-----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, SkRBFruECRTNGN2mqJ3Dp8vHioEOcHHzi6rhPyToRBmcw0xlivoWiEtDThqu7dq+ mHvzdmk2OqpejCc+LutGRA== 0000950152-97-004011.txt : 19970520 0000950152-97-004011.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950152-97-004011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27602 FILM NUMBER: 97608648 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. /QUARTERLY REPORT FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 UNITED STATES FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1997 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 -- 11,118,992 shares as of May 9, 1997 Class B Common Stock, $ .01 par value -- 6,379,100 shares as of May 9, 1997 1 2 NCS HEALTHCARE, INC. AND SUBSIDIARIES INDEX Page ---- Part I. Financial Information: Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets- March 31, 1997 and June 30, 1996 3 Condensed Consolidated Statements of Income- Three and nine months ended- March 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows- Nine months ended- March 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements - March 31, 1997 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) March 31, June 30, 1997 1996 --------- --------- ASSETS Current Assets: Cash and cash equivalents $ 21,207 $ 21,460 Accounts receivable, less allowances 62,598 27,762 Inventories 20,837 7,487 Other 3,960 2,484 -------- -------- Total current assets 108,602 59,193 Property and equipment, at cost net of accumulated depreciation and amortization 19,242 10,283 Goodwill, less accumulated amortization 174,854 39,101 Other assets 7,362 2,091 -------- -------- Total assets $310,060 $110,668 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 14,905 $ 4,968 Payable for acquisitions 7,500 - Accrued expenses and other liabilities 23,781 5,889 -------- -------- Total current liabilities 46,186 10,857 Long-term debt 9,615 1,961 Convertible subordinated debentures 6,549 6,549 Other 666 201 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; 11,077,085 and 5,560,492 shares issued and outstanding at March 31, 1997 and June 30, 1996, respectively 111 56 Class B - 20,000,000 shares authorized; 6,379,100 and 6,603,228 shares issued and outstanding at March 31, 1997 and June 30, 1996, respectively 64 66 Paid-in capital 232,908 84,907 Retained earnings 13,961 6,071 -------- -------- Total stockholders' equity 247,044 91,100 -------- -------- Total liabilities and stockholders' equity $310,060 $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 PER SHARE INFORMATION)
Three Months Ended Nine Months Ended March 31, March 31, ---------------------------- -------------------------- 1997 1996 1997 1996 --------------------------------------------------------------- Revenues $ 78,539 $ 30,209 $ 180,904 $ 80,236 Cost of revenues 58,867 22,197 135,013 58,183 --------------------------- -------------------------- Gross profit 19,672 8,012 45,891 22,053 Selling, general and administrative expenses 14,718 5,616 33,547 16,044 Special compensation (1) - - - 2,811 --------------------------- -------------------------- Operating income 4,954 2,396 12,344 3,198 Interest expense (income), net (517) 394 (1,650) 1,775 Income before income taxes 5,471 2,002 13,994 1,423 Income tax expense 2,380 881 6,104 626 --------------------------- -------------------------- Net income $ 3,091 $ 1,121 $ 7,890 $ 797 --------------------------- -------------------------- Net income per share $ 0.18 $ 0.12 $ 0.50 $ 0.10 --------------------------- -------------------------- Shares used in the computation 17,441 9,685 15,682 7,854 (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 $0.20 for the nine months ended March 31, 1996.
See notes to condensed consolidated financial statements. 4 5 NCS HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Nine Months Ended March 31, -------------------------- 1997 1996 -------------------------- OPERATING ACTIVITIES Net income $ 7,890 $ 797 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Special compensation - 2,811 Depreciation and amortization 5,673 2,174 Other - 423 Changes in assets and liabilities, net of effects of assets and liabilities acquired: Accounts receivable, net (13,461) (6,605) Accrued expenses and other liabilities 13,267 (2,399) Other, net (3,173) (472) -------------------------- Net cash provided by (used in) operating activities 10,196 (3,271) INVESTING ACTIVITIES Purchases of businesses (131,036) (12,125) Capital expenditures for property and equipment, net (6,033) (2,871) Other (4,971) (2,286) -------------------------- Net cash used in investing activities (142,040) (17,282) FINANCING ACTIVITIES Proceeds from issuance of common stock 123,626 68,878 Proceeds from convertible subordinated debentures - 12,925 Repayment of long-term debt (14,164) (4,784) Borrowings on line-of-credit 10,895 31,400 Payments on line-of-credit (10,895) (48,900) Accrued Initial Public Offering expenses - 1,500 Proceeds from issuance of long-term debt 22,129 - -------------------------- Net cash provided by financing activities 131,591 61,019 -------------------------- Net (decrease) increase in cash and cash equivalents (253) 40,466 Cash and cash equivalents at beginning of period 21,460 286 -------------------------- Cash and cash equivalents at end of period $ 21,207 $ 40,752 --------------------------
