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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 2003
----------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to ______________
Commission file number 0-12927
NATIONAL HOME HEALTH CARE CORP.
(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
- ---------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
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 __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes __ No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of March 14, 2003 was
5,549,488.
NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 2003
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Balance Sheets as of January 31, 2003 and July 31,
2002 (unaudited) 3-4
Statements of Operations for the three months
ended January 31, 2003 and January 31, 2002
and the six months ended January 31, 2003 and
January 31, 2002 (unaudited) 5
Statements of Cash Flows for the six months ended
January 31, 2003 and January 31, 2002
(unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13-14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 18
-2-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
January 31, 2003 July 31, 2002
---------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $12,568,000 $15,341,000
Investments 21,000 35,000
Accounts receivable - less allowance for possible
losses of $617,000 and $691,000 17,397,000 16,382,000
Prepaid expenses and other assets 1,130,000 778,000
Income taxes receivable 212,000 234,000
Deferred income taxes 341,000 295,000
----------- -----------
Total current assets 31,669,000 33,065,000
Furniture, equipment and leasehold
improvements, net 870,000 857,000
Goodwill 9,468,000 7,366,000
Other intangible assets, net 2,400,000 1,406,000
Deferred income taxes 249,000 515,000
Deposits and other assets 347,000 303,000
----------- -----------
$45,003,000 $43,512,000
=========== ===========
TOTAL
(continued)
-3-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
January 31, 2003 July 31, 2002
---------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $2,330,000 $3,581,000
Estimated third-party payor settlements 754,000 912,000
Deferred revenue 423,000 340,000
----------- -----------
Total current liabilities 3,507,000 4,833,000
----------- -----------
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 6,903,819 shares 7,000 7,000
Additional paid-in capital 25,556,000 25,552,000
Retained earnings 18,787,000 15,839,000
----------- -----------
44,350,000 41,398,000
Less: treasury stock (1,344,379 and 1,329,979
shares) at cost (2,854,000) (2,719,000)
----------- -----------
Total stockholders' equity 41,496,000 38,679,000
----------- -----------
TOTAL $45,003,000 $43,512,000
=========== ===========
See accompanying notes to consolidated financial statements.
-4-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months ended For the six months ended
January 31, January 31,
--------------------------------- ------------------------------------
2003 2002 2003 2002
---- ---- ---- ----
Net patient revenue $24,643,000 $20,466,000 $47,582,000 $40,741,000
---------------- --------------- --------------- -----------------
Operating expenses:
Cost of revenue 15,956,000 12,972,000 30,696,000 25,898,000
General and administrative 5,982,000 5,012,000 11,585,000 9,836,000
Amortization of intangibles 151,000 136,000 291,000 273,000
Provision for possible losses 50,000 65,000 100,000 180,000
---------------- --------------- --------------- -----------------
Total operating expenses 22,139,000 18,185,000 42,672,000 36,187,000
---------------- --------------- --------------- -----------------
Income from operations 2,504,000 2,281,000 4,910,000 4,554,000
Other income:
Interest 35,000 44,000 90,000 122,000
---------------- --------------- --------------- -----------------
Income before taxes 2,539,000 2,325,000 5,000,000 4,676,000
Provision for income taxes 1,065,000 904,000 2,052,000 1,840,000
---------------- --------------- --------------- -----------------
Net income $1,474,000 $1,421,000 $2,948,000 $2,836,000
================ =============== =============== =================
Net income per share:
Basic $0.26 $0.26 $0.53 $0.51
================ =============== =============== =================
Diluted $0.26 $0.24 $0.51 $0.49
================ =============== =============== =================
Weighted average shares outstanding:
Basic 5,563,255 5,517,393 5,567,017 5,533,217
================ =============== =============== =================
Diluted 5,767,091 5,814,296 5,772,217 5,839,609
================ =============== =============== =================
See accompanying notes to consolidated financial statements.
