3. DEBT

12 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

NOTE 3 - DEBT

NOTE 3 – DEBT

As of March 31, 2013, the Company had the following Credit Agreements:

— A $47.277 million Term Loan issued under the $80.0 million Restated Credit Agreement, bearing an interest rate of LIBOR plus 10%, with the LIBOR floor set at 2% (12% at March 31, 2013). If any event of default occurs and continues, the lender can increase the interest rate by 5% per year. As of March 31, 2013, the Company was in compliance with all financial covenants. The stated maturity date for this Restated Credit Agreement is April 13, 2016.

— A $35.0 million Revolving Credit Agreement, bearing an interest rate of 4.25% plus LIBOR, with a 2.5% floor, per year (6.75% at March 31, 2013) and an unused commitment fee of 0.5% per year ($30.0 million outstanding balance at March 31, 2013).  For purposes of calculating interest, all payments the Company makes on the Revolving Credit Agreement are subject to a five business day clearance period.  As of March 31, 2013, the Company was in compliance with all financial covenants. The stated maturity date for this Revolving Credit Agreement is March 25, 2016. At March 31, 2013, the Company had $5.0 million in additional availability under this facility.

Term loan - On August 1, 2012, the Company entered into Amendment No. 4 to Credit Agreement and Consent (the “Credit Agreement Amendment”), which amends the $80.0 million Credit Agreement, dated as of October 9, 2007, as amended, (the “Credit Agreement”) with SPCP Group IV, LLC, SPCP Group, LLC, and Silver Point Finance, LLC, as the Lender Agent (collectively, “Silver Point”), PCHI and Ganesha Realty, llc (“Ganesha”).  Under the Credit Agreement Amendment, Silver Point consented to and waived certain provisions under the Credit Agreement in connection with the Company’s execution of the Revolving Loan Amendment No. 3. In addition, the provisions in the Credit Agreement that provide for mandatory prepayment of the Company’s outstanding “A/R Financing,” as defined, upon receipt of certain federal matching funds under the QAF program were amended to replace 65% with 80%. In connection with the Credit Agreement Amendment, the Company agreed to pay Silver Point a one-time consent and amendment fee in an aggregate amount equal to $1.8 million, of which $450 was paid upon execution of the Credit Agreement Amendment and the balance was added to the principal amount under the Credit Agreement. The consent and amendment fee was recorded as a discount to the loan balance and is being amortized over the remaining life of the loan.

On February 7, 2013, the Company entered into an “Amendment and Restatement to the Credit Agreement” (the “Amendment”) with Silver Point, PCHI and Ganesha.

Under the Amendment, the Credit Agreement was amended and restated in its entirety in the form of the “Amended and Restated Credit Agreement ($47.277 million Term Loan)” attached as Exhibit A to the Amendment (the “Restated Credit Agreement”). The Restated Credit Agreement reflects changes to the terms of the Credit Agreement that were previously made under various amendments the Company entered into since inception of the Credit Agreement in October 2007. In connection with the Restated Credit Amendment, the Company agreed to pay Silver Point a one-time amendment fee of $841, which was added to the principal amount under the Restated Credit Agreement. The one-time amendment fee was recorded as a discount from the loan balance and, together with the amortized portion of the discount recorded under the Credit Agreement Amendment, is being amortized over the remaining life of the loan. In addition, the increase in the fair value of warrants issued to Silver Point on February 7, 2013 of $543 also were recorded as a discount from the loan balance and is being amortized over the remaining life of the loan. During the year ended March 31, 2013, the Company recognized $1.4 million in loan discount amortization relating to the Restated Credit Agreement.

In addition, the following new amendments were made to the Credit Agreement and reflected in the Restated Credit Agreement:

— The Stated Maturity Date was extended to April 13, 2016. The Credit Agreement was previously due to mature on April 13, 2013.  

— The annual interest rate applicable to the loans under the Credit Agreement was modified from the previous fixed rate of 14.5% to LIBOR plus 10%, with the LIBOR floor set at 2% (12% at March 31, 2013), except upon an Event of Default. The Company may elect from one, two or three months LIBOR interest periods, except in an Event of Default when the interest period may not exceed one month.  

— The principal balance under the Credit Agreement was increased from $46.350 million to $47.277 million, to reflect the Company’s new borrowings under the Restated Credit Agreement.  

