<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
________________________________________________________________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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: 0-24260
AMEDISYS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 11-3131700
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3029 S. Sherwood Forest Blvd., Ste. 300 Baton Rouge, LA 70816
(Address of principal executive offices including zip code)
(225) 292-2031
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (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 [ ]
Number of shares of Common Stock outstanding as of June 30, 1999: 3,116,692
shares
1
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PART I.
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998............................................ 3
Consolidated Statements of Operations for the Three and Six Months ended June 30, 1999 and 1998.................. 4
Consolidated Statements of Cash Flows for the Six Months ended June 30, 1999 and 1998............................ 5
Notes to Consolidated Financial Statements....................................................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................ 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS..................................................... 12
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................................................................ 12
ITEM 2. CHANGES IN SECURITIES............................................................................................ 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................................................................. 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................................. 13
ITEM 5. OTHER INFORMATION................................................................................................ 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................................. 13
</TABLE>
2
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Amedisys, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
as of June 30, 1999 and December 31, 1998
(Unaudited, in 000's)
<TABLE>
<CAPTION>
ASSETS June 30, 1999 December 31, 1998
<S> <C> <C>
Current Assets:
Cash $60 $572
Accounts Receivable, Net of Allowance for Doubtful
Accounts of $2,607,000 in June 1999 and
$3,095,000 in December 1998 20,989 7,456
Prepaid Expenses 778 604
Inventory 1,442 1,440
Other Current Assets 480 263
-------------------------- --------------------
Total Current Assets 23,749 10,335
Notes Receivable from Related Parties 0 89
Property, Plant and Equipment, Net 7,497 8,574
Other Assets, Net 25,165 25,430
-------------------------- --------------------
Total Assets $56,411 $44,428
========================== ====================
LIABILITIES
Current Liabilities:
Notes Payable $34,862 $18,979
Current Portion of Long-Term Debt 3,141 3,141
Deferred Revenue 2,119 2,119
Accounts Payable 8,088 7,295
Accrued Expenses:
Payroll and Payroll Taxes 4,118 5,257
Insurance 0 368
Other 6,105 4,456
-------------------------- --------------------
Total Current Liabilities 58,432 41,615
Long-Term Debt 5,477 5,447
Deferred Revenue 7,062 8,121
Other Long-Term Liabilities 826 826
-------------------------- --------------------
Total Liabilities 71,796 56,009
-------------------------- --------------------
Minority Interest 107 103
-------------------------- --------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock 3 3
Preferred Stock (750,000 shares) 1 1
Additional paid-in capital 12,152 12,005
Treasury Stock (4,667 shares) (25) (25)
Stock Subscriptions Receivable 0 0
Retained Earnings (Deficit) (27,623) (23,668)
-------------------------- --------------------
Total Stockholders' Equity (deficit) (15,492) (11,684)
-------------------------- --------------------
Total Liabilities and Stockholders' Equity $56,411 $44,428
========================== ====================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Amedisys, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 1999 and 1998
(Unaudited, in 000's)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
----------------------------------- -----------------------------------
1999 1998 1999 1998
(Restated) (Restated)
<S> <C> <C> <C> <C>
Income:
Service revenue $ 28,758 $ 7,539 $ 57,762 $ 15,681
Cost of service revenue 13,103 3,753 27,392 8,308
---------- ------------- ---------- -------------
Gross margin 15,655 3,786 30,370 7,373
General and administrative expenses:
Salaries and benefits 8,775 3,605 17,674 8,306
Other 8,163 3,388 15,682 6,516
---------- ------------- ---------- -------------
Total general and administrative expenses 16,938 6,993 33,356 14,822
---------- ------------- ---------- -------------
Operating (loss) (1,283) (3,207) (2,986) (7,449)
---------- ------------- ---------- -------------
Other income and expense:
Interest income 21 9 38 21
Interest expense (567) (214) (1,147) (415)
Other income, net 385 16 146 23
---------- ------------- ---------- -------------
Total other income and expenses (161) (189) (963) (371)
---------- ------------- ---------- -------------
(Loss) before income taxes and minority interest,
and discontinued operations (1,444) (3,396) (3,949) (7,820)
(Benefit) for estimated income taxes 0 (1,159) 0 (2,659)
---------- ------------- ---------- -------------
(Loss) before minority interest and
discontinued operations (1,444) (2,237) (3,949) (5,161)
Minority interest in consolidated subsidiary (11) 0 (4) 0
---------- ------------- ---------- -------------
(Loss) before discontinued operations (1,455) (2,237) (3,953) (5,161)
Discontinued operations:
Income from discontinued operations, net of
income tax 0 334 0 737
---------- ------------- ---------- -------------
Total discontinued operations 0 334 0 737
---------- ------------- ---------- -------------
Net (Loss) $ (1,455) $ (1,903) $ (3,953) $ (4,424)
========== ============= ========== =============
Weighted average common shares outstanding 3,117 3,064 3,075 3,057
Basic earnings (loss) per common share:
Net (loss) before discontinued operations $ (0.47) $ (0.73) $ (1.29) $ (1.69)
Income from discontinued operations, net of
income tax 0 0.11 0 0.24
---------- ------------- ---------- -------------
Net (loss) $ (0.47) $ (0.62) $ (1.29) $ (1.45)
========== ============= ========== =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Amedisys, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1999 and 1998
(Unaudited, in 000s)
<TABLE>
<CAPTION>
Six months ended
---------------------------------------------------------
June 99 June 98
<S> <C> <C>
Cash Flows from operating activities:
Net (Loss) ($3,953) ($4,424)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation and amortization 1,537 870
Provision for bad debts 919 415
Minority interest in affiliated company 4 0
(Gain) loss on sale of company assets (342) 4
Loss on disposal of durable medical equipment company 249 0
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (15,496) 2,919
(Increase) in prepaid expenses (180) (644)
(Increase) in other current assets (417) (3,217)
(Increase) in other assets (74) (198)
Increase in accounts payable 1,914 170
Increase (decrease) in accrued expenses (940) 485
Decrease in deferred revenue (1,059) 0
---------------------------- ------------------------
Net cash (used in) operating activities (17,838) (3,620)
---------------------------- ------------------------
Cash flow from investing activities:
Purchase of furniture, fixtures & equipment (176) (1,625)
Proceeds from sale of furniture, fixtures & equipment 24 0
Proceeds from sale of company assets 357 0
Cash paid for acquisitions 0 (2,005)
Proceeds from sale of durable medical equipment company 100 0
Decrease in notes receivable from related parties 89 28
---------------------------- ------------------------
Net cash provided by (used in) investing activities 394 (3,602)
---------------------------- ------------------------
Cash flow from financing activities:
Cash received in acquisitions 0 317
Net increase in borrowings on line of credit 17,145 284
Payments on notes payable (513) (704)
Proceeds from notes payable 300 473
Proceeds from preferred stock 0 3,253
---------------------------- ------------------------