-5-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six months ended January 31,
------------------------------------
2003 2002
---- ----
Cash flows from operating activities:
Net income $2,948,000 $2,836,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 430,000 401,000
Allowance for possible losses, net of writeoffs 74,000 (15,000)
Unrealized loss on investments 14,000 45,000
Deferred income taxes 220,000 -----
Tax benefit realized from the exercise of stock options
by employees ----- 299,000
Changes in assets and liabilities:
Accounts receivable (1,089,000) 126,000
Prepaid expenses and other (396,000) 154,000
Income taxes receivable 22,000 (282,000)
Accounts payable, accrued expenses and
other liabilities (1,251,000) (651,000)
Estimated third-party payor settlements (158,000) (340,000)
Deferred revenue 83,000 (22,000)
------------------ -----------------
Net cash provided by operating activities 897,000 2,551,000
------------------ -----------------
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements (82,000) (80,000)
Purchase of assets of business (3,457,000) (85,000)
Purchase of investments ----- (66,000)
------------------ -----------------
Net cash used in investing activities (3,539,000) (231,000)
------------------ -----------------
Cash flows from financing activities:
Proceeds from exercise of stock options 4,000 327,000
Purchase of treasury shares (135,000) (90,000)
------------------ -----------------
Net cash provided by (used in) financing activities (131,000) 237,000
------------------ -----------------
Net increase (decrease) in cash and cash equivalents (2,773,000) 2,557,000
Cash and cash equivalents - beginning of period 15,341,000 9,082,000
------------------ -----------------
Cash and cash equivalents - end of period $12,568,000 $11,639,000
================== =================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $1,811,000 $1,822,000
Interest 10,000 4,000
See accompanying notes to consolidated financial statements.
-6-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended
January 31, 2003 are not necessarily indicative of the results that may be
expected for the year ending July 31, 2003. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended July 31, 2002.
NOTE 2 - ACQUISITIONS
On September 3, 2002, the Company, through a newly-formed subsidiary in
Massachusetts, acquired certain assets of Medical Resources, Inc. and related
entities ("Medical Resources"). Medical Resources provides home health care
services throughout Massachusetts. The purchase price of $2,623,000 in cash,
including acquisition costs of $73,000, was financed using internal funds. The
acquisition was accounted for as a purchase.
On December 14, 2002, the Company, through a wholly-owned subsidiary in New
Jersey, acquired certain assets of Mary Baker's Health Care Services, Inc.
("Mary Baker"). Mary Baker provides home health care services in Bergen and
Passaic Counties, New Jersey. The purchase price of $434,000 in cash, including
acquisition costs of $14,000, was financed using internal funds. The acquisition
was accounted for as a purchase.
NOTE 3 - RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial
statements to conform to classifications used in the current period.
-7-
NOTE 4 - NET INCOME PER SHARE DATA
A reconciliation of shares used in calculating basic and diluted net income
per share is as follows:
For the three months ended
January 31,
----------------------------------------------------------------------
2003 2002
---- ----
Income Shares Income Shares
------ ------ ------ ------
Basic EPS:
Net income $1,474,000 5,563,255 $1,421,000 5,517,393
Effect of dilutive securities ----- 203,836 ----- 296,903
--------------- --------------- -------------- ---------------
Diluted EPS: $1,474,000 5,767,091 $1,421,000 5,814,296
=============== =============== ============== ===============
For the six months ended
January 31,
----------------------------------------------------------------------
2003 2002
---- ----
Income Shares Income Shares
------ ------ ------ ------
Basic EPS:
Net income $2,948,000 5,567,017 $2,836,000 5,533,217
Effect of dilutive securities ----- 205,200 ----- 306,392
--------------- --------------- -------------- ---------------
Diluted EPS: $2,948,000 5,772,217 $2,836,000 5,839,609
=============== =============== ============== ===============
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the attached consolidated financial
statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended July 31, 2002.
Except for historical information contained herein, certain matters set
forth in this report are forward-looking statements that are dependent on
certain risks and uncertainties, including such factors, among others, as the
ability of the Company to identify, consummate and integrate on favorable terms
acquisitions or market penetrations, as to which there can be no
-8-
assurance, market acceptance, pricing and demand for the Company's services,
changing regulatory environment, changing economic conditions, ability to
attract and retain qualified personnel, ability to manage the Company's growth,
and other risks detailed in the Company's other filings with the Securities and
Exchange Commission.
The Company is subject to significant external factors that could
significantly impact its business, including changes in Medicare and Medicaid
reimbursement, government fraud and abuse initiatives and other such factors
that are beyond the control of the Company. As a participant in the home health
care industry, the Company is subject to extensive federal, state and local
regulations. There can be no assurance that any of these regulations will not
change from existing standards, that additional standards will not be imposed or
that the Company will not experience adverse effects as a result of efforts to
comply with applicable standards, which are extensive, complex and
often-changing.
The Balanced Budget Act (the "Act") was signed into law in August 1997. The
Act made significant changes in the reimbursement system for Medicare home
health care services. The primary change that affects the Company is a
restructuring of the reimbursement system related to Medicare certified home
health care agencies.
Under the Act, Medicare home care reimbursement changes were scheduled in
two phases. A temporary or interim payment system ("IPS") took effect for cost
reports beginning on or after October 1, 1997. Under IPS, home health care
providers were reimbursed the lower of (i) their actual costs, (ii) cost limits
based on 105% of median costs of freestanding home health agencies or (iii) an
agency-specific per patient cost limit, based on 98% of 1994 costs adjusted for
inflation. Under IPS, most Medicare providers were reimbursed under an
agency-specific per patient cost limit. Prior to the implementation of IPS,
Medicare reimbursed providers on a reasonable cost basis subject to
program-imposed cost per visit limitations. Effective October 1, 2000, under the
prospective payment system, the last remaining phase of the Act, Medicare now
reimburses providers a predetermined base payment. The payment is adjusted for
the health condition and care needs of the beneficiary and is also adjusted for
the geographic differences in wages across the country. Medicare provides home
health agencies with payments for 60-day "episodes of care."
The latest aspect of the Act called for a 15% reduction in Medicare
reimbursement, effective October 1, 2002. Although the change to the prospective
payment system has not, to date, had a net material adverse impact on the
Company, there can be no assurance that the Medicare prospective payment or
Medicaid reimbursement systems will not adversely impact the Company's
reimbursement rates or otherwise have a material adverse effect on the Company.
The implementation of IPS resulted in a decrease in Medicare revenue from
the Company's Medicare certified agency in Connecticut. In addition, the
Company's operations in New York and New Jersey are dependent upon referral
sources, primarily from Medicare certified home health care agencies, whose
reimbursement has been adversely affected by the foregoing regulatory changes,
among other things. Under the prospective payment system, there can be no
assurance that future referrals to the Company will not be at reduced
reimbursement rates or at a reduced volume of business.
-9-
Results of Operations and Effects of Inflation
- ----------------------------------------------
Three Months Ended January 31, 2003 Compared to Three Months Ended
January 31, 2002
For the three months ended January 31, 2003, net patient revenue increased
$4,177,000, or 20.4%, to $24,643,000 from $20,466,000 for the three months ended
January 31, 2002. This increase is primarily attributable to the acquisition of
certain assets comprising Medical Resources, the Company's new operations in
Massachusetts, which generated net patient revenue of $2,043,000 for the recent
period. The net patient revenue increase also included $1,484,000 of growth in
existing markets. Lastly, the net patient revenue increase also included
$650,000 from the expansion of the Company's operations to include staffing and
related personnel to hospitals, nursing homes and facilities in New York and New
Jersey in the current period. Medicaid reimbursement (which accounted for 47% of
net patient revenue in fiscal 2002), like other third-party reimbursement, is
subject to rate changes from time to time that may affect the Company. For
example, although as of the date hereof no particular rate change materially
affecting the Company has been implemented or quantified, the Company believes
that certain Medicaid rates in Connecticut will be reduced some time in 2003. In
addition, net patient revenue in New York will be reduced by the re-imposition
of the 0.6% tax assessment on all home care providers, as well as by a reduction
in the 2003 trend factor from its prior level, which will result in reduced
Medicaid reimbursement rates.
