SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB-A
Amendment Number 1
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from to
Commission file No. 0-26666
RAMSAY MANAGED CARE, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 72-1249464
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
One Poydras Plaza
639 Loyola Avenue, Suite 1725
New Orleans, Louisiana 70113
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (504) 585-0515
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.
Yes X No
The number of shares of the Registrant's Common Stock outstanding at
November 2, 1995 follows:
Common Stock, par value $0.01 per share - 6,370,909 shares
Transitional Small Business Disclosure Format (Check one): Yes No X
<PAGE>
RAMSAY MANAGED CARE, INC.
FORM 10-QSB
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - September 30, 1995
and June 30, 1995 (unaudited) ...................... 1
Consolidated statements of income - quarters ended September 30, 1995
and 1994 (unaudited)................................ 3
Consolidated statements of cash flows - quarters ended September 30,
1995 and 1994 (unaudited)........................... 4
Notes to consolidated financial statements -
September 30, 1995 (unaudited)...................... 5
* Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 8
Part II. OTHER INFORMATION
Item 6. Exhibits and Current Reports on Form 8-K........ 14
SIGNATURES.............................................. 15
* Not amended
<PAGE>
PART I. FINANCIAL INFORMATION
RAMSAY MANAGED CARE, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30 June 30
1995 1995
----------------- -------------
Assets
Current assets:
Cash and cash equivalents.... $ 2,751,000 $ 4,314,000
Accounts receivable, less allowance for doubtful
accounts of $47,000 and $33,000 at September
30 and June 30, 1995 respectively... 757,000 925,000
Other receivables..................... 100,000 67,000
Income tax receivable................. 319,000 314,000
Deferred income taxes................. 136,000 142,000
Other current assets................... 277,000 282,000
-------------- ---------------
Total current assets...................... 4,340,000 6,044,000
Other assets:
Restricted cash........................ 1,250,000 1,253,000
Goodwill and other intangible assets... 10,022,000 10,217,000
Deferred preopening and organizational costs 2,131,000 1,857,000
Other non-current assets................ 481,000 281,000
----------- -------------
Total other assets.......................... 13,884,000 13,608,000
Property and equipment:
Building and improvements................ 137,000 121,000
Equipment, furniture and fixtures........ 2,343,000 2,149,000
------------- ------------
2,480,000 2,270,000
Less accumulated depreciation............ 1,166,000 1,074,000
------------- ------------
Total property and equipment................ 1,314,000 1,196,000
Total assets................................$ 19,538,000 $ 20,848,000
============ ===========
See notes to consolidated financial statements.
<PAGE>
RAMSAY MANAGED CARE, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30 June 30
1995 1995
-------------- ----------
Liabilities and stockholders' equity Current liabilities:
Accounts payable.................... $ 2,062,000 $ 2,384,000
Accrued salaries and wages.......... 761,000 518,000
Hospital and medical claims payable.. 893,000 922,000
Other accrued liabilities............ 423,000 281,000
Due to related party...................... 1,517,000 1,441,000
Current portion of long-term debt......... 1,305,000 978,000
-------------- -------------
Total current liabilities.................... 6,961,000 6,524,000
Deferred income taxes........................ 920,000 920,000
Long-term debt, less current portion:
Due to related party...................... 5,647,000 6,000,000
Other..................................... 1,598,000 1,820,000
Stockholders' equity:
ClassA convertible preferred stock, $.01 par
value - authorized 1,000,000 shares; issued
-0- shares at September 30, 1995 and -0- shares
at June 30, 1995............. -- --
Common stock, $.01 par value - authorized
20,000,000 shares; issued 6,370,909 shares at
September 30, 1995 and 6,370,909 shares at June
30, 1995............. ........ 64,000 64,000
Additional paid-in capital....... 7,393,000 7,393,000
Retained earnings (deficit)...... (2,684,000) (1,512,000)
Note receivable to purchase common stock.. (361,000) (361,000)
-------------- ---------------
Total stockholders' equity................ 4,412,000 5,584,000
------------- -------------
Total liabilities and stockholders' equity. $ 19,538,000 $ 20,848,000
============ ============
See notes to consolidated financial statements.
