U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
Commission file number 1-13604
STAT HEALTHCARE, INC.
(Exact name of small business issuer as
specified in its charter)
DELAWARE 76-0443952
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
12450 GREENSPOINT DRIVE SUITE 1200 HOUSTON, TEXAS 77060
(Address of principal executive offices)
(713)872-6900
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,702,472 SHARES OF COMMON
STOCK OUTSTANDING AS OF MAY 14, 1996.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
STAT HEALTHCARE, INC.
FORM 10-QSB
Quarter Ended March 31, 1996
Table of Contents
PART I
Item 1. Financial Statements .......................................... 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations .................................................... 1
PART II
Item 1. Legal Proceedings ............................................. 2
Item 2. Changes in Securities ......................................... 3
Item 3. Defaults Upon Senior Securities ............................... 3
Item 4. Submission of Matters to Vote of Security Holders ............. 3
Item 5. Other Information ............................................. 3
Item 6. Exhibits and Reports on Form 8-k .............................. 3
SIGNATURES ............................................................. 3
INDEX TO FINANCIAL STATEMENTS .......................................... FS-1
(ii)
<PAGE>
PART I
Item 1. Financial Statements
The unaudited summary financial statements of STAT Healthcare, Inc.(the
Company), commencing at page FS-1, have been prepared in accordance with the
requirements of Regulation S-B; supplementary financial information included
therein, if any, have been prepared in accordance with Item 310 (b) of
Regulation S-B and, therefore, omit or condense certain footnotes and other
information normally included in financial statements prepared in accordance
with generally accepted accounting principles.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The following discussion provides a comparative analysis of the consolidated
results of operations of the Company and its affiliated physician groups for the
quarters ended March 31, 1996 and 1995. This analysis and the financial
statements referred to in Item 1, above, should be read in conjunction with the
audited financial statements of the Company included in its Annual Report on
Form 10-KSB.
Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995
Net Service Revenues. Net service revenues increased by $1.2 million or 36%
from $3.2 million to $4.4 million. This increase is attributable to a 23%
increase in the number of patients treated in hospital emergency departments
(from approximately 44,000 to approximately 54,000) coupled with a 10% increase
in average revenue per patient (from $73.92 in 1995 to $81.19 in 1996). During
the 1995 quarter, 12 emergency departments were served throughout the period and
1 emergency department was served for 1 month. During the 1996 quarter, 11
emergency departments were served throughout the period, 2 emergency departments
were served for 2 months and 3 additional emergency departments were served for
1 month. The 5 additional emergency departments which were served for only a
portion of the 1996 quarter, represent 5 of 9 additional emergency departments
that the Company will be serving pursuant to its agreement with the Houston
Division of Columbia/HCA Healthcare Corporation. Service at the remaining 4
emergency departments is scheduled to commence between April 1 and July 1, 1996.
Additionally, emergency department services at 2 non-Columbia owned hospitals
were terminated effective April 30, 1996.
1
Direct Expenses. Direct expenses increased $849 thousand or 32% from $2.7
million to $3.5 million. Fees paid to independent contract physicians increased
$623 thousand and represented 64% of net service revenues in 1996 compared to
68% in 1995. The comparative decrease, from 1995 to 1996 as a percent of
revenues, is the result of more efficient utilization of physicians (i.e.
increase in patients treated per physician). Billing and collection costs
increased $129 thousand or 41%. During the 1995 period, 1 hospital contract was
compensated on a direct reimbursement basis and did not incur billing and
collection costs, whereas during 1996, all contracts are fee-for-service.
Insurance and other costs increased $97 thousand or 68% from 1995. This increase
is attributable to an increase in insurance rates which are charged on a per
patient visit basis.
Operating Expenses. Operating expenses increased $371 thousand or 105% from
$353 thousand to $724 thousand. This increase is primarily attributable to human
resource costs which increased $244 thousand between the periods because of an
increase in administrative personnel necessitated by increased recruiting,
credentialing and administrative activities associated with the new hospital
contracts obtained during the first quarter of 1996. Occupancy costs increased
by $43 thousand from 1995 because of the May 1995 move into different and larger
office facilities. Outside services increased by $59 thousand from 1995
primarily because of additional administrative costs associated with the Company
becoming publicly owned during the second quarter of 1995.
Income Taxes. Income taxes were provided during 1995 at the standard federal
corporate rate of 34%. During 1996, the rate increased to approximately 36%
because of state income (franchise) taxes. The Company has no significant book
to tax differences.
Liquidity and Capital Resources
On April 10, 1996, the Company increased its $600,000 revolving bank line of
credit to $1,500,000 to assist in the financing of increasing patient accounts
receivable associated with new contracts. The Company borrowed $600,000 from the
line on that date. The Company is discussing, with several banks, a larger line
of credit to be implemented upon completion of its pending reorganization with
the AmHealth companies and is also exploring alternatives regarding a secondary
offering of equity securities subsequent to the pending reorganization.
