UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 10-K
| x | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended May 31, 2003 or | |
| o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to |
Commission file number 1-9927
COMPREHENSIVE CARE CORPORATION
| Delaware (State or other jurisdiction of incorporation or organization) |
95-2594724 (IRS Employer Identification No.) |
|
| 200 South Hoover Blvd., Suite 200 Tampa, Florida (Address of principal executive offices) |
33609 (Zip Code) |
(813) 288-4808
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
| Title of each class | Name of each exchange on which registered | |
| Common Stock, Par Value $.01 per share 7 1/2% Convertible Subordinated Debentures due 2010 |
Over The Counter Bulletin Board Over-the-Counter |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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. x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No x
The aggregate market value of voting stock held by non-affiliates of the Registrant at September 3, 2003, was $8,468,955 based on the average bid and ask price of the Common Stock on September 3, 2003, as reported on the Over The Counter Bulletin Board.
At September 3, 2003, the Registrant had 3,939,049 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
PART I
Item 1. BUSINESS
Organizational History
Comprehensive Care Corporation ® (referred to herein as the “Company”, “CompCare"®(1), “we”, “our” or “us”) is a Delaware Corporation organized in 1969. Unless the context otherwise requires, all references to the Company include the Company’s principal operating subsidiary, Comprehensive Behavioral Care, Inc.SM(2) (“CBC”) and subsidiary corporations.
CompCare, through its operating subsidiaries, manages the delivery of psychiatric and substance abuse services to commercial, Medicare, and Medicaid members on behalf of employers, health plans, including health maintenance organizations (“HMOs”) and preferred provider organizations (“PPOs”), government organizations, third-party claims administrators, and commercial and other group purchasers of behavioral healthcare services. Current services include a broad spectrum of inpatient and outpatient mental health and substance abuse therapy, counseling, and supportive interventions.
Recent Developments
| • | During June 2003, we implemented one new client contract to provide behavioral healthcare benefits to approximately 97,000 members in Michigan. We estimate that annual revenues from this contract will be $1.5 million. | |
| • | The State of Texas has passed legislation that will reduce the amount of funds allocated to our clients to cover behavioral healthcare services to Medicaid and Children’s Health Insurance Program (“CHIP”) recipients in the State of Texas. Such legislation is subject to pending bills that, if passed, could restore some of the benefits to these programs. Under the recently passed legislation, the outpatient behavioral healthcare benefits available to adult Medicaid and CHIP recipients will be provided by the HMOs and their subcontractors, including the Company, on a very limited basis while the inpatient benefits for CHIP recipients may not be covered by the HMOs and their subcontractors. For the fiscal year ended May 31, 2003, we had operating revenue of $3.7 million and $4.5 million, respectively, specific to contracts covering Texas CHIP and Texas Medicaid recipients. These changes to Texas Medicaid and CHIP programs could have a material, adverse impact on our operations. However, we believe certain of our clients will continue to require the types of services we provide to mitigate their exposure to treat serious medical conditions that may result from the lack of adequate behavioral healthcare benefits. We are closely monitoring developments in Texas, but currently cannot predict what financial impact, if any, these changes may have on our business. |
Business General
The services we provide are delivered through management service agreements (“MSOs”), administrative service agreements (“ASOs”), and capitated contracts. MSOs and ASOs are contractual obligations under which the Company does not assume any financial risk or responsibility for the member’s behavioral health care costs. We may provide various managed care functions under MSO and ASO arrangements, including clinical care management, provider network development, customer service, claims processing, and information systems reporting. The scope of services under MSO arrangements is slightly narrower in comparison to those services we perform under ASO arrangements. Under capitated contracts, the primary payer of healthcare services prepays us a fixed, per member per month (“PMPM”) fee for covered psychiatric and substance abuse services regardless of actual member utilization and the Company assumes the financial risk for the member’s health care costs. Programs are contracted through inpatient facilities as well as through experienced outpatient practitioners.
We currently manage programs through which services are provided to recipients in fourteen states. Current programs and services include fully integrated, capitated behavioral healthcare services, Employee Assistance Programs (EAPs), case management/utilization review services, administrative services management (ASOs), provider sponsored health plan development, behavioral corrections programs, preferred provider network development, management and physician advisor reviews and overall care management services. We also provide prior and concurrent authorization for physician-prescribed psychotropic medications for a major Medicaid HMO in
| (1) | CompCare is a registered trademark of Comprehensive Care Corporation. | |
| (2) | Comprehensive Behavioral Care, Inc. is a registered service mark of the Company. |
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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
Michigan under that state’s mandated pharmacy management program. Members are generally directed to CompCare by their employer, health plan, or physician and receive an initial authorization for an assessment. Based upon the initial assessment, a treatment plan is established for the member. Fully integrated capitated lives (i.e. where the company has contractual, financial risk) totaled approximately 789,000 and 805,000 at May 31, 2003 and 2002, respectively. ASO lives were approximately 337,000 and 375,000 at May 31, 2003 and 2002, respectively. EAP lives were approximately 2,000 at May 31, 2003 and 2002.
Our objective is to provide easily accessible, high quality behavioral healthcare services and products and to manage costs through measures such as the monitoring of hospital inpatient admissions and the review of authorizations for various types of outpatient therapy. The goal is to combine access to quality behavioral healthcare services with effective management controls in order to ensure the most cost-effective use of healthcare resources.
Sources of Revenue
We provide managed behavioral healthcare and substance abuse services to recipients, primarily through subcontracts with HMOs who have historically carved out these functions to managed behavioral healthcare organizations (“MBHOs”) like CompCare. We generally receive a negotiated amount on a per member per month (“PMPM”) or capitated basis in exchange for providing these services. We then contract directly with behavioral healthcare providers who receive a pre-determined, fee-for-service rate or case rate. Behavioral healthcare providers include psychiatrists, clinical psychologists, therapists, other licensed healthcare professionals, and hospitals. As of May 31, 2003, we have approximately 12,000 behavioral healthcare practitioners in our network who are primarily located in the five states in which the Company has its principal contracts. Under such full-risk capitation arrangements, profit is a function of utilization and the amount of claims payments made to our network providers. Alternatively, we may subcontract with a provider company on a sub-capitated basis. In cases where we have made sub-capitation arrangements, the outside company manages service delivery through CompCare’s approved and credentialed network that is guided by stringent quality standards.
During Fiscal 2003, we provided services under capitated arrangements for commercial, Medicare, Medicaid, and Children’s Health Insurance Program patients in Florida and Texas, commercial and Medicaid patients in Michigan, Medicaid patients in Connecticut, and commercial patients in Arizona, Georgia, Indiana, Kentucky, Minnesota, New York, North Carolina, Ohio, South Carolina, and Wisconsin.
In Fiscal 2003, our new business included two commercial contracts in Indiana, two new Medicaid contracts in Michigan, one new Medicare contract in Texas, and contracts with one new client in Florida that cover individuals under both commercial and Medicaid plans. Additionally, we added one new EAP client with membership in eight states. We perform periodic reviews of our current client contracts to determine profitability. In the event a contract is not profitable, we may seek to revise the terms of the contract or to terminate the agreement in accordance with the specific contract terms.
Growth Strategy
Our objective is to expand our presence in both existing and new managed behavioral healthcare markets by obtaining new contracts with health plans, corporations, government agencies, and other payers through CompCare’s reputation of providing quality managed behavioral healthcare services with the most cost-effective use of healthcare resources. Our principal means for pursuing public sector business is through the submission of proposals in response to formal, competitive bidding proceedings that are initiated by health plans or government agencies. We intend, where feasible, to expand our commercial business during the upcoming fiscal year through new marketing initiatives directed at employer groups and, also, HMOs that contract directly with employers. Additionally, we continue to develop products that will bring our core competencies to new market areas such as child welfare, behavioral pharmacy management and preferred provider organization product management for health plans and self-insured employers. The success of our growth strategy is dependent upon our ability to competitively bid on new contracts, comply with conditions contained in requests for proposals, obtain required licenses, if any, in new markets, establish provider networks in new markets and negotiate favorable agreements with our providers.
Competition
The behavioral healthcare industry is very competitive and provides
products and services that are price sensitive. We believe that there are
approximately 150 managed behavioral healthcare companies providing service
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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
for an estimated 227 million
covered lives in the United States. Several competitors have revenues,
financial resources, and membership substantially larger than ours. We also compete with
small local and regional companies at times. Competition is built
around pricing, the overall quality of service provided, the extent
and quality of the provider network, and the technical capacity of
the behavioral healthcare organization.
GOVERNMENT REGULATION
Regulatory Monitoring and Compliance
CompCare is subject to extensive and evolving state and federal
regulations relating to the nation’s mental health system as well as changes in
Medicaid and Medicare reimbursement that could have an effect on the
profitability of our contracts. These regulations range from licensure and
compliance with regulations related to insurance companies and other
risk-assuming entities, to licensure and compliance with regulations related to
healthcare providers. These laws and regulations may vary considerably among
states. As a result, CompCare may be subject to the specific regulatory
approach adopted by each state for regulation of managed care companies and for
providers of behavioral healthcare treatment services. The Company holds
licenses or certificates to perform utilization review and third party
administrator (“TPA”) services in certain states. Certain of the services
provided by our managed behavioral healthcare subsidiaries may be subject to
such licensing requirements in other states. There can be no assurance that
additional utilization review or TPA licenses will not be required or, if
required, that CompCare will qualify to obtain such licenses. In many states,
entities that assume risk under contract with licensed insurance companies or
health plans who retain ultimate financial responsibility have not been
considered by state regulators to be conducting an insurance or HMO business.
As a result, we have not sought licensure as either an insurer or HMO in
certain states. If the regulatory positions of these states were to change,
our business could be materially affected until such time as CompCare meets the
regulatory requirements. Currently, we cannot quantify the potential effects of
additional regulation of the managed care industry, but such costs will have an
adverse effect on future operations to the extent that they are not able to be
recouped in future managed care contracts.
As of May 31, 2003, we managed approximately 813,000 lives in connection
with behavioral and substance abuse services covered through Medicaid and/or
Children’s Health Insurance Programs (“CHIPS”) in Connecticut, Florida,
Michigan and Texas. Any changes in Medicaid funding could ultimately affect our
reimbursement and overall profitability. We are aware that the State of Texas
has passed legislation that will reduce the amount of funds allocated to our
clients to cover behavioral healthcare services to CHIP recipients in the State
of Texas. Such legislation is subject to pending bills that, if passed, could
restore some of the benefits to these programs. Under the recently passed
legislation, the outpatient behavioral healthcare benefits available to adult
Medicaid and CHIP recipients will be provided by the HMOs and their
subcontractors, including the Company, on a very limited basis while the
inpatient benefits for CHIP recipients may not be covered by the HMOs and their
subcontractors. For the fiscal year ended May 31, 2003, we had operating
revenue of $3.7 million and $4.5 million, respectively, specific to contracts
covering Texas CHIP and Texas Medicaid recipients. These changes to Texas
Medicaid and CHIP programs could have a material, adverse impact on our
operations. However, we believe certain of our clients will continue to
require the types of services we provide to mitigate their exposure to treat
serious medical conditions that may result from the lack of adequate behavioral
healthcare benefits. We are closely monitoring developments in Texas, but
currently cannot predict what financial impact, if any, these changes may have
on our business.
CompCare is subject to the requirements of the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”). The purpose of the HIPAA
provisions is to improve the efficiency and effectiveness of the healthcare
system through standardization of the electronic data interchange of certain
administrative and financial transactions and, also, to protect the security
and privacy of protected health information. Entities subject to HIPAA include
some healthcare providers and all healthcare plans. To meet the specific
requirements of HIPAA, we will incur costs to insure the adequacy and security
of our healthcare information system and communication networks. Additionally,
we will incur costs to implement a new clinical information system that will
process the specific transaction codes required by HIPAA for claims, payment,
enrollment, eligibility, or to become compliant with security and privacy
rules, which may be more stringent for providers of certain behavioral
healthcare services (see “Management Information Systems” below). The expected
timetable for us to be compliant is currently October 2003 for transaction code
changes due to our October 2002 filing of a formal compliance plan. The
Company has met the deadline for compliance with the privacy rules, which was
April 14, 2003. Additionally, we have filed our Electronic Health Care
Transactions and Code Sets Standards Model Compliance Plan with the Centers for
Medicare and Medicaid Services. While these efforts will be ongoing, we expect
to meet all compliance rules and timetables with respect to the HIPAA
regulations. Failure to do so may result in penalties and have a material
adverse effect on the Company’s ability to retain its customers or to gain new
business.
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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
ACCREDITATION
To develop standards that effectively evaluate the structure and function
of medical and quality management systems in managed care organizations, the
National Committee on Quality Assurance, (“NCQA”) has developed an extensive
review and development process in conjunction with the managed care industry,
healthcare purchasers, state regulators, and consumers. The Standards for
Accreditation of Managed Behavioral Healthcare Organizations used by NCQA
reviewers to evaluate a managed behavioral healthcare organization address the
following areas: quality improvement; utilization management; credentialing;
members’ rights and responsibilities; preventative-care guidelines; and medical
records. These standards validate that a managed behavioral healthcare
organization is founded on principles of quality and is continuously improving
the clinical care and services it provides. NCQA utilizes Health Plan
Employer Data and Information Set (“HEDIS”), which is a core set of performance
measurements developed to respond to complex but clearly defined employer needs
as standards for patient care and customer satisfaction. CompCare’s Southeast
Region operation was awarded a one-year NCQA accreditation in July 1999 and
Full Accreditation in December 2001. Effective July 22, 2002, CompCare’s Full
Accreditation award extends the NCQA accreditation to July 22, 2005 and covers
membership in Connecticut, Florida, Georgia, and Michigan. Full Accreditation
is granted for a period of three years to those plans that have excellent
programs for continuous quality improvement and that meet NCQA’s rigorous
standards.
We believe our NCQA accreditation is beneficial to our clients and their
members we serve. Additionally, NCQA accreditation may be an important
consideration to our prospective clients.
MANAGEMENT INFORMATION SYSTEMS
We currently use a fully integrated, three-tier, managed care information
system. During recent months, we determined that a significant investment
would be required to upgrade our current version of this software to comply
with HIPAA regulations. As a result, during Fiscal 2003, we requested and
reviewed several proposals from various vendors and subsequently entered into a
Letter of Intent with a new vendor to design a new, customized management
information system at a cost below the current vendor’s estimate that will
enable us to meet HIPAA compliance. Additionally, the new software is expected
to streamline the Company’s entire clinical and claims functions and offer
service improvements to our participating providers. The new vendor will also
assist CompCare staff in developing an interim solution to meet the HIPAA
compliance rules that become effective in October 2003, before the expected
“go-live” date for the new system of February 1, 2004. We expect to incur
approximately $0.4 million of one-time costs to customize the new system and
activate the licenses needed for this and other, related third-party software.
We believe the system currently being designed will readily support continued
growth and meet our future business needs.
As is the case with our current system, the new system will allow all
CompCare locations to connect to the Company’s frame relay telecommunications
network, allowing automated call-path routing for overlap coverage at peak call
times. Major care management functions such as information assessment, service
plans, initial authorizations, extension requests, termination summaries,
appeals, credentialing, billing, and claim/encounter processing are supported
by built-in decision aids to correctly adjudicate patient-specific
transactions.
