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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 4, 2000
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HealthGrades.com, Inc.
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(Exact Name of Registrant Specified in Charter)
Delaware 0-22019 62-1623449
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 716-0041
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Item 5. Other Events
On February 7, 2000, HealthGrades.com, Inc. ("the Company") distributed a letter
to its stockholders, addressing a proposed financing by Essex Woodlands Health
Ventures Fund IV, L.P., Punk Ziegel & Company Investors LLC ("Punk Ziegel"), an
affiliate of Punk Ziegel, and some executive officers of HealthGrades.com, Inc.
Additionally, the Company issued a press release regarding the proposed
financing on February 7, 2000. A copy of the letter and the press release are
attached to this filing as Exhibit 99.1 and 99.2 respectively, and are
incorporated herein by reference.
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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.
HEALTHGRADES.COM, INC.
(Registrant)
By: /s/ D. Paul Davis
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D. Paul Davis
Executive Vice President of
Finance/Chief Financial Officer
Dated: February 8, 2000
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EXHIBIT 99.1
February 4, 2000
Dear Stockholder:
We are writing to advise you that we expect to complete a financing under which
Essex Woodlands Health Ventures Fund IV, L.P. ("Essex"), a venture capital fund,
will invest $5 million in HealthGrades.com. In connection with the financing,
Essex will receive 2.5 million shares of our common stock and five year warrants
to purchase 875,000 shares of our common stock at a purchase price of $4.00 per
share. In addition, some of our executive officers will invest an aggregate of
$3.2 million and will receive an aggregate of 1.6 million shares of common stock
and five year warrants to purchase 560,000 shares of common stock at $4.00 per
share. We currently anticipate that the executive officers will pay for their
investment through cancellation of $3.2 million in notes that were issued to the
executive officers in connection with a loan they made to us in December 1999.
The loan was made to facilitate our purchase of a portion of the minority
interest in our Internet health care information subsidiary, thereby enabling us
to increase our ownership of that subsidiary to 90%. Also, Punk, Ziegel &
Company Investors LLC and affiliate will invest $270,000 and will receive
135,000 shares of common stock and five year warrants to purchase 47,250 shares
of common stock at $4.00 per share. Consummation of the financing is subject to
certain conditions, including revision of payment terms under our bank credit
facility.
Because the shares to be issued in the financing exceed 20% of the voting power
of shares of our common stock outstanding prior to the transaction, and because
management is participating in the transaction, we would normally be required
under Nasdaq rules to obtain stockholder approval before completing the
transaction. However, because the delay involved in securing stockholder
approval would seriously jeopardize our financial viability, we have asked
Nasdaq to approve our reliance on an exception to the stockholder approval
requirements. Our Audit Committee has approved our reliance on the exception,
and Nasdaq is permitting us to proceed in reliance on the exception.
The securities to be issued in the transaction will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements. In addition, please note that this letter contains forward-looking
statements addressing the anticipated completion of the proposed financing and
the nature of the investments by Essex, some of our executive officers and Punk,
Ziegel & Company Investors LLC and affiliate. Actual results may differ
materially from those described in such forward looking statements due to
several factors, including the failure of HealthGrades.com to satisfy the
closing conditions applicable to it or the occurrence of events that delay or
prevent the closing of the financing.
Sincerely,
/s/ Kerry R. Hicks
Kerry R. Hicks, CEO
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EXHIBIT 99.2
MONDAY FEBRUARY 7, 8:37 AM EASTERN TIME
COMPANY PRESS RELEASE
HEALTHGRADES.COM ANNOUNCES PROPOSED FINANCING
LAKEWOOD, Colo.--(BW HealthWire)--Feb. 7, 2000--HealthGrades.com, Inc.
(Nasdaq:HGRD - news) today announced that it has signed an agreement for a
private equity financing by Essex Woodlands Health Ventures Fund IV, L.P.
("Essex"). Essex has advised HealthGrades.com that the principals of its General
Partner manage capital in excess of $225 million. Under the terms of the
agreement, the Company will raise $8.47 million of equity capital. Essex will
invest $5 million in HealthGrades.com and will receive 2.5 million shares of
HealthGrades.com common stock and five-year warrants to purchase 875,000 shares
of common stock at a purchase price of $4.00 per share. In addition, some of
HealthGrades.com's executive officers will receive an aggregate of 1.6 million
shares of common stock and five-year warrants to purchase 560,000 shares of
common stock at $4.00 per share in exchange for cancellation of $3.2 million in
promissory notes issued to them by the Company. In December 1999, the senior
executives of HealthGrades.com loaned the Company $3.55 million to facilitate
the purchase by HealthGrades.com of a portion of the minority interest in its
Internet healthcare information subsidiary, thereby enabling HealthGrades.com to
increase its ownership of that subsidiary to 90%. The executives are now willing
to convert $3.2 of that loan into equity on substantially the same terms as
Essex. Also, Punk, Ziegel & Company Investors LLC and an affiliate will invest
$270,000 and will receive 135,000 shares of common stock and five-year warrants
to purchase 47,250 shares of common stock at $4.00 per share. Consummation of
the financing is subject to certain conditions, including revision of payment
terms under our bank credit facility.
In connection with the proposed financing, Nasdaq has approved the Company's
request for an exception to Nasdaq's shareholder approval requirements.
The securities to be issued in the transaction will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements.
This press release contains forward-looking statements addressing the
anticipated completion of the proposed financing and the nature of the
investments by Essex, some of HealthGrades.com's executive officers and Punk,
Ziegel & Company Investors LLC and an affiliate. Actual results may differ
materially from those described in such forward-looking statements due to
several factors, including the failure of HealthGrades.com to satisfy the
closing conditions applicable to it or the occurrence of events that delay or
prevent the closing of the financing.
Contact:
HealthGrades.com Inc.
Patrick Jaeckle, 303/716-0041
