<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 10, 1997
RAMSAY HEALTH CARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-13849 63-0857352
- ----------------- ------------ -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 569-6993
---------------
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 13
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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Item 7 is hereby amended and restated as follows:
(a) Financial statements of business acquired.
The consolidated balance sheet of Ramsay Managed Care, Inc. ("RMCI")
as of June 30, 1996, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the two years in the
period ended June 30, 1996 are incorporated by reference to the Registrant's
Registration Statement on Form S-4 declared effective by the Commission on March
25, 1997 (file no. 333-23799).
The consolidated balance sheet of RMCI as of March 31, 1997, and the
related consolidated statements of operations and cash flows for the nine months
ended March 31, 1997 are incorporated by reference to RMCI's Quarterly Report on
Form 10-QSB for the quarterly period ended March 31, 1997 filed with the
Commission on May 20, 1997 (file no. 0-26666).
(b) Pro forma financial information:
Attached hereto as Annex A are the unaudited pro forma condensed
balance sheet of the Registrant as of March 31, 1997 and unaudited pro forma
consolidated statements of operations for the nine months ended March 31, 1997
and the fiscal year ended June 30, 1996, and the notes thereto.
Page 2 of 13
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
RAMSAY HEALTH CARE, INC.
By /s/ Daniel A. Sims
------------------------
Name: Daniel A. Sims
Title: Vice President and
Secretary
Dated: August 22, 1997
Page 3 of 13
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PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma condensed balance sheet of RHCI as
of March 31, 1997 and unaudited pro forma condensed statements of operations of
RHCI for the nine months ended March 31, 1997 and the fiscal year ended June 30,
1996 give effect to the Merger, assuming the Merger had been consummated on July
1, 1995 and accounted for under the purchase method of accounting. The pro forma
financial information also gives effect to the sale of RMCI's wholly owned
subsidiary, Apex Healthcare, Inc. ("Apex") on April 1, 1997.
The information contained in the columns entitled "Historical RHCI"
and "Historical RMCI" in the condensed balance sheet and statement of operations
as of and for the nine months ended March 31, 1997 is summarized from the
unaudited consolidated financial statements included in RHCI's March 31, 1997
Quarterly Report on Form 10-Q and RMCI's March 31, 1997 Quarterly Report on Form
10-QSB, respectively. The information contained in the columns entitled
"Historical RHCI" and "Historical RMCI" in the condensed statement of operations
for the fiscal year ended June 30, 1996 is summarized from the audited
consolidated financial statements included in RHCI's June 30, 1996 Annual Report
on Form 10-K and RMCI's June 30, 1996 Annual Report on Form 10-KSB,
respectively.
The pro forma condensed financial statements are presented for
informational purposes only and are not necessarily indicative of the financial
position or results of operations which would actually have occurred if the
Merger and the sale of Apex had been consummated as of the date presented and do
not purport to project RHCI's financial position or results of operations for
any future period or date. The pro forma condensed financial statements should
be read in conjunction with the historical consolidated financial statements and
related notes included in RHCI's March 31, 1997 Quarterly Report on Form 10-Q,
RHCI's June 30, 1996 Annual Report on Form 10-K, RMCI's March 31, 1997 Quarterly
Report on Form 10-QSB and RMCI's June 30, 1996 Annual Report on Form 10-KSB.
