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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2000
COMMISSION FILE NUMBER: 0-24260
AMEDISYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3131700
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
11100 MEAD ROAD, SUITE 300
BATON ROUGE, LOUISIANA 70816
(Address of principal executive offices, including zip code)
(225) 292-2031 or (800) 467-2662
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-K in this form, and if no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based on the last sale price as quoted by the OTC Bulletin Board
on March 12, 2001 was $26,522,000. As of March 12, 2001 registrant has 5,644,181
shares of Common Stock outstanding.
Documents incorporated by reference: Registrant's definitive Proxy
Statement for its 2001 Annual Meeting of Stockholders to be filed pursuant to
the Securities Exchange Act of 1934 is incorporated herein by reference into
Part III hereof.
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TABLE OF CONTENTS
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PART I.................................................................. 1
ITEM 1. BUSINESS.................................................... 1
ITEM 2. PROPERTIES.................................................. 14
ITEM 3. LEGAL PROCEEDINGS........................................... 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 15
PART II................................................................. 16
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS..................................................... 16
ITEM 6. SELECTED FINANCIAL DATA..................................... 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................... 18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS....................................................... 23
ITEM 8. FINANCIAL STATEMENTS........................................ 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.................................... 23
PART III................................................................ 23
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 23
ITEM 11. EXECUTIVE COMPENSATION...................................... 23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.................................................. 23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 23
PART IV................................................................. 24
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K............................ 24
SIGNATURES.............................................................. 27
FINANCIAL STATEMENTS.................................................... 28
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PART I
FORWARD LOOKING STATEMENTS
When included in the Annual Report on Form 10-K or in documents
incorporated herein by reference, the words "expects," "intends," "anticipates,"
"believes," "estimates," and analogous expressions are intended to identify
forward-looking statements. Such statements inherently are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, current cash flows and operating
deficits, debt service needs, adverse changes in federal and state laws relating
to the health care industry, competition, regulatory initiatives and compliance
with governmental regulations, customer preferences and various other matters,
many of which are beyond the Company's control. These forward-looking statements
speak only as of the date of the Annual Report on Form 10-K. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or any changes in the Company's expectations with regard thereto or any
changes in events, conditions or circumstances on which any statement is based.
ITEM 1. BUSINESS
GENERAL
Amedisys, Inc., a Delaware corporation ("Amedisys" or "the Company"), is a
leading multi-regional provider of home health care nursing services. The
Company operates fifty home care nursing offices, one ambulatory surgery center,
and one corporate office in the southern and southeastern United States.
Amedisys was incorporated in Louisiana in 1982. In 1993, the Company became
public through a merger with M & N Capital, a New York corporation. In 1994, it
moved its state of incorporation from New York to Delaware. Amedisys currently
trades on the OTC Bulletin Board under the symbol "AMED.OB".
During 1999, the Company changed its strategy from providing a variety of
alternate site provider health care services to becoming a leader in home health
care nursing services. The Company's change of focus was largely attributed to
its significant investment in this segment as a result of its acquisition of 83
home care offices from Columbia/HCA Healthcare Corporation a/k/a The Healthcare
Company ("Columbia/HCA") in late 1998. A second major factor was the
governmental reimbursement changes in the Medicare system that will now allow
home care the opportunity to be profitable since the Prospective Payment System
("PPS") was implemented in October 2000. A third significant factor was the
Company's established reputation and expertise in the field. Amedisys has over a
decade of experience in home care nursing and was an early innovator in bringing
technology, previously used only in acute care settings, to the home, as well as
providing traditional home care services.
Pursuant to this strategy, the Company launched a restructuring plan to
divest its non-home health care nursing divisions. During the period from
September, 1999 through December, 2000, the Company sold five of its six surgery
centers and three infusion locations. The Company plans to achieve market
dominance in the southern and southeastern United States by expanding its
referral base by utilizing a highly trained sales force, offering specialized
programs such as wound care, and completing selective acquisitions.
The Company is continuing to systematically reduce operating costs.
Converting its method of nurse pay to a variable or per visit rate rather than
fixed or salary system, utilizing economies of scale, and reducing corporate
overhead are significant cost reduction measures undertaken by the Company.
Business functions which are not considered part of the core business have been
outsourced and management layers have been streamlined.
The Company's business model has been developed to be successful under PPS.
The Company has implemented disease state management programs and clinical
protocols as well as supporting technology to monitor and report outcome data,
to standardize care, and to ensure quality outcomes. Using clinical managers to
assess and track patient progress and highly skilled nurses to deliver care are
also important components of the overall plan.
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DEVELOPMENTS
Acquisitions
In November, 1998, the Company signed a definitive agreement to purchase
certain assets, subject to the assumption of certain liabilities, of 83 home
care offices, including 35 provider numbers of Columbia/HCA, located in Alabama,
Georgia, Louisiana, North Carolina, Oklahoma, and Tennessee. Assets located in
Louisiana and Oklahoma were acquired on November 16, 1998, and the remaining
assets were acquired on December 1, 1998. Assuming the Columbia/HCA acquisition
occurred on January 1, 1998, unaudited pro forma information for the year ended
December 31, 1998, which is not necessarily indicative of future operating
results, is as follows (in 000's, except per share information).
TWELVE MONTHS ENDED
DECEMBER 31, 1998
-------------------
Net Service Revenue......................................... $150,645
Operating (Loss)............................................ (50,456)
(Loss) before Discontinued Operations....................... (43,292)
Net (Loss).................................................. (41,453)
Net (Loss) per Common Share................................. (13.48)
Effective October 1, 2000, the Company acquired through its wholly-owned
subsidiary Amedisys Northwest Home Health, Inc. certain assets and liabilities
of Northwest Home Health Agency, Inc. and Georgia Mountains Homecare Services,
Inc. (collectively, "Northwest"). The assets acquired consisted primarily of
cash and cash equivalents; accounts receivable; benefits of any prepaid items;
inventory; furniture, fixtures, and equipment; computer software; telephone and
facsimile numbers; all rights, title, and interests in third party agreements,
services agreements, or other contracts; all assignable permits, provider
numbers, certificates, licenses, franchises, and authorizations; trade name
used; all patents, copyrights, trade secrets, service marks, and any other
intellectual property; and the goodwill and going concern of Northwest. The
liabilities assumed consisted of Northwest's actual and contingent liabilities
and obligations relating to Northwest's business or any of the acquired assets,
excluding all actual and contingent liabilities and obligations of Northwest
arising from or related to Northwest's 403(a) and 403(b) retirement plans. The
purchase price was the assumption of the above-mentioned liabilities.
Effective November 17, 2000, the Company acquired through its wholly-owned
subsidiary Amedisys Home Health, Inc. of Florida certain assets and liabilities
of Mid-Florida Home Health Services from Winter Haven Hospital, Inc. The assets
acquired consisted primarily of all furniture, fixtures, equipment and leasehold
improvements; supplies; inventory; lists of current patients, mailing lists,
business records, and telephone numbers; goodwill and going concern; benefits of
all maintenance agreements, association dues, advertising, design, fees, rent
services, or interest; all rights, to the extent assignable, to the ownership,
development and operations of the Agencies including the Medicare and Medicaid
Provider Numbers; technical outlines, records, and software and other technology
including contracts, licenses, authorizations and permits; and all trade
secrets, inventions, patents, copyrights, trademarks and other intangible assets
including the right to use the trade name "Mid-Florida Home Health Services" for
a period of ninety days after the effective date. The liabilities assumed
consisted of employees' paid time-off balances ("PTO") and obligations under
capital and operating leases. In consideration for the acquired assets and
liabilities, the Company paid $975,000 cash, less PTO, at the time of closing
and executed a promissory note in the amount of $975,000 bearing an annual
interest rate of 7% and payable in 36 monthly principal and interest
installments of $30,105.
Effective March 1, 2001, the Company acquired through its wholly owned
subsidiary Amedisys Home Health, Inc. of Alabama, certain assets and liabilities
of Seton Home Health Services, Inc. ("Seton") from Seton Health Corporation of
North Alabama. The assets acquired consisted primarily of all furniture,
fixtures, equipment (except computer equipment and printers) and leasehold
improvements; supplies; inventory; lists of present and former patients and
mailing lists; vendor lists; employee records; telephone numbers and listings;
intangibles and other rights and privileges; leasehold interest in the
locations; goodwill and going
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concern; rights under certain agreements; rights under all contracts including
capital leases and non-competition agreements; licenses and permits relating to
ownership, development and operations; and rights under Medicare and Medicaid
Provider Agreements. The liabilities assumed consisted of accrued, but unused
employee vacation and obligations under operating leases. In consideration for
the acquired assets and liabilities, the Company paid $440,000 cash, which
represents a purchase price of $475,000 less the estimated value of accrued
vacation time.
Dispositions and Discontinued Operations
In the accompanying Statements of Operations for each of the three years
ended December 31, 2000, the Company has reflected its staffing, management
services, outpatient surgery, and infusion therapy divisions as discontinued
operations.
On September 21, 1998, the Company sold certain assets, subject to the
assumption of certain liabilities, of its wholly-owned subsidiaries of Amedisys
Staffing Services, Inc., Amedisys Nursing Services, Inc., and Amedisys Home
Health, Inc. to Nursefinders, Inc. The Company had no material relationship with
Nursefinders, Inc. prior to this transaction. The purchase price was $7,200,000.
The Company has agreed to a five year non-competition covenant. At closing,
$6,480,000 was paid with the balance of $720,000 placed in an escrow account for
a ninety day period. The escrow balance plus approximately $19,000 of interest
was distributed to the Company (approximately $365,000) and Nursefinders
(approximately $374,000) at December 31, 1999. Of the amount distributed to
Nursefinders, approximately $174,000 represented amounts applied to principal
and interest payments due Nursefinders by the Company pursuant to a note
payable. The Company recorded a pre-tax gain of $5,041,000 on the sale. The
Company filed a Current Report on Form 8-K with the SEC on October 5, 1998 with
regard to this transaction.
On November 3, 1998, the Company and CPII Acquisition Corp. ("CPII")
entered into an Asset Purchase Agreement whereby the Company sold certain of the
assets, subject to the assumption of certain liabilities, of its proprietary
software system (Analytical Medical Systems) and home health care management
division (Amedisys Resource Management) to CPII in exchange for $11,000,000
cash. The assets sold consisted primarily of proprietary rights with respect to
the home health information system developed and used by the Company and its
subsidiaries; deposits, prepayments or prepaid expenses relating to the
business; contracts; fixtures and equipment; books and records; rights under
warranties and claims, causes of action, choses in action, rights of recovery
and rights to set-off. The liabilities assumed were those associated with the
assumed contracts. The Company provided limited support services to CPII for a
period of one year from the date of the agreement. The Company has retained a
licensing agreement with CPII for the software for a period of five years. An
affiliate of CPII will utilize the assets to provide certain management services
to the Company's home health agencies. Due to the Company's continuing
involvement with the assets sold, the pre-tax gain on the sale of the software
system totaling $10,593,000 was deferred and is being amortized over the term of
the management services agreement referred to above. The Company filed a Current
Report on Form 8-K with the SEC on November 10, 1998 with regard to this
transaction.
On January 1, 1999, the Company sold all of the issued and outstanding
stock of Amedisys Durable Medical Equipment, Inc. d/b/a Care Medical and
Mobility ("ADME") to Ace Drug Medical Equipment, Inc. ("ACE"), a Texas
corporation. ACE acquired substantially all of the assets and liabilities of
ADME. The sales price was $672,385 of which $100,000 was paid at closing;
$418,318 was payable pursuant to a two year note in eight equal quarterly
payments of principal and interest at prime plus 2%, adjusted annually; and
$154,067 was payable pursuant to a one year note, payable in four quarterly
payments of principal plus accrued interest at prime plus 2%. Total principal
and interest payments due to the Company as of March 15, 2001 totaled $572,000.
As of March 16, 2001, these payments have not been received by the Company. As a
result, the Company has fully reserved for these notes as of December 31, 2000.
This disposition did not have a material effect on net revenues or income of the
Company.
In August 1999, the Company adopted a formal plan to sell all of its
interests in its outpatient surgery and infusion therapy divisions. The
Company's strategic plan was to become a focused home health nursing company. As
of December 31, 2000, the Company has divested of its entire infusion therapy
division and all of
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its outpatient surgery centers with the exception of one surgery center in
Hammond, Louisiana. A discussion of the sales that have occurred since the
adoption of the plan is as follows.
Effective September 1, 1999, by an Asset Purchase Agreement, the Company
sold certain assets, subject to the assumption of certain liabilities, of its
wholly-owned subsidiary, Amedisys Surgery Centers, L.C. ("ASC"), to United
Surgical Partners International, Inc. ("USP"). The assets and liabilities sold
related to two free-standing outpatient surgery centers operated by ASC,
Amedisys Surgery Center of Pasadena and Amedisys Surgery Center of South Houston
(the "Surgery Centers"). The assets of the Surgery Centers were acquired by two
Texas Limited Partnerships organized by USP and its wholly-owned subsidiaries.
The Company and its affiliates had no material relationship with USP prior to
this transaction. In consideration for the assets of the Surgery Centers, ASC
received $11,000,000. At closing, $10,562,000 was paid immediately to the
Company with a three-month $300,000 note receivable due in monthly installments
of $100,000 plus interest at an effective interest rate of 10%. The Company has
received payments of $205,000 on this note receivable and, as a result of the
final sale adjustments, has offset the remaining balance against the gain
recorded. In addition to cash consideration, USP agreed to pay off certain
creditors of ASC for debts related to the Surgery Centers of $1,101,083. The
Company recorded a pre-tax gain of $9,417,000 as a result of this transaction.
The Company filed a Current Report on Form 8-K with the SEC on September 15,
1999 with regard to this transaction.
Effective September 1, 1999, the Company sold 19.02 units of its 42 units
(each unit represents a 1% interest) in East Houston Surgery Center Ltd. and
EHSC Management Company, LLC to thirteen physician investors for $180,000 cash.
The Company recorded a pre-tax loss of $77,000 relating to the sale.
Effective December 1, 1999, ASC, by a Membership Interest Purchase
Agreement, sold all of its 67% membership interest in West Texas Ambulatory
Surgery Center, L.L.C. to U.S. Orthopedics Texas, L.L.C. ASC also assigned all
of its rights under a certain management agreement to U.S. Orthopedics, Inc. At
closing, ASC received $783,333 representing the purchase price for the
membership interest and ASC's share of the assignment of the management
agreement. ASC has agreed to a five-year non-compete covenant. The Company
recorded a pre-tax gain of $324,000 as a result of this transaction.
On April 28, 2000, the Company, Park Place Surgery Center, LLC ("Park
Place"), and the remaining Members of Park Place Surgery Center ("Physician
Members") entered into an agreement for the purchase and sale of the Company's
20% membership interest in Park Place, an outpatient surgery center in
Lafayette, Louisiana, to the Physician Members. The purchase price of $3,200,000
cash was paid to the Company at closing. The Company received a final
partnership distribution of $165,000 in May 2000. The Company and the Physician
Members had no material relationship prior to the transaction, except by virtue
of their membership interest in Park Place and that the Company and some
Physician Members served on the Board of Directors of Park Place. At the
closing, the management agreement existing between the Company and Park Place
was also terminated. The Company recorded a pre-tax gain of $2,665,000 as a
result of this transaction in the quarter ended June 30, 2000. The Company filed
a Current Report on Form 8-K with the SEC on May 11, 2000 with regard to this
transaction.
In May 2000, the Company decided, after a thorough evaluation of historical
financial results and available divestiture opportunities, to close one infusion
therapy location. In connection with this closure, the Company recorded a
goodwill impairment of $1,252,000 in the quarter ended June 30, 2000.
Concurrently, the Company re-evaluated the goodwill recorded for the remaining
infusion therapy locations, resulting in an additional goodwill impairment of
$519,000.
On August 9, 2000, the Company, through its wholly-owned subsidiaries,
Amedisys Alternate-Site Infusion Therapy Services, Inc. ("AASI") and PRN, Inc.
("PRN"), sold, by a Bill of Sale and Asset Purchase Agreement, certain assets,
subject to the assumption of certain liabilities, of AASI and PRN, to Park
Infusion Services, LP ("Park Infusion"). The transaction had an effective date
of August 1, 2000. Neither the Company, its affiliates nor its directors and
officers had any material relationship with Park Infusion prior to this
transaction. Subject to certain post-closing adjustments, the Company received
$1,750,000, paid immediately to the Company at closing. Subject to certain
exceptions, the assets sold consisted primarily of furniture, fixtures and
equipment; inventory and supplies on hand or in transit; service
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and provider contracts; business contracts; intellectual and intangible assets;
transferable licenses, permits and approvals; capital and operating leases;
telephone and facsimile numbers; customer and supplier lists; books and records;
goodwill; deposits; prepaid expenses; claims and rights associated with all
purchased assets; and other privileges, rights, interests, properties and
assets. Park Infusion assumed certain liabilities arising from operations from
and after the closing date. The Company recorded a pre-tax gain of $1,114,000 as
a result of this transaction in the quarter ended September 30, 2000. The
Company filed a Current Report on Form 8-K with the SEC on August 23, 2000 with
regard to this transaction.
On December 1, 2000, the Company's wholly-owned subsidiary, ASC, East
Houston Physician Surgical Services, Ltd. ("Surgical Services"), and East
Houston Surgery Center, Ltd. ("East Houston") entered into an agreement for the
purchase and sale of the Company's 22.98% membership interest in East Houston,
an outpatient surgery center in Houston, Texas, to Surgical Services. The
purchase price of $1,650,000 cash was paid to the Company at closing. The
Company and Surgical Services had no material relationship prior to the
transaction, except by virtue of their membership interest in East Houston and
that the Company and some of the member physicians served on the Board of
Directors of East Houston. At the closing, the management agreement existing
between the Company and East Houston was also terminated. The Company recorded a
pre-tax gain of $1,307,000 as a result of this transaction in the quarter ended
December 31, 2000.
Summarized financial information for the discontinued operations is as
follows (in 000's):
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Staffing Division:
Service Revenue............................ $ -- $ -- $12,607 $17,292 $12,538
Income from Discontinued Operations before
Provision for Income Taxes.............. $ -- $ -- $ 1,723 $ 4,139 $ 2,488
Income from Discontinued Operations Net of
Income Taxes............................ $ -- $ -- $ 1,137 $ 2,732 $ 1,642
Gain on Sale of Discontinued Operations
before Provision for Income Taxes....... $ -- $ -- $ 5,041 $ -- $ --
Gain on Sale of Discontinued Operations Net
of Income Taxes......................... $ -- $ -- $ 3,177 $ -- $ --
DME/Management Services Division:
Service Revenue............................ $ -- $ -- $ 1,203 $ 5,100 $ 3,396
Income (Loss) from Discontinued Operations
before Provision for Income Taxes....... $ -- $ (633) $ (616) $ 1,428 $ 549
Income (Loss) from Discontinued Operations
Net of Income Taxes..................... $ -- $ (612) $ (407) $ 943 $ 362
Outpatient Surgery Division:
Service Revenue............................ $ 3,030 $ 7,075 $ 6,224 $ 6,287 $ 4,626
Income (Loss) from Discontinued Operations
before Provision for Income Taxes....... $ 754 $ 1,311 $ 330 $(1,757) $ 983
Income (Loss) from Discontinued Operations
Net of Income Taxes..................... $ 754 $ 865 $ 218 $(1,160) $ 649
Gain on Sale of Discontinued Operations
before Provision for Income Taxes....... $ 3,972 $ 9,341 $ -- $ -- $ --
Gain on Sale of Discontinued Operations Net
of Income Taxes......................... $ 3,800 $ 6,165 $ -- $ -- $ --
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2000 1999 1998 1997 1996
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Infusion Therapy Division:
Service Revenue............................ $ 4,580 $ 7,616 $ 5,193 $ 7 $ --
Income (Loss) from Discontinued Operations
before Provision for Income Taxes....... $(4,035) $(1,572) $(3,464) $ (307) $ --
Income (Loss) from Discontinued Operations
Net of Income Taxes..................... $(4,035) $(1,037) $(2,286) $ (203) $ --
Gain on Sale of Discontinued Operations
before Provision for Income Taxes....... $ 1,114 $ -- $ -- $ -- $ --
Gain on Sale of Discontinued Operations Net
of Income Taxes......................... $ 1,114 $ -- $ -- $ -- $ --
Total Discontinued Operations:
Service Revenue............................ $ 7,610 $14,691 $25,227 $28,686 $20,560
Income (Loss) from Discontinued Operations
before Provision for Income Taxes....... $(3,281) $ (894) $(2,027) $ 3,503 $ 4,020
Income (Loss) from Discontinued Operations
Net of Income Taxes..................... $(3,281) $ (784) $(1,338) $ 2,312 $ 2,653
Gain on Sale of Discontinued Operations
before Provision for Income Taxes....... $ 5,086 $ 9,341 $ 5,041 $ -- $ --
Gain on Sale of Discontinued Operations Net
of Income Taxes......................... $ 4,914 $ 6,165 $ 3,177 $ -- $ --
The Company has one remaining outpatient surgery center yet to sell in
accordance with the divestiture plan adopted during 1999. Generally, a plan to
dispose of discontinued operations must be carried out over a period not to
exceed one year in order to continue to qualify for discontinued operation
accounting treatment. This remaining surgery center has been involved in
litigation outside of the Company's control which prevented the Company from
completing a timely disposition. For this reason, the Company has continued to
reflect the outpatient surgery division as discontinued operations. The Company
intends to sell the remaining surgery center in 2001.