Net cash provided by financing activities 16,932 3,623
---------------------------- ------------------------
Net (decrease) in cash and cash equivalents (513) (3,599)
Cash and cash equivalents, beginning of period 572 4,070
---------------------------- ------------------------
Cash and cash equivalents, end of period $60 $471
============================ ========================
Supplemental disclosures of cash flow information:
Cash payments for:
Interest $259 $426
============================ ========================
Income taxes $0 $151
============================ ========================
Supplemental schedule of non-cash investing activity (See
note 9 to financial statements):
Value of stock issued in exchange $894
Value of note payable issued in exchange 1,575
Cash acquired in exchange (317)
Working capital acquired net of cash and cash equivalents 3,553
Fair value of property, plant and equipment acquired (385)
Fair value of other assets acquired (27)
Long term debt assumed 3,069
Fair value of other liabilities assumed 54
------------------------
Non cash portion of acquisitions 8,416
Cash payment for acquisitions 2,005
========================
Goodwill recorded in exchange $10,421
========================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Amedisys, Inc. (the "Company") is a leading multi-regional provider of home
health nursing services, alternate-site infusion therapy, and ambulatory surgery
centers. The Company operates 69 offices within a network of subsidiaries in
the south and southeastern United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company experienced significant
losses from operations thus far in 1999, as well as in 1998 and 1997 and has a
deficit in stockholders' equity of $15,492,000 at June 30, 1999. In addition, at
June 30, 1999, the Company has $38,003,000 in debt repayment obligations coming
due within one year and Management's current projections indicate that
operations will not produce sufficient cash flow to fund those obligations.
These matters, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The Company has undertaken a significant
restructuring effort to reduce operating costs by closing unprofitable locations
and reducing components of overhead expenses to minimize this deficit. The
Company is negotiating the restructuring of certain debt obligations and is
considering the possible sale of certain operating assets to generate cash to
fund remaining obligations. Management believes that the strategies it has
undertaken will enable the Company to satisfy its obligations as they become
due; however, there can be no assurance that these strategies will succeed. The
financial statements do not include any adjustments relating to the
recoverability or classification of asset carrying amount or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the financial position
at June 30, 1999 and the result of operations for the three and six months and
cash flows for the six months ended June 30, 1999 and 1998. The results of
operations for the interim periods are not necessarily indicative of results of
operations for the entire year. These interim consolidated financial statements
should be read in conjunction with the Company's annual financial statements and
related notes in the Company's Form 10-K.
2. RECLASSIFICATIONS
Certain amounts previously reported in the 1998 interim unaudited financial
statements have been reclassified due to the sale of the Staffing division in
September, 1998 which qualified as a discontinued operation.
3. EARNINGS PER SHARE
Basic net income (loss) per share of common stock is calculated by dividing
net income (loss) applicable to common stock by the weighted-average number of
common shares outstanding during the period. Diluted net income (loss) per
share is not presented as stock options and convertible securities outstanding
(total 3,581,934 shares) during the periods presented were not dilutive.
4. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activities. In June
1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133 is
effective for fiscal years beginning after June 15, 2000 and must be applied to
instruments issued, acquired, or substantively modified after December 31, 1997.
The Company does not expect the adoption of the accounting pronouncement to have
a material effect on its financial position or results of operations.
5. MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING
The Company derives approximately 80% of its revenues from the Medicare
system. In 1997, Congress approved the Balanced Budget Act of 1997 (the "Budget
Act"). The Budget Act established an interim payment system (the "IPS") that
provided for the lowering of reimbursement limits for home health visits until
the Prospective Payment System ("PPS") is implemented. For cost reporting
periods beginning on or after October 1, 1997, Medicare-reimbursed home health
agencies' cost limits were determined as the lesser of (i) their actual
6
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costs, (ii) per visit cost limits based on 105% of median costs of freestanding
home health agencies, or (iii) a per beneficiary limit determined for each
specific agency based on whether the agency was an "old" or "new" provider. An
old provider was defined as an agency which filed a twelve month cost report in
Federal FY 1994 and a new agency as one that did not. An old provider per
beneficiary limit was based on 75% of 98% of the 1994 agency cost adjusted for
inflation, plus 25% of a regional average as determined by Health Care Financing
Administration ("HCFA"). A new provider per beneficiary limit was based on a
national average, as determined by HCFA, adjusted for regional labor costs. The
schedule of per visit limits for cost reporting periods ending on or after
October 1, 1997 was published by HCFA in January, 1998 and the schedule of per-
beneficiary limits for cost reporting periods beginning on or after October 1,
1997 was published in March, 1998, by HCFA. The new IPS cost limits apply to the
Company for the cost reporting period beginning January 1, 1998 and will remain
in effect until the implementation of PPS, which is currently anticipated to be
October, 2000.
As a result of these reimbursement changes, a significant restructuring
effort by the Company was completed during 1998, resulting in office
reorganizations, consolidations, and closures as it transitioned to IPS. After
the acquisition of certain home health care agencies from Columbia/HCA in
November and December, 1998, a similar restructuring effort is being
continuously implemented in an overall effort to reduce costs and improve
efficiencies, while maintaining the same high-quality of patient care. Since
these cost reductions are on-going, the Company expects to report improved
operating results for the remainder of the year.
As the home care industry faces continued changes in reimbursement
structure, Amedisys is committed to improve and streamline systems and take
appropriate actions to offset these changes, creating a company focused on long-
term growth.
6. DISPOSITION
On January 1, 1999, the Company sold all of the issued and outstanding
stock of Amedisys Durable Medical Equipment, Inc. d/b/a Care Medical and
Mobility ("ADME") to Ace Drug Medical Equipment, Inc. ("ACE"), a Texas
Corporation. ACE acquired substantially all of the assets and liabilities of
ADME. This transaction was accounted for as a sale by the Company. The sales
price was $672,385 of which $100,000 was paid at closing; $418,318 is payable
pursuant to a two year note in eight equal quarterly payments of principal and
interest at prime plus 2%, adjusted annually; and $154,067 is payable pursuant
to a one year note, payable in four quarterly payments of principal plus accrued
interest at prime plus 2%. Each note is solitarily guaranteed by Terry Huckabee,
a principal of ACE. In accordance with the payment terms of both notes, the
first and second quarterly payments due to the Company as of July 15, 1999
totaled $157,000. As of August 13, 1999, these payments have not been received
by the Company. As a result, the Company has fully reserved for these past due
payments. The Company expects that this disposition will not have a material
effect on net revenues or income of the Company.
