##### 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, 2009
 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
    
    (Commission
    
    (IRS Employer Identification No.)incorporation or organization)
    
    File Number)
 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)
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ
 17,573,389  (Outstanding shares of the issuers common stock as of May 4, 2009)




---



##### 



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 INDEX
 Page No.PART I
    
    Financial InformationItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets
    
    
    3Interim Condensed Consolidated Statements of Operations  Three
months ended March 31, 2009 and 2008
    
    
    5Interim Condensed Consolidated Statements of Cash Flows  Three
months ended March 31, 2009 and 2008
    
    
    6Notes to Interim Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4T.
    
    Controls and Procedures
    
    
    35Report of Independent Registered Public Accounting Firm
    
    
    36PART II
    
    Other Information and SignaturesItem 1A.
    
    Risk Factors
    
    
    37Item 6.
    
    Exhibits
    
    
    42Signatures
    
    
    
    
    43EX-15.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
  
 AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    12,769,000
    
    
    $
    13,488,000Restricted cash
    
    
    250,000
    
    
    
    250,000Accounts receivable, less allowance for doubtful accounts of
$5,369,000 and $5,869,000, respectively
    
    
    32,488,000
    
    
    
    39,061,000Inventories, net of inventory valuation allowances of $492,000
and $577,000, respectively
    
    
    8,705,000
    
    
    
    10,789,000Prepaid expenses and other current assets
    
    
    6,956,000
    
    
    
    9,863,000Total current assets
    
    
    61,168,000
    
    
    
    73,451,000Property and equipment
    
    
    131,703,000
    
    
    
    134,603,000Less accumulated depreciation and amortization
    
    
    (100,865,000
    )
    
    
    (102,561,000
    )Property and equipment, net
    
    
    30,838,000
    
    
    
    32,042,000Goodwill
    
    
    122,093,000
    
    
    
    122,093,000Investment in joint ventures
    
    
    7,956,000
    
    
    
    8,704,000Other assets
    
    
    16,452,000
    
    
    
    18,236,000Total other assets
    
    
    146,501,000
    
    
    
    149,033,000TOTAL ASSETS
    
    $
    238,507,000
    
    
    $
    254,526,000
  3




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
  March 31,
    
    
    December 31,2009
    
    
    2008LIABILITIES AND SHAREHOLDERS DEFICITCURRENT LIABILITIES:Current portion of long-term debt and capital leases
    
    $
    227,755,000
    
    
    $
    234,259,000Accounts payable
    
    
    11,932,000
    
    
    
    11,989,000Other payables
    
    
    842,000
    
    
    
    878,000Deferred revenue
    
    
    5,096,000
    
    
    
    6,261,000Accrued expenses:Payroll and related benefits
    
    
    5,372,000
    
    
    
    10,302,000Insurance, including self-insurance accruals
    
    
    5,861,000
    
    
    
    5,531,000Other
    
    
    1,926,000
    
    
    
    1,563,000Total current liabilities
    
    
    258,784,000
    
    
    
    270,783,000NONCURRENT LIABILITIES:Long-term debt and capital leases, less current portion
    
    
    38,000
    
    
    
    51,000Deferred tax liability
    
    
    8,910,000
    
    
    
    7,841,000Other noncurrent liabilities
    
    
    5,000
    
    
    
    8,000Total noncurrent liabilities
    
    
    8,953,000
    
    
    
    7,900,000Total liabilities
    
    
    267,737,000
    
    
    
    278,683,000SHAREHOLDERS DEFICITAmerican HomePatient, Inc. shareholders deficit:Preferred 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 shares
    
    
    176,000
    
    
    
    176,000Additional paid-in capital
    
    
    176,869,000
    
    
    
    176,788,000Accumulated deficit
    
    
    (206,751,000
    )
    
    
    (201,583,000
    )Total American HomePatient, Inc. shareholders deficit
    
    
    (29,706,000
    )
    
    
    (24,619,000
    )Noncontrolling interests
    
    
    476,000
    
    
    
    462,000Total shareholders deficit
    
    
    (29,230,000
    )
    
    
    (24,157,000
    )TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT
    
    $
    238,507,000
    
    
    $
    254,526,000
  4




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##### Table of Contents



AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
 
 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three Months Ended March 31,2009
    