<PAGE>
RAMSAY MANAGED CARE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Quarter Ended
September 30 September 30
1995 1994
----------------- ---------------
Revenues:
Managed care revenue.................... $ 4,494,000 $ 3,143,000
Clinical fee for service and other
revenue........................ 445,000 319,000
------------ -----------
Total revenues.................... 4,939,000 3,462,000
Operating expenses:
Contracted provider services... 1,836,000 1,043,000
Salaries, wages and benefits... 2,527,000 1,407,000
Management fees charged by related
companies............ 70,000 109,000
General and administrative expenses. 1,150,000 550,000
Depreciation and amortization....... 330,000 228,000
Interest and other financing charges 198,000 63,000
------------ ------------
Total operating expenses............... 6,111,000 3,400,000
------------ -----------
(Loss) income before income taxes...... (1,172,000) 62,000
Income tax (benefit) expense........... --- 56,000
-----------------------------------
Net (loss) income....................... $ (1,172,000) $ 6,000
============ ===========
(Loss) income per common share.......... $(0.18) $0.00
==========================
Weighted average number of shares outstanding... 6,370,909 2,500,002
========== ============
See notes to consolidated financial statements.
<PAGE>
RAMSAY MANAGED CARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Quarter Ended
September 30 September 30
1995 1994
------------ ------------
Cash flows from operating activities..... $ (1,172,000) $ 6,000
Net (loss) income
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization....... 330,000 228,000
Other............................... (55,000) ---
Cash flows from (increase) decrease
in operating assets:
Accounts receivable, net........ 168,000 19,000
Other receivables............... (33,000) ---
Income tax receivable........... (5,000) (159,000)
Deferred income taxes........... 6,000 76,000
Other current assets............ 5,000 (64,000)
Other non-current assets........ (200,000) 6,000
Cash flow from increase (decrease) in
operating liabilities:
Accounts payable................ (322,000) 271,000
Accrued salaries, wages and other
liabilities............... 243,000 91,000
Hospital and medical claims payable 29,000 272,000
Due to related party............... 76,000 ---
Other accrued liabilities.......... 142,000 (133,000)
-----------------------------------
Total adjustments........................ 384,000 607,000
---------- ---------
Net cash (used) provided by operating
activities..................... (788,000) 613,000
------------ -----------
Cash flows from investing activities
Expenditure for property and equipment.. (210,000) (99,000)
Preopening and organizational costs...... (274,000) (143,000)
Other intangibles........................ (43,000) (29,000)
----------------------------
Net cash used in investing activities.... (527,000) (271,000)
-----------------------------
Cash flows from financing activities
Payments to related party................ --- (46,000)
Payment on debt.......................... (248,000) (318,000)
----------------------------
Net cash (used) provided by financing
activities............................. (248,000) (364,000)
-----------------------------
Net (decrease) increase in cash and cash
equivalents............................. (1,563,000) (20,000)
Cash and cash equivalents at beginning
of period............................... 4,314,000 763,000
---------- --------
Cash and cash equivalents at end of period. $ 2,751,000 $ 743,000
========== ========
Supplemental disclosures of cash flow
information Cash paid (received) during
the period for:
Interest.............................. $ 179,000 $ 75,000
======== =======
Income taxes.......................... $ (158,000) $ 0
=========== ========
See notes to consolidated financial statements.
<PAGE>
RAMSAY MANAGED CARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
September 30, 1995
NOTE 1
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-B. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation of the interim information are of a normal
recurring nature and have been included. The Company's business is seasonal in
nature and subject to general economic conditions and other factors.
Accordingly, operating results for the quarter and three months ended September
30, 1995 are not necessarily indicative of the results that may be expected for
the year.
The Company was incorporated in the State of Delaware in July, 1993,
and commenced operations with the acquisition of Florida Psychiatric Management,
Inc. ("FPM") on October 31, 1993.
