<PAGE>
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): OCTOBER 29, 1998
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CONCENTRA MANAGED CARE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-22751 04-3363415
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
312 Union Wharf
Boston, Massachusetts 02109
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (617) 367-2163
Not Applicable
(former address if changed since last report)
<PAGE>
Item 5. Other Events
See the press release attached hereto as Exhibit 99.1 dated October 29, 1998
announcing earnings for the quarter ended September 30,1998 for Concentra
Managed Care, Inc. and the Company's formation of a special committee to
evaluate strategic alternatives in response to several unsolicited
expressions of interest regarding the possible acquisition of some or all of
the Company's common stock.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release of the Registrant dated October 29, 1998.
<PAGE>
SIGNATURES
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 thereunto duly authorized.
CONCENTRA MANAGED CARE, INC.
(Registrant)
By: /s/ Richard A. Parr II
-------------------------------------------
Name: Richard A. Parr II
Title: Executive Vice President, General Counsel &
Secretary
Date: October 29, 1998
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INDEX TO EXHIBITS
EXHIBIT
NUMBER PAGE
99.1 Press Release of Registrant dated October 29, 1998
<PAGE>
Exhibit 99.1
Contact: Joseph F. Pesce, CFO
Concentra Managed Care, Inc.
(617) 367-2163, Ext. 5101
CONCENTRA MANAGED CARE REPORTS THIRD QUARTER RESULTS
---------------
BOARD OF DIRECTORS FORMS SPECIAL COMMITTEE
TO EVALUATE STRATEGIC ALTERNATIVES
BOSTON, Mass. (October 29, 1998) - Concentra Managed Care, Inc.
(Nasdaq/NM: CCMC) today announced higher revenues and improved earnings for the
third quarter and first nine months of 1998, compared with year-earlier periods.
Revenues for the third quarter ended September 30, 1998, increased 21%
to $158,902,000 from $131,212,000 in the same period last year. Operating income
for the quarter totaled $25,029,000 compared with $22,202,000 last year. Net
income for the third quarter was $12,445,000 or $0.26 per diluted share versus
pro forma net income of $11,492,000 or $0.25 per diluted share in the
year-earlier period.
For the nine months of 1998, revenues increased 29% to $463,330,000
from $359,082,000 for the year-to-date period in 1997. Operating income for the
first nine months increased 38% to $74,621,000 compared with $53,897,000 last
year. Net income for the year-to-date period grew 32% to $37,053,000 or $0.78
per diluted share versus pro forma net income of $28,012,000 or $0.61 per
diluted share in the same period last year.
The results described above for the first nine months of 1998 do not
include a non-recurring charge of $12,600,000 ($9,600,000 after-tax or $0.20 per
diluted share) taken in the first quarter of 1998 for fees, expenses and
restructuring charges primarily associated with the February 1998 acquisition of
Preferred Payment Systems. Similarly, the results for the third quarter and
first nine months of 1997 do not include a non-recurring charge of $38,625,000
($29,040,000 after-tax) related to the August 1997 merger of Concentra's
predecessor companies.
"While Concentra's financial results for the third quarter demonstrate
an improvement over the comparable period last year, we are disappointed that
the Company fell short of management's expectations for revenues and
profitability in the third quarter," said Daniel J. Thomas, President and
Interim Chief Executive Officer
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<PAGE>
CCMC Announces Third Quarter Results
Page 2
October 29, 1998
of the Company. "Since announcing in early September that revenues and earnings
would be lower than expected for the third and fourth quarters of 1998, the rate
of growth in our managed care division, and particularly our field case
management services, has slowed more than anticipated. Start-up costs associated
with bringing certain customers online have been greater than expected, which
further affected our net income for the quarter.
"We are in the process of evaluating opportunities to reorganize our
managed care division to improve efficiency, and we intend to take the necessary
actions to strengthen the Company's long-term performance and improve
shareholder value," Thomas continued. "In connection with this review, we expect
to record a non-recurring charge of approximately $15 to $25 million in the
fourth quarter. We have also revised our earnings forecast for the final quarter
of 1998 and now expect to report between $0.15 and $0.18 per diluted share
before the non-recurring charge. Furthermore, the Company is currently
performing a thorough analysis of all its business lines, as part of its 1999
budget process, to reflect current market conditions and opportunities and
determine the most efficient allocation of its resources that will maximize the
long-term profitability of its operations. Following the completion of these
activities in late November, Concentra plans to issue revised guidance for 1999.
"In spite of the issues we have encountered recently, I am very excited
about Concentra's future prospects," he added. "We have many opportunities to
enhance the efficiency of our operations through greater investments in
technology. These technological improvements, primarily affecting our first
notice of loss reporting capabilities, along with our telephonic and field case
management information systems, will help us seamlessly integrate the
information systems of our various lines of business, improve the level of
service and outcomes for our customers, and generate higher revenues and profits
in the future."
Concentra also announced that it has received several unsolicited
expressions of interest regarding the possible acquisition of some or all of the
Company's common stock. Accordingly, the Company has formed a special committee
of the Board of Directors for the purpose of evaluating various strategic
alternatives available to the Company, including remaining independent and
pursuing its existing or a modified strategy. The special committee has engaged
BT Alex. Brown to assist in this endeavor. The Company's comprehensive review of
its business strategies and growth opportunities, as outlined above, will assist
the special committee in its evaluation of strategic alternatives.
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CCMC Announces Third Quarter Results
Page 3
October 29, 1998
Concentra Managed Care is the leading provider and comprehensive
outsource solution for cost containment and fully integrated care management
in the occupational, auto, and group healthcare markets. Concentra offers
prospective and retrospective services to employers and insurers of all
sizes, providing pre-employment testing, loss prevention services, first
report of injury, injury care, specialist networks and specialized cost
containment to the disability and automobile injury markets. The Company has
117 field case management offices, with approximately 1,400 field case
managers who provide medical management and return to work services in 49
states, the District of Columbia, and Canada. The Company also has 86 service
locations that provide specialized cost containment services including
utilization management, telephonic case management, and retrospective bill
review. Under the name Concentra Medical Centers, the Company operates the
nation's largest network of occupational healthcare centers, currently
managing the practices of 276 physicians located in 151 centers in 42 markets
in 23 states.
This press release contains certain forward-looking statements, which
the Company is making in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risks and uncertainties, and that the
company's actual results may differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, the potential adverse impact of
governmental regulation on the company's operations, and interruption in its
data processing capabilities, operational financing and strategic risks related
to the company's growth strategy, possible fluctuations in quarterly and annual
operations, and possible legal liability for adverse medical consequences,
competitive pressures, adverse changes in market conditions for the company's
services, and dependence on key management personnel. Additional factors include
those described in the company's filings with the Securities and Exchange
Commission.
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<PAGE>
CCMC Announces Third Quarter Results
Page 4
October 29, 1998
CONCENTRA MANAGED CARE, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES: Restated Restated
Field case management $ 42,067,000 $ 35,150,000 $ 128,265,000 $ 102,171,000
Specialized cost containment 45,687,000 40,094,000 137,190,000 101,895,000
------------- ------------- ------------- -------------
Managed care services 87,754,000 75,244,000 265,455,000 204,066,000
Health services 71,148,000 55,968,000 197,875,000 155,016,000
------------- ------------- ------------- -------------
Total revenues 158,902,000 131,212,000 463,330,000 359,082,000
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COST OF SERVICES:
Managed care services 67,458,000 57,114,000 199,988,000 157,660,000
Health services 52,469,000 40,009,000 148,707,000 114,225,000
------------- ------------- ------------- -------------
Total cost of services 119,927,000 97,123,000 348,695,000 271,885,000
------------- ------------- ------------- -------------
Total gross profit 38,975,000 34,089,000 114,635,000 87,197,000
General and administrative
expenses 11,883,000 10,311,000 33,876,000 29,324,000
Amortization of intangibles 2,063,000 1,576,000 6,138,000 3,976,000
Non-recurring charge -- 38,625,000 12,600,000 38,625,000
------------- ------------- ------------- -------------
Operating income (loss) 25,029,000 (16,423,000) 62,021,000 15,272,000
Interest expense 4,653,000 3,702,000 13,123,000 8,894,000
Interest income (1,277,000) (582,000) (2,939,000) (2,214,000)
Other, net 208,000 226,000 581,000 1,035,000
------------- ------------- ------------- -------------
Income (loss) before
income taxes 21,445,000 (19,769,000) 51,256,000 7,557,000
Provision for income taxes 9,000,000 (3,342,000) 23,803,000 6,159,000
------------- ------------- ------------- -------------
Net income (loss) $ 12,445,000 $ (16,427,000) $ 27,453,000 $ 1,398,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Pro forma net loss (1) $ (17,548,000) $ (1,028,000)
------------- -------------
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Basic pro forma and actual
earnings (loss) per share (1) $ 0.26 $ (0.41) $ 0.59 $ (0.02)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average common shares
outstanding 47,027,000 42,876,000 46,237,000 42,584,000
------------- ------------- ------------- -------------
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</TABLE>
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<PAGE>
CCMC Announces Third Quarter Results
Page 5
October 29, 1998
<TABLE>
<S> <C> <C> <C> <C>
Diluted pro forma and actual
earnings (loss) per share (1) $ 0.26 $ (0.41) $ 0.58 $ (0.02)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average common shares
and equivalents outstanding 47,896,000 42,876,000 47,828,000 42,584,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
(1) Net income and earnings per share for the three and nine months ended
September 30, 1997, have been calculated as if Preferred Payment Systems, Inc.
("PPS") had been subject to federal and state income taxes for the entire
period, based upon an effective tax rate indicative of the statutory rates in
effect. Prior to its acquisition by the company during the first quarter of
1998, PPS elected to be taxed as an S Corporation and, accordingly, was not
subject to federal and state income taxes in certain jurisdictions.
CONCENTRA MANAGED CARE, INC.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
Restated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 106,066,000 $ 12,576,000
Marketable securities 1,966,000 --
Accounts receivable, net 127,579,000 106,963,000
Prepaid expenses, tax assets and other current assets 31,128,000 26,212,000
------------- -------------
Total current assets 266,739,000 145,751,000
PROPERTY AND EQUIPMENT, AT COST 131,938,000 104,054,000
Less: Accumulated depreciation and amortization (48,742,000) (38,351,000)
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NET PROPERTY AND EQUIPMENT 83,196,000 65,703,000
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 279,944,000 262,592,000
MARKETABLE SECURITIES 12,530,000 --
OTHER ASSETS 16,784,000 8,925,000
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$ 659,193,000 $ 482,971,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facilities $ -- $ 49,000,000
Current portion of long-term debt 129,000 7,497,000
Accounts payable, accrued income tax and expenses 72,045,000 52,136,000
------------- -------------
Total current liabilities 72,174,000 108,633,000
</TABLE>
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<PAGE>
CCMC Announces Third Quarter Results
Page 6
October 29, 1998
<TABLE>
<S> <C> <C>
LONG-TERM DEBT, NET OF CURRENT PORTION 327,769,000 150,103,000
DEFERRED INCOME TAXES AND OTHER LIABILITIES 16,069,000 17,794,000
STOCKHOLDERS' EQUITY:
Common stock 471,000 436,000
Paid-in capital 269,058,000 257,022,000
Retained deficit (26,348,000) (51,017,000)
------------- -------------
Total stockholders' equity 243,181,000 206,441,000
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$ 659,193,000 $ 482,971,000
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</TABLE>
-END-
