-----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, Msg42oaYu4FoUteHnL3sOFmpbhkRmCXY58vdOKtJq78NKT2dZkbDuWBsinISiyC6 XhkvGkvLOwjPyS0Pzl9fSw== 0001144204-10-015626.txt : 20100325 0001144204-10-015626.hdr.sgml : 20100325 20100325160725 ACCESSION NUMBER: 0001144204-10-015626 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20100325 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100325 DATE AS OF CHANGE: 20100325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Conmed Healthcare Management, Inc. CENTRAL INDEX KEY: 0000943324 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 421297992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34408 FILM NUMBER: 10704689 BUSINESS ADDRESS: STREET 1: 7250 PARKWAY DR. STREET 2: SUITE 400 CITY: HANOVER STATE: MD ZIP: 21076 BUSINESS PHONE: 5152221717 MAIL ADDRESS: STREET 1: 7250 PARKWAY DR. STREET 2: SUITE 400 CITY: HANOVER STATE: MD ZIP: 21076 FORMER COMPANY: FORMER CONFORMED NAME: PACE HEALTH MANAGEMENT SYSTEMS INC DATE OF NAME CHANGE: 19960118 8-K 1 v178557_8k.htm Unassociated Document
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): March 25, 2010
               
 
CONMED HEALTHCARE MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware
0-27554
42-1297992
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)

7250 Parkway Dr.
Suite 400
Hanover, MD
(Address of principal executive offices)
 
 
21076
(Zip Code)

Registrant’s telephone number, including area code: (410) 567-5520
 
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))  
 

 

On March 25, 2010, Conmed Healthcare Management, Inc. (the “Company”) issued a press release announcing its financial results for the three
months and year ended December 31, 2009. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Exchange Commission for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise
expressly stated in such a filing.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit No.
Description
99.1
Press release dated March 25, 2010
 
This Current Report on Form 8-K may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements with respect to the Company 's plans, objectives, expectations and intentions; and (ii) other statements that are not historical facts including statements which may be identified by words such as “may”, “could”, “would”, “should”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “projects”, “potentially” or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control) including, without limitation, the Company's ability to increase revenue and to continue to obtain new contracts, contract renewals and extensions; inflation exceeding the Company’s projection of the inflation rate of cost of services under multi-year contracts; the ability to obtain bonds; decreases in occupancy levels or disturbances at detention centers; malpractice litigation; the ability to utilize third party administrators for out-of-facility care; compliance with laws and government regulations, including those relating to healthcare; competition; termination of contracts due to lack of government appropriations; material adverse changes in economic and industry conditions in the healthcare market; negative publicity regarding the provision of correctional healthcare services; dependence on key personnel and the ability to hire skilled personnel; increases in healthcare costs; insurance; completion and integration of future acquisitions; public company obligations; and stock price volatility. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the SEC, including the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2009. Investors and security holders are urged to read this document free of charge on the SEC's web site at www.sec.gov. The Company does not undertake to publicly update or revise its forwardlooking statements as a result of new information, future events or otherwise. 



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.
 
 
CONMED HEALTHCARE MANAGEMENT, INC.
 
By:
 
 
/s/ Thomas W. Fry
   
Name: Thomas W. Fry
 
Title: Chief Financial Officer
 
EX-99.1 2 v178557_ex99-1.htm Unassociated Document
 
Conmed Healthcare Management, Inc. Reports Record Revenues for Fourth Quarter and Full Year 2009

Fourth Quarter Revenue Increases 14.9% to a Record $14.0 Million
Full-Year Revenue Increases 30.2% to a Record $52.8 Million

Hanover, Md. -- (BUSINESS WIRE)—March 25, 2010 -- Conmed Healthcare Management, Inc. (NYSE Amex: CONM), a leading full service provider of correctional facility healthcare services to county and municipal detention centers, today announced financial results for its fourth quarter and year ended December 31, 2009.

Fourth Quarter Financial Highlights
·
Net revenue increased 14.9% to $14.0 million from $12.2 million in last year's comparable period.
·
Gross profit increased 12.3% to $2.7 million (19.2% gross margin), compared to $2.4 million (19.7% gross margin) last year.
·
Operating expenses as a percentage of revenue declined 330 basis points to 16.3% from 19.6% in the year-ago period.
·
Operating income was approximately $0.4 million, compared to approximately $11,000 in the fourth quarter of 2008.
·
Net income of approximately $1.4 million, or $0.11 per basic share and $0.07 per diluted share, compared to net income of approximately $19,000, or $0.00 per basic and diluted share, in last year’s same period.
·
The Company generated approximately $940,000 in positive cash flow in the fourth quarter, with $11.1 million in cash and cash equivalents as of December 31, 2009.

