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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): SEPTEMBER 28, 1998
RAMSAY HEALTH CARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-13849 63-087532
(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)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 28, 1998 the Registrant, Michigan Psychiatric Services,
Inc., a Michigan corporation and wholly-owned subsidiary of the Registrant
("Michigan"), and Havenwyck Hospital, Inc., a Michigan corporation and
wholly-owned subsidiary of Michigan ("Havenwyck"), consummated a sale/leaseback
transaction whereby the Registrant and Michigan sold the land, buildings and
fixed equipment of Havenwyck located in Auburn Hills, Michigan (the "Havenwyck
Facility"), to Capstone Capital Corporation, a Maryland corporation
("Capstone"), for the land, buildings and fixed equipment of the Registrant's
leased Desert Vista Hospital facility located in Mesa, Arizona and $1,300,000
in cash. In connection with the sale/leaseback, the Registrant has agreed to
lease the Havenwyck Facility over a term of approximately twelve (12) years,
with current annual minimum lease payments of $1,263,000. No material
relationships exist between Capstone, its affiliates, officers or directors,
and the Registrant, its affiliates, officers or directors.
The determination of the consideration for the sale/leaseback was
based on arms length negotiations between the Registrant and Capstone.
On September 28, 1998, (i) Carolina Treatment Center, Inc., a South
Carolina corporation, Houma Psychiatric Hospital, Inc., a Louisiana
corporation, Mesa Psychiatric Hospital, Inc., an Arizona corporation, The Haven
Hospital, Inc., a Delaware corporation, Transitional Care Ventures (Arizona),
Inc., a Delaware corporation, and Transitional Care Ventures (North Texas),
Inc., a Delaware corporation, each a direct or indirect wholly-owned subsidiary
of the Registrant (collectively, the "Sellers"), completed the sale of
substantially all of the assets and business of each of the Sellers
(collectively, the "Facilities") to Charter Behavioral Health System, LLC, a
Delaware limited liability company and its affiliates ("Charter"), and Crescent
Real Estate Equities Limited Partnership, a Delaware limited partnership
("Crescent"; together with Charter, the "Purchasers") and (ii) the Registrant
completed the sale of all of the issued and outstanding shares of common stock,
$.01 par value per share (the "Shares") of Ramsay Contract Services, Inc., a
Delaware corporation and wholly-owned subsidiary of the Registrant, to Charter.
The Facilities were engaged in the operation of psychiatric hospitals. Ramsay
Contract Services, Inc. was engaged in the management of the delivery of
behavioral health care programs on behalf of acute care hospitals and community
mental health centers. No material relationships exist between the Purchasers,
their respective affiliates, officers or members, and the Registrant, its
affiliates, officers or directors.
The purchase price for the Facilities and the Shares was $13,500,000,
in cash, subject to certain post-closing adjustments. Further information
concerning the sale of the Facilities and the Shares is contained in the
Registrant's press release dated September 30, 1998 (see Exhibit 99.1 hereto),
which press release is incorporated herein by reference.
The determination of the consideration for the sale of the Facilities
and the Shares was based on arms length negotiations between the Registrant and
the Purchasers.
On September 30, 1998, Psychiatric Institute of West Virginia, Inc., a
Virginia corporation and indirect wholly-owned subsidiary of the Registrant
("PIWV"), completed the sale of substantially all of the assets and business of
PIWV (the "Chestnut Ridge Facility") to West Virginia University Hospitals,
Inc., a West Virginia private non-stock, non profit corporation ("WVUH"). The
Chestnut Ridge Facility was engaged in the operation of Chestnut Ridge
Hospital. No material relationships exist between WVUH, its affiliates,
officers or members, and the Registrant, its affiliates, officers or directors.
The purchase price for the Chestnut Ridge Facility was $14,800,000, in
cash, subject to certain post-closing adjustments. Further information
concerning the sale of the Chestnut Ridge Facility is contained in the
Registrant's press release dated October 2, 1998 (see Exhibit 99.2 hereto),
which press release is incorporated herein by reference.
The determination of the consideration for the sale of the Chestnut
Ridge Facility was based on arms length negotiations between the Registrant and
WVUH.
The net proceeds from these sales were used by the Registrant to
prepay a portion of its outstanding indebtedness.