Gross profit margin decreased to 35.3% for the three months ended January
31, 2003 from 36.6% for the three months ended January 31, 2002. This decrease
is primarily attributable to lower gross profit margins on the new staffing
operations and, in addition, the Company did not experience any increase in its
Medicaid reimbursement rates in Connecticut, New York and New Jersey during the
recent three-month period. The Company's future gross profit margin would be
subject to further decrease as a result of the adverse rate and/or trend factor
changes referenced above.
General and administrative expenses increased $970,000, or 19.4%, to
$5,982,000 for the three months ended January 31, 2003 from $5,012,000 for the
three months ended January 31, 2002. This increase is primarily attributable to
additional administrative personnel and occupancy costs incurred, during the
recent period, in connection with the acquisition of certain assets comprising
Medical Resources in the amount of $548,000 and the expansion of the Company's
services to include staffing and related operations in New York and New Jersey
in the amount of $109,000. The balance of the increase of $313,000 is
attributable to the opening, during the recent period, of an additional
full-service administrative office in West Hartford, Connecticut, as well as
increases in all of the Company's insurance costs over the previous three-month
period. As a percentage of net patient revenue, general and administrative
expenses decreased slightly to 24.3% for the three months ended January 31, 2003
from 24.5% for the three months ended January 31, 2002.
Amortization of intangibles increased $15,000, or 11%, to $151,000 for the
three months ended January 31, 2003 from $136,000 for the three months ended
January 31, 2002. This increase results from additional such amortization
attributable to the acquisitions of certain assets comprising Medical Resources
and Mary Baker, offset by reduced amortization of intangibles from previous
acquisitions that have now been fully amortized.
-10-
The Company recorded an allowance for possible losses of $50,000 for the
three months ended January 31, 2003, as compared to $65,000 for the three months
ended January 31, 2002.
As a result of the foregoing, income from operations increased $223,000, or
9.8%, to $2,504,000 for the three months ended January 31, 2003 from $2,281,000
for the three months ended January 31, 2002.
Interest income decreased ($9,000), or (20.5%), to $35,000 for the three
months ended January 31, 2003 from $44,000 for the three months ended January
31, 2002. This decrease is attributable to the lower cash balances of the
Company, as a result of the acquisitions of Medical Resources and Mary Baker and
the continued decline in interest rates.
The Company's effective tax rate increased to 41.9% for the three months
ended January 31, 2003 from 38.9% for the three months ended January 31, 2002.
This increase is attributable to higher state income tax rates and a decrease in
work opportunity tax credits in the current three month period.
Net income increased $53,000, or 3.7%, to $1,474,000, or $.26 per diluted
share, in the three months ended January 31, 2003 from $1,421,000, or $.24 per
diluted share, in the three months ended January 31, 2002. This increase and the
increase in net patient revenue over the periods, as well as over other recent
periods, is attributable principally to the Company's expansion of its
operations through penetrations of markets vacated by competitors and the
successful integration of the Company's acquisitions over the past two years.
Such increases would not be expected to continue at the same rate, if it all, in
the absence of future such acquisitions or market penetrations, particularly in
light of potential Medicaid reimbursement rate and/or trend factor reduction
referenced above or otherwise, as to which there can be no assurance.
Six Months Ended January 31, 2003 Compared to Six Months Ended January 31, 2002
For the six months ended January 31, 2003, net patient revenue increased
$6,841,000, or 16.8%, to $47,582,000 from $40,741,000 for the six months ended
January 31, 2002. This increase is primarily attributable to the acquisition of
Medical Resources, which generated net patient revenue of $3,413,000 for the
recent period in Massachusetts. The net patient revenue increase also included
$2,215,000 of continued successful penetration of existing markets. Lastly, the
net patient revenue increase also included $1,213,000 from the expansion of the
Company's operations to include staffing and related personnel to hospitals,
nursing homes and facilities in New York and New Jersey in the current period.
