Borrowings

6 Months Ended

Jun. 30, 2011

Borrowings [Abstract]

Borrowings

Note 6 — Borrowings

The Company’s long-term debt as of June 30, 2011 and December 31, 2010 are as follows:

		Maturity	June 30,			December 31,
	Rate (1)	Date	2011			2010
Senior bank debt	6%	May 2014	$	5,000,000		$	8,000,000
Bank line of credit	6%	Aug. 2015		14,396,935			14,396,935
Notes payable on equipment	6 – 14%	April 2012 – Dec. 2013		344,992			417,249
Sleep center notes payable	3.75 – 8.75%	July 2011 – Jan. 2015		128,523			225,124
Seller financing	7.65%	Sept. 2012		65,961			90,662
Notes payable on vehicles	7.5%	Nov. 2012 – Dec. 2013		51,259			63,586
Insurance premium financing	2.97%	Nov. 2011		6,076			12,075
Total borrowings				19,993,747			23,205,631
Less: Current portion of long-term debt				(19,687,662	)		(22,768,781	)
Long-term debt			$	306,085		$	436,850

(1) Effective rate as of June 30, 2011

At June 30, 2011, future maturities of long-term debt were as follows:

Twelve months ended June 30,
2012	$	19,688,000
2013		207,000
2014		88,000
2015		11,000
2016		—
Thereafter		—

In May 2008 and as amended in May 2009, July 2010 and December 2010, the Company entered into a loan agreement with Arvest Bank consisting of a $30 million term loan (the “Term Loan”) and a $15 million line of credit to be used for future acquisitions (the “Acquisition Line”); collectively referred to as the “Credit Facility.” The Term Loan was used by the Company to consolidate certain prior loans to the Company’s subsidiaries SDC Holdings LLC (“SDC Holdings”) and ApothecaryRx LLC. The Term Loan and the Acquisition Line bear interest at the greater of the prime rate as reported in the Wall Street Journal or the floor rate of 6%. The rate on the Term Loan is adjusted annually on May 21. The rate on the Acquisition Line is adjusted on the anniversary date of each advance or tranche. The Term Loan matures on May 21, 2014 and requires quarterly payments of interest only. Commencing on September 1, 2011, the Company is obligated to make quarterly payments of principal and interest calculated on a seven-year amortization based on the unpaid principal balance on the Term Loan as of June 1, 2011. Each advance or tranche of the Acquisition Line will become due on the sixth anniversary of the first day of the month following the date of the advance or tranche. Each advance or tranche is repaid in quarterly payments of interest only for three years and thereafter, quarterly principal and interest payments based on a seven-year amortization until the balloon payment on the maturity date of the advance or tranche. The Credit Facility is collateralized by substantially all of the Company’s assets and is personally guaranteed by various individual shareholders of the Company. The Company has also agreed to maintain certain financial covenants including a Debt Service Coverage Ratio of not less than 1.25 to 1, as defined.

As of June 30, 2011, the Company’s Debt Service Coverage Ratio is less than 1.25 to 1. In June 2011, the Company prepaid approximately $1.1 million in principal and interest to Arvest Bank and as a result, Arvest Bank has waived the Debt Service Coverage Ratio requirement through December 31, 2011. The prepayment represents all principal and interest payments due to Arvest Bank between July 1, 2011 and December 31, 2011. The prepayment is reflected in other current assets on the accompanying condensed consolidated balance sheets. The prepayment will be recorded as interest expense and a reduction of principal in accordance with the loan agreement. There is no assurance that Arvest Bank will waive the Debt Service Coverage Ratio requirement beyond December 31, 2011. Since the waiver does not extend past twelve months from June 30, 2011, the associated debt with Arvest Bank has been classified as current in the accompanying condensed consolidated balance sheets.