-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KhtE/ENVlwEniqhyUSTKuCykpIje0NVEK1/WDRJF6tygd//dBMOoYdPjvGluCL6j QaBj+g5kTo2iYJ+gYKsUEw== 0000878748-96-000006.txt : 19961115 0000878748-96-000006.hdr.sgml : 19961115 ACCESSION NUMBER: 0000878748-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLYMEDICA INDUSTRIES INC CENTRAL INDEX KEY: 0000878748 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043033368 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19842 FILM NUMBER: 96661802 BUSINESS ADDRESS: STREET 1: 11 STATE ST CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179332020 MAIL ADDRESS: STREET 1: 11 STATE STREET CITY: WOBURN STATE: MA ZIP: 01801 10-Q 1 SECOND QTR. 10-Q FOR THE PERIOD ENDING 09/30/96 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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 No. 1-13690 PolyMedica Industries, Inc. (Exact name of registrant as specified in its charter) Massachusetts 04-3033368 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 11 State Street, Woburn, Massachusetts 01801 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 933-2020 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g)of the Act: Common Stock, $.01 par value per share (Title of class) Preferred Stock Purchase Rights (Title of class) 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 The number of shares outstanding of the registrant's class of Common Stock as of November 13, 1996 was 8,555,369 which includes 163,659 shares held in treasury. 1 POLYMEDICA INDUSTRIES, INC. TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets at September 30, 1996 and March 31, 1996 3 Consolidated Statements of Operations for the three and six months ended September 30, 1996 and 1995 5 Consolidated Statements of Cash Flows for the six months ended September 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders 19 Item 6 - Exhibits and Reports on Form 8-K 20 Signatures 21 Exhibit Index 22 2 PART I - FINANCIAL INFORMATION Item 1. Uaudited Financial Statements POLYMEDICA INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) Sept. 30, March 31, 1996 1996 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 12,768 $ 23,302 Accounts receivable -- trade (net of allowance for doubtful accounts of $434 and $82 as of September 30 and March 31, 1996) 5,401 2,558 Inventories 4,409 4,163 Prepaid expenses and other current assets 731 416 Total current assets 23,309 30,439 Property, plant, and equipment, net 6,171 6,273 Intangible assets, net 42,313 35,500 Other assets, net 351 361 Total assets $ 72,144 $ 72,573 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 POLYMEDICA INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) Sept. 30, March 31, 1996 1996 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,570 $ 1,288 Accrued expenses 2,229 3,605 Notes payable 625 -- Total current liabilities 4,424 4,893 Senior debt (net of unamortized discount of $556 and $600 as of Sept. 30 and March 31, 1996) 24,444 24,400 Notes payable - long term 625 -- Total liabilities 29,493 29,293 Commitments Stockholders' equity: Preferred stock $.01 par value; 2,000,000 shares authorized, none issued or outstanding -- -- Common stock, $.01 par value, 20,000,000 shares authorized, 8,555,369 and 8,112,635 shares issued as of Sept. 30 and March 31, 1996 86 81 Less treasury stock, at cost, 173,578 and and 159,905 shares as of Sept. 30 and March 31, 1996 (1,166) (1,036) Additional paid-in capital 53,248 54,917 Accumulated deficit (9,007) (10,105) Notes receivable from officers (322) (415) Currency translation adjustment (188) (162) Total stockholders' equity 42,651 43,280 Total liabilities and stockholders' equity $ 72,144 $ 72,573 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 POLYMEDICA INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data) Three Months Ended Six Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1996 1995 1996 1995 Revenues: Net product sales $ 7,063 $ 6,921 $11,888 $12,504 Royalties, exclusivity, development and license fees 40 72 208 293 Total revenues 7,103 6,993 12,096 12,797 Cost of product sales 2,691 2,729 4,518 4,839 Total revenues, less cost of product sales 4,412 4,264 7,578 7,958 Operating expenses: Selling, general, and administrative 3,122 2,546 5,269 4,751 Research and development 197 196 317 390 3,319 2,742 5,586 5,141 Income from operations 1,093 1,522 1,992 2,817 Other income and expense: Investment income 228 186 510 387 Interest expense (689) (666) (1,370) (1,332) (461) (480) (860) (945) Income from continuing operations before income taxes 632 1,042 1,132 1,872 Provision for income taxes 19 30 34 50 Income from continuing operations 613 1,012 1,098 1,822 Loss from discontinued operations -- (207) -- (441) Net income $ 613 $ 805 $ 1,098 $ 1,381 Net income (loss) per common share: Continuing operations $ .07 $ .14 $ .13 $ .25 Discontinued operations -- (.03) -- (.06) Net income $ .07 $ .11 $ .13 $ .19 Weighted average number of common shares outstanding 8,361 7,320 8,421 7,211 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 POLYMEDICA INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six Months Ended Sept. 30, Sept. 30, 1996 1995 Cash flows from operating activities: Net income $ 1,098 $ 1,381 Loss from discontinued operations -- 441 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 1,389 1,349 Gain on disposal of fixed assets -- (6) Provision for bad debts 33 18 Provision for sales allowances 444 562 Provision for inventory obsolescence 33 63 Changes in assets and liabilities: Accounts receivable--trade (1,518) (2,094) Inventories 37 (457) Prepaid expenses and other current assets (197) (158) Other assets (1) 10 Accounts payable -- trade (813) (761) Accrued expenses (1,096) (316) Total adjustments (1,689) (1,790) Net cash flows from continuing operations (591) 32 Net cash flows used for discontinued operations -- (396) Net cash flows from operating activities (591) (364) Cash flows from investing activities: Acquisition, net of cash acquired (6,648) -- Spinoff of CardioTech (3,830) -- Purchase of property, plant, and equipment (329) (914) Proceeds from sale of equipment -- 123 Net cash flows from investing activities (10,807) (791) Cash flows from financing activities: Proceeds from issuance of common stock 848 78 Purchase of common stock -- (173) Net cash flows from financing activities 848 (95) Net decrease in cash and cash equivalents (10,550) (1,250) Effect of exchange rate changes on cash 16 (8) Cash and cash equivalents at beginning of period 23,302 14,006 Cash and cash equivalents at end of period $12,768 $12,748 The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 POLYMEDICA INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The unaudited consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of interim period results. 