UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________________ to _______________________
Commission file number: 0-22052
PROXYMED, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0202059
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2501 DAVIE ROAD, SUITE 230, FT. LAUDERDALE, FLORIDA 33317
(Address of principal executive offices) (Zip Code)
(954) 473-1001
(Issuer's telephone number)
______________________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
COMMON STOCK, $.001 PAR VALUE
5,280,225 SHARES AS OF MAY 13, 1996
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 795,241
Trade receivables, net 348,944
Other receivables 1,512,797
Current portion of note receivable 371,014
Inventory 202,022
Other current assets 68,106
-----------
Total current assets 3,298,124
Property and equipment, net 1,016,192
Note receivable, less current portion 185,507
Intangible assets, net 609,642
Other assets 107,490
-----------
Total assets $5,216,955
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of capital lease obligations $ 209,137
Current portion of deferred revenue 332,680
Accounts payable and accrued expenses 818,656
-----------
Total current liabilities 1,360,473
Deferred revenue, less current portion 80,000
Capital lease obligations, less current installments 154,342
-----------
Total liabilities 1,594,815
-----------
Stockholders' equity:
Series A 9% Convertible preferred stock, $.01 par value.
Authorized 130,000 shares; issued and outstanding
83,000 shares; liquidation preference $2,075,000 830
Common stock, $.001 par value. Authorized 20,000,000
shares; issued and outstanding 3,297,063 shares 3,297
Additional paid-in capital 10,774,052
Accumulated deficit (7,156,039)
-----------
Total stockholders' equity 3,622,140
-----------
Total liabilities and stockholders' equity $5,216,955
===========
See accompanying notes.
2
<PAGE>
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1996 1995
----------- ---------
Net sales $ 1,543,426 4,730,089
----------- ---------
Costs and expenses:
Cost of sales 265,057 3,366,649
Selling, general and adminis-
trative expenses 1,067,542 2,071,130
----------- ---------
1,332,599 5,437,779
----------- ---------
Operating income (loss) 210,827 (707,690)
Other income (expense):
Gain (loss) on sale of assets 820,482 (1,878,741)
Interest, net (2,789) (84,967)
----------- ---------
Net income (loss) 1,028,520 (2,671,398)
Dividends on cumulative preferred stock (46,688) -
----------- ---------
Net income (loss) applicable to
common shareholders $ 981,832 (2,671,398)
=========== ==========
Net income (loss) per share of
common stock:
Primary $.28 (.84)
==== ====
Fully diluted $.25 (.84)
==== ====
See accompanying notes.
3
<PAGE>
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1996 1995
---------- -----------
Cash flows from operating activities:
Net income (loss) $1,028,520 (2,671,398)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization 68,935 114,711
(Gain) loss on sale of assets (820,482) 1,878,741
Changes in assets and liabilities,
net of effect of
acquisitions and
dispositions:
Accounts receivable 123,188 577,387
Inventory 36,241 31,300
Other (93,443) 100,306
Accounts payable and
accrued expenses 95,804 (2,619,904)
---------- ----------
Net cash provided by (used in)
operating activities 438,763 (2,588,857)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of dispensary assets - 2,662,342
Capital expenditures (145,851) (49,783)
---------- ----------
Net cash provided by (used in)
investing activities (145,851) 2,612,559
---------- ----------
Cash flows from financing activities:
Payment of notes payable and
long-term debt - (324,362)
Collection of notes receivable 92,754 -
Payment of capital lease obligations (54,405) (50,435)
---------- ----------
Net cash provided by (used in)
financing activities 38,349 (374,797)
---------- ----------
Net increase (decrease) in cash 331,261 (351,095)
Cash at beginning of period 463,980 1,137,913
---------- ----------
Cash at end of period $ 795,241 786,818
========== ==========
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 16,971 33,838
========== =========
Common stock issued for businesses
purchased $ - 65,065
========== =========
See accompanying notes.
4
<PAGE>
PROXYMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION - The accompanying unaudited financial statements of
ProxyMed, Inc. and subsidiaries (the "Company") have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles. However,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
Reference is made to the Company's annual report on Form 10-KSB for the year
ended December 31, 1995.
