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) October 21, 1997
-----------------------
INTEGRATED HEALTH SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-12306 23-2428312
- ---------------------------- ----------- ------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10065 Red Run Boulevard, Owings Mills, Maryland 21117
- ----------------------------------------------- ---------
of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 998-8400
-----------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 21, 1997, Integrated Health Services, Inc. ("IHS") acquired
RoTech Medical Corporation ("RoTech") through merger of a wholly-owned
subsidiary of IHS into RoTech (the "Merger"), with RoTech becoming a
wholly-owned subsidiary of IHS. RoTech provides home healthcare products and
services, with an emphasis on home respiratory, home medical equipment and
infusion therapy, primarily in non-urban areas. RoTech currently operates 631
home health locations in 36 states and approximately 26 primary care physicians
practices.
Under the terms of the Merger, holders of RoTech Common Stock received for
each share of RoTech Common Stock 0.5806 of a share of IHS Common Stock (the
"Exchange Ratio"), having a market value of $19.16 based on the $33.00 closing
price of the IHS Common Stock on October 21, 1997, the effective date of the
Merger. Options to purchase RoTech Common Stock ("RoTech Options") were
converted at the closing into options to purchase IHS Common Stock based on the
Exchange Ratio. IHS issued approximately 15,350,670 shares of IHS Common Stock
in the Merger, and reserved for issuance approximately 1,841,700 shares of IHS
Common Stock issuable upon exercise of RoTech Options. In addition, RoTech's
outstanding 5 1/4% convertible subordinated debentures became convertible into
approximately 2,433,000 shares of IHS Common Stock at a conversion price of
$45.21 per share of IHS Common Stock. The Merger consideration aggregated
approximately $514.8 million, substantially all of which will be recorded as
goodwill. The transaction will be treated as a purchase for accounting and
financial reporting purposes. IHS repaid the $199.7 million of RoTech bank debt
assumed in the transaction with the proceeds of the term loans under its new
revolving credit and term loan facility.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
1. The consolidated balance sheets of RoTech Medical Corporation and
subsidiaries at July 31, 1996 and 1997, and the related consolidated
statements of operations, shareholders' equity and cash flows for each
of the years in the three-year period ended July 31, 1997, and the
notes thereto, audited by Deloitte & Touche LLP, independent
accountants, are included in IHS' Current Report on Form 8-K dated
October 21, 1997 and filed with the Securities and Exchange Commission
on November 5, 1997.
(B) PRO FORMA FINANCIAL INFORMATION.
IHS' unaudited pro forma consolidated balance sheet at September 30,
1997 and statements of operations for the year ended December 31, 1996
and the nine months ended September 30, 1997, reflecting the
acquisition of RoTech Medical Corporation and certain other
acquisitions and divestitures consummated by IHS during the period
commencing January 1, 1996 and ending September 30, 1997, are included
herein.
(C) EXHIBITS.
2. Agreement and Plan of Merger, dated as of July 6, 1997, among
Integrated Health Services, Inc., IHS Acquisition XXIV, Inc. and
RoTech Medical Corporation (incorporated herein by reference to
Exhibit 2 to Current Report on Form 8-K dated July 6, 1997 of
Integrated Health Services, Inc.).
-2-
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma statements of operations give effect to
(i) the sale by IHS of its pharmacy division in July 1996 (the "Pharmacy Sale"),
(ii) the sale by IHS of a majority interest in its assisted living services
subsidiary ("ILC") in October 1996 (the "ILC Offering"), (iii) the acquisition
of First American Health Care of Georgia, Inc. ("First American") in October
1996 (the "First American Acquisition"), (iv) the acquisition of Community Care
of America, Inc. ("CCA") in September 1997 (the "CCA Acquisition"), (v) the
acquisition of the lithotripsy division (the "Coram Lithotripsy Division") of
Coram Healthcare Corporation (the "Coram Lithotripsy Acquisition") in October
1997, (vi) the acquisition of RoTech Medical Corporation ("RoTech") in October
1997 (the "RoTech Acquisition") and (vii) the acquisition of (a) Vintage Health
Care Center, a skilled nursing and assisted living facility, in January 1996
(the "Vintage Acquisition"), (b) Rehab Management Systems, Inc., an outpatient
rehabilitation company, in March 1996 (the "RMS Acquisition"), (c) Hospice of
the Great Lakes, Inc., a hospice company, in May 1996 (the "Hospice
Acquisition"), (d) J.R. Rehab Associates, Inc., an inpatient and outpatient
rehabilitation center, in August 1996 (the "J.R. Rehab Acquisition"), (e)
Extendicare of Tennessee, Inc., a home health company, in August 1996 (the
"Extendicare Acquisition"), (f) Edgewater Home Infusion Services, Inc., a home
infusion company, in August 1996 (the "Edgewater Acquisition"), (g) Century Home
Services, Inc., a home health services company, in September 1996 (the "Century
Acquisition"), (h) Signature Home Care, Inc., a home health company, in
September 1996 (the "Signature Acquisition"), (i) Mediq Mobile X-Ray Services,
Inc., a mobile diagnostics company, in November 1996 (the "Mediq Acquisition"),
(j) Total Rehab Services, LLC and Total Rehab Services 02, LLC, providers of
contract rehabilitation and respiratory services, in November 1996 (the "Total
Rehab Acquisition"), (k) Lifeway Inc., a physician management and disease
management company, in November 1996 (the "Lifeway Acquisition"), (l) In-Home
Health Care, Inc., a home health company, in January 1997 (the "In-Home
Acquisition"), (m) Portable X-Ray Labs, Inc., a mobile diagnostics company, in
February 1997 (the "Portable X-Ray Acquisition"), (n) Coastal Rehabilitation,
Inc., an inpatient rehabilitation company, in April 1997 (the "Coastal
Acquisition"), (o) Health Care Industries, Inc., a home health company, in June
1997 (the "Health Care Industries Acquisition"), (p) Rehab Dynamics, Inc. and
Restorative Therapy, Ltd., related contract rehabilitation companies, in June
1997 (the "Rehab Dynamics Acquisition"), (q) Ambulatory Pharmaceutical Services,
Inc. and APS American, Inc., related home health companies, in August 1997 (the
"APS Acquisition"), (r) Arcadia Services, Inc., a home health company, in August
1997 (the "Arcadia Acquisition") and (s) Barton Creek Healthcare, Inc., a home
health company, in September 1997 (the "Barton Creek Acquisition"). The pro
forma statements of operations for the year ended December 31, 1996 and the nine
months ended September 30, 1997 were prepared as if all of the foregoing
transactions were consummated on January 1, 1996. The pro forma statement of
operations information does not give effect to the acquisition of the assets of
three small ancillary service businesses and the acquisition of five mobile
diagnostic companies during the nine months ended September 30, 1997 or various
financings conducted by IHS in 1996 and 1997.
-3-
<PAGE>
The pro forma balance sheet at September 30, 1997 was prepared as if the
Coram Lithotripsy Acquisition and the RoTech Acquisition were consummated at
September 30, 1997. The Pharmacy Sale, the ILC Offering, the First American
Acquisition, the CCA Acquisition, the Vintage Acquisition, the RMS Acquisition,
the Hospice Acquisition, the J.R. Rehab Acquisition, the Extendicare
Acquisition, the Edgewater Acquisition, the Century Acquisition, the Signature
Acquisition, the Mediq Acquisition, the Total Rehab Acquisition, the Lifeway
Acquisition, the In-Home Acquisition, the Portable X-Ray Acquisition, the
Coastal Acquisition, the Health Care Industries Acquisition, the Rehab Dynamics
Acquisition, the APS Acquisition, the Arcadia Acquisition and the Barton Creek
Acquisition were all consummated prior to September 30, 1997 and are therefore
reflected in the actual September 30, 1997 balance sheet.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The unaudited pro forma
financial information set forth below is not necessarily indicative of IHS'
financial position or the results of operations that actually would have
occurred if the transactions had been consummated on the dates shown. In
addition, they are not intended to be a projection of results of operations that
may be obtained by IHS in the future. The unaudited pro forma financial
information should be read in conjunction with the consolidated financial
statements and related notes thereto of IHS and certain acquired companies
included in IHS' filings with the Securities and Exchange Commission.
