##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 American HomePatient, Inc.
 (exact name of registrant as specified in its charter)
 Delaware
    
    0-19532
    
    62-1474680(State or other jurisdiction of
incorporation or organization)
    
    (Commission
File Number)
    
    (IRS Employer Identification No.)
 5200 Maryland Way, Suite 400, Brentwood, Tennessee 37027
 (Address of principal executive offices) (Zip Code)
 (615) 221-8884
 (Registrants telephone number, including area code)
 None
 (Former name, former address and former fiscal year, if changes 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 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 þ No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non accelerated filer þ
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
 17,573,389
 
 (Outstanding shares of the issuers common stock as of May 2, 2006)




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##### 



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 INDEX
 Page No.PART I
    
    Financial InformationItem 1.
    
    Financial Statements (Unaudited)Interim Condensed Consolidated Balance Sheets
    
    
    3Interim Condensed Consolidated Statements of Operations  Three months ended March 31, 2006 and 2005
    
    
    5Interim Condensed Consolidated Statements of Cash Flows  Three months ended March 31, 2006 and 2005
    
    
    6Notes to Interim Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    30Report of Independent Registered Public Accounting Firm
    
    
    31PART II
    
    Other Information and SignaturesItem 1.
    
    Legal Proceedings
    
    
    32Item 1A.
    
    Risk Factors
    
    
    32Item 6.
    
    Exhibits
    
    
    36Signatures
    
    
    37EX-15.1 Awareness Letter of KPMG LLP.Ex-31.1  Section 302 Certification of the CEOEx-31.2  Section 302 Certification of the CFOEx-32.1  Section 906 Certification of the CEOEx-32.2  Section 906 Certification of the CFO
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
  AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 
 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
 (unaudited)
 March 31,
    
    
    December 31,ASSETS
    
    2006
    
    
    2005CURRENT ASSETS:Cash and cash equivalents
    
    $
    2,785,000
    
    
    $
    4,444,000Restricted cash
    
    
    650,000
    
    
    
    650,000Accounts receivable, less allowance for
doubtful accounts of $16,370,000 and
$15,964,000, respectively
    
    
    56,378,000
    
    
    
    56,464,000Inventories, net of inventory valuation
allowances of $843,000 and $863,000,
respectively
    
    
    12,751,000
    
    
    
    14,197,000Prepaid expenses and other current assets
    
    
    6,164,000
    
    
    
    8,674,000Total current assets
    
    
    78,728,000
    
    
    
    84,429,000Property and equipment
    
    
    174,870,000
    
    
    
    172,541,000Less accumulated depreciation and amortization
    
    
    (117,912,000
    )
    
    
    (115,560,000
    )Property and equipment, net
    
    
    56,958,000
    
    
    
    56,981,000Goodwill
    
    
    121,834,000
    
    
    
    121,834,000Investment in joint ventures
    
    
    6,115,000
    
    
    
    8,128,000Other assets
    
    
    16,015,000
    
    
    
    16,262,000Total other assets
    
    
    143,964,000
    
    
    
    146,224,000TOTAL ASSETS
    
    $
    279,650,000
    
    
    $
    287,634,000
  3




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
  March 31,
    
    
    December 31,LIABILITIES AND SHAREHOLDERS DEFICIT
    
    2006
    
    
    2005CURRENT LIABILITIES:Current portion of long-term debt and capital leases
    
    $
    508,000
    
    
    $
    908,000Accounts payable
    
    
    20,256,000
    
    
    
    18,110,000Other payables
    
    
    1,267,000
    
    
    
    1,274,000Short-term note payable
    
    
    2,572,000
    
    
    
    3,805,000Accrued expenses:Payroll and related benefits
    
    
    4,226,000
    
    
    
    10,260,000Insurance, including self-insurance accruals
    
    
    7,805,000
    
    
    
    7,552,000Other
    
    
    4,744,000
    
    
    
    7,385,000Total current liabilities
    
    
    41,378,000
    
    
    