    
    2008REVENUES:Sales and related service revenues, net
    
    $
    24,178,000
    
    
    $
    28,378,000Rental revenues, net
    
    
    34,133,000
    
    
    
    40,836,000Total revenues, net
    
    
    58,311,000
    
    
    
    69,214,000EXPENSES:Cost of sales and related services
    
    
    12,961,000
    
    
    
    14,318,000Cost of rentals and other revenues, including rental equipment
depreciation of $5,694,000 and $7,235,000, respectively
    
    
    7,598,000
    
    
    
    9,452,000Operating expenses
    
    
    31,582,000
    
    
    
    34,205,000Bad debt expense
    
    
    1,228,000
    
    
    
    1,349,000General and administrative
    
    
    5,126,000
    
    
    
    4,782,000Depreciation, excluding rental equipment, and amortization
    
    
    993,000
    
    
    
    1,079,000Interest expense, net
    
    
    3,866,000
    
    
    
    3,905,000Other expense (income)
    
    
    14,000
    
    
    
    (386,000
    )Change of control income
    
    
    (3,000
    )
    
    
    (68,000
    )Total expenses
    
    
    63,365,000
    
    
    
    68,636,000Earnings from unconsolidated joint ventures
    
    
    1,124,000
    
    
    
    1,341,000(LOSS) INCOME FROM OPERATIONS BEFORE INCOME
TAXES
    
    
    (3,930,000
    )
    
    
    1,919,000Provision for income taxes
    
    
    1,164,000
    
    
    
    1,270,000NET (LOSS) INCOME
    
    $
    (5,094,000
    )
    
    $
    649,000Less: Net income attributable to the noncontrolling interests
    
    $
    (74,000
    )
    
    $
    (95,000
    )NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN
HOMEPATIENT, INC.
    
    
    (5,168,000
    )
    
    
    554,000NET (LOSS) INCOME PER COMMON SHARE ATTRIBUTABLE TO
AMERICAN HOMEPATIENT, INC. COMMON SHAREHOLDERS- Basic
    
    $
    (0.29
    )
    
    $
    0.03- Diluted
    
    $
    (0.29
    )
    
    $
    0.03WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:- Basic
    
    
    17,573,000
    
    
    
    17,573,000- Diluted
    
    
    17,573,000
    
    
    
    17,814,000
  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 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (5,168,000
    )
    
    $
    554,000Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Change of control income
    
    
    (3,000
    )
    
    
    (68,000
    )Gain on sale of infusion branch
    
    
    (184,000
    )
    
    
    Deferred tax expense
    
    
    1,069,000
    
    
    
    1,120,000Depreciation and amortization
    
    
    6,687,000
    
    
    
    8,314,000Bad debt expense
    
    
    1,228,000
    
    
    
    1,349,000Stock compensation expense
    
    
    90,000
    
    
    
    55,000Equity in earnings of unconsolidated joint ventures
    
    
    (676,000
    )
    
    
    (882,000
    )Minority interest
    
    
    74,000
    
    
    
    95,000Change in assets and liabilities:Accounts receivable
    
    
    5,345,000
    
    
    
    2,454,000Inventories
    
    
    1,997,000
    
    
    
    1,451,000Prepaid expenses and other current assets
    
    
    2,907,000
    
    
    
    4,394,000Deferred revenue
    
    
    (1,165,000
    )
    
    
    33,000Accounts payable, other payables and accrued expenses
    
    
    (3,744,000
    )
    
    
    (8,502,000
    )Other assets and liabilities
    
    
    1,663,000
    
    
    
    212,000Due to unconsolidated joint ventures, net
    
    
    1,424,000
    
    
    
    1,788,000Net cash provided by operating activities
    
    
    11,544,000
    
    
    
    12,367,000CASH FLOWS FROM INVESTING ACTIVITIES:Cash payments for additions to property and equipment, net
    
    
    (4,804,000
    )
    
    
    (4,008,000
    )Proceeds from sale of infusion branch
    
    
    271,000
    
    
    
    Net cash used in investing activities
    
    $
    (4,533,000
    )
    
    $
    (4,008,000
    )
  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 31,2009
    
    
    2008CASH FLOWS FROM FINANCING ACTIVITIES:Distributions to minority interest owners
    
    $
    (60,000
    )
    