— The Company repaid all amounts owing to SPCP Group IV, LLC under the Credit Agreement, consisting of a principal balance of $8.120 million plus accrued interest of $19.6, and increased the principal amount owing to SPCP Group, LLC under the Credit Agreement by $9.047 million to reflect the repayment to SPCP Group IV, LLC and other new borrowings.  

— The financial covenants under the Credit Agreement were amended, including the covenants requiring the Company to maintain minimum levels of EBITDA (as defined in the Restated Credit Agreement).  

— Upon the Company’s receipt of enhanced federal matching funds from Medi-Cal under the QAF program (defined as “Net QAF Funds” under the Restated Credit Agreement), the Company is required to make certain prepayments of principal under its Revolving Loan Agreement with MidCap Financial, LLC.  

— A prepayment fee was established for voluntary prepayments under the Credit Agreement equal to 5% for prepayments made on or prior to December 31, 2013, and 2% for prepayments made after January 1, 2014 and before December 31, 2014.  

Revolving line of credit - On August 1, 2012, the Company entered into Amendment No. 3 to Credit and Security Agreement (the “Revolving Loan Amendment No. 3”), which amends Credit and Security Agreement, dated as of August 30, 2012, as amended, (the “Revolving Loan Agreement”) with MidCap Funding IV, LLC and Silicon Valley Bank, as lenders (the “Lenders”), and MidCap Financial, LLC, as agent (the “Agent”). Under the Revolving Loan Amendment No. 3, the minimum Revolving Loan Commitment Amount under the Revolving Loan Agreement was increased from $14.0 million to $30.0 million, and the Company agreed to pay the Lenders an origination fee of 1.0% of the Lenders’ increased commitment under the Revolving Loan Amendment No. 3, or $160.

On February 7, 2013, the Company entered into “Amendment No. 4 to Credit and Security Agreement and Limited Consent” (the “Revolving Loan Amendment No. 4”) with the Lenders and the Agent.

The Revolving Loan Amendment No. 4 amends the Revolving Loan Agreement, to reflect the following changes:

— The maximum face amount of the Letter of Credit Liabilities permitted under the Revolving Loan Agreement was increased to $761, and the Lenders consented to the issuance of a Letter of Credit in the same amount by Wells Fargo Bank, National Association.  

— The period during which the Prepayment Fee of 1% is applicable was extended from three years from the original closing date to the Commitment Expiry Date.  

— The Agent and Lenders consented to the Company’s entry into the Amendment with Silver Point and the Restated Credit Agreement thereunder.  

On March 25, 2013, the Company entered into Amendment No. 5 to Credit and Security Agreement and Limited Waiver (the “Revolving Loan Amendment No. 5”), which amends the Revolving Loan Agreement, with the Lenders and the Agent. The Company agreed to pay the Lenders an origination fee of 1.0% of the Lenders’ commitment under the Revolving Loan Amendment No. 5, or $350.

Among other things, the Revolving Loan Amendment No. 5 provides for the following:

— An increase in the Revolving Loan Commitment amount from $30.0 million to $35.0 million;

— The Applicable Margin was changed: (a) from 3.00% to 2.25% with respect to Revolving Loans bearing interest upon the Base Rate and (b) from 5.00% to 4.25% for all other Revolving Loans and Obligations;

— The Commitment Expiry Date was extended to March 25, 2016;

— Certain modifications were made to the definitions of Permitted Indebtedness and Prepayment Fee and the lockbox requirements; and

— The Company was granted a waiver of certain prior Events of Default or Defaults under the Revolving Loan Agreement and a waiver of the requirement to comply with the Fixed Charge Coverage Ratio covenant for the Defined Period ending March 31, 2013.

The Company's outstanding debt consists of the following:

	March 31, 2013			March 31, 2012
Current:
Revolving line of credit	$	30,000		$	14,000
Discount		(473	)		(217	)
	$	29,527		$	13,783
Noncurrent:
Term loan	$	47,277		$	45,000
Discount		(1,747	)		–
	$	45,530		$	45,000

The Company’s noncurrent debt matures as follows:

Year ending March 31,	Amount
2014	$	–
2015		–
2016		–
2017	$	47,277