NOTE 2
The Company's long-term debt consists of the following:
September 30 June 30
1995 1995
-------------------------------
8% 6-year unsecured promissory note issued
to Ramsay Health Care, Inc. payable
quarterly, due September 30, 2000..... $ 6,000,000 $ 6,000,000
Variable rate (interest rate of 8.7% at June 30,
1995), 3-year secured term loan to First
Union National Bank of Florida, Inc.,
payable quarterly, due January 31, 1998. 1,528,000 1,667,000
8.25% 3-year secured promissory note issued in
connection with the acquisition of HDI,
payable monthly, due June 30, 1997...... 583,000 667,000
7.25% 2-year unsecured notes due to former
shareholders of FPA, payable monthly, due
May 10, 1996............................ 57,000 71,000
Other notes and leases payable............... 388,000 393,000
----------------------------
8,550,000 8,798,000
Less amounts due within one year............. 1,305,000 978,000
----------------------------
$ 7,245,000 $ 7,820,000
========= =========
<PAGE>
RAMSAY MANAGED CARE, INC.
The 8%, six-year, unsecured promissory note (the "Subordinated
Promissory Note") has been issued to Ramsay Health Care, Inc. ("RHCI"), which is
the Company's former parent corporation, and represents certain amounts due to
RHCI at October 25, 1994. The note is subordinated and junior to all
indebtedness of the Company. Interest only is payable through September 30,
1996, at which time principal and interest will be payable in equal quarterly
installments with the final payment due on September 30, 2000.
As part of the acquisition of FPM in October 1993, the Company issued
7% three year debentures, totalling $2,500,000. These debentures were prepaid
with the proceeds of a 3-year secured term loan on April 28, 1995. The variable
rate, 3-year secured term loan by a bank is secured by the stock and assets of
RMCI's subsidiary, FPM Behavioral Health, Inc. and its subsidiaries ("FPM"). The
net book value of FPM at September 30, 1995 was approximately $773,000. The term
loan requires, among other things, that FPM maintain various financial ratios
and a minimum level of stockholders' equity. At September 30, 1995, the minimum
required level of FPM stockholders' equity was $700,000. The term loan is
payable in quarterly installments with the last payment due January 31, 1998.
Under the provisions of the term loan, FPM was required to maintain a
fixed charge coverage ratio of 1.25:1. At June 30, 1995, FPM's fixed charge
coverage ratio was less than the requirement. The bank agreed to reduce the
fixed charge coverage ratio requirement to 1.0:1 at June 30, 1995 and for the
period through June 30, 1996. Management believes FPM's operations in fiscal
year 1996 will be sufficient to maintain compliance with the reduced fixed
charge coverage ratio requirement. Accordingly, amounts payable under the term
loan agreement at September 30, 1995 are classified as long-term in the
accompanying balance sheet.
As part of the acquisition of certain assets of Human Dynamics
Institute ("HDI"), the Company issued an 8.25% secured promissory note due June
30, 1997. This note is secured by the stock of the Company's wholly-owned
subsidiary, FPMBH of Arizona, Inc., which was the acquiring entity of the assets
of HDI. It is payable in 36 equal monthly installments which began July 31, 1994
with the final installment due June 30, 1997. At September 30, 1995, FPMBH of
Arizona, Inc. had a net book value of $624,000.
The Company has a Revolving Credit Facility (Facility) with a bank for
up to $4,200,000. An aggregate amount of up to $3,250,000 of the Facility is
available for acquisitions and an aggregate amount of up to $950,000 is
available for working capital and general corporate purposes. The Facility
matures in January 2000. At September 30, 1995, $527,000 was outstanding under
the working capital portion of the Facility.
On April 24, 1995, RHCI distributed, in the form of a dividend, all of
the shares of the Company's common stock held by it to the holders of RHCI's
common stock, Class A convertible preferred stock and Class B convertible
preferred stock (the "Distribution").
<PAGE>
In addition to the Subordinated Promissory Note and pursuant to a
Distribution Agreement between RMCI and RHCI which governed the Distribution,
RMCI agreed to pay amounts owed to RHCI as of April 24, 1995 (the "Distribution
Date") totalling approximately $1,100,000. Pursuant to the Distribution
Agreement, $600,000 of this amount was payable by RMCI on or before October 21,
1995 or on such other date and on such other terms and conditions as mutually
agreed to by RMCI and RHCI. RMCI paid $275,000 to RHCI on June 30, 1995 in
partial satisfaction of the amount due on October 21, 1995 and the parties are
currently discussing deferred payment terms on the remaining $325,000. The
balance of the amount outstanding on the Distribution Date, approximately
$500,000, is payable on or before December 31, 1996, together with interest at
7% per annum accruing from October 21, 1995, or on such other date and on such
other terms and conditions as shall be mutually agreed to between RMCI and RHCI.
Subsequent to the Distribution Date, RHCI paid additional amounts
incurred by RMCI prior to the Distribution Date and provided certain
administrative services to RMCI pursuant to certain agreements entered into in
connection with the Distribution. RMCI will pay RHCI for these amounts, which at
September 30, 1995 totalled approximately $725,000, on terms currently being
discussed between the parties.
NOTE 3
The provision for income taxes included in the consolidated statements
of income differs from the amounts computed by applying the normal statutory
rates to income before income taxes because such provision includes a) amounts
reportable as income for federal income tax purposes which are not income for
financial reporting purposes, b) amounts deducted for financial reporting
purposes that are not allowable deductions for federal and state income tax
purposes and c) amounts for state income taxes applicable to profitable
subsidiaries which do not utilize the operating losses generated by unprofitable
subsidiaries to offset taxable income. At September 30, 1995, the Company has
estimated operating loss carry forwards of approximately $1,744,000 income tax
purposes, which expire from 2005 to 2010 and approximately $3,055,000 for state
income tax purposes, which expire from 2005 to 2010, and are available to reduce
future income taxes.
<PAGE>
RAMSAY MANAGED CARE, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company is involved in the management of mental health services and
substance abuse care on behalf of self-insured employers, health maintenance
organizations, insurance companies and government agencies in different states.
The Company not only manages such care but also provides where appropriate the
delivery of care through integrated systems involving clinics and other
providers. These services range from benefit design, case management and claims
processing to fully capitated (at risk) mental health care treatment.
The Company's strategy is to expand its operations through
acquisitions, development and joint venture efforts, and currently operates in
13 states. It is expected that any future acquisitions will look to enhance the
volume of the Company's business in various regions of the country.
Furthermore, RMCI's strategy has been to expand its managed care
efforts into the health maintenance organization (HMO) arena by way of
development. The Company currently holds licenses to operate HMO's in the states
of Louisiana and Mississippi and has applied for a license in Alabama. The
Company commenced marketing its services in the state of Louisiana in May 1995
and enrolled its first membership on June 1.
On April 24, 1995, Ramsay Health Care, Inc. distributed, in the form of
a dividend, all of the shares of the Company's common stock held by it to the
holders of Ramsay Health Care, Inc.'s common stock, class A convertible
preferred stock and class B convertible preferred stock. On that date, the
Company commenced a rights offering (the "Rights Offering") of 960,913 shares of
its common stock at a subscription price of $2.00 per share. All of the shares
of common stock offered in the Rights Offering were subscribed and paid for.
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, certain
items of the Company's consolidated statements of income as a percentage of the
Company's net revenues. The discussion following this table quantifies the
significant fluctuations in amounts reported in the Company's consolidated
statements of income between periods.
Percentage of Net Revenue
Quarter Ended
September 30
1995 1994
----------------------
Net revenues..... 100.0 % 100.0 %
----- -----
Operating expenses:
Contracted provider services... 37.2 % 30.1 %
Salaries, wages and benefits... 51.2 % 40.6 %
Other operating expenses....... 24.7 % 19.1 %
Depreciation and amortization.. 6.6 % 6.6 %
Interest and other financing changes... 4.0 % 1.8 %
----- -----
Total operating expenses...... 123.7 % 98.2 %
----- -----
Income (loss) before income taxes.... (23.7)% 1.8 %
====== ======
Quarter Ended September 30, 1995
Compared to Quarter Ended September 30, 1994
Net revenues in the quarter ended September 30, 1995, were $ 4.9
million compared to $ 3.5 million in the comparable quarter of the prior fiscal
year. The increase in net revenues is attributable to new managed care contracts
obtained, in particular in West Virginia effective January 1, 1995. Clinical and
other clinical service revenue increased as a result of new clinics opened
during calendar 1995. In addition, revenues increased due to HMO operations
which began in Louisiana in June 1995.
