-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PIljwhknF2IrmCIoncEY7sxJ1CFXZaI08UQVie3Snnuxd4lZpFIpUrFGRGcD2ia3 zKsIw7gxP12bGIFKCu8GuA== 0000950152-97-001039.txt : 19970222 0000950152-97-001039.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950152-97-001039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCS HEALTHCARE INC CENTRAL INDEX KEY: 0001004990 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 341816187 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27602 FILM NUMBER: 97534614 BUSINESS ADDRESS: STREET 1: 3201 ENTERPRISE PARKWAY STREET 2: SUITE 2200 CITY: BEACHWOOD STATE: OH ZIP: 44122 MAIL ADDRESS: STREET 1: 1400 MCDONALD INVESTMENT CENTER STREET 2: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 10-Q 1 NCS HEALTHCARE, INC. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1996 Commission File Number- 0-27602 ------- NCS HealthCare, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware No. 34-1816187 - ------------------------------- ------------------------------------ (State or other jurisdiction of (IRS employer identification number) incorporation or organization) 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122 - ---------------------------------------------------------- (Address of principal executive offices and zip code) (216) 514-3350 - ---------------------------------------------------------- (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 requirement for the past 90 days. Yes X No __ Common Stock Outstanding - ------------------------ Indicate the number of shares outstanding of each of the Issuers' classes of common stock, as of the latest practical date. Class A Common Stock, $ .01 par value -- 10,799,386 shares as of February 7, 1997 Class B Common Stock, $ .01 par value -- 6,362,020 shares as of February 7, 1997 1 2 NCS HEALTHCARE, INC. AND SUBSIDIARIES INDEX
Page ---- Part I. Financial Information: Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets- December 31, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Income- Three and six months ended- December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows- Six months ended- December 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements - December 31, 1996 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. Other Information: Item 2. Changes in Securities 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11
2 3 ITEM 1. FINANCIAL STATEMENTS NCS HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE INFORMATION)
(Unaudited) (Note A) December 31, June 30, ASSETS 1996 1996 ------------ -------- Current Assets: Cash and cash equivalents $100,017 $ 21,460 Accounts receivable, less allowances 44,810 27,762 Inventories 15,734 7,487 Other 3,696 2,484 -------- -------- Total current assets 164,257 59,193 Property and equipment, at cost net of accumulated depreciation and amortization 15,730 10,283 Goodwill, less accumulated amortization 96,024 39,101 Other assets 2,573 2,091 -------- -------- Total assets $278,584 $110,668 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 11,368 $ 4,968 Payable for acquisitions 9,665 -- Accrued expenses and other liabilities 13,025 5,889 -------- -------- Total current liabilities 34,058 10,857 Long-term debt 5,360 1,961 Convertible subordinated debentures 6,549 6,549 Other 474 201 Stockholders' Equity: Preferred stock, par value $ .01 per share, 1,000,000 shares authorized; none issued -- -- Common stock, par value $ .01 per share: Class A - 50,000,000 shares authorized; 10,473,131 and 5,560,492 shares issued and outstanding at December 31, 1996 and June 30, 1996, respectively 105 56 Class B - 20,000,000 shares authorized; 6,379,100 and 6,603,228 shares issued and outstanding at December 31, 1996 and June 30, 1996, respectively 64 66 Paid-in capital 221,104 84,907 Retained earnings 10,870 6,071 -------- -------- Total stockholders' equity 232,143 91,100 -------- -------- Total liabilities and stockholders' equity $278,584 $110,668 ======== ======== Note A: The balance sheet at June 30, 1996 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
See notes to condensed consolidated financial statements. 3 4 NCS HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
Three Months Ended Six Months Ended December 31, December 31, ------------------------ ------------------------- 1996 1995 1996 1995 ------------------------ ------------------------- Revenues $ 59,323 $27,599 $102,365 $ 50,027 Cost of revenues 44,292 19,774 76,146 35,986 -------- ------- -------- -------- Gross profit 15,031 7,825 26,219 14,041 Selling, general and administrative expenses 11,175 5,729 18,829 10,428 Special compensation (1) -- -- -- 2,811 -------- ------- -------- -------- Operating income 3,856 2,096 7,390 802 Interest expense (income), net (1,256) 874 (1,133) 1,381 -------- ------- -------- -------- Income (loss) before income taxes 5,112 1,222 8,523 (579) Income tax expense (benefit) 2,223 497 3,724 (255) -------- ------- -------- -------- Net income (loss) $ 2,889 $ 725 $ 4,799 $ (324) ======== ======= ======== ======== Net income (loss) per share $ 0.17 $ 0.10 $ 0.32 $ (0.05) ======== ======= ======== ======== Shares used in the computation 17,016 6,949 14,805 6,941 (1) Represents a one-time, non-recurring charge in connection with the termination of compensation arrangements with the prior owners of certain acquired businesses which had the effect of reducing net income per share by $0.23 for the six months ended December 31, 1995.