(2) REVENUE RECOGNITION - Revenues from the Company's prescription drug
dispensing activities are reported at net realizable amounts from HMO providers
and patients at the time the individual prescriptions are filled or services are
provided. Revenues from sales of software or software licenses are recognized
upon delivery of the software, or ratably upon the completion of any significant
Company obligations. Revenues from software rentals are recognized over the
rental period. Revenues from sales of computer hardware are recognized upon
shipment of the hardware.
(3) INVENTORY - Inventory, which consists primarily of prescription drugs, is
stated at the lower of cost (first-in, first-out method) or market.
(4) NET INCOME (LOSS) PER SHARE - Net income (loss) per share is generally
computed by dividing net income (loss) applicable to common shareholders by the
weighted average shares of common stock outstanding during the applicable period
(3,606,626 shares and 3,194,207 shares for the three months ended March 31, 1996
and 1995, respectively). Common stock equivalents have been included in the
computation using the modified treasury stock method for those periods in which
the Company reported net income; however, they have been excluded from the
computation in those periods in which the Company reported losses as their
effect would be anti-dilutive. In addition, in calculating fully diluted
earnings per share for the three months ended March 31, 1996, convertible
preferred stock and other potentially issuable securities have been included in
the computation of the weighted average shares of common stock outstanding
(4,245,376 shares).
(5) LICENSE FEES - On February 1, 1996, the Company, Bergen Brunswig Drug
Company and IntePlex, Inc. (collectively, "Bergen"), signed a strategic
marketing agreement whereby Bergen paid a one-time, non-refundable fee of
$1,000,000 for a non-exclusive license to market the Company's electronic
prescription processing products throughout the U.S. The Company will pay Bergen
from 10% to 30% of net revenues derived from the sale of these products,
depending on the overall annual volume of sales. The $1,000,000 fee, and related
incidental costs, have been recognized in the first quarter
5
<PAGE>
of 1996. Bergen Brunswig Drug Company and IntePlex, Inc. are wholly-owned
subsidiaries of Bergen Brunswig Corporation, a supplier of pharmaceutical
products with reported 1995 revenues of $8.4 billion.
On March 1, 1996, the Company entered into a license agreement with Blue
Cross and Blue Shield of Massachusetts, Inc. ("BCBSM"), a large health insurance
provider based in Boston. Under this agreement, BCBSM agreed to pay a one-time
license fee of $204,000 in exchange for an exclusive right to license
ProxyScript to physicians in six New England states. The Company has recognized
$189,000 of the license fee as revenue in the first quarter of 1996,
representing the portion of the fee earned.
(6) SALE OF ASSETS AND SALE OF SUBSIDIARY
(a) SALE OF ASSETS - On March 15, 1995, the Company sold to Eckerd
Corporation ("Eckerd") certain, but not all, of the assets related to the
Company's HMO prescription drug dispensing operations for $4,851,481. The
purchase price included $3,525,000 for the Company's prescription drug files,
transferable licenses, customer lists, goodwill and other intangible assets
relating to the portion of the pharmaceutical dispensing business being sold,
payable as follows: $1,325,000 was paid at closing, and $900,000 and $350,000
was paid on August 4, 1995 and April 5, 1996, respectively, based on
prescription business retained by Eckerd. Under the terms of the agreement, up
to $950,000 remains to be paid on October 5, 1996 (included in other
receivables). This final payment is subject to downward adjustment if the
cumulative percentage of business is less than 75% of the prescription business
which existed at the time of the sale, which was approximately 91,000
prescriptions per month. To the extent that the number of prescriptions filled
by Eckerd is less than 75% of this base number per month, the Company will
receive a proportionate payment amount per prescription filled.