ADMINISTRATION AND EMPLOYEES
Our executive and administrative offices are located in Tampa, Florida,
where we maintain operations, business development, accounting, reporting and
information systems, and provider and member service functions. We currently
employ 120 full-time and part-time employees.
MARKETING AND SALES
Our business development staff is responsible for generating new sales
leads and for preparing proposals and responses to formal commercial and public
sector Requests for Proposals (“RFPs”). The Company’s Chief Development Officer
manages marketing initiatives, along with the Company’s President and Chief
Executive Officer. Regional and administrative operations personnel strengthen
the Company’s marketing efforts by providing a local presence. Sales
expectations are integrated into the performance requirements for executive
staff and local sales personnel.
5
COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
AVAILABLE INFORMATION
The Company’s shareholder website is www.compcare-shareholders.com. The
Company makes available free of charge, through a link to the Securities and
Exchange Commission’s (“SEC”) internet site our annual, quarterly, and current
reports, and any amendments to these reports, as well as any beneficial
ownership reports of officers and directors filed electronically on Forms 3, 4,
and 5. All such reports will be available as soon as reasonably practicable
after electronically filing such reports with the SEC. Information contained on
our website or linked through our website is not part of this report on Form
10-K.
CORPORATE GOVERNANCE
Corporate governance is typically defined as the system that allocates
duties and authority among a company’s stockholders, board of directors and
management. The stockholders elect the board and vote on extraordinary
matters; the board is the company’s governing body, responsible for hiring,
overseeing and evaluating management, particularly the Chief Executive Officer
(CEO); and management runs the company’s day-to-day operations. Our
certificate of incorporation provides for a staggered board of five directors
separated into three classes. Our Board of Directors currently consists of
four directors. The Company is in an ongoing process to try to fill the one
remaining vacancy. The current Board members include two independent
directors. The primary responsibilities of the Board of Directors are
oversight, counseling and direction to the Company’s management in the
long-term interests of the Company and its stockholders. The Board’s detailed
responsibilities include: (a) selecting, regularly evaluating the performance
of, and approving the compensation of the Chief Executive Officer and other
senior executives; (b) reviewing and, where appropriate, approving the
Company’s major financial objectives, strategic and operating plans and
actions; (c) overseeing the conduct of the Company’s business to evaluate
whether the business is being properly managed; and (d) overseeing the
processes for maintaining the Company’s integrity with regard to its financial
statements and other public disclosures and compliance with law and ethics.
The Board of Directors has delegated to the Chief Executive Officer, working
with the Company’s other executive officers, the authority and responsibility
for managing the Company’s business in a manner consistent with the Company’s
standards and practices, and in accordance with any specific plans,
instructions or directions of the Board. The Chief Executive Officer and
management are responsible for seeking the advice and, in appropriate
situations, the approval of the Board with respect to extraordinary actions to
be undertaken by the Company.
Audit Committee
The Board of Directors has constituted an Audit Committee comprised of two
independent directors, as that term is defined under the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the “Act”).
Mr. Eugene L. Froelich is the Chairman of the Audit Committee and is the Audit
Committee Financial Expert. The Audit Committee has responsibility for the
appointment, compensation, retention and oversight of the Company’s independent
auditors; establishing procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls or auditing matters, and
procedures for the submission of confidential, anonymous concerns by employees
regarding questionable accounting or auditing matters.
The Audit Committee has, as required by the Act and Section 301 of
the Sarbanes-Oxley Act of 2002, adopted a ‘whistleblower policy’ providing for
the receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing matters and the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
Code of Conduct
The Board of Directors has adopted a Code of Conduct applicable to all
officers, directors and employees of the Company which provides, among other
things, for honest and ethical conduct; avoidance of conflicts of interest,
including the disclosure of any material transaction or relationship that could
be expected to give rise to a conflict; full, fair, accurate, and timely and
understandable disclosure in reports filed by the Company with the Securities
and Exchange Commission; internal reporting of Code of Conduct violations; and
accountability for any violations.
