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 SEPTEMBER 30, 1997
[ ] 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
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(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
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(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
11,268,572 SHARES AS OF NOVEMBER 7, 1997
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 4,181,354
Investment in U.S. Treasury Notes 1,500,158
Trade receivables, net 2,766,761
Notes and other receivables 839,373
Inventory 613,183
Other current assets 445,627
------------
Total current assets 10,346,456
Property and equipment, net 2,115,666
Purchased and capitalized software costs, net 4,478,284
Goodwill, net 1,556,309
Other assets 26,611
------------
Total assets $ 18,523,326
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 718,312
Accounts payable and accrued expenses 3,582,901
Deferred revenue 573,554
Other current liabilities 294,664
------------
Total current liabilities 5,169,431
Long-term debt 1,024,431
------------
Total liabilities 6,193,862
------------
Stockholders' equity:
Common stock, $.001 par value. Authorized 20,000,000
shares; 11,258,388 shares outstanding after deducting
110,000 shares in treasury 11,258
Additional paid-in capital 38,498,726
Accumulated deficit (26,180,520)
------------
Total stockholders' equity 12,329,464
------------
Total liabilities and stockholders' equity $ 18,523,326
============
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- -------------------------------
1997 1996 1997 1996
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 7,801,029 2,089,489 4,031,140 280,159
-------------- ------------- ------------- ------------
Costs and expenses:
Cost of sales 5,208,720 617,180 2,761,450 175,427
Selling, general and adminis-
trative expenses 8,711,754 3,803,586 3,899,767 1,466,061
Other operating
charges (Note 8) 632,958 - 632,958 -
-------------- ------------- ------------- ------------
14,553,432 4,420,766 7,294,175 1,641,488
-------------- ------------- ------------- ------------
Operating loss (6,752,403) (2,331,277) (3,263,035) (1,361,329)
Other income (expense):
In-process research and
development tech-
nology (Note 5) (8,632,654) - - -
Gain on sale of assets - 993,895 - 5,669
Interest, net 242,832 257,734 70,470 179,691
-------------- ------------- ------------- ------------
Net loss (15,142,225) (1,079,648) (3,192,565) (1,175,969)
Dividends on cumulative
preferred stock - 95,803 - 7,475
-------------- ------------- ------------- ------------
Net loss applicable to
common shareholders $ (15,142,225) (1,175,451) (3,192,565) (1,183,444)
-------------- ------------- ------------- ------------
Net loss per share of
common stock $ (1.47) (.17) (.29) (.13)
-------------- ------------- ------------- ------------
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(15,142,225) (1,079,648)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 664,506 267,569
Acquired in-process research
and development technology 8,632,654 --
Other operating charges (Note 8) 632,958 --
Common stock issued for services -- 56,000
Compensatory options and warrants 26,100 247,834
Amortization of covenant not-to-compete (60,000) (60,000)
Gain on sale of assets -- (993,895)
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable (2,175,171) 57,436
Inventory 19,220 63,046
Accounts payable and accrued expenses 1,431,130 (220,654)
Deferred revenue (196,993) --
Other 12,947 (122,336)
------------ -----------
Net cash used in operating activities (6,154,874) (1,784,648)
------------ -----------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (5,892,770) --
Maturities of U.S. Treasury Notes 4,500,000 1,018,637
Purchase of U.S. Treasury Notes -- (8,541,153)
Proceeds from sales of dispensary assets -- 350,000
Purchased and capitalized software (Note 6) (2,929,041) (429,895)
Capital expenditures (1,094,839) (581,731)
------------ -----------
Net cash used in investing activities (5,416,650) (8,184,142)
------------ -----------
Cash flows from financing activities:
Net proceeds from sale of common stock (Note 7) 9,282,250 13,041,309
Proceeds from exercise of stock options and warrants 1,014,603 1,820,097
Purchase of treasury stock (554,958) --
Draw on line of credit 2,500,000 --
Repayment of line of credit (2,500,000) --
Payment of note payable (9,375) --
Payment of preferred stock dividends -- (82,963)
Collection of notes receivable -- 541,739
Payment of capital lease obligations -- (417,884)
------------ -----------
Net cash provided by financing activities 9,732,520 14,902,298
------------ -----------
Net increase (decrease) in cash and cash equivalents (1,839,004) 4,933,508
Cash and cash equivalents at beginning of period 6,020,358 463,980
------------ -----------
Cash and cash equivalents at end of period $ 4,181,354 5,397,488
============ ===========
</TABLE>
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 and nine months ended
September 30, 1997 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, 1996.