Fourth Quarter Highlights:
·
Pima County, Arizona agreed to extend its contract with Conmed for healthcare services at the Pima County Adult Detention Center for two years, covering the period from July 1, 2010 through June 30, 2012. This remains Conmed’s largest contract to date and is expected to generate approximately $19.5 million in revenues throughout the term of the contract, or $9.7 million per year for each of the two year periods.
·
Baltimore County, Maryland exercised the first of two three-year extension periods for Conmed to provide services for the Baltimore County Detention Center.  The contract is valued at almost $6.0 million per annum and is Conmed’s second largest contract.
·
Sedgwick County, Kansas, one of Conmed’s top three customers, agreed to a new five-year contract with Conmed for the adult detention facility. The value of this contract totals approximately $22.2 million.

Subsequent to Year-End:
·
Signed a new 29-month contract with Pima County, Arizona to provide services at their Juvenile Detention Center with projected revenues of approximately $2.8 million. Agreement provides for two additional one-year extension periods available at the county’s option.
·
Signed agreement with Clark County, Washington, a new customer, to provide medical services for individuals detained at three county facilities. The contract is projected to generate approximately $16.0 million throughout the full six-year term.
·
Signed agreement with Garrett County, Maryland, with extensions expected to generate revenues of approximately $1.0 million over the full four and one-half year term.
 

 
Fourth Quarter Financial Results
Net revenue for the three months ended December 31, 2009 increased $1.8 million, or 14.9%, to $14.0 million from $12.2 million in last year's comparable period. The revenue improvement resulted from the addition of contracts signed with new jurisdictions since September 30, 2008. Revenues also increased as a result of the acquisition of Correctional Mental Health Services, LLC (“CMHS”) on November 4, 2008, as well as the expansion of services under existing contracts and price increases related to existing services.
 
"The fourth quarter of 2009 demonstrated continued solid momentum in our financial performance and the consistent execution of our growth strategy,” commented Richard Turner, Chairman and Chief Executive Officer of Conmed. “We again achieved record revenues in the fourth quarter and full year 2009, increased our operating income, increased our cash generation and generated a solid, debt free balance sheet.  The results continue to demonstrate the leverage in our operating model as we believe that our business has scaled to the point where our expanded client base and our recurring revenue model are more directly impacting the bottom line. We maintained our existing business, expanded geographically, improved our pricing, expanded services in many existing accounts and were awarded renewals with several of our largest current customers. Even though our rate of growth slowed in the fourth quarter, bid activity remains strong and we made three announcements of new multi-year contracts subsequent to the year-end that position us well for 2010 and beyond.”
 
Total healthcare expenses for the quarter ended December 31, 2009 were $11.3 million compared to $9.8 million in the year-ago period. The increase primarily reflects increased healthcare and mental health staffing plus medical and operating expenses required to support new business. Gross profit increased 12.3% to $2.7 million from $2.4 million in the prior year period, while gross margin declined slightly from 19.7% to 19.2%.

Total operating expenses decreased 4.0% to $2.3 million for the quarter ended December 31, 2009 compared to $2.4 million for the year-ago period. Operating expenses as a percentage of revenue declined 330 basis points to 16.3% from 19.6% in the year-ago period, which continues to reflect the leverage in the Company’s operating model. Selling, general and administrative expenses for the fourth quarter were $1.9 million, or 13.9% of revenue, compared to $1.8 million, or 14.6% of revenue, for the year-ago quarter.  The slight increase reflects investments in additional management and administrative personnel required to support the new contracts and services added in 2008, as well as to sustain the Company during anticipated future growth. Depreciation and amortization decreased 43% for the quarter to $343,000 from $599,000 in the year ago period. The decrease primarily reflects a reduction in amortization expense related to acquired contracts that have become fully amortized.

Conmed reported record operating income of approximately $400,000 in the fourth quarter up approximately 35-fold compared to operating income of approximately $11,000 in the fourth quarter last year. Net income was $1.4 million, or $0.11 per basic share and $0.07 per diluted share, compared to net income of approximately $19,000, or $0.00 per basic and diluted share, in the year-ago period. The fourth quarter 2009 net income included a $479,000 adjustment to reflect the change in fair value of derivatives (outstanding warrants) as required under EITF 07-5 ** plus a one-time tax benefit of $709,000 related to the reversal of the deferred tax valuation reserve.
 

