<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): March 31, 1998
DAOU SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-22073 330284454
(Commission File Number) (IRS Employer Identification No.)
5120 Shoreham Place, San Diego, California 92122
(Address of principal executive offices, including zip code)
(619) 452-2221
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
The registrant incorporates by reference herein the two press releases
dated March 31, 1998, attached hereto as Exhibit 99.1 and 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
(i) Exhibit 99.1
Press Release dated March 31, 1998.
(ii) Exhibit 99.2
Press Release dated March 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 1, 1998 DAOU SYSTEMS, INC.
By: /s/ DANIEL J. DAOU
__________________________________
Daniel J. Daou, President
-2-
<PAGE>
CONTACT:
Craig K. Collins
DAOU Systems, Inc.
(619) 646-2857
[email protected]
WWW.DAOU.COM
DAOU SYSTEMS MERGES WITH SENTIENT SYSTEMS, INC.
SAN DIEGO, March 31, 1998 -- DAOU Systems, Inc. (Nasdaq: DAOU) announced
today that it has entered into a merger agreement with Sentient Systems,
Inc., a Kensington, Md.-based systems integration and information technology
consulting firm. Like DAOU, Sentient Systems is focused within the healthcare
information technology market.
Under the terms of the agreement, DAOU will exchange shares of common
stock for all outstanding common shares of Sentient Systems. The equity value
of the merger is approximately $26 million, based on the exchange terms and
will be accounted for as a pooling of interests.
Sentient Systems will become a wholly owned subsidiary of DAOU. The
combined company will maintain head quarters in San Diego and will employ a
staff of 475. Together, the companies have provided services to more than
1,000 healthcare organizations throughout the United States.
The transaction is part of DAOU's strategy to integrate horizontally,
engaging the customer earlier in their decision-making and buying cycle by
providing consulting and information technology strategy services.
"This merger is a positive step as we pursue a path of growth and
increased market share," said Daniel Daou, President of DAOU Systems. "Our
mission is to become a sole-
<PAGE>
source provider of computer network solutions for healthcare organizations.
Sentient will help us expand our service offerings horizontally. With their
talented consulting and network integration teams, we can begin working with
a client at the very early stages of their information technology
development. We can then hand off to our network design team, hand off again
to our implementation team and again to our management services team. With
the addition of Sentient's services, we can expand our offerings to provide a
comprehensive solution to our clients. This will deliver value to both our
clients and our shareholders. On a financial note, apart from the transaction
costs, we believe the merger will be accretive to earnings per share."
Stephen Casey, President of Sentient Systems, said, "We're very excited
about the merger and look forward to realizing the full potential of our
combined companies. We will be able to deliver a significant customer base,
complementary services, and a talented team of technology experts. As a part of
DAOU, we look forward to providing turnkey solutions on a national basis to the
healthcare market."
Following the merger, Casey will remain with DAOU. No layoffs are expected
as the result of the transaction.
Sentient provides IT consulting services to the healthcare industry. The
company has been the partner of choice for more than 500 organizations including
Department of Defense Health Affairs, Foundation Health Systems, Humana,
National Institutes of Health, Prudential, and SmithKline Beecham. Sentient's
services include project management, system implementation, systems integration,
application development, and system support. Sentient consultants are
experienced in multiple healthcare information systems including Compucare,
HBOC's AMISYS managed care system, HSII, IDX, Lawson, and Sunquest.
DAOU Systems, Inc., designs, implements, and manages computer networks for
the healthcare industry. The company offers solutions for voice, video and data
networking, combining its technological expertise with its knowledge of the
healthcare industry's specialized needs. In addition, DAOU offers an array of
operational and Internet solutions. DAOU's clients comprise more than half of
the nation's top 50 integrated healthcare delivery networks and include such
organizations as Centura Health, North Shore Health System, Mercy Health
Services, Harris Methodist Health System, and Catholic Medical Center of
Brooklyn and Queens.