Page 4 of 13
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PRO FORMA CONDENSED BALANCE SHEET AT MARCH 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
----------------- ---------------------------------------------- RHCI
RHCI RMCI Subtotal Sale of Apex (a) Merger (b) Eliminations (c) Pro Forma
-------- ------- -------- ---------------- ---------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 872 $ 2,141 $ 3,013 $ -- $(1,300) $ -- $ 1,713
Patients accounts receivable, net 25,925 1,280 27,205 -- -- -- 27,205
Other current assets 12,837 1,221 14,058 (688) -- (1,412) 11,958
-------- ------- -------- ------- ------- ------- --------
Total current assets 39,634 4,642 44,276 (688) (1,300) (1,412) 40,876
Goodwill and other intangible assets 575 7,905 8,480 (153) 13,514 -- 21,841
Other assets 18,558 2,328 20,886 (2,253) (1,610) (6,387) 10,636
Property and equipment, net 65,561 710 66,271 -- -- -- 66,271
-------- ------- -------- ------- ------- ------- --------
TOTAL ASSETS $124,328 $15,585 $139,913 $(3,094) $10,604 $(7,799) $139,624
======== ======= ======== ======= ======= ======= ========
LIABILITIES
Current liabilities $ 34,119 $12,151 $ 46,270 $(5,928) $ -- $(1,482) $ 38,860
--
Long-term debt, less current portion 33,104 4,588 37,692 -- -- (4,588) 33,104
Other noncurrent liabilities 7,518 4,743 12,261 -- (867) (1,729) 9,665
-------- ------- -------- ------- ------- ------- --------
74,741 21,482 96,223 (5,928) (867) (7,799) 81,629
STOCKHOLDERS' EQUITY (DEFICIT) 49,587 (5,897) 43,690 2,834 8,408 -- 57,995
3,063
-------- ------- -------- ------- ------- ------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $124,328 $15,585 $139,913 $(3,094) $10,604 $(7,799) $139,624
======== ======= ======== ======= ======= ======= ========
</TABLE>
Page 5 of 13
<PAGE>
Notes to Unaudited Pro Forma Condensed Balance Sheet
(a) During the year ended June 30, 1996, RMCI adopted a plan to sell Apex,
which conducts RMCI's HMO operation. Accordingly, RMCI has classified its
HMO operation, the net operating assets of which totalled $442,000 at
March 31, 1997, as a discontinued operation. On April 1, 1997, Apex was
sold and the net sale proceeds resulting from the sale totalled
$3,429,000. Accordingly, the assets and liabilities of Apex are included
in the historical RMCI balance sheet at March 31, 1997. In order to effect
the closing on April 1, 1997, on March 31, 1997, RMCI received the
proceeds related to the sale, totalling $4,350,000 (of which $350,000 was
placed in escrow for 180 days from the closing to secure certain
representations and warranties of the sale agreement), and immediately
applied $2,285,000 to pay in full its outstanding bank indebtedness. Given
that the sale of Apex was not effective until April 1, 1997, in its March
31, 1997 balance sheet, RMCI recorded (a) the $350,000 of sale proceeds
placed in escrow as other current assets, (b) $1,715,000 of sale proceeds
as cash and cash equivalents, (c) $2,285,000 of sale proceeds as a
reduction of indebtedness and (d) the total amount received as other
current liabilities.
The pro forma adjustments reflect the elimination of the carrying value of
Apex's net operating assets, totalling $442,000 at March 31,1997, a write-
off of unamortized development costs related to Apex and recorded by RMCI,
totalling $153,000 at March 31, 1997, and a gain on sale equal to the net
sale proceeds in excess of the carrying value of Apex's net operating
assets at March 31, 1997.
(b) As of June 10, 1997, the effective date of the Merger, RHCI will issue
2,136,105 shares of RHCI Common Stock, and 100,000 shares of RHCI Series
1996 Preferred Stock, each share of which will be convertible into 10
shares of RHCI Common Stock. This RHCI Common Stock and RHCI Series 1996
Preferred Stock will be issued in the Merger in exchange for 6,408,315
shares of RMCI Common Stock and 100,000 shares of RMCI Series 1996
Preferred Stock. This RHCI Common Stock, including the RHCI Common Stock
issuable upon the conversion of the RHCI Series 1996 Preferred Stock, will
have a pro forma market value of approximately $9,408,000 based upon the
closing sale price of the RHCI Common Stock on NASDAQ of $3.00 per share
on June 10, 1997.
Page 6 of 13
<PAGE>
Under the purchase method of accounting, the assets and liabilities of RMCI
are adjusted to their estimated fair values. For purposes of these pro forma
financial statements, estimates have been made of the fair values of RMCI's
assets and liabilities as of March 31, 1997. These fair value adjustments
were based on the best information available to RHCI and are subject to
change as additional information becomes available.
In addition to the pro forma market value at March 31, 1997 of $9,408,000 of
RHCI Common Stock and RHCI Series 1996 Preferred Stock to be issued in the
Merger, the total purchase price includes direct acquisition costs, primarily
consisting of investment banking and legal costs, of approximately $300,000.
It is anticipated RHCI will also incur costs of approximately $1,000,000,
primarily consisting of legal, accounting, printing and mailing costs, in
connection with the issuance of RHCI Common Stock and RHCI Series 1996
Preferred Stock with such costs recorded as a reduction of equity in the pro
forma condensed balance sheet. The following table indicates the allocation
of the total purchase price to the deficit in net assets of RMCI:
Page 7 of 13
<PAGE>
<TABLE>
<S> <C> <C>
Deficit in net assets of RMCI at
March 31, 1997 $(5,897,000)
Expected gain on the sale of
Apex, based on the net assets
of Apex at March 31, 1997 (see
(a) above) 2,834,000
-----------
Adjusted deficit in net assets
of RMCI (3,063,000)
Purchase accounting adjustments:
Identifiable intangibles
arising from the acquisition 4,740,000
RMCI's existing goodwill and
identifiable intangible
assets (7,752,000)
Goodwill arising from the
acquisition 16,526,000
----------
13,514,000
Deferred income taxes related
to purchase accounting
adjustments:
Identifiable intangibles
arising from the acquisition (1,610,000)
RMCI's existing identifiable
intangible assets 867,000
----------
(743,000)
-----------
Total purchase price,
including direct acquisition
costs $ 9,708,000
===========
</TABLE>
(c) This adjustment reflects the elimination of all intercompany receivables
and payables.
