The selected consolidated financial data presented below should be read in conjunction with, and is qualified in its entirety by reference to,
On August 4, 2000, the Company acquired all of the issued and outstanding membership interest of ADIMA. The aggregate purchase price approximated $24,000, and included $19,000 in cash and 2.7 million shares of MIM common stock valued at that time at $5,000. ADIMA, located in Livingston, New Jersey, distributes and administers high cost specialty infusion therapy to patients requiring principally immunosuppression blood products, such as IGG, parenteral nutrition products, such as TPN, and antibiotic therapies such as rocephin or vancomycin. Unlike the Company's other specialty programs, patients being serviced through ADIMA have their therapies administered by IV certified nurses. The consolidated financial statements include the results of ADIMA from the date of acquisition.
The following unaudited consolidated pro forma financial information has been prepared assuming ADIMA was acquired as of January 1, 1999, with pro forma adjustments for amortization of goodwill and interest income. The pro forma financial information is presented for informational purposes only and is not indicative of the results that would have been realized had the acquisition been made on January 1, 1999. The Company's statement of operations for the year ended December 31, 2001 include ADIMA's results of operations for the entire period. In addition, this pro forma financial information for the year ended December 31, 1999 and 2000 is not intended to be a projection of future operating results.
Cost of revenue includes pharmacy claims, fees paid to pharmacists and other direct costs associated with pharmacy management, claims processing operations and mail order services, offset by volume rebates received from pharmaceutical manufacturers. For the years ended December 31, 2001, 2000 and 1999, gross rebates earned on rebate sharing arrangements on pharmacy benefit management contracts were $38,572, $45,230 and $43,611, respectively.
In August 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 14, 2002. The Company does not expect that the adoption of SFAS No. 143, which is effective for the Company as of January 1, 2003, will have any effect on its results of operations, financial position or cash flows.
Under certain circumstances, the Company was obligated to indemnify and advance defense costs to two former officers (one of which is a former director and still principal stockholder of the Company) of a subsidiary of the Company in connection with their involvement in the Federal and State of Tennessee investigation of which they are the subject. During 2001, 2000 and 1999, the Company advanced and expensed $0, $3,098 and $1,353, respectively, for the former officers' legal costs in this matter.
The effect of temporary differences that give rise to a significant portion of federal deferred taxes is as follows as of December 31:
Under the Plans, the Company's Board of Directors may grant stock to key employees. The Board of Directors may make the issuance of common stock subject to the satisfaction of one or more employment, performance, purchase or other conditions. As of December 31, 2001, the Company has granted 230,000 restricted stock grants (the "Performance Shares") that vest 8 years from the date of grant, or earlier if the Company exceeds certain earnings per share levels in 2001 and 2002. During 2001, the Company did not meet the earnings per share levels to accelerate vesting of the Performance Shares. The Company has recorded cumulative compensation expense of $217 related to these Performance Shares through December 31, 2001 based on the fair market value at the date of grant.