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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 19934 FOR THE TRANSITION PERIOD FROM ______________
_____ TO ____________________________.
Commission file number: 0-23220
Health Power, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 31-1145640
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1209 Orange Street, Wilmington, Delaware 19801
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(Address of principal executive offices) Zip Code
(302) 658-7581
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___ . Indicate the
number of shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date.
Common Stock, $0.01 Par Value 3,819,115
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Class Outstanding at August 1, 1997
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HEALTH POWER, INC. AND SUBSIDIARIES
INDEX
<TABLE>
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PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - as of 3 & 4
June 30, 1997 and December 31, 1996
Consolidated Statements of Operations for the 5
three months ended and six months ended
June 30, 1997 and June 30, 1996
Consolidated Statements of Cash Flows - for the six 6
months ended June 30, 1997 and June 30, 1996
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS as of June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
June 30, 1997 December 31,
ASSETS (Unaudited) 1996
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<S> <C> <C>
Current assets:
Cash and cash equivalents $13,027,508 $13,928,641
Accounts and notes receivable 4,235,325 2,257,390
Deferred commissions 231,861 19,065
Prepaid expenses 280,706 132,667
Income taxes 0 1,794,919
- ---------
Total current assets 17,775,400 18,132,682
---------- ----------
Property and equipment, net 2,858,871 2,392,677
Other assets 1,037,626 543,218
--------- -------
Total assets $21,671,897 $21,068,577
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</TABLE>
The accompanying notes are part of the financial statements
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CONSOLIDATED BALANCE SHEETS, Continued
<TABLE>
<CAPTION>
June 30, 1997 December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) 1996
- ------------------------------------ ----------- ----
<S> <C> <C>
Current liabilities:
Health care costs payable $8,955,963 $10,865,798
Capitation costs withheld and risk-sharing funds 412,577 0
Deferred revenues 4,217,351 4,782,552
Accounts payable 1,780,498 665,779
Accrued expenses and other liabilities 473,761 235,868
Income taxes 267,320 0
-------- -
Total current liabilities 16,107,470 16,549,997
----------- ----------
Stockholders' equity:
Common stock 38,191 38,103
Additional paid-in capital 10,738,655 10,711,292
Retained (deficit) (5,212,419) (6,230,815)
----------- -----------
Total stockholders' equity 5,564,427 4,518,580
---------- ---------
Total liabilities and stockholders' equity $21,671,897 $21,068,577
============ ===========
</TABLE>
The accompanying notes are part of the financial statements
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HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues: $18,342,693 $15,495,116 $35,955,828 $30,882,311
------------ ------------ ------------ -----------
Expenses:
Health care costs 11,080,085 13,827,313 24,993,819 26,933,535
Selling, general and administrative 5,659,438 3,867,744 10,262,755 7,442,564
---------- ---------- ----------- ---------
16,739,523 17,695,057 35,256,574 34,376,099
(Loss) income from operations 1,603,169 (2,199,941) 699,253 (3,493,788)
Interest income and other, net 364,153 97,222 633,334 330,682
-------- ------- -------- -------
(Loss) income before income taxes 1,967,322 (2,102,719) 1,332,587 (3,163,106)
Federal, state and local income taxes (benefit) 303,531 (736,591) 314,191 (1,112,856)
-------- --------- -------- -----------
Net (loss) income $1,663,791 ($1,366,128) $1,018,396 ($2,050,250)
=========== ============ =========== ============
Net (loss) earnings per common share $0.44 ($0.36) $0.27 ($0.54)
====== ======= ====== =======
Weighted average common shares outstanding 3,819,115 3,810,331 3,816,688 3,810,331
========== ========== ========== ==========
</TABLE>
The accompanying notes are part of the financial statements
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HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Net cash provided by operating activities $259,136 $312,940
-------- --------
Cash flows provided by (used in) investing activities:
Construction of Building in process (28,003) 0
Proceeds from sale of assets 5,080 99,000
Purchase of furniture and equipment (670,390) (200,807)
Other assets (494,406) 1,313
Intangible assets 0 (5,000,000)
- -----------
Net cash used in investing activities (1,187,719) (5,100,494)
----------- -----------
Cash flows provided by (used in) financing activities:
Issuance of common stock 27,451 0
Net cash provided by (used in) financing
activities 27,451 0
------ -
Net decrease in cash and cash equivalents (901,132) (4,787,554)
Cash and cash equivalents, beginning of period 13,928,640 19,492,893
---------- ----------
Cash and cash equivalents, end of period $13,027,508 $14,705,339
=========== ===========
</TABLE>
The accompanying notes are part of the financial statements
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HEALTH POWER, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements are unaudited and have
been prepared by Health Power, Inc. In the opinion of management, they
contain the adjustments (all of which are normal and recurring in nature)
necessary to present fairly the financial position, results of operations,
and cash flows for all periods presented. The results of operations for
the period ended June 30, 1997 are not necessarily indicative of operating
results for a full year.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and, therefore,
do not include all information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles. These financial statements should be read in
conjunction with the December 31, 1996, financial statements and notes
thereto contained in the Company's 1996 Annual Report on Form 10-K.