The portion of the sales price that is based on retention (originally
totaling $2,200,000) was recorded as deferred revenue, and is being recognized
as income when earned. As a result of deferring this income until earned, the
Company recorded a loss of $1,889,602 from the consummation of this transaction
in the quarter ended March 31, 1995. Based on prescription data supplied by
Eckerd, the Company recorded an appropriate portion of this deferred income as
earned in subsequent quarters, including $820,482 earned for the three months
ended March 31, 1996. As of March 31, 1996, approximately $250,000 of deferred
revenue remains to be earned from future prescription sales by Eckerd. The
Company estimates that the ultimate cumulative gain on this transaction
(including collection of the remaining deferred revenue) will be nominal after
accruing for costs associated with the transaction, including severance pay,
lease termination costs, costs associated with the Company's obligation to
perform clinical pharmacy services through September 15, 1996, and other items.
Net sales related to these prescription drug dispensing operations were $-0- for
the three months ended March 31, 1996, and approximately $3,404,000 for the
three months ended March 31, 1995.
6
<PAGE>
(b) SALE OF SUBSIDIARY - On September 29, 1995, the Company sold to
National Health Care Affiliates, Inc. and an affiliate thereof (collectively
"NHCA") all of the outstanding common stock of its wholly-owned subsidiary
ProxyFusion, Inc. for $1,542,029. ProxyFusion, Inc. provides home infusion
therapy services, including pharmacy and nursing services, primarily to HMO
patients. Net sales related to this operation were $-0- in the three months
ended March 31, 1996, and approximately $631,000 for the three months ended
March 31, 1995.
Pro forma data reflecting the results of operations as if both the sale
of assets to Eckerd and the sale of the subsidiary to NHCA had occurred as of
January 1, 1995 is as follows. Due to costs incurred by the Company subsequent
to these sales on the further development and marketing of its electronic
prescription processing programs and network (ProxyScript, RxReceive and
ProxyNet), amongst other factors, such pro forma data may not be indicative of
future results of operations.
PRO FORMA - THREE MONTHS
ENDED MARCH 31, 1995
------------------------
Net sales $ 694,000
---------
Costs and expenses:
Cost of sales 453,000
Selling, general and adminis-
trative expenses 544,000
---------
997,000
---------
Operating loss (303,000)
Other income (expense):
Gain on sale of assets 11,000
Interest income 4,000
Interest expense (18,000)
---------
Net loss $(306,000)
=========
Net loss per share of common stock $(.10)
=========
(7) SUBSEQUENT EVENT - SALE OF COMMON STOCK - On May 13, 1996, the Company
completed the sale of 1,945,000 shares of common stock in an underwritten
offering to the public at $6.63 per share. An additional 55,000 shares of common
stock were sold by the underwriter on behalf of an unaffiliated selling
shareholder. The sale of shares by the Company resulted in net proceeds of
$11,323,000, after estimated expenses of $1,562,625. In addition, the
underwriter may elect, within 45 days, to exercise an overallotment option to
sell an additional 300,000 shares on the Company's behalf at the same price,
less expenses. Net proceeds from the offering will be used for sales and
marketing of the Company's healthcare information technology products and
services, product development, payment of capital lease obligations, and working
capital. As part of the transaction, the Company issued warrants to purchase
200,000 shares of common stock to the underwriter, which are exercisable for
five years at a price of $7.95 per share.
7
<PAGE>
The following table presents the unaudited balance sheet of the Company
as of March 31, 1996, as well as the pro forma balance sheet after giving effect
to the net proceeds of the offering and the use of proceeds to repay certain
indebtedness, as if the offering had been consummated on March 31, 1996:
ACTUAL, PRO FORMA PRO FORMA
MARCH 31, ADJUSTMENTS MARCH 31,
1996 DR. (CR.) 1996
------------- ----------- ----------
ASSETS
Cash and cash equivalents $ 795,241 (1) 11,323,000 11,668,241
(2) (450,000)
Other current assets 2,502,883 2,502,883
----------- -----------
Total current assets 3,298,124 14,171,124
Property, equipment and
other assets 1,309,189 1,309,189
Intangible assets 609,642 609,642
----------- -----------
Total assets $ 5,216,955 16,089,955
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 1,360,473 (2) 295,658 1,064,815
Non-current liabilities 234,342 (2) 154,342 80,000
----------- -----------
Total liabilities 1,594,815 1,144,815
----------- -----------
Stockholders' equity:
Preferred stock 830 830
Common stock 3,297 (1) (1,945) 5,242
Additional paid-in
capital 10,774,052 (1) (11,321,055) 22,095,107
Accumulated deficit (7,156,039) (7,156,039)
----------- -----------
Total stockholders'
equity 3,622,140 14,945,140
----------- -----------
Total liabilities
and stock-
holders' equity $ 5,216,955 16,089,955
=========== ===========
(1) To reflect the net proceeds of the sale of 1,945,000 shares of common
stock for $6.63 per share, less estimated expenses.