 
Dr. Turner concluded, “During 2009, we observed that many county and municipal governments were struggling with budget pressures as they tried to maintain service levels with less revenue, even as inmate populations expanded. We believe that Conmed was able to demonstrate the additional value that our services provide by performing more efficiently than the county and municipal governments could themselves, all the while improving or maintaining quality of service. We continue to strengthen our brand and our unique service proposition, which includes our quality of service, our audit compliance track record and our exceptional customer renewal and retention rates. Our remarkable record of customer retention over the last 25 years truly sets us apart. We believe our quality record is one very important reason our clients choose us and stay with us over the long run.”

For the fourth quarter of 2009, adjusted EBITDA*, a non-GAAP measure, grew 17.8% to approximately $896,000 compared to approximately $761,000 in the prior year’s fourth quarter.

Year-to-Date Results
Net revenue for the year ended December 31, 2009 increased $12.2 million to a record $52.8 million, up 30.2%, compared to a record $40.6 million for last year's comparable period. Approximately $10.8 million, or 88.6%, of the year-over-year increase is due to the addition of new medical service contracts acquired after December 31, 2007. Revenue improvement related to the expansion of the services provided under a number of our existing contracts as well as price increases related to existing service requirements totaled approximately $1.7 million, or 14.1%, of the increase.

Total healthcare expenses for the year ended December 31, 2009 were $42.1 million compared to $33.1 million in the year-ago period. For the full year, gross profit increased 44% to $10.7 million, representing 20.3% gross margin, compared to gross profit of $7.4 million, or 18.3%, gross margin in last year's same period.

Total operating expenses were $9.7 million, or 18.4% of revenue, for the year ended December 31, 2009 compared to $8.5 million, or 20.9% of revenue, for the year-ago period. Conmed's operating income was approximately $998,000 compared to an operating loss of ($1.1 million) in the same period last year. The net loss for the year ended December 31, 2009 was approximately ($27,000), or ($0.00) loss per basic and diluted share (based on approximately 12.6 million weighted average shares outstanding), compared to a loss of ($919,000), or ($0.08) loss per basic and diluted share (based on approximately 12.1 million weighted average shares outstanding), in the year ago period. The full year 2009 net loss included a $1.2 million non-cash charge for a change in fair value of derivative instruments (outstanding warrants) as required under EITF 07-5 **.

For the full year 2009, adjusted EBITDA* increased 119% to approximately $3.6 million compared to approximately $1.6 million in last year’s same period.
 

 
The Company generated approximately $3.6 million in operating cash flow in the year ended December 31, 2009, and had $11.1 million in cash and cash equivalents as of December 31, 2009 compared to $7.5 million at December 31, 2008. Shareholders’ equity increased to $15.5 million at December 31, 2009 compared to $14.9 million at December 31, 2008. Days Sales Outstanding (DSO) as of December 31, 2009 was approximately 16 days.  The Company paid down the approximately $205,000 of its remaining debt during 2009, and currently is debt-free.

*Use of Non-GAAP Measures
In addition to containing results that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP), this press release also contains non-GAAP financial measures. Adjusted EBITDA, as used in this press release, represents net income (loss) from continuing operations before interest, taxes, depreciation and amortization adjusted for stock-based compensation, change in fair value of derivative financial instruments and gains or losses on the sale of assets. Adjusted EBITDA is a key indicator used by management to evaluate operating performance. While adjusted EBITDA is not intended to replace any presentation included in the consolidated financial statements under GAAP and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, the Company believes this measure is useful to investors in assessing the Company’s capital expenditures and working capital requirements. This calculation may differ in method of calculation from similarly titled measures used by other companies. A reconciliation of adjusted EBITDA to the nearest comparable GAAP financial measure is included in the financial schedules accompanying this press release. The adjusted financial measure, as well as other information in this press release, should be read in conjunction with the Company’s financial statements filed with the Securities and Exchange Commission.

**EITF 07-5 -- Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock:
We are required to record a non-cash charge to our GAAP results per Emerging Issues Task Force (“EITF”) Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock and thus our financial statements will continue to include this charge going forward until certain events occur and/or conditions are met, as defined in the new regulations. As a result of the Company’s adoption of EITF 07-5 effective January 1, 2009, approximately 1.7 million of our issued and outstanding common stock purchase warrants previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment and as a result they are now being recorded as a liability based on fair value estimates. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model and all changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised, amended or expire.

Conference Call
Conmed will host a conference call today, Thursday, March 25, 2010, at 4:30 PM ET.  Anyone interested in participating should call 877-941-2069 if calling within the United States or 480-629-9713 if calling internationally. A re-play will be available until April 1, 2010 which can be accessed by dialing 800-406-7325 if calling within the United States or 303-590-3030 if calling internationally. Please use passcode 4269918 to access the replay.
 

