<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): APRIL 30, 1998
-------------------
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 April 30, 1998
announcing earnings for the quarter ended March 31,1998 for Concentra Managed
Care, Inc.
See the Restatement of the Company's Statements of Operation (Unaudited),
excluding extraordinary items to include Concentra Managed Care, Inc.'s
February 24, 1998 acquisition of Preferred Payment Systems, Inc. for the
three years ended December 31, 1995, 1996 and 1997 attached hereto.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release of the Registrant dated April 30, 1998.
99.2 Restatement of the Company's Statements of Operation (Unaudited),
excluding extraordinary items to include Concentra Managed Care, Inc.'s
February 24, 1998 acquisition of Preferred Payment Systems, Inc. for
the three years ended December 31, 1995, 1996 and 1997.
<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 and General Counsel
Date: April 30, 1998
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER PAGE
- ------- ----
99.1 Press Release of Registrant dated April 30, 1998.
99.2 Restatement of the Company's Statements of Operation (Unaudited),
excluding extraordinary items to include Concentra Managed Care,
Inc.'s February 24, 1998 acquisition of Preferred Payment Systems,
Inc. for the three years ended December 31, 1995, 1996 and 1997.
<PAGE>
LETTERHEAD
EX. 99.1
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
Contact: Joseph F. Pesce, CFO
Concentra Managed Care, Inc.
(617) 367-2163, Ext. 5101
CONCENTRA MANAGED CARE, INC. announces
first-quarter 1998 financial results
Revenues up 36%; operating income increases 59%; and net income rises 48%
over the first quarter last year before non-recurring charge
BOSTON, Mass. (April 30, 1998) - Concentra Managed Care, Inc. (Nasdaq/NM:
CCMC) today announced that revenues for the first quarter ended March 31,
1998, increased 36% to $145,544,000, compared with revenues of $107,142,000
for the three months ended March 31, 1997. Operating income for the first
quarter of 1998 increased 59% to $21,772,000, from $13,712,000 for the same
period last year.
Net income for the three months ended March 31, 1998, rose 48% to $10,447,000
or $0.22 per diluted share, compared with pro forma net income of $7,080,000,
or $0.15 per diluted share, for the same period last year.
These results 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 24, 1998 acquisition of Preferred Payment Systems.
"We have had a very strong beginning to the year in two critical areas -
product line expansion and sales," said Donald J. Larson, Chairman and Chief
Executive Officer. "Our February acquisition of Preferred Payment Systems has
continued to expand our opportunities to cross-sell services to our existing
customer base and further develop our product line in the group healthcare
marketplace. The unique cross-selling opportunities represented by our
expanded product lines will further enhance our ability to grow our business
and continue our financial success. Our unmatched capability to provide fully
integrated services across the entire episode of care has earned us the highest
regard and confidence among our customers and shareholders, which is reflected
in our strong first quarter financial performance."
(more)
<PAGE>
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
130 field case management offices, with approximately 1,350 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 83 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 261 physicians located in 145 centers in 39 markets
in 20 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 interruption in its data
processing capabilities, 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 Securities and
Exchange Commission filings.
<PAGE>
Concentra Managed Care, Inc.