PART II
Item 1. Legal Proceedings
The Company is not presently a party to any material litigation, nor, to the
knowledge of Management, is any such litigation presently threatened.
2
Item 6. Exhibits and Reports on Form 8-K
A Form 8-K dated January 31, 1996 (Item 2) and amendment number 1 thereto on
Form 8-K/A (Item 7) were filed reporting the acquisition of assets of HEMA and
Amedica. The Form 8-K/A included summary financial statements of Amedica and
pro-forma financial data relating to both transactions.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
STAT HEALTHCARE, INC.
Date: May 14, 1996 By: \S\ VICTOR M. MIRANDA, M.D.
Victor M. Miranda, M.D.
President and Director
(Principal Executive Officer)
Date: May 14, 1996 By: \S\ NED E. CHAPMAN
Ned E. Chapman
Chief Financial Officer,
Treasurer and Director
(Principal Financial and
Accounting Officer)
<PAGE>
STAT HEALTHCARE, INC.
Index to Financial Statements
Balance Sheets ................................................ FS-2
Statements of Income .......................................... FS-3
Statement of Cash Flows ....................................... FS-4
Notes to Financial Statements ................................. FS-5
FS-1
<PAGE>
STAT HEALTHCARE, INC.
Balance Sheets
March 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1996 1995
ASSETS (unaudited) (audited)
---------- ----------
<S> <C> <C>
Cash and cash equivalents ........................................... $ 375,000 $1,763,000
Accounts receivable:
Customer accounts, net .............................................. 4,137,000 3,184,000
Due from STAT Physicians ............................................ 146,000 122,000
---------- ----------
Net accounts receivable ............................................. 4,283,000 3,306,000
Prepayments and other current assets ................................ 605,000 486,000
Notes Receivable .................................................... 200,000 200,000
---------- ----------
Total current assets ................................................ 5,463,000 5,755,000
Office equipment and furnishings, net ............................... 117,000 96,000
Purchased contract rights, net ...................................... 1,131,000 --
Excess of cost over fair value of assets acquired, net .............. 200,000 --
Non-compete covenants, net .......................................... 116,000 --
Other non-current assets ............................................ 9,000 9,000
---------- ----------
Total assets ........................................................ $7,036,000 $5,860,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued physicians fees ............................................. $ 983,000 $ 706,000
Accounts payable .................................................... 632,000 307,000
Accrued liabilities ................................................. 228,000 152,000
---------- ----------
Total current liabilities and total liabilities ..................... 1,843,000 1,165,000
---------- ----------
Shareholders' equity:
Common stock, $.01 par value. Authorized 10,000,000 shares;
issued and outstanding 3,702,472 and 3,623,332 shares ............... 37,000 36,000
Capital in excess of par value ...................................... 4,216,000 3,857,000
Retained earnings ................................................... 940,000 802,000
---------- ----------
Total shareholders' equity .......................................... 5,193,000 4,695,000
---------- ----------
Total liabilities and shareholders' equity .......................... $7,036,000 $5,860,000
========== ==========
</TABLE>
See accompanying notes to financial statements.
FS-2
<PAGE>
STAT HEALTHCARE, INC.
Consolidated Statements of Income
Quarters ended March 31, 1996 and 1995
(unaudited)
1996 1995
---------- -----------
Net service revenues ............................... $4,442,000 $ 3,255,000
Direct expenses:
Physicians' fees ................................... 2,823,000 2,200,000
Billing and collection ............................. 445,000 316,000
Insurance and other ................................ 240,000 143,000
---------- -----------
Total direct expenses .............................. 3,508,000 2,659,000
---------- -----------
Gross profit ....................................... 934,000 596,000
---------- -----------
Operating expenses:
Human resources .................................... 560,000 316,000
Occupancy .......................................... 62,000 19,000
Supplies ........................................... 36,000 11,000
Outside services and other ......................... 66,000 7,000
---------- -----------
Total operating expenses ........................... 724,000 353,000
---------- -----------
Operating income ................................... 210,000 243,000
Interest income (expense) .......................... 5,000 (17,000)
---------- -----------
Income before income taxes ......................... 215,000 226,000
Income taxes ....................................... 77,000 77,000
---------- -----------
Net income ......................................... $ 138,000 $ 149,000
========== ===========
Net income per common and
common equivalent share ............................ $ 0.03 $ 0.07
========== ===========
Number of shares used in computing
net income per share ............................... 3,980,390 2,199,624
========== ===========
See accompanying notes to financial statements
FS-3
<PAGE>
STAT HEALTHCARE, INC.