See notes to condensed consolidated financial statements. 4 5 NCS HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Six Months Ended December 31, ------------------------ 1996 1995 ------------------------ OPERATING ACTIVITIES Net income (loss) $ 4,799 $ (324) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Special compensation -- 2,811 Depreciation and amortization 3,103 1,315 --------- -------- 7,902 3,802 Changes in assets and liabilities, net of effects of assets and liabilities acquired: Accounts receivable, net (5,715) (4,333) Accrued expenses and other liabilities 4,115 (3,269) Other, net (2,808) (338) --------- -------- Net cash provided by (used in) operating activities 3,494 (4,138) INVESTING ACTIVITIES Purchases of businesses (52,009) (12,125) Capital expenditures for property and equipment, net (3,386) (1,861) Other (1,418) (1,242) --------- -------- Net cash used in investing activities (56,813) (15,228) FINANCING ACTIVITIES Proceeds from issuance of common stock 123,626 1,794 Proceeds from convertible subordinated debentures -- 12,925 Repayment of long-term debt (1,996) (3,760) Borrowings on line-of-credit 7,095 27,010 Payments on line-of-credit (7,095) (17,400) Proceeds from issuance of long-term debt 10,246 -- --------- -------- Net cash provided by financing activities 131,876 20,569 --------- -------- Net increase in cash and cash equivalents 78,557 1,203 Cash and cash equivalents at beginning of period 21,460 286 --------- -------- Cash and cash equivalents at end of period $ 100,017 $ 1,489 ========= ======== See notes to condensed consolidated financial statements.
5 6 NCS HEALTHCARE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 (UNAUDITED) 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended December 31, 1996 are not necessarily indicative of the results that may be expected for the year ending June 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant's Form 10 - K for the year ended June 30, 1996 (File No. 0 - 27602). 2. On February 14, 1996, the Company issued 4,476,000 shares of Class A Common Stock at $16.50 per share in connection with an initial public offering. A portion of the net proceeds from the stock issuance were used to repay approximately $27,000,000 of outstanding indebtedness under long-term and short-term borrowings. On October 4, 1996, the Company completed a public offering of 4,235,000 shares of Class A Common Stock at $31 per share. The offering raised approximately $123,600,000 (net of underwriting discounts and expenses). A portion of the net proceeds from the stock issuance was used to repay approximately $7,000,000 of outstanding indebtedness under short-term borrowings. 3. During the six months ended December 31, 1996, the Company completed acquisitions of Advanced Rx Services, Inc. in Northfield, New Jersey, IPAC Pharmacy, Inc. in Portland, Oregon, Medical Arts Pharmacy in Grand Rapids, Michigan, Northside Pharmacy Inc. and Thrifty Medical Supply, Inc. in Oklahoma City, Oklahoma, Thrifty Medical of Tulsa L.L.C. in Tulsa, Oklahoma, Hudson Pharmacy of Wichita, Inc. in Wichita, Kansas, IV - Pen Care Inc. in Fort Wayne, Indiana, Pharmacy Corporation of America - Wilsonville division, in Wilsonville, Oregon, I.V. Care of East Central Indiana, in Muncie, Indiana, Spectrum Health Services, Inc. in Tampa, Florida, Clinical Health Systems in Vancouver, Washington, J & K Newsom, Inc. in Cloverdale, Indiana, H.M.S. Production, Inc. in Dearborn Heights, Michigan, DeMoss Rexall Drugs, Inc. in Princeton, Indiana, First Pharmacy, Inc. in Flint, Michigan, Pharma-Care, Inc. in Flushing, Michigan, Pharmacy Acquisition Corporation in Philadelphia, Pennsylvania, PNS Pharmacy in Muncy, Pennsylvania and Beck's Nursing Home in Eldorado, Illinois. The aggregate purchase price for these businesses was $64,628,000 consisting of $50,741,000 in cash, $1,268,000 of debt and $12,619,000 of Class A Common Stock of the Company. During fiscal 1996, the Company completed acquisitions of Corinthian Healthcare Systems, Inc., located in Indianapolis, Indiana, The Apothecary, Inc. in Scranton, Pennsylvania, DeMoss Rexall Drugs, Inc., in Evansville, Indiana, Care Plus Pharmacy in Decatur, Illinois, Uni-Care Health Services Inc. in Londonderry, New Hampshire, Uni-Care Health Services of Maine in Wells, Maine, and Family Care Nursing Home Service, Inc. and Care Unlimited, Inc. in Herrin, Illinois. The aggregate purchase price for these businesses was $29,744,000 consisting of $19,983,000 in cash, $7,925,000 of convertible debentures and $1,836,000 of Class A Common Stock of the Company. Subsequent to December 31, 1996, the Company completed acquisitions of Davis Pharmacy in Golconda, Illinois, Allcare Pharmacy in Arkadelphia, Arkansas, Long Term Care Pharmacy Services in East Greenwich, Rhode Island, Health Mart Pharmacy in Albany, Oregon and Eakles Drug Store, Inc. in Hagerstown, Maryland. The aggregate purchase price for these businesses was $12,824,000 consisting of $7,824,000 in cash and $5,000,000 of Class A Common Stock of the Company. 