    $
    (117,000
    )Principal payments on long-term debt and capital leases
    
    
    (7,670,000
    )
    
    
    (5,004,000
    )Principal payments on short-term note payable
    
    
    
    
    
    
    (163,000
    )Net cash used in financing activities
    
    
    (7,730,000
    )
    
    
    (5,284,000
    )(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (719,000
    )
    
    
    3,075,000CASH AND CASH EQUIVALENTS, beginning of period
    
    
    13,488,000
    
    
    
    11,018,000CASH AND CASH EQUIVALENTS, end of period
    
    $
    12,769,000
    
    
    $
    14,093,000SUPPLEMENTAL INFORMATION:Cash payments of interest
    
    $
    3,954,000
    
    
    $
    4,163,000Cash payments of income taxes
    
    $
    76,000
    
    
    $
    152,000Non-Cash Activity:Capital leases entered into for property and equipment
    
    $
    1,153,000
    
    
    $
    Changes in accounts payable related to purchases of
property and equipment
    
    $
    (592,000
    )
    
    $
    742,000Change of control:Other liabilities
    
    $
    6,000
    
    
    $
    (403,000
    )Additional paid-in capital
    
    $
    (9,000
    )
    
    $
    335,000Supplemental Disclosure of Investing Activities:Disposition of infusion branch:Inventories sold
    
    $
    87,000
    
    
    
    
  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. GOING CONCERN AND LIQUIDITY
  8




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##### Table of Contents



3. STOCK BASED COMPENSATION
      WeightedAverageOptions
    
    
    Exercise PriceOutstanding at December 31, 2008
    
    
    2,531,000
    
    
    $
    1.68Granted
    
    
    415,000
    
    
    
    0.22Exercised
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    Outstanding at March 31, 2009
    
    
    2,946,000
    
    
    $
    1.48
 9




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##### Table of Contents



WeightedAverageGrant-dateNonvested Options
    
    Options
    
    
    Fair ValueBalance at December 31, 2008
    
    
    758,166
    
    
    $
    1.02Granted
    
    
    415,000
    
    
    
    0.17Vested
    
    
    (293,666
    )
    
    
    1.29Forfeited
    
    
    
    
    
    
    Balance at March 31, 2009
    
    
    879,500
    
    
    $
    0.53
 10




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##### Table of Contents



WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateWeighted
    
    
    
    
    
    
    
    
    
    
    Price of
    
    
    Life in
    
    
    IntrinsicAverage
    
    
    
    
    
    
    Options
    
    
    Options
    
    
    Years of
    
    
    ValueWeighted
    
    
    Remaining
    
    
    
    
    
    
    Exercisable
    
    
    Exercisable
    
    
    Options
    
    
    of OptionsAverage
    
    
    Contractual
    
    
    Aggregate
    
    
    at
    
    
    at
    
    
    Exercisable
    
    
    ExercisableYear of
    
    Options
    
    
    Exercise
    
    
    Exercise
    
    
    Life in
    
    
    Intrinsic
    
    
    March 31,
    
    
    March 31,
    
    
    at March 31,
    
    
    at March 31,Grant
    
    Outstanding
    
    
    Prices
    
    
    Price
    
    
    Years
    
    
    Value
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    20091999
    
    
    200,000
    
    
    $
    0.56
    
    
    $
    0.56
    
    
    
    0.61
    
    
    
    
    
    
    
    200,000
    
    
    $
    0.56
    
    
    
    0.61
    
    
    
    2000
    
    
    220,000
    
    
    $
    0.17 to $0.30
    
    
    $
    0.18
    
    
    
    1.60
    
    
    
    
    
    
    
    220,000
    
    
    $
    0.18
    
    
    
    1.60
    
    
    
    2004
    
    
    450,000
    
    
    $
    1.31 to $1.80
    
    
    $
    1.64
    
    
    
    5.14
    
    
    
    
    
    
    
    450,000
    
    
    $
    1.64
    
    
    
    5.14
    
    
    
    2005
    
    
    170,000
    
    
    $
    2.21 to $3.55
    
    
    $
    2.97
    
    
    
    5.85
    
    
    
    
    
    
    
    170,000
    
    
    $
    2.97
    
    
    
    5.85
    
    
    
    2006
    
    
    470,000
    
    
    $
    0.61 to $3.30
    
    
    $
    3.24
    
    
    