Included in the accompanying Consolidated Balance Sheets as of December 31,
2000 and 1999 are the following assets and liabilities Held for Sale (in 000's):
DECEMBER 31, 2000 DECEMBER 31, 1999
----------------- -----------------
Cash................................................ $ 20 $ 221
Accounts Receivable................................. 510 555
Prepaid Expenses.................................... 13 41
Inventory and Other Current Assets.................. 172 365
---- ------
Current Assets Held for Sale........................ $715 $1,182
==== ======
Property............................................ $681 $1,711
Other Assets........................................ 8 1,813
Investments......................................... -- 738
---- ------
Long-term Assets Held for Sale...................... $689 $4,262
==== ======
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DECEMBER 31, 2000 DECEMBER 31, 1999
----------------- -----------------
Accounts Payable.................................... $190 $ 138
Accrued Payroll..................................... 50 44
Accrued Other....................................... 34 38
Notes Payable....................................... -- 288
Current Portion of Long-term Debt................... 192 209
Current Portion of Obligations Under Capital
Leases............................................ 14 89
---- ------
Current Liabilities Held for Sale................... $480 $ 806
==== ======
Long-term Debt...................................... $966 $1,252
Obligations under Capital Leases.................... -- 23
---- ------
Long-term Liabilities Held for Sale................. $966 $1,275
==== ======
Recent Remodification of Loan
Effective September 30, 1999, the Company and Columbia/HCA signed an
agreement to modify the terms of a $14 million note payable to Columbia/HCA
which was a result of the acquisition of home health agencies consummated in
November 1998. The Company was to make quarterly principal and accrued interest
payments beginning April 30, 2001, with the balance of the note being due,
subject to certain prepayment provisions in the agreement, on July 31, 2004.
Under the loan modification agreement, the Company may have been required to
pre-pay certain amounts depending upon the Company having excess cash flows in
the fiscal year, as defined in the agreement. These amounts, if due, were
payable within 45 days after the end of each fiscal year ending after October 1,
1999 and prior to July 30, 2004. The balance on this note was presented in the
financial statements as of December 31, 1999 as long-term debt classified as
current due to a material adverse effect clause in the note agreement which
provided Columbia/HCA the ability to require immediate payment of outstanding
principal and accrued interest if the Company experienced a material adverse
change. A material adverse change includes, but is not limited to a material and
adverse change in the Company's financial condition, business operations, or the
value of the secured collateral.
On December 28, 2000, the Company entered into a loan agreement with NPF
Capital, Inc. ("NPF") for a principal sum of up to $11,725,000. At execution,
NPF paid $9,000,000 directly to Columbia/HCA for the benefit of the Company. The
Company also financed $725,000 of debt issue costs under this agreement, with
the remaining unfunded portion of $2,000,000 available for future acquisitions.
Simultaneously, Amedisys entered into a Termination Agreement with Columbia/HCA
relating to the note payable ("HCA Note"). The Termination Agreement with
Columbia/HCA was effective October 1, 2000. The Termination Agreement related to
that certain Credit Agreement dated November 16, 1998 and that certain
promissory note dated December 1, 1998 as modified by that certain Loan
Modification Agreement dated September 30, 1999. As part of this agreement, the
HCA Note, which carried a balance (including accrued interest) of $16.6 million
at September 30, 2000, was terminated effective October 1, 2000 for a cash
payment of $9,000,000 and the execution of a warrant agreement that allows
Columbia/HCA to purchase up to 200,000 shares of Amedisys' Common Stock, subject
to certain conditions. These warrants have an estimated value of $344,000. As of
result of these transactions, the Company has recorded an extraordinary gain of
$5.8 million, net of taxes, in the fourth quarter of 2000.
The loan agreement with NPF Capital, Inc. ("NPF Note"), an affiliate of
National Century Financial Enterprises, Inc., is for a principal sum not to
exceed $11,725,000 at an annual interest rate of 13.95%, adjustable in
accordance with the loan agreement. At loan execution, the Company borrowed an
amount ("Initial Loan Amount") equal to $9,000,000 which was paid directly to
Columbia/HCA. The Initial Loan Amount is payable over a three year term with
interest only payments for the first six months and monthly payments of
principal and interest for the remainder of the term. The Company has available
an amount not to exceed $2,000,000 ("Supplemental Loan Amount") for the
acquisition of businesses, companies and/or their assets. Any Supplemental Loan
Amounts received will be payable over a three year term commencing upon receipt
of the Supplemental Loan Amount with thirty-six monthly principal and interest
payments. The fees charged by NPF relating to the NPF Note totaled $725,000 and
are payable in accordance with the payment
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terms of the Initial Loan Amount. The security for this note consists of all
credits, deposits, account, securities or moneys, and all other property rights
belonging to or in which the Company has any interest, now or hereafter, as well
as every other liability now or hereafter existing of the Company, absolute or
contingent, due or to become due. In addition, the net cash proceeds received
from the divestiture of the Company's one remaining surgery center are payable
to NPF.
Segment Information
The Company's principal source of revenue is derived from home health care
services. The Company's Statements of Operations for the Years Ended December
31, 2000, 1999, and 1998, attached hereto and referenced in Item 8 herein and
the "Dispositions and Discontinued Operations" section above, contains financial
information on this segment. The financial information for the years ended
December 31, 1999, 1998, 1997 and 1996 have been reflected as continuing and
discontinued operations as a result of the Company's decision to reflect its
staffing, management services, outpatient surgery, and infusion therapy
divisions as discontinued operations. Financial information on the segments is
treated as discontinued operations as stated above.
INDUSTRY OVERVIEW
As national health care spending continues to outpace the rate of inflation
and the population of older Americans increases at a faster rate, alternatives
to costly hospital stays will be in even greater demand. Managed care, Medicare,
Medicaid and other payor pressures continue to drive patients through the
continuum of care until they reach a setting where the appropriate level of care
can be provided most cost effectively. Over the past several years, home health
care has evolved as an acceptable and often preferred alternative in this
continuum. In addition to patient comfort and convenience, substantial cost
savings can usually be realized through treatment at home as an alternative to
traditional institutional settings. The continuing economic pressures within the
health care industry and the reimbursement changes dictated by the Balanced
Budget Act of 1997 ("BBA"), have forced providers of home health care services
to closely examine and often modify the manner in which they provide patient
care and services. To survive under the Interim Payment System ("IPS"),
companies were challenged with streamlining operations and modifying staffing
models to manage costs and operate successfully. As we have now moved into PPS,
effective October 1, 2000, those pressures continue to exist. However, those
companies who successfully operate with effective business models can provide
patient care and manage costs under this reimbursement system.
Traditionally, the home health care industry has been highly fragmented,
comprised primarily of "mom and pop" local home health agencies offering limited
services. These local providers often do not have the capital necessary to
expand their operations or services and are often not able to achieve the
efficiencies to compete effectively. With the implementation of IPS and other
provisions of the BBA, the home health care industry has experienced major
consolidation for the first time in its history. Further, with PPS recently
implemented, we continue to experience closures/consolidations in the home
nursing sector.
STRATEGY
The Company's business objective is to enhance its position in its
geographic market areas as a leading provider of high quality, low cost home
health nursing services. To accomplish this, it will do the following:
Internal Growth Strategy
Focus on Its Employees. Because the Company is engaged in a service
business, the essence of the Company is its people. The Company's emphasis
on communication, education, empowerment, and competitive benefits allows
it to attract and retain highly skilled and experienced people in its
markets.
Expand Its Service Base. The Company has targeted selected markets in
the southern and southeastern United States. Through the expansion of its
services and development of niche programs, it plans to dominate these
markets, to increase utilization of its services by payors and referral
sources, and to enhance its overall market position.
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Expand Its Referral Base. It is anticipated that revenue growth will
be spurred by the Company's strategy to employ sales account executives
whose sole focus will be to expand its referral base, so the Company is not
dependent on relatively few physician groups in any given market.
Capitalize on the Closure of Competitive Agencies. Keeping a pulse on
agency closures (as a result of BBA) and understanding referral patterns in
each of its markets allows the Company the opportunity to gain market share
with no acquisition costs.
Manage Costs Through Disease State Management. Payors are focusing on
the management of patients who suffer from chronic diseases which correlate
with substantial long-term costs. In 1999, the Company introduced Disease
State Management programs for wound care, cardiac, and diabetics. In 2000,
the Company introduced other Disease State Management programs, such as
ortho/rehab, pain management, pulmonary/respiratory, pneumonia, cardio
vascular accident ("CVA"), and cancer. The Company's Disease State
Management programs include patient and family education and empowerment,
frequent monitoring and coordinated care with other medical professionals
involved in the care of the patient.
Manage Costs Through Technology. The Company utilizes a software
system that was developed internally which reduces its cost to operate its
business and integrates a number of financial and operating functions into
a single entry system. The software system was sold to CPII in 1998. The
Company is currently utilizing the software pursuant to a licensing
agreement with CPII which expires in 2004. By enhancing its operations
through the use of information technology and expanded computer
applications, the Company is positioned to not only operate more
efficiently, but to compete in an environment increasingly influenced by
cost containment.
External Growth Strategy
The Company's external growth strategy is to continue expansion through
selected acquisitions. The Company believes that home health nursing
companies are currently undervalued and provide excellent opportunities to
gain additional market share. The Company's acquisition strategy is to:
Focus on Large Hospital Systems with Internal Home Health
Agencies. PPS, which was implemented in October 2000, eliminates the
opportunities for cost-shifting by hospitals. Many hospitals are no longer
interested in participating in the home health business. As a result, many
have made the decision or are in the process of deciding, to sell their
agencies or partner with a reputable company to provide these services.
This not only provides the Company with the opportunity to acquire quality
agencies, but to acquire agencies with strong physician referral bases.