    49,294,000NONCURRENT LIABILITIES:Long-term debt and capital leases, less current portion
    
    
    250,308,000
    
    
    
    250,111,000Other noncurrent liabilities
    
    
    43,000
    
    
    
    50,000Total noncurrent liabilities
    
    
    250,351,000
    
    
    
    250,161,000Total liabilities
    
    
    291,729,000
    
    
    
    299,455,000MINORITY INTEREST
    
    
    632,000
    
    
    
    635,000SHAREHOLDERS
DEFICITPreferred stock, $.01 par value; authorized 5,000,000
shares; none issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; authorized 35,000,000
shares; issued and outstanding, 17,573,000 and
17,388,000 shares, respectively
    
    
    176,000
    
    
    
    174,000Additional paid-in capital
    
    
    174,595,000
    
    
    
    174,113,000Accumulated deficit
    
    
    (187,482,000
    )
    
    
    (186,743,000
    )Total shareholders deficit
    
    
    (12,711,000
    )
    
    
    (12,456,000
    )TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT
    
    $
    279,650,000
    
    
    $
    287,634,000
  4




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 
 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months Ended March 31,2006
    
    
    2005REVENUES:Sales and related service revenues, net
    
    $
    34,161,000
    
    
    $
    34,185,000Rental revenues, net
    
    
    46,385,000
    
    
    
    47,303,000Total revenues, net
    
    
    80,546,000
    
    
    
    81,488,000EXPENSES:Cost of sales and related services
    
    
    20,875,000
    
    
    
    19,776,000Cost of rental revenues, including rental equipment
depreciation of $6,217,000 and $5,705,000, respectively
    
    
    10,018,000
    
    
    
    9,549,000Operating expenses
    
    
    39,538,000
    
    
    
    39,989,000Bad debt expense
    
    
    2,792,000
    
    
    
    2,689,000General and administrative
    
    
    4,101,000
    
    
    
    4,199,000Depreciation, excluding rental equipment, and amortization
    
    
    922,000
    
    
    
    813,000Interest expense, net
    
    
    4,202,000
    
    
    
    4,290,000Other income, net
    
    
    (140,000
    )
    
    
    (55,000
    )Total expenses
    
    
    82,308,000
    
    
    
    81,250,000Earnings from unconsolidated joint ventures
    
    
    1,226,000
    
    
    
    1,207,000(LOSS) INCOME FROM OPERATIONS BEFORE REORGANIZATION ITEMS AND
INCOME TAXES
    
    
    (536,000
    )
    
    
    1,445,000Reorganization items
    
    
    116,000
    
    
    
    106,000(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES
    
    
    (652,000
    )
    
    
    1,339,000Provision for income taxes
    
    
    87,000
    
    
    
    96,000NET (LOSS) INCOME
    
    $
    (739,000
    )
    
    $
    1,243,000NET (LOSS) INCOME PER COMMON SHARE:- Basic
    
    $
    (0.04
    )
    
    $
    0.07- Diluted
    
    $
    (0.04
    )
    
    $
    0.07WEIGHTED AVERAGE COMMON SHARES OUTSTANDING- Basic
    
    
    17,450,000
    
    
    
    17,067,000- Diluted
    
    
    17,450,000
    
    
    
    17,867,000
  5




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 
 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three Months Ended March 31,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (739,000
    )
    
    $
    1,243,000Adjustments to reconcile net (loss) income to net cash
provided by operating activities:Depreciation and amortization
    
    
    7,139,000
    
    
    
    6,518,000Bad debt expense
    
    
    2,792,000
    
    
    
    2,689,000Stock compensation expense
    
    
    140,000
    
    
    
    Equity in earnings of unconsolidated joint ventures
    
    
    (756,000
    )
    
    
    (741,000
    )Minority interest
    
    
    106,000
    
    
    
    95,000Reorganization items
    
    
    116,000
    
    
    
    106,000Reorganization items paid
    
    
    (121,000
    )
    
    
    (157,000
    )Change in assets and liabilities:Accounts receivable
    
    
    (3,276,000
    )
    
