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, 2005

HearUSA, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-11655	22-2748248
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1250 Northpoint Parkway
West Palm Beach, Florida	33407
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (561) 478-8770

     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. below):

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

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

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

     o 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, 2005, HearUSA, Inc. (the “Company”) issued a press release and will host a conference call relating to the financial results for the fiscal quarter ended December 25, 2004 and the fiscal year ended December 25, 2004. Copies of the press release and conference call script are furnished with this Form 8-K as Exhibits 99.1 and 99.2, respectively.

The attached script contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning the Company’s expectations that the Company’s quarterly non-cash charge relating to the December 2003 financing is approximately $530,000; that the reorganization of the management team will provide strength and ability to reach the Company’s goals; that the previously announced, new or expanded contracts with healthcare providers will generate more than $5 million in revenue in 2005; that 2005 fiscal year revenues will exceed $80 million; and that 2005 will be the Company’s first profitable year. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as market demand for the Company’s goods and services; changes to the Company’s run rate; success of new and expanded healthcare provider contracts; effects of the Medicare Prescription Drug Improvement and Modernization Act; changes in the pricing environment; general economic conditions in those geographic regions where the Company’s centers are located; the impact of competitive products; and other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the 2003 fiscal year.

SIGNATURE

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.

	HearUSA, Inc. (Registrant)
Date: February 28, 2005	By:	/s/ Stephen J. Hansbrough
		Name:	Stephen J. Hansbrough
		Title:	Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press release issued February 28, 2005.
99.2	February 28, 2005 conference call script.

EX-99.1

Exhibit 99.1

Company Contact:	The Investor Relations Company:
Paul A. Brown, M.D., Chairman	Brien Gately
(561) 478-8770, Ext. 123	(847) 296-4200

HearUSA REPORTS 4^thQUARTER and 2004 RESULTS

WEST PALM BEACH, FL, February 28, 2005 — HearUSA, Inc. (AMEX: EAR) today announced revenues for the fiscal year ended December 25, 2004 of $72.3 million compared to $70.5 million for fiscal 2003. The loss of $3.5 million or 11 cents per share compared with a loss of $1.7 million or 6 cents for fiscal 2003. The loss for 2004 included a non-cash interest charge for debt discount amortization of $2.1 million associated with a financing completed in December 2003 compared to $517,000 for the same item in fiscal 2003.

Revenues in the fourth quarter of 2004 increased to $18.8 million from revenues of $16.9 million for the comparable period in the prior year. The net loss for the fourth quarter of fiscal 2004 of $669,000 or 2 cents per share compared to a loss of $2 million or 7 cents per share for the comparable period in the prior year. The fourth quarter for 2004 included a non-cash interest charge for debt discount amortization of $532,000 for the December 2003 financing compared to $517,000 for the same item in the comparable period of the prior year.

The company believes that revenues for 2005 should exceed $80 million and that 2005 should be the company’s first profitable year. A significant portion of the increase over 2004 revenues is expected to come from new or expanded healthcare provider contracts signed at the end of 2004. Consistent with the company’s recently announced policy of keeping the investment community up-to-date with the company’s steady progress, revenues for the month of February will be announced on March 8, 2005.

About HearUSA
HearUSA provides hearing care to patients whose health insurance and managed care organizations have contracted with the company for such care and to retail “self-pay” patients. The 154 company owned centers are located in California, Florida, New York, New Jersey, Massachusetts, Ohio, Michigan, Wisconsin, Minnesota, Missouri and Washington and the province of Ontario Canada. In addition, the company has a network of approximately 1,400 affiliated audiologists in 49 states. For further information, click on “investor information” at HearUSA’s website www.hearusa.com.

This press release contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning the Company’s expectation that

revenues for 2005 should exceed $80 million and that 2005 should be the company’s first profitable year; and that a significant portion of the increase over 2004 revenues is expected to come from new and expanded healthcare provider contracts signed at the end of 2004. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as market demand for the Company’s goods and services; successful implementation of the Company’s cost reduction program; changes in the pricing environment; general economic conditions in those geographic regions where the Company’s centers are located; the impact of competitive products; and other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission, including the Company’s quarterly report on Form 10-Q for the 2004 third quarter.