    6.90
    
    
    
    
    
    
    
    465,000
    
    
    $
    3.27
    
    
    
    6.90
    
    
    
    2007
    
    
    496,000
    
    
    $
    1.25 to $2.40
    
    
    $
    1.63
    
    
    
    8.00
    
    
    
    
    
    
    
    399,833
    
    
    $
    1.62
    
    
    
    7.97
    
    
    
    2008
    
    
    525,000
    
    
    $
    0.85 to $1.03
    
    
    $
    1.02
    
    
    
    8.94
    
    
    
    
    
    
    
    161,667
    
    
    $
    1.03
    
    
    
    8.92
    
    
    
    2009
    
    
    415,000
    
    
    $
    0.22
    
    
    $
    0.22
    
    
    
    9.92
    
    
    
    
    
    
    
    
    
    
    $
    0.22
    
    
    
    9.92
    
    
    
    2,946,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    2,066,500
    
    
    
    
    
    
    
    
    
    
    $
    
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateWeighted
    
    
    
    
    
    
    
    
    
    
    Price of
    
    
    Life in
    
    
    IntrinsicAverage
    
    
    
    
    
    
    Options
    
    
    Options
    
    
    Years of
    
    
    ValueWeighted
    
    
    Remaining
    
    
    
    
    
    
    Exercisable
    
    
    Exercisable
    
    
    Options
    
    
    of OptionsAverage
    
    
    Contractual
    
    
    Aggregate
    
    
    at
    
    
    at
    
    
    Exercisable
    
    
    ExercisableYear of
    
    Options
    
    
    Exercise
    
    
    Exercise
    
    
    Life in
    
    
    Intrinsic
    
    
    Dec. 31,
    
    
    Dec. 31,
    
    
    at Dec. 31,
    
    
    at Dec. 31,Grant
    
    Outstanding
    
    
    Prices
    
    
    Price
    
    
    Years
    
    
    Value
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    20081999
    
    
    200,000
    
    
    $
    0.56
    
    
    $
    0.56
    
    
    
    0.86
    
    
    
    
    
    
    
    200,000
    
    
    $
    0.56
    
    
    
    0.86
    
    
    
    2000
    
    
    220,000
    
    
    $
    0.17 to $0.30
    
    
    $
    0.18
    
    
    
    1.85
    
    
    
    
    
    
    
    220,000
    
    
    $
    0.18
    
    
    
    1.85
    
    
    
    2004
    
    
    450,000
    
    
    $
    1.31 to $1.80
    
    
    $
    1.64
    
    
    
    5.39
    
    
    
    
    
    
    
    450,000
    
    
    $
    1.64
    
    
    
    5.39
    
    
    
    2005
    
    
    170,000
    
    
    $
    2.21 to $3.55
    
    
    $
    2.97
    
    
    
    6.10
    
    
    
    
    
    
    
    170,000
    
    
    $
    2.97
    
    
    
    6.10
    
    
    
    2006
    
    
    470,000
    
    
    $
    0.61 to $3.30
    
    
    $
    3.24
    
    
    
    7.14
    
    
    
    
    
    
    
    391,667
    
    
    $
    3.27
    
    
    
    7.14
    
    
    
    2007
    
    
    496,000
    
    
    $
    1.25 to $2.40
    
    
    $
    1.63
    
    
    
    8.24
    
    
    
    
    
    
    
    341,167
    
    
    $
    1.62
    
    
    
    8.22
    
    
    
    2008
    
    
    525,000
    
    
    $
    0.85 to $1.03
    
    
    $
    1.02
    
    
    
    9.18
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    2,531,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    1,772,834
    
    
    
    
    
    
    
    
    
    
    $
    
   11




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##### Table of Contents



Weighted AverageOptions
    
    
    Exercise PriceOutstanding at December 31, 2008 and March 31, 2009
    
    
    536,000
    
    
    $
    1.25
  Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    Weighted
    
    
    Aggregate
    
    
    AggregateRemaining
    
    
    Remaining
    
    
    
    
    
    
    Average
    
    
    Intrinsic
    
    
    IntrinsicWeighted
    
    
    Contractual
    
    
    Contractual
    
    
    
    
    
