-----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, gDI14BGbyEFM+BPTIi1N+Miom4np+W7v1IlDLQMeyrrlIUAC5nwEIM2MwSGGr1H8 U2fRw0e/L3g9Rv0NikyDCA== 0000818645-95-000002.txt : 19950814 0000818645-95-000002.hdr.sgml : 19950814 ACCESSION NUMBER: 0000818645-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IN HOME HEALTH INC /MN/ CENTRAL INDEX KEY: 0000818645 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 411458213 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17490 FILM NUMBER: 95561570 BUSINESS ADDRESS: STREET 1: 601 LAKESHORE PKWY STE 500 STREET 2: CARLSON CENTER CITY: MINNETONKA STATE: MN ZIP: 55343-3837 BUSINESS PHONE: 6124497500 MAIL ADDRESS: STREET 1: 601 LAKESHORE PKWY STREET 2: STE 500 CITY: MINNETONKA STATE: MN ZIP: 55305 FORMER COMPANY: FORMER CONFORMED NAME: IN HOME HEALTH INC DATE OF NAME CHANGE: 19880803 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended June 30, 1995. COMMISSION FILE NO. 0-17490 IN HOME HEALTH, INC. (Exact name of registrant as specified in its charter) Minnesota 41-1458213 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 601 Lakeshore Parkway Suite 500 Minnetonka, Minnesota 55305-5214 (Address of principal executive offices) (Zip Code) 612-449-7500 (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 (1) No As of July 31, 1995, the number of shares outstanding of the registrant's common stock, $.01 par value was 16,142,980 shares. 1 IN HOME HEALTH, INC. INDEX PAGE NO. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets - June 30, 1995 and September 30, 1994 2-3 Consolidated Statements of Income - For the three and nine months ended June 30, 1995 and 1994 4 Consolidated Statements of Cash Flows - For the nine months ended June 30, 1995 and 1994 5 Notes to Consolidated Financial Statements 6-9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-15 PART II. OTHER INFORMATION 16 2 IN HOME HEALTH, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
June 30, 1995 Sept. 30, (Unaudited) 1994 ----------- --------- Current Assets: Cash and cash equivalents $ 1,951 $ 911 Accounts receivable, net 12,909 16,503 Prepaid income tax -- 459 Deferred income tax 1,868 800 Prepaid expenses and other current assets 1,557 1,438 -------- -------- Total current assets 18,285 20,111 -------- -------- Property: Furniture and equipment 9,805 9,007 Computer equipment and software 7,647 7,057 Leasehold improvements 738 654 -------- -------- Total 18,190 16,718 Accumulated depreciation (6,877) (4,993) -------- -------- Property - net 11,313 11,725 -------- -------- Other Assets: Accounts receivable 15,630 9,979 Goodwill 5,788 5,906 Covenants not to compete -- 128 Deposits 564 559 Other assets 989 652 -------- -------- Total other assets 22,971 17,224 -------- -------- Total Assets $52,569 $49,060 ======== ========
See Notes to Unaudited Consolidated Financial Statements. 3 IN HOME HEALTH, INC. CONSOLIDATED BALANCE SHEETS (continued) (Amounts in thousands)
June 30, 1995 Sept. 30, (Unaudited) 1994 ----------- -------- Current Liabilities: Current maturities of long-term debt $2,108 $ 2,286 Notes payable 1,000 -- Accounts payable 3,986 3,821 Accrued liabilities: Compensation 3,920 3,486 Income taxes 592 -- Insurance 4,537 2,960 Other 595 488 ------- ------- Total current liabilities 16,738 13,041 ------- ------- Long-Term Debt 2,546 3,304 Deferred Revenue 1,349 1,632 Deferred Rent Payable 484 516 Deferred Income Tax 1,702 2,085 Commitments and Contingencies -- -- Shareholders' Equity: Preferred stock - authorized 1,000 shares -- -- Common stock - $.01 par value: authorized - 40,000 shares; issues and outstanding - June 30 - 16,142 shares; September 30 - 15,944 shares 161 159 Additional paid-in capital 23,904 23,828 Retained earnings 5,685 4,495 ------- ------- Total shareholders' equity 29,750 28,482 ------- ------- Total Liabilities and Shareholders' Equity $52,569 $49,060 ======= =======
See Notes to Unaudited Consolidated Financial Statements. 4 IN HOME HEALTH, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the Three and Nine Months Ended June 30, 1995 and 1994 (Amounts in thousands except per share amounts)
Three Months Ended Nine Months Ended June 30 June 30 ----------------- ---------------- 1995 1994 1995 1994 ------ ------ ------ ------ Revenue $32,239 $30,591 $97,166 $90,538 -------- -------- -------- -------- Operating Expenses: Direct costs of revenue (primarily payroll related costs) 18,629 17,908 55,364 51,340 General, administrative and selling expenses 12,790 12,086 38,969 36,247 -------- -------- -------- -------- Total operating expenses 31,419 29,994 94,333 87,587 -------- -------- -------- -------- Income From Operations 820 597 2,833 2,951 -------- -------- -------- -------- Interest: Interest expense 182 159 640 541 Interest income (8) -- (17) (6) -------- -------- -------- -------- Net interest expense 174 159 623 535 -------- -------- -------- -------- Income Before Income Taxes 646 438 2,210 2,416 Income Tax Expense 299 286 1,020 1,208 -------- -------- -------- -------- Net Income $ 347 $ 152 $ 1,190 $ 1,208 ======== ======== ======== ======== Net Income Per Common and Common Equivalent Share $ .02 $ .01 $ .07 $ .08 ======== ======== ======== ======== Weighted Average Common and Common Equivalent Shares Outstanding 16,422 15,921 16,344 16,011 ======== ======== ======== ========