Target Large, Multi-Site Agencies. By acquiring multi-site agencies
and eliminating their corporate structure, the Company hopes to rapidly
dominate a market by either layering the new business into their current
agencies, enhancing current market share or expanding its coverage to
contiguous markets.
Concentrate on Metropolitan Areas. Metropolitan-based agencies are
principal targets due to the synergies created by large patient populations
located close together.
HOME HEALTH CARE SERVICES
Services provided in home health care include four broad categories: (1)
nursing and allied health services, (2) infusion therapy, (3) respiratory
therapy and, (4) home medical equipment. The National Association of Home Care
("NAHC") estimates that total spending for home care was $36 billion in 1999. Of
this total, the U.S. Department of Health and Human Services estimates that
approximately 85% of patients requiring home care services use nursing services
(Health, United States, 1999 Health and Aging Chartbook).
Accounting for $36 billion in expenditures in 1999, nursing and allied
services represent the largest sector, or 70%, of all home health care services.
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The Company currently operates 50 home health care nursing offices
consisting of 30 parent offices with Medicare provider numbers, and 20 branch
offices. Serving this market for the past 9 years, the Company has built an
excellent reputation based on quality care and specialty nursing services.
Because its services are comprehensive, cost-effective and can be accessed 24
hours a day, seven days a week, the Company's home health care nursing services
are attractive to payors and physicians. All of its offices are accredited or in
the process of seeking accreditation by the Joint Commission on Accreditation of
Health Care Organizations ("JCAHO"). The Company provides a wide variety of home
health care services including:
Registered nurses who provide specialty services such as infusion
therapy, skilled monitoring, assessments, and patient education. Many of
the Company's nurses have advanced certifications.
Licensed practical (vocational) nurses who perform technical procedures,
administer medications and change surgical and medical dressings.
Physical and occupational therapists who work to strengthen muscles,
restore range of motion and help patients perform the activities of
daily living.
Speech pathologists/therapists who work to restore communication and
oral skills.
Social workers who help families address the problems associated with
acute and chronic illnesses.
Home health aides who perform personal care such as bathing or
assistance in walking.
Private duty services such as continuous hourly nursing care and sitter
services.
BILLING AND REIMBURSEMENT
Revenues generated from the Company's home health care services are paid by
Medicare, Medicaid, private insurance carriers, managed care organizations,
individuals, and other local health insurance programs. Medicare is a federally
funded program available to persons with certain disabilities and persons aged
65 or older. Medicaid, a program jointly funded by federal, state, and local
governmental health care programs, is designed to pay for certain health care
and medical services provided to low income individuals without regard to age.
The Company has several contracts for negotiated fees with insurers and managed
care organizations. The Company submits all home health Medicare claims to a
single insurance company acting as a fiscal intermediary for the federal
government.
MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING
The Company derived approximately 90% of its revenues from continuing
operations from the Medicare system for the year ended December 31, 2000. In
1997, Congress approved BBA, which established IPS that provided for the
lowering of reimbursement limits for home health visits until PPS was
implemented on October 1, 2000. For cost reporting periods beginning on or after
October 1, 1997, Medicare reimbursed home health agencies' cost limits were
determined as the lesser of (i) their actual costs, (ii) per visit cost limits
based on 105% of national median costs of freestanding home health agencies, or
(iii) a per beneficiary limit determined for each specific agency based on
whether the agency was an "old" or "new" provider. An old provider was defined
as an agency which existed for a twelve month cost report period ending in
Federal FY 1994. The Company currently has agencies that qualify as "old"
providers and agencies that qualify as "new" providers under the guidelines. An
old provider per beneficiary limit was based on 75% of 98% of the 1994 agency
cost adjusted for inflation, plus 25% of 98% of a regional average as determined
by Health Care Financing Administration ("HCFA"). A new provider per beneficiary
limit was based on a national average, as determined by HCFA, adjusted for
regional labor costs. The schedule of per visit limits for cost reporting
periods ended on or after October 1, 1997 was published by HCFA in January, 1998
and the schedule of per-beneficiary limits for cost reporting periods beginning
on or after October 1, 1997 was published in March, 1998, by HCFA. The IPS cost
limits applied to the Company for the cost reporting periods beginning January
1, 1998 until the implementation of PPS on October 1, 2000.
As a result of these reimbursement changes, a significant restructuring
effort by the Company was completed during 1998, resulting in office
reorganizations, consolidations, and closures as it transitioned to
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IPS. After the acquisition of certain home health care agencies from
Columbia/HCA in November and December, 1998, a similar restructuring effort was
implemented during 1999 and 2000 in an overall effort to reduce costs and
improve efficiencies, while maintaining the same high quality of patient care.
In October 1999, HCFA issued proposed regulations for PPS. On June 28,
2000, HCFA issued the final rules for PPS which were effective for all
Medicare-certified home health agencies on October 1, 2000. The final
regulations establish payments based on episodes of care. An episode is defined
as a length of care up to sixty days with multiple continuous episodes allowed
under the rule. The services covered by the episode payment include all
disciplines of care, in addition to medical supplies, within the scope of the
home health benefit. A standard episode payment has been established at $2,115
per episode for federal fiscal year 2001, to be adjusted by a case mix adjuster
consisting of eighty (80) home health resource groups ("HHRG") and the
applicable geographic wage index. The standard episode payment may be subject to
further individual adjustments due to low utilization, intervening events and
other factors. Providers are allowed to make a request for anticipated payment
at the start of care equal to 60% of the expected payment for the initial
episode and 50% for each subsequent episode. The remaining balance due to the
provider is paid following the submission of the final claim at the end of the
episode. In contrast to the cost-based reimbursement system whereby providers'
reimbursement was limited, among other things, to their actual costs, episode
payments are to be made to providers regardless of the cost to provide care,
except with regard to certain outlier provisions. As a result, the Company
expects that home health agencies have the opportunity to be profitable under
this system.
In December 2000, Congress passed the Benefits Improvement and Protection
Act ("BIPA"), which provides additional funding to healthcare providers. BIPA
provided for the following: (i) a one-year delay in applying the budgeted 15%
reduction on payment limits, (ii) the restoration of a full home health market
basket update for episodes ending on or after April 1, 2001, and before October
1, 2001 resulting in an increase to revenues of 2.2%, and (iii) a 10% increase,
beginning April 1, 2001 and extending for a period of twenty four months, for
home health services provided in a rural area.
DATA PROCESSING
In connection with the acquisition of the home health care agencies from
Columbia/HCA in November 1998, the Company decided to out-source its home health
care billing and payroll processing functions to create greater operating and
financial efficiencies. On November 2, 1998, the Company and CareSouth Home
Health Services, Inc. ("CareSouth") entered into a Master Corporate Guaranty of
Service Agreement, which was amended and restated as of September 1, 1999,
whereby the Company agreed to act as guarantor for each Agency Service Agreement
between CareSouth and all home health agencies which are owned or managed by the
Company. Under the Agency Service Agreements, CareSouth has agreed to provide
payroll processing, billing services, and collection services for the home
health agencies.
The Company continues to use its internally-developed home health care
software program which was sold in November 1998, in accordance with a license
agreement with CPII, which expires in 2004. This software system features a
single entry system that allows data to flow through accounting, general ledger,
payroll and billing and meet the extensive cost reporting requirements for
Medicare reimbursement of home health care nursing services. It also provides
clinical documentation for tracking clinical outcome results.
QUALITY CONTROL AND IMPROVEMENT
As a medical service business, the quality and reputation of the Company's
personnel and operations are critical to its success. The Company has
implemented quality management and improvement programs, a corporate compliance
program, and policies and procedures in each of its divisions at both the
corporate and field levels. The Company strives to meet regulations set forth by
state licensure, federal guidelines for Medicare and Medicaid, and JCAHO
standards.
The Company maintains an active quality management team who makes periodic
on-site inspections of field offices to review systems, operations, and clinical
procedures. An educational division is also part of quality management
operations and conducts educational and training sessions at field offices, as
well as, disseminating continuing education materials to the Company's
employees. Additionally, the quality manage-
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ment team works in association with the Company's corporate compliance officer
to perform audits and conduct education to ensure the knowledge of the field
staff and compliance with state and federal laws and regulations.
RECRUITING AND TRAINING
The Company's Human Resources Department coordinates recruiting efforts for
corporate and field personnel. Employees are recruited through newspaper
advertising, professional recruiters, the Company's web page, networking,
participation in job fairs, and word-of-mouth referrals. The Company believes it
is competitive in the industry and offers its employees upward mobility, health
insurance, an Employee Stock Purchase Plan, a 401(k) plan with company matching
contributions, and a cafeteria plan.
Uniform procedures for screening, testing, and verifying references,
including criminal background checks where appropriate, have been established.
All employees receive a formalized orientation program, including
familiarization with the Company's policies and procedures.
The Company believes that it is in compliance with all Department of Labor
regulations.
GOVERNMENT REGULATION
The Company's home health care business is highly regulated by federal,
state and local authorities. Regulations and policies frequently change and the
Company monitors changes through trade and governmental publications and
associations. The Company's home health care subsidiaries are certified by HCFA
and are therefore eligible to receive reimbursement for services through the
Medicare system. As a provider under the Medicare and Medicaid systems, the
Company is subject to the various "anti-fraud and abuse" laws, including the
federal health care programs' anti-kickback statute. This law prohibits any
offer, payment, solicitation or receipt of any form of remuneration to induce
the referral of business reimbursable under a federal health care program or in
return for the purchase, lease, order, arranging for, or recommendation of items
or services covered by any federal health care programs or any health care plans
or programs that are funded by the United States (other than certain federal
employee health insurance benefits) and certain state health care programs that
receive federal funds under various programs, such as Medicaid. A related law
forbids the offer or transfer of any item or service for less than fair market
value, or certain waivers of copayment obligations, to a beneficiary of Medicare
or a state health care program that is likely to influence the beneficiary's
selection of health care providers. Violations of the anti-fraud and abuse laws
can result in the imposition of substantial civil and criminal penalties and,
potentially, exclusion from furnishing services under any federal health care
programs. In addition, the states in which the Company operates generally have
laws that prohibit certain direct or indirect payments or fee-splitting
arrangements between health care providers where they are designed to obtain the
referral of patients to a particular provider.
