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
Date of Report: June 2, 1997
(Date of Earliest Event Reported)
HUMANA INC.
(Exact name of Registrant as specified in its Charter)
Delaware 1-5975 61-0647538
(State of (Commission (I.R.S. Employer Tax
Incorporation) File Number) Identification No.)
500 West Main Street
Louisville, KY 40202
(Address of principal executive offices)
(502) 580-1000
(Registrant's telephone number, including area code)
Item 5. Other Events
Item 7. Financial Statements & Exhibits
<PAGE>
Item 5. Other Events
On June 3, 1997, Humana Inc., a Delaware corporation, (the "Company" or
"Registrant") announced that it had signed a definitive agreement to
acquire Physician Corporation of America, a Delaware corporation, ("PCA").
A copy of the Press Release issued by the Company on June 3, 1997, is
attached hereto as Exhibit 99(a) and is incorporated herein by reference.
Upon the terms and subject to the conditions set forth in the Agreement and
Plan of Merger, dated as of June 2, 1997, (the "Merger Agreement") among
the Company, its wholly owned subsidiary, HUMNOV, Inc., a Delaware
corporation ("Sub"), and PCA, the Company has agreed to purchase all
of the outstanding shares of common stock, par value $.01, of PCA
(the "Shares"), at a purchase price of $7.00 per Share,
net to the seller in cash, without interest.
The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction of the conditions set forth in the Merger
Agreement and in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware, Sub would be merged with and into
PCA (the "Merger").
Other than as described in the Merger Agreement, there are no material
relationships between the Company, Sub and PCA.
Concurrently with the execution of the Merger Agreement, PCA entered into
reinsurance and related agreements (the "Centre Re Agreements") with Centre
Reinsurance Company of New York ("Centre Re") relating to certain
outstanding obligations of PCA Property and Casualty Insurance Company
("P&C"), a wholly owned subsidiary of PCA. The reinsurance obligations of
Centre Re under the Centre Re Agreements will become effective as of the
consummation of the Merger unless either the Registrant or Centre Re elects
to cancel the reinsurance. In the event of such cancellation, the Registrant
has agreed with both PCA and the Florida Department of Insurance to make a
capital contribution to P&C of an amount equal to the statutory deficit of
P&C as of the closing (which statutory deficit was approximately $160 million as
of March 31, 1997) and to make additional contributions, from time to time,
in order to remove any statutory deficits thereafter incurred by P&C.
In addition, on June 5, 1997, the Company announced that it had signed a
definitive agreement to acquire ChoiceCare Corporation, an Ohio
corporation, ("CC").
A copy of the Press Release issued by the Company on June 5, 1997, is
attached hereto as Exhibit 99(b) and is incorporated herein by reference.
Upon the terms and subject to the conditions set forth in the Agreement and
Plan of Merger, dated as of June 3, 1997, (the "OH Agreement") among the
Company, its wholly owned subsidiary, HOCC, Inc., an Ohio corporation
("OH-Sub"), CC and The ChoiceCare Foundation, an Ohio nonprofit corporation,
(the "Foundation"), the Company has agreed to purchase all of the outstanding
shares of common stock, no par value, of CC (the "CC Shares"), at a purchase
price of $16.38 per CC Share, net to the seller in cash, without interest
(the "CC Purchase Price").
The Foundation owns approximately 91% of the CC Shares and has agreed to
vote in favor of the OH Agreement, the OH Merger, as defined below, and all
of the transactions described in the OH Agreement.
The OH Agreement provides, among other things, that as soon as practicable
after the satisfaction of the conditions set forth in the OH Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Ohio, OH-Sub would be merged with and into CC (the " OH Merger").
Other than as described in the OH Agreement, there are no material
relationships between the Company, OH-Sub and CC.
The aggregate purchase price of PCA of approximately $400 million, which
includes the assumption of approximately $130 million of debt, and the CC
Purchase Price of approximately $250 million, will be funded by the
Company through available cash and bank borrowings. The Company has
received a commitment from Chase Manhattan Bank to provide a new $1.5 billion
revolving credit facility, a portion of which will be used to finance the
transactions.