(2) REVENUE RECOGNITION - Transaction fee revenue is recorded in the period
the service is rendered. 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 when the related goods have been shipped
and title has passed. Revenues from the Company's prescription drug
dispensing activities are reported at net realizable amounts from
insurance providers and patients at the time the individual prescriptions
are delivered to the patients.
(3) INVENTORY - Inventory, consisting of finished goods, is stated at the
lower of cost (first- in, first-out method) or market. At September 30,
1997, inventory includes the following:
Computer hardware and software $410,950
Prescription drugs 202,233
--------
$613,183
--------
(4) NET LOSS PER SHARE - Net loss per share is computed by dividing net loss
applicable to common shareholders by the weighted average shares of common
stock outstanding during the applicable period (10,313,911 shares and
7,032,435 shares for the nine months ended September 30, 1997 and 1996,
respectively; and 11,169,651 shares and 9,351,790 shares for the three
months ended September 30, 1997 and 1996, respectively). Common stock
equivalents have been excluded from the computation as their effect would
be anti-dilutive. Conversions of preferred stock, had they occurred at the
beginning of the 1996 period, would have resulted in a net loss per share
of $(.12) and $(.14) for the three and nine months ended September 30,
1996, respectively.
5
<PAGE>
(5) ACQUISITION OF BUSINESSES -
(a) CLINICAL MICROSYSTEMS - On March 14, 1997, the Company
acquired substantially all the assets and certain liabilities
of Clinical MicroSystems, Inc. ("CMS"). CMS is the developer
of ClinScan, a physician desktop lab ordering and results
posting software used by over 100 labs and approximately 3,000
physicians throughout the United States. The purchase price
consisted of the following: $3,000,000 in cash and 125,786
shares of unregistered common stock paid at closing (valued at
$760,452), plus $2,000,000 in cash and common stock payable
over a three year period as follows: $750,000, $500,000 and
$750,000 in 12, 24 and 36 months following the closing date,
respectively. Each of the future payments will be at least 50%
in cash, with the remaining balance, if any, paid in shares of
common stock which are restricted from sale for 2 years
(b) HAYES COMPUTER SYSTEMS - On April 30, 1997, the Company
acquired substantially all the assets and assumed certain
specific, but limited liabilities of Hayes Computer Systems,
Inc. ("HCS"), a company that provides information technology
solutions and services to public and private sector
organizations including systems integration services, Internet
access services, and client/server software development. The
purchase price consisted of $3,147,126 in cash and 388,215
shares of common stock paid at closing (valued at $1,296,000).
The common stock is restricted from sale for 2 years. In
addition, the Company will pay up to $1,000,000 in cash and
common stock in each of the two subsequent 12 month periods if
certain defined operating criteria are achieved. Each of the
future payments will be at least 50% in cash, with the
remaining balance, if any, paid in shares of common stock. If
such payments are made, they will be allocated to the
long-term assets acquired, a substantial portion of which is
in-process research and development technology, which will be
expensed.