Congress adopted legislation in 1989, known as the "Stark" Law, that
generally prohibits a physician from ordering clinical laboratory services for a
Medicare beneficiary where the entity providing that service has a financial
relationship (including direct or indirect ownership or compensation
relationships) with the physician (or a member of his immediate family), and
prohibits such entity from billing for or receiving reimbursement for such
services, unless a specified exception is available. Additional legislation
became effective as of January 1, 1993 known as "Stark II," that extends the
Stark law prohibitions to services under state Medicaid programs, and beyond
clinical laboratory services to all "designated health services," including but
not limited to home health services, durable medical equipment and supplies, and
parenteral and enteral nutrients, equipment, and supplies. Violations of the
Stark Law may also trigger civil monetary penalties and program exclusion.
Pursuant to Stark II, physicians who are compensated by the Company will be
prohibited from seeking reimbursement for designated health services rendered to
such patients unless an exception applies. Several of the states in which the
Company conducts business have also enacted statutes similar in scope and
purpose to the federal fraud and abuse laws and the Stark laws.
Various federal and state laws impose criminal and civil penalties for
making false claims for Medicare, Medicaid or other health care reimbursements.
The Company believes that it bills for its services under such programs
accurately. However, the rules governing coverage of, and reimbursements for,
the Company's
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services are complex. There can be no assurance that these rules will be
interpreted in a manner consistent with the Company's billing practices.
Congress adopted additional legislation in 1996 known as the Health
Insurance Portability and Accountability Act ("HIPAA") which requires health
care providers to assure the confidentiality and security of individually
identifiable health care information. The final rule was issued on December 28,
2000 with an effective date of April 14, 2001 and a compliance date of April 14,
2003. Compliance with this law will require significant time and resources of
the Company, of which the Company has begun to devote. Violations of the law
will trigger civil monetary penalties, criminal fines and/or imprisonment.
Home health care offices have licenses granted by the health authorities of
their respective states. Additionally, some state health authorities require a
Certificate of Need ("CON"). Tennessee, Georgia, Alabama, and North Carolina do
require a CON to establish and operate a home health care agency, while
Louisiana, Oklahoma, Virginia and Florida currently do not. In every state, each
location license and/or CON issued by the state health authority determines the
service areas for the home health care agency. Currently, JCAHO accreditation of
home health care agencies is voluntary. However, Managed Care Organizations
("MCOs") use JCAHO accreditation as a minimum standard for regional and state
contracts.
The Company strives to comply with all federal, state and local regulations
and has satisfactorily passed all federal and state inspections and surveys. The
ability of the Company to operate properly and fulfill its business objective
will depend on the Company's ability to comply with all applicable healthcare
regulations.
COMPETITION
The services provided by the Company are also provided by competitors at
the local, regional and national levels. Home health care providers compete for
referrals based primarily on scope and quality of services, geographic coverage,
pricing, and outcomes data. The impact of competitors is best determined on a
market-by-market basis.
The Company believes its favorable competitive position is attributable to
its reputation for over a decade of consistent, high quality care; its
comprehensive range of services; its state-of-the-art information management
systems; and its widespread service network.
SEASONALITY
The demand for the Company's home health care nursing and outpatient
surgery are not typically influenced by seasonal factors.
EMPLOYEES
As of December 31, 2000, the Company had 1,100 full-time employees,
excluding part time field nurses and other professionals in the field. The
Company currently employs the following classifications of personnel:
administrative level employees which consist of a senior management team (CEO,
COO, CIO, Chief Compliance Officer, General Counsel, senior vice presidents and
vice presidents); office administrators; nursing directors; controllers;
accountants; sales executives; licensed and certified professional staff (RNs,
LPNs, therapists and therapy assistants); and non-licensed care givers (aides).
The Company complies with the Fair Labor Standards Act in establishing
compensation methods for its employees. Select positions within the Company are
eligible for bonuses based on the achievement of pre-determined budget criteria.
The Company sponsors and contributes toward the cost of a group health insurance
program for its eligible employees and their dependents. The group health
insurance program is self-funded by the Company; however, there is a
re-insurance policy in place to limit the liability for the Company. In
addition, the Company provides a group term life insurance policy and a long
term disability policy for eligible employees. The Company also offers a 401(k)
retirement plan, a Cafeteria 125 plan, an Employee Stock Purchase Plan,
supplemental benefit programs, and paid time-off benefits.
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The Company believes its employee relations are good. It successfully
recruits employees and most of its employees are shareholders.
INSURANCE
The Company maintains casualty coverages for all of its operations,
including professional and general liability, workers' compensation, automobile,
property, fiduciary liability, and directors and officers. The insurance program
is reviewed periodically throughout the year and thoroughly on an annual basis
to insure adequate coverage is in place. For the years ended December 31, 1995
through December 31, 1998, the Company was approved through the State of
Louisiana to self-insure its workers' compensation program. All other states
were covered on a fully insured basis through "A+" rated insurers. In January
1999, the Company changed from the self-insured workers' compensation plan to a
fully-insured, guaranteed cost plan. All of the Company's employees are bonded.
The Company is self-insured for its employee health benefits. In 2001, the
Company elected to change its workers' compensation program to a high-deductible
program underwritten by The Hartford.
ITEM 2. PROPERTIES
The Company operates fifty home care nursing offices, one ambulatory
surgery center, and one corporate office in the southern and southeastern United
States. The Company presently leases approximately 17,981 square feet located at
11100 Mead Road, Baton Rouge, Louisiana, representing the corporate office. This
lease provides for a basic annual rental rate of approximately $14.50 per square
foot through the expiration date on September 30, 2002. The Company has an
aggregate of 278,270 square feet of leased space for regional offices pursuant
to leases which expire between March, 2001 and October, 2011. Rental rates for
these regional offices range from $1.92 per square foot to $26.42 per square
foot with an average of $10.77 per square foot. During 1999 and 2000, the
Company consolidated offices that covered the same patient service area in an
overall effort to decrease costs and gain operating efficiencies, while still
providing quality and accessible home health services.
The following is a list of the Company's offices. Unless otherwise
indicated, the Company has one office in each city.
Georgia (21) Louisiana (7) Virginia (1)
Atlanta Alexandria Weber City
Blue Ridge Baton Rouge (2)
Cartersville Hammond North Carolina (1)
Cedartown Lafayette Chapel Hill
Clayton Metairie
Covington Monroe Oklahoma (4)
Dalton Claremore
Decatur Tennessee (11) Gore
Douglasville Athens Stilwell
Fayetteville Bristol Tulsa
Forest Park Chattanooga
Ft. Oglethorpe Gordonsville Alabama (6)
Gainesville Johnson City Demopolis
Jasper Kingsport Fairhope
Kennesaw Livingston Huntsville
Lavonia McMinnville Mobile
Lawrenceville Nashville Montgomery
Macon Pikeville Selma
Rome Winchester
Summerville Florida (1)
Toccoa Winter Haven
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ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company and its subsidiaries are defendants in
lawsuits arising in the ordinary course of the Company's business. While the
outcome of these lawsuits cannot be predicted with certainty, management
believes that the resolution of these matters will not have a material adverse
effect on the Company's financial condition or results of operations.
The Company filed a lawsuit against Mr. James P. Cefaratti, the Company's
former President and Chief Operations Officer, alleging various negligent
actions which constituted breaches of fiduciary duty owed to the Company and its
stockholders. The lawsuit was initially filed in the 19th Judicial District
Court of the Parish of East Baton Rouge, State of Louisiana on November 24,
1998. The lawsuit was then removed to the United States District Court for the
Middle District of Louisiana. The Company is seeking unspecified damages
incurred as a result of the alleged negligent actions and all other appropriate
relief.
On December 7, 1998, Mr. Cefaratti filed a lawsuit naming the Company as a
defendant and claimed that he was terminated in violation of an alleged
employment contract. Other ex-employees of the Company which have lawsuits
pending against the Company claiming breaches of alleged employment contracts
include Ms. Judi M. McQueary, the former President of the Company's managed care
division (filed on December 11, 1998) and Mr. William G. Hardee, the former Vice
President of the Company's southeastern alternate site infusion division (filed
on December 11, 1998).
All of the above mentioned lawsuits filed by the ex-employees of the
Company were initially filed in the United States District Court for the Eastern
District of Louisiana and were consolidated together as one lawsuit. All the
said lawsuits were then transferred to the United States District Court for the
Middle District of Louisiana and severed to be tried separately. The Chief
Executive Officer of the Company, and its directors and officers liability
insurer were named as defendants in all the abovementioned lawsuits. The relief
sought in all these cases are contract damages, penalty wages, costs, and
attorney fees.
The Company filed a lawsuit against Mr. Stephen L. Taglianetti, the former
President of the Company's alternate site infusion division alleging various
negligent actions which constituted breaches of fiduciary duty owed to the
Company and its stockholders. The lawsuit against Mr. Taglianetti was initially
filed in the 19th Judicial District Court of the Parish of East Baton Rouge,
State of Louisiana on November 19, 1998. The lawsuit was then removed to the
United States District Court for the Middle District of Louisiana. The Company
sought damages incurred as a result of the negligent actions and all other
appropriate relief. Mr. Taglianetti, on December 11, 1998, sued the Company
claiming that he was terminated in violation of an alleged employment contract
and for reporting alleged illegal billing practices. The Chief Executive Officer
of the Company and its directors and officers liability insurer were named as
defendants in this suit. Mr. Taglianetti's lawsuit has been settled out of court
and is no longer pending. All claims for damages by all parties thereto have
been released and otherwise waived.
Mr. Charles M. McCall, the former President of the supplemental staffing
division of the Company filed a lawsuit against the Company in the 19th Judicial
District Court of the Parish of East Baton Rouge, State of Louisiana on December
29, 1998. Said lawsuit claimed breaches of an alleged employment contract. Mr.
McCall's lawsuit has been settled out of court and is no longer pending. All
claims for damages by all parties thereto have been released and otherwise
waived.
Alliance Home Health, Inc. ("Alliance"), a wholly-owned subsidiary of the
Company, filed for Chapter 7 Federal bankruptcy protection with the United
States Bankruptcy Court in the Northern District of Oklahoma on September 29,
2000. Alliance was acquired by the Company in January, 1998 and ceased
operations in January, 1999 (see Note 2 in the Notes to the Consolidated
Financial Statements).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of 2000.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
From August 1997, through September 1998, the Company's common stock traded
on the Nasdaq National Market. Since September 1998, the Company has been
trading on the OTC Bulletin Board. As of March 12, 2001, there were
approximately 167 holders of record of the Company's Common Stock and the
Company believes there are approximately 2,136 beneficial holders. The Company
has not paid any dividends on its Common Stock since inception and expects to
retain any future earnings for use in its business development for the
foreseeable future. The following table provides the high and low prices of the
Company's Common Stock during 1999, 2000, and the first quarter of 2001 through
March 12 as quoted by Nasdaq and the OTC Bulletin Board.