HearUSA will hold a webcast today at 9:00 A.M. Eastern Time to allow securities analysts and shareholders the opportunity to hear management discuss the company’s Fourth Quarter 2004 and Year End Financial results. The call is being webcast by Vcall and can be accessed at HearUSA’s website at www.hearusa.com or investors can access the webcast at <http://www.vcall.com/CEPage.asp?ID=90633>. The conference can also be listened to by telephone by dialing (toll free) 877-407-9210 (international) 201-689-8049.

- Tables follow -

HearUSA, Inc.
Consolidated Balance Sheets

	December 25,			December 27,
	2004			2003
ASSETS
Current assets
Cash and cash equivalents	$	2,615,379		$	6,714,881
Restricted Cash and investment securities		435,000			435,000
Accounts and notes receivable, less allowance for doubtful accounts of $373,583 and $490,881		5,876,699			6,539,149
Inventories		877,206			979,092
Prepaid expenses and other		558,921			1,115,393
Total current assets		10,363,205			15,783,515
Property and equipment, net		3,493,862			4,969,265
Goodwill		33,652,380			33,222,779
Intangible assets, net		11,242,444			11,577,097
Deposits and other		549,924			630,694
	$	59,301,815		$	66,183,350
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	6,644,600		$	6,750,234
Accrued expenses		2,303,601			2,492,094
Accrued salaries and other compensation		1,982,559			1,706,252
Current maturities of long-term debt		4,152,908			6,436,271
Dividends payable		177,996			728,699
Total current liabilities		15,261,664			18,113,550
Long-term debt		17,296,125			20,579,977
Convertible subordinated notes, net of debt discount of $5,443,879 and $7,423,596		2,056,121			76,404
Total long-term debt and convertible subordinated notes		19,352,246			20,656,381
Commitments and contingencies		—			—
Mandatorily redeemable convertible preferred stock		4,709,921			4,600,107
Stockholders’ equity
Preferred stock (aggregate liquidation preference $2,330,000 and $2,330,000, $1 par, 5,000,000 shares authorized)
Series H Junior Participating (none outstanding)		—			—
Series J (233 shares outstanding)		233			233
Total preferred stock		233			233
Common stock: $0.10 par; 50,000,000 shares authorized, 30,060,690 and 29,528,432 shares issued		3,006,069			2,952,845
Stock subscription		(412,500	)		(412,500	)
Additional paid-in capital		120,197,937			120,226,050
Accumulated deficit		(101,968,452	)		(98,501,791	)
Accumulated other comprehensive income		1,639,838			1,033,616
Treasury stock, at cost: 523,662 common shares		(2,485,141	)		(2,485,141	)
Total stockholders’ equity		19,977,984			22,813,312
	$	59,301,815		$	66,183,350