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
REVENUES:
Field case management............................... $ 32,389,000 $ 41,840,000
Specialized cost containment........................ 28,370,000 44,379,000
------------ ------------
Managed care services.............................. 60,759,000 86,219,000
Health services..................................... 46,383,000 59,325,000
------------ ------------
Total revenues................................... 107,142,000 145,544,000
COST OF SERVICES:
Managed care services............................... 47,357,000 64,758,000
Health services..................................... 35,805,000 46,288,000
------------ ------------
Total cost of services........................... 83,162,000 111,046,000
------------ ------------
Total gross profit............................. 23,980,000 34,498,000
General and administrative expenses.................. 9,033,000 10,699,000
Amortization of intangibles.......................... 1,235,000 2,027,000
Non-recurring charge................................. - 12,600,000
------------ ------------
Operating income............................... 13,712,000 9,172,000
Interest expense..................................... 2,427,000 3,882,000
Interest income...................................... (851,000) (233,000)
Other, net........................................... 327,000 109,000
------------ ------------
Income before income taxes........................ 11,809,000 5,414,000
Provision for income taxes........................... 4,106,000 4,567,000
------------ ------------
Net income........................................... $ 7,703,000 $ 847,000
------------ ------------
------------ ------------
Pro forma net income (1)............................. $ 7,080,000
------------
------------
Basic pro forma and actual earnings per share (1).... $ 0.17 $ 0.02
------------ ------------
------------ ------------
Weighted average common shares outstanding........... 42,383,000 44,939,000
------------ ------------
------------ ------------
Diluted pro forma and actual earnings per share (1).. $ 0.15 $ 0.02
------------ ------------
------------ ------------
Weighted average common shares and equivalents
outstanding........................................ 46,309,000 47,769,000
------------ ------------
------------ ------------
</TABLE>
(1) Net income and earnings per share for the three months ended March 31,
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 Concentra during the first quarter 1998, PPS
elected to be taxed as an S corporation, and accordingly, was not subject to
federal and state income taxes in certain jurisdictions.
<PAGE>
Concentra Managed Care, Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................................... $ 12,576,000 $ 95,660,000
Accounts receivable, net ...................................... 106,963,000 110,994,000
Prepaid expenses, tax assets and other current assets ......... 26,212,000 27,314,000
------------ ------------
Total current assets ...................................... 145,751,000 233,968,000
Property and equipment, at cost ................................. 104,054,000 115,315,000
Less: Accumulated depreciation and amortization ............... (38,351,000) (42,142,000)
------------ ------------
Net property and equipment 65,703,000 73,173,000
Goodwill and other intangible assets, net ....................... 262,592,000 262,473,000
Other assets .................................................... 8,925,000 12,753,000
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$482,971,000 $582,367,000
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------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facilities .................................. $ 49,000,000 $ 0
Current portion of long-term debt ............................ 7,497,000 459,000
Accounts payable, accrued income tax and expenses ............ 52,136,000 61,473,000
------------ ------------
Total current liabilities ................................ 108,633,000 61,932,000
Long-term debt, net of current portion ......................... 150,103,000 297,922,000
Deferred income taxes and other liabilities .................... 17,794,000 17,445,000
STOCKHOLDERS' EQUITY:
Common stock ................................................. 436,000 465,000
Paid-in capital .............................................. 257,022,000 256,258,000