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ITEM 7.
(b) PRO FORMA FINANCIAL INFORMATION
In accordance with the provisions of Rule 11-01(a)(4) of Regulation S-X
the Company is required to file a proforma balance sheet for the most recently
filed financial statements, unless the transaction is already recorded in such
balance sheet. As of September 30, 1998, the above referenced transactions were
recorded in the Company's financial statements and therefore a proforma balance
sheet as of September 30, 1998 has not been included in this filing.
The following unaudited pro forma condensed consolidated statements of
operations of the Registrant for the quarter ended September 30, 1998 and the
fiscal year ended June 30, 1998 (i) give effect to the sales of the Facilities
and Shares as of July 1, 1997, (ii) give effect to the sale/leaseback of the
Havenwyck facility as of July 1, 1997, (iii) give effect to the sale of the
Chestnut Ridge Facility as of July 1, 1997 and (iv) exclude any gain or loss
directly attributable to these transactions.
The information contained in the column entitled "Historical RHCI" in
the condensed consolidated statement of operations for the quarter ended
September 30, 1998 is summarized from the unaudited consolidated financial
statements of the Registrant included in its September 30, 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 consolidated
statement of operations for the fiscal year ended June 30, 1998 is summarized
from the audited consolidated financial statements of the Registrant included in
its June 30, 1998 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
The pro forma condensed consolidated 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 Facilities, the sale of the Shares, the sale of the Chestnut
Ridge Facility and the Havenwyck Facility sale/leaseback transaction had been
consummated as of the date presented and do not purport to project the
Registrant's results of operations for any future period or date. The pro forma
condensed consolidated financial statements should be read in conjunction with
the historical consolidated financial statements and related notes of the
Registrant included in its June 30, 1998 Annual Report on Form 10-K and
September 30, 1998 Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission.
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RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------
Historical RHCI
RHCI Sales(a) Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Provider-based revenue $ 28,987,000 $(11,784,000) $ 17,203,000
Gain on sale of assets 2,039,000 (2,039,000) --
Investment income and other 94,000 -- 94,000
------------ ------------ ------------
TOTAL REVENUES 31,120,000 (13,823,000) 17,297,000
------------ ------------ ------------
Expenses:
Salaries, wages and benefits 17,162,000 (6,461,000) 10,701,000
Other operating expenses 10,232,000 (3,541,000) 6,691,000
Provision for doubtful accounts 1,101,000 (456,000) 645,000
Depreciation and amortization 703,000 (162,000) 541,000
Interest and other financing charges 1,215,000 (764,000) 451,000
------------ ------------ ------------
TOTAL EXPENSES 30,413,000 (11,384,000) 19,029,000
------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 707,000 (2,439,000) (1,732,000)
Provision for income taxes -- -- --
------------ ------------ ------------
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 707,000 $ (2,439,000) $ (1,732,000)
============ ============ ============
Net income (loss) from continuing
operations per common share:
Basic $ 0.04 $ (0.19)
Diluted $ 0.04 $ (0.17)
Weighted average number of common
shares outstanding:
Basic 10,876,000 10,876,000
Diluted 11,876,000 11,876,000
</TABLE>
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RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------
Historical RHCI
RHCI Sales(c) Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Provider-based revenue $130,884,000 $(57,018,000) $ 73,866,000
Managed care revenue 24,313,000 -- 24,313,000
Investment income and other 256,000 -- 256,000
------------ ------------ ------------
TOTAL REVENUES 155,453,000 (57,018,000) 98,435,000
Expenses:
Salaries, wages and benefits 82,740,000 (27,346,000) 55,394,000
Other operating expenses 53,486,000 (16,430,000) 37,056,000
Managed care patient costs 10,766,000 -- 10,766,000
Provision for doubtful accounts 6,649,000 (3,180,000) 3,469,000
Depreciation and amortization 5,714,000 (1,494,000) 4,220,000
