-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, S6rco3Nw8C4t/JWt7bhBmer2k0x2fXURaVv4FDPzWf1G/vgYJafUanWCeocVdCPS U6TKQdanIE2l3ul5Gp2Jyg== 0000936392-95-000077.txt : 19950814 0000936392-95-000077.hdr.sgml : 19950814 ACCESSION NUMBER: 0000936392-95-000077 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL IMAGING CENTERS OF AMERICA INC CENTRAL INDEX KEY: 0000746712 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 953643045 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12787 FILM NUMBER: 95561829 BUSINESS ADDRESS: STREET 1: 9444 FARNHAM ST STE 100 CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 6195600110 MAIL ADDRESS: STREET 2: 9444 FARNHAM STREET SUITE 100 CITY: SAN DIEGO STATE: CA ZIP: 92123 10-Q 1 MEDICAL IMAGING CENTERS OF AMERICA -- FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1995, or [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------------- --------------- Commission File Number 0-12787 MEDICAL IMAGING CENTERS OF AMERICA, INC. (Exact name of registrant as specified in its charter) California 95-3643045 - --------------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9444 Farnham St., Suite 100 San Diego, California 92123 - --------------------------------------- ---------------------------------- (Address of principal executive offices (Zip Code) (619) 560-0110 --------------------------------------------------- (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 requirements for the past 90 days. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 12,290,893 shares of Common Stock as of August 7, 1995 1 of 9 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements MEDICAL IMAGING CENTERS OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS
(in thousands except share information) June 30, 1995 Dec 31, 1994 ------------- ------------ ASSETS: Current assets: Cash and cash equivalents (includes restricted cash of $654 in 1995 and $832 in 1994) $ 6,573 $ 8,524 Trade and notes receivable, net of allowance for doubtful accounts of $5,164 in 1995 and $5,554 in 1994 8,962 9,524 Prepaid expenses and other current assets 963 1,611 Net assets sold (July 1995) 73 159 -------- -------- Total current assets 16,571 19,818 Equipment and leasehold improvements, net of accumulated depreciation and amortization of $29,394 in 1995 and $28,962 in 1994 21,293 27,167 Equipment held for sale, net of accumulated depreciation of $1,326 in 1995 and $1,137 in 1994 300 400 Investment in and advances to unconsolidated entities, net of allowance for doubtful accounts of $1,788 in 1995 and 1994 1,800 2,069 Intangible assets, net of accumulated amortization of $1,889 in 1995 and $1,606 in 1994 985 1,269 Other assets 1,224 1,259 -------- -------- $ 42,173 $ 51,982 ======== ======== LIABILITIES AND NET CAPITAL DEFICIENCY: Current liabilities: Current portion long-term debt and capital lease obligations $ 10,129 $ 10,818 Current portion convertible subordinated debt 2,800 2,800 Accounts payable 2,223 2,062 Accrued payroll and related taxes 973 1,493 Other accrued liabilities 2,272 3,230 -------- -------- Total current liabilities 18,397 20,403 Long-term debt and capital lease obligations 18,469 24,642 Minority interest in consolidated partnerships 1,230 1,598 Convertible subordinated debt 5,400 8,200 Commitments Net Capital Deficiency: Preferred stock, no par value, 5,000,000 shares authorized; Series B preferred shares, no par value, 300,000 shares authorized, no shares issued or outstanding --- --- Common stock, no par value, 30,000,000 shares authorized; 12,210,893 and 12,133,227 shares issued and outstanding at June 30, 1995 and December 31, 1994, respectively 54,535 54,473 Accumulated deficit (55,858) (57,334) -------- -------- Total Net Capital Deficiency (1,323) (2,861) -------- -------- $ 42,173 $ 51,982 ======== ========
See accompanying notes. 2 of 9 3 MEDICAL IMAGING CENTERS OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- (in thousands except per share information) 1995 1994 1995 1994 ------- ------- ------- ------- REVENUES: Medical services $11,634 $14,324 $23,773 $28,481 Equipment and medical suite sales 236 551 2,272 786 ------- ------- ------- ------- Total revenues 11,870 14,875 26,045 29,267 COSTS AND EXPENSES: Costs of medical services 7,283 8,972 14,956 18,339 Costs of equipment and medical suite sales 231 551 1,773 764 Marketing, general and administrative 710 1,254 1,493 2,403 Depreciation and amortization of equipment and leasehold improvements 2,498 3,098 5,131 6,146 Amortization of intangibles and deferred costs 149 83 307 176 Equity in net income of unconsolidated entities (172) (150) (355) (277) Interest expense 813 1,278 1,732 2,653 Interest income (106) (94) (260) (179) ------- ------- ------- ------- Total costs and expenses 11,406 14,992 24,777 30,025 ------- ------- ------- ------- Income (loss) before minority interest 464 (117) 1,268 (758) Minority interest in net (income) loss of consolidated partnerships 87 (113) 207 (134) ------- ------- ------- ------- Net income (loss) $ 551 $ (230) $ 1,475 $ (892) ======= ======= ======= ======= Net income (loss) per common share $ .04 $ (.02) $ .11 $ (.07) ======= ======= ======= ======= Shares used in per share amounts 12,731 12,130 12,705 12,126 ======= ======= ======= =======