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. The Company believes, however, that its disclosures are adequate to make the information presented not misleading. The results for the interim periods presented are not necessarily indicative of results to be expected for the full fiscal year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. The financial statements and the notes included herein should be read in conjunction with the financial statements and notes for the fiscal year ended March 31, 1996 and with the section entitled "Factors Affecting Future Operating Results" included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, as well as the section of the same title set forth herein. 2. Inventories consist of the following: (In thousands) Sept. 30, March 31, 1996 1996 Raw materials $ 1,808 $ 1,465 Work in process 709 902 Finished goods 1,892 1,796 $ 4,409 $ 4,163 3. In connection with the spinoff of CardioTech International, Inc. ("CardioTech"), for the three and six months ended September 30, 1995, CardioTech's operations are accounted for as discontinued operations in the Company's statement of operations, and accordingly, its operations are segregated in the accompanying consolidated statements of operations for that period. Net sales, operating costs and expenses, and other income and expense have been reclassified for amounts associated with CardioTech's discontinued operations. CardioTech's net revenues were not material for all periods presented. 7 4. On August 30, 1996, the Company acquired all of the outstanding stock of Liberty Medical Supply, Inc. for an aggregate purchase price of $9.36 million (including $363,000 of related expenses) in a transaction accounted for under the purchase method of accounting. Accordingly, the net assets and operations of Liberty Medical have been included in the Company's financial statements since the date of acquisition. The purchase price was comprised of (i) $6.75 million in cash, (ii) two-year 7% subordinated promissory notes in the aggregate amount of $1.25 million and (iii) 200,000 shares of the Company's common stock. In the event that Liberty Medical's performance in any of the calendar years ending December 31, 1997, 1998, and 1999 exceeds certain projections for that year, certain of the stockholders of Liberty Medical will be entitled to receive up to an aggregate of $1 million over the three year period. Liberty Medical is a leading mail-order marketer and distributor of diabetes-related products to the home market. The purchase price was assigned to the net assets acquired based on their fair value at the date of acquisition, and the excess of the purchase price over the fair value of the assets acquired was recorded as attributable to a customer list ($1.82 million, to be amortized over seven years) and goodwill ($5.92 million, to be amortized over twenty years). If the acquisition had taken place at the beginning of the year ending March 31, 1997, giving effect to adjustments for amortization of intangible assets, interest income and interest expense, the Company's pro forma revenues, net income and net income per share for the six months ended September 30, 1996 would have been $17.27 million, $1.32 million, and $.15, respectively. If the acquisition had taken place at the beginning of the year ended March 31, 1996, the Company's pro forma revenues, net income and net income per share for the six months ended September 30, 1995 would have been $17.88 million, $1.20 million, and $.16, respectively. 5. In October 1996, PolyMedica Pharmaceuticals (U.S.A.), Inc. received a waiver from John Hancock Mutual Life Insurance Company of a certain fiscal 1997 financial covenant with which it was not in compliance as of September 30, 1996. 6. In connection with the acquisition of Liberty Medical and the adjustment provisions in the Hancock warrant, the exercise price of the Hancock warrant was adjusted to $5.18 per share of common stock for the 543,464 shares exercisable under the warrant. 7. Certain amounts in the prior period financial statements have been reclassified to conform with the current year presentation. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview With the recent acquisition of Liberty Medical Supply, Inc. the Company is now transitioning from a manufacturer of wound care products and distributor of consumer healthcare products to an integrated developer, manufacturer and marketer of medical products. The Company offers a number of products which are based on proprietary technologies that deliver performance which the Company believes to be superior to that of competitive products. PolyMedica operates its businesses in the Medical Products, Consumer Healthcare and Ethical Pharmaceuticals Groups. The Company generates revenues from sales of medical devices and products, consisting of reimbursable diabetes-related products, consumer healthcare products, wound dressings and prescription and non-prescription pharmaceutical products. In addition, it generates revenues from royalties, exclusivity, development and license fees on certain of its products. The Company sells its products through a combination of mail-order, wholesalers, retail chains and national distributors. Diabetes-related products are sold directly to consumers through a mail-order network. Consumer healthcare and over-the-counter pharmaceutical products are sold through a network of more than 100 independent sales representatives and national wholesalers such as McKesson Drug Company, Bergen Brunswig Corporation and FoxMeyer Corporation, and to retailers including CVS HC Inc., Jack Eckerd Co., OSCO (American Drug Stores Inc.) and Rite-Aid Corp. Advanced wound dressings are sold through established exclusive relationships with Bristol-Myers Squibb, Mylan Laboratories Inc., Perstorp AB, Hisamitsu Pharmaceutical Co., Inc., Kuraray Co. Ltd. and others for use by institutional customers, such as hospitals, nursing homes and other healthcare providers, for patients with chronic wounds. The Company promotes sales of its products through local print media, national advertising in consumer and professional publications, on television and at professional and trade group meetings, as well as through retail advertising. Although certain of the Company's products are seasonal in nature, the Company does not believe its net product sales, in the aggregate, are generally subject to material seasonal fluctuations. Thermometer sales to consumers are higher during the winter cold and flu season. The Company's non-prescription urological products show higher retail sales during the warmer months, as do Patch Kits for People(TM), the Company's over-the-counter wound care line, which are primarily used in connection with outdoor sports activities during the summer and fall seasons. The Company has recently recruited and hired an experienced Vice President of Marketing