HIGH LOW
----- -----
1st Quarter 1999............................................ $2.50 $2.00
2nd Quarter 1999............................................ 2.31 1.50
3rd Quarter 1999............................................ 1.94 1.13
4th Quarter 1999............................................ 1.60 1.31
1st Quarter 2000............................................ $3.13 $1.31
2nd Quarter 2000............................................ 3.06 1.06
3rd Quarter 2000............................................ 5.16 2.75
4th Quarter 2000............................................ 4.88 3.13
1st Quarter 2001 (through March 12)......................... $6.94 $3.69
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ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below are derived from
audited financial statements for each of the years ended December 31, 1996
through December 31, 2000. Selected financial data for the years ended December
31, 1996 through December 31, 1999 have been restated for discontinued
operations (see "Dispositions and Discontinued Operations" section discussed in
Item 1). The financial data for the years ended December 31, 2000 and 1999
should be read in conjunction with the consolidated financial statements and
related notes attached hereto, the information set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
other financial information included herein.
SELECTED HISTORICAL STATEMENT OF INCOME DATA
2000 1999(1) 1998(1) 1997(1) 1996(1)
------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net Service Revenue......................... $90,755 $97,411 $ 25,466 $25,810 $25,500
Cost of Service Revenue..................... 41,468 46,890 17,569 14,567 14,509
Operating Revenues................ 49,287 50,521 7,897 11,243 10,991
General/Administrative Expenses............. 49,251 53,146 33,510 15,125 12,959
Operating Income (Loss)........... 36 (2,625) (25,613) (3,882) (1,968)
Other Income and Expense.................... (1,769) (4,719) (1,196) (720) (1,309)
Income Tax Expense (Benefit)................ (659) (3,263) (99) (1,148) (642)
Income (Loss) before Discontinued
Operations, Extraordinary Item and
Cumulative Effect of Change in Accounting
Principle................................. (1,074) (4,081) (26,710) (3,454) (2,635)
Discontinued Operations:
Income (Loss) from Discontinued
Operations, Net of Income Tax.......... (3,281) (784) (1,338) 2,312 2,653
Gain on Dispositions, Net of Income Tax... 4,914 6,165 3,177 -- --
Extraordinary Item, Net of Income Tax..... 5,811 -- -- -- --
Cumulative Effect of Change in Accounting
Principle.............................. -- -- -- (52) --
Net Income (Loss)......................... $ 6,370 $ 1,300 $(24,871) $(1,194) $ 18
Weighted Avg. Common Shares Outstanding... 4,336 3,093 3,061 2,735 2,575
Basic Earnings (Loss) per Common Share
Outstanding
Net (Loss) before Discontinued
Operations............................. $ (0.25) $ (1.32) $ (8.72) $ (1.26) $ (1.02)
Income (Loss) from Discontinued
Operations, Net of Income Tax.......... (0.76) (0.25) (0.44) 0.85 1.03
Gain on Dispositions, Net of Income Tax... 1.13 1.99 1.04 -- --
Extraordinary Item, Net of Income Tax..... 1.34 -- -- -- --
Cumulative Effect of Change in Accounting
Principle.............................. -- -- -- (0.02) --
Net Income (Loss)......................... 1.46 0.42 (8.12) (0.43) 0.01
Balance Sheet Data:
Total Assets.............................. $41,570 $44,602 $ 44,428 $22,870 $16,858
Total Long-term Obligations............... $21,102 $13,039 $ 14,394 $ 3,129 $ 3,223
Total Convertible Preferred Stock......... $ 1 $ 1 $ 1 $ 1 $ --
- ---------------
(1) Selected Financial Data for the years ended December 31, 1996 through
December 31, 1999 have been restated for discontinued operations. See
"Dispositions and Discontinued Operations" section discussed in Item 1.
17
20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Consolidated Financial Statements and notes thereto
referenced in Item 8.
GENERAL
Amedisys is a leading multi-regional provider of home health care nursing
services. The Company operates fifty home care nursing offices, one ambulatory
surgery center, and one corporate office in the southern and southeastern United
States.
During 1999, the Company changed its strategy from providing a variety of
alternate site provider health care services to becoming a leader in home health
care nursing services. The Company's change of focus was largely attributed to
its significant investment in this segment as a result of its acquisition of 83
home care offices from Columbia/HCA in late 1998. A second major factor was the
changes in Medicare reimbursement for home health services implemented on
October 1, 2000. A third significant factor was the Company's established
reputation and expertise in the field. Amedisys has over a decade of experience
in home care nursing and was an early innovator in bringing technology,
previously used only in acute care settings, to the home as well as providing
traditional home care services. Pursuant to this strategy, the Company launched
a restructuring plan to divest its non-home health care nursing divisions. The
Company sold five of its six surgery centers and sold or closed its four
infusion locations during 1999 and 2000 and expects to divest the one remaining
surgery center during 2001.
The Company has systematically reduced its operating costs since 1998 in
preparation for PPS. Significant cost reduction measures undertaken by the
Company included the consolidation/closure of offices which overlapped service
areas, converting its method of nurse pay to a variable or per visit rate rather
than a fixed or salary system, utilizing economies of scale, and reducing
corporate overhead when possible. Business functions which are not considered
part of the core business have been outsourced and management layers have been
streamlined.
The Company has positioned its offices to be successful under PPS. The
Company has implemented Disease State Management programs and clinical protocols
as well as supporting technology to monitor and report outcome data, to
standardize care, and to ensure quality outcomes. Using clinical managers to
assess and track patient progress and highly skilled nurses to deliver care are
also important components of the overall strategy.
The Company experienced recurring operational losses and negative cash flow
from operations for the periods ended December 31, 1999 and 1998. The
divestiture of the Company's non-core assets generated sufficient cash to offset
the operating cash deficits that were created during those years. Following the
change in the Medicare reimbursement system, the Company generated operating
profits of $2,532,000 in the fourth quarter of 2000 which offset operating
losses from the first three quarters. This allowed the Company to experience
operating income and positive cash flow from operations for the year ended
December 31, 2000. See the "Liquidity and Capital Resources" section of this
Item for further discussion.
18
21
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
included in the Company's consolidated statements of operations as a percentage
of net revenues:
YEARS ENDED DECEMBER 31,
-------------------------
2000 1999 1998
------ ------ -------
Net services revenues..................................... 100.00% 100.00% 100.00%
Cost of service revenues.................................. 45.69 48.14 68.99
------ ------ -------
Operating revenues........................................ 54.31 51.86 31.01
General and administrative expenses:
Salaries and benefits................................... 32.00 30.89 61.89
Other................................................... 22.27 23.67 69.70
------ ------ -------
Total general and administrative expenses............... 54.27 54.56 131.59
------ ------ -------
Operating income (loss)................................... 0.04 (2.70) (100.58)
Other income (expense).................................... (1.95) (4.84) (4.70)
------ ------ -------
Net (loss) before taxes, discontinued operations and
extraordinary item...................................... (1.91) (7.54) (105.28)
Income tax benefit........................................ (0.73) (3.35) (0.39)
------ ------ -------
Net (loss) before discontinued operations and
extraordinary item...................................... (1.18) (4.19) (104.89)
Discontinued operations:
(Loss) from discontinued operations, net of income
tax.................................................. (3.62) (0.80) (5.25)
Gain on dispositions, net of income tax................. 5.41 6.33 12.48
Extraordinary Item, net of income tax..................... 6.40 -- --
------ ------ -------
Net income (loss)......................................... 7.02% 1.33% (97.66)%
====== ====== =======
Years Ended December 31, 2000 and 1999
NET SERVICE REVENUES
For the year ended December 31, 2000 as compared to the year ended December
31, 1999, net revenues decreased $6,656,000 or 7%. This decrease was attributed
to a decrease in visits of 249,708 from 1,283,738 to 1,034,030 which is
primarily attributable to the implementation of Disease State Management
Programs which are diagnosis-specific treatment protocols implemented by each
agency. These protocols implement standardized treatment plans for patients to
reach a quality outcome in the most efficient manner possible.
COST OF SERVICE REVENUES
Cost of revenues decreased by 12% in 2000 as compared to 1999. This
decrease is primarily attributed to a reduction in visit volume as noted above.
As a percentage of net revenues, cost of revenues decreased to 46% in 2000 from
48% in 1999. This decrease is attributed to cost reduction efforts implemented
during 1999 and 2000 for all operating locations in preparation for PPS.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by 7% in 2000 as compared to
1999. This decrease is primarily attributed to the restructuring efforts during
1999 and 2000 following the acquisition of certain Columbia/HCA home health care
agencies in the latter part of 1998 in preparation for PPS. As a percentage of
net revenues, general and administrative expenses decreased to 54.3% in 2000
from 54.6% in 1999.
19
22
OPERATING INCOME (LOSS)
The Company had operating income of $36,000 in 2000 as compared to an
operating loss of $2,625,000 in 1999. The reduction in operating losses of
$2,661,000 or 101% is attributed to the restructuring efforts implemented during
1999 and 2000 and the implementation of PPS on October 1, 2000.
OTHER INCOME (EXPENSE)
Other income and expenses decreased by $2,950,000 primarily due to a
write-off of goodwill in 1999 of approximately $1.8 million related to the sale
of certain home health care agencies previously acquired from Columbia/HCA in
the latter part of 1998 and a decrease in interest expense of $1.5 million due
to lower net borrowings on line of credit agreements.
INCOME TAX BENEFIT
For the year ended December 31, 2000 as compared to December 31, 1999,
income tax expense decreased from $383,000 in 1999 to $200,000 in 2000 (see Note
10 in the Notes to the Consolidated Financial Statements). Total income tax
expense for 2000 of $200,000 is comprised of income tax benefit from continuing
operations of $659,000, offset by income tax expense from discontinued
operations of $172,000 and income tax expense related to an extraordinary item
of $687,000. For 1999, total income tax expense of $383,000 is comprised of
income tax benefit from continuing operations of $3,263,000, offset by income
tax expense from discontinued operations of $3,646,000.
DISCONTINUED OPERATIONS
Losses from discontinued operations, net of income taxes, amounted to
$3,281,000 for 2000 as compared to losses of $784,000 for 1999 primarily due to
a write-off of goodwill related to the infusion division of approximately $1,770
000. The gain on disposition of $4,914,000, net of taxes of $172,000, for 2000
is attributed to the sale of two surgery centers and the Company's Infusion
Division, while the gain on disposition of $6,165,000, net of taxes, for 1999 is
attributed to the sale of three surgery centers.