Contracted provider services increased to $1.8 million in the September
quarter of 1995 compared to $1.0 million in the prior year September quarter as
a result of the increased number of members whose care is managed by the
Company.
Other operating expenses comprising salaries and wages, and general and
administrative expenses increased from $2.0 million to $3.7 reflecting the
expanded operations base of the Company's managed behavioral health division
("FPM") and the development during the fiscal 1996 September quarter of the
Company's HMO division ("Apex Healthcare"). Significant start-up losses were
incurred during the September quarter and management expects that these losses
will continue in the HMO division.
The Company's loss before income taxes of $1.2 million occurred as a
result of significant marketing and development costs in the expansion of the
Company's behavioral health managed care services, and start-up costs associated
with the Company's HMO division.
<PAGE>
Liquidity and Capital Resources
General. In October 1994, the Company completed $3,320,000 of a
$5,820,000 private placement (the "Equity Investment") of RMCI Common Stock (the
"October 1994 Closing") to a corporate affiliate of Paul J. Ramsay, the Chairman
of the Company, and three officers of the Company. The Company received an
additional $2,500,000 in May 1995 pursuant to the second purchase of RMCI Common
Stock by that affiliate of Mr. Ramsay pursuant to the purchase agreement entered
into in October, 1994. In connection with the Rights Offering of 960,913 shares
of RMCI Common Stock at $2.00 per share which ended on June 8, 1995, the Company
also received net proceeds of approximately $823,000.
A portion of the funds received from the October 1994 Closing was used
to meet the $1,300,000 minimum statutory capital requirements relating to
obtaining the license in December 1994 for the operation of an HMO in Louisiana.
In addition, in May 1995, $200,000 was used to meet minimum statutory capital
requirements related to an application for an HMO license in the State of
Alabama. Further, in connection with the Company's grant of an HMO license in
the state of Mississippi, the Company required $250,000 to meet minimum
statutory capital requirements. Statutes and regulations applicable to the
operation of health maintenance organizations will require the Company to
maintain minimum levels of capital and net worth and will limit the ability of
the subsidiaries of the Company which will hold HMO licenses to pay dividends
(to the Company as such subsidiaries' sole stockholder) or make certain
investments. Except in connection with the Louisiana, Alabama and Mississippi
HMO applications described above, the Company cannot quantify the effect of
these statutory capital requirements. However, the imposition of these
requirements will increase the cost of conducting its health maintenance
organization businesses, thereby increasing the Company's cash requirements.
Pursuant to the Distribution Agreement between RMCI and RHCI, RMCI
agreed to pay amounts owed to RHCI as of the Distribution Date. RMCI will also
pay RHCI for services performed and amounts paid on behalf of RMCI subsequent to
the Distribution Date. The terms of repayment related to certain of the amounts
owed to RHCI at September 30, 1995 (excluding the Subordinated Promissory Note),
totalling approximately $1,050,000, are currently being discussed between RMCI
and RHCI. See Note 2 on page 7.
<PAGE>
The Company's sources of liquidity primarily will be its cash flow from
operations and the proceeds from a $4,200,000 Revolving Credit Facility
described below under "Financing," of which $3,250,000 will be available for
acquisitions by the Company and $950,000 will be available for working capital
and other general corporate purposes. In addition, the Company received
$2,500,000 in May 1995 in connection with the second and final closing under the
Equity Investment. Finally, in June 1995 the Company received additional cash
(at $2.00 per share) upon the exercise of the 960,913 rights issued in
connection with the Rights Offering of approximately $823,000 (net of expenses).
The Company expects to use its sources of liquidity for working capital and
other general corporate purposes, including for costs discussed above, costs
associated with the establishment and development of health maintenance
organization businesses and related provider networks in the southeastern region
of the United States and for possible acquisitions of managed mental health care
businesses. The Company will consider the possible establishment and development
of health maintenance organization businesses and any possible acquisitions in
light of its sources of liquidity and cash requirements existing at the time
that the development or acquisition opportunity is presented. Accordingly, the
Company anticipates that it will allocate its resources in such a fashion so as
to provide for then existing development or acquisition costs prior to
undertaking future expansion. There can be no assurance that the Company will
expand its operations by development, acquisition or internal expansion or that
any development effort, acquisition or expansion will be profitable.