(2) To reflect the use of proceeds to retire existing capital leases.
(8) EMPLOYEE MATTER - The Company is a party to an administrative proceeding
involving a former employee. Based on its internal investigation, the Company
does not anticipate that the ultimate resolution of this matter will be
material.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
From inception until 1995, the Company's business was principally
related to the dispensing of prescription drugs through a variety of methods of
delivery, including retail and institutional pharmacies and its home infusion
therapy subsidiary. In the first quarter of 1995, management determined that the
Company's retail pharmacy business was undesirable, primarily due to the need
for substantial additional capital required to achieve the economies of scale
required for profitable operations, and decided to shift the emphasis of the
Company's business. As part of the retail pharmacy operations, the Company
provided at no charge to its customers certain of its healthcare information
technology products and services, which were favorably received. Management also
recognized a need for these products and services in the marketplace.
Consequently, the Company elected to pursue the commercialization of its
healthcare information technology products and services. In March 1995, the
Company sold its retail pharmacy operations to Eckerd, and in September 1995 the
Company sold its home infusion subsidiary to NHCA. These sales enabled the
Company to pay off substantial debt to a major drug supplier and to raise cash
needed for the further development and commercialization of its new products and
services.
Through December 31, 1995, revenues from the Company's healthcare
information technology products and services were not material. On February 1,
1996, the Company consummated the Bergen agreement, pursuant to which the
Company received a one-time, non-refundable fee of $1,000,000. On March 1, 1996,
the Company entered into the BCBSM agreement, pursuant to which the Company is
entitled to receive a one-time license fee of $204,000 payable by September 1,
1996, of which $189,000 has been earned.
The Company still owns and operates ProxyCare, Inc. ("ProxyCare"), its
institutional pharmacy subsidiary which dispenses prescription drugs to patients
in long-term care facilities; however, the Company is considering whether
ProxyCare fits within its long-term business plan. There are no understandings,
commitments or agreements at the date of this Form 10-QSB for the sale of
ProxyCare.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996, COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
NET SALES. Net sales for the three months ended March 31, 1996 decreased
by $3,186,663, or 67%, to $1,543,426 from net sales of $4,730,089 for the three
months ended March 31, 1995. This decrease was attributable to the Eckerd and
NHCA dispositions which occurred in 1995. The combined net sales of these
operations comprised 85% of the Company's net sales in the three months ended
March 31, 1995.
9
<PAGE>
Net sales for the three months ended March 31, 1996 which were not attributable
to the operations sold increased $848,902, or 122%, to $1,543,426 over net sales
of $694,524 in the 1995 period. This increase was primarily due to the net
effect of two factors. First, the Company recognized income totaling $1,189,000
from two one-time license fees in the first quarter of 1996 (Bergen and BCBSM),
whereas no license fee income was received in the first quarter of 1995. Second,
sales by the Company's remaining drug dispensing operations, ProxyCare,
decreased $368,890, or 53%, to $325,634 for the three months ended March 31,
1996, as compared to net sales of $694,524 for the three months ended March 31,
1995. This decrease was due primarily to the loss of business from several
customers in the first quarter of 1996. The Company believes that price
fluctuations are not a significant factor affecting ProxyCare's sales because of
contractual fixed pricing arrangements with many customers.
GROSS PROFIT MARGIN. Gross profit margin for the three months ended
March 31, 1996 was 83% compared to a gross profit margin of 29% for 1995. Gross
profit margin, after deducting sales and costs of sales related to the
operations sold to Eckerd and NHCA, was 83% for 1996 compared to 35% for 1995.