2. SFAS 128 "Earnings Per Share" was issued in February 1997 and is effective
for financial statements issued for periods ending after December 15, 1997.
The statement specifies the computation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock. The impact of the statement on Health Power, Inc.'s earnings per
share is not expected to be material
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Health Power, Inc., a Delaware corporation (the "Company"), is a
managed care holding company whose operating subsidiaries are Health Power HMO,
Inc., an Ohio corporation ("Health Power HMO"), CompManagement, Inc., an Ohio
corporation ("CompManagement"), and CompManagement Health Systems, Inc., an
Ohio corporation (CompManagement Health Systems").
Health Power HMO provides comprehensive managed health care services to
members of its health maintenance organization ("HMO") in four service areas
encompassing 19 Ohio counties in and around the cities of Columbus, Dayton,
Cincinnati, Cleveland, and Youngstown. Health Power HMO primarily focuses on
serving Medicaid recipients enrolled in the Aid to Families with Dependent
Children and Healthy Start ("ADC") programs. Health Power HMO has been a leader
in developing the HMO markets for ADC Medicaid recipients in its service areas.
It was the first HMO to offer these services in the Columbus and Dayton markets
and an early entrant in the Cincinnati, and Youngstown markets. Health Power HMO
also provides comprehensive managed care services to commercial members enrolled
through employer groups. Health Power HMO is accredited by the National
Committee for Quality Assurance.
CompManagement offers claims management, risk management, and medical
cost containment services to employers with respect to workers' compensation
and unemployment compensation claims. It is one of the largest companies in
Ohio offering such services, as it currently serves approximately 11,000
employers located throughout Ohio. The Company acquired CompManagement in July
1995. The acquisition was accounted for as a pooling of interests.
CompManagement Health Systems is certified as a state-wide managed care
organization (an MCO") under Ohio's recently implemented managed care workers'
compensation system, and in March 1997, it began offering its MCO services to
approximately 18,000 employers located throughout Ohio. CompManagement Health
Systems was not operational prior to November 1996. As a state certified MCO,
CompManagement Health Systems provides, among other things, claims review and
processing for workers' compensation claims, bill review and payment with
respect to physician and hospital charges, quality assurance programs, and
medical management and cost containment services for employers with respect to
their workers' compensation claims. Because all workers' compensation claims
are reimbursed by the Ohio Bureau of Workers' Compensation, CompManagement
Health Systems does not assume any risk for the payment of medical or
disability benefits to employees with respect to their workers' compensation
claims.
For purposes of the following discussion, and except as otherwise
described below, the revenues and expenses of CompManagement Health systems have
been included with the revenues and expenses of CompManagement. In addition, the
following discussion reflects the acquisition of certain contract rights from
ChoiceCare Health Plans, Inc. ("ChoiceCare") which enabled the ADC Medicaid
recipients previously served by ChoiceCare to be automatically enrolled in
Health Power HMO as of July 1, 1996.