EXTRAORDINARY ITEM
The extraordinary item in 2000 of $5,811,000, net of income taxes of
$687,000, relates to the prepayment of a note payable to Columbia/HCA of $14
million plus accrued interest of $2.6 million for a cash payment of $9,000,000
and the execution of a warrant agreement that allows Columbia/HCA to purchase up
to 200,000 shares of Amedisys' Common Stock, subject to certain conditions (see
"Recent Remodification of Loan" in Item 1).
NET INCOME (LOSS)
The Company recorded net income of $6,370,000, or $1.47 per common share,
for 2000 compared with net income of $1,300,000, or $0.42 per common share, for
1999.
Years Ended December 31, 1999 and 1998
NET SERVICE REVENUES
For the year ended December 31, 1999 as compared to the year ended December
31, 1998, net revenues increased $71,945,000 or 283%. This increase was
attributed to the acquisition of certain Columbia/HCA home health care agencies
in the latter part of 1998.
COST OF SERVICE REVENUES
Cost of revenues increased by 167% in 1999 as compared to 1998. This
increase is primarily attributed to the acquisition of certain Columbia/HCA home
health care agencies. As a percentage of net revenues, cost of revenues
decreased to 48% in 1999 from 69% in 1998. This decrease is attributed to cost
reduction efforts
20
23
implemented during 1998 and 1999 for all operating locations. In the home health
care nursing division, all nursing employees were converted to a per-visit
payment basis, thereby increasing productivity.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by 59% in 1999 as compared to
1998. This increase is primarily attributed to the acquisition of certain
Columbia/HCA home health care agencies. As a percentage of net revenues, general
and administrative expenses decreased to 55% in 1999 from 132% in 1998. This
decrease is a result of cost reduction efforts implemented during 1999 in
addition to a non-recurring write-down of goodwill in 1998 of $9,522,000 for
acquisitions completed during that year. The cost reduction efforts were for all
operating locations and corporate departments in addition to improvements in
operating efficiencies. The operating efficiencies that were gained through
these efforts helped to offset the additional resources needed following the
Columbia/HCA acquisition, resulting in a minimal increase in administrative
personnel and resources to appropriately manage and support the new home health
care agencies.
OPERATING LOSS
The Company had an operating loss of $2,625,000 in 1999 as compared to an
operating loss of $25,613,000 in 1998. The reduction in operating losses of
$22,988,000 or 90% is attributed to the restructuring efforts implemented during
1998 and 1999, the economies of scale achieved with the acquisition of certain
Columbia/HCA home health care agencies, and the non-recurring write-down of
goodwill in 1998.
OTHER INCOME (EXPENSE)
Other income and expenses increased by $3,523,000 due to increased interest
expense of $2.7 million in 1999 related to the Company's borrowings and a
write-off of goodwill of approximately $1.8 million in 1999 related to the sale
of certain home health care agencies previously acquired from Columbia/HCA in
the latter part of 1998.
INCOME TAX BENEFIT
For the year ended December 31, 1999 as compared to December 31, 1998,
income tax expense decreased from $926,000 in 1998 to $383,000 in 1999 (see Note
10 in the Notes to the Consolidated Financial Statements attached hereto). Total
income tax expense for 1999 of $383,000 is comprised of income tax benefit from
continuing operations of $3,263,000, offset by income tax expense from
discontinued operations of $3,646,000. For 1998, total income tax expense of
$926,000 is comprised of income tax benefit from continuing operations of
$99,000, offset by income tax expense from discontinued operations of
$1,025,000.
DISCONTINUED OPERATIONS
Losses from discontinued operations, net of income taxes, amounted to
$784,000 for 1999 as compared to losses of $1,338,000 for 1998. The gain on
disposition of $6,165,000, net of taxes, for 1999 is attributed to the sale of
three surgery centers while the gain on disposition of $3,177,000 for 1998 is
attributed to the sale of the staffing division.
NET INCOME (LOSS)
The Company recorded net income of $1,300,000, or $0.42 per common share,
for 1999 compared with a net loss of $24,871,000, or $8.12 per common share, for
1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company recorded operating losses and had negative cash flow for the
year ended December 31, 1999 and the first three quarters of 2000, during which
its operations were primarily funded by the divestiture of certain non-core
assets. The losses and negative cash flow from operations are largely
attributable to the changes in Medicare reimbursement which were effective
January 1, 1998 for the Company. In the fourth
21
24
quarter of 2000, the Company returned to profitability and positive cash flow,
primarily as a result of the implementation of PPS on October 1, 2000. The
Company expects positive cash flow from operations will continue in subsequent
periods and to be able to fund operations primarily from this source.
At December 31, 2000, the Company was indebted under various promissory
notes for $12.7 million, including amounts due to NPF Capital, an affiliate of
National Century Financial Enterprises, Inc. ("NCFE") of $9.7 million, to
Merrill Lynch of $1.2 million (included in Held for Sale), to CareSouth Home
Health Services, Inc. ("CareSouth") of $934,000, to Winter Haven Hospital of
$951,000, to individuals of $1 million, and various other notes. The Company's
principal and interest requirements due under all promissory notes is
approximately $4.9 million in 2001 and $6.3 million in 2002. The fair value of
long-term debt as of December 31, 2000 and 1999, estimated based on the
Company's current borrowing rate of 15% at December 31, 2000 and 1999, was
approximately $12.3 million and $6.1 million, respectively.
The Company has an asset-based line of credit with availability, depending
on collateral, of up to $25 million with NCFE, which expires December 31, 2001.
The line of credit is collateralized by eligible accounts receivable of the home
health care nursing division and as of December 31, 2000, had an outstanding
balance of $2,953,000. The effective interest rate on this line of credit was
15.29% for the year ended December 31, 2000. The Company also has a $2.5 million
line of credit, which bears interest at Bank One Prime Floating, on which no
amounts were outstanding as of December 31, 2000.
Prior to the implementation of PPS, the Company recorded Medicare revenues
at the lower of actual costs, the per visit cost limit, or a per beneficiary
cost limit on a individual provider basis. Ultimate reimbursement under the
Medicare program was determined upon review of the annual cost reports. As of
December 31, 2000, the Company estimates an aggregate payable to Medicare of
$13.3 million, netted against accounts receivable, resulting from interim cash
receipts in excess of expected reimbursement. For the cost report year ended
December 31, 2000, the Company has an estimated payable of $2.3 million of which
$2.4 million is due to Medicare in excess of one year and $0.1 million is due
from Medicare to the Company within the next year. For the cost report year
ended 1999, the Company has an estimated payable of $6.4 million of which $3.4
million is due within one year and $3.0 million is due in excess of one year.
For the cost report years ended 1998 and prior, the Company has an estimated
payable of $4.6 million of which $4.0 million is due within one year and $0.6
million is due in excess of one year.
The Company's operating activities provided $6,914,000 in cash during the
year ended December 31, 2000, whereas such activities used $12,222,000 in cash
during the year ended December 31, 1999. Cash provided by operating activities
in 2000 is primarily attributable to net income of $6.4 million, non-cash items
such as depreciation and amortization of $5.2 million and changes in assets and
liabilities of $1.1 million, offset by gains on the sale of discontinued
operations of $5.1 million and deferred revenue of $2.1 million. Investing
activities provided $6.8 million for the year ended December 31, 2000, whereas
such activities provided $11.5 million for the year ended December 31, 1999.
Cash provided by investing activities in 2000 is primarily attributed to
proceeds from the sale of discontinued operations of $6.6 million. Financing
activities used cash during 2000 of $8.2 million, whereas such activities
provided $1.8 million during 1999. Cash used in financing activities in 2000 is
primarily attributed to payments on notes payable and capital leases of $20.7
million and payments on lines of credit of $2.4 million offset by proceeds from
the issuance of notes payable of $10.7 million and an increase in long-term
Medicare liabilities of $3.5 million.
The Company has begun the installation of a company-wide computer network
infrastructure to connect all of its regional offices. This wide area network
("WAN") will allow more immediate access to all company personnel including
senior management, which will increase operational efficiencies. This project is
expected to be completed in the third quarter of 2001 at an estimated cost of
$1.5 million.
INFLATION
The Company does not believe that inflation has had a material effect on
its results of operations for the twelve months ended December 31, 2000.
22
25
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company does not engage in derivative financial instruments, other
financial instruments, or derivative commodity instruments for speculative or
trading/non-trading purposes.
ITEM 8. FINANCIAL STATEMENTS
See Consolidated Financial Statements on Page 28.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Certain information required by Part III is omitted from this Report in
that the Registrant will file its definitive Proxy Statement for its 2001 Annual
Meeting of Shareholders to be held June 14, 2001 pursuant to Regulation 14A of
the Securities Exchange Act of 1934 (the "Proxy Statement") no later than 120
days after the end of the fiscal year covered by this Report, and certain
information included in the Proxy Statement is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors -- The information required by this Item is incorporated by
reference to the section entitled "Election of Directors" in the Proxy
Statement.
(b) Executive Officers -- The information required by this Item is
incorporated by reference to the section entitled "Executive Officers" in the
Proxy Statement.
(c) Section 16(a) Beneficial Ownership Reporting Compliance -- The
information required by this Item pursuant to Item 405 of Regulation S-K is
incorporated herein by reference to the section entitled "Election of Directors,
Compliance with Section 16(a) of the Exchange Act" in the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
sections entitled "Compensation of Executive Officers" and "Compensation of
Directors" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
sections entitled "Record Date and Principal Ownership" and "Security Ownership
of Management" in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
section entitled "Certain Transactions" in the Proxy Statement.
23
26
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
Documents to be filed with Form 10-K:
Report of Independent Public Accountants.................... 29
Consolidated Balance Sheets as of December 31, 2000 and
1999...................................................... 30
Consolidated Statements of Operations for the Years Ended
December 31, 2000, 1999, and 1998......................... 31
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2000, 1999, and 1998............. 32
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999, and 1998......................... 33
Notes to Consolidated Financial Statements as of December
31, 2000, 1999, and 1998.................................. 34
(a) Exhibits.
EXHIBIT
NO. IDENTIFICATION OF EXHIBIT
------- -------------------------
2.1(1) -- Acquisition Agreement dated December 20, 1993 between the
Company and M & N Capital Corp.
2.2(3) -- Plan of Merger dated August 3, 1994 between M & N Capital
Corp. and the Company
2.3(4) -- Certificate of Merger dated August 3, 1994 between M & N
Capital Corp. and the Company
2.4(7) -- Acquisition Agreement dated August 1,1997 between the
Company and Allgood Medical Services, Inc.