The relatively high gross profit margin for the 1996 period results from the
favorable impact of the one-time license fee revenues received from Bergen and
BCBSM. For ProxyCare, the gross margin was 26% and 35% for the three months
ended March 31, 1996 and 1995, respectively. The decrease in ProxyCare's gross
margin reflects the change in the mix of sales resulting from the loss of
certain customers in the 1996 period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended March 31, 1996 decreased
$1,003,588, or 52%, to $1,067,542 from $2,071,130 for the three months ended
March 31, 1995. After deducting selling, general and administrative expenses
related to the operations sold to Eckerd and NHCA, selling, general and
administrative expenses "as adjusted" in the three months ended March 31, 1996
increased by $529,850, or 99%, to $1,067,542 from $537,692 for the three months
ended March 31, 1995. Selling, general and administrative expenses, as adjusted,
were 69% and 77% of adjusted net sales in the 1996 and 1995 periods,
respectively. Selling, general and administrative expenses for ProxyCare
decreased by $112,583, or 54%, to $95,187 in the 1996 period, compared to
$207,780 in the 1995 period, primarily due to cost control measures instituted
upon the loss of certain customers in the 1996 period. As a result of these
measures, ProxyCare's selling, general and administrative expenses as a
percentage of sales was maintained at 29% of net sales in the 1996 period,
compared to 30% in the 1995 period. Other selling, general and administrative
expenses, as adjusted, increased by $642,433, or 195%, to $972,345 in the 1996
period, compared to $329,912 in the 1995 period, primarily due to the Company's
efforts to develop and market its new products and services. This increase
primarily resulted from the following: (i) payroll and related costs for sales,
customer service, and clinical pharmacy service and management personnel related
to the Company's new products and services ($416,000); (ii) marketing expenses
related to these products and services, marketing materials, attendance at
national and local trade shows, expenses for pilot programs for potential
customers and travel costs ($120,000); (iii) additional depreciation and
amortization related to new network equipment and capitalized software
10
<PAGE>
costs ($35,000); and (iv) insurance costs related to the addition of officer and
director insurance and product liability insurance for the Company's new
products and services ($20,000). In addition, selling, general and
administrative expenses for the 1996 period include commissions payable under
the Bergen agreement of $56,700, which were not incurred in the 1995 period.
INTEREST EXPENSE. Net interest expense for the three months ended March
31, 1996 decreased $82,178, or 97%, to $2,789 from $84,967 for the three months
ended March 31, 1995. The decrease in net interest expense is due primarily to
the use of proceeds from the Eckerd sale in March 1995, and from a private
placement of Series A Preferred Stock in July 1995, to repay all outstanding
notes payable and long-term debt. As of March 31, 1996, interest-bearing
indebtedness consists solely of capital lease obligations.
OTHER. Upon the sale of the Company's retail pharmacy operations to
Eckerd in March 1995, the Company recorded a loss of $1,878,741 in the three
month period ended March 31, 1995. Pursuant to the agreement with Eckerd, the
Company earns additional proceeds from the sale based on subsequent prescription
sales by Eckerd. Based on data provided by Eckerd, the Company earned $820,482
of additional sale proceeds in the three month period ended March 31, 1996. If
all of the remaining deferred revenue is earned, the Company will ultimately
record a nominal cumulative gain on the sale.
NET INCOME (LOSS). As a result of the foregoing, the Company recorded
net income of $1,028,520 in 1996, compared to a net loss of ($2,671,398) in
1995. Notwithstanding the net income recorded for the three months ended March
31, 1996, which resulted substantially from one-time license fees earned, the
Company anticipates that it will continue to incur significant operating losses
until it generates a substantial flow of recurring revenues from the sale of its
new products and services. There can be no assurance that the Company will
realize a significant level of recurring revenues from the sale of these new
products and services, or that revenues from these operations or those of
ProxyCare will ultimately result in significant reductions in losses or
achievement of profitability.
The Financial Accounting Standards Board has recently issued new
accounting pronouncements which will be effective in 1996. With respect to
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," the Company is already in compliance with the standards requiring an
evaluation of the carrying values of its intangible and other long-lived assets.