to bring sophisticated marketing techniques to its consumer business through the application of market research and a focus on those products with the greatest potential. This is an expansion of the Company's marketing and distribution focus. PolyMedica's goal is to provide superior wound management in each major Medicare reimbursement category and to use its 9 competitive edge as an efficient, vertically-integrated manufacturer of wound care products to offer high technology, low-cost wound dressings directly to wholesalers, distributors and buying groups already in its healthcare distribution network. The Company operates from manufacturing, distribution, and research and development facilities located in Massachusetts, Florida, Colorado and the United Kingdom. Virtually all of the Company's product sales are denominated in U.S. dollars. The Company produces proprietary polyurethane materials from which it manufactures advanced wound dressings. The Company's research and development activities are principally funded from ongoing operations and consist of the design, development and manufacture of polyurethane-based medical products derived from proprietary technology and manufacturing processes. Integral to the Company's growth strategy is the acquisition of new products and businesses. The Company has successfully integrated six acquisitions since 1990. Period to period comparisons of changes in net product sales are not necessarily indicative of results to be expected for any future period. Acquisition of Liberty Medical Supply, Inc. On August 30, 1996, the Company acquired all of the outstanding stock of Liberty Medical Supply, Inc. for an aggregate purchase price of $9.36 million (including $363,000 of related expenses) in a transaction accounted for under the purchase method of accounting. Accordingly, the net assets and operations of Liberty Medical have been included in the Company's financial statements since the date of acquisition. The purchase price was comprised of (i) $6.75 million in cash, (ii) two-year 7% subordinated promissory notes in the aggregate amount of $1.25 million and (iii) 200,000 shares of the Company's common stock. In the event that Liberty Medical's performance in any of the calendar years ending December 31, 1997, 1998, and 1999 exceeds certain projections for that year, certain of the stockholders of Liberty Medical will be entitled to receive up to an aggregate of $1 million over the three year period. Liberty Medical, headquartered in Palm City, Florida, was founded in 1989 and is a leading mail-order marketer and distributor of reimbursable diabetes-related products to the home market. Liberty Medical is a participating Medicare provider which accepts payments directly from Medicare, typically 80% of a product's purchase price, before any amounts are billed to the patient and/or the patient's medi-gap insurer. The benefits to a patient range from automatic shipment of supplies to the elimination of preparing paperwork or using personal resources while waiting for reimbursement. Liberty Medical ships to more than 20,000 customers in the U.S., making it one of the largest diabetic suppliers in the country. Its products address a market estimated to include 1.5 million insulin-dependent patients, of which it is estimated that 125,000 patients currently receive supplies through mail-order companies similar to Liberty. Based upon an estimated $720 annual reimbursement level for each patient, the Company believes that Liberty Medical participates in an approximately $1 billion market. 10 In addition to the above market, the Company believes that there is significant growth potential for Liberty Medical's products by expanding the market to include non-insulin dependent diabetics. There are current proposals in Congress to include non-insulin dependent diabetics under Medicare following a Congressional Budget Office study indicating that improving diabetes coverage would reduce Medicare expenditures. Results of Operations Three Months Ended September 30, 1996 Compared to Three Months Ended September 30, 1995 The Company's net income was $613,000, or $.07 per share, for the three months ended September 30, 1996. This performance compares to net income of $805,000, or $.11 per share, for the three months ended September 30, 1995. In the three months ended September 30, 1995, income from continuing operations was $1.01 million, offset by a loss from discontinued operations of $207,000 in connection with the spinoff of CardioTech International, Inc. Net product sales in the Medical Products Group decreased by 3.9% to $1.48 million in the three months ended September 30, 1996 as compared with $1.54 million in the three months ended September 30, 1995. Included in this group are sales of diabetes-related products from Liberty Medical and the Company's advanced wound dressings to the chronic market through national distributors. This net decrease was primarily due to a reduction in professional wound care sales offset by $900,000 of first time sales of diabetes-related products. The Company is beginning to implement an enhanced promotional program to allow Liberty Medical to take advantage of its buying efficiencies and customer service to grow its customer base. The Company is using working capital to purchase additional advertising to inform insulin-dependent diabetes patients on Medicare about the benefits of becoming a Liberty Medical customer. To help protect the Company from the effect of future changes in Medicare reimbursement levels, the Company plans to introduce the SPYRO line family of wound dressings, which includes all reimbursement categories. Currently ongoing telemarketing research conducted by the Company will permit it to best apply its resources to promote these dressings. In addition, the Company is test marketing LASERSITE, a high margin niche wound dressing product for cosmetic facial laser resurfacing. The Company has recently signed an agreement with Perstorp AB ("Perstorp"), pursuant to which Perstorp will become the exclusive pan-European distributor of SPYROSORB. Previously, the Company reacquired all rights to distribute SPYROSORB wound dressings to the professional health care market in the U.K. and Europe effective January 1, 1997. This action gave the Company control over the marketing and distribution of SPYROSORB and enables the Company to take advantage of this wound dressing's position as a tariffied product, which is fully reimbursable in the U.K. 11 The decrease in wound dressing sales is due in part to changes in Medicare reimbursement methodology for chronic wounds and a resulting switch by healthcare providers to more frequent and less costly dressing changes using low technology textile dressings and in part to reduced purchases by Bristol-Myers Squibb, as discussed below. The overall decrease