Gross profit margin decreased to 35.5% for the six months ended January 31,
2003 from 36.4% for the six months ended January 31, 2002. This decrease is
primarily attributable to lower gross profit margins on the new staffing
operations and, in addition, the Company did not experience any increase in its
Medicaid reimbursement rates in Connecticut, New York and New Jersey in the
recent six-month period.
General and administrative expenses increased $1,749,000, or 17.8%, to
$11,585,000 for the six months ended January 31, 2003 from $9,836,000 for the
six months ended January 31, 2002. This increase is attributable to additional
administrative personnel and occupancy costs
-11-
incurred, during the recent period, in connection with the acquisition of
certain assets comprising Medical Resources in the amount of $923,000 and the
expansion of the Company's services to include staffing and related operations
in New York and New Jersey in the amount of $220,000. The balance of the
increase of $606,000 is attributable to the opening, during the recent period,
of an additional full-service administrative office in West Hartford,
Connecticut, as well as increases in all of the Company's insurance costs over
the previous six-month period. As a percentage of net patient revenue, general
and administrative expenses increased slightly to 24.3% for the six months ended
January 31, 2003 from 24.1% for the six months ended January 31, 2002.
Amortization of intangibles increased $18,000, or 6.6%, to $291,000 for the
six months ended January 31, 2003 from $273,000 for the six months ended January
31, 2002. This increase is explained in the above three-month discussion.
The Company recorded an allowance for possible losses of $100,000 for the
six months ended January 31, 2003, as compared to $180,000 for the six months
ended January 31, 2002. This decrease is attributable to the Company reserving
against its accounts receivable in the previous period as a result of the
Company entering into contracts with many new payor sources over the past two
years.
As a result of the foregoing, income from operations increased $356,000, or
7.8%, to $4,910,000 for the six months ended January 31, 2003 from $4,554,000
for the six months ended January 31, 2002.
Interest income decreased ($32,000), or (26.2%), to $90,000 for the six
months ended January 31, 2003 from $122,000 for the six months ended January 31,
2002. This decrease is explained in the above three-month discussion.
The Company's effective tax rate increased to 41.0% for the six months
ended January 31, 2003 from 39.3% for the six months ended January 31, 2002.
This increase is explained in the above three-month discussion.
Net income increased $112,000, or 3.9%, to $2,948,000, or $.51 per diluted
share, in the six months ended January 31, 2003 from $2,836,000, or $.49 per
diluted share, in the six months ended January 31, 2002. This increase and the
increase in net patient revenue over the periods, as well as over other recent
periods, is attributable principally to the Company's expansion of its
operations through penetrations of markets vacated by competitors and the
successful integration of the Company's acquisitions over the past two years.
The rate of inflation had no material effect on operations for the six
months ended January 31, 2003.
Financial Condition and Capital Resources
- -----------------------------------------
Current assets decreased to $31,669,000 and current liabilities decreased
to $3,507,000, respectively, at January 31, 2003. This resulted in a decrease in
working capital of ($70,000) from $28,232,000 at July 31, 2002 to $28,162,000 at
January 31, 2003. Cash and cash equivalents decreased ($2,773,000) to
$12,568,000 at January 31, 2003 from $15,341,000 at
-12-
July 31, 2002. This decrease in cash and working capital is attributable to the
cash used for the acquisitions of certain assets comprising Medical Resources
and Mary Baker.
The Company provided net cash from operating activities of $897,000 for the
six months ended January 31, 2003 as compared to cash provided by operating
activities of $2,551,000 for the six months ended January 31, 2002. The decrease
in cash provided by operating activities of ($1,654,000), or (64.8%), is
attributable to an increase in operating assets, primarily accounts receivable,
of ($1,463,000), a decrease in operating liabilities of ($313,000), offset by an
increase in operating cash flow of $120,000 over the comparable period for the
six months ended January 31, 2002. Net cash used in investing activities for the
six months ended January 31, 2003, consisted of the purchase of assets of
businesses and the purchase of equipment. The net cash used in investing
activities for the six months ended January 31, 2002 consisted of the purchase
of assets of businesses, equipment and investments. Net cash used in financing
activities for the six months ended January 31, 2003 consisted of the purchase
of treasury shares, offset by the proceeds from the exercise of stock options.