The acquisitions of both CMS and HCS have been accounted for as
purchases and accordingly, the acquired assets and liabilities have been
recorded at their estimated fair values at the dates of acquisition. A
significant portion of the purchase price for each acquisition was
allocated to in-process research and development technology, resulting in
a $4,300,000 charge to the Company's operations in the first quarter of
1997 for the CMS acquisition and a $4,332,654 charge to the Company's
operations in the second quarter of 1997 for the HCS acquisition. These
charges were each valued using a risk adjusted cash flow model, under
which projected income and expenses attributable to the purchased
technology were identified, and potential income streams were discounted
for certain risks and uncertainties, including the stage of development of
the technology, viability of target markets, rapidly changing nature of
the industry, and other factors. The income tax benefits resulting from
these charges are estimated to be approximately $1,613,000 and $1,625,000
for the CMS and HCS acquisitions, respectively; however, based on the
weight of available evidence, valuation allowances in the amounts of
$1,613,000 and $1,625,000 have been recorded concurrently. For the CMS
acquisition, the excess of the consideration paid over the estimated fair
value of
6
<PAGE>
net assets acquired (including the in-process research and development) in
the amount of approximately $998,000 has been recorded as goodwill, and is
being amortized on the straight-line basis over 20 years.
The following unaudited pro forma summary presents the consolidated
results of operations of the Company, CMS and HCS as if the acquisitions
of these businesses had occurred at the beginning of 1996, including any
amortization of goodwill and additional interest expense but excluding
one-time charges for acquired in-process research and development
technology. These pro forma results do not necessarily represent results
which would have occurred if the acquisitions had taken place at that
date, or of results which may occur in the future.
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------
1997 1996
---- ----
Net sales $10,776,542 8,678,310
Net loss $(6,835,435) (1,293,846)
Net loss per share of common stock $(.65) (.17)
(6) ACQUISITION OF SOFTWARE - On June 27, 1997, the Company acquired all
rights, title and interest in all copyrights and trademarks related to the
technology underlying the PRE-SCRIBE(Registered Trademark) pharmacy-
physician prescription network (the "PRE-SCRIBE network") from Walgreens
Co. Concurrently, Walgreens entered into a network services agreement
whereby Walgreens will pay fees to the Company for 12 years (the first
three of which are on an exclusive basis) for transactions (as defined)
received over the PRE-SCRIBE network or ProxyMed's existing network,
ProxyNet. ProxyMed paid Walgreens $2,000,000 at closing, issued a 10-year
warrant for 200,000 shares of ProxyMed's common stock exercisable at the
market price ($9.96 per share) commencing on the fourth anniversary of the
closing date, and will pay $500,000 per year on the first, second and
third anniversaries of the agreement. The value of the warrant resulted in
a $731,938 credit to additional paid-in capital and was computed using the
Black-Scholes model using the following assumptions: risk-free interest
rate of 6.45%, expected life of 10 years, expected volatility of 75% and
no dividend yield.
At the time of the purchase, the PRE-SCRIBE network was being operated by
Integrated Systems Solutions Corp. ("ISSC"), a division of IBM. ISSC will
continue to operate the PRE-SCRIBE network until November 25, 1997, after
which the Company will commence operations.
(7) CAPITAL TRANSACTIONS -
(a) SALES OF COMMON STOCK - On April 29, 1997, the Company sold 425,000
shares of unregistered common stock for $5.25 per share in a private
placement to Bellingham Industries, Inc. ("Bellingham"). Net
proceeds from this sale, after deducting estimated costs and
expenses, were $2,181,250. On June 20, 1997, the Company sold an
additional 600,000 shares of unregistered common stock for $11.00
per share in a private placement to Bellingham. Net proceeds from
this sale
7
<PAGE>
were approximately $6,078,000 after deducting estimated costs and
expenses, including a 7% commission to an underwriter. Subsequently,
on July 31, 1997, Bellingham purchased another 100,000 shares of
unregistered common stock from the Company for $11.00 per share, for
which the Company received net proceeds of $1,023,000 after
commissions. Such issuances are exempt from the registration
provisions of Section 5 of the Securities Act of 1933, as amended
(the "Act"), by virtue of Section 4(2) of the Act. Based on
information provided by Bellingham, as of October 31, 1997 it
beneficially owned 2,794,600 shares or approximately 24.5% of the
Company's outstanding common stock.
(b) REPURCHASE OF COMMON STOCK - On April 14, 1997, the Company
repurchased 110,000 shares of its common stock on the open market
for $5.05 per share.
(8) OTHER OPERATING CHARGES - Operating loss for the three and nine months
ended September 30, 1997 includes $632,958 in other operating charges
consisting of the following: (i) $160,920 in fixed assets write-offs, as
the Company, during the quarter, determined that it will no longer utilize
certain computer hardware and software in its business, (ii) $202,318 in
capitalized software write-offs due to certain previously capitalized
software projects which were reviewed and found to not be of any future
benefit, and (iii) $269,720 in termination and severance payments for
certain employees.
(9) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1996
------------ ----------
<S> <C> <C>
Cash paid for interest $ 3,230 31,123
============ ==========
Warrants issued for purchase
of software (Note 6) $ 731,938 -
============ ==========
Common stock issued for businesses acquired $ 2,056,452 -
Debt issued for businesses acquired 1,649,555 -
Other acquisition costs accrued 1,055,000 -
Details of businesses acquired:
Working capital (473,334) -
In-process research and
development technology (8,632,654) -
Property and equipment (430,617) -
Goodwill (997,744) -
Note payable 9,375 -
Capitalized software (383,159) -
------------ ----------
Cash paid for acquisitions (6,147,126) -
Less cash acquired 254,356 -
------------ ----------
Net cash paid for acquisitions $ (5,892,770) -
============ ==========
</TABLE>
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company is a healthcare information technology company providing
online transaction processing services to physicians and other healthcare
providers by offering one-stop shopping through ProxyNet, its national
healthcare information network. The Company also provides such services through
its free-standing software products. In addition, through its recent acquisition
of Hayes Computers Systems, Inc. ("HCS"), the Company provides information
technology solutions and systems integration services, Internet access services
and client/server development.
The Company also 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.
This report contains "forward-looking statements" within the meaning
of the federal securities laws. These forward-looking statements include, among
others, statements relating to the Company's growth strategy, which is based
upon the Company's interpretation and analysis of healthcare industry trends and
management's abilities to successfully develop, implement, market and sell its
online transaction processing services to physicians and other healthcare
providers. This strategy assumes that physicians will prefer "one-stop shopping"
for online services and that the Company will be able to successfully acquire or
develop all of the necessary clinical and financial transaction sets and
implement them into the Company's existing products and services. This strategy
also assumes that the Company will be able to successfully develop and execute
its strategic relationships, especially with the providers of information
systems to physicians under the Company's Electronic Commerce Partner ("ECP")
program, and with pharmacy chains, independent pharmacy owners and pharmacy
information vendors. Many known and unknown risks, uncertainties and other
factors may cause these assumptions to prove incorrect and may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1996
NET SALES. Net sales for the three months ended September 30, 1997
increased by $3,750,981, or 1,339%, to $4,031,140 from net sales of $280,159 for
the three months ended September 30, 1996. Net sales for the nine months ended
September 30, 1997 increased by $5,711,540, or 273%, to $7,801,029 from net
sales of $2,089,489 for the nine months ended September 30, 1996. These
increases were primarily due to the net effect of three factors.
9
<PAGE>
First, the 1997 results include sales from Clinical MicroSystems, Inc. ("CMS")
and HCS which were acquired in March 1997 and April 1997, respectively. Sales of
CMS's ClinScan products were $170,935 and $520,443 in the three and nine months
ended September 30, 1997, and sales of HCS's network integration products and
services were $3,525,983 and $6,171,278 in the three and nine months ended
September 30, 1997, whereas these two operations were not included in the 1996
period. The Company recently introduced its ClinScan for Windows product, and
installations of this new product will commence in the fourth quarter of 1997.
Second, the Company recognized income totaling $1,189,000 from two one-time
license fees in the first quarter of 1996 from Bergen Brunswig Drug Corporation
("Bergen") and Blue Cross/Blue Shield of Massachusetts, Inc. ("BCBSM"), whereas
no similar license fee income was received in the 1997 period. Finally,
ProxyCare, the Company's drug dispensing operation, had increased sales of
$43,727 and $106,629 for the three and nine months ended September 30, 1997 over
the same periods in 1996.