 
The call will also be accompanied by a live webcast over the Internet and accessible at Conmed’s corporate website at www.conmedinc.com or directly at http://viavid.net/dce.aspx?sid=00007276

About Conmed
Conmed has provided correctional healthcare services since 1984, beginning in the State of Maryland, and currently serves county and municipal correctional facilities in thirty-eight counties in seven states, including Arizona, Kansas, Maryland, Oklahoma, Oregon, Virginia and Washington. Conmed's services have expanded to include mental health, pharmacy and out-of-facility healthcare services.

Forward Looking Statements
This press release may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements with respect to the Company's plans, objectives, expectations and intentions; and (ii) other statements that are not historical facts including statements which may be identified by words such as "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "projects," "potentially," or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control) including, without limitation, the Company's ability to increase revenue and to continue to obtain new contracts, contract renewals and extensions; inflation exceeding the Company’s projection of the inflation rate of cost of services under multi-year contracts; the ability to obtain bonds; decreases in occupancy levels or disturbances at detention centers; malpractice litigation; the ability to utilize third party administrators for out-of-facility care; compliance with laws and government regulations, including those relating to healthcare; competition; termination of contracts due to lack of government appropriations; material adverse changes in economic and industry conditions in the healthcare market; negative publicity regarding the provision of correctional healthcare services; dependence on key personnel and the ability to hire skilled personnel; increases in healthcare costs; insurance; completion and integration of future acquisitions; public company obligations; and stock price volatility. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2009. Investors and security holders are urged to read this document free of charge on the SEC's web site at www.sec.gov. The Company does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.


 
CONMED HEALTHCARE MANAGEMENT, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
YEARS ENDED DECEMBER 31, 2009 AND 2008

   
December 31,
2009
   
December 31,
2008
 
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ 11,056,143     $ 7,472,140  
Accounts receivable
    2,278,074       2,375,583  
Prepaid expenses
    865,261       291,599  
Deferred taxes
    102,000       --  
Total current assets
    14,301,478       10,139,322  
PROPERTY AND EQUIPMENT, NET
    605,578       529,304  
DEFERRED TAXES
    1,381,000       645,000  
OTHER ASSETS
               
Service contracts acquired, net
    984,000       2,004,000  
Non-compete agreements, net
    436,667       821,667  
Goodwill
    6,263,705       6,254,544  
Deposits
    11,549       15,408  
Total other assets
    7,695,921       9,095,619  
    $ 23,983,977     $ 20,409,245  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
CURRENT LIABILITIES
               
Accounts payable
  $ 1,489,498     $ 1,080,259  
Accrued expenses
    4,146,940       3,210,749  
Deferred revenue
    1,018,645       561,734  
Notes payable, current portion
    --       170,228  
Income taxes payable
    550,000       432,380  
Total current liabilities
    7,205,083       5,455,350  
NOTES PAYABLE, LONG-TERM
    --       35,000  
DERIVATIVE FINANCIAL INSTRUMENTS
    1,299,450       --  
SHAREHOLDERS' EQUITY
               
Preferred stock no par value; authorized 5,000,000 shares; issued and outstanding zero shares as of December 31, 2009 and December 31, 2008
    --       --  
Common stock, $0.0001 par value, authorized 40,000,000 shares; issued and outstanding 12,629,572 and 12,457,539  shares as of December 31, 2009 and 2008, respectively
    1,263       1,246  
Additional paid-in capital
    37,829,900       36,875,610  
Retained (deficit)
    (22,351,719 )     (21,957,961 )
Total shareholders' equity
    15,479,444       14,918,895  
    $ 23,983,977     $ 20,409,245  
 

 
CONMED HEALTHCARE MANAGEMENT, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
PERIODS ENDED DECEMBER 31, 2009 AND 2008
 
   
For the Year Ended December 31, 2009
   
For the Year Ended December 31, 2008
   
For the Three Months Ended December 31, 2009
   
For the Three Months Ended December 31, 2008
 
                         
Service contract revenue
  $ 52,784,559     $ 40,550,414     $ 14,009,250     $ 12,188,133  
                                 
HEALTHCARE EXPENSES:
                               
Salaries, wages and employee benefits
    29,871,129       21,412,861       7,732,799       6,717,393  
Medical expenses
    10,283,969       10,378,753       3,035,549       2,675,962  
Other operating expenses
    1,940,000       1,333,425       551,220       399,494  
Total healthcare expenses
    42,095,098       33,125,039       11,319,568       9,792,849  
                                 
Gross profit
    10,689,461       7,425,375       2,689,682       2,395,284  
                                 
OPERATING EXPENSES:
                               
