<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 9, 1999
--------------------------------
UICI
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-14320 75-2044750
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(State or other jurisdiction of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
</TABLE>
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 392-6700
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
Fourth Quarter 1999 Pre-Tax Operating Loss
On December 9, 1999, UICI ("UICI" or the "Company") announced that it
expects to record, in the fourth quarter ending December 31, 1999, a
pre-tax operating loss, resulting from an expected pre-tax operating loss
at UICI's United CreditServ subsidiary of approximately $79 million ($52
million after tax, or approximately ($1.12) per share). The operating
results for the 4th quarter of all other UICI business units are currently
in line with expectations.
The operating loss resulted primarily at United CreditServ from
increased charges to reserves for credit card losses associated with the
relatively new ACE credit card program and the anticipated write-down of
certain assets. Beginning in the fourth quarter of 1998 and throughout
1999, United CreditServ has experienced a significant increase in new ACE
cards issued. United CreditServ has taken steps to substantially
restructure and reprice the ACE credit card product. United CreditServ and
its subsidiaries provide credit cards in the sub-prime market.
UICI has taken significant steps during 1999 to strengthen United
CreditServ's management team and operating systems. In May 1999, UICI
purchased the remaining minority interest in the business from United
CreditServ's former chief executive. Subsequently and over the next several
months, UICI installed an entirely new management team, including William
P. Benac (formerly UICI's chief financial officer now serving as United
CreditServ's President and Chief Executive Officer), Vernon R. Woelke
(formerly UICI's chief accounting officer now serving as Chief Financial
Officer) and, most recently, W. David Huddleston (formerly President of
Associates National Bank now serving as President and Chief Executive
Officer of United Credit National Bank, United CreditServ's credit card
issuing bank). United CreditServ's new management team has implemented
significant changes to information and portfolio servicing systems, has
expanded the company's internal audit and compliance functions and has
intensified collection activities.
Agreement to Merge Insurdata Incorporated and HealthAxis.com, Inc.
The Company has executed a definitive merger agreement with Provident
American Corporation, providing for the merger of Insurdata, a UICI
subsidiary and one of the largest providers of healthcare administration
software solutions, with HealthAxis.com, Inc., one of the Internet's
leading online health insurance e-commerce providers. The combined entity
will retain the "HealthAxis" name.
In the merger, UICI will in effect transfer its majority interest in
Insurdata for a 44% interest in the new, combined HealthAxis. UICI
anticipates that, for financial reporting purposes, upon closing of the
merger UICI will record in the first quarter of 2000 a one-time gain in the
amount of approximately $140 million. Thereafter, HealthAxis will be
reflected upon the books of UICI as an unconsolidated subsidiary accounted
for under the equity method, with UICI recording its proportionate share of
HealthAxis' income and loss. In connection with the merger, the new
HealthAxis expects to record goodwill and other intangibles in excess of
$300 million, which is expected to be ratably amortized over a 3-5 year
period. In particular, UICI's share of the non-cash charges associated with
amortization of this goodwill is currently expected to be approximately $45
million (assuming a three year amortization period) in each of 2000, 2001
and 2002.
UICI also announced that HealthAxis had completed, concurrently with
the signing of the definitive merger agreement with Insurdata, a $57
million equity financing with institutional
2
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investors, led by Brown Simpson Asset Management and including Lehman
Brothers International, Royal Bank of Canada, LBI Group, Inc. and Tudor
Investment Corporation. Several of the funding parties are currently
investors in either Provident American Corporation or HealthAxis.com.
Michael Ashker, currently Chief Executive Officer of HealthAxis.com,
will become CEO of the combined entity. Dennis Maloney, currently Chief
Executive Officer of Insurdata, will become Chief Operating Officer of the
new HealthAxis. Gregory Mutz, UICI President and CEO, Ronald Jensen, UICI
Chairman, and Dennis Maloney will join the new nine person HealthAxis Board
of Directors, along with three representatives from Provident American and
three independent Directors selected jointly by UICI and Provident
American. HealthAxis will maintain its headquarters in the Philadelphia
area, and will maintain a significant operational and management presence
in Dallas. HealthAxis will also have eight other technology or operational
locations in the United States as well as abroad. The new combined
HealthAxis will employ over 350 information technology professionals with
significant experience in developing sophisticated technology solutions
both for e-commerce health insurance sales as well as in the claims and
administration areas. Although the combined company's consumer and
business-to-business e-commerce services will be marketed separately, all
other corporate functions will be consolidated, including technology,
sales, finance/accounting, human resources, and legal.