in total unit volume of wound dressings was partially offset by an approximate 20% increase in average selling price of all dressing sizes, stated on a 4" x 4" equivalent basis, due to a change in the product mix. The Company has renegotiated its Supply Requirements and Licensing Agreement with Bristol-Myers Squibb. Under the amended terms of the contract, the Company has acquired the rights to MITRAFLEX in the U.S., which gives it greater control over future marketing and sales initiatives. Bristol-Myers Squibb has retained U.S. exclusivity to distribute MITRAFLEX in the U.S. through December 31, 1996 and is not required to make additional purchases thereafter. In the three months ended September 30, 1996 net product sales to Bristol-Myers Squibb decreased by 46.6% when compared to the three months ended September 30, 1995 as reimbursement and managed care influences affected the entire chronic wound care market. The Company expects the uneven ordering patterns for FLEXZAN from its U.S. distributor will continue for the remainder of calendar 1996. The Company believes that the changes in ordering patterns are due to inventory level adjustments at that distributor and ongoing changes in the reimbursement and managed care marketplaces. Net product sales in the Consumer Healthcare Group increased by 10.1% to $2.75 million in the three months ended September 30, 1996 as compared with $2.49 million in the three months ended September 30, 1995. Included in this group are sales to the over-the-counter market of: (i) medical devices including thermometry, home healthcare kits and skin care; (ii) wound dressings sold in burn, abrasion and blister kits and (iii) urological remedies, including AZO-STANDARD and AZO-CRANBERRY. This division manufactures and distributes nearly 100 products through a network of more than 36,000 retail stores. Approximately half of the increase in net product sales in the three months ended September 30, 1996 is due to increased shipments of SPYROFLEX wound dressings sold in abrasion, blister and burn kits. To support this growth, the Company market tested SPYROFLEX in spring and summer 1996 for introduction into the estimated $450 million retail market in order to gain distribution and prepare for a product launch. The Company used national television spots on ESPN and ESPNII and major print media, such as Sports Illustrated. With enhanced market research conducted by the Vice President of Marketing, the Company expects to apply future resources to build upon consumer awareness of how minor burns, abrasions, blisters and lacerations can be treated by advanced wound dressings. Major customers in this group include the top 20 pharmacy chains, major supermarkets and mass merchandisers. AZO-STANDARD is the leading product in its category of urinary-tract analgesics. This growth has attracted Johnson & Johnson to become a category developer with its version of AZO-STANDARD, which should expand the market segment. In addition, the Company expects to market a urinary tract infection test strip suitable for use in the home. 12 Net product sales in the Ethical Pharmaceuticals Group decreased by 1.7% to $2.83 million in the three months ended September 30, 1996 as compared with $2.88 million in the three months ended September 30, 1995. Included in this group are branded products used for the treatment of urinary tract infections. Royalty, exclusivity, development and license fees from continuing operations decreased by 44.6% to $40,000 in the three months ended September 30, 1996 as compared with $72,000 in the three months ended September 30, 1995. This decrease is due to reduced royalties in the U.S. from sales of MITRAFLEX. As a percentage of net product sales, overall gross margins were 61.9% in the three months ended September 30, 1996, which compares to 60.6% reported in the three months ended September 30, 1995. Gross margins increased primarily due to the Company's ability to find lower cost products and suppliers of materials needed to manufacture its products. Selling, general, and administration expenses ("SG&A expenses") increased by 22.6% in the three months ended September 30, 1996 to $3.12 million as compared with $2.55 million (exclusive of CardioTech expenses) in the three months ended September 30, 1995. Included in SG&A expenses were depreciation and amortization, wages, benefit costs, and outside professional services totaling $1.38 million in the three months ended September 30, 1996, or 44.1% of SG&A expenses, as compared with $1.12 million, or 43.9% of SG&A expenses in the three months ended September 30, 1995. Research and development expenses were $197,000 in the three months ended September 30, 1996, as compared with $196,000 in the three months ended September 30, 1995. Investment income increased by 22.3% to $228,000 in the three months ended September 30, 1996, as compared with $186,000 in the six months ended September 30, 1995, as the Company earned interest on larger average cash balances, at higher overall interest rates. Interest expense was $689,000 in the six months ended September 30, 1996, as compared with $666,000 in the six months ended September 30, 1995, as the Company accrued interest expense in both periods on $25 million of Guaranteed Senior Secured Notes due January 31, 2003 (the "Hancock Notes") to the John Hancock Mutual Life Insurance Company ("Hancock"). The interest rate on the Hancock Notes increased from 10.65% to 10.90% as a result of a January 1, 1996 amendment. Six Months Ended September 30, 1996 Compared to Six Months Ended September 30, 1995 The Company's net income was $1.10 million, or $.13 per share, for the six months ended September 30, 1996. This performance compares to net income of $1.38 million, or $.19 per share, for the six months ended September 30, 1995. In the six months ended September 30, 1995, income from continuing operations was $1.82 million, offset by a loss from discontinued operations of $441,000 in connection with the spinoff of CardioTech. 