6 7 Unaudited pro forma data, as though the Company had completed its initial and secondary public offerings and had purchased each of these businesses as of July 1, 1995, are set forth below:
Six Months Six Months Ended Ended December 31, 1996 December 31, 1995 ----------------- ----------------- (In thousands, except per share information) Revenues $140,112 $126,287 Net income (A) $ 5,415 $ 703 Net income per common share (A) $ 0.37 $ 0.10
(A) The pro forma results of operations of the Company for the six months ended December 31, 1995, include a one-time, non-recurring charge of $2,811,000 in connection with the termination of compensation arrangements with the prior owners of certain acquired businesses which had the effect of reducing the net income per share by $0.23. 4. During January 1997, the Company acquired Rescot Systems Group, Inc. (Rescot) for $3,500,000 of Class A Common Stock of the Company. Rescot is a software company that provides information systems to institutional pharmacies. The results of Rescot have not been included in the pro forma results above. 7 8 NCS HEALTHCARE, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE AND SIX MONTHS ENDED DECEMBER 31, 1996 Results of Operations Revenues for the three months ended December 31, 1996 increased 114.9% to $59,323,000 from $27,599,000 recorded in the comparable period in fiscal 1996. For the six months ended December 31, 1996, revenues increased 104.6% to $102,365,000 from $50,027,000 recorded in the comparable period in fiscal 1996. The increase in quarter and year to date revenues over comparable prior year periods is primarily attributed to two factors; the Company's acquisition program and internal growth. Total revenues for the six months ended December 31, 1996 include the acquisitions of Advanced Rx Services, Inc. in July, 1996, IPAC Pharmacy, Inc., Medical Arts Pharmacy, Northside Pharmacy Inc., Thrifty Medical Supply, Inc., and Thrifty Medical of Tulsa L.L.C. in August, 1996, Hudson Pharmacy of Wichita, Inc., in September, 1996, IV - Pen Care Inc., Pharmacy Corporation of America - Wilsonville division, I.V. Care of East Central Indiana and Spectrum Health Services, Inc. in October 1996, Clinical Health Systems and J & K Newsom, Inc. in November, 1996, and H.M.S. Production, Inc., DeMoss Rexall Drugs, Inc., First Pharmacy, Inc., Pharma-Care Inc., Pharmacy Acquisition Corporation, PNS Pharmacy and Beck's Nursing Home in December, 1996. In addition, fiscal 1996 acquisitions have had a full period of operations included as part of the fiscal 1997 year to date consolidated operating results. Those fiscal 1996 acquisitions include Corinthian Healthcare Systems, Inc., acquired in September, 1995, The Apothecary, Inc., acquired in November, 1995, DeMoss Rexall Drugs, Inc., acquired in December, 1995, Care Plus Pharmacy acquired in April, 1996, Uni-Care Health Services Inc. and Uni-Care Health Services of Maine acquired in May, 1996, and Family Care Nursing Home Service, Inc. and Care Unlimited, Inc. acquired in June, 1996. The total number of beds serviced by the Company as of December 31, 1996 increased 106% to 100,000 beds, from 48,500 beds at December 31, 1995. The Company's existing operations continued to produce internal growth through marketing efforts to new and existing clients, increased drug utilization of long-term care facility residents, and the growth and integration of new and existing products and services. Cost of revenues for the three months ended December 31, 1996 increased 124.0% to $44,292,000, from $19,774,000 recorded in the comparable period in fiscal 1996. For the six months ended December 31, 1996, cost of revenues increased 111.6% to $76,146,000 from $35,986,000 recorded in the comparable period in fiscal 1996. Cost of revenues as a percentage of revenues for the three and six month periods ended December 31, 1996 was 74.7% and 74.4%, respectively, compared to 71.6% and 71.9% for the comparable periods during