    
    (4,722,000
    )Inventories
    
    
    1,446,000
    
    
    
    1,207,000Prepaid expenses and other current assets
    
    
    2,510,000
    
    
    
    1,248,000Accounts payable, other payables and accrued
expenses
    
    
    (4,391,000
    )
    
    
    4,911,000Other assets and liabilities
    
    
    (64,000
    )
    
    
    (2,361,000
    )Due to unconsolidated joint ventures, net
    
    
    2,769,000
    
    
    
    901,000Net cash provided by operating activities
    
    
    7,671,000
    
    
    
    10,937,000CASH FLOWS FROM INVESTING ACTIVITIES:Additions to property and equipment, net
    
    
    (6,397,000
    )
    
    
    (6,339,000
    )Net cash used in investing activities
    
    
    (6,397,000
    )
    
    
    (6,339,000
    )
  6




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
  Three Months Ended March 31,2006
    
    
    2005CASH FLOWS FROM FINANCING ACTIVITIES:Distributions to minority interest owners
    
    $
    (109,000
    )
    
    $
    (69,000
    )Proceeds from exercise of employee stock options
    
    
    457,000
    
    
    
    156,000Principal payments on long-term debt and capital leases
    
    
    (48,000
    )
    
    
    (5,000
    )Principal payments on short-term note payable
    
    
    (1,233,000
    )
    
    
    (1,191,000
    )Payment for OIG settlement
    
    
    (2,000,000
    )
    
    
    Net cash used in financing activities
    
    
    (2,933,000
    )
    
    
    (1,109,000
    )(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,659,000
    )
    
    
    3,489,000CASH AND CASH EQUIVALENTS, beginning of period
    
    
    4,444,000
    
    
    
    5,772,000CASH AND CASH EQUIVALENTS, end of period
    
    $
    2,785,000
    
    
    $
    9,261,000SUPPLEMENTAL INFORMATION:Cash payments of interest
    
    $
    4,258,000
    
    
    $
    4,270,000Cash payments of income taxes
    
    $
    49,000
    
    
    $
    11,000NON-CASH ACTIVITY:Capital leases entered into for property and equipment
    
    $
    415,000
    
    
    $
    Write-off of related notes receivable and notes payable
    
    $
    570,000
    
    
    $
    
  7




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 
 NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. BASIS OF PRESENTATION
    2. STOCK BASED COMPENSATION
  8




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##### Table of Contents



Three Months endedMarch 31, 2005Net income  as reported
    
    $
    1,243Additional compensation expense
    
    $
    (150
    )Net income  pro forma
    
    $
    1,093Net income per common share  as reportedBasic
    
    $
    0.07Diluted
    
    $
    0.07Net income per common share  pro formaBasic
    
    $
    0.06Diluted
    
    $
    0.06
    Quarter ended 3/31/06Dividend yield
    
    
    0
    %Expected volatility
    
    
    99
    %Expected lives
    
    5 yearsRisk-free interest rate
    
    
    4.55
    %
  9




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##### Table of Contents



WeightedAverageOptions
    
    
    Exercise PriceOutstanding at December 31, 2005
    
    
    2,105,500
    
    
    $
    5.16Granted
    
    
    560,000
    
    
    
    3.30Exercised
    
    
    (185,000
    )
    
    
    1.86Canceled
    
    
    (267,750
    )
    
    
    17.50Outstanding at March 31, 2006
    
    
    2,212,750
    
    
    $
    3.47
  10




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##### Table of Contents



WeightedAverageExerciseWeighted
    
    
    
    
    
    
    
    
    
    
    Price of
    
    
    WeightedAverage
    
    
    
    
    
    
    Options
    
    
    Options
    
    
    AverageWeighted
    
    
    Remaining
    
    
    
    
    
    
    Exercisable
    
    
    Exercisable
    
    
    RemainingAverage
    
    
    Contractual
    
    
    Aggregate
    
    
    at
    
    
    at
    
    
    Contractual
    
    
    AggregateYear of
    
    Options
    
    
    
