DIALYSIS CORP OF AMERICA - 10-Q Quarterly Report

FORM 10--Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(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, 2005

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 0-8527

	DIALYSIS CORPORATION OF AMERICA
	(Exact name of registrant as specified in its charter)

Florida		59-1757642
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



1344 Ashton Road, Hanover, Maryland		21076
(Address of principal executive offices)		(Zip Code)

	(410) 694-0500
	(Registrant’s telephone number, including area code)

	NOT APPLICABLE
	(Former name, former address and former fiscal year, if changed since last report)

Indicate by check ü 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 or No o

Indicate by check ü whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o or No x

Common Stock Outstanding

Common Stock, $.01 par value - 8,661,815 shares as of April 30, 2005.

DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES

INDEX

PART I -- FINANCIAL INFORMATION

The Consolidated Financial Statements (Unaudited) for the three months ended March 31, 2005 and March 31, 2004, include the accounts of the Registrant and its subsidiaries.

Item 1.	Financial Statements

	1)	Consolidated Statements of Income for the three months ended March 31, 2005 and March 31, 2004 (Unaudited).

	2)	Consolidated Balance Sheets as of March 31, 2005 (Unaudited) and December 31, 2004.

	3)	Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and March 31, 2004 (Unaudited).

	4)	Notes to Consolidated Financial Statements as of March 31, 2005 (Unaudited).

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Item 4.	Controls and Procedures


PART II--OTHER INFORMATION

Item 1.	Legal Proceedings

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Item 6.	Exhibits

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements

DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended March 31,
	2005			2004
Operating revenues:
Medical service revenue	$	10,484,101		$	8,409,524
Other income		128,395			217,045
		10,612,496			8,626,569
Operating costs and expenses:
Cost of medical services		6,542,601			5,162,222
Selling, general and administrative expenses		3,243,761			2,795,470
Provision for doubtful accounts		247,994			148,295
		10,034,356			8,105,987

Operating income		578,140			520,582

Other income (expense):
Interest income on officer/director note		1,292			961
Interest expense on note and advances payable to parent		(34,936	)		(3,018	)
Other income, net		31,855			22,294
		(1,789	)		20,237
Income before income taxes, minority interest
and equity in affiliate earnings		576,351			540,819

Income tax provision		308,803			216,108

Income before minority interest and equity in
affiliate earnings		267,548			324,711

Minority interest in income
of consolidated subsidiaries		(63,270	)		(55,832	)

Equity in affiliate earnings		120,109			19,033

Net income	$	324,387		$	287,912

Earnings per share:
Basic	$	.04		$	.04
Diluted	$	.04		$	.03

See notes to consolidated financial statements.

DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2005		2004(A)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	642,913	$	601,603
Accounts receivable, less allowance
of $1,916,000 at March 31, 2005;
$1,636,000 at December 31, 2004		8,653,780		8,592,476
Inventories		1,217,391		1,297,782
Deferred income tax asset		720,000		720,000
Officer loan and interest receivable		112,989		111,696
Prepaid expenses and other current assets		1,061,033		1,223,023
Total current assets		12,408,106		12,546,580

Property and equipment:
Land		519,716		376,211
Buildings and improvements		2,366,048		2,352,191
Machinery and equipment		8,164,369		8,087,349
Leasehold improvements		4,698,399		4,674,704
		15,748,532		15,490,455
Less accumulated depreciation and amortization		6,871,908		6,496,571
		8,876,624		8,993,884

Goodwill		3,649,014		3,649,014
Other assets		1,263,475		1,300,236
Total other assets		4,912,489		4,949,250
	$	26,197,219	$	26,489,714
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,004,423	$	1,625,930
Accrued expenses		3,819,432		4,921,769
Note payable and accrued interest payable to parent		2,468,404		1,461,647
Current portion of long-term debt		485,000		513,000
Acquisition liabilities - current portion		380,298		380,298
Total current liabilities		8,157,557		8,902,644