Page 8 of 13
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
----------------- --------------------------------------------- RHCI
RHCI RMCI Subtotal Merger Eliminations (c) Sale of Apex (d) Pro Forma
------- ------- -------- ------ ---------------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $98,408 $17,878 $116,286 $ -- $(785) $ -- $115,501
Expenses
Salaries, wages and benefits 49,736 6,986 56,722 (139)(a) -- -- 56,583
Other operating expenses 32,613 3,601 36,214 (35)(a) -- -- 36,179
Contracted provider services -- 6,497 6,497 -- (425) -- 6,072
Provision for doubtful accounts 3,332 -- 3,332 -- -- -- 3,332
Depreciation and amortization 3,969 1,000 4,969 540(b) -- -- 5,509
Interest and other financing charges 4,463 675 5,138 -- (360) (196) 4,582
------- ------- -------- ----- ----- ----- --------
Total Expenses 94,113 18,759 112,872 366 (785) (196) 112,257
------- ------- -------- ----- ----- ----- --------
Income (Loss) From Continuing
Operations Before Income Taxes 4,295 (881) 3,414 (366) -- 196 3,244
Income Taxes (1,632) -- (1,632) -- -- -- (1,632)
------- ------- -------- ----- ------ ----- --------
Net Income (Loss) From Continuing
Operations $ 2,663 $ (881) $ 1,782 $(366) $ -- $ 196 $ 1,612
======= ======= ======== ===== ====== ===== ========
Net income from continuing
operations per common and dilutive
common equivalent share:
Primary $ 0.25 $ 0.10(e)
Fully diluted $ 0.25 $ 0.10(e)
Weighted average number of common
and dilutive common equivalent
shares outstanding:
Primary 11,750 12,461
Fully diluted 11,750 12,461
</TABLE>
Page 9 of 13
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments
------------------ --------------------------------------------- RHCI
RHCI (f) RMCI (g) Subtotal Merger Eliminations (c) Sale of Apex (d) Pro Forma
-------- -------- -------- ------ ---------------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $117,423 $21,602 $139,025 $ -- $(1,060) $ -- $137,965
Expenses
Salaries, wages and benefits 66,259 8,743 75,002 (150)(a) -- -- 74,852
Other operating expenses 42,387 6,252 48,639 (47)(a) (180) -- 48,412
Contracted provider services -- 8,088 8,088 -- (400) -- 7,688
Provision for doubtful
accounts 5,805 -- 5,805 -- -- -- 5,805
Depreciation and
amortization 5,490 1,323 6,813 428(b) -- -- 7,241
Goodwill write down -- 1,929 1,929 -- -- -- 1,929
Interest and other
financing charges 6,892 685 7,577 -- (480) (195) 6,902
Losses related to asset
sales and closed
businesses 4,473 -- 4,473 -- -- -- 4,473
Asset impairment charges 5,485 -- 5,485 -- -- -- 5,485
-------- ------- -------- ------ ------- ----- --------
Total Expenses 136,791 27,020 163,811 231 (1,060) (195) 162,787
-------- ------- -------- ------ ------- ----- --------
Loss From Continuing
Operations Before Income
Taxes (19,368) (5,418) (24,786) (231) -- 195 (24,822)
Income Tax Benefit 2,887 -- 2,887 -- -- -- 2,887
-------- ------- -------- ------ ------- ----- --------
Net Loss From Continuing
Operations $(16,481) $(5,418) $(21,899) $(231) $ -- $ 195 $(21,935)
Net loss from continuing ======== ======= ======== ====== ======= ===== ========
operations per common and
dilutive common equivalent
share:
Primary $ (2.12) $ (2.23)(e)
Fully diluted $ (2.12) $ (2.23)(e)
Weighted average number of
common and dilutive common
equivalent shares
outstanding:
Primary 7,929 10,065
Fully diluted 7,929 10,065
</TABLE>
Page 10 of 13
<PAGE>
Notes to Unaudited Pro Forma Condensed Statements of Operations
(a) These adjustments reflect certain savings which RHCI expects to achieve
through reductions in operating costs in connection with the Merger. The
extent to which these savings will be achieved depends, among other
things, on economic conditions and may be affected by unanticipated
changes in business activities, inflation and certain external factors.
Therefore, there can be no assurance that these savings will be realized.
(b) This adjustment relates to the amortization of goodwill and other
intangible assets arising from the acquisition of RMCI by RHCI, as if RMCI
had been acquired on July 1, 1995. The calculation of the pro forma
amortization expense is as follows:
<TABLE>
<CAPTION>
Amortization Amortization Amortization
Amount Period 7/1/96-3/31/97 7/1/95-6/30/96
----------------------------------------------------------
<S> <C> <C> <C> <C>
Goodwill $16,526,000 25 years $ 496,000 $ 661,000
Other intangible assets:
Managed care contracts 2,405,000 51 months 424,000 566,000
Clinical protocols 2,335,000 15 years 117,000 156,000
----------- ---------- ----------
$21,266,000 1,037,000 1,383,000
Less amortization expense
recorded by RMCI on
goodwill and other
intangible assets (497,000) (955,000)
Net increase in ---------- ----------
amortization expense $ 540,000 $ 428,000
========== ==========
</TABLE>
The amortization period of goodwill and other intangible assets arising
from the acquisition of RMCI by RHCI is based on the following:
- -- Managed care contracts -- as of the date of the Merger, the weighted
average future life of RMCI's existing contracts, based on the percentage
of each contract's annual revenue to total revenue and based on the
assumption that the contracts will, on average, renew for four additional
12-month periods.
- -- Clinical protocols -- estimated period over which RMCI's existing clinical
protocols, which are used as the basis
Page 11 of 13
<PAGE>
for RMCI's treatment decisions and product pricing, will be valid and
appropriate.
- -- Goodwill -- estimated period based on RHCI's assessment that RMCI's
operations, after elimination of certain overhead and public company-
related costs, will be profitable and that it has the ability to remain
profitable for an indeterminate period of time.
(c) These adjustments reflect the elimination of RHCI and RMCI intercompany
income and expense amounts including, for the nine months ended March 31,
1997 and year ended June 30, 1996, interest on intercompany debt of
$360,000 and $480,000, respectively, charges for certain corporate
services provided by RHCI to RMCI of $0 and $180,000, respectively, and
patient service revenues and related contracted provider services expenses
related to certain managed care arrangements between RHCI and RMCI of
$425,000 and $400,000, respectively.
(d) This adjustment reflects the reduction in interest expense and, in the
nine months ended March 31, 1997, $50,000 of loan costs related to RMCI
indebtedness which was repaid upon the sale of Apex on April 1, 1997.
(e) Income (Loss) per common and dilutive common equivalent share is
calculated as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
March 31, 1997 June 30, 1996
----------------- -------------
<S> <C> <C>
Pro forma net income (loss) from continuing operations $ 1,612,000 $(21,935,000)
Less: Dividends on RHCI Series C Preferred Stock (272,000) (362,000)
Less: Dividends on RHCI Series 1996 Preferred Stock (112,000) (150,000)
----------- ------------
$ 1,228,000 $(22,447,000)
=========== ============
Pro forma net income (loss) from continuing operations
per share $ 0.10 $ (2.23)
=========== ============
Weighted average shares outstanding (Primary and
Fully Diluted) 12,461,000 10,065,000
=========== ============
</TABLE>
(f) During the fiscal year ended June 30, 1996, the following nonrecurring
amounts were recorded in the consolidated statement of operations of RHCI:
(i) contractual adjustment expenses of approximately $1,900,000 related
to intermediary audits of prior year cost reports; as a result, RHCI
recorded reserves in the fourth quarter totalling $3,500,000 related
to possible future adjustments of its cost report estimates by
intermediaries;
Page 12 of 13
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(ii) losses totalling $4,473,000 related to additional asset write-
downs, cost report settlements and other adjustments related to
businesses which closed at various times prior to fiscal 1996, a
reserve for Medicaid disproportionate share payments which the
State of Louisiana has contended were improperly paid to two of
RHCI's Louisiana facilities in fiscal 1995 and 1994, and lease
commitments and other costs incurred in connection with RHCI's
decision to relocate its corporate headquarters; and
(iii) asset impairment charges totalling $5,485,000 related to an excess
of carrying value of certain long-lived assets and investments over
the fair value of these assets.
(g) During the fiscal year ended June 30, 1996, RMCI recorded certain
nonrecurring amounts in its consolidated statement of operations,
including a goodwill impairment charge of $1,929,000 related to its
acquisition of Human Dynamics Institute, and $426,000 related to the
write-off of deferred development costs based on RMCI's decision not to
expand in certain markets in the United States.
Page 13 of 13