    
    
    
    Exercise
    
    
    Life in
    
    
    Intrinsic
    
    
    March 31,
    
    
    March 31,
    
    
    Life in
    
    
    IntrinsicGrant
    
    Outstanding
    
    
    Exercise Prices
    
    
    Price
    
    
    Years
    
    
    Value
    
    
    2006
    
    
    2006
    
    
    Years
    
    
    Value1997
    
    
    52,000
    
    
    $
    21.50
    
    
    $
    21.50
    
    
    
    0.91
    
    
    $
    
    
    
    
    52,000
    
    
    $
    21.50
    
    
    
    0.91
    
    
    $
    1998
    
    
    485,750
    
    
    $
    2.13 to $18.13
    
    
    $
    6.27
    
    
    
    2.50
    
    
    
    
    
    
    
    485,750
    
    
    $
    6.27
    
    
    
    2.50
    
    
    
    1999
    
    
    200,000
    
    
    $
    0.56
    
    
    $
    0.56
    
    
    
    3.62
    
    
    
    588,000
    
    
    
    200,000
    
    
    $
    0.56
    
    
    
    3.62
    
    
    
    588,0002000
    
    
    220,000
    
    
    $0.17 to  $0.30
    
    $
    0.18
    
    
    
    4.63
    
    
    
    731,300
    
    
    
    220,000
    
    
    $
    0.18
    
    
    
    4.63
    
    
    
    731,3002004
    
    
    450,000
    
    
    $1.31 to  $1.80
    
    $
    1.64
    
    
    
    8.14
    
    
    
    838,500
    
    
    
    375,000
    
    
    $
    1.70
    
    
    
    8.05
    
    
    
    674,2502005
    
    
    245,000
    
    
    $2.21 to  $3.83
    
    $
    3.23
    
    
    
    8.88
    
    
    
    65,650
    
    
    
    117,500
    
    
    $
    3.25
    
    
    
    8.86
    
    
    
    29,2752006
    
    
    560,000
    
    
    $
    3.30
    
    
    $
    3.30
    
    
    
    9.89
    
    
    
    112,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,212,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,335,450
    
    
    
    1,450,250
    
    
    
    
    
    
    
    
    
    
    $
    2,022,825
  WeightedWeighted
    
    
    
    
    
    
    AverageAverage
    
    
    Options
    
    
    Exercise Price
    
    
    WeightedWeighted
    
    
    Remaining
    
    
    Exercisable
    
    
    of Options
    
    
    AverageAverage
    
    
    Contractual
    
    
    at
    
    
    Exercisable at
    
    
    RemainingYear of
    
    Options
    
    
    
    
    
    
    Exercise
    
    
    Life in
    
    
    December 31,
    
    
    December 31,
    
    
    ContractualGrant
    
    Outstanding
    
    
    Exercise Prices
    
    
    Price
    
    
    Years
    
    
    2005
    
    
    2005
    
    
    Life in Years1996
    
    
    267,750
    
    
    $
    17.50
    
    
    $
    17.50
    
    
    
    0.04
    
    
    
    267,750
    
    
    $
    17.50
    
    
    
    0.041997
    
    
    52,000
    
    
    $
    21.50
    
    
    $
    21.50
    
    
    
    1.12
    
    
    
    52,000
    
    
    $
    21.50
    
    
    
    1.121998
    
    
    520,750
    
    
    $
    2.13 to $18.13
    
    
    $
    5.99
    
    
    
    2.77
    
    
    
    520,750
    
    
    $
    5.99
    
    
    
    2.771999
    
    
    200,000
    
    
    $
    0.56
    
    
    $
    0.56
    
    
    
    3.86
    
    
    
    200,000
    
    
    $
    0.56
    
    
    
    3.862000
    
    
    220,000
    
    
    $0.17 to  $0.30
    
    $
    0.18
    
    
    
    4.85
    
    
    
    220,000
    
    
    $
    0.18
    
    
    