13 Net product sales in the Medical Products Group decreased by 31.2% to $2.22 million in the six months ended September 30, 1996 as compared with $3.22 million in the six months ended September 30, 1995. This net decrease was primarily due to a reduction in professional wound care sales offset by $900,000 of first time sales of diabetes-related products. The decrease in wound dressing sales is due to reasons described above. The overall decrease in total unit volume of wound dressings was partially offset by an approximate 5% increase in average selling price of all dressing sizes, stated on a 4" x 4" equivalent basis, due to a change in the product mix. Net product sales in the Consumer Healthcare Group increased by 16.9% to $4.96 million in the six months ended September 30, 1996 as compared with $4.24 million in the six months ended September 30, 1995. This increase is principally due to higher shipments of AZO-STANDARD in the six months ended September 30, 1996. Net product sales in the Ethical Pharmaceuticals Group decreased by 6.5% to $4.71 million in the six months ended September 30, 1996 as compared with $5.04 million in the six months ended September 30, 1995. Royalty, exclusivity, development and license fees decreased by 29.2% to $208,000 in the six months ended September 30, 1996 as compared with $293,000 in the six months ended September 30, 1995. This decrease is due to reduced royalties in the U.S. from sales of MITRAFLEX, partially offset by license fees from Kuraray Co. Ltd. of Japan in the six months ended September 30, 1996. As a percentage of net product sales, overall gross margins were 62.0% in the six months ended September 30, 1996, which compares to 61.3% reported in the six months ended September 30, 1995. Gross margins increased primarily due to the Company's ability to source lower cost products and suppliers of materials needed to manufacture its products. SG&A expenses increased by 10.9% in the six months ended September 30, 1996 to $5.27 million as compared with $4.75 million (exclusive of CardioTech expenses) in the six months ended September 30, 1995. Included in SG&A expenses were depreciation and amortization, wages, benefit costs, and outside professional services totaling $2.38 million in the six months ended September 30, 1996, or 45.2%, of SG&A expenses, as compared with $2.21 million or 46.5% of SG&A expenses in the six months ended September 30, 1995. SG&A expenses in the six months ended September 30, 1996 include costs related to Liberty Medical operations. As a result of the CardioTech spinoff, the Company estimates that approximately $500,000 of related costs have been saved during the six months ended September 30, 1996. The Company expects its marketing costs to increase in the future as a result of the marketing initiatives described above. 14 Research and development expenses decreased by 18.9% to $317,000 in the six months ended September 30, 1996, as compared with $391,000 in the six months ended September 30, 1995. Investment income increased by 31.7% to $510,000 in the six months ended September 30, 1996, as compared with $387,000 in the six months ended September 30, 1995, as the Company earned interest on larger average cash balances, at higher overall interest rates. Interest expense was $1.37 million in the six months ended September 30, 1996, as compared with $1.33 million in the six months ended September 30, 1995, as the Company accrued interest expense in both periods on the Hancock Notes. Liquidity and Capital Resources Since its inception, the Company has raised $53.46 million in gross equity capital, of which $7.16 million was from venture capital financings before the Company's initial public offering, $39.00 million from its March 1992 initial public offering, $4.55 million from a November 1995 public offering of common stock, and $2.75 million from the sale of its common stock, pursuant to Regulation S promulgated under the Securities Act of 1933. In January 1993, the Company sold to Hancock $25 million of 10.65% Guaranteed Senior Secured Notes due January 31, 2003. As of September 30, 1996, working capital was $18.89 million, including cash and cash equivalents of $12.77 million. In connection with the acquisition of Liberty Medical and the adjustment provisions in the Hancock warrant, the exercise price of the Hancock warrant was adjusted to $5.18 per share of common stock for the 543,464 shares exercisable under the warrant. In October 1996, PolyMedica Pharmaceuticals (U.S.A.), Inc. received a waiver from Hancock of a certain fiscal 1997 financial covenant with which it was not in compliance as of September 30, 1996. The Company expects that its current working capital and funds generated from future operations will be adequate to meet its liquidity and capital requirements for current operations. In the event that the Company undertakes to make acquisitions of complementary businesses or products, the Company may require substantial additional funding beyond currently available working capital and funds generated from operations. Currently, the Company is conducting an active search for the strategic acquisition of complementary businesses or products. The Company has no present commitments or agreements with respect to any such acquisition. 15 Factors Affecting Future Operating Results The future operating results of the Company remain difficult to predict. The Company continues to face many risks and uncertainties which could affect its operating results, including without limitation, those described below. Reliance on Distributors; Limited Direct Marketing Experience. The Company has a limited direct marketing and sales organization and relies on its current distributors, including primarily Bristol-Myers Squibb and Mylan Laboratories Inc., to sell its wound care products in the institutional marketplace. The Company has a limited direct sales force which it may need to broaden for certain of its products. There can be no assurance that the Company will establish such a direct sales force or that any such sales force that may be established will be able to successfully market and distribute the Company's products or to offset any decline in sales to its existing distributors. The Company's ability to sell its new products will depend in part on its ability to enter into marketing and distribution agreements with pharmaceutical, medical device, personal care and other distributors in the United States and other countries. If the Company enters into any such agreements, there can be no assurance that the Company's third party distributors will be able to market the products effectively. Acquisitions of Other Businesses. As part of its growth strategy, the Company currently intends to expand through the acquisition of other businesses, as well as internal growth and strategic business alliances with other companies. The Company regularly reviews potential acquisitions and business alliances, some of which may be material. The acquisition of other businesses is integral to the Company's business strategy; however, there can be no assurance that the Company will successfully acquire any businesses, or that such acquired businesses, if any, will be profitable. The Company does not currently have any commitments or agreements with respect to the acquisition of any businesses or products. Competition and Technological Change. The Company is engaged in rapidly evolving and highly competitive fields. The Company competes with numerous companies in the healthcare industry, including Bristol-Myers Squibb which is also the exclusive distributor of the Company's MITRAFLEX product in the United States. Competition