Item 7. Financial Statements and Exhibits.
Exhibit 99(a) Company's Press Release dated June 3, 1997.
Exhibit 99(b) Company's Press Release dated June 5, 1997.
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 hereunto duly authorized.
HUMANA INC.
/s/ Arthur P. Hipwell
By: Arthur P. Hipwell
Senior Vice President
Dated: June 16, 1997
<PAGE>
Exhibit Index
Exhibit 99(a) Company's Press Release dated June 3, 1997.
Exhibit 99(b) Company's Press Release dated June 5 1997.
Exhibit 99(a)
For More Information:
Laurie Scarborough
Investor Relations
502/580-1037
E-MAIL: [email protected]
Greg Donaldson
Public Affairs
502/580-3683
E-MAIL: [email protected]
TARGETING GROWTH, HUMANA ANNOUNCES ACQUISITION OF
PHYSICIAN CORPORATION OF AMERICA
Combination Establishes Humana As Health Services Powerhouse
Gains Immediate Leadership Position In Important Texas And
Florida Markets
Company Foresees Significant Synergies, Cost Savings From
Combined Operations
LOUISVILLE, KY (June 3, 1997) --- Targeting growth and
critical mass in its core Florida and Texas markets, Humana Inc.
(NYSE: HUM) announced today that the company signed a definitive
agreement to acquire Physician Corporation of America (Nasdaq:
PCAM) for $7 per share plus the assumption of $130 million in
debt, for a total consideration of approximately $400 million in
cash. Physician Corporation of America (PCA), with 1.1 million
members, provides comprehensive health care services through its
health maintenance organizations in Florida, Texas and Puerto
Rico.
As a result of the transaction, Humana will have approximately
six million members and over $8 billion in annual premiums.
"This acquisition represents a compelling strategic opportunity
that strengthens our competitive position in Florida and Texas,
with all of the critical mass and purchasing power that is
absolutely critical for long-term leadership in our industry,"
said David A. Jones, Chairman and Chief Executive Officer of
Humana.
Gregory H. Wolf, Humana's President and Chief Operating
Officer, added, "Having implemented an aggressive program of
operating improvements since the middle of last year -- all
aimed at making our service second-to-none in the industry -- we
are now poised to seize opportunities in a consolidating
marketplace, broaden our product line and pursue accelerated
growth. We are confident that we can obtain immediate synergies
and cost savings through the acquisition of PCA, and that it
will be a meaningful contributor to our earnings growth in the
future."
By joining forces with PCA, Humana will broaden and deepen its
competitive position in both Florida and Texas. Humana
currently has 1.1 million members in Florida, and PCA will bring
324,000 new members including a strong base in Northern Florida.
In Texas, PCA has 323,000 members which, added to Humana's
337,000 members, will give the combined companies about 660,000
members, making it one of the largest managed care organizations
in Texas. PCA brings established positions in such key Texas
cities as Austin and San Antonio. In addition, PCA has 491,000
members in Puerto Rico.
Humana's current products include commercial, Medicare risk,
and CHAMPUS (Civilian Health and Medical Program of the
Uniformed Services) and, with the acquisition of PCA, it will
gain almost 600,000 Medicaid members. The company believes that
it will now be well positioned in the Medicaid market as federal
and state governments continue to turn to the private sector to
improve the quality and efficiency of government-funded medical
programs.
Commenting on the Florida transaction, Douglas Cook, Director
of the Florida Agency for Health Care Administration, said: "I
look forward to partnering with one of the largest HMOs in
Florida in the delivery of health care services to Medicaid
recipients. Humana has been our best partner in the Community
Health Purchasing Alliances in the delivery of quality health
care to small business. Humana has a commitment to and history
of high-quality health care and customer service."