7. DISCONTINUED OPERATIONS
In September, 1998, the Company sold certain assets, subject to the
assumption of certain liabilities, of its Staffing division. This sale
qualified as a discontinued operation, and has been reflected as such in the
consolidated statements of operations. Summarized financial information for the
discontinued operation is as follows (in 000's):
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 1998 June 1998
------------------ ----------------
<S> <C> <C>
Service Revenue $4,226 $8,794
Income from discontinued
operations before provision
for income taxes $ 506 $1,117
Income from discontinued
operations, net of income
taxes $ 334 $ 737
</TABLE>
7
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8. INCOME TAXES
For the three and six month periods ending June 30, 1998, the Company
established a deferred tax asset by recording an estimated net income tax
benefit of $987,000 and $2,279,000, respectively. These amounts are comprised of
a $1,159,000 and a $2,659,000 income tax benefit for the three and six month
period ending June 30, 1998 which are reflected in the accompanying consolidated
statement of operations as a benefit for income taxes. These benefits are offset
by a $172,000 and a $380,000 income tax expense for the three and six month
period ending June 30, 1998 which are reflected in the accompanying consolidated
statements of operations as a component of income from discontinued operations.
In December, 1998, a valuation allowance was recorded against this deferred tax
asset, effectively writing-off the deferred tax asset due to the significant
losses incurred by the Company for the year ended December 31, 1998. Due to the
continued losses for the three and six month periods ending June 30, 1999, the
Company has not recorded an estimated income tax benefit for these periods.
9. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY
The following unaudited table presents (in 000's) a summary of the
acquisitions completed during the first quarter of 1998 and a detail of the
acquisitions completed during the second quarter of 1998 as presented in the
supplemental schedule to the consolidated cash flow statement. No acquisitions
were completed during the first and second quarters of 1999.
<TABLE>
<CAPTION>
Precision Quality Home
1/st/ Quarter Home Home Health of
1998 Health, Health, Alexandria
Total Inc. Inc. Inc. Total
------------- --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
Supplemental schedule of non-cash investing activity:
Value of stock issued in exchange $ 874 $ 0 $ 20 $ 0 $ 894
Value of note payable issued in exchange 375 1,200 0 0 1,575
Cash acquired in exchange (123) (0) (132) (62) (317)
Working capital deficit acquired net of cash and cash
equivalents 3,272 0 306 (25) 3,553
Fair value of property, plant and equipment acquired (279) (102) 3 1 (385)
Fair value of other assets acquired (26) (0) 1 0 (27)
Long term debt assumed 2,998 0 2 69 3,069
Fair value of other liabilities assumed 54 0 0 0 54
------ ------ ----- ---- -------
Non cash portion of acquisitions 7,146 1,098 192 (20) 8,416
Cash payment for acquisition 1,905 0 80 20 2,005
------ ------ ----- ---- -------
Goodwill recorded in exchange $9,051 $1,098 $ 272 $ 0 $10,421
------ ------ ----- ---- -------
</TABLE>
10. NOTES PAYABLE
Notes payable consist primarily of a $25 million asset-based line of
credit, a $14 million note payable to Columbia/HCA due in December, 1999, a $6.6
million unsecured liability payable to Columbia/HCA, and borrowings under
revolving bank lines of credit of $1,500,000 and $750,000. The $25 million
asset-based line of credit is collateralized by eligible accounts receivable of
the home health care nursing division. Eligible receivables are defined as
receivables, exclusive of workers' compensation and self-pay, that are aged less
than 181 days. The ongoing fees associated with this line of credit equate to 1%
of eligible billed receivables generated during each billing period. This line
of credit expires on December 31, 2001. The $14 million note payable to
Columbia/HCA is a result of the acquisition consummated in November 1998. The
$6.6 million unsecured net liability payable to Columbia/HCA resulted from
Periodic Interim Payments ("PIP") directed to Columbia/HCA and subsequently
forwarded to the Company which have been determined by the fiscal intermediary
as funds belonging to Columbia/HCA. The revolving bank lines of credit of
$1,500,000 and $750,000 bear interest at bank prime plus 1.5% and bank prime
plus 1%, respectively. At August 13, 1999, approximately $900,000 was available
under the combined bank lines of credit (see further discussion below). These
lines of credit are collateralized by 80% of eligible receivables in outpatient
surgery and infusion, 75% of eligible receivables in home health care, and 80%
of physician notes receivable. Eligible receivables are defined principally as
accounts that are aged less than 90 days for outpatient surgery and infusion and
120 days for home health care. Subsequent to June 30, 1999,
8
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the $1,500,000 line of credit was decreased to $900,000, with scheduled step-
downs in availability until the expiration of the line on the earlier of
December 1, 1999 or the sale of all or a portion of one of the Company's
operating units. The $750,000 line of credit has scheduled principal payments
until the expiration of the line on December 1, 1999.
The $1,500,000 bank line of credit is subject to certain covenants,
including a monthly borrowing base, a debt service coverage ratio, and a
leverage ratio. At December 31, 1998 and June 30, 1999, the Company was not in
compliance with the debt service coverage ratio requirement of 1.1 : 1.0 due to
the losses incurred in these periods. This default was waived by the bank
through the quarterly reporting period ending June 30, 1999.
11. AMOUNTS DUE TO AND DUE FROM MEDICARE
The Company is continuing to reconcile the amounts due to and due from the
Medicare program for the first and second quarters of 1999. The integration
and change of ownership process of the acquired home health agencies of
Columbia/HCA have delayed the rate review process with Medicare. Rate reviews
and reconciliations have been forwarded to Medicare and responses are being
evaluated as received. Based on the information currently available to the
Company, the Company has a total estimated aggregate payable due to Medicare of
$8 million which is netted against accounts receivable. For the cost report
years ending November 30 and December 31, 1999, the Company has estimated a net
cost report payable of $3.7 million for which twelve month repayment plans have
been negotiated with Medicare. For the cost report year ending December 31,
1998, year-end cost reports have been compiled with an estimated aggregate
payable due to Medicare of $4.3 million which the Company is in the process of
negotiating with Medicare for extended repayment. Although management expects
Medicare to agree to a revised payment plan, there is no assurance at this time
that the proposed terms will be accepted by Medicare.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Consolidated Financial Statements appearing in Item 1.
