8-K

United States

Securities and Exchange Commission

Washington, DC 20549

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 28, 2014

AMERICAN CARESOURCE HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-33094	20-0428568
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5429 Lyndon B. Johnson Freeway, Suite 850, Dallas, Texas	75240
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (972) 308-6830

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.)

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02    Results of Operations and Financial Condition.

On February 28, 2014, American CareSource Holdings, Inc. (the “Company”) issued a press release announcing its earnings for the quarter ended December 31, 2013.  A copy of the press release is attached hereto as Exhibit 99.1.

In the attached press release the Company uses Adjusted EBITDA, which is a “non-GAAP financial measure,” i.e., not a measure of financial performance under U.S. generally accepted accounting principles (GAAP).   Adjusted EBITDA is defined by the Company as operating income or loss before interest, income taxes, depreciation and amortization and excludes the impact of non-cash stock-based compensation expense, severance charges, amortization of long-term client agreements, strategic transaction-related costs and other non-cash charges. Adjusted EBITDA should be considered in addition to, but not in lieu of, net income or loss reported under GAAP.  A reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure is provided in the press release.

Management of the Company believes that Adjusted EBITDA, as a performance measure, and not as a liquidity measure, provides investors and analysts with a useful measure of results unaffected by differences in capital structures, tax structures, capital investment cycles, ages of related assets and compensation structures among otherwise comparable companies.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibit attached hereto, is furnished under Item 2.02 - “Results of Operations and Financial Condition.”  The information presented herein, including the exhibit attached hereto, shall not be deemed to be “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section.  The information in this Current Report on Form 8-K, or in the exhibit attached hereto, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 9.01    Financial Statements and Exhibits.

 (d)           Exhibits

This exhibit is furnished pursuant to Item 2.02 and shall not be deemed “filed.”

99.1 Press release of Registrant, dated February 28, 2014

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 hereunto duly authorized.

		AMERICAN CARESOURCE HOLDINGS, INC.
Date:	February 28, 2014	By:	/s/ Matthew D. Thompson
			Matthew D. Thompson
			Acting Chief Operating Officer and Chief Financial Officer

EX-99.1

American CareSource Announces Fourth Quarter and Year-End Financial Results for 2013

DALLAS, Feb. 28, 2014 - American CareSource Holdings (NASDAQ: ANCI), a leading national network of ancillary healthcare providers, today reported net revenue of $6.2 million for the fourth quarter of 2013, as compared with $9.1 million for the fourth quarter of 2012. For 2013, net revenue was $26.8 million, as compared with $34.9 million for 2012.

Net loss for the three months ended Dec. 31, 2013 was $267,000, as compared with a loss of $629,000 during the same period a year earlier. The improvement was realized largely because of a positive shift in provider margins and company efforts to reduce non-variable costs in areas such as professional and consulting fees. Net loss for 2013 was $3.8 million, as compared with $3.1 million in 2012.

Operating expenses were $1.3 million and $7 million for the fourth quarter and full year of 2013, respectively, which were down from $2 million and $7.7 million in the same periods of 2012. Operating expenses in the last half of 2013 declined 27.5 percent compared to the first half of the year.

Net Revenue

Net revenue for fourth quarter of 2013 was $6.2 million, as compared with $9.1 million reported during fourth quarter 2012. For the quarter ended Dec. 31, 2013, revenue from ACS’ two historically significant legacy accounts declined by a combined $1.6 million, or 57.5 percent, as compared with the same period in 2012, due to factors described previously by the company. Fourth quarter 2013 net revenue was $6.2 million as compared with $6.5 million in third quarter 2013.

Excluding the impact of our two historically significant legacy clients, fourth quarter revenue from all other accounts decreased 22 percent, to $5 million from $6.4 million in the same period of 2012. The decline in those accounts was the result of some attrition within their own client base, competition from national carriers and increased pricing competition. The aforementioned declines were partially offset by improvement in collections, the addition of employer groups that were not previously accessing our network of ancillary providers and the revenue contribution of approximately $300,000 in the fourth quarter from two new clients added in 2013. Collections on claims in the fourth quarter of 2012 were stronger as compared with fourth quarter 2013.

Excluding the impact of our two historically significant legacy clients, revenue from all other accounts generated $5.4 million in the third quarter of 2013.

Claims Volumes

ACS billed 29,000 claims during fourth quarter 2013, a decrease from 37,000 claims billed during the same period last year. The lower claims volume was primarily the result of declines in claims volume from the company’s two historically significant legacy clients.