the prior fiscal year. The increase in cost of revenues as a percentage of revenues was primarily the result of two factors; acquisitions and a change in the State of Pennsylvania Medicaid reimbursement rates. First, at the time of acquisition, the gross margins of the acquired companies are typically lower than the Company as a whole. This is the result of several factors, including less advantageous purchasing terms, lack of formulary management and higher production costs. Second, during the second quarter of fiscal 1996, the State of Pennsylvania changed the reimbursement methodology under the State Medicaid program which resulted in a lower reimbursement percentage for Company sites located in Pennsylvania. Selling, general and administrative expenses as a percentage of revenues were 18.8% and 18.4% for the three and six month periods ended December 31, 1996, compared to 20.8% and 20.8% during the comparable periods in fiscal 1996. The percentage decreases are the result of operational efficiencies and continuing efforts to leverage corporate overhead over a larger revenue base. The increase in selling, general, and administrative expenses in absolute dollars is mainly attributable to acquisitions completed during the current fiscal year. 8 9 Special compensation of $2,811,000 for the six months ended December 31, 1995 represents a one-time, non-recurring charge resulting from the termination of compensation and performance incentive arrangements with the prior owners of certain acquired businesses. As a result of interest income of $1,673,000 and $1,714,000, interest expense, net of interest income, decreased to $(1,256,000) and $(1,133,000) for the three and six months ended December 31, 1996, from $874,000 and $1,381,000 during the comparable periods in the prior fiscal year. These decreases are primarily attributed to the reduction of long-term debt with funds from the initial public offering completed on February 14, 1996 and interest income earned on funds from a public offering completed on October 4, 1996. Liquidity and Capital Resources Net cash provided by operating activities was $3,494,000 for the six months ended December 31, 1996, as compared to net cash used by operating activities of $4,138,000 during the comparable period in fiscal 1996. Net cash provided by operating activities increased from the comparable period in fiscal 1996 due to increased profitability and an increase in accrued expenses and other liabilities. The increase in accrued expenses and other liabilities resulted primarily from an increase in income taxes payable, an increase in trade accounts payable and the timing of payment of certain accruals. These cash flow increases were offset by increases in accounts receivable and inventory during the period. Net cash used in investing activities increased to $56,813,000 during the six months ended December 31, 1996, as compared to $15,228,000 during the comparable period in fiscal 1996. This is primarily the result of fiscal 1997 acquisitions, as well as an increase in capital expenditures. Significant capital expenditures during the six months ended December 31, 1996 included computer and information systems equipment, computer software, furniture and fixtures at a new facility in Eastlake, Ohio, leasehold improvements and medication carts for new and existing customers. Net cash provided by financing activities increased to $131,876,000 during the six months ended December 31, 1996, from $20,569,000 during the comparable period in fiscal 1996. The increase is primarily the result of funds received from a secondary public offering completed on October 4, 1996. The Company believes that its cash and available sources of capital are sufficient to meet its normal operating requirements and acquisition needs through June 30, 1998. 9 10 ITEM 2. CHANGES IN SECURITIES The following information is furnished as to all equity securities of the Company sold during the second fiscal quarter that were not registered under the Securities Act of 1933, as amended (the "Securities Act"). (A) On October 1, 1996 the Company issued 6,298 shares of its Class A Common Stock to two stockholders in connection with the acquisition of certain assets of IV - Pen Care, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (B) On November 1, 1996 the Company issued 64,621 shares of its Class A Common Stock to five stockholders in connection with the acquisition of certain assets of Clinical Health Systems. Exemption from registration is claimed