GENERAL
Amedisys, Inc. is a leading multi-regional provider of fully integrated
alternate-site health care services. The Company offers the following services:
home health nursing services; infusion therapy; and ambulatory surgery centers.
The Company operates 69 offices within a network of subsidiaries in the south
and southeastern United States.
9
<PAGE>
RESULTS OF OPERATIONS
Revenues. Net revenues increased $21,219,000 or 281% and $42,081,000 or
268% for the three and six months ended June 30, 1999, respectively, as compared
to the same periods in 1998. The Home Health Care Nursing division's net
revenues increased $20,637,000 or 515% for the three month period ended June 30,
1999 and $40,620,000 or 447% for the six month period ended June 30, 1999.
This increase was attributed to the acquisition of certain Columbia/HCA home
health care agencies in the latter part of 1998. Visits for the three month
period ended June 30 increased 245,171 or 359% from 68,204 in 1998 to 313,375 in
1999. For the six month period ended June 30, visits increased 477,926 or 285%
from 167,642 in 1998 to 645,568 in 1999. Infusion therapy revenues increased
$1,364,000 or 54% for the six month period ended June 30, 1999.
Cost of Revenues. Cost of revenues increased by 249% and 230% for the three
and six months ended June 30, 1999 as compared to the same periods in 1998. This
increase is primarily attributed to the acquisition of certain Columbia/HCA home
health care agencies. As a percentage of net revenues, cost of revenues
decreased to 46% from 50% for the three months ended June 30, 1999 and 1998,
respectively, and to 47% from 53% for the six months ended June 30, 1999 and
1998, respectively. This decrease is attributed to cost reduction efforts
implemented during 1998 in all operating divisions. For the home health care
nursing division, all nursing employees were converted to a per-visit payment
basis, thereby increasing overall productivity.
General and Administrative Expenses ("G&A"). General and administrative
expenses increased by 142% and 125% for the three and six months ended June 30,
1999 as compared to the same periods in 1998. This increase is primarily
attributed to the acquisition of certain Columbia/HCA home health care agencies.
As a percentage of net revenues, general and administrative expenses decreased
to 59% from 93% for the three months ended June 30, 1999 and 1998, respectively,
and to 58% from 95% for the six months ended June 30, 1999 and 1998,
respectively. This decrease is attributed to the cost reduction efforts
implemented for all operating divisions and corporate departments in addition to
improvements in operating efficiencies. The operating efficiencies that were
gained through these efforts helped to offset the additional resources needed
following the Columbia/HCA acquisition, resulting in a minimal increase in
administrative personnel and resources to appropriately manage and support the
new home health care agencies.
Operating (Loss). The Company had an operating loss of $1,283,000 for
the three months ended June 30, 1999 as compared to an operating loss of
$3,207,000 for the same period in 1998 and an operating loss of $2,986,000 for
the six months ended June 30, 1999 as compared to an operating loss of
$7,449,000 for the same period in 1998. The reduction in operating losses of
$1,924,000 or 60% for the three month period ended June 30, 1999 and of
$4,463,000 or 60% for the six month period ended June 30, 1999 is mainly
attributed to the restructuring efforts implemented during 1998 and the
economies of scale achieved with the acquisition of certain Columbia/HCA home
health care agencies.
(Benefit) for Estimated Income Taxes. For the three and six month periods
ending June 30, 1998, the Company established a deferred tax asset by recording
an estimated net income tax benefit of $987,000 and $2,279,000, respectively.
These amounts are comprised of a $1,159,000 and a $2,659,000 income tax benefit
for the three and six month period ending June 30, 1998 which are reflected in
the accompanying consolidated statement of operations as a benefit for income
taxes. These benefits are offset by a $172,000 and a $380,000 income tax expense
for the three and six month period ending June 30, 1998 which are reflected in
the accompanying consolidated statements of operations as a component of income
from discontinued operations. In December, 1998, a valuation allowance was
recorded against this deferred tax asset, effectively writing-off the deferred
tax asset due to the significant losses incurred by the Company for the year
ended December 31, 1998. Due to the continued losses for the three and six month
periods ending June 30, 1999, the Company has not recorded an estimated income
tax benefit for these periods.
Discontinued Operations. In September, 1998, the Company sold its Staffing
division and reflected this sale as a discontinued operation in the accompanying
consolidated statements of operations. Net revenues for the Staffing division
were $4,226,000 and $8,794,000 for the three and six months ended June 30, 1998
and net income from discontinued operations, net of income tax of $172,000 and
$380,000, was $334,000 and $737,000 for the three and six months ended June 30,
1998, respectively.
10
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Net (Loss). As a result of the reasons described above, the Company had a
net loss of $1,455,000 and $3,953,000 for the three and six months ended June
30, 1999, respectively, compared with a net loss of $1,903,000 and $4,424,000
for the three and six months ended June 30, 1998, respectively. The company
expects the quarterly losses to decrease throughout 1999 as the full benefit of
the restructuring efforts are realized.
FINANCIAL CONDITION
The Company's principal capital requirements are for additional working
capital to fund current cash requirements of the Company. The Company recorded
a net loss for the year-ended December 31, 1998 and the three and six months
ended June 30, 1999 and had negative cash flow from operations. The negative
cash flow from operations is largely attributable to the changes in Medicare
reimbursement which were effective January 1, 1998 for the Company. The Company
has undertaken a significant restructuring effort to reduce operating costs but
expects to record losses for the remainder of 1999. The operating losses and
negative cash flow from operations have impacted the availability of the
Company's current financing sources and have decreased the Company's overall
liquidity position. The Company expects the negative cash flow from operations
to continue on a short-term basis and is currently evaluating alternative
strategies to secure the needed capital until such time that a positive cash
flow from operations is generated.
Notes payable consist primarily of a $25 million asset-based line of
credit, a $14 million note payable to Columbia/HCA due in December 1999, a $6.6
million unsecured liability payable to Columbia/HCA, and borrowings under
revolving bank lines of credit of $1,500,000 and $750,000. The $25 million
asset-based line of credit is collateralized by eligible accounts receivable of
the home health care nursing division. Eligible receivables are defined as
receivables, exclusive of workers' compensation and self-pay, that are aged less
than 181 days. The ongoing fees associated with this line of credit equate to 1%
of eligible billed receivables generated during each billing period. This line
of credit expires on December 31, 2001. The $14 million note payable to
Columbia/HCA is a result of the acquisition consummated in November 1998.