Net cash provided by financing activities for the six months ended January 31,
2002 consisted of the proceeds from the exercise of stock options, offset by the
purchase of treasury shares.
The nature of the Company's business requires weekly payments to health
care personnel at the time services are rendered. The Company typically receives
payment for these services on a basis of 90 to 120 days with respect to
contracted and insurance business and 15 to 45 days with respect to certain
governmental payors, such as Medicare and Medicaid programs. Accounts receivable
turnover was 67 days at January 31, 2003 as compared to 77 days at January 31,
2002.
The Company has a $7,500,000 committed revolving line of credit facility
(the "credit facility") with its bank. The credit facility provides for the
Company to borrow up to the lesser of $7,500,000 or 80% of eligible accounts
receivable that are aged less than 120 days at the bank's prime rate or LIBOR
plus 2.5%. The credit facility expires on October 23, 2003 and requires the
Company to meet certain financial covenants and ratios. The Company is required
to pay .25% commitment fee on unused amounts, payable quarterly in arrears.
The Company intends to incur capital expenditures of approximately
$1,000,000 during the current fiscal year in connection with the proposed
implementation of new computer software systems and hardware. The new hardware
would be designed to, among other things, update certain data input capability
regarding services rendered at certain locations. The Company believes that the
software would provide efficiencies in data organization, retrieval and
analysis, both for continuing operations and in connection with certain audits.
The Company intends to fund these expenditures and otherwise meet its short term
and long term liquidity needs with its current cash balances, cash flow from
operations and its credit facility.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of shareholders of the Company (the "Meeting") was held
on December 6, 2002. Proxies for the Meeting were solicited pursuant to Rule 14A
of the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition.
-13-
At the Meeting, Frederick H. Fialkow, Bernard Levine, M.D., Steven Fialkow,
Ira Greifer, M.D. and Robert C. Pordy, M.D. were elected as directors of the
Company to serve until the Company's next annual meeting of stockholders and
until their respective successors are elected and qualified. The votes for each
director were as follows:
For Withheld
--- --------
Frederick H. Filakow 5,205,488 102,235
Steven Fialkow 5,205,488 102,235
Bernard Levine, M.D. 5,295,198 12,525
Ira Greifer, M.D. 5,295,198 12,525
Robert C. Pordy, M.D. 5,295,198 12,525
In addition, the Company's shareholders ratified at the Meeting the
selection by the Board of Directors of BDO Seidman, LLP as the Company's
independent certified accountants for the year ending July 31, 2003. The votes
for such ratification were as follows:
For Against Abstain
--- ------- -------
5,303,599 472 3,652
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
Exhibit
Number Description
------ -----------
99.1 Certificate of Chief Executive Officer
99.2 Certificate of Chief Financial Officer
(b) Reports on Form 8-K: None
-14-
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.
National Home Health Care Corp.
Date: March 14, 2003 /s/ Robert P. Heller
---------------------------------------
Robert P. Heller
Vice President of Finance (chief financial
and accounting officer)
-15-
CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
I, Steven Fialkow, certify that:
1. I have reviewed this quarterly report on Form 10-Q of National Home Health
Care Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 14, 2003
/s/ Steven Fialkow
--------------------------------------
Steven Fialkow
Chief Executive Officer
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CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
I, Robert P. Heller, certify that:
1. I have reviewed this quarterly report on Form 10-Q of National Home Health
Care Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 14, 2003
/s/ Robert P. Heller
----------------------------------------
Robert P. Heller
Vice President of Finance and Chief
Financial Officer
EXHIBIT INDEX
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EXHIBIT DOCUMENT
NUMBER --------
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99.1* Certification of Principal Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
99.2* Certification of Principal Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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* Filed herewith