In addition, from time to time the Company engages in discussions
concerning possible acquisitions of businesses in the managed mental health care
industry. At the present time, the Company is not party to any letter of intent
or agreement to purchase any such businesses. There can be no assurance that the
Company will enter into any agreement to purchase or will purchase any such
businesses in the future.
Indebtedness. In connection with RMCI's acquisition of all the
outstanding shares of common stock of FPM in October 1993, FPM issued 7%
Debentures due October 31, 1996 (the "Debentures") in the aggregate principal
amount of $2,500,000 to the selling stockholders of FPM, including Martin
Lazoritz, Robert W. Pollack and I. Paul Mandelkern, officers of the Company or
its subsidiaries. Subsequently, on April 28, 1995 these Debentures were prepaid
with the $1,667,000 secured Term Loan described in "Financing" below.
In connection with RMCI's acquisition of HDI, through its wholly-owned
subsidiary FPMBH of Arizona, Inc., RMCI issued a promissory note in the
principal amount of $1,000,000 (the "HDI Note") to Phoenix South Community
Mental Health Centers ("Phoenix South"). Interest accrues on the HDI Note at a
fixed rate of 8.25% per annum and is payable monthly in arrears, together with
equal installments of principal, until the HDI Note matures on June 30, 1997.
The HDI Note is secured pursuant to a Stock Pledge Agreement dated June 30,
1994, pursuant to which Phoenix South has a first priority lien on all of the
common stock of FPMBH of Arizona, Inc. (f/k/a Ramsay HDI). Upon payment in full
of the HDI Note, the Bank will have a first priority lien on such common stock
under the Credit Facility. See "Financing" below.
<PAGE>
In addition, in connection with the Distribution, RMCI issued to RHCI
the Subordinated Promissory Note in the principal amount of $6,000,000,
evidencing certain funds advanced to or on behalf of RMCI by RHCI, including in
connection with the acquisition of certain acquired businesses. Prior to its
issuance, the amounts evidence by the Subordinated Promissory Note were recorded
as intercompany indebtedness between RMCI and RHCI. Interest accrues on the
Subordinated Promissory Note at an annual fixed rate of 8%, payable in quarterly
payments in arrears commencing June 30, 1995. The Subordinated Promissory Note
is payable as to interest only through September 30, 1996, and commencing on
September 30, 1996 principal and interest will be payable in equal quarterly
installments in arrears for a four-year period with the final payment due on
September 30, 2000.
The Subordinated Promissory Note is unsecured and is subordinated and
junior in right of payment to all indebtedness of RMCI and its subsidiaries
incurred in connection with the acquisition of HDI and future acquisitions of
other managed mental health care services businesses, and any other Senior
Indebtedness (as defined in the Subordinated Promissory Note), including
indebtedness arising under the Credit Facility discussed below and any other
bank indebtedness of RMCI or its subsidiaries. At the present time, there is no
Senior Indebtedness outstanding other than the HDI Note and amounts due under
the Credit Facility described below.
As of September 30, 1995, the aggregate amount of principal and
interest on the foregoing obligations payable during the fiscal year of the
Company ending June 30, 1996 and during each of the next four fiscal years of
the Company will be approximately $978,000, $2,331,000, $2,047,000, $1,491,000,
and $1,491,000, respectively. The foregoing amounts take into account the
replacement of the Debentures with the secured Term Loan, but do not take
account of any repayments on the Revolving Credit Facility.
The Company may be required to raise additional funds for working
capital, development and growth beyond its immediate plans and/or to remain
competitive with its larger competitors. Any additional equity financing may
result in substantial dilution to the stockholders of the Company. Except for
the Credit Facility, the Company has made no arrangements to obtain any
additional debt financing, and there can be no assurance that RMCI will be able
to obtain any required additional funds.