6
COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
Compensation Committee
The Compensation Committee reviews the Company’s compensation programs and
exercises authority with respect to the payment of salaries and incentive
compensation to the Company’s executive officers. The Compensation Committee
also administers the Company’s 1995 and 2002 Stock Option Plans.
Item 2. PROPERTIES
We do not own any real property. The following table sets forth certain
information regarding our leased properties as of May 31, 2003. All leases are
triple net leases, under which CompCare bears all costs of operations,
including insurance, taxes, and utilities.
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Table of Contents
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| Monthly Rental | |||||||||
| Name and Location | Lease Expires | (in Dollars) | |||||||
Corporate Headquarters, Regional, Administrative,
And Other Offices |
|||||||||
Tampa, Florida, Corporate Headquarters and
Southeastern Regional
offices |
2006 | $ | 22,813 | ||||||
Grand Prairie, Texas |
2004 | 6,474 | |||||||
Bloomfield Hills, Michigan |
2004 | 9,237 | |||||||
Item 3. LEGAL PROCEEDINGS
We had previously reported that the Company had filed an “Offer in Compromise” (“Offer”) with the Internal Revenue Service (“IRS”) to settle a tax dispute that began in August 1998 when the IRS notified the Company that it was disallowing $12.4 million of tax refunds previously received by the Company specific to its Fiscal 1985 and 1986 income tax returns as amended. In January 2003, the Company reported the IRS had accepted its Offer, which gave the Company the option of paying approximately $2.6 million over two years or paying approximately $2.2 million within 90 days of the letter of acceptance in addition to a $50,000 down payment made by the Company at the time its Offer was submitted to IRS. In February 2003, the Company concluded the IRS settlement by making a cash payment of approximately $2.2 million to the IRS to fully settle the previously accrued tax liability of $12.1 million. Coincident with the IRS settlement, the Company reached an agreement with its former tax advisor requiring the tax advisor to refund $525,000 of the original $2.5 million of fees previously paid by the Company. The Company received the $525,000 refund in February 2003.
As a result of the resolution of this matter, the Company extinguished the $12.1 million liability and recorded a non-operating gain in the quarter ended February 28, 2003 of approximately $7.7 million. The gain is net of settlement expenses consisting primarily of professional fees and $2.0 million of the aforementioned, unrecovered tax advisor fees. The gain represented $1.97 earnings per share ($1.77 diluted earnings per share). No taxable income resulted from the settlement of the liability. Additionally, the IRS settlement requires that the Federal net operating loss carryforwards of approximately $42.0 million resulting from losses incurred in fiscal years ended May 31, 1995 through May 31, 2001, and a minimum tax credit carryover of approximately $0.7 million, are no longer available to the Company.
From time to time, the Company and its subsidiaries may be parties to and their property is subject to ordinary, routine litigation incidental to their business, in which case claims may exceed insurance policy limits and the Company or anyone of its subsidiaries may have exposure to a liability that is not covered by insurance. Management is not aware of any such lawsuits that could have a material adverse impact on the Company’s financial statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no matters were submitted to a vote of security holders of the Company.
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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
PART II.
