorded against these assets.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, the Company had a working capital deficit of
$6.9 million and cash and cash equivalents of $1.2 million. Net cash used in
operating activities for the nine months ended September 30, 1999 was $3.5
million. In March, 1999, the Company completed the Tropical acquisition for $1.8
million in cash and 100,000 shares of common stock at the then fair value of
$1.63 per share. Also in March 1999, the Company repaid a $5 million line of
credit obligation to a bank.
In the event that the MCS merger described below should not close,
there would be significant liquidity constraints on the Company. Under this
scenario, the Company would require additional cash availability. The Company
believes that the funds available from the combination of its cash, cash
equivalents, cash to be generated from future operations, the commercial line of
credit and a successful completion of the planned merger with MCS will be
sufficient to meet the Company's operating requirements, assuming no material
adverse change in the operation of the Company's business, for at least the next
twelve months.
In May 1999, the Company entered into a definitive agreement to merge
with MCS, Inc., a wholly owned subsidiary of Mestek. For every share of
outstanding Company common stock, the Company agreed to issue .85 shares of its
common stock to Mestek in the exchange. MCS is a leading provider of information
systems and services to the home healthcare industry with approximately $16.6
million (unaudited) in revenues and $1.4 million (unaudited) in net income in
1998.
<PAGE> 17
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In August 1999, the Company completed the CareCentric merger for
approximately 3.0 million shares of the Company's Series A Preferred Stock. The
preferred stock was valued at $3.00 per share at closing. Under the terms of the
merger, the Company may have to issue up to an additional 3.0 million shares of
Series A Preferred Stock if the Company's common stock does not meet certain
price targets. On June 30, 2001 the Series A Preferred Stock is convertible into
Company common stock, subject to shareholder approval. If the shareholder
approval for conversion is not obtained by June 30, 2000, the Series A holders
will be given a right to sell the Series A stock to the Company for cash. In
conjunction with the CareCentric merger the Company assumed a loan from a bank
with an outstanding balance of $1.5 million. The $1.5 million bank loan was
retired through use of a new loan extended by Mestek in September 1999.
CareCentric Solutions is an emerging provider of point-of-care systems in the
home healthcare information systems' marketplace.
In September 1999, the Company obtained a $5.0 million commercial line
of credit with a national bank. The Company's trade accounts receivable are used
as collateral for the line and must be maintained at certain levels of aging to
support availability of advancement under the line. Actual availability under
the terms of the line averaged $1.4 million in October, its first month of
existence.
Also in September 1999, in connection with an amendment of the MCS
merger, the Company received $3.0 million of loan proceeds from Mestek, the
parent company of MCS. The loan proceeds were used to retire $1.5 million of
term loans assumed with the acquisition of CareCentric and fund operating needs.
If the MCS merger is completed in January 2000, Mestek's note evidencing the
loan will be converted into Series B preferred stock and Mestek will pay an
additional $3.0 million for the Series B stock and options and warrants to
purchase common stock. If the MCS merger is not completed in January 2000,
Mestek's $3.0 million note will mature in June, 2000. In addition to the
commercial line of credit and the $3.0 million loan from Mestek, the Company
received commitments of $1.6 million of loans to fund operating needs and
continue the execution of product strategies in the 4th quarter of 1999. The
$1.6 million of loans have varying terms and maturity as disclosed in Note 12 of
the financial statements. The combined funds provided by these additional loans,
the line of credit and the $3.0 Mestek loan provide adequate funding through the
projected completion date of the MCS Merger.
IMPACT OF NEW ACCOUNTING STANDARDS
In 1998, the Financial and Accounting Standards Board issued SFAS No.
133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 is effective for the Company's fiscal year ending
December 31, 2000. The Company's management does not believe that the adoption
of SFAS No. 133 will have a material impact on the Company's position or results
of operations.
<PAGE> 18
SIMIONE CENTRAL HOLDINGS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Neither the Company nor any of its subsidiaries is currently a
party to any legal proceedings which would be material to the business
or financial condition of the Company on a consolidated basis. The
Company was, however, served on July 17, 1997 with an administrative
subpoena issued by the United States Department of Health and Human
Services, Office of Inspector General. In connection with that
subpoena, the Department of Justice ("DOJ") has advised the Company
that certain aspects of the Company's past relationship with affiliates
of Columbia/HCA Healthcare Corporation are within the scope of an
ongoing grand jury investigation. However, the DOJ has confirmed to the
Company that neither the Company, nor any of its officers, directors or
employees, is a target in this investigation and, based upon the
information known to the DOJ at this time, neither the Company, nor any
of its officers, directors or employees, is likely to become one. The
Company is cooperating fully with the government and does not currently
believe that this inquiry will have The Company was one of several
defendants named in a "whistleblower" lawsuit related to Medicare fraud
filed under the False Claims Act in the Northern District of Georgia
(U.S. ex rel. McLendon v. Columbia/HCA Healthcare Corp., et al., No.