Financing. On April 28, 1995, the Company's loan agreement (the "Credit
Facility") with First Union National Bank of Florida (the "Bank") became
effective. Pursuant to the Credit Facility, the Bank will provide secured
Revolving Credit Facility of up to $4,200,000 to the Company and a secured Term
Loan of $1,667,000 for prepayment of Debentures mentioned above. An aggregate
amount of up to $3,250,000 of the Revolving Credit Facility will be available
for acquisitions by the Company and an aggregate amount of up to $950,000 will
be available for working capital and other general corporate purposes. The
Revolving Credit Facility will mature in January, 2000, unless the Credit
Facility is earlier terminated in accordance with its terms. Currently,
approximately $627,000 is outstanding under the Revolving Credit Facility. The
<PAGE>
proceeds of the Term Loan were used to prepay the outstanding principal amount
of the Debentures in full. The Term Loan will mature in January, 1998. The
Revolving Credit Facility and the Term Loan will bear interest at the following
rates, as applicable and selected by the Company from time to time: (i) the
Bank's LIBOR adjusted rate plus 2.5%, or (ii) the Bank's Prime Rate plus 0.5%.
The Credit Facility is secured by a pledge of the stock of RMCI's
subsidiaries (other than the subsidiaries of RMCI conducting or which will
conduct health maintenance organization businesses), and the accounts receivable
of RMCI's subsidiaries (other than the subsidiaries of RMCI conducting or which
will conduct health maintenance organization businesses).
The Credit Facility contains covenants customary for facilities of this
type, which include, without limitation, covenants which contain limitations on
the ability of the Company and its subsidiaries, subject to certain exceptions,
to (i) assume or incur liens, (ii) alter the nature of their business or effect
mergers, consolidations, or sales of assets, (iii) incur indebtedness or make
investments, or (iv) acquire businesses. In addition, the Credit Facility will
contain financial covenants related to senior debt to cash flow, interest
coverage, fixed charge coverage and minimum stockholders equity. See Note 2 on
page 6.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits required to be filed as part of this Quarterly Report on Form
10-QSB are as follows:
Exhibit 11 Computation of Net Income (Loss) per Share
Exhibit 27 Financial Data Schedule
(b) Current Reports on Form 8-K
There were no Current Reports on Form 8-K filed with the Commission during the
quarter ended September 30, 1995.
<PAGE>
RAMSAY MANAGED CARE, INC.
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 thereupon duly authorized.
RAMSAY MANAGED CARE, INC.
Registrant
/s/ Warwick D. Syphers
Chief Financial Officer
Date: September 20, 1996
Exhibit 11
RAMSAY MANAGED CARE, INC.
COMPUTATION OF INCOME (LOSS) PER SHARE
(unaudited)
Quarter Ended September 30
1995 1994
----------------------------
PRIMARY
Weighted average common shares outstanding. 6,370,909 2,500,002
--------- ----------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES..... 6,370,909 2,500,002
========= =========
Income (Loss) Available to Common
Shareholders............ $ (1,172,000) $ 6,000
========= =========
INCOME (LOSS) PER SHARE...... $(0.18) $0.00
===== ====
FULLY DILUTED
Weighted average common shares
outstanding..................... 6,370,909 2,500,002
--------- ----------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES..... 6,370,909 2,500,002
========= =========
Income (Loss) Available to Common
Shareholders............ $ (1,172,000) $ 6,000
=========== ======
INCOME (LOSS) PER SHARE...... $(0.18) $0.00
===== ====
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-1-1995
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,751,000
<SECURITIES> 0
<RECEIVABLES> 1,223,000
<ALLOWANCES> 47,000
<INVENTORY> 0
<CURRENT-ASSETS> 4,340,000
<PP&E> 2,480,000
<DEPRECIATION> 1,166,000
<TOTAL-ASSETS> 19,538,000
<CURRENT-LIABILITIES> 6,961,000
<BONDS> 0
0
0
<COMMON> 64,000
<OTHER-SE> 4,348,000
<TOTAL-LIABILITY-AND-EQUITY> 19,538,000
<SALES> 0
<TOTAL-REVENUES> 4,939,000
<CGS> 0
<TOTAL-COSTS> 4,363,000
<OTHER-EXPENSES> 1,550,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198,000
<INCOME-PRETAX> (1,172,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,172,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,172,000)
<EPS-PRIMARY> ($0.18)
<EPS-DILUTED> ($0.18)
</TABLE>