Item 5. MARKET FOR COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
| Our Common Stock is traded on the Over The Counter Bulletin Board (“OTC-BB”) under the symbol CHCR. The following table sets forth the range of high and low closing prices for the Common Stock, as reported by the OTC-BB, for the fiscal quarters indicated: |
| Price | ||||||||||||
| Fiscal Year | High | Low | ||||||||||
2003 |
First Quarter | $ | 1.65 | $ | 0.75 | |||||||
| Second Quarter | 1.01 | 0.32 | ||||||||||
| Third Quarter | 2.38 | 0.65 | ||||||||||
| Fourth Quarter | $ | 3.05 | $ | 2.01 | ||||||||
2002 |
First Quarter | $ | 0.61 | $ | 0.25 | |||||||
| Second Quarter | 0.55 | 0.24 | ||||||||||
| Third Quarter | 0.96 | 0.43 | ||||||||||
| Fourth Quarter | $ | 1.85 | $ | 0.70 | ||||||||
| (a) | As of September 3, 2003, the Company had 1,416 common stockholders of record. | |
| (b) | The Company did not pay any cash dividends on its Common Stock during any quarter of Fiscal 2003 2002, or 2001 and does not contemplate the initiation of payment of any cash dividends in the foreseeable future (see Item 7. “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”). |
Item 6. SELECTED FINANCIAL DATA
Prior to Fiscal 1993, CompCare principally engaged in the ownership, operation, and management of psychiatric and substance abuse programs in company owned, leased, or unaffiliated hospitals. During Fiscal 1999, we completed our plan to dispose of our hospital business segment.
Fiscal 2003 results include a $7.7 million, non-operating gain related to the IRS settlement (see Note 13 – “Income Taxes” to the audited, consolidated financial statements). Additionally, Fiscal 2003 results included a $470,000 non-operating gain related to the Medi-Cal settlement (see Note 16 – “Commitments and Contingencies” to the audited, consolidated financial statements). As a result, CompCare reported net income of $7.5 million, or $1.91 earnings per share ($1.72 diluted earnings per share) and an operating loss of $608,000, for the year ended May 31, 2003 compared to the net loss of $770,000, or $0.20 loss per share (basic and diluted), and an operating loss of $774,000, for the fiscal year ended May 31, 2002. Excluding the $8.2 million of non-operating gains from net income would have resulted in a $729,000 net loss ($0.19 loss per basic and diluted share) for the fiscal year ended May 31, 2003.
The selected consolidated financial data that follows should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this report. Reclassifications of prior year amounts have been made to conform to the current year’s presentation.
8
COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
| Year Ended May 31, | |||||||||||||||||||||
| 2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||||||
| (Amounts in thousands, except per share data) | |||||||||||||||||||||
Statement of Operations Data: |
|||||||||||||||||||||
Operating revenues |
$ | 32,267 | $ | 27,625 | $ | 18,192 | $ | 17,719 | $ | 39,029 | |||||||||||
Costs and expenses: |
|||||||||||||||||||||
Healthcare operating expenses |
29,201 | 24,625 | 15,326 | 15,801 | 29,778 | ||||||||||||||||
General and administrative expenses |
3,459 | 3,544 | 3,842 | 6,974 | 9,148 | ||||||||||||||||
Provision for (recovery of) doubtful accounts |
20 | (112 | ) | (439 | ) | (606 | ) | 1,641 | |||||||||||||
Depreciation and amortization |
195 | 342 | 656 | 794 | 1,037 | ||||||||||||||||
Restructuring expenses |
— | — | (30 | ) | 831 | 600 | |||||||||||||||
| 32,875 | 28,399 | 19,355 | 23,794 | 42,204 | |||||||||||||||||
