XSI American Caresource Holdings

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

American CareSource Holdings, Inc.

 

 

Delaware		20-0428568
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
5429 Lyndon B. Johnson Freeway, Suite 700, Dallas, Texas  75240
(Address of principal executive offices)
(972) 308-6830
(Issuer’s telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 last 90 days. Yes x  No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

q Large Accelerated Filer	q Accelerated Filer
q   Non-Accelerated Filer  (do not check if a smaller reporting company)	x Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x 
 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 12, 2008, 15,067,423 shares of the Company’s common stock, par value $0.01 per share, were outstanding.

 

 

 TABLE OF CONTENTS

AMERICAN CARESOURCE HOLDINGS, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2008

Part I	Financial Information	1
Item 1.	Financial Statements	1
	Consolidated Balance Sheets (unaudited)	1
	Consolidated Statements of Operations (unaudited)	2
	Consolidated Statements of Stockholders’ Equity (unaudited)	3
	Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	9
Item 4.	Controls and Procedures	13
Part II	Other Information	13
Item 1A.	Risk Factors	13
Item 6.	Exhibits	14
Signatures		15

 

 

PART I.  FINANCIAL INFORMATION

 

Item 1. Financial Statements

AMERICAN CARESOURCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		As of
Assets		March 31, 2008 (unaudited)				December 31, 2007
Current assets:
Cash and cash equivalents		$	5,857,094			$	4,272,498
Accounts receivable (less allowance for losses of $358,158  in 2008 and $189,556 in 2007)			3,248,579				3,651,203
Prepaid and other current assets			427,195				409,445
Total current assets			9,532,868				8,333,146
Property and equipment, net			388,504				332,450
Other Assets
Certificate of deposit, restricted			145,000				145,000
Deferred income taxes Other non-current assets Intangible assets			255,731 164,507 1,440,843				255,731 237,246 1,494,238
Goodwill			4,361,299				4,361,299
Total other assets			6,367,380				6,493,514
Total assets		$	16,288,752			$	15,159,110
Liabilities and stockholders’ equity
Current Liabilities
Due to service providers		$	3,709,889			$	3,344,278
Accounts payable and accrued liabilities			1,288,963				1,320,036
Current maturities of long-term debt			56,697				55,697
Total current liabilities			5,055,549				4,720,011
Long-term debt			35,784				50,348
Total liabilities			5,091,333				4,770,359
Stockholders’ equity :
Common stock-par value $0.01, 40,000,000 shares authorized and 15,067,423 and 14,668,416 shares issued and outstanding as of March 31, 2008 and December 31,  2007, respectively			150,674				146,684
Preferred stock-par value $0.01, 10,000,000 shares authorized and none outstanding			-				-
Additional paid-in-capital			17,897,140				17,613,880
Accumulated deficit			(6,850,395	)			(7,371,813	)
Total stockholders’ equity			11,197,419				10,388,751
Total liabilities and stockholders’ equity		$	16,288,752			$	15,159,110

 

See notes to unaudited consolidated financial statements.

 

 

AMERICAN CARESOURCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

		Three Months Ended
		March 31,
		2008				2007
Net revenue		$	11,505,675			$	2,266,569
Total cost of revenues			9,801,122				2,101,643
Contribution margin			1,704,553				164,926
Selling, general, and administrative expense			1,112,854				694,421
Depreciation and amortization			92,067				78,074
Total operating expense			1,204,921				772,495
Operating  income (loss)			499,632				(607,569	)
Financing (income) expenses:
Interest income			(40,668	)			(53,874	)
Interest expense			1,838				11,071
Debt issuance cost			—				46,300
Total financing (income) expenses			(38,830	)			3,497
Net income (loss) before income taxes			538,462				(611,066	)
Income tax provision			17,044				—
Net income (loss)		$	521,418			$	(611,066	)
Earnings (loss) per common share:
Basic		$	0.04			$	(0.04	)
Diluted		$	0.03			$	(0.04	)
Basic weighted average common shares outstanding			14,880,266				14,486,749
Diluted weighted average common shares outstanding			17,255,201				14,486,749

See notes to unaudited consolidated financial statements.