Selling and administrative expenses
    7,720,525       6,359,694       1,946,424       1,785,265  
Depreciation and amortization
    1,971,288       2,132,748       343,337       598,878  
Total operating expenses
    9,691,813       8,492,442       2,289,761       2,384,143  
                                 
Operating income (loss)
    997,648       (1,067,067 )     399,921       11,141  
                                 
OTHER  INCOME (EXPENSE)
                               
Interest income
    80,215       154,949       19,088       9,864  
Interest (expense)
    (8,294 )     (7,149 )     (304 )     (2,428 )
   Change in fair value of derivatives
    (1,209,715 )     --       478,909       --  
       Total operating expenses
    (1,137,794 )     147,800       497,693       7,436  
Income (loss) before income taxes
    (140,146 )     (919,267 )     897,614       18,577  
Income tax (benefit)
    (113,000 )     --       (515,000 )     --  
Net income (loss)
  $ (27,146 )   $ (919,267 )   $ 1,412,614     $ 18,577  
                                 
EARNINGS (LOSS) PER COMMON SHARE
                               
Basic
  $ (0.00 )   $ (0.08 )   $ 0.11     $ 0.00  
Diluted
  $ (0.00 )   $ (0.08 )   $ 0.07     $ 0.00  
                                 
WEIGHTED-AVERAGE SHARES OUTSTANDING
                               
Basic
    12,566,382       12,090,399       12,624,626       12,339,487  
Diluted
    12,566,382       12,090,399       14,104,892       13,324,598  
 

 
CONMED HEALTHCARE MANAGEMENT, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2009 AND 2008

   
December 31, 2009
   
December 31, 2008
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net (loss)
  $ (27,146 )   $ (919,267 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities
               
Depreciation
    216,288       112,415  
Amortization
    1,755,000       2,020,333  
Stock-based compensation
    628,618       573,775  
Change in fair value of derivatives
    1,209,715       --  
Loss on disposal of property
    --       2,257  
Deferred income taxes
    (838,000 )     (555,000 )
Changes in working capital components
               
Decrease (increase) in accounts receivable
    97,509       (623,459 )
(Increase) in prepaid expenses
    (573,662 )     (75,083 )
Decrease in deposits
    3,859       45,000  
Increase in accounts payable
    409,239       243,115  
Increase in accrued expenses
    852,421       1,350,865  
Increase in income taxes payable
    117,620       427,380  
Increase in deferred revenue
    456,911       208,659  
Net cash provided by operating activities
    4,308,372       2,810,990  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of property and equipment
    (292,562 )     (426,161 )
Stock purchase of CMHS, LLC
    (187,891 )     (1,767,855 )
Asset Purchase from EMDC, P.C.
    --       (245,853 )
Service contract extensions
    (87,500 )     --  
Net cash (used in) investing activities
    (567,953 )     (2,439,869 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Borrowings on line of credit
    --       39,903  
Payments on line of credit
    (100,000 )     --  
Payments on loans payable
    (105,228 )     (75,604 )
Proceeds from exercise of warrants and stock options
    48,812       --  
Net cash (used in) financing activities
    (156,416 )     (35,701 )
                 
Net increase in cash and cash equivalents
    3,584,003       335,420  
                 
CASH AND CASH EQUIVALENTS
               
Beginning
    7,472,140       7,136,720  
Ending
  $ 11,056,143     $ 7,472,140  


 
CONMED HEALTHCARE MANAGEMENT, INC.

RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA
 
   
For the Year Ended December 31, 2009
   
For the Year Ended December 31, 2008
   
For the Three Months Ended December 31, 2009
   
For the Three Months Ended December 31, 2008
 
Net income (loss)
  $ (27,146 )   $ (919,267 )   $ 1,412,614     $ 18,577  
Income tax (benefit)
    (113,000 )     --       (515,000 )     --  
Interest income
    (80,215 )     (154,949 )     (19,088 )     (9,864 )
Interest expense
    8,294       7,149       304       2,428  
Depreciation and Amortization
    1,971,288       2,132,748       343,337       598,878  
Stock-based compensation
    628,618       573,775       153,021       150,554  
Change in fair value of warrants
    1,209,715       --       (478,909 )     --  
Gain or Loss on Sale of Assets
    --       2,257       --       --  
Adjusted EBITDA
  $ 3,597,554     $ 1,641,713     $ 896,279     $ 760,573  
 

Contact:
Conmed Healthcare Management, Inc.
Thomas W. Fry, 410-567-5529
Chief Financial Officer
tfry@conmed-inc.com

or
Hayden IR
Peter Seltzberg, 646-415-8972
peter@haydenir.com

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