See accompanying notes. 3 of 9 4 MEDICAL IMAGING CENTERS OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, ------------------------- (in thousands) 1995 1994 -------- ------- OPERATING ACTIVITIES: Net income (loss) $ 1,475 $ (892) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,438 6,322 Provision for bad debts 488 633 Equity in net income of unconsolidated entities (355) (277) Minority interest in net income (loss) of consolidated partner (207) 134 Net value of equipment dispositions 1,881 975 Change in assets and liabilities: (Increase) decrease in trade receivables (1) 1,197 Decrease in prepaid expenses and other current assets 694 99 Decrease in accounts payable and other accrued liabilities (738) (578) Decrease in accrued payroll and related taxes (520) (612) -------- ------- Net cash provided in operating activities 8,155 7,001 INVESTING ACTIVITIES: Capital expenditures (449) (1,504) Cost of acquisitions (60) --- Investment in and advances to unconsolidated entities, net 649 312 Other, net (59) 274 -------- ------- Net cash used in investing activities 81 (918) FINANCING ACTIVITIES: Principal payments on long-term debt and capital lease obligations (10,097) (5,841) Distribution to minority interests (151) (345) Other, net 61 (24) -------- ------- Net cash used in financing activities (10,187) (6,210) -------- ------- Net decrease in cash and cash equivalents (1,951) (127) Cash and cash equivalents at beginning of period 8,524 8,182 -------- ------- Cash and cash equivalents at end of period $ 6,573 $ 8,055 ======== ======= SUPPLEMENTAL CASH FLOW DATA: Interest paid $ 1,760 $ 2,653 ======== ======= Income taxes paid $ 98 $ 36 ======== ======= SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Additions to capital lease and long-term debt obligations $ 671 $ 3,238 ======== ======= Retirement of debt and termination of capital lease obligations $ 639 $ 919 ======== =======
See accompanying notes. 4 of 9 5 MEDICAL IMAGING CENTERS OF AMERICA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The financial statements included herein have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the financial statements reflect, in the opinion of management, all normal and recurring adjustments necessary to state fairly the financial position and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 1994, which are included in the Company's Form 10-K. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 1995. 2. Primary net income (loss) per share is computed on the basis of weighted average number of common shares outstanding and includes common stock equivalents when their effect is dilutive. For the three and six months ended June 30, 1994, common stock equivalents were excluded from the net loss computation as their effect was antidilutive. 3. No income tax provisions have been recorded for the six months ended June 30, 1995 and 1994 due to net operating loss carryforwards available for income tax purposes. 4. Certain 1994 amounts have been reclassified to conform with the June 30, 1995 presentation. 5. On July 31, 1995, the Company sold the assets (exclusive of accounts receivable) of its Ultrasound and Nuclear Medicine Division based in Chicago, Illinois (the "Division") to Diagnostic Health Services, Inc. for cash of $3.7 million and the assumption of certain liabilities totaling $5 million. The sale of assets consists primarily of equipment. The following table summarizes the net assets sold as of June 30, 1995: Equipment, net $ 1,179 Liabilities assumed (1,106) ------- Net assets sold $ 73 =======
The net assets sold have been classified as a current asset in the accompanying consolidated balance sheet as of June 30, 1995 because of the pending sale which was completed on July 31, 1995. Management estimates that the sale of assets will result in a net gain of approximately $3.5 million to the Company after an accrual for alternative minimum taxes due as a result of the sale. The following table summarizes the results of operations of the Division for the three and six months ended June 30, 1995:
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Medical services revenues $1,330 $1,429 $2,718 $2,863 Costs of medical services 864 952 1,813 1,896 Depreciation and amortization of equipment and leashold Improvements 219 267 455 546 Interest expense 31 52 67 106 ------ ------ ------ ------ Operating results $ 216 $ 158 $ 383 $ 315 ====== ====== ====== ======
5 of 9 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations: BUSINESS Medical Imaging Centers of America, Inc. ("MICA" or the "Company") is a California corporation organized in July 1981 which provides outpatient services and medical equipment rentals to physicians, managed care providers and hospitals. These services include magnetic resonance imaging ("MRI"), computed tomography ("CT"), nuclear medicine and ultrasound. The Company's operations include diagnostic medical centers ("DMC's"), diagnostic equipment rentals, fee-for-service agreements (fixed and mobile), and management, marketing and related support services. RESULTS OF OPERATIONS REVENUES FROM MEDICAL SERVICES Revenues for the second quarter declined from $14.3 million in 1994 to $11.6 million in 1995. Revenues for the six months ended June 30 decreased from $28.5 million in 1994 to $23.8 million in 1995. The decline was primarily due to the Company's sale of underperforming assets and termination of certain unprofitable leases and contracts used in its fee-for-service business. As noted above, a number of factors exist that could have an impact on the Company's future revenues, including declining prices and an oversupply in the diagnostic equipment market, declining trends in reimbursement and competition in the healthcare industry. REVENUES FROM EQUIPMENT AND MEDICAL SUITE SALES Revenues from equipment and medical suite sales for the second quarter decreased from $.6 million in 1994 to $.2 million in 1995. Revenues for the six months ended June 30 increased from $.8 million in 1994 to $2.3 million in 1995. The increase in sales is due to the quantity and type of equipment and medical suites sold and will vary accordingly. The Company intends to sell equipment and its remaining inventory of medical suites in the future, but such sales are subject to market conditions and there can be no assurances that such sales will or will not occur. COSTS OF MEDICAL SERVICES Costs for the second quarter decreased from $9 million in 1994 to $7.3 million in 1995. For the six months ended June 30, costs of medical services decreased from $18.3 million in 1994 to $15 million in 1995. The decrease was primarily due to the Company's sales of underperforming assets and termination of certain unprofitable leases and contracts used in its fee-for-service business. COSTS OF EQUIPMENT AND MEDICAL SUITE SALES Costs of equipment and medical suite sales for the second quarter decreased from $.6 million in 1994 to $.2 million in 1995. For the six months ended June 30, costs of equipment and medical suite sales increased from $.8 million in 1994 to $1.8 million in 1995. The difference in costs is directly related to the quantity and type of equipment and medical suites sold and will vary accordingly. MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES Marketing, general and administrative expenses for the second quarter decreased from $1.3 million in 1994 to $.7 million in 1995. Expenses for the six months ended June 30 decreased from $2.4 million in 1994 to $1.5 million in 1995. The decrease in costs resulted from spending reductions which took place throughout 1994 and continued administrative cost reductions during 1995. DEPRECIATION AND AMORTIZATION Depreciation and amortization of equipment and leasehold improvements for the second quarter decreased from $3.2 million in 1994 to $2.6 million in 1995. For the six months ended June 30, depreciation and amortization decreased from $6.3 million in 1994 to $5.4 million in 1995. This decrease is primarily due to the sale of underperforming assets and termination of certain unprofitable leases used in the fee-for-service business. INTEREST EXPENSE Interest expense for the second quarter decreased from $1.3 million in 1994 to $.8 million in 1995. Interest expense for the six months ended June 30 decreased from $2.7 million in 1994 to $1.7 million in 1995. This decrease resulted from the sale of underperforming assets and termination of certain unprofitable leases used in the fee-for-service business. 6 of 9 7 LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995, the Company's cash and cash equivalents totalled $6.6 million as compared to $8.5 million at December 31, 1994. The decrease of $1.9 million primarily reflects the $2.8 million mandatory redemption payment made in April of 1995 toward the Company's convertible subordinated debentures offset by cash generated from operating activities. The working capital deficit at June 30, 1995 totals $1.8 million which reflects the $2.8 million payment made in April (as discussed above) as well as the second $2.8 million mandatory redemption payment which is due within twelve months (April of 1996). During the first six months of 1995, cash flows from operating activities of $8.2 million were offset by payments against long-term debt of $10.1 million (which includes the $2.8 million paid in April 1995 toward the convertible subordinated debentures). The Company's ability to meet its current obligations is dependent on its ability to maintain revenues from existing contracts while reducing related costs. In addition, a number of factors exist that could have an impact on the Company's future revenues: (i) declining prices and an oversupply in the diagnostic equipment market; (ii) changes in healthcare legislation which has limited reimbursement and prohibited referrals from physician investors; (iii) healthcare initiatives which could reduce reimbursement to the Company; and (iv) competition in the healthcare industry. OPERATING TRENDS Declining reimbursement continues to adversely impact revenues earned by the Company, and MICA does not expect improvements in reimbursement trends in the future. The Company's strategy is to offset the declining trends in reimbursement by securing managed care contracts and developing strategic alliances with hospitals or other healthcare providers to increase the extent of its imaging services. By positioning itself to take advantage of managed care contracts, management believes that it can maintain its DMC revenues. The Company will continue to pursue opportunities in its fee-for-service business; however, in view of the historical unprofitability and uncertainty regarding fee-for- service arrangements, the Company expects to sell equipment used in its fee-for-service business as the related hospital contracts expire. The Company will continue to evaluate its operating costs and reduce spending as appropriate; however, there can be no assurances that such actions will be sufficient to provide adequate cash to sustain the operations of the Company. 7 of 9 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: None. (b) Reports: A Form 8-K will be filed by August 15, 1995 regarding the sale of the assets of the Company's Ultrasound and Nuclear Medicine Divisions based in Chicago, Illinois. 8 of 9 9 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. MEDICAL IMAGING CENTERS OF AMERICA, INC. Date: August 10, 1995 /s/ Robert S. Muehlberg -------------------------------------- Robert S. Muehlberg Chairman of the Board of Directors, President and Chief Executive Officer Date: August 10, 1995 /s/ Denise L. Sunseri -------------------------------------- Denise L. Sunseri Vice President and Chief Financial Officer 9 of 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 6,573 0 14,126 5,164 0 16,571 52,313 30,720 42,173 18,397 25,099 54,535 0 0 (55,858) 42,173 2,272 26,045 1,773 16,241 5,438 488 1,732 1,268 0 1,475 0 0 0 1,475 .11 0
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