The acquisition comes during a period in which Humana has
undertaken a major program to reinvent its customer service and
underscore its commitment to quality and patient care. Among
other improvements, Humana has introduced HumanaFirst, a 24-hour
health information hotline, streamlined physician referrals, and
expanded member access to customer service representatives in
the evenings and weekends. Additionally, just last week, Humana
introduced a new family of commercial health plans --
"HumanaFreedom" plans -- offering more flexibility to HMO
members who wish to access medical services outside of the
existing provider network.
"From my perspective, this acquisition offers an ideal
combination of long-term growth and synergistic benefits. It is
an excellent fit," said Wolf, who added: "Our vision is to
improve the health of every one of our members. It is very
exciting for us to have an opportunity to bring our commitment
to service and caring to these new members of the Humana family."
The transaction is subject to certain customary conditions,
including various insurance regulatory approvals and approval of
PCA's stockholders.
Humana, headquartered in Louisville, Ky., is one of the
nation's largest publicly-traded managed health care companies
with more than 4.7 million health plan members primarily located
in 17 states. Humana offers coordinated health care through a
variety of delivery systems -- health maintenance organizations,
preferred provider organizations, point-of-service plans,
administrative services products and medical savings accounts --
to employer groups, government-sponsored plans and individuals.
More information about Humana is available on the Internet at
http://www.humana.com.
This press release contains forward-looking information.
The forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements may be significantly impacted
by certain risks and uncertainties described in Humana's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1996.
HUMANA INC.
PHYSICIAN CORPORATION OF AMERICA
FACT SHEET
Humana PCA Combined
<TABLE>
Premiums
<S> <C> <C> <C>
(Latest 12 months) $6.9 billion $1.3 billion $8.2 billion
Medical Membership at March 31, 1997:
By State --
Florida 1,128,500 324,200 1,452,700
Texas 336,800 323,100 659,900
Other 3,302,800 490,900 (a) 3,793,700
4,768,100 1,138,200 5,906,300
By Product --
Commercial 2,577,800 480,400 3,058,200
Medicaid 53,200 597,600 (a) 650,800
Medicare risk 374,200 60,200 434,400
CHAMPUS 1,103,100 -- 1,103,100
Medicare supplement 93,500 -- 93,500
Administrative services 566,300 -- 566,300
4,768,100 1,138,200 5,906,300
</TABLE>
(a) Includes approximately 142,000 Medicaid members effective
April 1, 1997.
Exhibit 99(b)
For More Information:
Laurie Scarborough
Investor Relations
502/580-1037
E-MAIL: [email protected]
Greg Donaldson
Public Affairs
502/580-3683
E-MAIL: [email protected]
IN SUPPORT OF LONG-TERM STRATEGY, HUMANA ANNOUNCES ACQUISITION
OF ONE OF THE NATION'S MOST DISTINGUISHED HMOs, CHOICECARE
CORPORATION OF CINCINNATI
Acquisition makes Humana the leader in Cincinnati and vicinity,
with attractive platform for further expansion in Ohio
ChoiceCare brings superb record of quality and service; one of only
two plans nationally to be named to Sachs Honor Roll in 1996 and 1997
Humana adds a total of 1.4 million members and over $1.5 billion
in annual premium revenues through ChoiceCare, PCA acquisitions;
company strengthens leadership in Florida, Texas and Ohio
LOUISVILLE, KY (June 5, 1997) -- Humana Inc. (NYSE: HUM)
announced today that it has reached a definitive agreement with
ChoiceCare Corporation, the largest health maintenance
organization (HMO) in Cincinnati, under which Humana will
purchase all of ChoiceCare's outstanding shares of common stock
for $16.38 per share, or a total consideration of $250 million
in cash.
ChoiceCare serves more than 245,000 members, offering HMO,
point-of-service and administrative services products. The
combined companies will have about 310,000 members in the
Greater Cincinnati area.
"Speaking on behalf of the entire Humana management team, we
are deeply gratified to be able to join forces with ChoiceCare,
an organization that is an outstanding leader in Cincinnati and
one of the most distinguished and respected HMOs in America,"
said David A. Jones, Humana's Chairman and Chief Executive
Officer. "ChoiceCare's emphasis on quality, service and caring
could not fit better with the values on which we have built
Humana, and I look forward to a long partnership that will only
deepen and expand the many accomplishments of one of the 'crown
jewels' in our industry," Mr. Jones added.
