<PAGE> 1
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 MARCH 31, 1998 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.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1145640
- ---------------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1209 Orange Street, Wilmington, Delaware 19801
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) Zip Code
(302) 636-7593
--------------
(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 3,820,498
- ---------------------------------------- ---------------------------------
Class Outstanding at May 7, 1998
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<TABLE>
HEALTH POWER, INC. AND SUBSIDIARIES
INDEX
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - as of
March 31, 1998 and December 31, 1997 3 & 4
Consolidated Statements of Operations for the
three months ended March 31, 1998 and
March 31, 1997 5
Consolidated Statements of Cash Flows - for the
three months ended March 31, 1998 and
March 31, 1997 6
Notes to the Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
OTHER INFORMATION
PART II.
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS as of March 31, 1998 and December 31, 1997
March 31, 1998 December 31,
ASSETS (Unaudited) 1997
------ ----------- ----
Current assets:
Cash and cash equivalents $13,176,679 $ 8,427,483
Accounts and notes receivable 5,296,207 5,277,502
Deferred commissions 49,490 44,490
Prepaid expenses 391,459 385,553
Deferred income taxes, net 787,426 787,426
----------- -----------
Total current assets 19,701,261 14,922,454
----------- -----------
Property and equipment, net 3,192,774 3,151,104
Deferred income taxes, net 1,403,176 1,403,176
Other assets 1,040,576 1,040,876
----------- -----------
Total assets $25,337,787 $20,517,610
=========== ===========
The accompanying notes are an integral part of the financial statements
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CONSOLIDATED BALANCE SHEETS, Continued
<TABLE>
<CAPTION>
March 31, 1998 December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) 1997
- ------------------------------------ ----------- ----
<S> <C> <C>
Current liabilities:
Health care costs payable $ 5,860,384 $ 6,688,029
Capitation costs withheld and risk-sharing funds 1,739 0
Deferred revenues 8,003,055 3,902,493
Accounts payable 1,565,675 1,801,394
Accrued commissions 167,011 85,036
Taxes payable 863,782 218,547
Accrued expenses and other liabilities 356,539 257,290
----------- -----------
Total current liabilities 16,818,185 12,952,789
----------- -----------
Stockholders' equity:
Common stock 38,205 38,205
Additional paid-in capital 10,743,643 10,743,643
Accumulated (deficit) (2,262,246) (3,217,027)
----------- -----------
Total stockholders' equity 8,519,602 7,564,821
----------- -----------
Total liabilities and stockholders' equity $25,337,787 $20,517,610
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
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HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1998 and March 31, 1997
<TABLE>
<CAPTION>
(Unaudited)
1998 1997
---- ----
<S> <C> <C>
Revenues: $18,042,834 $17,613,135
----------- -----------
Expenses:
Health care costs 10,073,450 13,913,734
Selling, general and administrative 6,666,159 4,603,317
----------- -----------
16,739,609 18,517,051
Income (loss) from operations 1,303,225 (903,916)
Interest income and other, net 293,522 269,181
----------- -----------
Income (loss) before income taxes 1,596,747 (634,735)
Federal, state and local income taxes 641,966 10,660
----------- -----------
Net income (loss) $ 954,781 $ (645,395)
=========== ===========
Net income (loss) per common share, basic and diluted $ 0.25 $ (0.17)
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
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<PAGE> 6
HEALTH POWER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
(Unaudited)
1998 1997
---- ----
<S> <C> <C>
Net cash provided by operating activities $ 4,961,264 $ 5,134,260
----------- -----------
Cash flows provided by (used in) investing activities:
Construction of building in process (21,732)
Proceeds from sale of assets 5,080
Purchase of furniture and equipment (212,368) (353,970)
Other assets 300 (493,907)
----------- -----------
Net cash (used in) investing activities (212,068) (864,529)
----------- -----------
Cash flows provided by financing activities
Issuance of common stock 0 27,451
----------- -----------
Net cash provided by financing activities 0 27,451
----------- -----------
Net increase in cash and cash equivalents 4,749,196 4,297,182
Cash and cash equivalents, beginning of period 8,427,483 13,928,640
----------- -----------
Cash and cash equivalents, end of period $13,176,679 $18,225,822
=========== ===========
</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 March 31, 1998 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, 1997, financial statements and notes
thereto contained in the Company's 1997 Annual Report on Form 10-K.
