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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) May 18, 1998
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InSight Health Services Corp.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-28622 33-0702770
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(949) 476-0733
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
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.
(a) On May 18, 1998, InSight Health Services Corp., a Delaware corporation
("Registrant"), through its wholly owned subsidiary, SMSI Acquisition
Company, a Delaware corporation ("SMSI"), acquired all of the capital
stock of Signal Medical Services, Inc., a Delaware corporation ("Signal"),
in a merger of Signal with and into SMSI (the "Merger"). The Merger was
consummated pursuant to an Agreement and Plan of Merger dated as of
April 15, 1998 among Registrant, SMSI, Signal, SMSI Holdings, Inc.
("Holdings"), Brian P. Stone, Thomas W. Crucitti and Todd Stowell, as
amended by the First Amendment thereto dated May 15, 1998 and the Second
Amendment thereto dated May 18, 1998. Holdings and Messrs. Stone, Crucitti
and Stowell were the stockholders of Signal (collectively, the "Signal
Stockholders"). The assets acquired by Registrant as a result of the Merger
consist of certain tangible and intangible assets, including mobile
diagnostic imaging equipment, customer contracts and other agreements
entered into in by Signal in connection with providing diagnostic imaging
services to customers in the Northeastern and Southeastern United States.
Pursuant to the Merger Agreement and the Certificate of Merger filed with
the Secretary of State of the State of Delaware, at the effective time of
the Merger, SMSI changed its name to "Signal Medical Services, Inc."
The aggregate purchase price, including the assumption of indebtedness,
was $45.7 million, and was determined by negotiations among the parties.
The purchase price was paid entirely in cash and is subject to
certain post-closing adjustments. A portion of the purchase price is
being held in escrow for a period of time after the Merger for the
satisfaction of certain indemnification obligations of the Signal
Stockholders. As a condition to the Merger, Messrs. Stone, Crucitti,
Stowell and David M. Karchner, all former officers and employees of Signal,
entered into employment agreements with Registrant pursuant to which such
individuals agreed to serve as employees of Registrant. In connection
with such employment agreements, Messrs. Stone, Crucitti and Karchner
received options to purchase a number of shares of common stock of
Registrant. Registrant utilized its existing credit facility with
NationsBank, N.A. to fund the purchase price.
(b) At the time of the Merger, Signal provided diagnostic imaging services,
including magnetic resonance imaging, computed tomography and lithotripsy
services, in eleven states, primarily in the Northeastern and Southeastern
United States. Registrant intends to use the assets acquired in the Merger
to expand upon its existing business. Registrant provides diagnostic
imaging and information, treatment and related management services to
managed care, hospitals and other contractual customers in 25 United
States, including five major U.S. markets.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of businesses acquired.
It is impractical to file with this report the financial statements
required by this Item. Audited financial statements of Signal Medical
Services, Inc. for the fiscal years ended December 31, 1996 and 1997
required by this Item will be included in an amendment to this report
to be filed within 60 days after the date this report is filed with
the Securities and Exchange Commission ("SEC").
(b) Pro forma financial information.
It is impractical to file with this report the pro forma financial
information required by this Item. Pro forma financial information
required by this Item will be included in an amendment to this report
to be filed within 60 days after the date this report is filed with
the SEC.
(c) Exhibits.
*2.1 Agreement and Plan of Merger dated as of April 15, 1998 among
InSight Health Services Corp., SMSI Acquisition Company, Signal
Medical Services, Inc., SMSI Holdings, Inc., Brian P. Stone,
Thomas W. Crucitti and Todd Stowell (incorporated herein by
reference to Exhibit 10.32 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998 filed with the
Commission on May 13, 1998).
2.2 First Amendment to Agreement and Plan of Merger dated as of May
15, 1998 by and among InSight Health Services Corp., SMSI
Acquisition Company, Signal Medical Services, Inc., SMSI
Holdings, Inc., Brian P. Stone, Thomas W. Crucitti and Todd
Stowell (filed herewith).
2.3 Second Amendment to Agreement and Plan of Merger dated as of May
18, 1998 by and among InSight Health Services Corp., SMSI
Acquisition Company, Signal Medical Services, Inc., SMSI
Holdings, Inc., Brian P. Stone, Thomas W. Crucitti and Todd
Stowell (filed herewith).
99.1 Press Release dated May 19, 1998 announcing the completion of the
Merger (filed herewith).
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* Previously filed.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 2, 1998
INSIGHT HEALTH SERVICES CORP.