    
    Exercise
    
    
    Value
    
    
    ValueAverage
    
    
    Life in
    
    
    Life in
    
    
    
    
    
    
    Price of
    
    
    of Options
    
    
    of OptionsYear of
    
    Options
    
    
    Exercise
    
    
    Exercise
    
    
    Years
    
    
    Years
    
    
    Options
    
    
    Options
    
    
    Exercisable
    
    
    ExercisableGrant
    
    Outstanding
    
    
    Prices
    
    
    Price
    
    
    12/31/2008
    
    
    3/31/2009
    
    
    Exercisable
    
    
    Exercisable
    
    
    12/31/2008
    
    
    3/31/20091999
    
    
    6,000
    
    
    $
    0.53
    
    
    $
    0.53
    
    
    
    1.00
    
    
    
    0.75
    
    
    
    6,000
    
    
    $
    0.53
    
    
    
    
    
    
    
    2000
    
    
    140,000
    
    
    $
    0.20 to $0.30
    
    
    $
    0.26
    
    
    
    1.61
    
    
    
    1.37
    
    
    
    140,000
    
    
    $
    0.26
    
    
    
    
    
    
    
    2001
    
    
    15,000
    
    
    $
    0.75
    
    
    $
    0.75
    
    
    
    3.00
    
    
    
    2.75
    
    
    
    15,000
    
    
    $
    0.75
    
    
    
    
    
    
    
    2002
    
    
    15,000
    
    
    $
    0.15
    
    
    $
    0.15
    
    
    
    4.00
    
    
    
    3.76
    
    
    
    15,000
    
    
    $
    0.15
    
    
    
    
    
    
    
    1502003
    
    
    80,000
    
    
    $
    1.29
    
    
    $
    1.29
    
    
    
    5.00
    
    
    
    4.76
    
    
    
    80,000
    
    
    $
    1.29
    
    
    
    
    
    
    
    2004
    
    
    100,000
    
    
    $
    1.18 to $3.46
    
    
    $
    2.32
    
    
    
    5.71
    
    
    
    5.47
    
    
    
    100,000
    
    
    $
    2.32
    
    
    
    
    
    
    
    2005
    
    
    50,000
    
    
    $
    3.27
    
    
    $
    3.27
    
    
    
    7.00
    
    
    
    6.76
    
    
    
    50,000
    
    
    $
    3.27
    
    
    
    
    
    
    
    2006
    
    
    50,000
    
    
    $
    1.40
    
    
    $
    1.40
    
    
    
    8.00
    
    
    
    7.76
    
    
    
    50,000
    
    
    $
    1.40
    
    
    
    
    
    
    
    2007
    
    
    40,000
    
    
    $
    1.12
    
    
    $
    1.12
    
    
    
    9.00
    
    
    
    8.76
    
    
    
    40,000
    
    
    $
    1.12
    
    
    
    
    
    
    
    2008
    
    
    40,000
    
    
    $
    0.12
    
    
    $
    0.12
    
    
    
    10.00
    
    
    
    9.76
    
    
    
    40,000
    
    
    $
    0.12
    
    
    
    800
    
    
    
    1,600536,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    536,000
    
    
    
    
    
    
    $
    800
    
    
    $
    1,750
  12




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##### Table of Contents



4. NET (LOSS) INCOME PER COMMON SHARE
   Three Months Ended March 31,2009
    
    
    2008Net (loss) income attributable to American
HomePatient, Inc.
    
    $
    (5,168,000
    )
    
    $
    554,000Weighted average common shares outstanding
    
    
    17,573,000
    
    
    
    17,573,000Effect of dilutive options
    
    
    
    
    
    
    241,000Adjusted diluted common shares outstanding
    
    
    17,573,000
    
    
    
    17,814,000Net (loss) income per common share attributable to
American HomePatient, Inc. common
shareholders Basic
    
    $
    (0.29
    )
    
    $
    0.03 Diluted
    
    $
    (0.29
    )
    
    $
    0.03
 5. INCOME TAXES
   13




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6. CHANGE OF CONTROL
    14




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##### Table of Contents



7. FAIR VALUE MEASUREMENTS AND FAIR VALUE OPTION
  
    
    Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the Company has the ability to access at the measurement date.
    