97-VC-0890 (N.D. GA.)). The Company has learned that the Justice
Department has elected not to join in the claims asserted against it by
Donald McClendon, who is a former employee of an unrelated service
provider to Columbia/HCA. Although the Justice Department joined the
suit with regard to other defendants, it specifically declined to
intervene with regard to Simione Central.
The Company has had indications that Mr. McLendon may still
pursue "whistleblower" claims against the Company directly. The Company
does not believe that any such claims will have merit or any material
effect on the Company's overall business or financial condition.
Item 2. Change in Securities.
On July 12, 1999 the Company entered into a merger agreement
(the "Agreement") with CareCentric Solutions, Inc. The CareCentric
merger was completed on August 12, 1999. Under the Agreement,
CareCentric merged into a wholly-owned subsidiary of the Company, and
the Company issued 3,034,521 shares of Series A Preferred Stock to the
former preferred stockholders and noteholders of CareCentric and paid
$3.00 per share in cash to the former common stockholders of
CareCentric. Only the former CareCentric preferred stockholders and
noteholders who represented themselves to be "accredited investors"
received stock in the merger; those who did not sign such
representation received cash only. The Series A Preferred Stock is
convertible into the Company's common stock on a share-for-share basis
only upon the approval of the conversion by a majority of the Company's
stockholders. The Company intends to seek stockholder approval of the
conversion prior to June 30, 2000. In issuing the shares without
registration, the Company relied on the exemption from registration
provided in Section 4(2) of the Securities Act of 1933, as amended, and
Rule 506 of Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
<PAGE> 19
SIMIONE CENTRAL HOLDINGS, INC.
PART II - OTHER INFORMATION (CONTINUED)
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
2.1(1,3) Agreement and Plan of Merger dated as of July 12, 1999 among
the Company, Simione Acquisition Corporation and CareCentric Solutions,
Inc.
2.2(1,2) Second Amended and Restated Agreement and Plan of Merger and
Investment Agreement, dated as of October 25, 1999 by and among MCS,
Inc., Mestek, Inc., the Company, John E. Reed, Stewart B. Reed and E.
Herbert Burk.
10.1(3) Form of Shareholder Voting Agreement by and among the Company,
Daniel J. Mitchell as agent ("CareCentric Agent") for shareholders of
CareCentric Solutions, Inc. and each of Barrett C. O'Donnell and
O'Donnell Davis, Inc.
10.2(3) Shareholder Voting Agreement by and among the Company,
CareCentric Agent, and Mestek, Inc.
27.1 Financial Data Schedule (for SEC use only).
- -----------------------------
(1) In accordance with Item 601(b)(2) of Regulation S-K, the
schedules have been omitted. There is a list of schedules at
the end of the Exhibit, briefly describing them. The Company
will furnish supplementary a copy of any omitted schedule to
the Commission upon request.
(2) Incorporated herein by reference to Exhibit 2.1 to the
Form 10 of MCS, Inc. (File No. 000-27829) filed on October 26,
1999.
(3) Incorporated by reference to the Registrants Current
Report on Form 8-K dated as of August 12, 1999.
(b) Reports on Form 8-K:
The Company filed a Report on Form 8-K dated August 12, 1999 reporting
the completion of the Company's merger with CareCentric Solutions, Inc.
The Company filed a Report on Form 8-K/A dated September 9, 1999
reporting that the Company had entered into an amendment to the MCS,
Inc. merger agreement dated May 26, 1999.
<PAGE> 20
SIMIONE CENTRAL HOLDINGS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SIMIONE CENTRAL HOLDINGS, INC.
Dated: November 15, 1999 By: /s/ R. Bruce Dewey
------------------
R. BRUCE DEWEY
Chief Executive Officer
By: /s/ George M. Hare
------------------
GEORGE M. HARE
Chief Financial Officer
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE SIMIONE CENTRAL HOLDINGS, INC. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
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<FISCAL-YEAR-END> DEC-31-1999
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