BY: /S/ E. LARRY ATKINS
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E. Larry Atkins
President and Chief Executive Officer
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DOCUMENT DESCRIPTION NUMBERED PAGE
<S> <C> <C>
*2.1 Agreement and Plan of Merger dated as of April 15,
1998 among InSight Health Services Corp., SMSI
Acquisition Company, Signal Medical Services, Inc.,
SMSI Holdings, Inc., Brian P. Stone, Thomas W.
Crucitti and Todd Stowell (incorporated herein by
reference to Exhibit 10.32 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed with the Commission on
May 13, 1998)
2.2 First Amendment to Agreement and Plan of Merger
dated as of May 15, 1998 by and among InSight
Health Services Corp., SMSI Acquisition Company,
Signal Medical Services, Inc., SMSI Holdings,
Inc., Brian P. Stone, Thomas W. Crucitti and Todd
Stowell (filed herewith) . . . . . . . . . . . . . 6
2.3 Second Amendment to Agreement and Plan of Merger
dated as of May 18, 1998 by and among InSight
Health Services Corp., SMSI Acquisition Company,
Signal Medical Services, Inc., SMSI Holdings,
Inc., Brian P. Stone, Thomas W. Crucitti and Todd
Stowell (filed herewith) . . . . . . . . . . . . . 8
99.1 Press Release dated May 19, 1998 announcing the
completion of the Merger (filed herewith). . . . . 10
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* Previously filed.
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EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "First
Amendment") is made and entered into as of this 15th day of May, 1998, by and
among (i) InSight Health Services Corp., a Delaware corporation ("InSight"),
(ii) SMSI Acquisition Company, a Delaware corporation and a wholly-owned
subsidiary of InSight ("Newco"), (iii) Signal Medical Services, Inc., a Delaware
corporation (the "Company"), (iv) SMSI Holdings, Inc., a Connecticut corporation
("SMSI") and (v) Brian P. Stone ("Stone"), Thomas W. Crucitti ("Crucitti") and
Todd Stowell ("Stowell") (Stone, Crucitti and Stowell are sometimes collectively
referred to herein as the "Minority Stockholders" and, with SMSI, as the
"Stockholders").
RECITALS
A. InSight, Newco, the Company and the Stockholders are parties to an
Agreement and Plan of Merger dated as of April 15, 1998 (the "Agreement") which,
by its terms, may be terminated by the parties if certain conditions set forth
therein are not satisfied by May 15, 1998.
B. The parties wish to extend the term of the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, InSight, Newco, the Company and the Stockholders mutually
agree as follows, with capitalized terms used herein and not defined having the
meanings ascribed to them in the Agreement.
1. Sections 9.1(d) and 9.1(e) of the Agreement are hereby amended in
their entirety as follows:
(d) InSight and Newco, if the conditions set forth in Sections 8.1
or 8.3 shall not have been satisfied or waived by May 18, 1998;
or
(e) the Company and the Stockholders, if the conditions set forth in
Sections 8.1 or 8.2 shall not have been satisfied or waived by
May 18, 1998; or
2. This First Amendment may be executed in any number of counterparts,
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute one agreement.
3. Except as amended hereby, the Agreement remains in full force and
effect and the parties hereby ratify and confirm each and every provision
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first written above.
INSIGHT HEALTH SERVICES CORP.
By: /S/ E. LARRY ATKINS
---------------------------------
Name: E. Larry Atkins
Title: President and CEO
SMSI ACQUISITION COMPANY
By: /S/ E. LARRY ATKINS
---------------------------------
Name: E. Larry Atkins
Title: President and CEO
SIGNAL MEDICAL SERVICES, INC.
By: /S/ DAVID M. KARCHNER
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Name: David M. Karchner
Title: CFO
SMSI HOLDINGS, INC.
By: /S/ ROBERT T. BROWN
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Name: Robert T. Brown
Title:
MINORITY STOCKHOLDERS
/S/ BRIAN P. STONE
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Brian P. Stone
/S/ THOMAS W. CRUCITTI
---------------------------------
Thomas W. Crucitti
/S/ TODD STOWELL
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Todd Stowell
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EXHIBIT 2.3
SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER is made and entered into
as of this 18th day of May, 1998 by and among (i) InSight Health Services Corp.,
a Delaware corporation ("InSight"), (ii) SMSI Acquisition Company, a Delaware
corporation and a wholly-owned subsidiary of InSight ("Newco"), (iii) Signal
Medical Services, Inc., a Delaware corporation (the "Company"), (iv) SMSI
Holdings, Inc., a Connecticut corporation ("SMSI") and (v) Brian P. Stone
("Stone"), Thomas W. Crucitti ("Crucitti") and Todd Stowell ("Stowell") (Stone,
Crucitti and Stowell are sometimes collectively referred to herein as the
"Minority Stockholders" and, with SMSI, as the "Stockholders").