    4.852004
    
    
    600,000
    
    
    $1.31 to  $1.80
    
    $
    1.68
    
    
    
    8.34
    
    
    
    425,000
    
    
    $
    1.71
    
    
    
    8.282005
    
    
    245,000
    
    
    $2.21 to  $3.83
    
    $
    3.23
    
    
    
    9.13
    
    
    
    61,250
    
    
    $
    3.23
    
    
    
    9.132,105,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,746,750
  11




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##### Table of Contents



WeightedAverageOptions
    
    
    Exercise PriceOutstanding at December 31, 2005 and March 31, 2006
    
    
    424,000
    
    
    $
    1.99
  Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    WeightedRemaining
    
    
    Remaining
    
    
    
    
    
    
    AverageWeighted
    
    
    Contractual
    
    
    Contractual
    
    
    
    
    
    
    ExerciseAverage
    
    
    Life in
    
    
    Life in
    
    
    
    
    
    
    Price of
    
    
    AggregateYear of
    
    Options
    
    
    
    
    
    
    Exercise
    
    
    Years
    
    
    Years
    
    
    Options
    
    
    Options
    
    
    IntrinsicGrant
    
    Outstanding
    
    
    Exercise Prices
    
    
    Price
    
    
    12/31/05
    
    
    3/31/06
    
    
    Exercisable
    
    
    Exercisable
    
    
    Value1996
    
    
    6,000
    
    
    $
    26.25
    
    
    $
    26.25
    
    
    
    1.00
    
    
    
    0.75
    
    
    
    6,000
    
    
    $
    26.25
    
    
    $
    1997
    
    
    6,000
    
    
    $
    21.06
    
    
    $
    21.06
    
    
    
    2.00
    
    
    
    1.75
    
    
    
    6,000
    
    
    $
    21.06
    
    
    
    1998
    
    
    6,000
    
    
    $
    1.69
    
    
    $
    1.69
    
    
    
    3.00
    
    
    
    2.75
    
    
    
    6,000
    
    
    $
    1.69
    
    
    
    10,8601999
    
    
    6,000
    
    
    $
    0.53
    
    
    $
    0.53
    
    
    
    4.00
    
    
    
    3.75
    
    
    
    6,000
    
    
    $
    0.53
    
    
    
    17,8202000
    
    
    140,000
    
    
    $
    0.20 to $ 0.30
    
    
    $
    0.26
    
    
    
    4.61
    
    
    
    4.37
    
    
    
    140,000
    
    
    $
    0.26
    
    
    
    453,8002001
    
    
    15,000
    
    
    $
    0.75
    
    
    $
    0.75
    
    
    
    6.00
    
    
    
    5.75
    
    
    
    15,000
    
    
    $
    0.75
    
    
    
    41,2502002
    
    
    15,000
    
    
    $
    0.15
    
    
    $
    0.15
    
    
    
    7.00
    
    
    
    6.75
    
    
    
    15,000
    
    
    $
    0.15
    
    
    
    50,2502003
    
    
    80,000
    
    
    $
    1.29
    
    
    $
    1.29
    
    
    
    8.00
    
    
    
    7.75
    
    
    
    80,000
    
    
    $
    1.29
    
    
    
    176,8002004
    
    
    100,000
    
    
    $
    1.18 to $ 3.46
    
    
    $
    2.32
    
    
    
    8.72
    
    
    
    8.47
    
    
    
    100,000
    
    
    $
    2.32
    
    
    
    118,0002005
    
    
    50,000
    
    
    $
    3.27
    
    
    $
    3.27
    
    
    
    10.00
    
    
    
    9.75
    
    
    
    50,000
    
    
    $
    3.27
    
    
    
    11,500424,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    424,000
    
    
    
    
    
    
    $
    880,280
  3. NET (LOSS) INCOME PER COMMON SHARE




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Three Months Ended March 31,2006
    
    
    2005Net (loss) income
    
    $
    (739,000
    )
    