from medical device manufacturers, pharmaceutical companies and other competitors is intense and expected to increase. Many of these companies have substantially greater capital resources, research and development staffs and facilities, and greater experience in obtaining regulatory approvals and in marketing and distribution of products, than the Company. Academic institutions, hospitals, governmental agencies and other public and private research organizations are also conducting research and seeking patent protection and may develop competing products on their own or through joint ventures. There can be no assurance that the Company's competitors will not succeed in developing technologies and products that are more effective than any that are being developed or sold by the Company. Patents and Trade Secrets. The Company's success will depend, in part, on its ability to obtain patents, maintain trade secrets protection and operate 16 without infringing on the proprietary rights of third parties. The Company is the owner of five, and the co-owner of one, issued patents in the United States and has filed applications for additional patents in the United States and abroad. There can be no assurance that any pending patent applications will result in issued patents. In addition, there can be no assurance that any issued patents will provide the Company with significant protection against competitors. Moreover, there can be no assurance that any patents issued to or licensed by the Company will not be infringed upon or designed around by others. The Company also relies on unpatented proprietary technology, and no assurance can be given that others will not independently develop substantially equivalent proprietary information, techniques or processes, that such technology will not be disclosed or that the Company can meaningfully protect its rights to such unpatented proprietary technology. There can be no assurance that the Company's non-disclosure agreements will provide meaningful protection for the Company's trade secrets or other proprietary know-how. In the absence of patent protection, the Company's business may be adversely affected by competitors who independently develop substantially equivalent technology. Moreover, there can be no assurance that the patents held by others might not have an adverse effect on some of the Company's products or require that the Company obtain licenses to continue to test, manufacture or market the affected product, and, if so, there can be no assurance that such licenses will be available on acceptable terms, if at all. Product Liability. The testing, marketing and sale of wound care products and other medical and consumer products entail an inherent risk that product liability claims will be asserted against the Company or its third party distributors. A product liability claim or a product recall could have a material adverse effect on the business or financial condition of the Company. Certain manufacturers of materials and/or implantable devices have been subjected to significant claims for damages allegedly resulting from their products. The Company currently maintains product liability insurance coverage which it believes to be adequate for its present purposes, but there can be no assurance that in the future the Company will be able to maintain such coverage on acceptable terms or that current insurance or insurance subsequently obtained will provide adequate coverage against any or all potential claims. Healthcare Reimbursement. Political, economic and regulatory influences are resulting in fundamental changes in the healthcare industry in the United States. The Company anticipates that Congress and state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods and that public debate of these issues will likely continue in the future. Sales of the Company's products will depend to some extent on the availability of reimbursement to certain of the Company's customers by third party payors such as government and private insurance plans. No assurance can be given that such reimbursement will be available. Government Regulation. The production and marketing of the Company's products and its ongoing research and development activities are subject to regulation by numerous governmental authorities in the United States, the United 17 Kingdom and other countries, and may become subject to the regulations of additional countries. The rigorous preclinical and clinical testing requirements and regulatory approval process required to introduce new products can take a number of years and require the expenditure of substantial resources. The Company has limited experience in conducting and managing preclinical testing and relies on third parties to conduct clinical testing necessary to obtain government approvals. Delays in obtaining regulatory approvals would adversely affect the marketing of products developed by the Company and the Company's ability to receive product revenues or royalties. In addition, the Company cannot predict the extent to which government regulations or changes thereto might have an adverse effect on the production and marketing of the Company's existing or future products. A number of the Company's products under development will require clearance by the Food and Drug Administration ("FDA") in the United States. Although the Company believes each of these products, if successfully developed, will obtain FDA clearance, no assurance can be made that each will obtain such clearance, or that the process of clearance will be without undue delay or expense. 18 PART II - OTHER INFORMATION PolyMedica Industries, Inc. Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Stockholders held on September 12, 1996, the following proposals were adopted by the vote specified below: Proposal Broker For Against Abstain Non votes(1) Election of Directors: Richard H. Bard 5,958,565 1,323,251(2) Thomas S. Soltys, Jr. 6,945,055 336,761(2) Amendment to 1990 Stock Option Plan increasing by 400,000 the number of shares available for issuance under the Plan 2,066,310 1,568,932 263,215 3,383,359 Amendment to 1992 Directors' Stock Option Plan increasing by 137,000 the number of shares available for issuance under the Plan 2,074,972 1,558,992 264,493 3,383,359 Ratification of Coopers & Lybrand L.L.P. as independent public accountants 7,016,817 26,864 238,135 0 - ---------------------- (1) Votes counted for quorum purposes, as to which the broker or other nominee holder was not authorized by the beneficial owner to cast a vote on this particular proposal but was authorized to cast (and did cast) a vote on at least one other proposal. (2) Represents votes "withheld" from each respective director. 19 Item 6. Exhibits and Reports on Form 8-K (a) See Exhibit Index (b) There was one report on Form 8-K filed during the three months ended September 30, 1996. 