Operating loss from continuing operations before items
shown below |
(608 | ) | (774 | ) | (1,163 | ) | (6,075 | ) | (3,175 | ) | |||||||||||
Other income (expenses): |
|||||||||||||||||||||
Net gain on IRS settlement |
7,717 | — | — | — | — | ||||||||||||||||
Gain on settlement of other liability |
470 | — | — | — | — | ||||||||||||||||
Loss in connection with prepayment of note receivable |
— | — | (496 | ) | — | — | |||||||||||||||
Gain on sale of assets |
4 | — | — | 9 | 2 | ||||||||||||||||
Loss on sale of assets |
(5 | ) | — | — | (1 | ) | (4 | ) | |||||||||||||
Reduction in accrued interest expense |
— | — | 290 | — | — | ||||||||||||||||
Other non operating income |
34 | 40 | 332 | 204 | 41 | ||||||||||||||||
Interest income |
47 | 88 | 163 | 399 | 309 | ||||||||||||||||
Interest expense |
(181 | ) | (178 | ) | (208 | ) | (289 | ) | (281 | ) | |||||||||||
Income (loss) from continuing operations before income taxes |
7,478 | (824 | ) | (1,082 | ) | (5,753 | ) | (3,108 | ) | ||||||||||||
Income tax expense (benefit) |
20 | 1 | 35 | 13 | (146 | ) | |||||||||||||||
Income (loss) from continuing operations |
7,458 | (825 | ) | (1,117 | ) | (5,766 | ) | (2,962 | ) | ||||||||||||
Discontinued operations: |
|||||||||||||||||||||
Loss from operations |
— | — | — | — | (334 | ) | |||||||||||||||
Loss on disposal, including operating loss of $282 |
— | — | — | — | (698 | ) | |||||||||||||||
Income (loss) before cumulative effect of change in
accounting principle |
7,458 | (825 | ) | (1,117 | ) | (5,766 | ) | (3,994 | ) | ||||||||||||
Cumulative effect of change in accounting principle |
— | 55 | — | — | — | ||||||||||||||||
Net income (loss) |
7,458 | (770 | ) | (1,117 | ) | (5,766 | ) | (3,994 | ) | ||||||||||||
Dividends on convertible Preferred Stock |
— | — | — | — | (55 | ) | |||||||||||||||
Net income (loss) attributable to common stockholders |
$ | 7,458 | $ | (770 | ) | $ | (1,117 | ) | $ | (5,766 | ) | $ | (4,049 | ) | |||||||
Basic earnings per share: |
|||||||||||||||||||||
Income (loss) from continuing operations |
$ | 1.91 | $ | (0.21 | ) | $ | (0.29 | ) | $ | (1.51 | ) | $ | (0.85 | ) | |||||||
Discontinued operations: |
|||||||||||||||||||||
Loss from operations |
— | — | — | — | (0.09 | ) | |||||||||||||||
Loss on disposal |
— | — | — | — | (0.20 | ) | |||||||||||||||
Cumulative effect of change in accounting principle |
— | 0.01 | — | — | — | ||||||||||||||||
Net income (loss) |
$ | 1.91 | $ | (0.20 | ) | $ | (0.29 | ) | $ | (1.51 | ) | $ | (1.14 | ) | |||||||
Diluted earnings per share: |
|||||||||||||||||||||
Income (loss) from continuing operations |
$ | 1.72 | $ | (0.21 | ) | $ | (0.29 | ) | $ | (1.51 | ) | $ | (0.85 | ) | |||||||
Discontinued operations: |
|||||||||||||||||||||
Loss from operations |
— | — | — | — | (0.09 | ) | |||||||||||||||
Loss on disposal |
— | — | — | — | (0.20 | ) | |||||||||||||||
Cumulative effect of change in accounting principle |
— | 0.01 | — | — | — | ||||||||||||||||
Net income (loss) |
$ | 1.72 | $ | (0.20 | ) | $ | (0.29 | ) | $ | (1.51 | ) | $ | (1.14 | ) | |||||||
Balance Sheet Data: |
|||||||||||||||||||||
Working capital (deficit) |
$ | (4,447 | ) | $ | (12,275 | ) | $ | (11,770 | ) | $ | (12,245 | ) | $ | (9,355 | ) | ||||||
Total assets |
6,379 | 11,399 | 9,754 | 21,275 | 29,066 | ||||||||||||||||
Long-term debt |
2,244 | 2,244 | 2,244 | 2,244 | 2,253 | ||||||||||||||||
Long-term debt including current maturities and debentures |
2,244 | 2,244 | 2,244 | 2,244 | 2,256 | ||||||||||||||||
Stockholders’ deficit |
$ | (4,990 | ) | < | |||||||||||||||||