In a separate press release, the Company reaffirmed that UICI's ability
to close the transaction contemplated by the Insurdata - - HealthAxis.com
merger agreement should not be affected by the announced operating loss at
its United CreditServ, Inc. subsidiary.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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Exhibit Page
Number Description of Exhibit Number
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99.1 Press release announcing that the Company anticipates recording a fourth
quarter pre-tax operating loss at its United CreditServ subsidiary ------
99.2 Press release announcing that the Company's Insurdata incorporated
subsidiary has executed a merger agreement with HealthAxis.com, Inc. ------
99.3 Press release reaffirming that Insurdata transaction unAffected by
announced problems at its United CreditServ subsidiary ------
</TABLE>
3
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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.
UICI
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(Registrant)
Date December 10, 1999 By /s/ Gregory T. Mutz
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Gregory T. Mutz
President and Chief Executive
Officer
Date December 10, 1999 By /s/ William Benac
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William Benac
Executive Vice President and Chief
Financial Officer
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INDEX TO EXHIBITS
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Exhibit
Number Description of Exhibit
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<S> <C>
99.1 Press release announcing that the Company anticipates recording a
fourth quarter pre-tax operating loss at its United CreditServ
subsidiary
99.2 Press release announcing that the Company's Insurdata incorporated
subsidiary has executed a merger agreement with HealthAxis.com, Inc.
99.3 Press release reaffirming that Insurdata transaction unAffected by
announced problems at its United CreditServ subsidiary
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EXHIBIT 99.1
UICI
News Release: Contact: Warren B. Idsal, Vice President
UICI
4001 McEwen, Suite 200
Dallas, Texas 75244
Phone: (972) 392-6700
(For Immediate Release)
UICI ANNOUNCES EXPECTED 4TH QUARTER OPERATING LOSS DUE TO SIGNIFICANT LOSS AT
UNITED CREDITSERV SUBSIDIARY
Dallas, TX December 9, 1999 --- UICI (the "Company") (NYSE: Symbol "UCI")
announced today that it expects to record, in the fourth quarter ending December
31, 1999, a pre-tax operating loss, resulting from an expected pre-tax operating
loss at UICI's United CreditServ subsidiary of approximately $79 million ($52
million after tax, or approximately ($1.12) per share). The operating results
for the 4th quarter of all other UICI business units are currently in line with
expectations.
The operating loss resulted primarily at United CreditServ from
increased charges to reserves for credit card losses associated with the
relatively new ACE credit card program and the anticipated write-down of certain
assets. Beginning in the fourth quarter of 1998 and throughout 1999, United
CreditServ has experienced a significant increase in new ACE cards issued.
United CreditServ has taken steps to substantially restructure and reprice the
ACE credit card product. United CreditServ and its subsidiaries provide credit
cards in the sub-prime market.
UICI has taken significant steps during 1999 to strengthen United
CreditServ's management team and operating systems. In May 1999, UICI purchased
the remaining minority interest in the business from United CreditServ's former
chief executive. Subsequently and over the next several months, UICI installed
an entirely new management team, including William P. Benac (formerly UICI's
chief financial officer now serving as United CreditServ's President and Chief
Executive Officer), Vernon R. Woelke (formerly UICI's chief accounting officer
now serving as Chief Financial Officer) and, most recently, W. David Huddleston
(formerly President of Associates National Bank now serving as President and
Chief Executive Officer of United Credit National Bank, United CreditServ's
credit card issuing bank). United CreditServ's new management team has
implemented significant changes to information and portfolio servicing systems,
has expanded the company's internal audit and compliance functions and has
intensified collection activities.
Gregory T. Mutz, President and CEO of UICI, commented: "Obviously, I am
extremely disappointed in the developments at United CreditServ and the poor
performance of this business. Nonetheless, I believe we have identified the
sources of the problems and have taken all appropriate corrective actions.
Needless to say, UICI will continue to closely monitor United CreditServ's
credit card portfolio. I continue to believe we have a valuable business, that
provides much needed services for our customers, and that the current management
team,
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together with the other loyal and hardworking employees of this operation,
will return United CreditServ to a profitable operation during the year 2000."
UICI has previously announced the pending acquisition of HealthPlan
Services Corporation in a stock-for-stock merger transaction. UICI has advised
HealthPlan Services of the expected pre-tax operating loss at United CreditServ.
UICI has expressed its intent to proceed with the transaction, subject to
obtaining financing sufficient to retire HealthPlan Services' outstanding debt
on terms acceptable to UICI.
With respect to the HealthPlan Services transaction, Mr. Mutz
commented: "I am hopeful of finding a mutually satisfactory way to complete the
HealthPlan Services transaction. We continue to believe that there is a strong
strategic fit between HealthPlan Services and UICI. We are working with
HealthPlan Services' senior management team, our investment bankers and Bank of
America (UICI'S lead commercial bank) to structure a transaction that is fair
and reasonable for both companies in light of these developments at United
CreditServ."
CORPORATE PROFILE:
UICI, headquartered in Dallas, Texas, is a diversified financial services
company offering financial services, health administrative services and
insurance through its various subsidiaries and divisions to niche consumer and
institutional markets. UICI provides health insurance through its insurance
subsidiaries, United Group Association and Cornerstone Marketing of America;
Internet-enabled software for health insurance and healthcare markets through
Insurdata; enrollment, billing and collection claims administration and risk
management services for healthcare payors and providers through UICI
Administrators; credit cards for individuals with no credit or troubled credit
histories through United CreditServ; financial services and products for
college, undergraduates and graduate students, including providing
federally-guaranteed student loans through the Educational Finance Group; and
manages blocks of life insurance and life insurance products to selected markets
through its OKC Division.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Certain statements in this press release are "forward looking statements"
within the meaning of the Private Securities Litigation Act of 1995. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results to differ materially. Such risks, uncertainties and
other factors include, but are not limited to, changes in general economic
conditions; changes in the regulatory environment; levels of competition
(including managed health care competition in the health industry); availability
of, and volatility of interest rates associated with, funding sources to
originate student loans and credit card receivables; the ability of the Company
and its third party vendors to become Year 2000 Ready; and other factors
described in detail in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
UICI press releases and other company information are available at UICI's
website located at www.uici.net.
<PAGE> 1
EXHIBIT 99.2
UICI
NEWS RELEASE:
Contact: Warren B. Idsal, Vice President
UICI
4001 McEwen, Suite 200
Dallas, Texas 75244
Phone: (972) 392-6700
(For Immediate Release)
UICI ANNOUNCES MERGER OF INSURDATA WITH HEALTHAXIS.COM TO FORM THE INTERNET'S
FIRST FULLY INTEGRATED E-COMMERCE INSURANCE PLATFORM.
THE MERGER OF INSURDATA WITH HEALTHAXIS.COM WILL FORM AN INTERNET COMPANY
PROVIDING END-TO-END, DIGITAL INSURANCE SALES, MARKETING, AND ADMINISTRATION
SERVICES.
Dallas, TX, December 9, 1999 --- UICI (the "Company") (NYSE: Symbol "UCI")
announced today that it has signed a definitive merger agreement with Provident
American Corporation (NASDAQ: Symbol "PAMC") providing for the merger of
Insurdata, a UICI subsidiary and one of the largest providers of healthcare
administration software solutions, with HealthAxis.com, one of the Internet's
leading online health insurance e-commerce providers. The combined entity, which
will retain the "HealthAxis" name, will be one of the largest players in the
web-enabled health insurance space, with estimated pro forma 1999 revenues of
$42 million.
In the merger, UICI will in effect transfer its majority interest in
Insurdata for a 44% interest in the new, combined HealthAxis. UICI anticipates
that, for financial reporting purposes, upon closing of the merger UICI will
record in the first quarter of 2000 a one-time gain in the amount of
approximately $140 million. Thereafter, HealthAxis will be reflected upon the
books of UICI as an unconsolidated subsidiary accounted for under the equity
method, with UICI recording its proportionate share of HealthAxis' income and
loss. In connection with the merger, the new HealthAxis expects to record
goodwill and other intangibles in excess of $300 million, which is expected to
be ratably amortized over a 3-5 year period. In particular, UICI's share of the
non-cash charges associated with amortization of this goodwill is currently
expected to be approximately $45 million (assuming a three year amortization
period) in each of 2000, 2001 and 2002.
UICI also announced that HealthAxis had completed, concurrently with
the signing of the definitive merger agreement with Insurdata, a $57 million
equity financing with institutional investors, led by Brown Simpson Asset
Management and including Lehman Brothers International, Royal Bank of Canada,
LBI Group, Inc. and Tudor Investment Corporation. Several of the funding parties
are currently investors in either Provident American Corporation or
HealthAxis.com.