20 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. PolyMedica Industries, Inc. (registrant) /s/ Steven J. Lee Steven J. Lee Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Eric G. Walters Eric G. Walters Chief Financial Officer, Treasurer, and Clerk (Principal Financial and Accounting Officer) Dated: November 13, 1996 21 Exhibit Index PolyMedica Industries, Inc. Exhibit Description Page 4.12 - Letter Agreement amending the Note and Warrant Agreement dated August 2, 1996. 4.13 - Letter Agreement amending the Note and Warrant Agreement dated October 30, 1996. 22 EX-99 2 LETTER AMENDING NOTE AND WARRANT AGREEMENT08/02/96 POLYMEDICA INDUSTRIES, INC. POLYMEDICA PHARMACEUTICALS (U.S.A.), INC. POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC. 11 State Street Woburn, Massachusetts 01801 August 2, 1996 Exhibit 4.12 JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY John Hancock Place P. O. Box 111 Boston, Massachusetts 02117 Ladies and Gentlemen: POLYMEDICA INDUSTRIES, INC., a Massachusetts corporation (the "Parent"), and POLYMEDICA PHARMACEUTICALS (U.S.A.), INC., a Massachusetts corporation and a Wholly-Owned Subsidiary of the Parent (the "Company"), and POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC., a Massachusetts corporation and a Wholly-Owned Subsidiary of the Company ("PPR") (the Company and PPR are sometimes collectively referred to as the "Borrowers" and each as a "Borrower"), agree with you as follows: 1. Definitions. Reference is hereby made to that certain Note and Warrant Agreement dated January 26, 1993, as amended and supplemented by nine letter agreements dated April 27, 1993, June 15, 1993, March 29, 1994, June 17, 1994, June 30, 1994, October 27, 1994, June 26, 1995, October 18, 1995, January 1, 1996, and June 19, 1996 (the "Note and Warrant Agreement"). Capitalized terms used herein without definition have the meanings ascribed to them in the Note and Warrant Agreement. 2. Amendment of Section 4.2(n) (ii) of the Warrants. In consideration of the representations, warranties and agreements of the Parent and the Borrowers set forth herein, you agree that section 4.2(n) (ii) of each of the Warrants is hereby amended by deleting the figure "2,500,000" appearing therein and inserting the figure "3,000,000" in place thereof. 3. Waiver of Default under Section 14.7 of the Note and Warrant Agreement. The Parent and the Borrowers hereby request that you waive any Default or Event of Default arising solely from the failure of the Company to comply with the provisions of section 14.7 (b) of the Note and Warrant Agreement for the 1 period of four (4) consecutive quarterly accounting periods ended June 30, 1996. In consideration of the representations, warranties and agreements of the Parent and the Borrowers set forth herein, you, by your signature below, hereby grant such waiver, solely with respect to such period four (4) consecutive quarterly accounting periods. 4. No Default, Representations and Warranties, etc. (a) The Parent and the Borrowers represent and warrant that the representations and warranties contained in the Note and Warrant Agreement and the other Operative Agreements are correct on and as of the date hereof as if made on such date (except to the extent affected by the consummation of transactions permitted by the Note and Warrant Agreement) and that no Default or Event of Default exists. (b) The Parent and the Borrowers each ratify and confirm the Note and Warrant Agreement and each of the other Operative Agreements to which each is a party and agree that each such agreement, document and instrument is in full force and effect, that its obligations thereunder and under this Letter Agreement are its legal, valid and binding obligations enforceable against it in accordance with the terms thereof and hereof and that it has no defense, whether legal or equitable, setoff or counterclaim to the payment and performance of such obligations. (c) The Parent and the Borrowers agree that (i) if any default shall be made in the performance or observance of any covenant, agreement of condition contained in this Letter Agreement or in any agreement, document or instrument executed in connection herewith or pursuant hereto or (ii) if any representation or warranty made by the Parent or the Borrowers herein or therein shall prove to have been false or incorrect on the date as of which made, the same shall constitute an Event of Default under the Note and Warrant Agreement and the other Operative Agreements and, in such event, you and each other holder of any of the Notes shall have all rights and remedies provided by law and/or provided or referred to in the Note and Warrant Agreement and the other Operative Agreements. The Parent and the Borrowers further agree that this Letter Agreement is an Operative Agreement and all references in the Note and Warrant Agreement and in any other of the other Operative Agreements referred to therein shall include this Letter Agreement. 5. Payment of Transaction Costs. Concurrently with the execution of this Letter Agreement, the Parent and the Borrowers shall pay all reasonable fees and disbursements incurred by you at or prior to such time, including, without limitation, the reasonable fees, expenses and disbursements of your special counsel. 2 6. Governing Law. This Letter Agreement, including the validity hereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by the domestic substantive laws of The Commonwealth of Massachusetts without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. 7. Miscellaneous. The headings in this Letter Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Letter Agreement embodies the entire agreement and understanding among the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any provision in this Letter Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Letter Agreement may be executed in any number of counterparts and by the parties hereto on separate counterparts but all such counterparts shall together constitute but one and the same instrument. (The remainder of this page is left blank intentionally) 3 If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart hereof, whereupon this Letter Agreement shall become a binding agreement under seal among the parties hereto. Please then return one of such counterparts to the Company. Very truly yours, POLYMEDICA INDUSTRIES, INC. By: /s/ Steven James Lee Steven James Lee Chairman and Chief Executive Officer POLYMEDICA PHARMACEUTICALS (U.S.A.), INC. By: /s/ Steven James Lee Steven James Lee Chief Executive Officer POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC. By: /s/ Steven James Lee Steven James Lee Chief Executive Officer The terms and provisions of the foregoing Letter Agreement are hereby acknowledged and agreed to. POLYMEDICA SECURITIES, INC. POLYMEDICA