Med Diversified Provides Update on Company Performance.Business Editors and Health/Medical Writers (AMEX AMEX See: American Stock Exchange : MED), the following is a letter from Med Diversified, Inc., to its employees that the Company placed on its website June 26, 2002: To All Med Diversified Employees: In a couple of months, Med Diversified, Inc. will celebrate its first birthday. I am looking forward to this with great anticipation, as it will mean we faced a tough year of hurdles and together we persevered. To be sure, our work is long from over. We are still dealing with key business challenges and they are not to be under stated. From our corporate headquarters in Andover, Massachusetts, a small team of about 30 people work to manage the operations of a business that has approximately $500 million in "revenue under management" on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. Because some of you have recently inquired, "revenue under management" includes $420 million in total combined company sales plus an additional $80 million in sales generated by our joint ventures (NCOE's). Although we are responsible for the daily management of the NCOE NCOE National Commission on Entrepreneurship NCOE Net-Centric Operations Environment NCOE NATO Common Operating Environment NCOE Network Channel Office Equipment NCOE NAVWAR Common Operating Environment business, we do not directly recognize this revenue under the equity method of accounting. The team in Andover is proud of your success in field operations and we applaud you for all of your efforts. As for the corporate team, we had successes this year as well. We successfully integrated three diverse entities: e-MedSoft.com, Chartwell Diversified Services and Tender Loving Care. We saw the transition of the resulting company--Med Diversified--from a broken and lost medical Applications Service Provider (ASP), to a full-fledged home and alternate site health care services provider. Along the way, we reduced expenses by more than $20 million and decreased our annual cost of capital by $4 million. While our successes are indeed strong, we still face many challenges. In the spirit of open communication, I would like to share with you the plans and expectations of the Executive Management Team, correct misunderstandings you may have resulting from information distributed via various communication channels and clarify recent developments. I hope to explain how this team is working to achieve our goal of becoming the best provider of home health care services in the industry. Restructuring e-MedSoft.com Since August 2001, senior management time has been devoted to working through the problematic business issues relating directly to e-MedSoft.com. These included overstaffing; unfinished technology projects; the dismantling dis·man·tle tr.v. dis·man·tled, dis·man·tling, dis·man·tles 1. a. To take apart; disassemble; tear down. b. of long-term employment and earn-out contracts; American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. (AMEX) related matters; negotiations with technology vendors; and seeking to resolve the tremendous amount of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. in which e-Medsoft.com was involved. Additionally, we needed to reevaluate the technology of e-Medsoft.com--much of which ultimately proved to be in development stages, had little or no demand in the marketplace, and ultimately led us to believe it was unworthy of further financial support. The above is just a short list of the wreckage of e-MedSoft.com that has required significant capital and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. on the part of Med Diversified to secure positive resolutions. Fiscal Year Ended 2002: Evaluating Past Performance We believe the current price per share of Med Diversified's stock does not reflect the true value of our company. It does however, reflect a serious uncertainty within financial markets about our perceived prospects for profitability and our ability to navigate through various financing events. We believe this uncertainty was influenced in part by the global macro-economic business environment, the Company's weak financial performance and the fact that certain disclosed transactions did not develop and finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... as predicted. Additionally, we believe our stock price was affected by the Company's decision to halt non-essential press announcements and act in a manner more appropriate for a Health Care Services business. We defend this action and believe it is the more appropriate public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most strategy. The value of our company will not be recognized through frivolous marketing-focused press releases. Until we identify and address all the known and unknown skeletons from e-MedSoft.com and demonstrate corporate successes to the market--we will not achieve the value we deserve. Management invested considerable time and effort examining the operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon of Med Diversified and evaluating certain assets for the fourth quarter of fiscal year 2002. To that end, we have identified assets on our balance sheet, which today, are clearly not valuable. The Company cannot waste capital and human resources pursuing projects that either do not have market opportunities or will never occupy a market leadership position. These include: e-commerce, physician practice management software and transcription services, etc. These markets either never materialized or Med Diversified was so far behind, it was a fruitless fruit·less adj. 1. Producing no fruit. 2. Unproductive of success: a fruitless search. See Synonyms at futile. effort to continue. Simultaneously, our management team is seeking strategic alternatives for our Trestle division. All of these items will be dealt with during the fourth quarter of fiscal year 2002 resulting in the expectation that these issues will not affect the 2003 fiscal year. Conversely, we have identified assets within the Company with the potential to emerge as independent businesses. This opens up our value proposition to our loyal shareholders and employees. It is our goal to achieve profitability in the fourth quarter of fiscal year 2003. In order for this to happen, we need three things to occur: 1. Sustained revenue growth 2. Disciplined expense management 3. Elimination of all prior period issues from our fiscal year 2003 by properly accounting for these issues in fiscal year 2002. I am confident we have the ability to accomplish these milestones. Reporting of Fiscal Year Results Additionally, it is the goal of this operating team operating team Surgery The participants–surgeons, nurses, etc–in a sterile surgical procedure performed under general–less commonly, local anesthesia to deliver and report all financial results in a timely and appropriate manner. Given the extensive review and analysis as detailed above, the efforts of this team are to be applauded. With regard to the current year-end review, certain settlement discussions will likely affect our ability to complete the Fiscal Year End results prior to the regulatory deadline without an extension. This completion is contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent information tied to certain dispute resolutions, which are anticipated to cause a delay. Should this occur, the Company would adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. all policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental as governed by the SEC and the AMEX. American Stock Exchange (AMEX) We are continuing to evaluate our appeal of the de-listing notification we received from the AMEX. Although we are confident in our decision to challenge the merits of the items in the de-listing notification and believe four of the five items of concern could be resolved, based on the financial results of fiscal year 2002, the Company will not meet the minimum financial requirements for continued listing. As we move toward ultimate resolution of this matter, we will act in what we feel is in the long-term interest of our shareholders and the best result for Med Diversified. Should the Company voluntarily or by AMEX removal cease trading on the exchange, the alternative would be to trade on the OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). Bulletin Board--an alternative controlled quotation service. Addus Healthcare On January 8, 2002, Med Diversified announced it had entered into a definitive agreement to acquire Addus Healthcare, Inc. contingent upon our review of disclosure documents provided by Addus. The acquisition of Addus was eagerly anticipated. After reviewing several disclosure documents, our management team had additional questions of Addus. Throughout this process, we continued to re-negotiate the terms based on these new disclosures. At all times, we remained ready, willing and able to close under terms which were more conducive given new operational and financial updates provided by Addus. Our management team has held steadfast on this issue. We will not over pay for this asset. By rightfully staking our position to renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. terms with Addus, we have protected the Company and its shareholders. Recently, we received Addus's financial draft audit for 2001 revealing a material discrepancy between what was represented to the Company and the actual results. Based on this discrepancy, and other factors, Med Diversified has decided to proceed with litigation to protect its interests. This misrepresentation misrepresentation In law, any false or misleading expression of fact, usually with the intent to deceive or defraud. It most commonly occurs in insurance and real-estate contracts. False advertising may also constitute misrepresentation. and delay has caused the Company to lose credibility in the financial markets and sustain a substantial loss in market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . We are seeking, among other things, all of our monies held by Addus to be returned immediately. Private Investment Bank Limited (PIBL PIBL Presque Isle Branch Library (Fairview Township, PA) ) and American Reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control As you know, during fiscal year 2002, PIBL lent our company $70 million. At this time, we are negotiating with PIBL to extend the maturity date with a resolution beneficial to both Med Diversified and the PIBL lenders. Additionally, we created American Reimbursement, LLC, a special purpose subsidiary, specifically for the purposes of helping the Company provide collateral to PIBL for their loan and to indemnify To compensate for loss or damage; to provide security for financial reimbursement to an individual in case of a specified loss incurred by the person. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft, and flooding, which Med Diversified. Bond Financing On December 27, 2001, Med Diversified announced a $1 billion, gross revenue accounts receivable-based, bond financing facility with Swiss-based Societe Financier du Seujet Limited (SFSL SFSL Six Flags Saint Louis (Missouri) SFSL Squared Financial Services Limited (Dublin, Ireland) ). After receiving rate reductions from our current senior lender without the restrictive accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying covenants as in the SFLS SFLS San Francisco Law School (San Francisco, CA) SFLS Shanghai Foreign Language School (Shanghai, China) facility, Management has determined that it is in the best interest of the Company not to access this facility. Additionally, we feel that our cost of capital rates are now in line with what was contemplated under the SFSL arrangement. We recognize that all of these issues are significant, but they are certainly not insurmountable. During the last 12 months, our team has done its level best to restore and improve the financial security and long-term viability of our Company. Each day, we work closer toward our goal of profitability. I believe we have made tremendous strides and we remain steadfast in our efforts to rebuild this great organization. We are counting on each one of you to keep up the day-to-day activities of delivering the highest quality of care to our clients. With each of us doing our part, we will succeed and win as a team. I envision a day when all other home health providers look to us as the benchmark for quality care and health services health services Managed care The benefits covered under a health contract . Med Diversified will emerge from these issues as one of the most respected home care providers. I look forward to working with each of you to make this a reality. Sincerely, Frank P. Magliochetti, Jr. About Med Diversified Med Diversified operates companies in various segments within health care industry, including pharmacy, home infusion, multi-media, management, clinical respiratory services, home medical equipment, home health services and other functions. For more information, see http://www.meddiversified.com. Statements in this news release that relate to management's expectations, intentions or beliefs concerning future plans, expectations, events and performance are "forward looking" within the meaning of the federal securities laws. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. include assumptions, beliefs and opinions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's business strategy, management's ability to satisfy industry and consumer needs with its products and services and, health-care industry trends. Management's forward-looking statements further assume that the Company will be able to successfully develop and execute on its strategic relationships. Many known and unknown risks, uncertainties and other factors, including general economic conditions and risk factors detailed from time to time in news releases and the Company's filings with the Securities and Exchange Commission, may cause these forward-looking statements to be incorrect in whole or in part. The investor should review such public filings to get a comprehensive picture and analysis of all conditions and circumstances. The Company expressly disclaims any intent or obligation to update any forward-looking statements. Actual results or events could differ materially from those anticipated in the forward-looking statements due to a variety of factors set out above, including, without limitation, integration of business and management associated with the Company's business relationships and acquisitions, acceptance by customers of the Company's products and services, competition in the health-care market, government regulation of health care, the Company's limited operating history, general economic conditions, availability of capital and other factors. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion