<PAGE>
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 (Date of earliest event reported): June 2, 1998
- - ------------------------------------------------- ------------
RAMSAY HEALTH CARE, INC.
------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-13849 63-0857352
---------------- ----------------- ------------------
(State or Other (Commission (IRS 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)
- - --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 15
Index to Exhibits at Page 12
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Item 2. Acquisition or Disposition of Assets.
- - ------ ------------------------------------
On June 2, 1998 Ramsay Managed Care, Inc., a Delaware corporation
("RMCI"), the Registrant's wholly-owned subsidiary, completed the sale of all of
the issued and outstanding shares of common stock, $.01 par value (the "FPM
Shares"), of FPM Behavioral Health, Inc., a Delaware corporation and wholly-
owned subsidiary of RMCI which constituted all of the operating activities of
RMCI ("FPMBH"), to Horizon Health Corporation, a Delaware corporation (the
"Buyer"). FPMBH is engaged in the business of providing managed behavioral
health care services, employee assistance programs and other related behavioral
health care services to health maintenance organizations and self-insured
employers in nine states. No material relationships exist between the Buyer, its
affiliates, officers or directors, and the Registrant, its affiliates, officers
or directors.
The purchase price for FPMBH was $20,000,000 in cash (of which
$1,000,000 is being held in escrow), subject to certain post-closing
adjustments. Further information concerning the sale of Horizon is contained in
the Registrant's press release dated June 2, 1998 (see Exhibit 99.1 hereto),
which press release is incorporated herein by reference.
The determination of the consideration for the sale of the FPM
Shares was based on arms length negotiations between the Registrant and the
Buyer.
On June 2, 1998, Greenbrier Hospital, Inc., a Louisiana
corporation ("Greenbrier"), the Registrant's wholly-owned subsidiary completed
the sale of substantially all of the assets and business of Greenbrier (the
"Greenbrier Facility") to Provider Options Holdings, L.L.C., a Louisiana limited
liability company
Page 2 of 15
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("Provider"). The Greenbrier Facility was engaged in the operation of
Greenbrier Psychiatric Hospital. No material relationships exist between
Provider, its affiliates, officers or members, and the Registrant, its
affiliates, officers or directors.
The purchase price for the Greenbrier Facility was $1,600,000 in
cash, subject to certain post-closing adjustments. Further information
concerning the sale of the Greenbrier Facility is contained in the Registrant's
press release dated June 5, 1998 (see Exhibit 99.2 hereto), which press release
is incorporated herein by reference.
The determination of the consideration for the sale of the
Greenbrier Facility was based on arms length negotiations between the Registrant
and Provider.
The net proceeds from these sales were used by the Registrant to
prepay a portion of its outstanding indebtedness.
Page 3 of 15
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Item 7.
- - ------
(b) Pro Forma Financial Information:
-------------------------------
The following unaudited pro forma condensed balance sheet of the
Registrant as of March 31, 1998 gives effect to the sale of the FPM Shares and
the sale of the Greenbrier Facility, assuming these sales had been consummated
on March 31, 1998. The following unaudited pro forma condensed statements of
operations of the Registrant for the nine months ended March 31, 1998 and the
fiscal year ended June 30, 1997 (i) give effect to the sale of the FPM Shares as
of June 10, 1997 (the date RMCI was acquired by the Registrant) (ii) assume the
sale of the Greenbrier Facility had been consummated on July 1, 1996 and (iii)
exclude any gain or loss directly attributable to these transactions.
The information contained in the column entitled "Historical RHCI" in
the condensed balance sheet and statement of operations as of and for the nine
months ended March 31, 1998 is summarized from the unaudited consolidated
financial statements of the Registrant included in its March 31, 1998 Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission. The
information contained in the column entitled "Historical RHCI" in the condensed
statement of operations for the fiscal year ended June 30, 1997 is summarized
from the audited consolidated financial statements of the Registrant included in
its June 30, 1997 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
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 sale
of the FPM
Page 4 of 15
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Shares and the sale of the Greenbrier Facility had been consummated as of the
date presented and do not purport to project the Registrant'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 of the Registrant included
in its June 30, 1997 Annual Report on Form 10-K and March 31, 1998 Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission.
Page 5 of 15
<PAGE>
Ramsay Health Care, Inc.
Pro Forma Condensed Balance Sheet at March 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------------
Sale of
Sale of FPM Greenbrier
Historical RHCI Shares (a) Facility (b) RHCI Pro Forma
--------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,751,000 $ (498,000) $ -- $ 4,253,000
Patient accounts receivable, net 24,109,000 (1,395,000) -- 22,714,000
Other current assets 10,425,000 (432,000) (46,000) 9,947,000
------------ ------------ ----------- ------------
Total current assets 39,285,000 (2,325,000) (46,000) 36,914,000
Other assets:
Cost in excess of net asset value of
purchased businesses 3,799,000 -- -- 3,799,000
Unamortized loan costs 3,440,000 (1,135,000) (104,000) 2,201,000
Other noncurrent assets 1,158,000 1,000,000 -- 2,158,000
------------ ------------ ----------- ------------
Total other assets 8,397,000 (135,000) (104,000) 8,158,000
Assets held for sale:
Cost in excess of net asset value of
purchased businesses 15,209,000 (15,209,000) -- --
Other noncurrent assets 1,188,000 -- -- 1,188,000
Property and equipment 25,427,000 (1,828,000) (1,342,000) 22,257,000
------------ ------------ ----------- ------------
Total assets held for sale 41,824,000 (17,037,000) (1,342,000) 23,445,000
Property and equipment 35,581,000 -- -- 35,581,000
------------ ------------ ----------- ------------
TOTAL ASSETS $125,087,000 $(19,497,000) $(1,492,000) $104,098,000
============ ============ =========== ============
LIABILITIES
Current liabilities $ 34,220,000 $ (962,000) $ -- $ 33,258,000
Long-term debt, less current portion 52,250,000 (17,400,000) (1,400,000) 33,450,000
Other noncurrent liabilities 14,073,000 -- -- 14,073,000
------------ ------------ ----------- ------------
TOTAL LIABILITIES 100,543,000 (18,362,000) (1,400,000) 80,781,000
CLASS B REDEEMABLE PREFERRED
STOCK 6,636,000 -- -- 6,636,000
STOCKHOLDERS' EQUITY 17,908,000 (1,135,000) (92,000) 16,681,000
------------ ------------ ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $125,087,000 $(19,497,000) $(1,492,000) $104,098,000
============ ============ =========== ============
</TABLE>
Notes to Unaudited Pro Forma Condensed Balance Sheet
(a) The pro forma adjustments reflect (i) the removal of the asset
and liability balances related to FPMBH as of March 31, 1998 (comprised of
current assets of $2,325,000, cost in excess of net asset value of purchased
businesses of $15,209,000, property and equipment of $1,828,000 and current
Page 6 of 15
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liabilities of $3,212,000), (ii) $1,000,000 of net sale proceeds held in escrow,
(iii) the write-off of a proportionate amount of unamortized loan costs
($1,135,000) in connection with a $17,400,000 prepayment of debt with proceeds
from the sale and (iv) $2,250,000 related to certain potential post-closing
adjustments.
(b) The pro forma adjustments reflect (i) the removal of certain
asset balances at March 31, 1998 related to the Greenbrier Facility totalling
$58,000, (ii) the removal of the net book value of property and equipment at
March 31, 1998 related to the Greenbrier Facility totalling $1,342,000 and (iii)
the write-off of a proportionate amount of unamortized loan costs ($92,000) in
connection with a $1,400,000 prepayment of debt with proceeds from the sale.
Page 7 of 15
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Ramsay Health Care, Inc.
Pro Forma Condensed Statement of Operations
Nine Months Ended March 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------
Sale of
Sale of FPM Greenbrier
Historical RHCI Shares (a) Facility (b) Eliminations(c) RHCI Pro Forma
--------------- ------------ -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues:
Provider--based operations $ 94,698,000 $ -- $(5,098,000) $565,000 $ 90,165,000
Managed care operations 19,859,000 (19,859,000) -- -- --
Investment income and other 221,000 -- -- -- 221,000
------------ ------------ ----------- ------------ ------------
TOTAL REVENUES 114,778,000 (19,859,000) (5,098,000) 565,000 90,386,000
Expenses:
Salaries, wages and benefits 60,962,000 (6,502,000) (3,522,000) -- 50,938,000
Managed care provider
expenses 7,805,000 (8,370,000) -- 565,000 --
Other operating expenses 40,714,000 (2,667,000) (1,186,000) -- 36,861,000
Provision for doubtful
accounts 5,033,000 (55,000) (240,000) -- 4,738,000
Depreciation and
amortization 4,929,000 (1,358,000) (241,000) -- 3,330,000
Interest and other financing
charges 5,540,000 (1,255,000) (101,000) -- 4,184,000
Restructuring charges 3,927,000 -- -- -- 3,927,000
Asset impairment charges 16,525,000 (9,923,000) (3,555,000) -- 3,047,000
------------ ------------ ----------- ------------ ------------
TOTAL EXPENSES 145,435,000 (30,130,000) (8,845,000) 565,000 107,025,000
Income (Loss) From Continuing
Operations Before Income Taxes (30,657,000) 10,271,000 3,747,000 -- (16,639,000)
Income taxes 9,411,000 -- -- -- 9,411,000
------------ ------------ ----------- ------------ ------------
Net Income (Loss) From
Continuing Operations $(40,068,000) $ 10,271,000 $ 3,747,000 -- $(26,050,000)
============ ============ =========== ============ ============
Net loss from continuing
operations
per common share:
Basic $(3.79) $(2.49)(d)
Diluted $(3.79) $(2.49)(d)
Weighted average number of
common shares outstanding:
Basic 10,755,000 10,755,000
Diluted 10,755,000 10,755,000
</TABLE>
Page 8 of 15
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Ramsay Health Care, Inc.
Pro Forma Condensed Statement of Operations
Year Ended June 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------------
Sale of
Sale of FPM Greenbrier
Historical RHCI Shares(e) Facility(f) RHCI Pro Forma
--------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Revenues:
Provider--based operations $132,705,000 $ -- $(8,300,000) $124,405,000
Managed care operations 1,964,000 (1,964,000) -- --
Investment income and other 2,050,000 -- -- 2,050,000
------------ ----------- ----------- ------------
TOTAL REVENUES 136,719,000 (1,964,000) (8,300,000) 126,455,000
Expenses:
Salaries, wages and benefits 67,793,000 (780,000) (5,134,000) 61,879,000
Managed care provider expenses 472,000 (472,000) -- --
Other operating expenses 46,347,000 (381,000) (1,949,000) 44,017,000
Provision for doubtful accounts 5,688,000 (10,000) (681,000) 4,997,000
Depreciation and amortization 5,473,000 (161,000) (319,000) 4,993,000
Interest and other financing charges 5,942,000 (107,000) (157,000) 5,678,000
------------ ----------- ----------- ------------
TOTAL EXPENSES 131,715,000 (1,911,000) (8,240,000) 121,564,000
------------ ----------- ----------- ------------
Income (Loss) From Continuing Operations
Before Income Taxes 5,004,000 (53,000) (60,000) 4,891,000
Income taxes 1,726,000 -- -- 1,726,000
------------ ----------- ----------- ------------
Net Income (Loss) From Continuing
Operations $ 3,278,000 $ (53,000) $ (60,000) $ 3,165,000
============ =========== =========== ============
Net income from continuing operations
per common and dilutive common
equivalent share:
Basic $0.35 $0.33(g)
Diluted $0.33 $0.32(g)
Weighted average number of common
and dilutive common equivalent
shares outstanding:
Basic 8,404,000 8,404,000
Diluted 10,037,000 10,037,000
</TABLE>
Notes to Unaudited Pro Forma Condensed Statements of Operations
(a) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of FPMBH during the nine months ended March 31, 1998, (ii) the
elimination of amortization expense totalling $1,094,000 associated with
intangible assets recorded in connection with the acquisition of RMCI on
June 10, 1997 (given that FPMBH constituted all of the operating activities
of RMCI), (iii) a reduction of interest expense totalling $1,255,000
related to RHCI indebtedness repaid with proceeds from the sale of FPMBH
and (iv) the elimination of asset impairment charges totalling $9,923,000
which are directly attributable to the sale of FPMBH and which are recorded
in the March 31, 1998 financial statements of RHCI.
(b) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of Greenbrier during the nine months ended March 31, 1998, (ii) a
reduction of interest expense totalling $101,000 related to RHCI
indebtedness repaid with proceeds from the sale of the Greenbrier Facility
and (iii) the elimination of asset impairment charges totalling $3,555,000
which are directly attributable to the sale of the Greenbrier Facility and
which are recorded in the March 31, 1998 financial statements of RHCI.
(c) This adjustment reflects the elimination of intercompany revenues and
expenses recorded between RHCI and RMCI, respectively, related to certain
managed care arrangements between RHCI and RMCI.
(d) Net loss per common share is calculated as follows:
Pro forma net loss from continuing operations $(26,050,000)
Less: Dividends on RHCI Series C Preferred Stock (272,000)
Less: Dividends on RHCI Series 1996 Preferred Stock (113,000)
Less: Dividends on RHCI Series 1997 Preferred Stock (113,000)
Less: Dividends on RHCI Series 1997-A Preferred Stock (181,000)
-------------
$(26,729,000)
=============
Pro forma net loss from continuing operations per
share (basic and diluted) $ (2.49)
=============
Weighted average shares outstanding (basic
and diluted) 10,755,000
=============
(e) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of FPMBH from June 10, 1997 (the date RMCI was acquired) to June
30, 1997, (ii) the elimination of amortization expense from June 10, 1997
to June 30, 1997 totalling $134,000 associated with intangible assets
recorded in connection with the acquisition of RMCI (given that FPMBH
constituted all of the operating activities of RMCI) and (iii) a reduction
of interest expense from June 10, 1997 to June 30, 1997 totalling $107,000
related to RHCI indebtedness repaid with proceeds from the sale of FPMBH.
The pro forma adjustments do not include a loss on the sale of FPMBH of
$9,923,000 expected by RHCI and recorded in the financial statements of
RHCI during the quarter and nine months ended March 31, 1998.
(f) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of Greenbrier during the year ended June 30, 1997 and (ii) a
reduction of interest expense totalling $157,000 related to RHCI
indebtedness repaid with proceeds from the sale of the Greenbrier Facility.
The pro forma adjustments do not include a loss on the sale of the
Greenbrier Facility of $3,555,000 expected by RHCI and recorded in the
financial statements of RHCI during the quarter and nine months ended March
31, 1998.
(g) Net income per common and dilutive common equivalent share is calculated as
follows:
Basic Diluted
---------- ----------
Pro forma net income from continuing operations $3,165,000 $3,165,000
Less: Dividends on RHCI Series C Preferred Stock (362,000) n/a
----------- ----------
$2,803,000 $3,165,000
=========== ==========
Pro forma net income from continuing operations
per share $0.33 $0.32
=========== ==========
Weighted average shares outstanding 8,404,000 10,037,000
=========== ==========
Page 9 of 15
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(c) Exhibits:
--------
The exhibits required to be filed as part of this Report are listed in
the attached Index to Exhibits.
<PAGE>
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.
RAMSAY HEALTH CARE, INC.
By /s/ Carol C. Lang
-----------------------------------
Name: Carol C. Lang
Title: Executive Vice President
and Chief Financial Officer
Dated: June 17, 1998
Page 11 of 15
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Index to Exhibits
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Location
- - ------- ----------- -------------
<S> <C> <C>
2.1 Stock Purchase Agreement dated as of May 1, 1998 __
by and among Ramsay Health Care, Inc., Ramsay
Managed Care, Inc. and Horizon Health Corporation
(incorporated by reference to Exhibit 2.7 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998). Pursuant to Reg.
S-K, Item 601(b)(2), the Registrant agrees to furnish a
copy of the Disclosure Schedules to such Stock
Purchase Agreement to the Commission upon request.
2.2 Asset Purchase Agreement, dated as of May 15, 1998, __
among Provider Options Holdings, L.L.C.,
Greenbrier Hospital, Inc. and Ramsay Health Care,
Inc., (incorporated by reference to Exhibit 2.8 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998). Pursuant to Reg.
S-K, Item 601(b)(2), the Registrant agrees to furnish a
copy of the Disclosure Schedules to such Asset
Purchase Agreement to the Commission upon request.
99.1 Press Release of the Registrant dated June 2, 1998. 13
99.2 Press Release of the Registrant dated June 5, 1998. 15
</TABLE>
Page 12 of 15
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EXHIBIT 99.1
RAMSAY HEALTH CARE, INC.
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
HORIZON HEALTH CORPORATION AND RAMSAY HEALTH CARE, INC.
ANNOUNCE THE SALE OF FPM BEHAVIORAL HEALTH, INC.
Horizon Health Corporation (Nasdaq: HORC) and Coral Gables, Florida-based
Ramsay Health Care, Inc. (Nasdaq: RHCI) announced today that, effective June 1,
1998, Horizon acquired from Ramsay all the outstanding capital stock of FPM
Behavioral Health, Inc. of Winter Park, Florida. The purchase price was
$20,000,000 in cash, subject to certain post-closing adjustments. As a result
of the acquisition, FPM Behavioral Health, Inc. has become a wholly-owned
subsidiary of Horizon.
FPM provides managed behavioral health care services, employee assistance
programs (EAP) and other related behavioral health care services to health
maintenance organizations and self-insured employers. At February 28, 1998, FPM
had 46 contracts covering approximately 1,135,000 lives in 9 states. FPM
provides its services both through health care professionals employed by FPM and
through independent health care professional that have contracted with FPM on a
fee-for-service basis. At April 1998, the FPM provider network was composed of
over 2,000 providers. For the nine months ended March 31, 1998, FPM revenues
were approximately $19.0 million and pretax income was approximately $2.0
million.
With the FPM acquisition, Horizon, through its subsidiaries, will have
approximately 200 contracts for the provision of EAP and mental health services
covering nearly 2.0 million lives.
Horizon plans to consolidate its previously acquired Florida PPS subsidiary
into FPM's operations prior to the close of its current fiscal year on August
31, 1998. As a result of this and other factors, Horizon expects the
acquisition of FPM to be accretive to its fiscal 1999 earnings.
James Ken Newman, Chairman of Horizon Health Corporation, said, "We are
very pleased with the successful completion of the FPM acquisition. The FPM
acquisition further expands our capabilities in the provision of employee
assistance programs and other behavioral health care services offered by
Horizon. The FPM acquisition continues the diversification of our business
operations consistent with our overall business plan."
Ramsay Health Care Chairman of the Board, Paul J. Ramsay, stated, "We
are very pleased with the consummation of this transaction because it begins to
solidify our debt reduction strategy."
Luia E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc.
commented, "This transaction reaffirms our commitment to Ramsay Health Care,
Inc.'s new strategic direction which focuses on the Youth Services Industry."
Page 13 of 15
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The statements contained herein based on future expectations rather than on
historical facts are forward-looking statements as defined under the Private
Securities Litigation Reform Act of 1995 that involve a number of risks and
uncertainties. Factors that could cause actual results to differ materially
from those in any such forward-looking statements include, but are not limited
to, Horizon's ability to retain FPM's existing contracts, to successfully
integrate the operations of FPM on a cost-effective basis, and various other
risks as outlined in Horizon and Ramsay's Securities and Exchange Commission
filings.
Ramsay Health Care, Inc. is a provider and manager of specialized programs
and services for at-risk and troubled youth. The Company through its subsidiary,
Ramsay Youth Services, Inc., operates residential youth facilities, group homes
and a juvenile assignment center. Ramsay Health Care, Inc. also operates
psychiatric facilities and manages the delivery of behavioral health care
programs on behalf of acute care hospitals and community mental health centers.
Horizon Health Corporation is a leading provider of EAP and mental health
services to business and managed care organizations as well as the leading
contract manager of clinical programs offered by general acute care hospital in
the United States. At June 1, 1998, Horizon had over 200 contracts to provide
EAP and mental health services covering nearly 2,000,000 lives.
Page 14 of 15
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EXHIBIT 99.2
RAMSAY HEALTH CARE, INC.
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Ramsay Health Care, Inc. (Nasdaq: RHCI) today announced the sale of the
Company's Greenbrier Psychiatric Hospital in Covington, Louisiana. As
previously announced on April 3, 1998, this facility was scheduled to close on
June 2, 1998. The purchase price for the Hospital was $1.6 million in cash,
with the proceeds used by the Company to repay outstanding indebtedness.
Luis E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc. said,
"We continue to move forward with our new youth services strategy. The
execution of this transaction is an important component of the Company's non-
youth services business divestiture plan."
Ramsay Health Care, Inc. is a provider and manager of specialized programs
and services for at-risk and troubled youth. The Company through its
subsidiary, Ramsay Youth Services, Inc., operates residential youth facilities,
group homes and a juvenile assignment center. Ramsay Health Care, Inc. also
operates psychiatric facilities and manages the delivery of behavioral health
care programs on behalf of acute care hospitals and community mental health
centers.
Page 15 0f 15