<PAGE> 2
Michael Ashker, currently Chief Executive Officer of HealthAxis.com,
will become CEO of the combined entity. Dennis Maloney, currently Chief
Executive Officer of Insurdata, will become Chief Operating Officer of the new
HealthAxis. Gregory Mutz, UICI President and CEO, Ronald Jensen, UICI Chairman,
and Dennis Maloney will join the new 9 person HealthAxis Board of Directors,
along with 3 representatives from Provident American and 3 independent Directors
selected jointly by UICI and Provident American. HealthAxis will maintain its
headquarters in the Philadelphia area, and will maintain a significant
operational and management presence in Dallas. HealthAxis will also have eight
other technology or operational locations in the United States as well as
abroad. The new combined HealthAxis will employ over 350 information technology
professionals with significant experience in developing sophisticated technology
solutions both for e-commerce health insurance sales as well as in the claims
and administration areas. Although the combined company's consumer and
business-to-business e-commerce services will be marketed separately, all other
corporate functions will be consolidated, including technology, sales,
finance/accounting, human resources, and legal.
Insurdata's proprietary software group, to be designated as HealthAxis'
Application Solutions Group, provides web-enabled, integrated proprietary
software applications to healthcare payors -- insurance companies, third-party
administrators, and large, self-funded groups -- that address the workflow and
processing inefficiencies embedded in the healthcare insurance industry. The
Application Solutions Group, through its proprietary applications, provides
Internet enrollment and online access to health insurance plan and claims data.
These software applications increase the efficiency of a client's interaction
with other participants by eliminating paper-based processes and improving the
client's ability to share data with plan members and other industry
participants. Additional information may be found on Insurdata's website at
www.insurdata.com.
HealthAxis will continue to market its fully transaction-enabled,
online insurance retail website to individuals and small businesses through
www.healthaxis.com. HealthAxis.com is a fully licensed online health insurance
agency representing leading carriers, including Aetna/US HealthCare, WellPoint
Networks, CIGNA, UICI, Blue Cross-Blue Shield Association and Aegon. The
HealthAxis web site offers product information, plan quotes, the ability to buy
insurance products online, and both pre- and post-sale customer service to
health insurance consumers. HealthAxis' retail platform combines the benefits of
a highly efficient, low-cost channel of distribution with a superior insurance
shopping experience. HealthAxis has exclusive marketing agreements for the sale
of health insurance products with America Online, Lycos, Snap.com and CNet.
UICI believes that the combination will open up significant new
business opportunities for HealthAxis. HealthAxis anticipates targeting
worksites through the Application Solution Group's client base of large,
self-funded employer health plans. In addition, HealthAxis' attractiveness to
prospective Carrier Partners is enhanced by its ability to provide not only
distribution services, but also a suite of efficiency tools across multiple
business activities. Moreover, Insurdata's 350 information technology
professionals will provide a significant advantage to HealthAxis in expediting
the carrier integration process, by which new carriers are added "live" to the
www.healthaxis.com e-commerce platform. Finally, the $55 million capital
infusion associated with the merger will enable HealthAxis to increase its
investment in new product development, sales, and customer service.
Gregory T. Mutz, President and CEO of UICI, commented: "UICI is
delighted to announce the merger of our Insurdata unit with HealthAxis. We view
this combination as a substantial step toward capitalizing upon the intellectual
and technology value of Insurdata by
<PAGE> 3
giving UICI a significant e-commerce platform as well as an enhanced capability
in our health care claim and administration operations. We believe that the
combined company will be uniquely positioned to serve, on an end-to-end basis,
both consumers and payors with an integrated web-based platform. For payors, the
new HealthAxis can now offer carriers a comprehensive suite of web-enabled
software solutions for marketing, sales, and plan administration. For consumers
and small businesses, the Company will be able to offer an enhanced set of
products and services utilizing its Internet-based platform to seamlessly
connect carriers and purchasers. We feel, too, that the funding of $57 million
of equity into HealthAxis is a significant vote of confidence in HealthAxis'
business plan."
Completion of the merger is subject to satisfaction of certain closing
conditions, including Hart-Scott Rodino antitrust clearance and receipt of
opinions that the merger will be tax-free to HealthAxis, Insurdata and their
respective shareholders. It is currently anticipated that the merger transaction
will close in early January 2000. Upon the closing of the merger, UICI will own
approximately 44% and Provident American will own approximately 35% of the new
HealthAxis, with the remaining shares held among Intel Corporation, America
Online, First Health Corporation, the Brown Simpson investment group, members of
management and other institutional investors.