With respect to the accounting for its stock-based employee compensation plans,
the Company will elect to account for such plans in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(which is consistent with its present method of accounting for such plans)
rather than the fair value-based method prescribed by SFAS 123, "Accounting for
Stock-Based Compensation." Accordingly, neither of these new standards will have
an effect on the Company's financial position or results of operations.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the three month period ended March 31, 1996, the Company generated
positive cash flow from operations of $438,763, and overall positive cash flow
of $331,261 after including the results of investing and financing activities.
A comparison of the Company's financial condition from March 31, 1996 to
December 31, 1995 is as follows:
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
Current ratio 2.4 to 1 1.5 to 1
Quick ratio 2.2 to 1 1.2 to 1
Working capital $1,937,651 $ 990,734
Notes payable and long term debt $ - $ -
Capital leases payable $ 363,479 $ 417,884
Net tangible assets $3,012,498 $1,974,664
Net assets $3,622,140 $2,593,620
As of March 31, 1996, the Company had cash and cash equivalents of
$795,241. This available cash, together with $350,000 received from Eckerd in
April 1996 under the terms of the agreement for the sale of the retail pharmacy
assets, and the net proceeds of $11,323,000 received on May 13, 1996 from the
sale of common stock as described in Note 7 to the Consolidated Financial
Statements above, continues to be used for operations, for the further
development and marketing of the Company's new products and services, and for
the acquisition of equipment and other general corporate purposes. The Company
is also obligated to pay cash dividends on its Series A Preferred Stock of
$86,625 in June and December of each year. In addition to these cash resources,
the Company expects to receive additional non-operating cash as follows: (i)
$950,000 in October 1996 from the Eckerd sale (subject to downward adjustment as
described in Note 6 of Notes to Consolidated Financial Statements above), (ii)
six quarterly payments of $93,000 from the NHCA sale beginning in June 1996, and
(iii) $109,500 due from BCBSM on or before September 1, 1996 (less $32,850
payable under the Bergen Agreement).
Accounts receivable turnover for ProxyCare was 4.0 times in 1996
compared to 5.8 times in 1995. Inventory turnover for ProxyCare was 4.4 times in
1996 compared to 6.9 times in 1995. Both of these indicators were adversely
affected by the decline in ProxyCare's 1996 sales as discussed above.
Beginning in the second quarter of 1996, the Company expects to incur
significant negative net cash flow from operations until it begins receiving
substantial recurring revenues from the sale of its new products and services.
Furthermore, while the Company presently has no material commitments for capital
expenditures, management is committed to the strategy of investing funds in
further marketing and development of its products and services to the extent it
can afford to do so, including pursuing pilot programs at no cost to the
customer. However, with the cash received from the sale of common stock and from
the other expected sources described above, management
12
<PAGE>
believes that its cash resources are sufficient to support its planned
operations for the foreseeable future.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
In September 1995, an administrative charge of sex discrimination was
filed against the Company before the Clearwater, Florida, Human Relations
Department by a former employee who had been terminated in connection with the
sale of the Company's retail pharmacy operations to Eckerd. The claimant alleges
sexual harassment by another former employee, in violation of applicable
federal, state and local laws. The claimant seeks unspecified back pay and other
damages, together with costs and attorneys' fees. No discovery has been taken to
date in this case; however, the Company has conducted an internal investigation
and believes that the claim is without merit. The Company intends to vigorously
defend this claim.
ITEM 5 - OTHER INFORMATION.
See Note 7 of Notes to Consolidated Financial Statements (included in
Part 1 herein), describing the sale by the Company of 1,945,000 shares of common
stock, resulting in net proceeds of $11,323,000.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(b) Reports on Form 8-K.
During the quarter ended March 31, 1996, the following report on
Form 8-K was filed:
February 1, 1996 - Reporting on the strategic marketing
agreement entered into by the Company with Bergen.
13
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROXYMED, INC.
(Registrant)
Date May 15, 1996 /s/ BENNETT MARKS
------------------------------------
Bennett Marks
Executive Vice President - Finance,
Chief Financial Officer and Principal
Accounting Officer
14
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