Management of the Company and representatives from Columbia/HCA are currently in
negotiations to restructure the repayment terms of this note payable. In the
event that an agreement can not be reached, the Company does not expect to have
the cash flow to fund the obligation when due, which raises substantial doubt
about the Company's ability to continue as a going concern. The $6.6 million
unsecured liability payable to Columbia/HCA resulted from Periodic Interim
Payments ("PIP") directed to Columbia/HCA and subsequently forwarded to the
Company which have been determined by the fiscal intermediary as funds belonging
to Columbia/HCA. Management of the company and representatives from Columbia/HCA
are currently in negotiations as to when this payment is due. The revolving bank
lines of credit of $1,500,000 and $750,000 bear interest at bank prime plus 1.5%
and bank prime plus 1%, respectively. At August 13, 1999, approximately $900,000
was available under the combined bank lines of credit. These lines of credit are
collateralized by 80% of eligible receivables in outpatient surgery and
infusion, 75% of eligible receivables in home health care, and 80% of physician
notes receivable. Eligible receivables are defined principally as accounts that
are aged less than 90 days for outpatient surgery and infusion and 120 days for
home health care. Subsequent to June 30, 1999, the $1,500,000 line of credit was
decreased to $900,000, with scheduled step-downs in availability until the
expiration of the line on the earlier of December 1, 1999 or the sale of all or
a portion of one of the Company's operating units. The $750,000 line of credit
has scheduled payments until the expiration of the line on December 1, 1999.
The $1,500,000 bank line of credit is subject to certain covenants,
including a monthly borrowing base, a debt service coverage ratio, and a
leverage ratio. At December 31, 1998 and June 30, 1999, the Company was not in
compliance with the debt service coverage ratio requirement of 1.1 : 1.0 due to
the losses incurred in these periods. This default was waived by the bank
through the quarterly reporting period ending June 30, 1999.
The Company's operating activities used $17,838,000 during the first six
months of 1999, whereas such activities used $3,620,000 in cash during the first
six months of 1998. This increase in cash used in operating activities is
primarily attributable to an increase in accounts receivable as a result of the
acquisition of certain home health agencies of Columbia/HCA. The Company's
investing activities provided $394,000 for the six months ended June 30, 1999,
whereas investing activities used $3,602,000 for the six months ending June 30,
1998. Cash used in acquisitions decreased due to a decrease in purchases of
furniture, fixtures and equipment of $1,449,000 and a decrease in cash paid for
acquisitions of $2,005,000 for the six months ended June 30, 1999 as compared to
the same period in 1998. Net cash provided by financing activities increased to
$16,932,000 from $3,623,000 for the six months ending June 30, 1999 and 1998,
respectively. This increase is due to the net increase in borrowings on the
lines of credit of $16,861,000 resulting from increased expenditures related to
the acquired home health care agencies of Columbia/HCA, offset by a decrease in
proceeds from preferred stock of $3,253,000.
At June 30, 1999, the Company had negative working capital of $34,683,000
and a stockholder's equity deficit of $15,492,000.
11
<PAGE>
YEAR 2000 COMPLIANCE ISSUES
The Company continues to evaluate its entire operation in preparation for
potential problems associated with Year 2000 ("Y2K"). Some internal areas and
processes being evaluated include initial charge entry through billing and
collections; accounts payable invoice receipt through processing and payment;
bank processing of receipts and disbursements; computer hardware and software
functionality; and time and/or date-sensitive office and medical equipment
functionality. In preparation for Y2K, the Company has replaced, or is in the
process of replacing, all of its mission critical computer systems that are not
Y2K compliant. The general accounting system was replaced and has been in use
since October, 1998. Management believes that the Company's home health care
nursing, outpatient surgery center, and infusion division software systems are
Y2K compliant. At present, the Company does not anticipate any material
disruption in its operations or significant costs to be incurred to attain
compliance. There can be no assurance, however, that the Company will identify
or adequately assess all aspects of the business that may be affected. Due to
this uncertainly, a contingency plan is being developed as each area is
evaluated to minimize any negative impact to the Company. In the event that any
of the Company's significant payors, suppliers, or customers do not successfully
and in a timely manner achieve Year 2000 compliance, the Company's business
and/or operations could be adversely affected.
FORWARD LOOKING STATEMENTS
When included in the Quarterly Report on Form 10-Q or in documents
incorporated herein by reference, the words "expects", "intends", "anticipates",
"believes", "estimates", and analogous expressions are intended to identify
forward-looking statements. Such statements inherently are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, current cash flows and operating
deficits, debt services needs, adverse changes in federal and state laws
relating to the health care industry, competition, regulatory initiatives and
compliance with governmental regulations, customer preferences and various other
matters, many of which are beyond the Company's control. These forward-looking
statements speak only as of the date of the Quarterly Report on Form 10-Q. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or any changes in the Company's expectations with regard thereto or
any changes in events, conditions or circumstances on which any statement is
based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company does not engage in derivative financial instruments, other
financial instruments, or derivative commodity instruments for speculative or
trading/non-trading purposes.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
Effective February 16, 1999, the terms of conversion of the Company's
Series A Preferred Stock were amended through Preferred Stock Conversion
Agreements. These agreements reduced the conversion rate for the Series A
Preferred Stock to $3.00 per common share. Prior to the agreements, the
conversion rate at June 30, 1999 was $4.2525 which would convert into 1,763,668
shares of common stock. Under the new agreements, the preferred shares would
convert into 2,500,000 common shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
At June 30, 1999, the Company was not in compliance with the debt service
coverage ratio requirement on the $1,500,000 revolving bank line of credit. The
line of credit is collateralized by accounts receivable and is subject to
certain covenants, including a monthly borrowing base, a debt service coverage
ratio, and a leverage ratio. The Company was not in compliance with the debt
service coverage ratio requirement of 1.1 : 1.0 due to the losses incurred in
these periods. This default was waived by the bank through the June 30, 1999
quarterly reporting period.
12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders meeting of the Company was held on June 24, 1999
with the following two items voted on:
Item 1. Election of five directors to serve until the next annual meeting
of the shareholders of the Company. The nominated individuals were William F.