    Level 2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
    
    Level 3 inputs are unobservable inputs for the asset or liability.
 15




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##### Table of Contents



Money Market Accounts
 8. RECENTLY ADOPTED ACCOUNTING STANDARDS
  16




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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 business strategy, the ability to satisfy interest expense and
principal repayment obligations or to refinance those 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 current and future reimbursement rates, as well as
reimbursement reductions and the Companys ability to mitigate the impact of the reductions. 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
  17




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##### Table of Contents



Three Months Ended March 31,2009
    
    2008Oxygen systems
    
    
    37
    %
    
    
    39
    %Sleep therapy
    
    
    34
    
    
    
    27Inhalation drugs
    
    
    5
    
    
    
    9Nebulizers
    
    
    2
    
    
    
    2Other respiratory
    
    
    4
    
    
    
    3Total home respiratory therapy services
    
    
    82
    %
    
    
    80
    %Enteral nutrition services
    
    
    6
    
    
    
    5Other infusion services
    
    
    4
    
    
    
    5Total home infusion therapy services
    
    
    10
    %
    
    
    10
    %Total home medical equipment and supplies
    
    
    8
    %
    
    
    10
    %100
    %
    
    
    100
    %
  Revenue Growth
 18




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Bad Debt Expense.
 Cash Flow.
 Days Sales Outstanding.
 Unbilled Revenues.
 19




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##### Table of Contents



Productivity and Profitability.
 Trends, Events, and Uncertainties
   20




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The Companys Secured Debt Matures on August 1, 2009.
 Reimbursement Changes and the Companys Response
 DRA Reimbursement Impact
 
    
    The DRA contains a provision that eliminated the Medicare capped rental methodology
for certain items of durable medical equipment, including wheelchairs, beds, and
respiratory assist devices. The DRA changes the rental period to thirteen months, at
which time the rental payments stop and title to the equipment is transferred to the
beneficiary. The effective date of the provision to eliminate the capped rental
methodology applies to items for which the first rental month occurs on or after
January 1, 2006. As a result, the impact of this change will be realized over a period
of several years which began in 2007.
    
    The DRA also contains a provision that limits the duration of monthly Medicare
rental payments on oxygen equipment to 36 months. Prior to the DRA, Medicare provided
indefinite monthly reimbursement for the rental of oxygen equipment as long as the
patient needed the equipment and met medical qualifications. The effective date for
the implementation of the 36 month rental cap for oxygen equipment was January 1, 2006.
In the case of individuals who received oxygen equipment on or prior to December 31,
2005, the 36 month period began on January 1, 2006. Therefore, the financial impact
of the reduction in revenue associated with the 36 month cap began in 2009. The DRA
provided for the transfer of title of the oxygen equipment from the supplier to the
patient at the end of the 36 month period. With the enactment of the Medicare
Improvement for Patients and Providers Act of 2008 (MIPPA) in July of 2008, the
provision related to the transfer of title of oxygen equipment was repealed effective
January 1, 2009; however MIPPA did not repeal the cap on rental payments subsequent to
the 36th month. MIPPA also established new payment rules and supplier
responsibilities following the 36 month rental period, the most significant of which
are described below.
 
    
    A suppliers responsibility to service an oxygen patient ends at the time the
oxygen equipment has been in continuous use by the patient for the equipments
reasonable useful lifetime (currently defined by CMS as five years for oxygen
equipment). However, the supplier may replace this equipment and a new 36 month
rental period and new reasonable useful lifetime period is started on the date the
replacement item is delivered. Oxygen equipment that is lost, stolen, or
irreparably damaged may also be replaced and a new 36 month rental period and new
reasonable useful lifetime period is started (with CMS approval). A new
certificate of medical necessity is required when oxygen equipment is replaced in
each of the situations described above.
 21




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
    
    A change in oxygen equipment modalities (e.g. from a concentrator to a
stationary liquid system) prior to the end of the reasonable useful lifetime does
not result in the start of a new 36 month rental period or new reasonable useful
lifetime period, unless the change is medically justified and supported by written
documentation from the patients physician. In addition, replacing oxygen
equipment that is not functioning properly prior to the end of the reasonable
useful lifetime period does not result in the start of a new 36 month rental period
or new reasonable useful lifetime period. Finally, the transfer by a beneficiary
to a new supplier prior to the end of the reasonable useful lifetime period does
not result in the start of a new 36 month rental period or new reasonable useful
lifetime period.
    
    Suppliers furnishing liquid or gaseous oxygen equipment during the initial 36
month rental period will be required to continue furnishing oxygen contents for any
period of medical need following the 36 month rental cap for the remainder of the
reasonable useful lifetime of the equipment. The reimbursement rate for portable
oxygen contents will increase from approximately $29 per month during the 36 month
rental period to approximately $77 per month after the 36 month rental period. At
the start of a new 36 month rental period, the reimbursement rate for portable
oxygen contents will revert back to approximately $29 per month.
    
    Suppliers are responsible for performing any repairs or maintenance and
servicing of the oxygen equipment that is necessary to ensure that the equipment is
in good working order for the reasonable useful lifetime of the oxygen equipment.
No payment will be made for supplies, repairs, or maintenance and servicing either
before or after the initial 36 month rental period, with the exception of one
in-home visit by a supplier to inspect oxygen concentrators and transfilling
equipment and provide general maintenance six months after the initial 36 month
cap. Suppliers may not be reimbursed for more than 30 minutes of labor for this
one in-home visit. Currently, reimbursement for the one in-home visit has only been
approved by CMS for 2009.
    
    The Companys financial results will be materially and adversely impacted
beginning in 2009 as a result of changes in oxygen reimbursement as described
above. These new rules are complex and final claims filing and processing
instructions are still being developed. Management believes net revenue and net
income will be reduced on an annual basis by approximately $16.5 million beginning
in 2009 as a result of the reimbursement changes related to the 36 month oxygen
cap. (See Recap of 2009 Impact of Medicare Reimbursement Changes below for
additional discussion.)
 
    
    On August 3, 2006, CMS published a Proposed Rule to implement the changes required
by the DRA relating to the payment for oxygen, oxygen equipment, and capped rental DME
items. The rule, which became final November 9, 2006 (DRA Implementation Rule),
establishes revised payment classes and reimbursement rates for oxygen and oxygen
equipment effective January 1, 2007, including revised rates for concentrators, liquid
and gas stationary systems, and portable liquid and gas equipment. The DRA
Implementation Rule also establishes a reimbursement rate for portable oxygen
generating equipment and changes regulations related to maintenance reimbursement
 22




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##### Table of Contents



and equipment replacement reimbursement. Under the DRA Implementation Rule, during the
initial 36 months of rental, the reimbursement rate for concentrators and stationary
liquid and gas systems was approximately $199 per month for calendar years 2007 and
2008, approximately $193 per month for 2009, and approximately $189 per month for 2010.
Under the DRA Implementation Rule, the reimbursement rate for liquid or gas portable
equipment during the initial 36 months of rental is approximately $32 per month from
2007 through 2010. As a result of the enactment of MIPPA in July of 2008, the above
reimbursement rates were decreased by 9.5% beginning on January 1, 2009. The Company
estimates that the reduced oxygen rates as specified in the DRA Implementation Rule that
went into effect January 1, 2009 will reduce the Companys annualized net revenue and
net income by approximately $1.5 million.
 Competitive Bidding
   23




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Recap of 2009 Impact of Medicare Reimbursement Changes
   Accreditation
 24




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Inhalation Drug Changes
 Positive Airway Pressure (PAP) Devices
  25




---



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Surety Bond
  Proposals to Further Reduce the Reimbursement for Oxygen Equipment
 26




---



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Proposed Supplier and Quality Standards
   27




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Product Mix
 Critical Accounting Policies and Estimates
  Results of Operations
  28




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Percentage of RevenuesThree Months Ended March 31,2009
    
    2008Revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales and related services
    
    
    22.2
    
    
    
    20.7Cost of
rental, including rental equipment depreciation
    
    
    13.0
    
    
    
    13.7Operating expenses
    
    
    54.2
    
    
    
    49.4Bad debt expense
    
    
    2.1
    
    
    
    1.9General and administrative
    
    
    8.8
    
    
    
    6.9Depreciation, excluding rental equipment, and
amortization
    
    
    1.7
    
    
    
    1.6Interest expense, net
    
    
    6.6
    
    
    
    5.6Other income, net
    
    
    
    
    
    
    (0.6
    )Change of control income
    
    
    
    
    
    
    (0.1
    )Total expenses
    
    
    108.6
    %
    
    
    99.1
    %Earnings from unconsolidated joint ventures
    
    
    1.9
    %
    
    
    1.9
    %(Loss) income from operations before income taxes
    
    
    (6.7
    )
    
    
    2.8Provision for income taxes
    
    
    2.0
    
    
    
    1.8Net (loss) income
    
    
    (8.7
    )%
    
    
    1.0
    %Less: Net income attributable to the noncontrolling
interests
    
    
    (0.1
    )
    
    
    (0.2
    )Net (loss) income attributable to American
HomePatient, Inc.
    