RECITALS
A. InSight, Newco, the Company and the Stockholders are parties to an
Agreement and Plan of Merger dated as of April 15, 1998 (the "Agreement").
B. The parties wish to amend the Agreement to make the changes set forth
below.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, InSight, Newco, the Company and the Stockholders mutually
agree as follows, with capitalized terms used herein and not defined having the
meanings ascribed to them in the Agreement:
1. References in Section 2.2(b) of the Agreement to (a) the Dollar amount
$25,519,936 are hereby changed to $24,970,120, and (b) the Dollar amount
$20,809,064 are hereby changed to $21,358,880.
2. References in Sections 7.2(f) and 8.2(d) of the Agreement to the
Dollar amount $6,160,064 are hereby changed to $6,709,880.
3. The reference in Section 7.8(a) of the Agreement to the Dollar amount
$4,945,941 is hereby changed to $5,371,123.
4. Except as amended hereby, the Agreement remains in full force and
effect and the parties hereby ratify and confirm each and every provision
thereof.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be fully
executed and delivered, all as of the date and year first above written.
INSIGHT HEALTH SERVICES CORP.
By: /S/ E. LARRY ATKINS
--------------------------------
Name: E. Larry Atkins
Title: President and CEO
SMSI ACQUISITION COMPANY
By: /S/ E. LARRY ATKINS
---------------------------------
Name: E. Larry Atkins
Title: President and CEO
SIGNAL MEDICAL SERVICES, INC.
By: /S/ BRIAN P. STONE
---------------------------------
Name: Brian P. Stone
Title: CEO
SMSI HOLDINGS, INC.
By: /S/ ROBERT T. BROWN
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Name: Robert T. Brown
Title:
MINORITY STOCKHOLDERS
/S/ BRIAN P. STONE
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Brian P. Stone
/S/ THOMAS W. CRUCITTI
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Thomas W. Crucitti
/S/ TODD STOWELL
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Todd Stowell
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EXHIBIT 99.1
CONTACTS
At Lippert/Heilshorn & Assoc.:
Lillian Armstrong/Adam Aron
415-433-3777
At InSight:
Tom Croal
Executive Vice President/
Chief Financial Officer
714-476-0733
INSIGHT HEALTH SERVICES CORP. COMPLETES ACQUISITION OF
SIGNAL MEDICAL SERVICES, INC.
NEWPORT BEACH, CALIFORNIA, May 19, 1998 - InSight Health Services Corp.
("InSight") (NASDAQ: IHSC) today announced that the acquisition of Signal
Medical Services, Inc. ("Signal") by a wholly-owned subsidiary of InSight has
been consummated.
Signal currently serves 61 customers in 11 states primarily in the
Northeast and Southeast. The transaction adds 3 new states, Connecticut,
Massachusetts and Vermont, to InSight's geographic coverage as well as imaging
services in Florida, where InSight has an existing gamma knife facility. Signal
currently operates 19 mobile MRI units, 4 mobile lithotripters, 3 fixed site MRI
centers, 3 fixed site multi-modality imaging centers and 1 fixed site CT center.
For the year ended December 31, 1997, Signal's revenues were approximately $21
million.
SAFE HARBOR STATEMENT
Statements made in this news release that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions for the
future are forward-looking statements that involve risks and uncertainties. It
is important to note that the Company's actual results and experience with
respect to operation of Signal's business could differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. The risks and uncertainties that may affect the operations,
performance, developments and results of the Company's business include, but are
not limited to changing regulatory environment, limitations and delays in
reimbursement by third party payors, contract renewals, financial stability of
customers, aggressive
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INSIGHT HEALTH SERVICES
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competition, industry-wide market factors and other risk factors detailed in
the Company's SEC filings.
ABOUT INSIGHT HEALTH SERVICES
InSight, headquartered in Newport Beach, California, provides diagnostic
imaging and information, treatment and related management services. It serves
managed care, hospitals and other contractual customers in 25 US states,
including five major US markets: California, the Southwest, including a major
presence in Texas, the Midwest, the Northeast and the Southeast.
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