See notes to condensed consolidated financial statements. 5 6 NCS HEALTHCARE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (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 nine month period ended March 31, 1997 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. Significant acquisitions completed by the Company during the nine months ended March 31, 1997 include 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, Spectrum Health Services, Inc. in Tampa, Florida, Clinical Health Systems in Vancouver, Washington, Rescot Systems Group, Inc. in Philadelphia, Pennsylvania, W.P. Malone, Inc. in Arkadelphia, Arkansas, Long Term Care Pharmacy Services in East Greenwich, Rhode Island, Eakles Drug Store, Inc. in Hagerstown, Maryland, Pharmacare in Glendale, California, Advanced Pharmaceutical Services, Inc. in Tujunga, California, Dahlin Pharmacy, Inc. in Paramount, California, Stoll Services, Inc. in Modesto, California, Cooper Hall Pharmacy, Inc. in Mount Pleasant, South Carolina, Hammer Incorporated in Des Moines, Iowa, Daven Drug in Los Angeles, California and Medi-Centre Pharmacy in Lansing, Michigan The aggregate purchase price for all businesses acquired during the nine months ended March 31, 1997 was $155,461,000 consisting of $125,727,000 in cash, $5,309,000 of debt and $24,425,000 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. 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:
Nine Months Nine Months Ended Ended March 31, 1997 March 31, 1996 -------------- -------------- (In thousands, except per share information) Revenues $ 254,812 $ 229,595 Net income (A) $ 8,012 $ 1,387 Net income per common share (A) $ 0.51 $ 0.18 (A) The pro forma results of operations of the Company for the nine months ended March 31, 1996, 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 $0.20.
4. During April 1997, the Company acquired Vangard Labs, Inc. (Vangard) for $3,800,000 in cash. Vangard is a drug packaging company. The results of Vangard 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 NINE MONTHS ENDED MARCH 31, 1997 Results of Operations Revenues for the three months ended March 31, 1997 increased 159.9% to $78,539,000 from $30,209,000 recorded in the comparable period in fiscal 1996. For the nine months ended March 31, 1997, revenues increased 125.5% to $180,904,000 from $80,236,000 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. Of the $100,668,000 increase for the nine months ended March 31, 1997, $60,255,000 was due to 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, Spectrum Health Services, Inc. in October, 1996, Clinical Health Systems in November, 1996, Rescot Systems Group, Inc., W.P. Malone, Inc., Long Term Care Pharmacy Services and Eakles Drug Store, Inc. in January, 1997, Pharmacare, Advanced Pharmaceutical Services, Inc. and Dahlin Pharmacy, Inc. in February, 1997 and Stoll Services, Inc., Cooper Hall Pharmacy, Inc., Hammer Incorporated, Daven Drug, and Medi-Centre Pharmacy in March, 1997. In addition, $27,963,000 of the increase is attributable to revenues for the first nine months of fiscal 1997 including a full period of operations for fiscal 1996 acquisitions. These 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. Internal growth accounted for $12,450,000 of the increase as the Company's existing operations continued to grow 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. The total number of beds serviced by the Company as of March 31, 1997 increased 192% to 146,000 beds, from 50,000 beds at March 31, 1996. Of the $48,330,000 increase in revenues for the three months ended March 31, 1997, $36,593,000 was due to the fiscal 1997 acquisitions noted above. In addition, $6,798,000 of the increase is attributable to revenues for the three months ended March 31, 1997 including a full period of operation for the fiscal 1996 acquisitions noted above and internal growth accounted for $4,939,000 of the increase. Cost of revenues for the three months ended March 31, 1997 increased 165.2% to $58,867,000, from $22,197,000 recorded in the comparable period in fiscal 1996. For the nine months ended March 31, 1997, cost of revenues increased 132.0% to $135,013,000 from $58,183,000 recorded in the comparable period in fiscal 1996. Cost of revenues as a percentage of revenues for the three and nine month periods ended March 31, 1997 was 74.9% and 74.6%, respectively, compared to 73.5% and 72.5% 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 for the three months ended March 31, 1997 increased 162.1% to $14,718,000, from $5,616,000 recorded in the comparable period in fiscal 1996. For the nine months ended March 31, 1997, selling, general and administrative expenses increased 109.1% to $33,547,000 from $16,044,000 recorded in the comparable period in fiscal 1996. Selling, general and administrative expenses as a percentage of revenues was 18.7% and 18.5% for the three and nine month periods ended March 31, 1997, compared to 18.6% and 20.0% during the comparable periods in fiscal 1996. The percentage decrease for the nine month period ended March 31, 8 9 1997 is 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 expenses associated with the operations of businesses acquired during the current fiscal year. Special compensation of $2,811,000 for the nine months ended March 31, 1996 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 $799,000 and $2,514,000, interest expense, net of interest income, decreased to $(517,000) and $(1,650,000) for the three and nine months ended March 31, 1997, from $394,000 and $1,775,000 during the comparable periods in fiscal 1996. 