Borne, CEO of Amedisys, Inc.; Ronald A. LaBorde, President and CEO of Piccadilly
Cafeterias; Jake L. Netterville, managing director of Postlethwaite and
Netterville, a public accounting firm; David R. Pitts, President and CEO of
Pitts Management Associates, Inc.; and David F. Ricchiuti, Assistant Dean and
Director of Research at Tulane University's A.B. Freeman School of Business.
These individuals were approved with the following votes:
<TABLE>
<CAPTION>
Director Votes in Favor Votes Against Votes Abstained
-------- -------------- ------------- ---------------
<S> <C> <C> <C>
Mr. Borne 2,510,157 0 167,939
Mr. LaBorde 2,500,531 0 177,564
Mr. Netterville 2,500,532 0 177,564
Mr. Pitts 2,500,593 0 177,503
Mr. Ricchiuti 2,500,532 0 177,564
</TABLE>
Item 2. Reappointment of the Company's independent public accounting firms
of Arthur Andersen LLP and Hannis T. Bourgeois & Co., LLP. The reappointment of
the independent public accounting firms was approved by the shareholders,
receiving 2,675,046 votes in favor, 3,050 votes against, and no votes abstained.
ITEM 5. OTHER INFORMATION
On April 1, 1999, Mitchel G. Morel resigned from the Company. Mr. Morel
served as Chief Financial Officer of the Company from June, 1994 to March, 1999.
On May 10, the Company increased the matching of employee 401(k) Plan
contributions with Company common stock to $.50 for every $1.00 of employee
contributions from $.25 for every $1.00 up to a maximum level of 6% of the
employee's total contribution for 1999.
The Company issued a total of 756,772 common stock options to directors,
officers, and key employees. The exercise prices range from $3.00 to $7.00 and
the options vest intermittently through December 10, 2000. The number of options
issued to directors and officers are as follows:
Director/Officer Number of Shares
---------------- ----------------
William F. Borne 89,530
Ronald A. LaBorde 12,305
Jake L. Netterville 12,305
David R. Pitts 12,305
David F. Ricchiuti 12,305
Larry R. Graham 75,000
Michael Lutgring 17,000
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Identification of Exhibit Page Number
3.1(ii) --- Certificate of Incorporation --
3.2(ii) --- Bylaws --
4.1(iii) --- Certificate of Designation for Series A
Preferred Stock --
4.2(iii) --- Specimen of Common Stock Certificate --
4.3(iii) --- Specimen of Preferred Stock Certificate --
4.4(iii) --- Form of Placement Agent's Warrant Certificate --
4.5(i) --- Specimen of Series A Preferred Stock Conversion
Agreement 15
4.6(i) --- Specimen of Certificate of Amendment of
Certificate of Designation of Amedisys, Inc. 29
27.1(i) --- Financial Data Schedule 30
(i) Filed herewith.
(ii) Previously filed as an exhibit to the Annual Report on Form 10-KSB
for the year ended December 31, 1994 which is incorporated herein by
reference.
(iii) Previously filed as an exhibit to the Registration Statement on
Form S-3 dated March 1, 1998 which is incorporated herein by
reference.
(b) Report on Form 8-K
No reports on Form 8-K were filed during the second quarter of 1999.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMEDISYS, INC.
/s/ LARRY R. GRAHAM
By:___________________________________
Larry R. Graham
Principal Financial and Accounting Officer
and duly authorized officer
DATE: September 14, 1999
14
<PAGE>
EXHIBIT 4.5
PREFERRED STOCK CONVERSION AGREEMENT
PREFERRED STOCK CONVERSION AGREEMENT (this "Agreement"), dated as of this
16/th/ day of February, 1999, by and between Amedisys, Inc., a Delaware
corporation (the "Company"), ______________ ("Stockholder") and the beneficial
owners set forth on the signature page hereto.
WITNESSETH:
WHEREAS, Stockholder is presently the record holder of the number of shares
of Series A Convertible Preferred Stock, par value $.001 per share, of the
Company (the "Preferred Stock") set forth on Exhibit A attached hereto;
WHEREAS, the Preferred Stock is convertible into shares of common stock of
the Company, par value $.001 per share (the "Common Stock"), at a current
effective conversion rate of $4.625 per share (subject to reduction in
accordance with the terms of that certain Registration Rights Agreement (the
"Registration Rights Agreement") between Stockholder and the Company, dated as
of December 22, 1997 ) (the "Current Conversion Rate"); and
WHEREAS, Stockholder and the Company wish to amend the terms of the
Preferred Stock to, among other things, reduce the conversion rate of the
Preferred Stock on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, each intending to be legally bound hereby, agree as follows:
ARTICLE 1.
CONVERSION OF PREFERRED STOCK
1.1 Reduction of Conversion Rate. Upon the terms and subject to the
conditions set forth in this Agreement, the Company and Stockholder hereby agree
that as of the Effective Date (as hereinafter defined in Section 2.1), the
conversion rate for the Preferred Stock shall be reduced from the Current
Conversion Rate to a conversion rate equal to $3.00 per share (the "Reduced
Conversion Rate").
<PAGE>
1.2 Restriction on Transfer; Company Option. In consideration of and in
exchange for Stockholder's entitlement to the reduction of the conversion rate
of the Preferred Stock to the Reduced Conversion Rate, Stockholder (i) agrees,
until December 31, 1999, not to, without the prior written consent of the
Company, sell, transfer, assign, pledge, hypothecate or otherwise dispose of any
securities of the Company owned by Stockholder (other than in connection with a
tender offer, merger or similar business combination expressly approved by the
Continuing Directors (as defined below)); and (ii) hereby grants to the Company
an option (the "Option"), commencing on the Effective Date and expiring on
December 31, 1999 (the "Exercise Date"), to purchase up to thirty (30%) percent
(the "Option Cap") of the number of shares of Preferred Stock owned by
Stockholder and/or, if Stockholder shall have prior to December 31, 1999
converted any or all of the Preferred Stock into shares of Common Stock, the
number of shares of Common Stock acquired by Stockholder upon such conversion,
at an effective price of $3.25 (the "Exercise Price") per share of Common Stock
(whether such shares of Common Stock are outstanding following conversion or
underlie unconverted shares of Preferred Stock, the number of which shall be
calculated as if such shares of Preferred Stock had been converted into shares
of Common Stock at the Reduced Conversion Rate). By way of illustration only,
the maximum aggregate Exercise Price of the Company for Stockholder's shares of
Preferred Stock (assuming for this illustration that the number of shares of
Preferred Stock set forth on Exhibit A is accurate) shall be: the quotient of
100,000 (number of shares of Preferred Stock owned) divided by $3.00 (Reduced
Conversion Rate) multiplied by $3.25 (Exercise Price) and then multiplied by 0.3
(the Option Cap). For purposes of this Agreement, the term "Continuing
Directors" shall mean (i) any member of the Company's Board of Directors who is
such a member as of the date of this Agreement (a "Current Member") or (ii)
any person who subsequently becomes a
2
<PAGE>
member of the Board of Directors, if such person's nomination for election or
election to the Board of Directors is recommended or approved by at least two-
thirds of the Current Members.