Retained deficit ............................................. (51,017,000) (51,655,000)
------------ ------------
Total stockholders' equity ............................... 206,441,000 205,068,000
------------ ------------
$482,971,000 $582,367,000
------------ ------------
------------ ------------
</TABLE>
<PAGE>
Restatement of the Company's Statements of Operation (Unaudited),
excluding extraordinary items to include Concentra Managed Care,
Inc.'s February 24, 1998 acquisition of Preferred Payment Systems,
Inc. for the three years ended December 31, 1995, 1996 and 1997
in thousands, except per share data
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, Quarter Quarter Quarter Quarter December 31,
1995 1996 Q1-97 Q2-97 Q3-97 Q4-97 1997
--------- -------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Field Case Management $106,462 $118,864 $32,389 $34,632 $35,150 $36,552 $138,723
Cost Containment 61,907 83,784 28,370 33,431 40,094 41,024 142,919
--------- -------- ------- ------- ------- ------- --------
Subtotal Managed Care 168,369 202,648 60,759 68,063 75,244 77,576 281,642
Health Services 136,986 170,035 46,383 52,665 55,968 57,221 212,237
--------- -------- ------- ------- ------- ------- --------
Total Revenues 305,355 372,683 107,142 120,728 131,212 134,797 493,879
Cost of Sales-Managed Care 135,636 159,174 47,357 53,189 57,114 59,603 217,263
Cost of sales-HS 107,284 130,754 35,805 38,411 40,009 44,762 158,987
--------- -------- ------- ------- ------- ------- --------
Total Cost of Sales 242,920 289,928 83,162 91,600 97,123 104,365 376,250
Gross Profit-Managed Care 32,733 43,474 13,402 14,874 18,130 17,973 64,379
Gross Profit-HS 29,702 39,281 10,578 14,254 15,959 12,459 53,250
--------- -------- ------- ------- ------- ------- --------
Total Gross Profit 62,435 82,755 23,980 29,128 34,089 30,432 117,629
General & Admin. Exp. 30,220 33,155 9,033 9,980 10,311 10,684 40,008
Amortization Expense 1,871 3,442 1,235 1,165 1,576 1,969 5,945
Non-recurring Charge 898 964 38,625 38,625
--------- -------- ------- ------- ------- ------- --------
Operating Income 29,446 45,194 13,712 17,983 (16,423) 17,779 33,051
Interest Expense 5,499 3,741 2,427 2,765 3,702 3,773 12,667
Interest Income (860) (859) (851) (781) (582) (83) (2,297)
Other Expense 561 836 327 482 226 584 1,619
--------- -------- ------- ------- ------- ------- --------
Pretax Income 24,246 41,476 11,809 15,517 (19,769) 13,505 21,062
Income Tax (1) 10,401 16,167 4,729 6,077 (2,221) 5,288 13,873
--------- -------- ------- ------- ------- ------- --------
Net Income (1) $ 13,845 $ 25,309 $ 7,080 $ 9,440 ($17,548) $ 8,217 $ 7,189
--------- -------- ------- ------- ------- ------- --------
--------- -------- ------- ------- ------- ------- --------
Net Income 13,845 25,309 7,080 9,440 (17,548) 8,217 7,189
Interest on CSE, net of tax 0 290 77 77 0 77 308
--------- -------- ------- ------- ------- ------- --------
Diluted Net Income 13,845 25,599 7,157 9,517 (17,548) 8,294 7,497
Earnings Per Share - Basic 0.41 0.63 0.17 0.22 (0.41) 0.19 0.17
Earnings Per Share - Fully Diluted 0.39 0.59 0.15 0.21 (0.41) 0.17 0.16
Basic Weighted Ave. Shares O/S 33,810 40,411 42,383 42,494 42,876 43,346 42,774
Common Share Equivalent 2,129 2,933 3,926 3,843 1,448 4,447 4,121
--------- -------- ------- ------- ------- ------- --------
Fully Diluted 35,939 43,344 46,309 46,337 44,324 47,793 46,895
As a Percentage of Revenue:
Gross Profit-MC 19.44% 21.45% 22.06% 21.85% 24.09% 23.17% 22.86%
Gross Profit-HS 21.68% 23.10% 22.81% 27.07% 28.51% 21.77% 25.09%
--------- -------- ------- ------- ------- ------- --------
Gross Profit-TOTAL 20.45% 22.21% 22.38% 24.13% 25.98% 22.58% 23.82%
General & Administrative 9.90% 8.90% 8.43% 8.27% 7.86% 7.93% 8.10%
Operating Income 9.64% 12.13% 12.80% 14.90% -12.52% 13.19% 6.69%
Tax Rate 42.90% 38.98% 40.05% 39.16% 11.23% 39.16% 65.87%
Net Income 4.53% 6.79% 6.61% 7.82% -13.37% 6.10% 1.46%
</TABLE>
NOTE: Above results exclude 1995 extraordinary item
(1) Net income and earnings per share for all periods presented have been
calculated as if Preferred Payment Systems, Inc. ("PPS") had been subject to
federal and state income taxes for all periods presented, based upon an
effective tax rate indicative of the statutory rates in effect. Prior to its
acquisition during the first quarter of 1998 by the Company, PPS elected to
be taxed as an S corporation, and accordingly, was not subject to federal and
state income taxes in certain jurisdictions.