    
    (8.8
    )%
    
    
    0.8
    %
 29




---



##### Table of Contents



Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Revenues.
 Sales and Related Services Revenues.
 Rental Revenues
 Cost of Sales and Related Services
 Cost of Rental Revenues
 30




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Operating Expenses
 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
 31




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Liquidity and Capital Resources
       32




---



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33




---



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Contractual Obligations and Commercial Commitments
  Twelve Months Ending March 31,
    
    
    After March 31,Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2013Secured debt and
capital leases
    
    $
    227,793,000
    
    
    $
    227,755,000
    
    
    $
    38,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest on secured debt
and capital leases
    
    
    5,207,000
    
    
    
    5,207,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease
obligations
    
    
    12,762,000
    
    
    
    6,127,000
    
    
    
    4,105,000
    
    
    
    1,817,000
    
    
    
    560,000
    
    
    
    153,000Total contractual cash
obligations
    
    $
    245,762,000
    
    
    $
    239,089,000
    
    
    $
    4,143,000
    
    
    $
    1,817,000
    
    
    $
    560,000
    
    
    $
    153,000
     34




---



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ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4T  CONTROLS AND PROCEDURES
  35




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
       
 36




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1A  RISK FACTORS
  The Companys secured debt becomes due on August 1, 2009.
  Reductions in Medicare and Medicaid reimbursement rates, as well as reductions from other third
party payors, are having a material adverse effect on the Companys results of operations and
financial condition and future reductions could have further adverse effects.
  37




---



##### Table of Contents



Highland Capital Management, L.P. controls approximately 48% of the Companys common stock and
holds a majority of the Companys $226.4 million secured debt, which may allow Highland to exert
significant influence on certain aspects of our business.
  The Company maintains substantial leverage.
  The Company is subject to extensive government regulation, and the Companys inability to comply
with existing or future laws, regulations or standards could have a material adverse effect on the
Companys operations, financial condition, business, or prospects.
  38




---



##### Table of Contents



Because of reimbursement reductions, the Company must continue to find ways to grow revenues and
reduce expenses in order to generate earnings and cash flow.
  The Company has substantial accounts receivable, and increased bad debt expense or delays in
collecting accounts receivable could have a material adverse effect on the Companys cash flows and
results of operations.
  New healthcare legislation or other changes in the administration or interpretation of government
health care programs or initiatives may have a material adverse effect on the Company.
  39




---



##### Table of Contents



The Company depends on retaining and obtaining profitable managed care contracts, and the Companys
business may be materially adversely affected if it is unable to retain or obtain such managed care
contracts.
  The Companys common stock trades on the over-the-counter bulletin board, which reduces the
liquidity of an investment in the Company.
  Compliance with privacy regulations under HIPAA could result in significant costs to the Company
and delays in its collection of accounts receivable.
    40




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##### Table of Contents



The Company is highly dependent upon its senior management.
  The market in which the Company operates is highly competitive, and if the Company is unable to
compete successfully, its business will be materially adversely affected.
  The provision of healthcare services entails an inherent risk of liability, and the Companys
insurance may not be sufficient to effectively protect the Company from all claims.
  41




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##### Table of Contents



ITEM 6  EXHIBITS
 EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBITS3.1
    
    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).3.7
    
    Amendment to the Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the
Companys Current Report on Form 8-K dated November 5, 2007).15.1
    
    Awareness Letter of KPMG LLP.31.1
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a)  Chief Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a)  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.
 42




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SIGNATURES
  AMERICAN HOMEPATIENT, INC.May 5, 2009
    By:
    /s/ Stephen L. ClantonStephen L. ClantonChief Financial Officer and An Officer Duly
Authorized to Sign on Behalf of the registrant 43