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 12, 1998
MAXICARE HEALTH PLANS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12024 95-3615709
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1149 South Broadway Street
Los Angeles, California
(Address of principal executive offices)
90015
(Zip Code)
(213) 765-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On June 12, 1998, Maxicare Health Plans, Inc. issued a news
release announcing non-cash adjustments to 1997 and 1995
financial results and related restatement of financial statements
for the years ended December 31, 1995, 1996, and 1997.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
Exhibit No. 99.9 - News release announcing non-
cash adjustments to 1997 and 1995 financial results.
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SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
MAXICARE HEALTH PLANS, INC.
(Registrant)
By:/s/ Richard A. Link
Richard A. Link
Chief Financial Officer
Date: June 19, 1998
Exhibit 99.9
MAXICARE ANNOUNCES NON-CASH ADJUSTMENTS TO
1997 AND 1995 FINANCIAL RESULTS
LOS ANGELES, JUNE 12, 1998 - MAXICARE HEALTH PLANS, INC. (NASDAQ-
NMS:MAXI) announced today that it will restate its consolidated
financial statements for the three years ended December 31, 1997.
The adjustments reflect the reversals of both a $10 million
increase in estimated amounts due the Company from the
Pennsylvania Department of Public Welfare ("DPW") recorded in
1995 and a $10 million charge in 1997 relating thereto. These
adjustments do not impact the Company's 1998 financial
statements.
The principal effect of the restatement is to: 1) decrease the
Company's loss in the first quarter of 1997 by $10 million,
resulting in the reduction of the previously reported full year
1997 net loss of $35.1 million to $25.1 million; and 2) reduce
the Company's net income in the fourth quarter of 1995 by $10
million, resulting in the previously reported full year 1995 net
income of $27.7 million being reduced to $17.7 million.
In addition, the Company's total assets and shareholders' equity
as of December 31, 1995 and 1996 will be reduced by $10 million
from the previously reported balances, but will remain unchanged
as of December 31, 1997. The adjustments have no effect on the
recorded balances of total assets or shareholders' equity as of
December 31, 1997 and are non-cash adjustments that do not impact
the Company's previously reported cash flows for any of the
restatement periods.
The Company has been in litigation with the DPW since 1990 in
connection with its claims for amounts due by the DPW of
approximately $29 million plus interest thereon related to the
Company's prior operation of a Medicaid managed care program from
1986 through 1989. Based upon an evaluation of the status of
these proceedings, the Company increased the estimated amounts
due it from the DPW in the fourth quarter of 1995 from $5 million
to $15 million, after consultation with, and the concurrence of,
the Company's outside auditors.
In March 1997, the Pennsylvania Board of Claims ruled that the
Company was not entitled to any recovery on its claims against
the DPW. The Company believes the ruling of the Board of Claims
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to be erroneous and is appealing the ruling in State Court in
Pennsylvania, as well as pursuing claims relating to this matter
in the Bankruptcy Court in California. The Company recorded, in
the first quarter of 1997, a $16 million non-cash litigation
charge to fully reserve for the previously recorded estimate of
$15 million due the Company from the DPW and related litigation
costs. Nevertheless, as a result of discussing this matter with
the Securities and Exchange Commission, the Company is restating
its financial statements for the periods discussed herein.
Selected financial data related to the statements of operations
and balance sheets for the three years ended December 31, 1997,
as previously reported, together with such data as restated, are
presented below.
Maxicare Health Plans, Inc. is a managed healthcare company with
operations in California, Indiana, Illinois, Louisiana, North
Carolina, South Carolina and Wisconsin.
###
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MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(Amounts in thousands except per share data)
As Previously
Reported As Restated
<S> ------------- -----------
<C> <C>
At and for the year ended December 31, 1997:
Statement of Operations Data
Litigation and management restructuring charges........ $ 19,000 $ 9,000
Total expenses......................................... 706,322 696,322
Net loss............................................... (35,081) (25,081)
Net loss per share, diluted............................ $ (1.96) $ (1.40)
At December 31, 1996:
Balance Sheet Data
Accounts receivable.................................... $ 33,107 $ 23,107
Total assets........................................... 184,522 174,522
Shareholders' equity................................... 116,246 106,246
At and for the year ended December 31, 1995:
Statement of Operations Data
Total revenues......................................... $ 477,344 $ 467,344
Net income............................................. 27,676 17,676
Net income per share, diluted.......................... $ 1.53 $ .97
Balance Sheet Data
Accounts receivable.................................... $ 32,946 $ 22,946
Total assets........................................... 162,836 152,836
Shareholders' equity................................... 94,705 84,705
(Continued)
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<TABLE>
<CAPTION>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED FINANCIAL DATA
(Amounts in thousands except per share and membership data)
For The Years Ended December 31,
--------------------------------
1997 1996 1995 1994 1993
--------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
(Restated) (Restated)
REVENUES................................................ $ 663,823 $562,765 $ 467,344 $432,173 $440,186
--------- -------- --------- -------- --------
EXPENSES
Health care expenses................................. 630,869 503,006 414,296 379,608 394,721
Marketing, general and administrative expenses....... 55,702 48,753 43,993 44,084 40,998
Depreciation and amortization........................ 751 1,279 1,245 2,087 4,054
Litigation and management restructuring charges...... 9,000
--------- -------- --------- -------- --------
TOTAL EXPENSES.......................................... 696,322 553,038 459,534 425,779 439,773
--------- -------- --------- -------- --------
INCOME (LOSS) FROM OPERATIONS........................... (32,499) 9,727 7,810 6,394 413
Investment income.................................... 7,481 6,528 6,299 3,319 2,636
Interest expense..................................... (63) (97) (58) (36) (32)
--------- -------- --------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES ...................... (25,081) 16,158 14,051 9,677 3,017
INCOME TAX BENEFIT...................................... 3,267 3,625 3,658 2,571
--------- -------- --------- -------- --------
NET INCOME (LOSS)....................................... (25,081) 19,425 17,676 13,335 5,588
PREFERRED STOCK DIVIDENDS............................... (5,280) (5,400)
--------- -------- --------- -------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS...... $ (25,081) $ 19,425 $ 17,676 $ 8,055 $ 188
========= ======== ========= ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic:
Basic earnings (loss) per common share................ $ (1.40) $ 1.11 $ 1.09 $ .78 $ .02
========= ======== ========= ======== ========
Weighted average number of common shares
outstanding.......................................... 17,897 17,520 16,158 10,367 10,025
Diluted:
Diluted earnings (loss) per common share.............. $ (1.40) $ 1.05 $ .97 $ .76 $ .02
========= ======== ========= ======== ========
Weighted average number of common and common
dilutive potential shares outstanding................ 17,897 18,415 18,137 17,581 10,025
At December 31,
---------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(Restated)(Restated)
BALANCE SHEET DATA:
Total assets......................................... $ 167,422 $ 174,522 $ 152,836 $ 128,692 $ 106,807
Total indebtedness .................................. $ 86,386 $ 68,276 $ 68,131 $ 63,342 $ 54,422
Shareholders' equity................................. $ 81,036 $ 106,246 $ 84,705 $ 65,350 $ 52,385
MEMBERSHIP DATA:
Number of members.................................... 515,000 423,000 345,000 292,000 308,000
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