under Section 4(2) of the Securities Act. (C) On December 3, 1996 the Company issued 1,802 shares of its Class A Common Stock to two stockholders in connection with the acquisition of assets of Tele-Rx Pharmacy Services, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit Numbers Exhibit ------- ------- 11 Computation of Earnings Per Common Share 15 Independent Accountants' Review Report 27 Financial Data Schedule (b) Reports on Form 8-K: (1) On October 15, 1996 the Company amended its Current Report on Form 8-K dated August 1, 1996, relating to the acquisition of IPAC Pharmacy, Inc. (2) On October 21, 1996 the Company amended its Current Report on Form 8-K dated August 13, 1996, relating to the acquisition of Thrifty Medical of Tulsa, L.L.C., Northside Pharmacy, Inc., and Thrifty Medical Supply, Inc. (3) On November 1, 1996 the Company filed a Current Report on Form 8-K dated November 1, 1996, pursuant to Item 5 of Form 8-K, relating to the acquisition of Clinical Health Systems. 10 11 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. NCS HealthCare, Inc. (Registrant) Date: February 14, 1997 By /s/ Kevin B. Shaw ---------------------------------------- Kevin B. Shaw President, Chief Executive Officer and Director (Principal Executive Officer) Date: February 14, 1997 By /s/ Jeffrey R. Steinhilber ---------------------------------------- Jeffrey R. Steinhilber Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
11 EX-11 2 EXHIBIT 11 1 EXHIBIT 11 NCS HEALTHCARE, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
Three Months Ended Six Months Ended December 31, December 31, --------------------- -------------------- 1996 1995 1996 1995 --------------------- -------------------- Net income (loss) used in calculation of primary earnings per share $ 2,889 $ 725 $ 4,799 $ (324) Add impact of assumed conversion of subordinated debentures 71 124 142 170 ------- ------ ------- ------- Net income (loss) used in calculation of fully diluted earnings per share $ 2,960 $ 849 $ 4,941 $ (154) ======= ====== ======= ======= Weighted average common shares outstanding 16,829 6,177 14,618 6,082 Net effect of dilutive stock options -- Note A 187 772 187 859 ------- ------ ------- ------- Shares used in calculation of primary earnings per share 17,016 6,949 14,805 6,941 Add impact of assumed conversion of subordinated debentures 649 1,035 649 728 ------- ------ ------- ------- Shares used in calculation of fully diluted earnings per share 17,665 7,984 15,454 7,669 ======= ====== ======= ======= Primary net income (loss) per share $ 0.17 $ 0.10 $ 0.32 $ (0.05) ======= ====== ======= ======= Fully diluted net income (loss) per share-- Note B $ 0.17 $ 0.11 $ 0.32 $ (0.02) ======= ====== ======= ======= NOTE A -- Stock options granted within a twelve-month period preceding the Company's initial public offering in February 1996 are included as if they were outstanding for all periods presented. The dilutive effect of all options outstanding was calculated using the treasury stock method. NOTE B -- Fully dilutive net income (loss) per share has not been presented in the Condensed Consolidated Statements of Income because the effect is either immaterial or anti-dilutive.
12 EX-15 3 EXHIBIT 15 1 EXHIBIT 15 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors and Stockholders NCS HealthCare, Inc. and Subsidiaries We have reviewed the accompanying condensed consolidated balance sheet of NCS HealthCare, Inc. and subsidiaries (the Company) as of December 31, 1996, and the related condensed consolidated statements of income for the three-month and six-month periods ended December 31, 1996 and 1995, and the condensed consolidated statements of cash flows for the six-month periods ended December 31, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of NCS HealthCare, Inc. and subsidiaries as of June 30, 1996, and the consolidated statements of income, stockholders' equity and cash flows for the year then ended, not presented herein, and in our report dated August 2, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 1996 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Cleveland, Ohio /s/ Ernst & Young LLP February 14, 1997 13 EX-27 4 EXHIBIT 27
5 0001004990 N/A U.S. DOLLARS 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 1 100,117 0 54,691 9,881 15,734 164,257 30,262 14,533 278,584 34,058 11,909 169 0 0 231,974 278,584 102,365 102,365 76,146 76,146 0 337 582 8,523 3,724 4,799 0 0 0 4,799 .32 .32
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