GROSS PROFIT MARGIN. Gross profit margin for the three months ended
September 30, 1997 was 31%, compared to a gross profit margin of 37% for the
three months ended September 30, 1996. This decrease is primarily due to the
impact of the network integration sales, which had a gross margin of 28% for
this period. Gross profit margin for the nine months ended September 30, 1997
was 33% compared to a gross profit margin of 70% for the nine months ended
September 30, 1996. This decrease is primarily due to the favorable impact of
the one-time license fee revenues received in the first quarter of 1996 from
Bergen and BCBSM.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended September 30, 1997 increased
by $2,433,706, or 166%, to $3,899,767 from selling, general and administrative
expenses of $1,466,061 for the three months ended September 30, 1996. Selling,
general and administrative expenses for the nine months ended September 30, 1997
increased by $4,908,168, or 129%, to $8,711,754 from selling, general and
administrative expenses of $3,803,586 for the nine months ended September 30,
1996. These increases are primarily due to the Company's continued efforts to
develop and market its healthcare information technology products and services,
and the additional operating costs from CMS and HCS, which were acquired in
1997. Specifically, these increases for the nine months ended September 30, 1997
resulted from the following additional costs: (i) payroll and related costs for
sales, product development, clinical pharmacy service and management personnel
related to the Company's technology products and services and personnel costs
for the employees of CMS and HCS ($3,479,000); (ii) marketing expenses related
to these products and services, marketing materials, attendance at national and
local trade shows, expenses for potential customers and travel costs ($514,000);
(iii) depreciation, amortization and computer costs related to network equipment
and capitalized software costs ($392,000); (iv) consulting fees to various
software and business consultants ($169,000); (v) telecommunication costs
related to the Company's development of its ProxyNet network, and from CMS and
HCS ($207,000), and (vi) occupancy costs primarily associated with CMS and HCS
($147,000).
OTHER OPERATING CHARGES. Other operating charges were $632,958 for the
three and nine months ended September 30, 1997. These charges consist of the
following: (i) $160,920 in fixed assets write-offs, as the Company, during the
third quarter of 1997, determined that it
10
<PAGE>
will no longer utilize certain computer hardware and software in its business,
(ii) $202,318 in capitalized software write-offs due to certain previously
capitalized software projects which were reviewed and found to not be of any
future benefit, and (iii) $269,720 in termination and severance payments for
certain employees.
INTEREST, NET. Net interest income for the three months ended
September 30, 1997 decreased by $109,221, or 61% to $70,470, from $179,691 for
the three months ended September 30, 1996. Net interest income for the nine
months ended September 30, 1997 decreased by $14,902, or 6% to $242,832, from
$257,734 for the nine months ended September 30, 1996. The decrease in net
interest income is due primarily to interest expense of approximately $93,000 in
1997 on the debt issued for the acquisition of CMS.
OTHER. As a result of the acquisitions of CMS and HCS, the Company
recorded charges of $8,632,654 in the nine months ended September 30, 1997
related to the expensing of in-process research and development technology (see
Note 5 to the financial statements). In the nine months ended September 30,
1996, the Company earned $993,895 from the sale of certain assets of its drug
dispensing operations to Eckerd Corporation in 1995.