 

 

AMERICAN CARESOURCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2008 (UNAUDITED)
		Common Stock								Additional Paid-In				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance December 31, 2007			14,668,416			$	146,684			$	17,613,880			$	(7,371,813	)		$	10,388,751
Exercise of stock options			399,007				3,990				125,735				—				129,725
Stock-based compensation expense			—				—				157,525				—				157,525
Net income			—				—				—				521,418				521,418
Balance March 31, 2008			15,067,423			$	150,674			$	17,897,140			$	(6,850,395	)		$	11,197,419

See notes to unaudited consolidated financial statements.

 

 

AMERICAN CARESOURCE HOLDINGS, INC. AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2008				2007
Cash flows from operating activities:
Net income (loss)		$	521,418			$	(611,066	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation expense			157,525				49,536
Depreciation and amortization			92,067				78,074
Amortization of debt issuance costs			—				46,300
Client management fee expense related to warrants			13,228				—
Changes in operating assets and liabilities:
Accounts receivable			402,624				384,844
Prepaid and other current assets			41,761				(25,660	)
Accounts payable and accrued liabilities			(31,073	)			(22,287	)
Due to service providers			365,611				(445,683	)
Net cash provided by   (used in) operating activities			1,563,161				(545,942	)
Cash flows from investing activities:
Purchase of property and equipment			(94,726	)			(18,833	)
Net cash used in investing activities			(94,726	)			(18,833	)
Cash flows from financing activities:
Payments on long-term debt			(13,564	)			(309,659	)
Net proceeds from the exercise of stock options			129,725				1,924
Net cash provided by (used in) financing activities		$	116,161				(307,735	)
Net increase (decrease) in cash and cash equivalents		$	1,584,596				(872,510	)
Cash and cash equivalents at beginning of period			4,272,498				5,025,380
Cash and cash equivalents at end of period		$	5,857,094			$	4,152,870
Supplemental disclosures cash flow information:
Cash paid for interest		$	1,838			$	29,931

 

See notes to unaudited consolidated financial statements.

 

 

AMERICAN CARESOURCE HOLDINGS, INC. AND SUBSIDIARIES

 

Notes to Unaudited Consolidated Financial Statements for the period ended March 31, 2008

 

Note 1.  Description of Business and Basis of Presentation

 

American CareSource Holdings, Inc., a Delaware corporation (the “Company, ” “American CareSource Holdings, ” “ACS, ” “we, ” “our, ” “us, ” or the “Registrant”), is in the business of delivering ancillary healthcare services for employment groups through its national network of ancillary care providers. The Company markets its products to insurance companies, third-party administrators and preferred provider organizations.  American CareSource Holdings has one wholly owned subsidiary, Ancillary Care Services, Inc. (“Care Services”).

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) interim reporting requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (“SEC”). Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with GAAP have been condensed or omitted.  Balance sheet amounts are as of March 31, 2008 and December 31, 2007 and operating result amounts are for the three months ended March 31, 2008 and 2007, and include all normal and recurring adjustments that we consider necessary for the fair summarized presentation of our financial position and operating results.  As these are condensed financial statements, readers of this report should, therefore, refer to the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the SEC on March 31, 2008.

 

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures About Segments of an Enterprise and Related Information, ” the Company uses the “management approach” for reporting information about segments in annual and interim financial statements.  The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance.  Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company.  Based on the “management approach” model, the Company has determined that its business is comprised of a single operating segment.

 

Our interim results of operations are not necessarily indicative of results of operations that will be realized for the full fiscal year.

 

Note 2.  Revenue Recognition

The Company evaluates its service provider contracts using the indicators of EITF No. 99-19 “Reporting Gross Revenue as a Principal vs. Net as an Agent” (EITF 99-19) to determine whether the Company is acting as a principal or an agent in the fulfillment of services to be rendered.

  

Revenues are recorded gross when services by providers have been authorized and performed and collections from third-party payors are reasonably assured. The Company acts as principal under EITF 99-19 when settling claims for service providers through its contracted service provider network for the following reasons: