<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 13, 1999
INNOVATIVE CLINICAL SOLUTIONS, LTD.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-27568 65-0617076
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10 DORRANCE STREET, SUITE 400, PROVIDENCE, RHODE ISLAND 02903
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 831-6755
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N/A
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 13, 1999, certain wholly-owned subsidiaries of Innovative
Clinical Solutions, Ltd. (collectively, the "ICSL Group") sold certain assets
involved in their diagnostic imaging line of business, including equipment,
leasehold interests and contract rights but excluding cash and accounts
receivable (the "Diagnostic Assets"), to PresGar Imaging, L.C., and certain of
its affiliates (collectively, "PresGar"), for an aggregate purchase price of
approximately $27,348,450 in cash and the assumption of approximately $4 million
of debt. The purchase price received by the ICSL Group in the transaction was
determined as the result of arm's-length negotiations between the ICSL Group and
the principals of PresGar.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Statements of
Operations for the six months ended July 31, 1999 and the year ended January
31, 1999 have been prepared to reflect the sale of the Diagnostic Assets as
well as the sale or disposition since October 1998 by certain subsidiaries of
Innovative Clinical Solutions, Inc. (the "Company") of certain other assets
relating to their diagnostic imaging, infusion therapy, lithotripsy services,
real estate services and radiation therapy businesses, and physician
practices, as if the sales or dispositions had been completed on February 1,
1998. The Unaudited Pro Forma Consolidated Balance Sheet at July 31, 1999
gives effect to the sale of the Diagnostic Assets and the other sales or
dispositions completed since that date as if such sales or dispositions had
occurred on July 31, 1999.
The Unaudited Pro Forma Consolidated Financial Information has been
prepared based on the audited and unaudited historical financial statements of
the Company, and such Unaudited Pro Forma Consolidated Financial Information
should be read in conjunction with the consolidated historical financial
statements and related notes contained in the annual and quarterly reports filed
with the Securities and Exchange Commission.
The Unaudited Pro Forma Consolidated Financial Information has been
prepared in accordance with generally accepted accounting principles. These
principles require management to make extensive use of estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates. The Unaudited Pro
Forma Consolidated Statements of Operations are not necessarily indicative of
future operating results.
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INNOVATIVE CLINICAL SOLUTIONS, LTD.
PROFORMA CONSOLIDATED BALANCE SHEET
JULY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Adjusted
July 31, Total Pro Forma July 31,
1999 Adjustments(1) 1999
(unaudited) (unaudited) (unaudited)
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<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 14,709 $27,500 $ 42,209
Receivables:
Accounts receivable, net 18,079 7,790 25,869
Income tax refund receivable 10,789 0 10,789
Other receivables 6,314 0 6,314
Notes receivable 3,630 0 3,630
Prepaid expenses and other (including advances to shareholder) 12,337 0 12,337
Assets held for sale 45,133 (36,281) 8,852
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Total current assets 110,991 (991) 110,000
Property, plant and equipment, net 9,543 0 9,543
Notes receivable 8,481 0 8,481
Goodwill, net 28,525 0 28,525
Management service agreements, net 9,012 0 9,012
Other assets 3,931 0 3,931
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Total assets $170,483 ($991) $169,492
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of debt and capital leases 19,493 (3,833) 15,660
Accounts payable 13,236 0 13,236
Accrued compensation 2,147 0 2,147
Accrued and other liabilities 14,914 2,842 17,756
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Total current liabilities 49,790 (991) 48,799
Long-term debt less current maturities 4,311 0 4,311
Convertible subordinated debentures 100,000 0 100,000
Other long-term liabilities 940 0 940
Minority interest 673 0 673
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Total liabilities 155,714 (991) 154,723
Commitments and contingencies
Shareholders' equity
Common Stock 325 0 325
Treasury Stock (2,037) 0 (2,037)
Additional paid in capital 224,778 0 224,778
Accumulated deficit (208,297) 0 (208,297)
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Total shareholders' equity 14,769 0 14,769
Total liabilities and shareholders equity $170,483 ($991) $169,492
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</TABLE>
(1) The pro forma adjustments principally reflect the proceeds received on
the sale of the dispositions as well as the paydown on the Company's line of
credit. In addition, accounts receivable to be collected and liabilities
retained by the Company for the disposed entities have been reclassified out
of assets held for sale to the respective balance sheet accounts.
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INNOVATIVE CLINICAL SOLUTIONS, LTD.
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TOTAL TOTAL ADJUSTED
SIX MONTHS TOTAL PRO FORMA SIX MONTHS
JULY 31, 1999 ADJUSTMENTS(2) JULY 31, 1999
(unaudited) (unaudited) (unaudited)
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<S> <C> <C> <C>
Total revenue $110,516 $28,741 $81,775
Operating costs and administrative expenses:
Salaries, wages and benefits 35,652 9,084 26,568
Professional fees 9,422 996 8,426
Supplies 24,776 7,390 17,386
Utilities 2,346 595 1,751
Depreciation and amortization 6,813 3,301 3,512
Rent 8,699 2,520 6,179
Provision for bad debts 1,664 210 1,454
Non-recurring expenses 15,825 0 15,825
Capitation expense 24,310 0 24,310
Other 16,915 4,422 12,493
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Total operating costs and administrative expenses 146,422 28,518 117,904
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Interest expense, net 4,718 346 4,372
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Loss before extraordinary item
and provision for income taxes (40,624) (123) (40,501)
Income tax expense 100 0 100
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Net loss before extraordinary item $(40,724) $(123) $(40,601)
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</TABLE>
(2) Pro forma adjustments reflect the historical results of the disposed
entities for the relevant period.
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INNOVATIVE CLINICAL SOLUTIONS, LTD.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1999
<TABLE>
<CAPTION>
TOTAL TOTAL ADJUSTED
YEAR ENDED TOTAL PRO FORMA YEAR ENDED
JANUARY 31, 1999 ADJUSTMENTS(2) JANUARY 31, 1999
(unaudited) (unaudited)
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<S> <C> <C> <C>
Total revenue $291,278 $102,392 $188,886
Operating costs and administrative expenses:
Salaries, wages and benefits 94,710 30,902 63,808
Professional fees 16,287 2,540 13,747
Supplies 60,055 25,214 34,841
Utilities 5,501 2,073 3,428
Depreciation and amortization 14,786 8,091 6,695
Rent 20,671 7,886 12,785
Provision for bad debts 8,428 4,371 4,057
Gain/loss on sale of assets (5,414) 262 (5,676)
Provision for write-down of notes receivable 2,674 0 2,674
Goodwill impairment write-down 9,093 9,093 0
Nonrecurring expenses 10,465 2,912 7,553
Capitation expense 53,875 0 53,875
Other 37,667 11,759 25,908
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Total operating costs and administrative expenses 328,798 105,103 223,695
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Interest expense, net 8,005 613 7,392
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Loss before extraordinary item and
provision for income taxes (45,525) (3,324) (42,201)
Income tax benefit (11,549) 0 (11,549)
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Loss before extraordinary item $(33,976) $(3,324) $(30,652)
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</TABLE>
(2) Pro forma adjustments reflect the historical results of the disposed
entities for the relevant period.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INNOVATIVE CLINICAL SOLUTIONS, LTD.
By: /s/ GARY S. GILLHEENEY
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Gary S. Gillheeney
Chief Financial Officer
Date: September 28, 1999