2. In June 1997, the Financial Accounting Standards Board FASB issued SFAS No.
130 "Reporting Comprehensive Income". This statement, which is effective
for the year ended December 31, 1998, requires the reporting of
comprehensive income and its components in an additional full set of
general-purpose financial statements. There are no components of
comprehensive income as outlined by the statement for the periods ended
March 31, 1998 and 1997, respectively.
In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information." This Statement provides guidance
for the way public enterprises report information about operating segments
in annual financial statements and requires selected information about
operating segments in interim financial reports. It also requires certain
related disclosures about products and services, geographic areas and major
customers. The segment and other information disclosure are required for
the year ended December 31, 1998.
<TABLE>
<CAPTION>
3. Supplemental Disclosures for Earnings Per Share: 1998 1997
<S> <C> <C>
Basic:
Earnings:
Net income (loss) $ 954,781 $ (645,395)
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Shares:
Weighted average common shares outstanding 3,820,498 3,814,235
---------- ----------
Net income (loss) per common share, basic $ 0.25 $ (0.17)
---------- ----------
Diluted:
Earnings:
Net income (loss) $ 954,781 $ (645,395)
---------- ----------
Shares:
Weighted average common shares outstanding 3,820,498 3,814,235
Add: dilutive effect of outstanding options 19,020 0
---------- ----------
Weighted average common shares
outstanding, diluted 3,839,518 3,814,235
---------- ----------
Net income (loss) per common share, diluted $ 0.25 $ (0.17)
---------- ----------
</TABLE>
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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 18 Ohio counties in and around the cities of Columbus, Dayton,
Cincinnati and Cleveland. Health Power HMO primarily focuses on serving Medicaid
recipients enrolled in the Ohio Works First/Healthy Start Program (the "OWF
Program"). 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, currently serving approximately 13,000 employers located
throughout Ohio. CompManagement began business in September 1984, and was
acquired by the Company 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 Health Partnership Program, a managed care
workers' compensation program. It began offering its MCO services in March 1997,
and currently serves approximately 19,000 employers located throughout Ohio. As
a state certified MCO, CompManagement Health Systems provides medical management
services for workers' compensation claims, including, among other things, the
following: a state-wide health care provider network; treatment guidelines and
utilization review procedures; peer review and quality assurance programs;
provider sanction and termination procedures; medical and vocational case
management programs; utilization management programs; medical bill adjudication
and payment procedures; dispute resolution procedures; provider, employer, and
employee relations and education programs; and health care fraud detection and
reporting programs. 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 consolidated with the revenues and expenses of CompManagement.
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,
1997. Except for historical information, all other information provided in this
report is "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. 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. The most
significant of such uncertainties are described in the Company's Form 10-K filed
with the Securities and Exchange Commission for its fiscal year ended December
31, 1997.
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RECENT DEVELOPMENTS
Sales and Exchange of Medicaid Membership; Exit from Northeast Service
Area
The contract rights for Health Power HMO's Medicaid membership in
Mahoning (Youngstown) County were sold to Total Health Care Plan, Inc. effective
May 1, 1998. In connection with such sale, a total of 404 Medicaid members were
transferred from Health Power HMO to Total Health Care Plan, Inc. for an
aggregate price of $123,220. Health Power HMO has also received approvals from
the Ohio Departments of Human Services and Insurance for the sale of its
Medicaid membership in Cuyahoga (Cleveland) County, and it is expected that this
membership will be sold to Emerald HMO, Inc. effective June 1, 1998. In
connection with this sale, it is expected that approximately 1,650 Medicaid
members will be transferred from Health Power HMO to Emerald HMO, Inc. for an
aggregate sale price of approximately $536,000. Pursuant to its ODHS provider
agreement, Health Power was providing health care services to approximately
2,300 Medicaid recipients in Mahoning and Cuyahoga counties as of April 30,
1998, which represents over 99% of Health Power HMO's membership in its
Northeast service area. The Company plans to exit the Northeast service area as
soon as permissible following the completion of these transactions because of
the insignificant membership remaining in that service area.
Approvals have also been received from the Ohio Departments of Human
Services and Insurance for the exchange of the contract rights for Health Power
HMO's Butler County (between Dayton and Cincinnati) Medicaid membership for the
contract rights for the Montgomery County (Dayton) Medicaid membership of
Medical Mutual of Ohio. Under their respective provider agreements, Health Power
HMO and Medical Mutual were providing health care services to approximately 400
Butler County Medicaid recipients and 700 Montgomery County Medicaid recipients,
respectively as of April 30, 1998. It is expected that this exchange will be
effective June 1, 1998.
Reserve Adjustments
Health Power HMO's health care costs include reserve estimates of
health care costs incurred but not yet reported or paid. Health Power HMO
estimates this reserve amount quarterly and makes adjustments based upon a
number of factors, including recent claim payment experience. Adjustments, if
necessary, are made to health care costs in the period during which the actual
claim costs are ultimately determined. Health Power HMO utilizes an actuary
company to review the adequacy of its reserve estimates. As part of the recent
quarterly reserve setting process, Health Power HMO increased its health care
costs by $1.0 million for the first quarter of 1998, which increase included
adjustments for the settlement of claims from prior quarters. This reserve
estimate may be subject to further adjustments in subsequent quarters
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<PAGE> 10
RESULTS OF OPERATIONS
Three months ended March 31, 1998, compared to three months ended March
31, 1997
The Company's revenues increased $430,000, or 2.4 %, to $18.0 million
during the first quarter of 1998, from $17.6 million for the same period in
1997. CompManagement's revenues increased $4.0 million, or 116%, to $7.4 million
during the first quarter of 1998, as compared to $3.4 million for the same
period in 1997, primarily due to revenues from CompManagement Health Systems
increasing $3.7 million, or 520%, to $4.4 million during the first quarter of
1998, from $709,000 in the same period in 1997 when it was operational for only
one month. Health Power HMO's revenues decreased $3.6 million, or 25.1%, to
$10.7 million during the first quarter of 1998, from $14.3 million for the same
period in the prior year, due to a 28.8% decrease in member months, which offset
a 5.1% increase in revenue per member months. The decrease in member months was
the result of actions taken to eliminate unprofitable commercial accounts as
part of the Company's financial turnaround plan, the termination of the State of
Ohio employee commercial group contracts and involuntary termination's of OWF
Medicaid members. Involuntary termination's relate to members who are no longer
eligible to receive OWF Medicaid benefits. There has been an approximate 11%
decrease in the number of eligible Medicaid recipients enrolled in the OWF
Program in the counties Health Power HMO serves due to favorable economic
conditions experienced in Ohio during the first quarter of 1998. At March 31,
1998, Health Power HMO's Medicaid enrollment was 29,647, as compared to 34,797
at March 31, 1997, a decrease of 15%, and its commercial enrollment was 1,714,
as compared to 7,917 at March 31, 1997, a decrease of 78.4%.
Health Power HMO's health care costs decreased $3.8 million, or 27.6%,
to $10.0 million during the first quarter of 1998, from $13.9 million for the
same period in 1997. Health care costs, stated as a percentage of Health Power
HMO's revenues (the "HMO medical loss ratio"), were 93.8% for the first quarter
of 1998, as compared to 97.0% for the same period in the prior year. The
decrease in the HMO medical loss ratio was due to the aforementioned 5.1%
increase in per member revenue, which was partially offset by a 1.7% increase in
per member health care costs during the first quarter of 1998, as compared to
the same period in the prior year. The increase in per member revenue resulted
from the July 1, 1997 capitation rate increase from ODHS and improving pricing
conditions in the commercial marketplace. The foregoing results include
increases in health care cost reserves for the first quarter in 1998, discussed
above.
The Company's selling, general and administrative ("SGA") expenses
increased $2.1 million, or 44.8%, to $6.7 million for the first quarter of 1998,
from $4.6 million for the same period in 1997. CompManagement's SGA expenses
increased $2.2 million, or 73.6%, to $5.1 million for the first quarter of 1998,
from $2.9 million for the same period in the prior year,. This increase was
primarily a result of CompManagement Health Systems' SGA expenses increasing
$1.7 million, or 151% for the first quarter of 1998, from $1.1 million for the
same period in 1997 in connection with the operation of its MCO. The MCO was
operational for the full first quarter of 1998 as compared to only one month in
the same period in 1997. The balance of the increases in CompManagement's SGA
expenses were to support the increase in the number of employers contracting for
CompManagement's services. Health Power HMO's SGA expenses decreased $90,000, or
5.3%, to $1.6 million for the first quarter of 1998, from $1.7 million for the
same period in 1997. These SGA expenses, stated as a percentage of Health Power
HMO's revenues (the "HMO administrative ratio"), were 14.8% for the first
quarter of 1998, as compared to 11.7% for the same period in 1997. The
improvement in the Health Power HMO's SGA expenses was the result of
management's implementing a plan of action designed to improve the financial
performance of the HMO business. Among the actions implemented were a reduction
in the number of HMO employees, limited use of contract labor, and cost savings
in the areas of professional fees, transportation
10 of 12
<PAGE> 11
and advertising. The increase in administrative ratio was due to allocating the
HMO's fixed SGA expenses over a substantially smaller revenue base.
The Company's interest and other income increased approximately $24,000
to $294,000 for the first quarter of 1998, from $269,000 for the same period in
the prior year. This increase resulted primarily from an increase in the average
available investable cash balance.
The Company's income tax expense increased $631,000 to $642,000 for the
first quarter of 1998, from $11,000 for the same period in 1997. This increase
results from increased earnings before taxes of $1.6 million attributable to
CompManagement. The Company files its income taxes on a consolidated basis.
As a result of the foregoing, the Company had a net income of $955,000,
or $0.25 per share, diluted for the first quarter of 1998 as compared to a net
loss of $645,000, or ($0.17) per share, diluted for the same period in the prior
year. There were 3,839,518 and 3,814,235 weighted average common diluted shares
outstanding at March 31, 1998 and 1997, respectively.
Health Power HMO's operating results have been and may continue to be
adversely affected by the potential occurrence of various factors, such as
increases in reserve estimates, decreases in capitation rates from ODHS,
increases in health care costs and decreases in the size of the Medicaid
population. There can be no assurance that reserve estimates will not be subject
to further adjustments during 1998. While the Company does not anticipate
capitation rate reductions from ODHS in 1998, as was experienced in 1995 and
1996, it anticipates only a slight increase in such rates to occur during the
second half of 1998. However, there can be no assurance that health care costs
will not increase at a rate in excess of such capitation rate increases.
Furthermore, because of favorable economic conditions, Ohio has experienced, and
continues to experience, a decrease in the number of eligible Medicaid
recipients. This decrease in the number of Medicaid recipients may continue to
negatively impact Health Power HMO in 1998. Based upon the foregoing factors and
the Company's most recent operating projections, it is not expected that the
operations of Health Power HMO will be profitable during 1998. The Company's
management team is carefully considering what measures and alternatives might be
taken to stem the losses from Health Power HMO. However the Company's management
believes that, barring unforeseen circumstances, the Company's operating results
on a consolidated basis will continue to be profitable during 1998, because of
the operations of CompManagement and CompManagement Health Systems.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations through internally generated funds,
and its principal sources of cash have been contract and MCO revenues from
CompManagement and CompManagement Health Systems, respectively, premium revenues
from Health Power HMO, and investment income. The Company's principal capital
needs are to fund ongoing operations.
The Company's HMO also needs to maintain necessary regulatory capital.
At March 31, 1998, the statutory net worth of Health Power HMO was $149,208,
which did not meet Ohio's $1.7 million minimum statutory net worth requirement.
Health Power HMO has submitted a proposed corrective action plan to the Ohio
Department of Insurance ("ODI") which is currently under review by ODI.
11 of 12
<PAGE> 12
In May 1998, Health Power HMO received $123,220 in connection with the
sale of contract rights for its Medicaid membership in Mahoning County. The HMO
also anticipates receiving approximately $536,000 in June 1998, in connection
with the sale of contract rights for its Medicaid membership in Cuyahoga County.
At March 31, 1998, the Company had working capital of $2.9 million, as
compared to working capital of $2.0 million at December 31, 1997. At March 31,
1998, cash and cash equivalents were $13.2 million, an increase of $4.7 million
from $8.4 million at December 31, 1997. This increase was attributable primarily
to the receipt of deferred revenue by CompManagement during the first quarter of
1998. 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 $400,000 as of March 31, 1998,
are included with other assets on the balance sheet.
CompManagement leases a 70,000 square foot building in Dublin, Ohio.
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 $5.0 million for the
first quarter of 1998, as compared to $5.1 million 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.
The Company believes that internally generated funds will be sufficient
to support the Company's ongoing operations during 1998. However, as mentioned
above, the Company's HMO did not meet Ohio's $1.7 million minimum statutory net
worth requirements as of March 31, 1998. Health Power HMO has submitted a
corrective action plan to ODI which is currently under review by ODI. The
Company is unable to predict, at this time, the results of ODI's review or what
actions it may require the HMO to undertake for compliance purposes.
YEAR 2000 COMPLIANCE
The Year 2000 Issue is the result of computer programs having been
written using two digits rather than four to define the applicable year. Any of
the computer programs used by the Company or its subsidiaries that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of uncertain duration in the Company's operations,
including, among other things, an inability to process transactions or engage in
normal business activities. The Company's management currently does not believe
that the cost of addressing the Year 2000 will materially effect the Company's
business, operations, or financial condition or will require material
expenditures for the Year 2000 compliance.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
- ------- ---------------------------------------------------------
Disclosure not currently required.
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<PAGE> 13
Part II - Other Information
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: MAY 14, 1998 BY /S/ BERNARD F. MASTER, DO
-----------------------------------------------
BERNARD F. MASTER, DO, PRESIDENT,
CHIEF OPERATING OFFICER AND CHAIRMAN
OF THE BOARD
DATE: MAY 14, 1998 BY /S/ RONALD J WURTZ
-----------------------------------------------
RONALD J. WURTZ, CHIEF FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 13,177
<SECURITIES> 0
<RECEIVABLES> 5,588
<ALLOWANCES> (292)
<INVENTORY> 0
<CURRENT-ASSETS> 19,701
<PP&E> 5,356
<DEPRECIATION> 2,163
<TOTAL-ASSETS> 25,338
<CURRENT-LIABILITIES> 16,818
<BONDS> 0
0
0
<COMMON> 38
<OTHER-SE> 8,481
<TOTAL-LIABILITY-AND-EQUITY> 25,338
<SALES> 0
<TOTAL-REVENUES> 18,043
<CGS> 0
<TOTAL-COSTS> 16,740
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (294)
<INCOME-PRETAX> 1,597
<INCOME-TAX> 642
<INCOME-CONTINUING> 955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 955
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