    $
    1,243,000Weighted average common shares outstanding
    
    
    17,450,000
    
    
    
    17,067,000Effect of dilutive options
    
    
    
    
    
    
    800,000Adjusted diluted common shares outstanding
    
    
    17,450,000
    
    
    
    17,867,000Net (loss) income per common share- Basic
    
    $
    (0.04
    )
    
    $
    0.07- Diluted
    
    $
    (0.04
    )
    
    $
    0.07
 4. PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 including, without limitation, statements
containing the words believes, anticipates, intends, expects, estimates, projects,
may, plan, will, likely, could and words of similar import. Such statements include
statements concerning the Companys Approved Plan (as defined in Note 4 to the interim condensed
consolidated financial statements), other effects and consequences of the Bankruptcy Filing (as
defined in Note 4 to the interim condensed consolidated financial statements), forecasts upon which
the Approved Plan is based, business strategy, the ability to satisfy interest expense and
principal repayment obligations, operations, cost savings initiatives, industry, economic
performance, financial condition, liquidity and capital resources, adoption of, or changes in,
accounting policies and practices, existing government regulations and changes in, or the failure
to comply with, governmental regulations, legislative proposals for healthcare reform, the ability
to enter into strategic alliances and arrangements with managed care providers on an acceptable
basis, and changes in reimbursement policies. Such statements are not guarantees of future
performance and are subject to various risks and uncertainties. The Companys actual results may
differ materially from the results discussed in such forward-looking statements because of a number
of factors, including those identified in the Risk Factors section and elsewhere in this
Quarterly Report on Form 10-Q. The forward-looking statements are made as of the date of this
Quarterly Report on Form 10-Q and the Company does not undertake to update the forward-looking
statements or to update the reasons that actual results could differ from those projected in the
forward-looking statements.
 Overview
  15




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Three Months Ended March 31,2006
    
    
    2005Oxygen systems
    
    
    37
    %
    
    
    37
    %Inhalation drugs
    
    
    9
    
    
    
    10Nebulizers
    
    
    3
    
    
    
    3Respiratory assist devices
    
    
    21
    
    
    
    18Other respiratory
    
    
    3
    
    
    
    4Total home respiratory therapy services
    
    
    73
    %
    
    
    72
    %Enteral nutrition services
    
    
    6
    
    
    
    6Other infusion services
    
    
    6
    
    
    
    6Total home infusion therapy services
    
    
    12
    %
    
    
    12
    %Total home medical equipment and supplies
    
    
    15
    %
    
    
    16
    %100
    %
    
    
    100
    %
  Revenue Growth
 16




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Bad Debt Expense
 Cash Flow.
 Days Sales Outstanding
 Unbilled Revenue.
 Productivity and Profitability
 17




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Trends, Events, and Uncertainties
   Reimbursement Changes
 18




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20




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HIPAA
  Medicaid.
 22




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Bankruptcy Appeal
  Critical Accounting Policies and Estimates
  Results of Operations
  23




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Percentage of RevenuesThree Months Ended March 31,2006
    
    
    2005Revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales and related services
    
    
    25.9
    
    
    
    24.3Cost of rental, including rental equipment
depreciation
    
    
    12.4
    
    
    
    11.7Operating expenses
    
    
    49.1
    
    
    
    49.1Bad debt expense
    
    
    3.5
    
    
    
    3.3General and administrative expense
    
    
    5.1
    
    
    
    5.2Depreciation, excluding rental equipment, and
amortization
    
    
    1.1
    
    
    
    1.0Interest expense, net
    
    
    5.2
    
    
    
    5.3Other income, net
    
    
    
    
    
    
    Total expenses
    
    
    102.3
    
    
    
    99.9Earnings from unconsolidated joint ventures
    
    
    1.5
    
    
    
    1.5(Loss) income from operations before
reorganization items and income taxes
    
    
    (0.8
    )
    
    
    1.6Reorganization items
    
    
    0.1
    
    
    
    0.1Provision for income taxes
    
    
    0.1
    
    
    