Interest and other financing charges 7,230,000 (3,452,000) 3,778,000
Restructuring charges 2,349,000 (2,349,000) --
Losses related to asset sales and
closed businesses 12,483,000 -- 12,483,000
Asset impairment charges 18,316,000 (18,316,000) --
------------ ------------ ------------
TOTAL EXPENSES 199,733,000 (72,567,000) 127,166,000
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (44,280,000) 15,549,000 (28,731,000)
Provision for income taxes 9,981,000 5,909,000 15,890,000
------------ ------------ ------------
NET LOSS FROM CONTINUING OPERATIONS $(54,261,000) $ 9,640,000 $(44,621,000)
============ ============ ============
Net loss from continuing operations
per common share:
Basic $ (5.12) $ (4.23)
Diluted $ (5.12) $ (4.23)
Weighted average number of common
shares outstanding:
Basic 10,784,000 10,784,000
Diluted 10,784,000 10,784,000
</TABLE>
Notes to Unaudited Pro Forma Consolidated Condensed Statements of Operations
(a) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of Ramsay Contract Services, Inc. and the Facilities for the
quarter ended September 30, 1998, (ii) the elimination of revenues and
expenses of the Chestnut Ridge Facility for the quarter ended
September 30, 1998, (iii) the inclusion of lease expense attributable
to the Havenwyck Facility sale/leaseback in the amount of $316,000,
(iv) the
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elimination of depreciation expense as a result of the Havenwyck
sale/leaseback in the amount totalling $72,000, (v) a reduction of
interest expense totalling $764,000 related to RHCI indebtedness repaid
with proceeds from the above sales, and (vi) the elimination of the
gain on sale of the Chestnut Ridge Facility totalling $2,039,000.
(b) Net loss per common share is calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Pro forma net loss from continuing operations $ (1,732,000)
Less: Dividends on RHCI Series C Preferred Stock (91,000)
Less: Dividends on RHCI Series 1996 Preferred Stock (38,000)
Less: Dividends on RHCI Series 1997 Preferred Stock (69,000)
Less: Dividends on RHCI Series 1997-A Preferred Stock (90,000)
------------
Numerator for basic and diluted earnings per share $ (2,020,000)
============
Pro forma net loss from continuing operations per share - basic $ (0.19)
============
Pro forma net loss from continuing operations per share - diluted $ (0.17)
============
Weighted average shares outstanding - basic 10,876,000
============
Weighted average share outstanding - diluted 11,876,000
============
</TABLE>
(c) The pro forma adjustments reflect (i) the elimination of revenues and
expenses of Ramsay Contract Services, Inc. and the Facilities for the
fiscal year ended June 30, 1998, (ii) the elimination of revenues and
expenses of the Chestnut Ridge Facility for the fiscal year ended June
30, 1998, (iii) the inclusion of lease expense attributable to the
Havenwyck Facility sale/leaseback in the amount of $1,263,000, (iv) the
elimination of depreciation expense as a result of the Havenwyck
sale/leaseback in an amount totalling $288,000, (v) a reduction in
interest expense totalling $3,452,000 related to RHCI indebtedness
repaid with proceeds from the above sales, and (vi) the elimination of
restructuring charges and asset impairment charges totalling $2,349,000
and $18,316,000, respectively.
(d) Net loss per common share is calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Pro forma net loss from continuing operations $(44,621,000)
Less: Dividends on RHCI Series C Preferred Stock (362,000)
Less: Dividends on RHCI Series 1996 Preferred Stock (150,000)
Less: Dividends on RHCI Series 1997 Preferred Stock (182,000)
Less: Dividends on RHCI Series 1997-A Preferred Stock (271,000)
------------
Numerator for basic earnings per share (45,586,000)
Effect of dilutive securities:
Less: Convertible preferred stock (38,000)
------------
Numerator for diluted earnings per share $(45,624,000)
============
Pro forma net loss from continuing operations per share - basic $ (4.23)
============
Pro forma net loss form continuing operations per share - diluted $ (4.23)
============
Weighted average shares outstanding (basic and diluted) 10,784,000
============
</TABLE>
(c) EXHIBITS:
The exhibits required to be filed as part of this Report are listed in
the attached Index to Exhibits.
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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.
RAMSAY HEALTH CARE, INC.