<PAGE>
Statements in this press release concerning DAOU Systems' and Sentient
Systems' separate or combined business outlook or future economic
performances, revenues, or other financial items, anticipated synergies and
product or service line growth, together with other statements that are not
historical facts, are forward-looking statements. Any such statements are only
predictions, reflecting the best judgment of DAOU Systems and Sentient Systems
based upon currently available information and involve numerous risks and
uncertainties that could cause actual results to differ materially from those
stated in such statements. Such factors include the company and industry risks
set forth under the caption "Risk Factors" in the Company's Annual Report on
Form 10-KSB for the year ended Dec. 31, 1997. These risks include specific
acquisition-related risks, such as difficulties in the assimilation of the
operations and personnel of an acquired business, the diversion of management's
attention from other business concerns, risks of entering markets in which DAOU
has limited direct prior experience, and the potential loss of key employees of
an acquired business. The forward-looking statements contained in this press
release or in other public statements of DAOU Systems and Sentient Systems
should be considered in light of those factors.
<PAGE>
EXHIBIT 99.2
CONTACT:
Craig K. Collins
DAOU Systems, Inc.
(619) 646-2857
[email protected]
WWW.DAOU.COM
DAOU SYSTEMS MERGES WITH SYNEXUS INCORPORATED
SAN DIEGO, March 31, 1998 -- DAOU Systems, Inc. (Nasdaq: DAOU)
has entered into a merger agreement with Synexus Incorporated, an Exton,
Penn.-based healthcare information technology firm specializing in software
application interface systems, network integration, and project management.
Under the terms of the agreement, DAOU will exchange shares of
common stock for all outstanding common shares of Synexus. The equity value
of the merger is approximately $3 million, based on the exchange terms and
will be accounted for as a pooling of interests.
Synexus will become a wholly owned subsidiary of DAOU. The
combined company will maintain headquarters in San Diego and will employ a
staff of 485. Together, the companies have provided services to more than
1,000 healthcare organizations throughout the U.S.
"The transaction provides DAOU with an important service that
addresses the needs of large, multi-facility healthcare organizations," said
Daniel Daou, President of DAOU Systems. "As these entities continue to merge,
they are faced with the daunting task of integrating networks and application
platforms. Synexus is important to DAOU and our customers because they are
experts in the highly technical aspects of network integration. With Synexus
on board, we can now provide customers with technologies that
<PAGE>
enable applications to talk to one another and run smoothly across the
network infrastructure."
Daou added, "Synexus is a good fit within our merger strategy. In
addition, apart from the transaction costs, we believe the merger will be
accretive to earnings per share."
John Smaling, President of Synexus, said, "We look forward to
working with DAOU and being part of the team. We're particularly excited to
begin delivering our unique services to DAOU's large and growing customer
base."
Following the merger, Smaling will remain with DAOU. No layoffs
are expected as the result of the transaction.
Synexus Incorporated provides information technology services to
the healthcare industry. The company specializes in application interface
systems, network integration, application integration, project management and
strategic planning.
DAOU Systems, Inc., designs, implements, and manages computer
networks for the healthcare industry. The company offers solutions for voice,
video and data networking, combining its technological expertise with its
knowledge of the healthcare industry's specialized needs. In addition, DAOU
offers an array of operational and Internet solutions. DAOU's clients
comprise more than half of the nation's top 50 integrated healthcare delivery
networks and include such organizations as Centura Health, North Shore Health
System, Mercy Health Services, Harris Methodist Health System, and Catholic
Medical Center of Brooklyn and Queens.
Statements in this press release concerning DAOU Systems' and
Synexus' separate or combined business outlook or future economic
performances, revenues, or other financial items, anticipated synergies and
product or service line growth, together with other statements that are not
historical facts, are forward-looking statements. Any such statements are
only predictions, reflecting the best judgment of DAOU Systems and Synexus
based upon currently available information and involve numerous risks and
uncertainties that could cause actual results to differ materially from those
stated in such statements. Such factors include the company and industry
risks set forth under the caption "Risk Factors" in the Company's Annual
Report on Form 10-KSB for the year ended Dec. 31, 1997. These risks include
specific acquisition-related risks, such as
<PAGE>
difficulties in the assimilation of the operations and personnel of an
acquired business, the diversion of management's attention from other
business concerns, risks of entering markets in which DAOU has limited direct
prior experience, and the potential loss of key employees of an acquired
business. The forward-looking statements contained in this press release or
in other public statements of DAOU Systems and Synexus should be considered
in light of those factors.