2.5(7) -- Exchange Agreement dated January 1, 1998 between the
Company and Alliance Home Health, Inc. and University
Capital Corp. dated December 10, 1997
2.6(7) -- Stock Purchase Agreement by and among Amedisys,
Alternate-Site Infusion Therapy Services, Inc., PRN, Inc.
d/b/a Home IV Therapy, Joseph W. Stephens, and Terry I.
Stevens dated February 23, 1998
2.7(7) -- Agreement to Purchase by and between Amedisys,
Alternate-Site Infusion Therapy Services, Inc. and
Precision Health Systems, L.L.C. dated February 27, 1998
2.8(7) -- Promissory note in the amount of $250,000 to Precision
Health Solutions, L.L.C. in connection with the purchase
of the company
2.9(7) -- Stock Purchase Agreement by and among Amedisys
Alternate-Site Infusion Therapy Services, Inc., Infusion
Care Solutions, Inc. and Daniel D. Brown dated February
27, 1998
2.10(7) -- Promissory note in the amount of $125,000 to Daniel D.
Brown in connection with the purchase of the company
2.11(8) -- Stock Purchase Agreement by and among Amedisys
Specialized Medical Services, Inc., Quality Home Health
Care, Inc., Frances Unger, and James Unger dated May 1,
1998
2.12(8) -- Asset Purchase Agreement by and among Amedisys
Specialized Medical Services, Inc., and Precision Home
Health Care, Inc. dated May 1, 1998
2.13(8) -- Promissory note in the amount of $800,000 to Precision
Home Health Care, Inc. in connection with the purchase of
the company
2.14(8) -- Promissory note in the amount of $400,000 to Precision
Home Health Care, Inc. in connection with the purchase of
the company
24
27
EXHIBIT
NO. IDENTIFICATION OF EXHIBIT
------- -------------------------
2.15(9) -- Asset Purchase agreement among Nursefinders, Inc.,
Amedisys Staffing Services, Inc., Amedisys Nursing
Services, Inc., and Amedisys Home Health, Inc. and
Amedisys, Inc.
2.16(10) -- Asset Purchase Agreement by and between CPII Acquisition
Corp. and Amedisys, Inc.
2.17(10) -- Asset Purchase Agreement by and between Columbia/HCA
Healthcare Corporation and Amedisys, Inc.
2.18(13) -- Asset Purchase Agreement among Amedisys Surgery Centers,
L.C. and Permian Surgical Care Center, Inc. d/b/a
Tanglewood Surgery Center
2.19(15) -- Asset Purchase Agreement among Amedisys, Inc., Amedisys
Surgery Centers, L.C. and United Surgical Partners
International, Inc.
2.20(15) -- Promissory Note from United Surgical Partners
International, Inc.
2.21(17) -- Membership Interest Purchase Agreement by and among U.S.
Orthopedics, Texas, L.L.C., Amedisys Surgery Centers,
L.C., Ambulatory Systems Development of Texas, Inc.,
Ambulatory Systems Development Corporation, and U.S.
Orthopedics, Inc.
2.22(18) -- Agreement for Purchase and Sale of LLC Membership
Interest among Amedisys, Inc., Park Place Surgery Center,
LLC, and the Members of Park Place Surgery Center, LLC
2.23(19) -- Bill of Sale and Asset Purchase Agreement by and among
Park Infusion Services, LP, Amedisys Alternate-Site
Infusion Therapy Services, Inc., PRN, Inc., and Amedisys,
Inc.
3.1(4) -- Certificate of Incorporation
3.2(4) -- Bylaws
4.1(4) -- Certificate of Designation for the Series A Preferred
Stock
4.2(7) -- Common Stock Specimen
4.3(7) -- Preferred Stock Specimen
4.4(7) -- Form of Placement Agent's Warrant Agreement
4.5(14) -- Certificate of Amendment of Certificate of Designation
Specimen
4.6(14) -- Series A Preferred Stock Conversion Agreement Specimen
10.1(4) -- Master Note with Union Planter's Bank of Louisiana
10.2(4) -- Merrill Lynch Term Working Capital Management Account
10.3(5) -- Promissory Note with Deposit Guaranty National Bank
10.4(7) -- Amended and Restated Stock Option Plan
10.5(7) -- Registration Rights Agreement
10.6(11) -- Master Corporate Guaranty of Service Agreements between
CareSouth Home Health Services, Inc. and Amedisys, Inc.
dated November 2, 1998
10.7(16) -- Loan Modification Agreement by and between Amedisys, Inc.
and Columbia/HCA Healthcare Corporation
10.8(20) -- Employment Agreement between Amedisys, Inc. and William
F. Borne
10.9(20) -- Employment Agreement between Amedisys, Inc. and Larry
Graham
10.10(20) -- Amendment to Employee Agreement by and between Amedisys,
Inc. and Larry Graham
10.11(20) -- Employee Agreement between Amedisys, Inc. and John
Joffrion
25
28
EXHIBIT
NO. IDENTIFICATION OF EXHIBIT
------- -------------------------
18.1(12) -- Letter regarding Change in Accounting Principles
21.1(7) -- List of Subsidiaries
23.1(20) -- Consent of Arthur Andersen, LLP, Independent Public
Accountants
- ---------------
(1) Previously filed as an exhibit to the Current Report on Form 8-K dated
December 20, 1993.
(2) Previously filed as an exhibit to the Current Report on Form 8-K dated
February 14, 1994.
(3) Previously filed as an exhibit to the Current Report on Form 8-K dated
August 11, 1994.
(4) Previously filed as an exhibit to the Annual Report on Form 10-KSB for the
year ended December 31, 1994.
(5) Previously filed as an exhibit to the Current Report on Form 8-K dated June
30, 1995.
(6) Previously filed as an exhibit to the Registration Statement on Form S-1
(333-8329) dated July 18, 1996.
(7) Previously filed as an exhibit to the Registration Statement on Form S-3
dated March 11, 1998.
(8) Previously filed as an exhibit to the Quarterly Report on Form 10-Q dated
August 14, 1998.
(9) Previously filed as an exhibit to the Current Report on Form 8-K dated
October 5, 1998.
(10) Previously filed as an exhibit to the Current Report on Form 8-K dated
November 10, 1998.
(11) Previously filed as an exhibit to the Quarterly Report on Form 10-Q dated
December 30, 1998.
(12) Previously filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1997.
(13) Previously filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1998.
(14) Previously filed as an exhibit to the Quarterly Report on Form 10-Q/A for
the period ended June 30, 1999.
(15) Previously filed as an exhibit to the Current Report on Form 8-K dated
September 15, 1999.
(16) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the
period ended September 30, 1999.
(17) Previously filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1999.
(18) Previously filed as an exhibit to the Current Report on Form 8-K dated May
11, 2000.
(19) Previously filed as an exhibit to the Current Report on Form 8-K dated
August 23, 2000.
(20) Filed herewith.
(b) Report on Form 8-K
None.
26
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, there unto duly authorized, on the 16th day of
March, 2001.
AMEDISYS, INC.
By: /s/ WILLIAM F. BORNE
----------------------------------
WILLIAM F. BORNE,
Chief Executive Officer
and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WILLIAM F. BORNE Chief Executive Officer and March 16, 2001
- ----------------------------------------------------- Chairman of the Board
William F. Borne
/s/ JOHN M. JOFFRION Principal Financial and Accounting March 16, 2001
- ----------------------------------------------------- Officer
John M. Joffrion
/s/ JAKE L. NETTERVILLE Director March 16, 2001
- -----------------------------------------------------
Jake L. Netterville
Director March 16, 2001
- -----------------------------------------------------
David R. Pitts
Director March 16, 2001
- -----------------------------------------------------
Peter F. Ricchiuti
/s/ RONALD A. LABORDE Director March 16, 2001
- -----------------------------------------------------
Ronald A. Laborde
27
30
AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2000 AND 1999
TOGETHER WITH AUDITORS' REPORT
28
31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Amedisys, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Amedisys,
Inc. (a Delaware Corporation) and Subsidiaries (the Company) as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amedisys, Inc.
and Subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
February 23, 2001
29
32
AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2000 AND 1999
(IN 000'S EXCEPT SHARE DATA)
2000 1999
-------- --------
CURRENT ASSETS:
Cash and cash equivalents................................. $ 6,967 $ 1,425
Accounts receivable, net of allowance for doubtful
accounts of $1,385 in 2000 and $2,199 in 1999........... 9,228 13,944
Prepaid expenses.......................................... 196 319
Inventory and other current assets........................ 414 487
Current assets held for sale.............................. 715 1,182
-------- --------
Total current assets............................... 17,520 17,357
PROPERTY AND EQUIPMENT, NET (Notes 3 and 9)................. 2,935 3,439
OTHER ASSETS, NET (Note 5).................................. 20,426 19,544
LONG-TERM ASSETS HELD FOR SALE (Notes 3, 4, 5 and 9)........ 689 4,262
-------- --------
Total assets....................................... $ 41,570 $ 44,602
======== ========
CURRENT LIABILITIES:
Accounts payable.......................................... $ 1,590 $ 4,739
Accrued expenses --
Payroll and payroll taxes............................... 6,203 6,240
Insurance (Note 13)..................................... 708 660
Income taxes............................................ 638 437
Legal Settlements....................................... 1,469 1,323
Other................................................... 2,456 2,229
Notes payable (Note 6).................................... 2,952 4,917
Long-term debt classified as current (Note 7)............. -- 15,461
Notes payable to related parties (Note 11)................ 10 10
Current portion of long-term debt (Note 8)................ 3,379 2,325
Current portion of obligations under capital leases (Note
9)...................................................... 385 402
Deferred revenue, current portion (Note 2)................ 2,119 2,119
Current liabilities held for sale......................... 480 806
-------- --------
Total current liabilities.......................... 22,389 41,668
LONG-TERM DEBT (Note 8)..................................... 9,343 2,206
LONG-TERM MEDICARE LIABILITIES (Note 15).................... 6,053 2,518
DEFERRED REVENUE (Note 2)................................... 3,884 6,003
OBLIGATIONS UNDER CAPITAL LEASES (Note 9)................... 30 211
OTHER LONG-TERM LIABILITIES................................. 826 826
LONG-TERM LIABILITIES HELD FOR SALE (Notes 8 and 9)......... 966 1,275
-------- --------
Total liabilities.................................. 43,491 54,707
-------- --------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.............. -- 81
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT) (Note 12):
Preferred stock -- $.001 par value; 5,000,000 shares
authorized; 390,000 and 750,000 shares outstanding in