This discussion should be read in conjunction with the consolidated
financial statements, notes, and tables included elsewhere in this report and in
the Company's Form 10-K for its fiscal year ended December 31, 1996. The Company
cautions readers that any forward looking statements contained in this report,
in a report incorporated by reference into this report, or made by management of
the Company involve risks and uncertainties and are subject to change based on
various factors. Actual results could differ materially from those expressed or
implied.
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RECENT DEVELOPMENTS
The change in Health Power HMO's health care costs reflect a
significant change in the Company's estimate for unpaid claims as compared to
the prior quarter. This change resulted from more recent claim payment
experience and increased claim payments. The unpaid claims estimate may be
subject to further adjustments in subsequent quarters.
As of July 1, 1997, Health Power HMO received an increase of
approximately 4% in the capitation rate paid by the Ohio Department of Human
Services ("ODHS") for ADC Medicaid recipients enrolled in its HMO. This current
rate will remain in effect through December 31, 1997.
RESULTS OF OPERATIONS
Three months ended June 30, 1997, compared to three months ended June
30, 1996
The Company's revenues increased $2.8 million, or 18.4 %, to $18.3
million during the second quarter of 1997, from $15.5 million for the same
period in 1996. This increase was primarily due to growth in the number of
employers contracting with CompManagement and to revenues received for
CompManagement Health Systems' first full quarter of operations.
CompManagement's revenues increased $3.2 million, or 192.3%, to $4.9 million
during the second quarter of 1997, as compared to the same period in the prior
year, as a result of an increase in the number of employers contracting for its
services, in particular, employers participating in group rating plans, and the
$2.2 million in revenue received by CompManagement Health Systems since March
1997, its first four months of operations. Health Power HMO's revenues
decreased $.4 million, or 2.8%, to $13.4 million during the second quarter of
1997, from $13.8 million for the same period in the prior year. This decrease
was due to a 29.2% decrease in Health Power HMO's commercial revenues during
the second quarter of 1997, as compared to the same period in the prior year.
Commercial revenues decreased primarily as a result of a 30.2% decrease in
member months, which more than offset a 1.4% increase in revenue per member
months. The decrease in the commercial member months was the result of actions
taken to eliminate unprofitable commercial accounts as part of the Company's
financial turn around plan, discussed below. Health Power HMO's ADC Medicaid
revenues increased 7.3% during the second quarter of 1997, as compared to the
same period in the prior year, primarily as a result of a 23.8% increase in
member months which was primarily due to the enrollment of the ADC Medicaid
recipients previously served by ChoiceCare, which more than offset a 13.4 %
decrease in the revenue per member month. The decrease in the ADC Medicaid
revenue per member month resulted from the July 1, 1996 capitation rate
reduction of approximately 12 % from ODHS.
Health Power HMO's health care costs decreased $2.7 million, or 19.9%,
to $11.1 million during the second quarter of 1997, from $13.8 million for the
same period in 1996. Health care costs, stated as a percentage of Health Power
HMO's revenues (the "HMO medical loss ratio"), were 82.5% for the second
quarter of 1997, as compared to 100.1% for the same period in the prior year.
The decrease in the HMO medical loss ratio was due to the decrease in the ADC
Medicaid per member health care costs of 21.8%, which was partially offset by
the aforementioned decrease in the ADC Medicaid per member revenue of 13.4%
during the second quarter of 1997, as compared to the same period in the prior
year, a 31.8% decrease in commercial per member health care costs during the
second quarter of 1997, as compared to the same period in the prior year, and
the aforementioned 1.4% increase in per member commercial revenue. The decrease
in the ADC Medicaid and commercial per member health care costs were the result
of the renegotiation of existing provider contracts at more favorable rates and
the decrease in commercial member months due to not renewing
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unprofitable commercial accounts. The increase in commercial per member revenue
was due to improving pricing conditions in the marketplace. The decrease in the
ADC Medicaid per member revenue was attributable to decreases in the capitation
rates from ODHS which were in effect during such period, as compared to the same
period in the prior year. The capitation rates from ODHS are fixed in advance of
each year's agreement, and Health Power HMO is unable to adjust such rates
during the contract term. ODHS bases its rate, in part, on estimates of per
member ADC Medicaid health care costs.