Following are claims volumes for the periods presented:

(Claim amounts in 000s)	Q4 2013	Q3 2013	Q4 2012
Claims:
Processed	35	36	47
Billed	29	30	37

Contribution Margin

Contribution margin for fourth quarter 2013 increased to 17.2 percent, as compared with 14.7 percent during fourth quarter 2012. The increase in contribution margin was primarily the result of the decline in provider payments as a percentage of revenue, from 73.3 percent in fourth quarter 2012 to 68 percent in the same period this year. The increase in margin on provider payments was the result of revenue generated from specific ancillary service categories and providers, which create significant savings for our clients, and continued to shift the mix of service categories and providers to categories and providers which result in higher margins in our business, as compared to the mix of those categories and providers used in the fourth quarter 2012.

Contribution margin was negatively affected by the cost of claims administration and provider development. Those costs, as a percentage of revenue, increased to 11.1 percent in fourth quarter 2013, from 7.8 percent in the fourth quarter a year ago. The increase was the result of the decline in quarterly revenue as compared with the same period last year. In absolute dollars, claims administration and provider development costs decreased 4.1 percent, to $686,000, compared with fourth quarter 2012.

Following is a comparison of statement of operations components as a percentage of net revenue:

	Q4 2013		Q3 2013		Q4 2012
Provider payments	68.0	%	74.1	%	73.3	%
Administrative fees	3.7	%	4.1	%	4.2	%
Claims administration and provider development	11.1	%	10.0	%	7.8	%
Total cost of revenues	82.8	%	88.2	%	85.3	%

Selling, General and Administrative Expenses (SG&A)

SG&A for fourth quarter 2013 decreased to $1.2 million, from $1.7 million in the same period last year. The decrease was primarily the result of an adjustment in the overall cost structure of the Company at the beginning of the third quarter. The adjustment included a reduction in sales and strategic consulting services costs and legal and audit fees. In addition, natural attrition and minor adjustments to headcount contributed to the decrease in SG&A as compared with fourth quarter 2012.

SG&A was 18.5 percent of revenues in the fourth quarter of 2013, as compared with 19.2 percent in fourth quarter 2012. The change was the result of the adjustments to the cost structure offset by the decline in revenue in the current quarter as compared with the same period last year.

Adjusted EBITDA

Adjusted EBITDA for the quarter was $39,000, compared with a loss of $247,000 in the prior-year period.

Adjusted EBITDA is defined as operating income or loss before interest, income taxes, depreciation and amortization and excludes the impact of non-cash stock-based compensation expense, severance charges, amortization of long-term client agreements, strategic transaction-related costs and other non-cash charges. Adjusted EBITDA should be considered in addition to, but not in lieu of, income or loss from operations reported under generally accepted accounting principles (GAAP).

A reconciliation of adjusted EBITDA to operating income or loss is provided in the tables accompanying this release.

Financial Liquidity

Total cash and cash equivalents as of Dec. 31, 2013, amounted to $6.2 million, as compared with $6.4 million on Sept. 30, 2013 and $10.7 million on Dec. 31, 2012.

About American CareSource Holdings, Inc.

American CareSource Holdings is the first national, publicly traded ancillary care network services company. The company offers a comprehensive national network of approximately 5,000 ancillary service providers and approximately 33,500 sites through its subsidiary, Ancillary Care Services. ACS provides ancillary healthcare services through its network that offers cost-effective alternatives to physician and hospital-based services. These providers offer services in 31 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, infusion centers, long-term acute care centers, home-health services and non-hospital surgery centers, as well as durable medical equipment. The company’s ancillary network and management provide a complete outsourced solution for a wide variety of healthcare payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third-party administrators and both federal and local governments. For additional information, please visit www.anci-care.com.

ANCI-F

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

Any statements that are not historical facts contained in this release, including with respect to the company’s plans, objectives and expectations for future operations, projections of the company’s future operating results or financial condition, and expectations regarding the healthcare industry and economic conditions, are forward-looking statements. Substantial risks and uncertainties could cause actual results to differ materially from those indicated by such forward-looking statements, including, but not limited to, the company’s dependence upon its two largest clients and recent declines in their business, the company’s inability to attract or maintain providers or clients or achieve its financial results, changes in national healthcare policy, federal or state regulation, and/or rates of reimbursement including without limitation the impact of the Patient Protection and Affordable Care Act, Health Care and Educational Affordability Reconciliation Act and medical loss ratio regulations, general economic conditions (including the recent economic downturns and increases in unemployment), lower than anticipated demand for ancillary services, pricing, market acceptance/preference, the company’s ability to integrate with its clients, consolidation in the industry that affect the company’s key clients, changes in the business decisions by significant clients, term expirations of contracts with significant clients, possible termination of relationship with significant clients, increased competition, decisions by service providers in the company’s network to terminate their agreements with ACS, the company’s inability to manage growth, implementation and performance difficulties, and other risk factors detailed from time to time in the company’s periodic filings with the Securities and Exchange Commission. Except as otherwise required by law, the company undertakes no obligation to update or revise these forward-looking statements.