UICI has previously announced its pending acquisition of HealthPlan
Services Corporation in a stock-for-stock merger transaction. HealthPlan
Services Corporation holds approximately 950,000 shares of HealthAxis.com, Inc,
which shares will represent approximately 2% of the new HealthAxis' outstanding
equity.
CORPORATE PROFILE:
UICI, headquartered in Dallas, Texas, is a diversified financial services
company offering financial services, health administrative services and
insurance through its various subsidiaries and divisions to niche consumer and
institutional markets. UICI provides health insurance through its insurance
subsidiaries, United Group Association and Cornerstone Marketing of America;
Internet-enabled software for health insurance and healthcare markets through
Insurdata; enrollment, billing and collection claims administration and risk
management services for healthcare payors and providers through UICI
Administrators; credit cards for individuals with no credit or troubled credit
histories through United CreditServ; financial services and products for
college, undergraduates and graduate students, including providing
federally-guaranteed student loans through the Educational Finance Group; and
manages blocks of life insurance and life insurance products to select markets
through its OKC Division.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this press release are "forward looking statements" within
the meaning of the Private Securities Litigation Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially. Such risks, uncertainties and other factors
include, but are not limited to, changes in general economic conditions; changes
in the regulatory environment; levels of competition (including managed health
care competition in the health industry); availability of, and volatility of
interest rates associated with, funding sources to originate student loans and
credit card receivables; the ability of the Company and its third party vendors
to become Year 2000 Ready; and other factors described in detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
UICI press releases and other company information are available at UICI's
website located at www.uici.net.
<PAGE> 1
EXHIBIT 99.3
UICI
Contact: Warren B. Idsal, Vice President
UICI
4001 McEwen, Suite 200
Dallas, Texas 75244
Phone: (972) 392-6700
(For Immediate Release)
UICI AFFIRMS INSURDATA TRANSACTION UNAFFECTED BY PROBLEMS IN CREDIT CARD UNIT.
NO CHANGE IN PLANS WITH RESPECT TO MERGER OF INSURDATA UNIT INTO
HEALTHAXIS.COM.
Dallas, TX, December 10, 1999 --- UICI (NYSE: Symbol "UCI"), a diversified
financial services company, today reaffirmed that the unexpected losses in
its credit card division, disclosed yesterday, are completely isolated from
the planned sale of its Insurdata unit to HealthAxis.com. The Company
stated without reservation that the two matters are entirely unrelated.
UICI announced yesterday that it has signed a definitive merger agreement
with Provident American Corporation (NASDAQ: Symbol "PAMC") providing for
the merger of Insurdata, a UICI subsidiary and one of the largest providers
of healthcare administration software solutions, with HealthAxis.com, one
of the Internet's leading online health insurance e-commerce providers. The
transaction is anticipated to close in January of 2000.
Gregory T. Mutz, President and CEO of UICI, said, "The merger between
HealthAxis and Insurdata will move forward exactly as previously announced.
Activities in other areas of our business have absolutely no bearing on our
strategic plan in regards to the Insurdata merger. UICI remains committed
to this business combination. I believe HealthAxis will contribute
significantly to creating shareholder value here at UICI."
CORPORATE PROFILE:
UICI, headquartered in Dallas, Texas, is a diversified financial services
company offering financial services, health administrative services and
insurance through its various subsidiaries and divisions to niche consumer
and institutional markets. UICI provides health insurance through its
insurance subsidiaries, United Group Association and Cornerstone Marketing
of America; Internet-enabled software for health insurance and healthcare
markets through Insurdata; enrollment, billing and collection claims
administration and risk management services for healthcare payors and
providers through UICI Administrators; credit cards for individuals with no
credit or troubled credit histories through United CreditServ; financial
services and products for college, undergraduates and graduate students,
including providing federally-guaranteed
<PAGE> 2
student loans through the Educational Finance Group; and manages blocks of
life insurance and life insurance products to select markets through its
OKC Division.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this press release are "forward looking statements"
within the meaning of the Private Securities Litigation Act of 1995. Such
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results to differ materially. Such risks,
uncertainties and other factors include, but are not limited to, changes in
general economic conditions; changes in the regulatory environment; levels
of competition (including managed health care competition in the health
industry); availability of, and volatility of interest rates associated
with, funding sources to originate student loans and credit card
receivables; the ability of the Company and its third party vendors to
become Year 2000 Ready; and other factors described in detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
UICI press releases and other company information are available at UICI's
website located at www.uici.net.