1.3 Method of Exercise.
The Option may be exercised by the Company, in whole or in part, at any time
from the date of this Agreement until the Exercise Date, by written notice
directed to Stockholder, which notice shall be accompanied by full payment of
the Exercise Price for the number of shares with respect to which the Option is
being exercised. The Exercise Price shall be paid at the time of exercise by
means of a wire transfer or certified or bank check for immediately available
funds payable to the order of Stockholder. Upon payment by the Company of the
Exercise Price, Stockholder shall deliver to the Company its certificate or
certificates representing all of the shares of Common Stock and/or Preferred
Stock held by Stockholder along with a stock transfer power(s) duly endorsed in
blank by Stockholder. Upon receipt of the certificate or certificates and the
stock transfer power(s) set forth above, the Company shall issue to Stockholder
a new certificate(s) for the amount of shares previously owned by Stockholder
less the amount of shares purchased by the Company pursuant to the Option. The
Option may be exercised successively until the Option Cap.
ARTICLE 2.
EFFECTIVE DATE
2.1 Effective Date of Agreement. Subject to the satisfaction of the
conditions set forth in this Agreement on the date all notices and/or amendments
to the Company's Certificate of Designation required by the State of Delaware to
effectuate the transactions contemplated by this Agreement are duly filed, this
Agreement, including the reduction of the conversion rate to the
3
<PAGE>
Reduced Conversion Rate, and the restrictions on transfer and grant of Option
shall become effective (the "Effective Date").
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Stockholder as follows:
(a) Authorization.
The execution, delivery and performance of this Agreement and consummation of
the transactions contemplated hereby have been duly authorized, adopted and
approved by the Board of Directors of the Company. The Company has taken all
necessary corporate action and has all necessary corporate power to enter into
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and is the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, or by legal or equitable principles, relating
to or limiting creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
4
<PAGE>
(b) Organization.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has the corporate
power and authority to own and lease its properties and assets and to carry on
its business as it is now being conducted.
3.2 Representations and Warranties of Stockholder. Stockholder hereby
represents and warrants to the Company as follows:
(a) Authorization.
The execution, delivery and performance of this Agreement and consummation of
the transactions contemplated hereby have been duly authorized, adopted and
approved by Stockholder. Stockholder has taken all necessary action and has all
necessary power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Stockholder and is the valid and binding obligation of Stockholder,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(b) Organization.
Stockholder is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it was formed. Stockholder has all requisite
power and authority to
5
<PAGE>
own and lease its properties and assets and to carry on its business as it is
now being conducted.
(c) Ownership of Company Shares.
Stockholder is the record owner of the shares of Preferred Stock set forth on
Exhibit A hereto for the beneficial owners set forth on the signature page
hereto, and such shares of Preferred Stock are not subject to any voting trust,
proxy arrangement, rights of first refusal, pledge, security interest, lien,
charge or other encumbrance agreement whatsoever.
(d) Representations and Warranties in Subscription Agreement.
Stockholder acknowledges that the representations and warranties made to the
Company in Section 2 of that certain Subscription Agreement between Stockholder
and Company, dated December 1997, are true and correct as of the date hereof in
all material respects, and shall be true and correct in all material respects on
and as of the Effective Date, with the same force and effect as though such
representations and warranties had been made on and as of the Effective Date.
(e) No Conflicts. The execution, delivery and performance of this
Agreement will not (i) conflict with, result in a breach of, or constitute a
default under the organizational documents of Stockholder, or any agreement or
other obligation to which Stockholder is a party or by which Stockholder or any
of its assets or properties are bound, or any judgment, decree, order, writ,
injunction, determination or award of any court or other governmental agency,
instrumentality or body applicable to Stockholder, or (ii) violate any law, rule
or regulation applicable to Stockholder or its property.
6
<PAGE>
3.3 Survival of Representations and Warranties. The representations and
warranties of the parties contained herein shall survive the execution and
delivery of this Agreement.
ARTICLE 4.
COVENANTS
4.1 Covenants of the Company. The Company hereby covenants and agrees that:
(a) Best Efforts and Cooperation; Further Assurances. Prior to the
Effective Date, with the cooperation of Stockholder where appropriate, the
Company shall:
(i) comply with all filing requirements which Federal, state or local
law may impose on the Company with respect to the transactions contemplated
by this Agreement, including but not limited to, the filing of an amendment
to the Certificate of Designation of the Company;
(ii) use its diligent efforts to take all actions necessary to be taken
in connection with the transactions contemplated by this Agreement; and
(iii) not take any action that would cause any representation or
warranty of it contained herein to be inaccurate, untrue, incomplete or
misleading.
4.2 Covenants of Stockholder. Stockholder hereby covenants and agrees that:
(a) Best Efforts and Cooperation; Further Assurances. Prior to the Effective
Date, with the cooperation of the Company where appropriate, Stockholder shall:
7
<PAGE>
(i) use its diligent efforts to take all actions necessary to be taken
in connection with the transactions contemplated by this Agreement; and
(ii) not take any action that would cause any representation or warranty
of it contained herein to be inaccurate, untrue, incomplete or misleading.
(b) Termination of Registration Rights Agreement. As of the Effective Date,
the Registration Rights Agreement is hereby terminated and rendered null and
void and Stockholder shall have no further rights under such agreement.
ARTICLE 5.
CONDITIONS
5.1 Conditions to Obligations of the Company. This Agreement shall not be
deemed to be effective unless each of the following conditions have been
fulfilled:
(a) Participation. The Company shall obtain the execution and delivery
of agreements substantially identical to this Agreement from holders of at least
sixty-seven (67%) percent of the total outstanding shares of the Preferred
Stock, including Stockholder; and
(b) Accuracy of Representations and Warranties; Performance of
Covenants.