Date: December 10, 1998 By /s/ Marcio C. Cabrera
---------------------------------------
Name: Marcio C. Cabrera
Title: Executive Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential Page
Exhibit Number Description Location
- --------------- --------------------------------------------------------------------------- -----------------
<S> <C> <C>
2.9 Purchase Agreement dated as of June 24, 1998 among Charter
Behavioral Health Systems, LLC, the Company, Carolina
Treatment Center, Inc., Houma Psychiatric Hospital, Inc.,
Mesa Psychiatric Hospital, Inc., RHCI San Antonio, Inc., The
Haven Hospital, Inc., Transitional Care Ventures (Arizona),
Inc., Transitional Care Ventures (North Texas), Inc. and
Transitional Care Ventures (Texas), Inc. Pursuant to Reg.
S-K, Item 601(b) (2), the Company agrees to furnish a copy
of the Disclosure Schedules and attachments to such
Agreement to the Commission upon request (incorporated by
reference to Exhibit 2.9 to the Company's Report on Form 8-K
dated September 28, 1998)...................................................
2.10 Purchase and Sale Contract dated as of June 25, 1998 among Charter
Behavioral Health Systems, LLC, Carolina Treatment Center, Inc. and Mesa
Psychiatric Hospital, Inc. Pursuant to Reg. S-K, Item 601(b) (2), the
Company agrees to furnish a copy of the Disclosure Schedules and
attachments to such Agreement to the Commission upon request (incorporated
by reference to Exhibit 2.10 to the Company's Report on Form 8-K dated
September 28, 1998).........................................................
2.11 Purchase and Sale Contract dated as of June 26, 1998 among Crescent Real
Estate Equities Limited Partnership and The Haven Hospital, Inc. Pursuant
to Reg. S-K Item 601(b) (2), the Company agrees to furnish a copy of the
Disclosure Schedules and attachments to such Agreement to the Commission
upon request (incorporated by reference to Exhibit 2.11 to the Company's
Report on Form 8-K dated September 28, 1998)................................
2.12 Asset Purchase Agreement dated as of July 2, 1998 among West Virginia
University Hospitals, Inc., Psychiatric Institute of West Virginia, Inc.
and the Company. Pursuant to Reg. S-K Item 601(b) (2), the Company agrees
to furnish a copy of the Disclosure Schedules and attachments to such
Agreement to the Commission upon request (incorporated by reference to
Exhibit 2.12 to the Company's Report on Form 8-K dated September 28, 1998)..
2.13 Amendment No. 1 dated as of September 28, 1998 Purchase Agreement dated
as of June 24, 1998 among Charter Behavioral Health Systems, LLC, the
Company, Carolina Treatment Center, Inc., Houma Psychiatric Hospital,
Inc., Mesa Psychiatric Hospital, Inc., RHCI San Antonio, Inc., The Haven
Hospital, Inc., Transitional Care Ventures (Arizona), Inc., Transitional
Care Ventures (North Texas), Inc. and Transitional Care Ventures (Texas),
Inc (incorporated by reference to Exhibit 2.13 to the Company's Report on
Form 8-K dated September 28, 1998)..........................................
2.14 Agreement of Sale and Purchase dated as of September 28, 1998 by and
among Havenwyck Hospital, Inc., Michigan Psychiatric Services, Inc. and
Capstone Capital Corporation. Pursuant to Reg. S-K Item 601(b) (2), the
Company agrees to furnish a copy of the Disclosure Schedules and
attachments to such Agreement to the Commission upon request (incorporated
by reference to Exhibit 2.14 to the Company's Report on Form 8-K dated
September 28, 1998).........................................................
10.116 Lease Agreement dated as of September 28, 1998 between Capstone Capital
Corporation and Havenwyck Hospital, Inc. (incorporated by reference to
Exhibit 10.116 to the Company's Report on Form 8-K dated September 28,
1998).......................................................................
10.117 Guaranty of Obligations Pursuant to Lease Agreement described in Exhibit
10.116 above dated as of September 28, 1998 by the Company in favor of
Capstone Capital Corporation (incorporated by reference to Exhibit 10.117
to the Company's Report on Form 8-K dated September 28, 1998)...............
99.1 Press Release of Registrant dated September 30, 1998........................
99.2 Press Release of Registrant dated October 2, 1998...........................
</TABLE>
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Exhibit 99.1
FOR IMMEDIATE RELEASE
- ---------------------
RAMSAY HEALTH CARE, INC. AND
CHARTER BEHAVIORAL HEALTH SYSTEMS
ANNOUNCE THE COMPLETION OF TRANSACTION
CORAL GABLES, FLORIDA, SEPTEMBER 30, 1998, . . . Ramsay Health Care, Inc.
