UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 24, 2000
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(Date of Report)
Claimsnet.com inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-14665 75-2649230
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
12801 N. Central Expressway, Suite 1515, Dallas, Texas 75243
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(Address of principal executive offices)
(972) 458-1701
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
Attached hereto as Exhibit 99.1 is a press release, dated March 23, 2000,
of the Registrant. This Current Report on Form 8-K contains forward-looking
statements that reflect management's goals, objectives and expectations. These
statements relate to, among other things, benefits to be realized from the
transaction described above and its pro forma financial impact. Achievement of
the expressed goals, objectives and expectations is subject to certain risks and
uncertainties that could cause actual results to differ materially from those
goals, objectives or expectations. Important factors that may cause such
differences include, but are not limited to, the Company's limited operating
history and need to generate revenues, the substantial competition in the
Company's market, the effect of substantial and changing government regulation,
possible systems interruptions, and a failure to attract and retain key
employees and risks related to intellectual property. Such forward-looking
statements speak only as of the date on which such statements were made, and the
Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which any such statement is
made to reflect the occurrence of unanticipated events. Additional discussions
of the risks faced by the Company are contained in Registration Statement on
Form S-1 under the Securities Act of 1933, as amended (Registration No.
333-72687) and its Annual Report on Form 10-K.
Item 7. Exhibits.
99.1 Text of Claimsnet.com inc. press release, dated March 23, 2000
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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.
Dated: March 23, 2000
CLAIMSNET.COM INC.
By: /s/ Bo W. Lycke
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Bo W. Lycke
Chairman of the Board of Directors,
President, and Chief Executive Officer
[LETTERHEAD OF CLAIMSNET.COM]
FOR IMMEDIATE RELEASE:
Claimsnet.com to Acquire VHx Company in
An Estimated $32 Million Transaction
This Pioneer Internet Infomediary Launches Claimsnet.com into the $600 Billion
Employer-based Health Benefit Market
DALLAS - March 23, 2000 Claimsnet.com Inc. (NASDAQ: CLAI; BSE: CLA), a leading
provider of Internet-based business-to-business solutions for the healthcare
industry, today announced that it is expanding its business into the
employer-sponsored health benefits market by signing a definitive agreement to
acquire the assets of Atlanta-based, VHx Company (VHx). VHx is a pioneer
Internet-based health care infomediary, providing all four core health network
constituents: self-insured employers, health plans, doctors and
employees/members (consumers) with highly customized administrative services,
health and disease management tools, and e-commerce opportunities. Its business
is primarily conducted through three cutting edge, customizable, proprietary
healthcare products; HealthExchange(TM), BenefitExchange(TM) and
CareExchange(TM). Each product is based on secure, scalable ASP technology that
meets all currently proposed federal guidelines for patient record
confidentiality. This acquisition will enable Claimsnet.com to expand quickly
into the online management of the $600 billion employer-based health benefit
market. The transaction is expected to be valued at approximately $32 million.
VHx's solution is the first of its kind to supply health plans, providers,
members and employers with highly customized services, health management tools
and content, and e-commerce offerings. Together, the three products provide a
comprehensive Internet-based solution aimed at reducing costs and enhancing
health plan members' health and overall experience. Through a proprietary suite
of Internet tools and e-commerce solutions, VHx facilitates the flow of vital
information and transactions between employers, doctors and health plans, and
most uniquely, ties the employee/member into the benefit and health management
process in a personalized, confidential online relationship. The result is a
reduction in health benefit administrative costs for employers and health plans,
and improved health outcomes and satisfaction for employees/members. The
management of Claimsnet.com knows of no other company that offers an integrated,
end-to-end Internet solution that meets these needs for all four vital
constituents of the healthcare network.
VHx Company moved from development stage to operations in the fourth quarter of
1999. John Deere Health (JDH), a subsidiary of industry giant, Deere & Co.
(NYSE:DE) participated in the pilot development of the products. JDH represents
approximately 1,800 employers in addition to Deere & Co. Primary revenue sources
for VHx currently include subscription fees (per member per month), transaction
fees for e-commerce, co-branding and sponsorship fees and permission marketing
fees (for delivering
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highly focused, permission-based marketing messages to users). VHx has signed
product and marketing-related Letters of Intent with Columbia University
(clinical data repository with web-based physician/patient access) and
Employease.com (web-based HR benefits management), and contracts with
Hewlett-Packard (eSpeak(TM) Internet service brokering platform), RX Remedy/Do
Health (Healthscout.com content and health risk assessments), VeriSign (digital
encryption), Caredata.com (NASD:CDCM) (managed care forecasting tools, Citeline
search engine, physician credentialing) and eGain (NASD:EGAN) (Web-based agent
customer support technology).
Under the terms of the agreement, Claimsnet.com will acquire substantially all
of the assets of VHx Company in a transaction estimated at $32 million. The
price includes 1.2 million Claimsnet.com common shares, assumption of $2.5
million in debt, and the remainder in contingent convertible preferred stock.
The ultimate amount of convertible preferred stock to be issued by Claimsnet.com
is contingent upon the acquired VHx Company business meeting two key performance
milestones measured in cumulative member months and total members under contract
(covered lives) on March 31, 2001. These measures are important indicators of
the ultimate value of the acquired assets.
