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UNITED STATES | OMB APPROVAL |
SECURITIES AND EXCHANGE COMMISSION +--------------+
Washington, D.C. 20549 | OMB Number: |
| 3235-0058 |
FORM 12b-25 | Expires: |
| May 31, 1997 |
NOTIFICATION OF LATE FILING | Estimated |
|average burden|
(Check One): [X] Form 10-K [ ] Form 20-F [ ] Form 11-K | hours per |
[ ] Form 10-Q [ ] Form N-SAR |response..2.50|
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For Period Ended: ________________________ +--------------+
| SEC File No. |
[ ] Transition Report on Form 10-K | |
[ ] Transition Report on Form 20-F | 0-27276 |
[ ] Transition Report on Form 11-K +--------------+
[ ] Transition Report on Form 10-Q +--------------+
[ ] Transition Report on Form N-SAR | CUSIP No. |
| |
For the Transition Period Ended: ____________________________ +--------------+
[ Read Instruction (on back page) Before Preparing Form. Please Print or Type ]
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
MedPartners, Inc.
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Full Name of Registrant
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Former Name if Applicable
3000 Galleria Tower, Suite 1000
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Address of Principal Executive Office (Street and Number)
Birmingham, Alabama 35244
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City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
| (a) The reasons described in reasonable detail in Part III of this form
| could not be eliminated without unreasonable effort or expense;
| (b) The subject annual report, semi-annual report, transition report on
| Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof, will be
| filed on or before the fifteenth calendar day following the
[X] | prescribed due date; or the subject quarterly report of transition
| report on Form 10-Q, or portion thereof will be filed on or before
| the fifth calendar day following the prescribed due date; and
| (c) The accountant's statement or other exhibit required by Rule
| 12b-25(c) has been attached if applicable.
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PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR, or the transition report or portion thereof, could not be filed within
the prescribed time period.
On March 5, 1999, MedPartners, Inc. (the "Company") received notice that the
California Department of Corporations (the "DOC") had issued a Cease and Desist
Order (the "Order") against MedPartners Provider Network, Inc., a wholly-owned
subsidiary of the Company doing business in the State of California ("MPN"). The
Order prohibited, among other things, MPN from transferring any funds to the
Company or any of its affiliates except for certain payments to healthcare
providers. MPN, a Health Care Service Plan which is licensed under the
Knox-Keene Health Care Services Plan Act of 1975, is regulated in California by
the DOC and is part of the Company's physician practice management ("PPM")
division. As previously reported, the Company has announced its intention to
divest its PPM operations, has classified such businesses as discontinued
operations and has disclosed its intention to record a charge of approximately
$1.1 billion for the quarter ending December 31, 1998 to cover the anticipated
loss associated with the disposal of discontinued operations.
On March 11, 1999, the DOC, acting through its appointed conservator, assumed
control of MPN and filed a voluntary Chapter 11 petition on behalf of MPN under
the United States Bankruptcy Code in California. On March 17, 1999, the Company
filed an emergency motion in the United States Bankruptcy Court for the Central
District of California and an Application for an Order to Show Cause and
Injunction in the Superior Court of the State of California for the County of
Los Angeles seeking to prohibit the DOC from taking MPN and placing it in
bankruptcy.
Management of the Company currently is engaged in negotiations with
representatives of the State of California and the DOC in an effort to try and
resolve the issues relating to the Order, the seizure of MPN and the bankruptcy
filing (the "MPN Issues"). The Company believes that further clarification of
the MPN Issues is necessary in order to prepare accurate and complete disclosure
in the Form 10-K.
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As a result of the ongoing negotiations with the State of California and the DOC
noted above, the Company also is seeking certain amendments to its bank
facility. The amendment is not yet finalized and approved by the syndicate of
lenders. These amendments need to be finalized before complete and adequate
disclosure, particularly with regard to liquidity and capital resources, can be
made as required by Form 10-K. The Company anticipates that the amendments will
be finalized and approved by the syndicate of lenders within the next two weeks.
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification.
Howard A. McClure (205) 733-8996
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that
the registrant was required to file such report(s) been filed? If answer is
no, identify report(s). [X] Yes [ ] No
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(3) Is it anticipated that any significant changes in results of operations
from the corresponding period for the last fiscal year will be reflected by
the earnings statements to be included in the subject report or portion
thereof? [X] Yes [ ] No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
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The Registrant has reported operating results for the fiscal year ended
December 31, 1998. A copy of the Registrant's Press Release is attached hereto
as Addendum A.
MedPartners, Inc.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date April 1, 1999 By /s/ Howard A. McClure
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Howard A. McClure
Senior Vice President and
Chief Accounting Officer
INSTRUCTION: The form may be signed by an executive officer of the registrant
or by any other duly authorized representative. The name and title of the
person signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
+----------------------------------ATTENTION-----------------------------------+
| INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT |
| CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001). |
+------------------------------------------------------------------------------+
GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the
General Rules and Regulations under the Act. The information contained in or
filed with the form will be made a matter of public record in the Commission
files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of
the registrant is registered.
4. Amendments to the notifications must also be filed on form 12b-25 but need
not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
5. Electronic Filers. This form shall not be used by electronic filers unable
to timely file a report solely due to electronic difficulties. Filers
unable to submit a report within the time period prescribed due to
difficulties in electronic filing should comply with either Rule 201 or
Rule 202 of Regulation S-T ((S)232.201 or (S)232.202 of this chapter) or
apply for an adjustment in filing date pursuant to Rule 13(b) of Regulation
S-T ((S)232.13(b) of this chapter).
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Addendum A Narrative Required by Part IV (3)
MedPartners
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3000 Galleria Tower, Suite 1000 (205) 733-8996 NEWS RELEASE
Birmingham, Alabama 35244 www.medpartners.com
Contact: Tadd McVay Robert Mead
MedPartners, Inc. Gavin Anderson & Co.
Birmingham: 205-982-4265 New York: 212-373-0271
FOR IMMEDIATE RELEASE
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MedPartners Announces Fourth Quarter and Full Year Fiscal 1998 Results
Company takes accounting charge to cover exit of PPM and
Contract Services businesses
Birmingham, AL -- February 10, 1999 -- MedPartners, Inc. (NYSE:MDM) today
reported its operating results for the fourth quarter and fiscal year ended
December 31, 1998. As previously announced, the Company is reporting as
discontinued operations the financial results of its physician practice
management (PPM) and contract services operations. MedPartners recorded a
charge against fourth quarter earnings of $1.226 billion, primarily non-cash,
relating to the discontinued operations.
Continuing Operations Performance
MedPartners' continuing operations, consisting of the pharmaceutical services
business (Caremark), corporate overhead, and interest allocated in accordance
with generally accepted accounting principles ("GAAP"), posted significant
revenue and operating income growth during the fourth quarter and full year.
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Fourth quarter revenues increased to $714 million, up to $120 million over
the same period in 1997. Operating income (income before interest, taxes and
restructuring expense) was $40 million, an increase of $33 million over the
fourth quarter of 1997. Fourth quarter net income from continuing operations
totaled $11 million, or $0.06 per share, compared with a loss of $2 million
(excluding restructuring charges), or a loss of $0.01 per share during the
prior year.
The results for the fourth quarter and fiscal year ended December 31, 1997
were negatively impacted by a $20 million charge, $12 million or $0.06 per
share after-tax, related to a loss contract in the pharmaceutical services
business. This loss contract reserve resulted in a reduction in revenues,
operating income, and income from continuing operations.
Revenues for the full year totaled $2.6 billion, an increase of $271 million
over 1997. Earnings before interest, taxes, depreciation, amortization and
restructuring items totaled $163 million during 1998 versus $125 million in
1997. Annual operating income increased by $37 million to $138 million. Net
income from continuing operations in 1998 totaled $31 million, or $0.16 per
share, compared to $38 million, or $0.20 per share in 1997. The decline in
1998 net income from continuing operations as compared to 1997 was primarily
attributable to additional after-tax interest expense of $32 million, or
$0.17 per share in 1998. Offsetting this item, for comparative purposes, is
the 1997 after-tax charge for a loss contract of $12 million or $0.06 per
share referred to above.
Regarding its forward prospects, management said that it believes the current
allocation of certain costs between continuing and discontinued operations,
as is mandated by GAAP, does not necessarily reflect the expenses which will
be incurred by the Company after the completion of the divestiture plan.
Management expects corporate overhead and interest expense to be lower
subsequent to the completion of the divestiture process.
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"While the accounting charge makes year-over-year comparisons for our entire
organization difficult, we can clearly see that Caremark turned in a solid
performance in 1998," said Mac Crawford, Chairman and CEO of MedPartners,
Inc. "Caremark processed 44 million prescriptions during the year, and the
operation entered 1999 with its best net new business book in the last three
years."
Accomplishments and Outlook
In 1998, MedPartners took several initiatives aimed at restructuring the
Company's business. An experienced new management team was brought on board
and developed a strategic business plan which shifted focus toward the
Company's pharmaceutical business. A comprehensive plan to divest
MedPartner's holdings in the physician practice management and contract
services businesses was announced and initiated. Management also negotiated
additional insurance coverage that ensures protection going forward from any
material adverse financial risk associated with pending shareholder
litigation.
Since the close of fiscal 1998, the Company has continued to make progress in
implementing its strategic plan. The Company completed amendments to its bank
credit agreement which provides that up to 25% of its first $500 million in
net divestiture proceeds to be retained for general corporate purposes.
Additionally, the Company completed the sale of its Government Services
Division for $67 million and announced a definitive agreement to sell its
Team Health Division for $335 million, less certain expenses, and will retain
approximately 7.3% of the equity of the recapitalized company.
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"We are please to turn the page on what has been a very difficult year for
the Company," said Mr. Crawford. "While we made significant progress in
addressing the Company's challenges in 1998, our mission for 1999 is clear.
Most immediately, we seek to close the sale of Team Health, to complete
divestiture of our PPM businesses, and to de-leverage our balance sheet.
Continuing to regain our shareholders' confidence is also a priority--we can
do this best by achieving Caremark's 1999 growth targets and by setting in
place the building blocks required to achieve predictable long-term growth."
Loss from Discontinued Operations
The loss from discontinued operations was $1.285 billion for 1998. The loss
includes the estimated losses from the disposal of these operations and the
corresponding operating results for 1998. The Company expects that, over
time, approximately $191 million will be paid out in the form of cash as a
result of the charge.
This press release contains statements that constitute "forward-looking
statements" within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934 as amended by the Private Securities
Litigation Reform Act of 1995. "Forward-looking" statements contained in this
press release include the intent, belief or current expectations of the
Company and members of its senior management team with respect to corporate
overhead costs and interest expense to be incurred in future periods and the
anticipated growth prospects, trends, and margins for the PBM industry,
growth prospects for the Caremark division, the sale of Team Health, the
divestiture of the physician practice services division, earnings,
profitability, growth prospects and predictability of results of operations
of the Company in future periods, as well as the assumptions upon which such
statements are based. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance, and
involves risks
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and uncertainties, and that actual results may differ materially from those
contemplated by such forward-looking statements. Important factors currently
known to management that could cause actual results to differ materially from
those contemplated by the forward-looking statements in this press release
include, but are not limited to, adverse developments with respect to the sale
of Team Health or the planned divestiture of physician practice services
division (including the timing terms or feasibility of such sale and
divestiture), adverse developments with respect to the operation of the
Company's business units during such sale and divestiture process, failure to
meet operating objectives and to execute the operating plan and adverse
developments with respect to the healthcare industry in general and overall
market conditions.
Additional factors that could cause actual results to differ materially from
those contemplated in this press release can be found in the Company's Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission on
November 16, 1998.
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MEDPARTNERS, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
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December 31, December 31, December 31, December 31,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net Revenue $ 713,726 $ (593,780) $ 2,634,017 $2,363,404
Operating expenses:
Cost of revenues 642,245 554,462 2,383,666 2,153,005
General and administrative 20,366 18,656 70,945 67,431
Corporate overhead 3,815 7,618 16,776 18,162
Depreciation and amortization 7,185 6,291 24,722 24,289
Net interest expense 22,024 9,478 78,796 27,169
Restructuring charges -- 10,610 9,500 10,610
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Income (loss) before income taxes 18,091 (13,335) 49,612 62,738
Income tax expense (benefit) 6,875 (5,145) 18,852 24,689
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Net income (loss) from continuing operations 11,216 (8,190) 30,760 38,049
Loss from discontinued operations (1,225,602) (806,716) (1,284,878) (832,775)
Cumulative effect of change in accounting principle (6,348) (25,889) (6,348) (25,889)
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Net loss $(1,220,734) $ (840,795) $(1,260,466) $ (820,615)
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Basic earnings (loss) per share
from continuing operations $ 0.06 $ (0.04) $ 0.16 $ 0.20
Basic loss per share from discontinued operations (6.45) (4.29) (6.79) (4.48)
Basic loss per share from cumulative effect of
change in accounting principle (0.03) (0.14) (0.03) (0.14)
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Basic loss per common share $ (6.42) $ (4.47) $ (6.66) $ (4.42)
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Diluted earnings per share from continuing operations $ 0.06 $ (0.04) $ 0.16 $ 0.20
Diluted loss per share from discontinued operations (6.41) (4.29) (6.77) (4.39)
Diluted loss per share from cumulative effect of
change in accounting principle (0.03) (0.14) (0.03) (0.14)
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Diluted loss per common share $ (6.38) $ (4.47) $ (6.64) $ (4.33)
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Weighted average common shares outstanding 190,078 187,888 189,327 185,830
Dilutive effect of employee stock options 1,137 --(A) 600 3,743
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Weighted average common shares outstanding
assuming dilution 191,215 187,888 189,927 189,573
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(A) No incremental shares related to options are included due to losses.
Income (loss) from continuing operations
excluding restructuring charges $ 11,216 $ (1,673) $ 36,649 $ 44,448
============ ============= ============ ============
Income (loss) from continuing operations
per share excluding restructuring charges $ 0.06 $ (0.01) $ 0.19 $ 0.23
============ ============= ============ ============
</TABLE>
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MEDPARTNERS, Inc.
Consolidated Balance Sheets
(in thousands)
As of December 31,
1998 1997
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Assets
Current Assets:
Cash & cash equivalents $ 23,100 $ 109,098
Accounts receivable, net 185,719 304,624
Inventories 171,739 138,235
Income tax receivable -- 10,446
Deferred tax assets, net -- 72,203
Prepaid expenses and other
current assets 11,513 8,721
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Total Current Assets 392,071 643,327
Property and equipment, net 115,835 114,152
Intangible assets, net 27,463 35,883
Deferred tax assets, net -- 175,619
Other assets 51,272 27,090
Net assets of discontinued operations 595,129 934,382
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Total Assets $1,181,770 $1,930,453
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Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable $ 215,861 $ 192,421
Other accrued expenses and liabilities 303,345 215,960
Income tax payable 9,480 --
Current portion of long-term debt 207 233
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Total Current Liabilities 528,893 408,614
Long-term debt, net of current portion 1,735,096 1,395,079
Other long-term liabilities 61,955 34,539
Stockholders' Equity (Deficit)
Common stock 199 198
Additional paid in capital 954,420 937,233
Unrealized loss on marketable securities (5,874) (5,035)
Shares held in trust (142,477) (150,200)
Accumulated deficit (1,950,442) (689,975)
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Total Stockholders' Equity (Deficit) (1,144,174) 92,221
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Total Liabilities and Stockholders' Equity (Deficit) $ 1,181,770 $1,930,453
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