PHARMACEUTICALS SECURITIES, INC. By: /s/ Steven James Lee By: /s/ Steven James Lee Steven James Lee Steven James Lee President President The foregoing is hereby accepted and agreed to: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ D. Dana Donovan D. Dana Donovan Senior Investment Officer 4 EX-99 3 LETTER AMENDING NOTE AND WARRANT AGREEMENT10/30/96 POLYMEDICA INDUSTRIES, INC. POLYMEDICA PHARMACEUTICALS (U.S.A.), INC. POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC. 11 State Street Woburn, Massachusetts 01801 October 30, 1996 Exhibit 4.13 JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY John Hancock Place P. O. Box 111 Boston, Massachusetts 02117 Ladies and Gentlemen: POLYMEDICA INDUSTRIES, INC., a Massachusetts corporation (the "Parent"), and POLYMEDICA PHARMACEUTICALS (U.S.A.), INC., a Massachusetts corporation and a Wholly-Owned Subsidiary of the Parent (the "Company"), and POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC., a Massachusetts corporation and a Wholly-Owned Subsidiary of the Company ("PPR") (the Company and PPR are sometimes collectively referred to as the "Borrowers" and each as a "Borrower"), agree with you as follows: 1. Definitions. Reference is hereby made to that certain Note and Warrant Agreement dated January 26, 1993, as amended and supplemented by eleven letter agreements dated April 27, 1993, June 15, 1993, March 29, 1994, June 17, 1994, June 30, 1994, October 27, 1994, June 26, 1995, October 18, 1995, January 1, 1996, June 19, 1996, and August 2, 1996 (the "Note and Warrant Agreement"). Capitalized terms used herein without definition have the meanings ascribed to them in the Note and Warrant Agreement. 2. Waiver of Default under Section 14.7 of the Note and Warrant Agreement. The Parent and the Borrowers hereby request that you waive any Default or Event of Default arising solely from the failure of the Company to comply with the provisions of section 14.7 (b) of the Note and Warrant Agreement for the period of four (4) consecutive quarterly accounting periods ended September 30, 1996. In consideration of the representations, warranties and agreements of the Parent and the Borrowers set forth herein, you, by your signature below, hereby grant such waiver, solely with respect to such period four (4) consecutive quarterly accounting periods. 1 3. No Default, Representations and Warranties, etc. (a) The Parent and the Borrowers represent and warrant that the representations and warranties contained in the Note and Warrant Agreement and the other Operative Agreements are correct on and as of the date hereof as if made on such date (except to the extent affected by the consummation of transactions permitted by the Note and Warrant Agreement) and that no Default or Event of Default exists. (b) The Parent and the Borrowers each ratify and confirm the Note and Warrant Agreement and each of the other Operative Agreements to which each is a party and agree that each such agreement, document and instrument is in full force and effect, that its obligations thereunder and under this Letter Agreement are its legal, valid and binding obligations enforceable against it in accordance with the terms thereof and hereof and that it has no defense, whether legal or equitable, setoff or counterclaim to the payment and performance of such obligations. (c) The Parent and the Borrowers agree that (i) if any default shall be made in the performance or observance of any covenant, agreement of condition contained in this Letter Agreement or in any agreement, document or instrument executed in connection herewith or pursuant hereto or (ii) if any representation or warranty made by the Parent or the Borrowers herein or therein shall prove to have been false or incorrect on the date as of which made, the same shall constitute an Event of Default under the Note and Warrant Agreement and the other Operative Agreements and, in such event, you and each other holder of any of the Notes shall have all rights and remedies provided by law and/or provided or referred to in the Note and Warrant Agreement and the other Operative Agreements. The Parent and the Borrowers further agree that this Letter Agreement is an Operative Agreement and all references in the Note and Warrant Agreement and in any other of the other Operative Agreements referred to therein shall include this Letter Agreement. 4. Payment of Transaction Costs. Concurrently with the execution of this Letter Agreement, the Parent and the Borrowers shall pay all reasonable fees and disbursements incurred by you at or prior to such time, including, without limitation, the reasonable fees, expenses and disbursements of your special counsel. 2 5. Governing Law. This Letter Agreement, including the validity hereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by the domestic substantive laws of The Commonwealth of Massachusetts without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. 6. Miscellaneous. The headings in this Letter Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Letter Agreement embodies the entire agreement and understanding among the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any provision in this Letter Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Letter Agreement may be executed in any number of counterparts and by the parties hereto on separate counterparts but all such counterparts shall together constitute but one and the same instrument. (The remainder of this page is left blank intentionally) 3 If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart hereof, whereupon this Letter Agreement shall become a binding agreement under seal among the parties hereto. Please then return one of such counterparts to the Company. Very truly yours, POLYMEDICA INDUSTRIES, INC. By: /s/ Steven James Lee Steven James Lee Chairman and Chief Executive Officer POLYMEDICA PHARMACEUTICALS (U.S.A.), INC. By: /s/ Steven James Lee Steven James Lee Chief Executive Officer POLYMEDICA PHARMACEUTICALS (PUERTO RICO), INC. By: /s/ Steven James Lee Steven James Lee Chief Executive Officer The terms and provisions of the foregoing Letter Agreement are hereby acknowledged and agreed to. POLYMEDICA SECURITIES, INC. POLYMEDICA PHARMACEUTICALS SECURITIES, INC. By: /s/ Steven James Lee By: /s/ Steven James Lee Steven James Lee Steven James Lee President President The foregoing is hereby accepted and agreed to: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ D. Dana Donovan D. Dana Donovan Senior Investment Officer 4 EX-27 4 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-Q
5 0000878748 PolyMedica Industries, Inc. 1,000 U.S. Dollars 3-MOS MAR-31-1997 JUL-01-1996 SEP-30-1996 1 12768 0 5401 434 4409 23309 6171 4026 72144 4424 25069 0 0 86 42565 72144 7063 7103 2691 3319 461 33 689 632 19 613 0 0 0 613 0.07 0.07
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