(NASDAQ:RHCI) and Atlanta, Georgia based Charter Behavioral Health Systems,
LLC, announced today that they have completed a transaction under which Charter
Behavioral Health Systems acquired four of Ramsay Health Care, Inc.'s
psychiatric hospitals and Ramsay's contract management business.
As a result of the transaction, the following Ramsay psychiatric hospitals are
now Charter operated facilities: Bayou Oaks in Houma, Louisiana; Coastal
Carolina in Conway, South Carolina; The Haven in DeSoto, Texas; and Desert
Vista in Mesa, Arizona. In addition, through this transaction Charter has
acquired Ramsay's contract management business which manages the delivery of
behavioral health care programs on behalf of acute care hospitals and community
mental health centers.
Luis E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc., said, "We
are very pleased with the successful completion of the Charter transaction.
This transaction further solidifies our commitment to our debt reduction
strategy and our focus on the youth services industry."
Vernon S. Westrich, Chief Operating Officer of Charter Behavioral Health
Systems, LLC, said, "Charter is pleased to add facilities and expand contract
management services through attractive pricing in key strategic markets.
We are delighted to welcome these facilities and staff to our network."
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements as defined under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties.
Actual
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operations and results may differ materially from those expected in the
forward-looking statements made by the Company. Please refer to Ramsay's
filings with the Securities and Exchange Commission for additional information.
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 treatment centers, group
homes and other specialized treatment and educational youth programs in 9
states and Puerto Rico.
Charter Behavioral Health Systems, LLC, is the nation's leading provider of
behavioral and addiction treatment programs. The Company's 88 domestic
facilities provide a full continuum of care, including inpatient, outpatient
and partial hospitalization programs. The company is owned equally by Magellan
Health Services, Inc. (NYSE:MGL) and Crescent Operating, Inc. (Nasdaq:COPI).
###
Contacts: Isa Diaz Joel Weiden
Vice President Charter Behavioral Health Systems, LLC
Corporate Relations (212) 445-8244
Ramsay Health Care, Inc.
(305) 569-4626
<PAGE> 1
Exhibit 99.2
FOR IMMEDIATE RELEASE
RAMSAY HEALTH CARE, INC. AND WEST VIRGINIA UNIVERSITY HOSPITALS
ANNOUNCE THE COMPLETION OF TRANSACTION
Coral Gables, FL, October 2, 1998 . . . Ramsay Health Care, Inc., (NASDAQ:RHCI)
and West Virginia University Hospitals announced today that they have completed
a transaction under which West Virginia University Hospitals has acquired, for
$14.8 million in cash, Ramsay Health Care, Inc.'s Chestnut Ridge Hospital, a 70
bed psychiatric facility located on the West Virginia University Campus in
Morgantown.
Luis E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc., stated,
"We are delighted that we have finalized the transaction with West Virginia
University Hospitals. The consummation of this transaction and the recently
announced transaction with Charter Behavioral Health Systems reflects our
commitment to our debt reduction strategy and our focus on the youth services
industry."
"Patient care has continued without any interruption, and the transaction has
been a smooth one," says Bruce McClymods, President and CEO of WVUH. "We have
retained the same management team that made this a successful hospital in the
past, and the employees are now a part of our hospital family."
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements as defined under the safe
harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties.
Actual operations and results may differ materially from those expected in the
forward looking statements made by the Company. Please refer to Ramsay's
filings with the Securities Exchange Commission for additional information.
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 treatment centers, group homes
and other specialized treatment and educational youth programs in 9 states and
Puerto Rico.
<PAGE> 2
West Virginia University Hospitals is a private, not-for-profit corporation
that provides health care services, clinical education and research in support
of the mission of the Robert C. Byrd Health Sciences Center at West Virginia
University. It is a member institution of the West Virginia United Health
System. The Department of Behavioral Medicine and Psychiatry of the WVU School
of Medicine is located in Chestnut Ridge Hospital and provides its medical
staff.
###
Contacts: Isa Diaz Bill Case
Vice President Manager, News Service
Corporate Relations West Virginia University Hospitals
Ramsay Health Care, Inc. (304) 293-7087
(305) 569-4626