NET LOSS. As a result of the foregoing, the Company recorded a net
loss of $3,192,565 for the three months ended September 30, 1997, as compared to
a net loss of $1,183,444 for the three months ended September 30, 1996, and a
net loss of $15,142,225 for the nine months ended September 30, 1997, as
compared to a net loss of $1,175,451 for the nine months ended September 30,
1996. The Company believes it is making progress in its acquisition strategy,
strategic relationships and other plans to increase the usage of its healthcare
information technology products and services. However, the Company anticipates
that it will continue to incur operating losses until it generates a substantial
flow of recurring revenues from these products and services. In addition, the
Company expects its operations to be impacted, at least through the remainder of
1997, by charges related to its June 1997 acquisition of the PRE-SCRIBE network
from Walgreens Co. Such charges are expected to include amortization of the
acquisition costs, and costs of operations, development, marketing and customer
service related to this network. There can be no assurance that the Company will
realize a significant level of recurring revenues from the sale of its products
and services, or that revenues from these operations or those of its
newly-acquired businesses or ProxyCare will ultimately result in significant
reductions in losses or achievement of profitability.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the nine month period ended September 30, 1997, cash used in
operating activities totaled $6,154,874, $5,892,770 was used to acquire CMS and
HCS, $2,000,000 was used to acquire the PRE-SCRIBE network, and $554,958 was
used to purchase 110,000 shares of its common stock in the open market. These
activities were financed through available cash resources, private placement
sales of 1,125,000 of the Company's common stock resulting in net proceeds of
$9,282,250, and $1,014,603 in proceeds from the exercise of stock options and
warrants. After these receipts and expenditures, the Company had cash, cash
equivalents and investments in U.S. Treasury Notes totaling $4,181,354 as of
September 30, 1997. These available funds continue to be used for operations,
the further development and marketing of the Company's products and services,
equipment and other general corporate purposes. In addition, the Company is
continuously evaluating acquisition opportunities that add synergies to the
product offerings.
The Company has a revolving bank line of credit of up to $5,000,000.
Borrowings, if any, are due on demand, collateralized by certificates of deposit
and U.S. Treasury Notes, and bear interest at the prime rate less 3/4%.
Accounts receivable turnover for the Company was 6.0 times in the
nine months ended September 30, 1997 compared to 4.0 times in the 1996 period,
after eliminating the effect of one-time license fee revenue in 1996. Inventory
turnover was 17.1 times for the Company in the nine months ended September 30,
1997 compared to 4.0 times in the 1996 period. The increase in both ratios
reflect the favorable impact of the CMS and HCS acquisitions.
As mentioned above, the Company expects to continue to incur negative
net cash flow from operations until it begins receiving substantial recurring
revenues from the sale of its healthcare information technology products and
services or from revenues generated by its newly-acquired businesses. Management
is committed to the strategy of investing funds in further marketing and
development of its products and services, the development and marketing of the
newly-acquired PRE-SCRIBE network, and may pursue additional acquisitions which
are deemed to be in accordance with its business strategy. During the fourth
quarter 1997, the Company is obligated to pay approximately $316,000 for
continued transition services related to its PRE-SCRIBE acquisition. The Company
believes it has sufficient funds available to support its operations for the
foreseeable future. However, if an acquisition is identified that requires a
cash investment, the Company may seek additional equity financing, although
there can be no assurances that such financing will be available under terms and
conditions acceptable to the Company.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K:
- No reports on Form 8-K were filed during the third quarter
ending September 30, 1997.
13
<PAGE>
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 NOVEMBER 13, 1997 /S/ BENNETT MARKS
----------------- -----------------
Bennett Marks
Executive Vice President - Finance,
Chief Financial Officer and Principal
Accounting Officer
14
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,181,354
<SECURITIES> 1,500,158
<RECEIVABLES> 2,766,761
<ALLOWANCES> 0
<INVENTORY> 613,183
<CURRENT-ASSETS> 10,346,456
<PP&E> 2,115,666
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,523,326
<CURRENT-LIABILITIES> 5,169,431
<BONDS> 0
0
0
<COMMON> 11,258
<OTHER-SE> 38,498,726
<TOTAL-LIABILITY-AND-EQUITY> 18,523,326
<SALES> 7,801,029
<TOTAL-REVENUES> 3,769,889
<CGS> 7,801,029
<TOTAL-COSTS> 5,208,720
<OTHER-EXPENSES> 14,553,432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (242,832)
<INCOME-PRETAX> (15,142,225)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,142,225)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,142,225)
<EPS-PRIMARY> (1.47)
<EPS-DILUTED> (1.47)
</TABLE>