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 $10,196,000 for the nine months ended March 31, 1997, as compared to net cash used in operating activities of $3,271,000 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 accrued expenses associated with new acquisitons 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 $142,040,000 during the nine months ended March 31, 1997, as compared to $17,282,000 during the comparable period in fiscal 1996. The increase is primarily the result of fiscal 1997 acquisitions, as well as an increase in capital expenditures. Significant capital expenditures during the nine months ended March 31, 1997 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 $131,591,000 during the nine months ended March 31, 1997, from $61,019,000 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 is currently in the process of negotiating a new $150,000,000 credit facility. The Company believes that its cash and available sources of capital, including funds anticipated to be available under the new credit facility, are sufficient to meet its normal operating requirements and acquisition needs through June 30, 1998. Factors That May Affect Future Results Except for historical financial information contained in this Form 10-Q, the statements made in this report are forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include the availability and cost of attractive acquisition candidates, continuation of various trends in the long-term care market (including the trend toward consolidation), competition among providers of long-term care pharmacy services, the availability of capital for acquisitions and capital requirements, changes in regulatory requirements and reform of the health care delivery system. 9 10 ITEM 2. CHANGES IN SECURITIES The following information is furnished as to all equity securities of the Company sold during the third fiscal quarter that were not registered under the Securities Act of 1933, as amended (the "Securities Act"). (A) On January 2, 1997 the Company issued 129,729 shares of its Class A Common Stock to five stockholders in connection with the acquisition of certain assets of Rescot Systems Group, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (B) On January 6, 1997 the Company issued 74,074 shares of its Class A Common Stock to five stockholders in connection with the acquisition of certain assets of W. P. Malone, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (C) On January 8, 1997 the Company issued 100,869 shares of its Class A Common Stock to five stockholders in connection with the acquisition of certain assets of Loomis Enterprises, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (D) On February 1, 1997 the Company issued 4,506 shares of its Class A Common Stock to one stockholder in connection with the acquisition of certain assets of Wabash Valley Rehabilitation, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (E) On February 4, 1997 the Company issued 15,384 shares of its Class A Common Stock to one stockholder in connection with the acquisition of certain assets of Pharmacare. Exemption from registration is claimed under Section 4(2) of the Securities Act. (F) On February 14, 1997 the Company issued 108,970 shares of its Class A Common Stock to one stockholder in connection with the acquisition of certain assets of Advanced Pharmaceutical Services, Inc. and the stock of Kinetic Services, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (G) On March 7, 1997 the Company issued 106,232 shares of its Class A Common Stock to one stockholder in connection with the acquisition of certain assets of Stoll's Services, Inc. Exemption from registration is claimed under Section 4(2) of the Securities Act. (H) On March 11, 1997 the Company issued 64,190 shares of its Class A Common Stock to one stockholder in connection with the acquisition of certain assets of Daven Drug, 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 February 14, 1997 the Company amended its Current Report on Form 8-K dated November 1, 1996, 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: May 15, 1997 By /s/ Kevin B. Shaw ----------------------------------------------- Kevin B. Shaw President, Chief Executive Officer and Director (Principal Executive Officer) Date: May 15, 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 PER SHARE INFORMATION)
Three Months Ended Nine Months Ended March 31, March 31, --------------------- --------------------- 1997 1996 1997 1996 --------------------- --------------------- Net income (loss) used in calculation of primary earnings per share $ 3,091 $ 1,121 $ 7,890 $ 797 Add impact of assumed conversion of subordinated debentures 71 123 212 293 --------------------- --------------------- Net income (loss) used in calculation of fully diluted earnings per share $ 3,162 $ 1,244 $ 8,102 $ 1,090 --------------------- --------------------- Weighted average common shares outstanding 17,257 9,544 15,496 7,235 Net effect of dilutive stock options -- Note A 184 141 186 619 --------------------- --------------------- Shares used in calculation of primary earnings per share 17,441 9,685 15,682 7,854 Add impact of assumed conversion of subordinated debentures 627 1,005 625 835 --------------------- --------------------- Shares used in calculation of fully diluted earnings per share 18,068 10,690 16,307 8,689 ===================== ===================== Primary net income (loss) per share $ 0.18 $ 0.12 $ 0.50 $ 0.10 ===================== ===================== Fully diluted net income (loss) per share-- Note B $ 0.18 $ 0.12 $ 0.50 $ 0.13 ===================== ===================== 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 March 31, 1997, and the related condensed consolidated statements of income for the three-month and nine-month periods ended March 31, 1997 and 1996, and the condensed consolidated statements of cash flows for the nine-month periods ended March 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical 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 reviews, 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 related 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 May 2, 1997 13 EX-27 4 EXHIBIT 27
5 0001004990 NCS Healthcare, Inc. 1,000 9-MOS JUN-30-1997 JUL-01-1996 MAR-31-1997 21,207 0 78,299 15,701 20,837 108,602 34,596 15,354 310,060 46,186 0 0 0 0 247,044 310,060 180,904 180,904 135,013 135,013 0 625 865 13,994 6,104 7,890 0 0 0 7,890 .50 .50
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