The Company's selling, general and administrative ("SGA") expenses
increased $1.8 million, or 46.3%, to $5.7 million for the second quarter of
1997, from $3.9 million for the same period in 1996. CompManagement's SGA
expenses increased $2.2 million, or 171.1%, to $3.5 million for the second
quarter of 1997, from $1.3 million for the same period in the prior year. This
increase was primarily a result of CompManagement Health Systems' expenditures
of $1.6 million for the second quarter of 1997 in connection with the
development of its MCO operations; it was not operational for the same period
in the prior year. The balance of the increase in SGA expenses was to support
the increase in the number of employers contracting for CompManagement's
services. Health Power HMO's SGA expenses decreased $.4 million, or 16.2%, to
$2.2 million for the second quarter of 1997, from $2.6 million for the same
period in 1996. These SGA expenses, stated as a percentage of Health Power
HMO's revenues (the "HMO administrative ratio"), were 16.1% for the second
quarter of 1997, as compared to 18.7% for the same period in 1996. The
improvement in the Health Power HMO's SGA expenses was the result of
management's implementing a plan of action to turn around the HMO business.
Among the actions implemented were a reduction in the number of HMO employees,
a reduction in the amount of professional fees and lower transportation and
advertising expenses. The improvement in the HMO administrative ratio was due
to the decrease in the HMO's SGA expenses and to the achievement of certain
operating efficiencies as fixed overhead costs and expenses were allocated over
a larger membership base. At the direction of the Ohio Department of Insurance,
the Company changed its method of allocating SGA expenses among its
subsidiaries. Because of this change, the 1996 second quarter HMO
administrative ratio and the 1996 second quarter SGA expenses of Health Power
HMO have been revised to be comparable to those of the 1997 second quarter.
This change resulted in the 1996 second quarter HMO administrative ratio being
18.7% instead of the previously reported 15.5%, and the 1996 second quarter SGA
expenses of Health Power HMO being $2.6 million instead of the previously
reported $2.1 million.
The Company's interest income and other increased approximately
$267,000 to $364,000 for the second quarter of 1997, from $97,000 for the same
period in the prior year. This increase resulted primarily from an increase in
the average available investable cash balance.
The Company had an income tax expense of $ 304,000 for the second
quarter of 1997, as compared to an income tax benefit of $737,000 for the same
period in 1996. The second quarter of 1996 tax benefit was the result of a loss
from operations of $2.1 million.
As a result of the foregoing, the Company reported a net income of
$1.7 million as compared to a net loss of $1.4 million during the same period
in the prior year.
Six months ended June 30, 1997, compared to six months ended June 30,
1996
The Company's revenues increased $5.1 million, or 16.4%, to $36.0
million during the first six months of 1997, from $30.9 million for the same
period in 1996. This increase was due to growth in the number of employers
contracting with CompManagement and to revenues received for CompManagement
Health Systems' first four months of operations. CompManagement's revenues
increased $5.1 million, or 160.6% to
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$8.3 million during the first six months of 1997, as compared to the same period
in the prior year, as a result of an increase in the number of employers
contracting for its services, and in particular, employers participating in
group rating plans, and the $2.9 million in revenue received by CompManagement
Health Systems since March 1997, its first four months of operations. Health
Power HMO's revenues decreased $.1 million, or .2%, to $27.6 million during the
first six months of 1996, from $27.7 million for the same period in the prior
year. Health Power HMO's ADC Medicaid revenues increased 8.1% during the first
six months of 1997, as compared to the same period in the prior year, primarily
as a result of a 23.9% increase in member months, which more than offset a 12.7%
decrease in the revenue per member month. Health Power HMO's commercial
revenues decreased 22.3% during the first six months of 1997, as compared to the
same period in the prior year, primarily as a result of a 24.7% decrease in
member months, which more than offset a 3.1% increase in revenue per member
months. The decrease in the ADC Medicaid revenue per member month resulted from
the July 1, 1996 capitation rate reduction of approximately 12% from ODHS. The
decrease in the commercial member months was the result of actions taken to
eliminate unprofitable commercial accounts as part of the Company's financial
turn around plan, discussed below.