    0.1Net (loss) income
    
    
    (1.0
    )%
    
    
    1.4
    %
 24




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Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
 Revenues.
 Sales and Related Services Revenues.
 Rental Revenues
 Cost of Sales and Related Services
 Cost of Rental Revenues
 Operating Expenses
 25




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Bad Debt Expense.
 General and Administrative Expenses
 Depreciation and Amortization
 Interest Expense, Net
 Other Income, Net
 Earnings from Unconsolidated Joint Ventures
 Provision for Income Taxes
 Liquidity and Capital Resources
    26




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27




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Contractual Obligations and Commercial Commitments
  Twelve Months Ending March 31,After March 31,Total
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Long-term debt and
capital leases
    
    $
    250,816,000
    
    
    $
    508,000
    
    
    $
    171,000
    
    
    $
    49,000
    
    
    $
    250,050,000
    
    
    $
    38,000Interest on
long-term debt and
capital leases
    
    
    57,371,000
    
    
    
    17,215,000
    
    
    
    17,205,000
    
    
    
    17,201,000
    
    
    
    5,750,000
    
    
    
    Operating lease
obligations
    
    
    21,860,000
    
    
    
    9,651,000
    
    
    
    6,979,000
    
    
    
    3,531,000
    
    
    
    1,237,000
    
    
    
    462,000Total contractual
cash obligations
    
    $
    330,047,000
    
    
    $
    27,374,000
    
    
    $
    24,355,000
    
    
    $
    20,781,000
    
    
    $
    257,037,000
    
    
    $
    500,000
       29




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ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4  CONTROLS AND PROCEDURES
  30




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Report of Independent Registered Public Accounting Firm
 
     /s/ KPMG LLP
 
 31




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
  
 ITEM 1A  RISK FACTORS
  Medicare Reimbursement Reductions.
 Dependence on Reimbursement by Third-Party Payors.
 32




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Substantial Leverage.
 Bankruptcy Appeal
 Expense Reduction.
 Government Regulation.
 33




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Collectibility of Accounts Receivable.
 Health Care Initiatives.
 Role of Managed Care.
 Liquidity.
 HIPAA Compliance.
 34




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Ability to Attract and Retain Management.
 Competition.
 Liability and Adequacy of Insurance.
 35




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ITEM 6  EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBITS2.1
    
    Second Amended Joint Plan of Reorganization Proposed by the Debtors and the Official
Unsecured Creditors Committee dated January 2, 2003 (incorporated by reference to Exhibit 99.3
to the Companys Current Report on Form 8-K filed on March 27, 2003).3.1
    
    Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the
Companys Registration Statement No. 33-42777 on Form S-1).3.2
    
    Certificate of Amendment to the Certificate of Incorporation of the Company dated October 31,
1991 (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Companys
Registration Statement No. 33-42777 on Form S-1).3.3
    
    Certificate of Amendment to the Certificate of Incorporation of the Company Dated May 14,
1992 (incorporated by reference to the Companys Registration Statement on Form S-8 dated
February 16, 1993).3.4
    
    Certificate of Ownership and Merger merging American HomePatient, Inc. into Diversicare Inc.
dated May 11, 1994 (incorporated by reference to Exhibit 4.4 to the Companys Registration
Statement No.33-89568 on Form S-2).3.5
    
    Certificate of Amendment to the Certificate of Incorporation of the Company dated June 8,
1996 (incorporated by reference to Exhibit 3.5 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004).3.6
    
    Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.3 to the Companys
Registration Statement No. 33-42777 on Form S-1).15.1
    
    Awareness Letter of KPMG LLP.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  Chief Executive
Officer.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  Chief Financial
Officer.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002  Chief Executive Officer.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002  Chief Financial Officer.
 36




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SIGNATURES
  AMERICAN HOMEPATIENT, INC.May 4, 2006
    
    By:
    
    /s/ Stephen L. Clanton

Stephen L. ClantonChief Financial Officer and An Officer DulyAuthorized to Sign on Behalf of the registrant
 37