HearUSA, Inc.
Consolidated Statements of Operations

	Year Ended
	December 25,			December 27,			December 28,
	2004			2003			2002
Net revenues	$	72,300,623		$	70,545,154		$	57,230,128
Operating costs and expenses
Cost of products sold		20,464,789			20,097,594			16,428,569
Center operating expenses		37,518,850			35,059,925			31,577,182
General and administrative expenses		10,218,284			10,470,717			11,185,160
Depreciation and amortization		2,311,016			3,017,280			2,522,389
Total operating costs and expenses		70,512,939			68,645,516			61,713,300
Income (loss) from operations		1,787,684			1,899,638			(4,483,172	)
Non-operating income (expense):
Interest income		17,543			20,836			114,152
Interest expense (including approximately $2,127,000 and $517,000, in 2004 and 2003, of non-cash debt discount amortization)		(4,563,729	)		(2,828,327	)		(1,722,990	)
Loss before equity in loss of affiliated company		(2,758,502	)		(907,853	)		(6,092,010	)
Equity in loss of affiliated company		—			—			(630,801	)
Loss from continuing operations		(2,758,502	)		(907,853	)		(6,722,811	)
Discontinued operations
Loss from discontinued operations (including loss on disposal of $105,296 in 2003)		—			(201,536	)		(157,658	)
Net loss		(2,758,502	)		(1,109,389	)		(6,880,469	)
Dividends on preferred stock		(708,159	)		(626,956	)		(696,541	)
Loss applicable to common stockholders	$	(3,466,661	)	$	(1,736,345	)	$	(7,577,010	)
Loss from continuing operations, including dividends on preferred stock, per common share — basic and diluted	$	(0.11	)	$	(0.05	)	$	(0.33	)
Net loss applicable to common stockholders per common share — basic and diluted	$	(0.11	)	$	(0.06	)	$	(0.34	)
Weighted average number of shares of common stock outstanding		30,426,829			30,424,262			22,524,393

EX-99.2

Exhibit 99.2

Final Draft

Conference Call February 28, 2005 — 9:00 A.M.

     Good morning everyone. The purpose of today’s call is to discuss our 2004 fourth quarter and year-end results. As we have previously stated, beginning with the first quarter of 2005, the quarterly conference calls will be interactive allowing for a question and answer period. At that time, I will be joined by Stephen J. Hansbrough, President and Chief Executive Officer and Gino Chouinard, our Executive Vice-President and Chief Financial Officer.

     Our remarks today include forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties are described in the company’s current report on Form 8-K filed today with the SEC. These forward-looking statements represent the company’s judgment as of the date of this call.

     Earlier this morning, we released our numbers for the 4^th quarter of 2004 and for the full year. We are very pleased that despite the slow start to 2004, quarterly revenues have increased steadily throughout the year to $18.8 million in the 4^th quarter from $16.9 million in the comparable period of the prior year. We have seen sequential improvement each quarter from the fourth quarter of 2003. Income from operations during the 4th quarter increased to $580,000 from a loss of $636,000 for the comparable period last year. The net loss for the 2004 fourth quarter was $669,000 compared to a net loss of $2 million for the comparable period of the prior year. The fourth quarter for 2004 included a non-cash interest charge for debt discount amortization of $532,000 relating to the December 2003 financing compared to $517,000 for the same item in the comparable period of the prior year.

     At the end of 2003, the company negotiated a financing (a convertible subordinated debenture with warrants) when the price of our shares was $1.61. The conversion price and the warrant price were both set at $1.75. From the time of the agreement with the investors to the

time of the closing, the price of our shares increased to over $2.40. As a result of the difference between the value of the negotiated conversion and warrant price of $1.75 per share and the market value of the common stock at the closing, the company must take a non-cash charge off each quarter until a total of approximately $7.5 million is amortized. Currently, the quarterly charge is approximately $530,000. Although this charge affects our “bottom line”, it does not affect the company from an Income from Operations or Cash Flow point of view. In the event the investors elect to convert and exercise their warrants or the debt is repaid prior to maturity, there will be an acceleration of any unamortized non-cash charge during that quarter.

     Revenues for the 2004 fiscal year increased to $72.3 million from $70.5 million in 2003. The net loss for the year increased to $3.5 million from $1.7 million, but included the non-cash charge from the 2003 financing of $2.1 million in 2004 compared to only $517,000 in 2003. Depreciation and amortization was approximately $2.3 million in the most recent fiscal year as compared to $3.0 million in 2003.

     During the last fiscal year, the company successfully implemented a cost reduction program which reduced annual expenses by more than $2.5 million. A reorganization of our management team was also completed to provide the strength and ability to reach our corporate goals for the future. Finally, as previously announced, new or expanded contracts with healthcare providers were signed which should generate more than $5 million in annual revenue in 2005 and allow the company to achieve the goal of our first profitable year and revenues in excess of $80 million for 2005.

     Thank you for listening. February revenues will be discussed on March 8, 2005.