- ### -

Investor Relations Contact:

Matthew D. Thompson, CFO and acting COO

mthompson@anci-care.com

Phone (972) 308-6830

AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share data)
	Three months ended						Twelve months ended
	December 31,						December 31,
	2013			2012			2013			2012
Net revenues	$	6,210		$	9,100		$	26,751		$	34,902
Cost of revenues:
Provider payments	4,223			6,668			19,762			25,660
Administrative fees	230			383			1,083			1,551
Claims administration and provider development	686			715			2,705			3,032
Total cost of revenues	5,139			7,766			23,550			30,243
Contribution margin	1,071			1,334			3,201			4,659
Selling, general and administrative expenses	1,150			1,744			6,166			6,841
Depreciation and amortization	180			216			795			878
Total operating expenses	1,330			1,960			6,961			7,719
Loss before income taxes	(259		)	(626		)	(3,760		)	(3,060		)
Income tax provision	8			3			25			31
Net loss	$	(267	)	$	(629	)	$	(3,785	)	$	(3,091	)
Loss per basic and diluted common share	$	(0.05	)	$	(0.11	)	$	(0.66	)	$	(0.54	)
Basic and diluted weighted average common shares outstanding	5,722			5,711			5,715			5,707
Reconciliation of non-GAAP financial measures to reported GAAP financial measures:
	Three months ended						Twelve months ended
	December 31,						December 31,
	2013			2012			2013			2012
Net loss	$	(267	)	$	(629	)	$	(3,785	)	$	(3,091	)
Income tax provision	8			3			25			31
Depreciation and amortization	180			216			795			878
Other	—			7			(22		)	(8		)
EBITDA	(79		)	(403		)	(2,987		)	(2,190		)
Non-cash stock-based compensation expense	78			75			299			408
Amortization of long-term client agreement	—			63			—			250
Severance charges (included in selling, general and administrative expenses)	—			18			216			95
Strategic transaction-related costs	57			—			107			—
Other	(17		)	—			(17		)	—
EBITDA, as adjusted	$	39		$	(247	)	$	(2,382	)	$	(1,437	)

AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
	December 31, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	6,207		$	10,705
Accounts receivable, net	1,977			2,432
Prepaid expenses and other current assets	363			296
Total current assets	8,547			13,433
Property and equipment, net	1,236			1,593
Other assets:
Other non-current assets	606			238
Intangible assets, net	640			768
TOTAL ASSETS	$	11,029		$	16,032
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Due to service providers	$	1,865		$	3,100
Accounts payable and accrued liabilities	1,056			1,343
Total current liabilities	2,921			4,443
STOCKHOLDERS' EQUITY
Common stock	57			57
Additional paid-in capital	23,149			22,845
Accumulated deficit	(15,098		)	(11,313		)
Total stockholders' equity	8,108			11,589
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,029		$	16,032

AMERICAN CARESOURCE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
	Year ended
	December 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(3,785	)	$	(3,091	)
Adjustments to reconcile net loss to net cash used in operations:
Non-cash stock-based compensation expense	299			408
Depreciation and amortization	795			878
Amortization of long-term client agreement	—			250
Deferred income taxes	7			4
Loss on write-off of software development costs	5			14
Changes in operating assets and liabilities:
Accounts receivable	455			1,885
Prepaid expenses and other assets	(442		)	27
Accounts payable and accrued liabilities	(287		)	129
Due to service providers	(1,235		)	(578		)
Net cash used in operating activities	(4,188		)	(74		)
Cash flows from investing activities:
Investments in software development costs	(303		)	(419		)
Additions to property and equipment	(12		)	(109		)
Net cash used in investing activities	(315		)	(528		)
Cash flows from financing activities:
Proceeds from exercise of equity incentives	5			—
Payment of income tax withholdings on net exercise of equity incentives	—			(8		)
Net cash provided by (used in) financing activities	5			(8		)
Net decrease in cash and cash equivalents	(4,498		)	(610		)
Cash and cash equivalents at beginning of period	10,705			11,315
Cash and cash equivalents at end of period	$	6,207		$	10,705
Supplemental cash flow information:
Cash paid for taxes	$	117		$	49
Supplemental non-cash operating and financing activity:
Accrued bonus paid with equity incentives	$	—		$	23