METROPOLITAN HEALTH NETWORKS INC - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to________

Commission file number 0-28456

METROPOLITAN HEALTH NETWORKS, INC.

(Exact name of registrant as specified in its charter)

Florida	65-0635748
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

250 Australian Avenue/Suite 400, West Palm Beach, FL	33401
(Address of principal executive office)	(Zip Code)

(561) 805-8500

(Registrant’s telephone number, including area code)

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 [ ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of March 31, 2003

Common Stock par value $.001	33,249,411

Metropolitan Health Networks, Inc.

Index

Part I.	FINANCIAL INFORMATION	Page

Item 1.	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets
	as of March 31, 2003 and December 31, 2002	3

	Condensed Consolidated Statements of
	Income for the Three Months
	Ended March 31, 2003 and 2002	4

	Condensed Consolidated Statements of
	Cash Flows for the Three Months Ended
	March 31, 2003 and 2002	5

	Notes to Condensed Consolidated
	Financial Statements	6-11

Item 2.	Management’s Discussion and Analysis of
	Financial Condition and Results of
	Operations	12-15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

PART II.	OTHER INFORMATION

	Summary of Legal Proceedings	17

	Changes in Securities and Use of Proceeds	17

	Default Upon Senior Securities	17

	Submission of Matters to a Vote of Security
	Holders	17

	Other Information	17

	Forward Looking Statements and
	Associated Risks	17

SIGNATURES		18
CERTIFICATIONS		19-22

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002

			March 31, 2003	December 31, 2002
ASSETS			(Unaudited)	(Audited)
CURRENT ASSETS
	Cash and equivalents		$ 439,451	$ 399,614
	Accounts receivable, net of allowances		3,766,514	3,498,945
	Inventory		1,146,183	1,221,592
	Other current assets		722,416	535,397
		TOTAL CURRENT ASSETS	6,074,564	5,655,548
CERTIFICATES OF DEPOSIT – restricted			900,000	850,000
CERTIFICATES OF DEPOSIT RECEIVABLE – restricted			100,000	150,000
PROPERTY AND EQUIPMENT, net			1,286,179	1,159,981
GOODWILL, net			1,992,133	1,992,133
OTHER ASSETS			332,230	351,249
		TOTAL ASSETS	$ 10,685,106	$ 10,158,911

LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
	Advances from HMO		$ 877,245	$ 1,666,953
	Accounts payable		5,239,377	4,299,322
	Accrued expenses		1,055,374	1,651,961
	Current maturities of capital lease obligations		129,246	126,220
	Current maturities of long-term debt		2,113,316	2,234,521
	Payroll taxes payable		4,021,670	3,805,598
		TOTAL CURRENT LIABILITIES	13,436,228	13,784,575
CAPITAL LEASE OBLIGATIONS			65,525	122,416
LONG-TERM DEBT			3,002,510	3,120,213

COMMITMENTS AND CONTINGENCIES

DEFICIENCY IN ASSETS:
	Preferred stock, par value $.001 per share; stated value $100 per share;
		10,000,000 shares authorized; 5,000 issued and outstanding	500,000	500,000
	Common stock, par value $.001 per share; 80,000,000 shares authorized;
		33,249,411 and 31,376,822 issued and outstanding, respectively	33,249	31,376
	Additional paid-in capital		29,978,100	29,660,886
	Accumulated deficit		(35,924,389)	(36,640,086)
	Securities issued for services to be rendered		(406,117)	(420,469)
		TOTAL DEFICIENCY IN ASSETS	(5,819,157)	(6,868,293)
	TOTAL LIABILITIES AND DEFICIENCY IN ASSETS		$ 10,685,106	$ 10,158,911

See accompanying notes – unaudited

METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002


			March 31, 2003	March 31, 2002
			(Unaudited)	(Unaudited)

REVENUES
	Medical services		$ 36,876,548	$ 34,420,822
	Pharmacy sales, net of intersegment sales		3,906,563	3,114,233
			40,783,111	37,535,055

EXPENSES
	Direct medical costs		31,559,691	29,447,618
	Cost of sales		2,822,845	2,249,197
	Payroll, payroll taxes and benefits		2,894,220	2,980,392
	Medical supplies		428,586	21,889
	Depreciation and amortization		188,623	193,588
	Consulting expense		443,727	582,356
	General and administrative		1,361,476	1,432,231
		TOTAL EXPENSES	39,699,168	36,907,271

INCOME BEFORE OTHER INCOME (EXPENSE)			1,083,943	627,784
OTHER INCOME (EXPENSE):
	Interest and penalty expense		(388,204)	(158,744)
	Other income		19,958	24,626
		TOTAL OTHER INCOME (EXPENSE)	(368,246)	(134,118)
INCOME FROM CONTINUING OPERATIONS			715,697	493,666
DISCONTINUED OPERATIONS:
	Loss from operations of discontinued operations		-	(41,803)
NET INCOME			$ 715,697	$ 451,863