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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 29, 1997
MEDPARTNERS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Other Jurisdiction of Incorporation)
0-27276 63-1151076
(Commission File No.) (I.R.S. Employer Identification No.)
3000 Galleria Tower
Suite 1000
Birmingham, Alabama 35244
(Address of Principal Executive Offices)
(205) 733-8996
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On October 29, 1997, MedPartners, Inc. ("MedPartners") executed a Plan and
Agreement of Merger (the "Merger Agreement") with Phycor, Inc., a Delaware
corporation ("PhyCor"), pursuant to which MedPartners would be merged with and
into Phycor (the "Merger") upon satisfaction of certain conditions, as noted
below. Under the terms of the Merger Agreement, holders of MedPartners common
stock will receive a fixed ratio of 1.18 shares of PhyCor common stock for each
share of MedPartner common stock held. The transaction is expected to be
accounted for as a pooling-of-interests and to be treated as a tax-free
exchange. The transaction is subject to customary conditions, including, among
others, the approval of various state and Federal regulatory agencies and the
approval of both companies' stockholders.
In the case of MedPartners' stockholders, the Merger Agreement will be
submitted to them for their consideration at a special meeting at which all
MedPartners stockholders of record (as of a record date to be established by
MedPartners' Board of Directors in accordance with applicable law) will be
entitled to vote. To be approved at that stockholders' meeting, the Merger
Agreement must receive the affirmative vote of the holders of a majority of the
issued and outstanding shares of MedPartners common stock.
On October 29, 1997, PhyCor and MedPartners issued a press release relating
to the execution of the Merger Agreement. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release of MedPartners, Inc. and PhyCor, Inc. dated
October 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report be signed on its behalf by the
undersigned, thereunto duly authorized.
MEDPARTNERS, INC.
By /s/ Harold O. Knight, Jr.
---------------------------------
Harold O. Knight, Jr.
Executive Vice President and
Chief Financial Officer
Dated: October 31, 1997
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EXHIBIT 99.1
MEDPARTNERS
NEWS RELEASE
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CONTACT: FOR PHYCOR, INC.: FOR MEDPARTNERS, INC.:
Joseph C. Hutts Larry R. House
Chairman, President and Chief Executive Officer Chairman and Chief Executive Officer
or or
John K. Crawford Harold O. Knight, Jr.
Chief Financial Officer Chief Financial Officer
(615) 665-9066 (205) 733-8996
Investment Relations: Investment Relations:
Shawn Carder Randy Pittman
Director Vice President - Finance
(615) 665-9066 or
Tom Bartels
New York Media Contact: Director
Sam Ostrow (205) 733-8996
(203) 328-3018
Media Relations:
Other Media Contact: Tom Dingledy
Tom Lawrence Vice President-Corporate Communications
(615) 665-9066 (205) 733-8996
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PHYCOR ANNOUNCES AGREEMENT TO ACQUIRE MEDPARTNERS
COMBINING NATION'S LEADING PHYSICIAN MANAGEMENT ORGANIZATIONS
Birmingham, Alabama (October 29, 1997) - The Boards of Directors of PhyCor, Inc.
(Nasdaq/NM:PHYC) and MedPartners, Inc. (NYSE:MDM) today unanimously approved a
definitive agreement under which PhyCor would acquire MedPartners, forming a
nationwide physician management company with revenues of more that $8.4 billion.
Under the terms of the agreement, holders of MedPartners common stock will
receive a fixed ratio of 1.18 shares of PhyCor stock for each MedPartners share
held. The transaction is valued at approximately $8.0 billion including the
assumption of $1.2 billion of debt. The transaction is expected to be
accounted for as a pooling-of-interests and to be treated as a tax-free
exchange. It is subject to the approval of shareholders of both companies,
various state and Federal regulatory agencies, and other customary conditions.
Closing of the transactions is anticipated in the first quarter of 1998.
The combined company will operate in all 50 of the United States and will
be affiliated with approximately 35,000 physicians. In addition, the combined
company will serve more than three million patients under prepaid health plans.
"This is an extraordinary and unique opportunity," said Joseph C. Hutts,
chairman, president and chief executive officer of PhyCor. "The purpose of
PhyCor has always been make a fundamental contribution to our healthcare system.
This combination positions us to attain our goal. Despite the combining of the
two largest physician management companies, we will only represent approximately
5% of
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PHYC to Acquire MDM
October 29, 1997
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all physicians in America. We have plenty of work to do. In an increasingly
competitive environment, physicians need organization strength and resources
to make a positive difference in healthcare cost and quality. This transaction
creates the most compelling physician organization in our nation -- one that
meets the needs of physicians, employers, payors, and especially patients."
Larry R. House, MedPartners' chairman and chief executive officer,
commented, "These are the two preeminent physician practice companies in the
industry, and each has been on the leading edge of developing strong physician
networks to improve patient service and outcomes. The companies' complementary
strategies accelerate our opportunity to continue building the premier
physician-driven healthcare delivery system in the United States. This merger is
in the best interests of shareholders, physicians, and employees and will result
in an enterprise that is uniquely positioned to meet the needs of patients and
payors nationwide."
Mr. Hutts will remain chairman, president and chief executive officer of
the combined entity. Mr House will join PhyCor's current 11-member board along
with another current MedPartners director, Richard M. Scrushy, chairman and
chief executive officer of HEALTHSOUTH (NYSE:HRC) of Birmingham, Alabama.
PhyCor, Inc. is a physician practice management company that operates
multi-speciality clinics and manages independent practice associations (IPAs).
The Company operates 53 clinics will approximately 3,780 physicians in 28 states
and manages IPAs with over 17,800 physicians in 27 markets.
MedPartners, Inc. is a physician practice management company operating in
40 states. The company develops, consolidates and manages healthcare delivery
systems. Through the company's network of affiliated group and IPA physicians,
MedPartners provides primary and specialty healthcare services to prepaid
managed care enrollees and fee-for-service patients. MedPartners also manages
the nation's largest independent prescription management company.
BT Alex. Brown Incorporated and Smith Barney Inc. acted as financial
advisors to PhyCor and MedPartners, respectively.
This press release contains forward-looking information. The forward-
looking statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
may be significantly impacted by certain risks and uncertainties described
herein and in the Company's annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1996.
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PHYCOR, INC./MEDPARTNERS, INC. MERGER
FACT SHEET
Combined Company Highlights:
- - Approximately 35,000 affiliated physicians
- - Over 36,000 employees in 44 states
- - $8.4 billion in annualized revenue (third quarter annualized)
- - $717 million in annualized EBITDA (third quarter annualized)
Terms of the Merger:
- - PhyCor will issue approximately 236 million shares in connection with the
merger
- - Transaction valued at $8.0 billion including $1.2 billion in assumed debt
(10/28/97 price)
- - Each MedPartners share will convert into 1.18 shares of PhyCor common
stock
- - Transaction expected to be accounted for as a pooling-of-interests and a
tax-free exchange
- - Customary break-up fees for a transaction of this size
Key Operating Statistics:
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PhyCor MedPartners COMBINED
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Physicians:
Group Physicians 3,780 3,385 7,165
Hospital-Based and Other Physicians - 2,475 2,475
IPA Physicians 17,800 7,482 25,282
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Total 21,580 13,342 34,922
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Practices 53 289 342
Locations 495 674 1,169
Markets 73 51 110
States 28 40 44
Prepaid Enrollment:
Professional Only 968,405 1,174,221 2,142,626
Global 155,862 962,645 1,118,507
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Total Prepaid Enrollment 1,124,267 2,136,866 3,261,133
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Senior Enrollment 169,733 248,000 417,733
Run-Rate Financials (third quarter annualized - in millions):
Net Health Services Revenue $ 2,220 $ 6,220 $ 8,440
Revenue Net of Payments and
Pass-Through Costs $ 1,137 $ 3,308 $ 4,445
EBITDA $ 192 $ 525 $ 717
Net Income $ 60 $ 218 $ 278
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