Health Power HMO's health care costs decreased $1.9 million, or 7.2%,
to $25.0 million during the first six months of 1997, from $26.9 million for
the same period in 1996. The HMO medical loss ratio was 90.4% for the first six
months of 1997, as compared to 97.3% for the same period in the prior year. The
decrease in the HMO medical loss ratio was primarily due to decreases in per
member health care costs in its commercial business. The per member health care
costs for commercial business decreased 15.8% during the first half of 1997, as
compared to the same period in the prior year, while the commercial business
experienced a 3.1% increase in per member commercial revenue during the same
period. The decrease in the commercial per member health care costs was the
result of the renegotiation of existing provider contracts at more favorable
rates and the decrease in commercial member months due to not renewing
unprofitable commercial accounts.
The Company's SGA expenses increased $2.8 million, or 37.9%, to $10.3
million for the first six months of 1997, from $7.4 million for the same period
in 1996. CompManagement's SGA expenses increased $3.9 million, or 153.9 %, to
$6.4 million for the first six months of 1997, from $2.5 million for the same
period in the prior year. This increase was primarily the result of
CompManagement Health Systems' expenditures of $2.7 million in connection with
the development of its MCO operations; it was not operational for the same
period in the prior year. The balance of the increase in SGA expenses was to
support the increase in the number of employers contracting for
CompManagement's services. Health Power HMO's SGA expenses decreased $1.1
million, or 21.9%, to $3.8 million for the first six months of 1997, from $4.9
million for the same period in 1996. The HMO administrative ratio was 13.9% for
the first six months of 1997, as compared to 17.7% for the same period in 1996.
The improvement in the Health Power HMO's SGA expenses was the result of
management's implementing a plan of action to turn around the HMO business.
Among the actions implemented were a reduction in the number of HMO employees,
a reduction in the amount of professional fees and lower transportation and
advertising expenses. The improvement in the HMO administrative ratio was due
to the decrease in the HMO's SGA expenses and to the achievement of certain
operating efficiencies as fixed overhead costs and expenses were allocated over
a larger membership base. At the direction of the Ohio Department of Insurance,
the Company changed its method of allocating SGA expenses among its
subsidiaries. Because of this change, the 1996 first six months administrative
ratio and the 1996 first six months SGA expenses of Health Power HMO have been
revised to be comparable to those of the 1997 first six months. This change
resulted in the 1996 first six months HMO administrative ratio being 17.7%
instead of the previously reported 15.5%, and the 1996 first six months SGA
expenses of Health Power HMO being $4.9 million instead of the previously
reported $4.3 million.
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The Company's interest income and other increased approximately
$303,000 to $633,000 for the first six months of 1997, from $330,000 for the
same period in the prior year. This increase resulted primarily from an
increase in the average available investable cash balance.
The Company had an income tax expense of $314,000 for the first six
months of 1997, as compared to an income tax benefit of $1.1 million for the
same period in 1996. The 1996 tax benefit was the result of a loss from
operations of $3.2 million.
As a result of the foregoing, the Company reported a net income of $1.0
million as compared to net loss of $2.1 million during the same period in the
prior year.
During the second half of 1996, the Company's management developed and
implemented a plan of action to turn around its HMO business. As previously
discussed, among the actions implemented were the renegotiation of existing
provider contracts at more favorable rates; the elimination of unprofitable
commercial accounts; the closure of the Company's Dayton and Miamisburg offices
and the consolidation of such operations in the Company's Columbus office; a
reduction in the number of the Company's HMO staff; and decreases in expenses
for advertising, professional fees and transportation.
Management believes that the turnaround efforts in the Company's HMO
business, the increase in the capitation rate from ODHS, and the continued
profitable operations of CompManagement will continue the improved operating
results of the Company, and that, barring unforeseen circumstances, the
Company's operating results on a consolidated basis will continue to be
profitable during the second half of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations through funds on hand from the
March 1994 public offering and internally generated funds, and its principal
sources of cash are premium revenues from Health Power HMO, contract and MCO
revenues from CompManagement, and investment income. The Company's principal
capital needs are to fund ongoing operations and to maintain necessary
regulatory capital. At June 30, 1997 , the statutory net worth of Health Power
HMO was approximately $2.9 million, which met the minimum statutory net worth
requirements of the Ohio Department of Insurance. Health Power HMO had been
placed under supervision by the Ohio Department of Insurance in December 1996,
because of its failure to satisfy these minimum statutory net worth
requirements. However, on March 20, 1997, Health Power was released from
supervision after it satisfied the Department's requirements to be released
from supervision.
At June 30, 1997, the Company had working capital of $1.7 million, as
compared to working capital of $1.6 million at December 31, 1996. At June 30,
1997, cash and cash equivalents were $13.0 million, a decrease $0.9 million
from $13.9 million at December 31, 1996. This decrease was attributable
primarily to the payment of health care claims during the first six months of
1997. The Company's cash and cash equivalents do not include statutory cash
deposits segregated as required by the Ohio Department of Insurance and the
Ohio Department of Human Services. These deposits of $0.4 million as of June
30, 1997, are included with other assets on the balance sheet.
CompManagement has entered into a lease agreement to lease a 70,000
square foot building currently being constructed in Dublin, Ohio.
CompManagement expects to occupy the building during the fourth quarter of
1997. The lease is for a term of 15 years, provides for an annual rent of
$814,800 for years one through seven and $938,000 for years eight through
fifteen, and requires CompManagement to pay all operating
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expenses for the building. The lease also provides for, among other things,
three renewal options of five years each, an option to purchase the building,
and a right of first offer with respect to the sale of such building. The lease
restricts CompManagement's ability to distribute funds and/or assets to the
Company or another affiliate unless CompManagement meets certain tangible net
worth requirements.
Net cash provided by operating activities was $259,000 million for the
second quarter of 1997, as compared to $313,000 during the same period in the
prior year. In general, changes from year to year in cash flow from operations
are primarily due to changes in net earnings, health care costs payable,
purchase of property and equipment, and deferred revenues. Many of these
fluctuations are due to timing of cash receipts or payments. Because premium
payments received prior to the month of coverage are recorded as deferred
revenues, the extent of such receipts can cause fluctuations in the total
amount of cash from month to month.
As previously discussed, the Company's management believes that,
barring unforeseen circumstances, the Company's operating results on a
consolidated basis will continue to be profitable during the second half of
1997. The Company believes that internally generated funds will be sufficient
to support the Company's ongoing operations and to maintain necessary
regulatory capital during 1997.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Disclosure not currently required.
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Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Stockholders on May 28,
1997.
(b) Directors elected at the meeting were Robert S. Garek, Frank R.
Nutis, Dr. Burt E. Schear, and Robert J. Bossart. Set forth
below is the number of votes cast for and the number of votes
withheld with respect to each nominee:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C> <C>
(i) Robert S. Garek 3,615,602 17,940
(ii) Frank R. Nutis 3,615,790 17,790
(iii) Dr. Burt E. Schear 3,615,752 17,790
(iv) Robert J. Bossart 3,615,652 17,890
</TABLE>
Directors whose terms continued after the meeting were Thomas E.
Beaty, Jr., Dr. Elliott P. Feldman, Dr. Bernard F. Master, Crystal
A. Kuykendall, and Dr. Peter Somani.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
HEALTH POWER, INC.
DATE: AUGUST 8, 1997 BY /S/ THOMAS E. BEATY, JR.
--------------------------------
THOMAS E. BEATY, JR.,
PRESIDENT AND CHIEF
OPERATING OFFICER
DATE: AUGUST 8, 1997
BY /S/ RONALD J. WURTZ
--------------------------------
RONALD J. WURTZ,
CHIEF FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER
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<TABLE> <S> <C>
<ARTICLE> 5
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