Opticare Health (AMEX:OPT)
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OptiCare Restates its 2002 and 2003 and First Quarter 2004
Financial Statements, Files its Form 10-Q for the Second Quarter 2004 and
Reports Second Quarter 2004 Financial Results
WATERBURY, Conn., Sept. 2 /PRNewswire-FirstCall/ -- OptiCare Health Systems,
Inc. (AMEX:OPT) announced today that it has completed its previously announced
review of its classification of long term debt in its previously reported
financial statements for the years ended December 31, 2002 and 2003 and its
previously announced review of its accounting for inventory during the quarter
ended March 31, 2004 and has restated its financial statements for the years
ended December 31, 2002 and 2003 and for the quarter ended March 31, 2004. The
company also filed its Form 10-Q for the quarter ended June 30, 2004.
In connection with the restatement of its 2002 and 2003 financial statements,
the company reclassified approximately $9.7 million and approximately $1.6
million owed under its loan agreement with its senior lender as of December 31,
2003 and December 31, 2002, respectively, from a long term liability to a
current liability. The restated financial statements reported current portions
of long-term debt of approximately $10.8 million and approximately $2.8 million
as of December 31, 2003 and December 31, 2002, respectively, and long term debt
of approximately $1.8 million and approximately $1.0 million as of December 31,
2003 and December 31, 2002, respectively. The company concluded that the
amounts outstanding pursuant to certain provisions contained in the credit
facility should have been classified as current liabilities rather than
long-term debt, pursuant to the provisions of consensus 95-22 issued by the
Financial Accounting Standards Board's Emerging Issues Task Force. There was
no change in the net income or loss available to common stockholders as
originally reported for such periods as a result of this restatement.
In connection with the restatement of its first quarter 2004 financial
statements, the company determined that at March 31, 2004 its inventory was
overstated by approximately $0.7 million and an inventory liability was
understated by approximately $0.3 million. The effect of these changes
resulted in an approximate $0.2 million reduction to revenue and an approximate
$0.8 million increase to cost of goods sold, which resulted in a net income
reduction of approximately $1.0 million for the quarter ended March 31, 2004.
As a result, the restated financial statements reported a net loss to common
stockholders for the quarter ended March 31, 2004 of approximately $1.1 million
opposed to approximately $0.2 million as originally reported and net loss per
common share for the quarter ended March 31, 2004 of $0.04 opposed to $0.01 as
originally reported. The company concluded that the overstatement of inventory
resulted primarily from mathematical errors in the calculation of inventory.
The company also announced today that it reported total net revenues for the
six months ended June 30, 2004 of approximately $60.3 million, down from
approximately $63.4 million for the six months ended June 30, 2003 and total
net revenues for the three months ended June 30, 2004 of approximately $30.8
million, down from approximately $32.0 million for the three months ended June
30, 2003. The company also reported loss from continuing operations for the
six months ended June 30, 2004 of approximately $1.0 million, down from
approximately $2.0 million for the six months ended June 30, 2003; loss from
continuing operations for the three months ended June 30, 2004 of approximately
$0.1 million, down from approximately $2.2 million for the three months ended
June 30, 2003; net loss to common stockholders for the six months ended June
30, 2004 of approximately $2.3 million, which is equal to the net loss to
common stockholders of approximately $2.3 million for the six months ended June
30, 2003; and net loss to common stockholders for the three months ended June
30, 2004 of approximately $1.1 million, down from approximately $2.3 million
for the three months ended June 30, 2003.
Additionally, the company stated that on August 27, 2004, the company amended
the terms of its loan agreement with its senior lender to remove the condition
precedent that there is no material adverse effect or material adverse change
with respect to the company from the lender's obligation to advance funds to
the company and to remove the occurrence of a material adverse effect or
material adverse change with respect to the company from the definition of
events of default under the loan agreement. In connection with this amendment,
the company's major stockholder, Palisade Concentrated Equity Partnership,
L.P., guaranteed an additional $1,000,000 of the company's obligations under
the loan agreement.
About OptiCare Health Systems, Inc.
OptiCare Health Systems, Inc. is an integrated eye care services company
focused on vision benefits management, the distribution of products and
software services to eye care professionals, and consumer vision services,
including medical, surgical and optometric services and optical retail.