See Notes to Unaudited Consolidated Financial Statements. 5 IN HOME HEALTH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended June 30, 1995 and 1994 (Amounts in thousands)
1995 1994 ------ ------ Cash Flows From Operating Activities: Net income $1,190 $1,208 Adjustments: Depreciation and amortization 2,365 2,176 Accounts receivable (2,057) (4,225) Prepaid expenses and other assets (730) (258) Accounts payable 165 (404) Accrued liabilities 2,822 669 Deferred liabilities (1,766) 717 ------- ------- Net cash provided (used) by operating activities 1,989 (117) ------- ------- Cash Flows From Investing Activities: Acquisition of businesses -- (369) Acquisition of property (570) (943) Advances of officers and employees 39 -- ------- ------- Net cash used by investing activities (531) (1,312) ------- ------- Cash Flows From Financing Activities: Payment of long-term debt (1,496) (1,814) Notes payable to banks 1,000 1,000 Issuance of common stock 78 370 ------- ------- Net cash used by financing activities (418) (444) ------- ------- Cash and Cash Equivalents: Net increase (decrease) 1,040 (1,873) Beginning of period 911 3,081 ------- ------- End of period $1,951 $1,208 ======= ======= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 636 $ 530 ======= ======= Income taxes $1,420 $ (21) ======= ======= Noncash Investing and Financing Activities: Property acquired by capital lease $ 907 $ 583 ======= =======
See Notes to Unaudited Consolidated Financial Statements. 6 IN HOME HEALTH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. FINANCIAL STATEMENTS In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal, recurring accruals) necessary to present fairly the financial position of the Company and its subsidiaries as of June 30, 1995 and the results of operations for the three and nine month and cash flows for the nine month periods ended June 30, 1995 and 1994. The results of operations for any interim period are not necessarily indicative of the results for the year. These interim consolidated financial statements should be read in conjunction with the Company's annual financial statements and related notes in the Company's Form 10-K. 2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is computed by dividing net income by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Common stock equivalents result from dilutive stock options and warrants. Any differences in common stock equivalents for primary and fully diluted shares are the results of the quoted market price of the Company's common stock being higher at the end of the period than the average market price during the period. Primary and fully diluted net income per share are the same for all periods presented. 3. MEDICARE COST REIMBURSEMENT Approximately 76% of revenue for the nine months ended June 30, 1995 is derived from services provided to Medicare beneficiaries. Payment for these services is made by the Medicare program based on reimbursable costs incurred in rendering the services. Payments are made via an interim payment rate as services are rendered. Cost reports are filed with Medicare on an annual basis, which are subject to audit and retroactive adjustment by Medicare. The Company reports revenue only for those costs that it believes are reasonably assured of recovery under the applicable Medicare statutes and regulations. The Company utilizes an extensive system of internal controls to ensure such proper reporting of revenues. The Company employs personnel with significant Medicare reimbursement experience to prepare its cost reports, and to monitor its operations on an ongoing basis to identify and minimize those costs which are not reimbursed. As a part of its system of internal controls, the Company uses a detailed analysis process in calculating its Medicare revenue. This process considers applicable statutes and regulations, administrative and judicial decisions, consultation with independent industry experts and legal counsel, disputed costs, and historical knowledge from past Medicare audits. Results of this analysis are extrapolated to other open cost reporting years for all of the Company's operations to determine the gross amount of reimbursement that would be effected. The Company, through this ongoing control and monitoring process, provides a reserve (by means of a revenue reduction) for any costs incurred which the Company believes are not reasonably assured of recovery. Over the years, Medicare, in connection with its retrospective audit process, has taken certain positions with respect to certain types of costs, claiming that they are not reimbursable and thus not recoverable by the Company from the Medicare program. These positions are based on interpretations promulgated after the period covered by the cost reports and applied retroactively, on interpretations of cost reimbursement principles that are contrary to the Company's interpretations, or on what the Company believes to be misapplications of specific reimbursement principles, that could not have been foreseen. These positions taken by Medicare are usually determined from Medicare's Notice of Program Reimbursement (NPR) which typically are not received until two to three years after the services are rendered. Upon receipt of an NPR that contains denial of certain costs as reimbursable, the Company assesses the probability of its success in challenging positions taken by Medicare that are contrary to the Company's positions. In those situations where the Company decides to not challenge the NPR, any revenue relating to costs for which Medicare has denied reimbursement as well as the extrapolated impact on other open cost reporting years, if not written off or provided for earlier, is written off as a revenue reduction at that time. The results of all NPRs are included in the analysis process in calculating net Medicare revenue. The Company has received NPRs challenging $11.6 million of costs as of June 30, 1995. There was an additional $14.4 million of costs at June 30, 1995 related to open cost reporting years that are similar to the costs that have been challenged on NPRs. Together these amounts ($26 million at June 30, 1995) comprise the total amount the Company considers to be disputed costs. The major cost category in dispute, accounting for approximately half of total disputed costs, is the treatment of certain personnel costs relating to the Company's community liaison positions, which Medicare alleges are unreimbursable sales costs; other costs in dispute relate to the cost of physical therapists employed by the Company, administration and general costs allocated to branch operations, certain corporate expenses, and cost transfers among branch operations. The amount of disputed costs has increased over the last several years as the Company has received the NPRs and has extrapolated that amount of costs that may be challenged to other open cost reporting years. The normal Medicare administrative appeal process may take several years to resolve these types of disputes. The Company disagrees with the positions taken by the Medicare fiscal intermediaries and the Health Care Financing Administration and is vigorously pursuing these matters through administrative and legal channels. The Company has filed two suits against the U.S. Department of Health and Human Services (HHS) and several members of the Blue Cross Association which HHS uses to administer the Medicare program. The two suits allege that the defendants have unjustly withheld payments that are owed to the Company for services it provided to Medicare beneficiaries from fiscal 1989 through fiscal 1994. The Company, based on its disputed cost analysis process, believes that recovery of $5,860,000 of total disputed costs (including the extrapolated impact) may not be reasonably assured and, accordingly, has established a reserve in that amount as of June 30, 1995. The remaining net amount of disputed costs has been included in revenues in the respective years in which services were rendered and, to the extent not paid to the Company, is included in accounts receivable. Total accounts receivable (net of reserves) due from Medicare at June 30, 1995 were $22,943,000 including the receivables (net of reserves) for disputed costs of $18,516,000. In view of the expectation that resolution of the disputed costs will not likely be accomplished within the next twelve months, related net receivables of $15,630,000 have been classified as a non-current asset. 4. SUBSEQUENT EVENTS On May 2, 1995, the Company entered into an agreement to form a strategic partnership with Manor Healthcare Corp. ("Manor Healthcare"), a wholly owned subsidiary of Manor Care, Inc., a national health care and international lodging firm. Pursuant to this partnership, Manor Healthcare will purchase up to 6.4 million common shares from the Company for $3.40 in cash per share. The Company will conduct a cash self-tender for 6.4 million of its shares (40% of outstanding) at $3.40 per share. In addition, Manor Care will invest $20 million in the Company in exchange for voting convertible preferred stock. Manor Healthcare will also receive a three year warrant to purchase an additional 6 million shares of common stock at an exercise price of $3.75 per share. This transaction is subject to, among other conditions, the approval of the Company's shareholders and the completion of the self-tender by the Company. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's level of operation and financial condition. This discussion should be read with the consolidated financial statements appearing in Item 1. RESULTS OF OPERATIONS Revenue for the three and nine months ended June 30, 1995 increased by 5% and 7%, respectively, over the same periods in the prior year. The increase is the result of industry growth, the Company's marketing efforts and improved name recognition. Direct costs of revenue, as a percentage of revenue, were 58% for the three month period ended June 30, 1995 as compared to 59% for the comparable prior year period. The lower direct costs as a percentage of revenue were a result of changes in net revenue as a result of Medicare reserves. Direct costs of revenue as a percentage of revenue were 57% for the nine month periods ended June 30, 1995 and 1994. Direct costs of revenue, as a percentage of revenue before the Medicare reserves, were 57% for the three months ended June 30, 1995 and 1994 and 56% for the nine months ended June 30, 1995 and 1994. Changes in net revenue as a result of Medicare reserve adjustments have resulted in an increase in gross profit for the three months ended June 30, 1995 to 42% as compared to 41% for the comparable prior year period. The gross profit percentage of 43% for the nine months ended June 30, 1995 was unchanged from the comparable prior year period. Gross profit as a percentage of revenue before the Medicare reserves were 43% for the three months ended June 30, 1995 and 1994 and 44% for the nine months ended June 30, 1995 and 1994. General, administrative and selling expenses, as a percentage of revenue, remained unchanged at 40% for the three and nine months ended June 30, 1995 and 1994. For the nine months ended June 30, 1995 and 1994, respectively, the Company has recorded income tax expense at 46% and 50% of income before income taxes. Net income for the three months and nine months ended June 30, 1995 was $347,000 and $1,190,000 compared to $152,000 and $1,208,000 in the same periods during the previous year. The change in net income for the three months ended June 30, 1995 was principally due to the change in the Medicare revenue reserves. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents increased $1,040,000 to $1,951,000 at June 30, 1995. Accounts receivable classified as current decreased from $16,503,000 at September 30, 1994 to $12,909,000 at June 30, 1995. This change relates to disputes concerning payment for services to Medicare beneficiaries. Approximately 76% of revenue for the nine months ended June 30, 1995 is derived from services provided to Medicare beneficiaries. Payment for these services is made by the Medicare program based on reimbursable costs incurred in rendering the services. Payments are made via an interim payment rate as services are rendered. Cost reports are filed with Medicare on an annual basis, which are subject to audit and retroactive adjustment by Medicare. The Company reports revenue only for those costs that it believes are reasonably assured of recovery under the applicable Medicare statutes and regulations. The Company utilizes an extensive system of internal controls to ensure such proper reporting of revenues. The Company employs personnel with significant Medicare reimbursement experience to prepare its cost reports, and to monitor its operations on an ongoing basis to identify and minimize those costs which are not reimbursed. As a part of its system of internal controls, the Company uses a detailed analysis process in calculating its Medicare revenue. This process considers applicable statutes and regulations, administrative and judicial decisions, consultation with independent industry experts and legal counsel, disputed costs, and historical knowledge from past Medicare audits. Results of this analysis are extrapolated to other open cost reporting years for all of the Company's operations to determine the gross amount of reimbursement that would be effected. The Company, through this ongoing control and monitoring process, provides a reserve (by means of a revenue reduction) for any costs incurred which the Company believes are not reasonably assured of recovery. Over the years, Medicare, in connection with its retrospective audit process, has taken certain positions with respect to certain types of costs, claiming that they are not reimbursable and thus not recoverable by the Company from the Medicare program. These positions are based on interpretations promulgated after the period covered by the cost reports and applied retroactively, on interpretations of cost reimbursement principles that are contrary to the Company's interpretations, or on what the Company believes to be misapplications of specific reimbursement principles, that could not have been foreseen. These positions taken by Medicare are usually determined from Medicare's Notice of Program Reimbursement (NPR) which typically are not received until two to three years after the services are rendered. Upon receipt of an NPR that contains denial of certain costs as reimbursable, the Company assesses the probability of its success in challenging positions taken by Medicare that are contrary to the Company's positions. In those situations where the Company decides to not challenge the NPR, any revenue relating to costs for which Medicare has denied reimbursement as well as the extrapolated impact on other open cost reporting years, if not written off or provided for earlier, is written off as a revenue reduction at that time. The results of all NPRs are included in the analysis process in calculating net Medicare revenue. The Company has received NPRs challenging $11.6 million of costs as of June 30, 1995. There was an additional $14.4 million of costs at June 30, 1995 related to open cost reporting years that are similar to the costs that have been challenged on NPRs. Together these amounts ($26 million at June 30, 1995) comprise the total amount the Company considers to be disputed costs. The major cost category in dispute, accounting for approximately half of total disputed costs, is the treatment of certain personnel costs relating to the Company's community liaison positions, which Medicare alleges are unreimbursable sales costs; other costs in dispute relate to the cost of physical therapists employed by the Company, administration and general costs allocated to branch operations, certain corporate expenses, and cost transfers among branch operations. The amount of disputed costs has increased over the last several years as the Company has received the NPRs and has extrapolated that amount of costs that may be challenged to other open cost reporting years. The normal Medicare administrative appeal process may take several years to resolve these types of disputes. The Company disagrees with the positions taken by the Medicare fiscal intermediaries and the Health Care Financing Administration and is vigorously pursuing these matters through administrative and legal channels. The Company has filed two suits against the U.S. Department of Health and Human Services (HHS) and several members of the Blue Cross Association which HHS uses to administer the Medicare program. The two suits allege that the defendants have unjustly withheld payments that are owed to the Company for services it provided to Medicare beneficiaries from fiscal 1989 through fiscal 1994. The Company, based on its disputed cost analysis process, believes that recovery of $5,860,000 of total disputed costs (including the extrapolated impact) may not be reasonably assured and, accordingly, has established a reserve in that amount as of June 30, 1995. The remaining net amount of disputed costs has been included in revenues in the respective years in which services were rendered and, to the extent not paid to the Company, is included in accounts receivable. Total accounts receivable (net of reserves) due from Medicare at June 30, 1995 were $22,943,000 including the receivables (net of reserves) for disputed costs of $18,516,000. In view of the expectation that resolution of the disputed costs will not likely be accomplished within the next twelve months, related net receivables of $15,630,000 have been classified as a non-current asset. Operating activities provided $1,989,000 in cash for the nine month period ended June 30, 1995, compared to using $117,000 during the comparable prior year period. Accounts receivable have grown by a lesser amount due to less revenue growth during the current year. The average age of accounts receivable was essentially unchanged from September 30, 1994. Investing activities used $531,000 in cash for the nine month period ended June 30, 1995 compared to $1,312,000 during the comparable prior year period. Investing activities consist primarily of property purchases for branch operations. Investing activities for the nine month period ending June 30, 1994 consist primarily of property purchases and two business acquisitions. Financing activities used $418,000 in cash during the nine month period ended June 30, 1995 compared to $444,000 during the comparable prior year period. Financing activities consist of borrowings of $1,000,000 under the bank line of credit agreement, which was offset by payment of long-term debt. The Company has a line of credit with a commercial bank that will expire in December 1995. Under the credit line, the Company may borrow or obtain letters of credit, all of which in the aggregate may not exceed the lesser of $7.5 million or a borrowing base (which was $6,575,000 at June 30, 1995) that consists of 80% of eligible accounts receivable. Substantially all the Company's receivables and general intangible assets are pledged to secure the credit line. As of June 30, 1995 the Company had $1,000,000 in borrowings and had utilized $4,390,000 of the credit facility as the basis for a letter of credit. The interest rate on the line of credit is prime plus .75% (9.5% at August 4, 1995). The credit agreement obligates the Company to, among other things, maintain certain financial ratios and limits the payment of dividends. As of June 30, 1995, the Company was not in compliance with a covenant of the credit agreement, but has obtained a waiver of this non-compliance. The bank has advised the Company that it does not intend to renew the line of credit agreement beyond the expiration date. The bank has also advised the Company that the letter of credit must be replaced by December 15, 1995 or the bank will draw upon the line of credit to fund a collateral account to accommodate any cash requirements of the letter of credit. The Company is currently considering possible alternative sources of financing, which may include establishment of a line of credit with a new lender or other financing of certain accounts receivable and fixed assets. Because of the pending Medicare disputes and their effect on liquidity, the Company has significantly reduced its efforts to expand its business. This posture is expected to continue until new capital is found and/or a significant portion of the Medicare cost disputes are resolved, and it is uncertain when either of these will occur. The Company continues to lease the majority of its capital additions (primarily office furniture and equipment). Currently the Company has no other material commitments which will require a significant use of cash. On May 2, 1995, the Company entered into an agreement to form a strategic partnership with Manor Healthcare Corp. ("Manor Healthcare"), a wholly owned subsidiary of Manor Care, Inc., a national health care and international lodging firm. Pursuant to this partnership, Manor Healthcare will purchase up to 6.4 million common shares from the Company for $3.40 in cash per share. The Company will conduct a cash self-tender for 6.4 million of its shares (40% of outstanding) at $3.40 per share. In addition, Manor Care will invest $20 million in the Company in exchange for voting convertible preferred stock. Manor Healthcare will also receive a three year warrant to purchase an additional 6 million shares of common stock at an exercise price of $3.75 per share. Pursuant to this agreement, the Company anticipates receiving net cash proceeds of $18 million. These proceeds will be available to the Company for general corporate purposes. The Company anticipates that it will principally use the proceeds to invest in the expansion of Company operations into the eight geographic areas where Manor Healthcare is present and the Company is not and to finance the Company's continued operations. 16 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - None. ITEM 2. CHANGE IN SECURITIES - None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None. ITEM 5. OTHER INFORMATION - None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (11) Computation of Per Share Earnings (b) Reports on Form 8-K (1) Securities Purchase and Sale Agreement between In Home Health, Inc. and Manor Healthcare Corp. dated May 2, 1995. Filed on May 4, 1995. /TABLE 17 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. In Home Health, Inc. Registrant Date: August 11, 1995 /s/Judy M. Figge Judy M. Figge President Chief Executive Officer Date: August 11, 1995 /s/Kenneth J. Figge Kenneth J. Figge Executive Vice President Chief Financial Officer 18 EXHIBIT (11) IN HOME HEALTH, INC. COMPUTATION OF PER SHARE EARNINGS For the Three and Nine Months Ended June 30, 1995 and 1994 (Amounts in thousands except per share amounts)
Three Months Ended Nine Months Ended June 30 June 30 ---------------- --------------- 1995 1994 1995 1994 ----- ----- ----- ----- Primary: Net Income $ 347 $ 152 $ 1,190 $ 1,208 ======= ======= ======= ====== Shares: Weighted average number of shares outstanding during the period 16,120 15,611 16,020 15,561 Shares issuable in connection with stock options and warrants less shares assumed purchased from proceeds 281 310 240 450 ------- ------- ------- ------- Total shares 16,401 15,921 16,260 16,011 ======= ======= ====== ======= Net income per share $ .02 $ .01 $ .07 $ .08 ======= ======= ======= ======= Assuming Full Dilution: Net Income $ 347 $ 152 $ 1,190 $ 1,208 ======= ======= ======= ======= Shares: Weighted average number of shares outstanding during the period 16,120 15,611 16,020 15,561 Shares issuable in connection with stock options and warrants less shares assumed purchase from proceeds 302 310 324 450 ------- ------- ------- ------- Total shares 16,422 15,921 16,344 16,011 ======= ======= ======= ======= Net income per share $ .02 $ .01 $ .07 $ .08 ======= ======= ======= =======
-----END PRIVACY-ENHANCED MESSAGE-----