Consolidated Statements of Cash Flows
Quarters ended March 31, 1996 and 1995
(unaudited)
1996 1995
----------- ---------
Cash flows from operating activities:
Net income ........................................... $ 138,000 $ 149,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ........................ 43,000 --
Changes in assets and liabilities:
Increase in net accounts receivable .................. (977,000) (565,000)
Decrease (increase) in other current assets .......... (77,000) 52,000
Increase in accrued physicians' fees ................. 277,000 58,000
Increase in accounts payable ......................... 325,000 187,000
Increase in accrued liabilities ...................... 76,000 170,000
Increase in amount due to STAT Physicians ............ -- 138,000
----------- ---------
Total adjustments .................................... (333,000) 40,000
----------- ---------
Net cash flows from operating activities ............. (195,000) 189,000
----------- ---------
Cash flows from investing activities:
Purchase of HEMA assets .............................. (963,000) --
Purchase of Amedica assets ........................... (200,000) --
Purchase of office equipment and furnishings ......... (30,000) --
----------- ---------
Net cash flows from investing activities ............. (1,193,000) --
----------- ---------
Cash flows from financing activities:
Deferred offering costs and other non-current assets . -- (127,000)
----------- ---------
Net increase (decrease) in cash and equivalents ...... (1,388,000) 62,000
Cash and equivalents at beginning of period .......... 1,763,000 159,000
----------- ---------
Cash and equivalents at end of period ................ 375,000 221,000
=========== =========
See accompanying notes to financial statements.
FS-4
STAT HEALTHCARE, INC.
Notes to Financial Statements
March 31, 1996
(1) Financial Statement Presentation
The accompanying financial statements of STAT Healthcare, Inc. (the Company)
present financial information for the quarters ended March 31, 1996 and 1995.
Because these financial statements are unaudited and do not include all
disclosures required by generally accepted accounting principles, they should be
read in conjunction with the Company's audited annual financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
estimates) necessary for a fair presentation of the financial information for
the periods reported have been made. Results of operations for the quarter ended
March 31, 1996 are not necessarily indicative of the results for the year ending
December 31, 1996.
Consolidated income statement and cash flow information combines the results
of operations and cash flows of the Company and its affiliated physician groups.
Assets and liabilities arising from the consolidated operations are included in
the balance sheet of the Company.
(2) Net Income Per Common Share
Net income per common share is computed based on the number of common and
common equivalent shares of the Company. Equivalent shares are attributable to
outstanding warrants and options to purchase common shares.
(3) Pending Plan of Reorganization
On March 15, 1996, the Company entered into an amended agreement and plan of
reorganization with AmHealth Corporation and its related corporate and
partnership entities (AmHealth). A new company, New STAT Healthcare (New STAT)
was organized by the Company to act as a constituent entity in the
reorganization. New STAT currently has no business activity unrelated to the
reorganization. The closing of the proposed reorganization is contingent upon,
among other things, the requisite approval of the security holders of the
Company and AmHealth.
If the proposed reorganization is consummated, the Company will be merged
with a wholly owned subsidiary of New STAT, the AmHealth corporate entities will
be merged into New STAT and the partnership interests of AmHealth partners
electing to participate in the transaction will be acquired by New STAT. Common
stock and related warrants and options to purchase common stock of the Company
will be converted on a share per share basis into shares, warrants and options
of New STAT. Additionally, up to 11,200,000 shares of New STAT common stock will
be
FS-5
issued in exchange for outstanding ownership interests in AmHealth. The proposed
merger transaction is expected to be accounted for as a pooling of interests.
New STAT filed a Form S-4 Registration Statement relating to this
reorganization with the Securities and Exchange Commission on March 18, 1996.
The Form was subsequently amended on April 22 and May 8, 1996. Upon its becoming
effective, a joint prospectus and proxy statement describing the merger and
seeking its approval will be mailed to security holders of the Company and
AmHealth.
Following is unaudited summarized pro forma income statement information of
New STAT (the combined companies) for the quarters ended March 31, 1996 and 1995
as if the merger was completed at the beginning of each period:
1996 1995
----------- ----------
Net service revenues .................... $ 7,549,000 $4,873,000
Operating income ........................ 1,263,000 879,000
Income before
income taxes ............................ 1,211,000 849,000
Pro forma net income .................... $ 775,000 $ 560,000
----------- ----------
Pro forma net income
per share ............................... $ .05 $ .07
----------- ----------
Number of shares used
in computing pro forma
net income per share .................... 15,180,390 7,583,176
----------- ----------
FS-6
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 375,000
<SECURITIES> 0
<RECEIVABLES> 4,283,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,463,000
<PP&E> 117,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,036,000
<CURRENT-LIABILITIES> 1,843,000
<BONDS> 0
37,000
0
<COMMON> 0
<OTHER-SE> 5,156,000
<TOTAL-LIABILITY-AND-EQUITY> 7,036,000
<SALES> 4,442,000
<TOTAL-REVENUES> 4,442,000
<CGS> 3,508,000
<TOTAL-COSTS> 4,232,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 215,000
<INCOME-TAX> 77,000
<INCOME-CONTINUING> 138,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,000
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