Gregory H. Wolf, Humana's President and Chief Operating
Officer, added, "ChoiceCare is a very successful company with an
extraordinary franchise in the Cincinnati market. As such, it
fits perfectly into our overall corporate strategy of targeting
key local markets where we can have the critical mass,
purchasing power and brand-name recognition that are crucial to
leadership. By combining with ChoiceCare, the plan of choice
for members, providers and employers, we will move to a
leadership position in Cincinnati and -- just as important --
establish a platform for growth across Ohio, where we see
significant potential."
"With the acquisition of Physician Corporation of America (PCA)
earlier this week, we have now taken two major steps to advance
our long-term business strategy and build value for our
shareholders," Mr. Wolf added.
In April, ChoiceCare was identified as one of only thirteen
health plans named to Sachs HMO Honor Roll for 1997. The Sachs
Group announced ChoiceCare's place on the honor roll following a
comprehensive survey of 215 plans and 90,000 members located in
30 different markets. ChoiceCare is one of only two plans in
the country awarded this recognition two consecutive years. In
addition, it was the first Cincinnati plan to receive three-year
full accreditation from the National Committee for Quality
Assurance.
"Today is a momentous day in the history of ChoiceCare, as we
join together with Humana and renew our commitment to deliver
the highest quality care to our members," said Daniel Gregorie,
M.D., Chief Executive Officer of ChoiceCare. "Humana brings to
us a national scope that we have long desired, plus an
unswerving commitment to quality, service and caring for its
members. I am very confident that our combined vision will lead
to even greater achievements in the years ahead."
Of ChoiceCare's 245,000 total members, about 195,000 are in
commercial plans and 50,000 are in administrative service
products. Mr. Wolf said that among the early strategic
priorities for the combined companies will be to accelerate the
growth of Humana's Medicare and specialty products, and to
broaden ChoiceCare's penetration in small group and national
employer accounts.
This transaction will require approval by ChoiceCare
shareholders and certain regulatory authorities. On closing,
ChoiceCare will become a wholly owned subsidiary of Humana.
Completion of the transaction is expected in the fall of this
year.
As a result of the ChoiceCare and PCA transactions, Humana
received a commitment from Chase Manhattan Bank to provide a new
$1.5 billion revolving credit facility, a portion of which will
be used to finance the transactions.
Humana, headquartered in Louisville, Ky., is one of the
nation's largest publicly-traded managed health care companies
with more than 4.7 million health plan members primarily located
in 17 states. Humana offers coordinated heath care through a
variety of delivery systems -- health maintenance organizations,
preferred provider organizations, point-of-service plans,
administrative services products and medical savings accounts --
to employer groups, government-sponsored plans and individuals.
More information about Humana is available on the Internet at
http://www.humana.com.
This press release contains forward-looking information. The
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements may be significantly impacted
by certain risks and uncertainties described in Humana's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1996.
HUMANA INC.
CHOICECARE and PHYSICIAN CORPORATION OF AMERICA
FACT SHEET
<TABLE>
Humana PCA ChoiceCare Combined
Premiums
<S> <C> <C> <C> <C>
(Latest 12 months) $6.9 billion $1.3 billion $0.3billion $8.5 billion
Medical Membership:
By State --
Florida 1,128,500 324,200 -- 1,452,700
Texas 336,800 323,100 -- 659,900
Ohio 100,800 -- 232,700 333,500
Other 3,202,000 490,900 12,700 3,705,600
4,768,100 1,138,200 245,400 6,151,700
By Product --
Commercial 2,577,800 480,400 195,700 3,253,900
Medicaid 53,200 597,600 -- 650,800
Medicare risk 374,200 60,200 -- 434,400
CHAMPUS 1,103,100 -- -- 1,103,100
Medicare supp. 93,500 -- -- 93,500
Admin. services 566,300 -- 49,700 616,000
4,768,100 1,138,200 245,400 6,151,700
</TABLE>