This press release may contain forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements include, but are not limited to, statements containing words
such as "plan," "anticipate," "expect," "intend," "believe," "will," or similar
expressions. The company's actual results could differ materially from those
expressed or indicated by any forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, the
impact of the restatements, the reaction of the company's stockholders,
customers, venders and lenders to the reviews and restatements, the risk that
the company may not be able to improve cash flow, may not be able to
successfully integrate its acquisitions, to retain and attract qualified
employees, the impact of current and future governmental regulations in
existing lines of business, the company's ability to successfully and
profitably manage its operations and growth of the operations, if any, the
risks related to managed care contracting, and the ability of the company to
successfully raise capital on commercially reasonable terms, if at all.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, including those risks and uncertainties detailed in the
company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ending December 31, 2003.
Forward-looking statements speak only as of the date they are made, and the
company undertakes no duty or obligation to update any forward-looking
statements in light of new information or future events.
OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
June 30, December 31, June 30,
2004 2003 2003
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $2,362 $1,695 $3,881
Accounts receivable,
net 9,031 7,867 9,600
Inventories 5,243 5,770 6,463
Deferred income taxes,
current - - 1,660
Assets held for sale 1,115 1,652 1,656
Other current assets 1,090 565 841
TOTAL CURRENT ASSETS 18,841 17,549 24,101
Property and equipment, net 4,037 4,647 5,551
Goodwill, net 17,892 17,892 19,531
Intangible assets, net 1,124 1,179 1,235
Deferred income taxes,
non-current - - 3,320
Assets held for sale,
non-current 792 1,339 1,496
Other assets 3,139 3,249 3,028
TOTAL ASSETS $45,825 $45,855 $58,262
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $8,936 $5,525 $8,114
Accrued expenses 6,590 5,379 4,990
Current portion of long-term
debt 9,306 10,828 12,395
Liabilities of held for sale
business 1,057 1,241 1,389
Other current liabilities 1,022 548 435
TOTAL CURRENT LIABILITIES 26,911 23,521 27,323
Long-term debt, less current
portion 63 1,775 54
Other liabilities 539 512 550
TOTAL NON-CURRENT LIABILITIES 602 2,287 604
Series B 12.5% mandatorily
redeemable, convertible
preferred stock-related
party 5,986 5,635 5,317
STOCKHOLDERS' EQUITY:
Series C preferred stock-
related party 1 1 1
Common stock 31 30 30
Additional paid-in-capital 79,534 79,700 79,966
Accumulated deficit (67,240) (65,319) (54,979)
TOTAL STOCKHOLDERS' EQUITY 12,326 14,412 25,018
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $45,825 $45,855 $58,262
OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Amounts in thousands, except share data)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
NET REVENUES:
Managed vision $6,267 $7,480 $12,317 $14,888
Product sales 17,880 19,174 35,837 36,938
Other services 5,517 4,819 10,460 9,173
Other income 1,098 530 1,718 2,368
Total net revenues $30,762 32,004 60,332 63,367
OPERATING EXPENSES:
Medical claims expense 4,717 5,514 9,360 11,257
Cost of product sales 13,761 14,626 27,963 28,568
Cost of services 2,427 2,043 4,468 3,898
Selling, general and
administrative 9,234 9,318 18,017 17,739
Loss from early
extinguishment of debt - 1,847 - 1,847
Depreciation 420 359 811 702
Amortization 27 29 56 58
Interest 277 630 596 1,389
Total operating expense 30,863 34,366 61,271 65,458
Loss from continuing
operations before taxes (101) (2,362) (939) (2,091)
Income tax expense (benefit) 46 (183) 52 (72)
Loss from continuing
operations (147) (2,179) (991) (2,019)
Discontinued operations
(Note 3)
Income (loss) from discon-
tinued operations
(including loss on
disposal of $580) (810) 9 (929) 5
Income tax expense
(benefit) - (3) - (2)
Income (loss) on discon-
tinued operations (810) 6 (929) 3
Net loss (957) (2,173) (1,920) (2,016)
Preferred stock dividends (177) (160) (351) (300)
Net loss to common
stockholders $(1,134) $(2,333) $(2,271) $(2,316)
EARNINGS (LOSS) PER
SHARE- BASIC AND
DILUTED:
Loss from continuing
operations $(0.01) $(0.08) $(0.04) $(0.08)
Discontinued operations (0.03) 0.00 (0.03) 0.00
Net income (loss) (0.04) (0.08) (0.07) (0.08)
DATASOURCE: OptiCare Health Systems, Inc.
CONTACT: Christopher J. Walls, General Counsel of OptiCare Health
Systems, Inc., +1-203-596-2236