VHx Company
VHx was formed from the merger of EXTRACORP of Cedar Rapids, Iowa and Virtual
Health of Atlanta, Georgia for the purpose of creating and marketing the first
integrated Internet solution for employers, health plans and consumers
(employees/members). Together these companies had experience in transaction
processing, health behavior modeling, clinical information systems, disease
state management and knowledge engineering, all of which met HIPAA (Health
Insurance Portability and Accountability Act) compliance guidelines. The target
solution, which is in operation today, was designed to respond to three key
dynamics: the rising cost of healthcare, the increasing complexity of managing
the health benefit, and the escalating demand for more choice and control by
health care consumers. The company's product suite consists of front-office web
products for managing relationships with employers, members, providers and
vendors, and back-office products for completing administrative functions. It
has three core products through which the objectives are met:
HealthExchange(TM) - a consumer/member web site enabling administrative
self-service, health management, and money saving commerce opportunities;
BenefitsExchange(TM) - an employer/health plan web site for managing billings,
administering plans, identifying, responding to and reporting on health and
disease management trends; and
CareExchange(TM): a physician web site that processes claims and eligibility
requests, enables collaboration with patients, plans and employers while
integrating with existing practice management and electronic medical records
systems.
All of these solutions are designed to conform with the electronic transactions
guidelines currently outlined by the HIPAA regulations.
The VHx web-based applications were developed with the latest, state of the art
technologies to provide an unparalleled level of function, usability and
security. Each technology has a path to support a minimum load of 10 million
users and is available 24 hours per day, seven days per week. The technology
adheres to open standards, allowing for the integration of new technologies and
an expanded mission in the future. Each architectural component was selected to
provide real value to the end customer.
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VHx additions to Claimsnet.com's management include:
Nan Smith, president and chief operating officer, with more than 20 years of
experience in the healthcare industry. Ms. Smith founded and served as president
and chief executive officer of Care 2000, Inc., a clinical information company
that was acquired by McKessonHBOC, Inc. (formerly HBO & Company) in 1994.
Following the sale, Ms. Smith served as part of HBO & Company's senior
management team for two years. She is a member of the Case Management Society of
America and is a director of Ecton, Inc., a medical equipment company. She has
an undergraduate degree in nursing and a graduate degree in education.
Eric T. Hillerbrand, Ph.D., chairman and executive vice president for product
development, co-founded Virtual Health in 1998. Dr. Hillerbrand has over 10
years of experience developing innovative healthcare delivery systems, disease
management programs and technology. In 1990, he joined Delphi Technology to
develop one of the first decision support systems for the rehabilitation
industry. In 1993, he headed Piedmont Care Management, a disease-state
management program for AIDS and gastrointestinal patients. In 1996, he started
KARA Rehabilitation, an outpatient rehabilitation company that focused on
disease-state carve outs for clinical care utilizing information and technology
to improve care delivery. Dr. Hillerbrand holds a Ph.D. in Psychology.
Jeff Muscarella, executive vice president for business development, co-founded
Virtual Health. Mr. Muscarella's career includes 10 years in healthcare
consulting with PriceWaterhouseCoopers' health care technology practice, First
Consulting Group, a leading US health care consulting firm, and Andersen
Consulting. He is co-author and editor of Faulkner and Gray's "Guide to
Developing and Managing Health Care Intranets". He has an undergraduate degree
in engineering and a graduate degree in business administration.
"We are very excited about having joined forces with VHx, which allows us to
continue to lead with exceptional technology and to enter the huge
employer-based health benefit management market quickly", said Bo W. Lycke,
chairman and chief executive officer of Claimsnet.com. "VHx has the experience,
management, customer-base and technology to allow us to maintain first mover
advantage as a solution for all four core constituents of the health care
network. In combination with our leading provider-focused transaction processing
technology, the VHx technology and services will allow us to respond today to a
real need-based demand by corporate America and the 1500+ health plans across
the country. Through this acquisition, we will be positioned to create value for
our customers and our investors and to demonstrate that quality healthcare can
be delivered at a reasonable cost."
Claimsnet.com inc. is a leading provider of Internet-based, business to business
solutions for the healthcare industry, including distinctive, advanced
technology for online healthcare transaction processing. Headquartered in
Dallas, TX, Claimsnet.com offers a proprietary system that is distinguished by
ease of use, customer care, security and measurable cost advantages.
Claimsnet.com trades on the NASDAQ Smallcap under the symbol "CLAI" and on the
Boston Stock Exchange under the symbol "CLA". More information on Claimsnet.com
can be found at www.claimsnet.com.
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-Safe Harbor and Contact Information Follows-
Safe Harbor Statement Under the Private Securities Litigation Act 1995- With the
exception of historical information, the matters discussed in this press release
are forward looking statements that involve a number of risks and uncertainties.
The actual future results of the Company could differ significantly from those
statements. Factors that could cause or contribute to such differences include,
but are not limited to the limited operating histories of Claimsnet.com and VHx
Company and assumptions regarding business expansion, operating strategies and
effectiveness, contract implementations, integration effectiveness financial
markets and maintenance of technology leadership. Further information on the
Company's risk factors is contained in the Company's periodic and annual reports
as filed with the Securities and Exchange Commission.
# # #
For more information, please contact:
Paul Miller Nancy Hetherington, Media Doris Banchik, Investor
Claimsnet.com Hetherington Marketing, Inc. Relations Banchik &
(972) 458-1701 (214) 929-3298 Associates
[email protected] [email protected] (805) 688-2340
[email protected]