Each of the representations and warranties of Stockholder was true, correct
and complete in all material respects when made and shall also be true, correct
and complete in all material respects on and as of the Effective Date, with the
same force and effect as if made on and as of the Effective Date. Stockholder
shall have performed and complied in all material respects
8
<PAGE>
with all agreements and covenants required by this Agreement to be performed by
Stockholder on or prior to the Effective Date. The condition set forth in this
Section 5.1 (b) may be waived by the Company.
5.2 Conditions to Obligations of Stockholder. This Agreement shall not be
deemed to be effective unless the following condition has been fulfilled:
(a) Accuracy of Representations and Warranties; Performance of Covenants.
Each of the representations and warranties of the Company set forth in this
Agreement was true, correct and complete in all material respects when made and
shall also be true, correct and complete in all material respects on and as of
the Effective Date. The Company shall have performed and complied in all
material respects with all agreements and covenants required by this Agreement
to be performed by the Company on or prior to the Effective Date. The condition
set forth in this Section 5.2 (a) may be waived by Stockholder.
ARTICLE 6.
MISCELLANEOUS
6.1 Fees and Expenses. Stockholder and the Company shall pay their own
respective fees and expenses incident to negotiation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
9
<PAGE>
6.2 Modification, Amendments and Waiver. The parties hereto may amend,
modify or otherwise waive any provision of this Agreement only by a written
instrument signed by Stockholder and the Company, acting only upon the approval
of the Continuing Directors.
6.3 Entire Agreement. This Agreement and the exhibits and other
documents referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby and supersede all
prior agreements with respect thereto, whether written or oral.
6.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard, however, to
such jurisdiction's principles of conflicts of laws.
6.5 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto shall be in writing and delivered
personally, by facsimile transmission or telex, or sent by commercial overnight
delivery service or registered or certified mail (return receipt requested),
postage prepaid, addressed as follows:
If to Stockholder: _________________________
If to the Company: Amedisys, Inc.
3029 S. Sherwood Forest Blvd.
Suite 300
Baton Rouge, LA 70816
Attention: Michael Lutgring, Esq.
Facsimile: (504) 295-9678
10
<PAGE>
with a copy to: Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas 45th Floor
New York, NY. 10020
Attn: Stephen R. Connoni
Facsimile: (212) 536-3901
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If sent as aforesaid, the date any such notice
shall be deemed to have been delivered is on the date of transmission of a
facsimile or telex, the day after delivery to a commercial overnight delivery
service, or five days after delivery into a United States Postal facility.
6.6 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.7 Severability of Provisions. The provisions of this Agreement shall
be considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable.
Such invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
6.8 Headings. The headings set forth in the articles and sections of
this Agreement and in the schedule to this Agreement are inserted for
convenience of reference only and shall not be deemed to constitute a part
hereof.
11
<PAGE>
6.9 No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.
6.10 Amendments to Certificate of Designation. By its execution of this
Agreement, Stockholder hereby consents to the Company's filing of an amendment
to the Certificate of Designation relating to the Preferred Stock to reflect and
effectuate the transactions contemplated by this Agreement. For purposes of
Section 7(c) of the Company's Certificate of Designation relating to the
Preferred Stock, the undersigned hereby waives any requirement that a meeting of
the holders of the Preferred Stock be called to vote on the amendment of such
Certificate of Designation.
6.11 Deemed Effective Date. Notwithstanding anything to the contrary
contained herein, for purposes of any conversion of Preferred Stock,
Stockholder's agreement to the reduction of the conversion rate to the Reduced
Conversion Rate shall, subject to this Agreement becoming effective as provided
herein, be deemed to have become effective on December 31, 1998.
6.12 Beneficial Owners. The parties hereto acknowledge that ___________
is the record owner of the Preferred Stock holding such Stock as nominee for the
beneficial owners set forth on the signature page hereto. By execution of this
Agreement, the beneficial owners agree to the terms of this Agreement and to be
joined in the representations, warranties, covenants and other agreements set
forth in this Agreement.
* * * * *
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Preferred Stock Conversion
Agreement to be executed and delivered on the date and year first above written.
AMEDISYS, INC.
By:______________________
_________________________
By:______________________
BENEFICIAL OWNERS:
___________________________
___________________________
___________________________
___________________________
___________________________
13
<PAGE>
EXHIBIT A
Number of
Name of Shares of Series A
Stockholder Convertible Preferred Stock
- -------------- ---------------------------
<PAGE>
EXHIBIT 4.6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
AMEDISYS, INC.
Amedisys, Inc. (the "Corporation"), a corporation duly organized and
existing under the General Corporation Law of the State of Delaware (the
"DGCL"), does hereby certify that:
1. The Corporation filed a Certificate of Designation on December 31, 1997 (the
"Certificate of Designation") setting forth the rights of a series of
preferred stock designated as Series A Preferred Stock.
2. The Amendment to the Corporation's Certificate of Designation set forth below
was duly adopted in accordance with the provisions of Sections 242 and 228 of
the DGCL.
3. The Certificate of Designation is hereby amended as follows:
(i) Section 3(a) of the Certificate of Designation is amended by deleting
the second sentence of such Section in its entirety and inserting in
lieu thereof the following:
"The initial Conversion Price is equal to $3.00
("Initial Conversion Price")."
(ii) Section 4 of the Certificate of Designation is amended by deleting the
first sentence of such Section in its entirety and inserting in lieu
thereof the following:
"The Series A shall be automatically converted into
shares of Common Stock at such time as the average
of the closing sale price of the Common Stock as
listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the
New York Stock Exchange ("NYSE"), the American Stock
Exchange ("ASE") or wherever the Company's common
stock then trades, is at least $6.25 for fifteen (15)
consecutive trading days."
(iii) Section 5(e) of the Certificate of Designation is amended by deleting
such Section in its entirety and inserting in lieu thereof the
following:
"Intentionally Omitted".
IN WITNESS WHEREOF, Amedisys, Inc. has caused this Certificate to be executed
by , its authorized officer on this day of ,
1999.
By:
--------------------------------
Title:
I certify that , personally known to me to be the same
person whose name is subscribed to the foregoing instrument, this day
personally appeared before me as the , of Amedisys, Inc.,
and he acknowledged that he has executed the foregoing instrument fully and
voluntarily on behalf of Amedisys, Inc. for the use and purpose therein
expressed.
Sworn to and subscribed before me this day of , 1999.
My commission expires:
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