-4-
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
PRO FORMA BALANCE SHEET AS OF SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
CORAM LITHOTRIPSY
DIVISION
IHS ---------------------------------
ACTUAL ACTUAL(1) ADJUSTMENTS
------------ ----------------- -----------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents .................. $ 58,915 $ --
Temporary investments ..................... 821,965 -- $ (131,000)
Patient accounts and third-party payor
settlements receivable, net ............ 377,546 1,930
Inventories, prepaid expenses and other
current assets ........................... 36,457 4,356
Income tax receivable ..................... 25,630 --
---------- -------- -----------
Total current assets ..................... 1,320,513 6,286 (131,000)
---------- -------- -----------
Property, plant and equipment, net ......... 948,120 5,776
Assets held for sale ........................ 12,109 --
Intangible assets ........................... 836,804 77,745 62,378 (3)
Other assets .............................. 110,534 3,736
---------- -------- -----------
Total assets ........................... $3,228,080 $93,543 $ (68,622)
========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C> <C>
Current maturities of long-term debt ...... $ 6,782 $ --
Accounts payable and accrued expenses ...... 332,813 19,921 $5,000(3)
---------- ---------- ------
Total current liabilities ............... 339,595 19,921 5,000
---------- ---------- ------
Long-term debt:
Convertible subordinated debentures ...... 258,750 --
Other long-term debt less current
maturities .............................. 1,933,233 --
---------- ----------
Total long-term debt ..................... 2,191,983 --
---------- ----------
Other long-term liabilities(2) ............ 36,114 --
Deferred income taxes ..................... 27,501 --
Deferred gain on sale-leaseback
transactions .............................. 5,463 --
Stockholders' equity:
Common stock .............................. 27 --
Additional paid-in capital ............... 531,500 --
Retained earnings .......................... 108,221 73,622 $ (73,622)(4)
Treasury stock ........................... (12,324) --
---------- ---------- -----------
Total stockholders'
equity ................................. 627,424 73,622 (73,622)
---------- ---------- -----------
Total liabilities and stockholders'
equity .............................. $3,228,080 $ 93,543 $ (68,622)
========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
ASSETS
ROTECH ROTECH PRO FORMA
ACTUAL(1)* ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents .................. $ 12,819 $ 71,734
Temporary investments ..................... -- $(180,991)(5) 509,974
Patient accounts and third-party payor
settlements receivable, net ............ 112,341 491,817
Inventories, prepaid expenses and other
current assets ........................... 26,980 67,793
Income tax receivable ..................... -- 800 (6) 26,430
-------- --------- -----------
Total current assets ..................... 152,140 (180,191) 1,167,748
-------- --------- -----------
Property, plant and equipment, net ......... 131,240 1,085,136
Assets held for sale ........................ -- 12,109
Intangible assets ........................... 272,795 306,967 (7) 1,556,689
Other assets .............................. 4,557 118,827
-------- --------- -----------
Total assets ........................... $560,732 $126,776 $3,940,509
======== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Current Liabilities:
<S> <C> <C> <C>
Current maturities of long-term debt ...... $180,991 $(180,991)(5) $ 6,782
Accounts payable and accrued 4,750 (6)
expenses ................................. 30,970 10,250 (8) 403,704
-------- --------- -----------
Total current liabilities ............... 211,961 (165,991) 410,486
-------- --------- -----------
Long-term debt:
Convertible subordinated debentures ...... 110,000 368,750
Other long-term debt less current
maturities .............................. -- 1,933,233
-------- ----------
Total long-term debt ..................... 110,000 2,301,983
-------- ----------
Other long-term liabilities(2) ............ 20,735 36,114
Deferred income taxes ..................... 48,236
Deferred gain on sale-leaseback
transactions .............................. -- -- 5,463
Redeemable Common stock .................... 4,076 (4,076) (9) --
Stockholders' equity:
Common Stock................................ 5 11 (10) 43
Additional paid-in capital ............... 131,269 383,468 (10) 1,046,237
(83,534)(10)
Retained earnings ......................... 83,534 (3,950) (6) 104,271
Treasury stock ........................... (848) 848 (10) (12,324)
-------- -------- -----------
Total stockholders'
equity ................................. 213,960 296,843 1,138,227
-------- -------- -----------
Total liabilities and stockholders'
equity .............................. $560,732 $126,776 $3,940,509
======== ======== ==========
</TABLE>
- ----------
* As of July 31, 1997
-5-
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
IHS PHARMACY ILC
ACTUAL(11) ADJUSTMENTS(12) ADJUSTMENTS(13)
------------- ------------------- -------------------
<S> <C> <C> <C>
Net revenues:
Basic medical services ..................... $ 389,773 $ (16,101)(a)
Specialty medical services .................. 999,209 $ (52,331)(a)
Management services and other ............... 45,713 (1,020)(a)
----------- ------------ ------------
Total revenues .......................... 1,434,695 (52,331) (17,121)
Costs and expenses:
Operating, general and administrative
expenses.................................... 1,154,924 (43,279)(a) (12,453)(a)
Depreciation and amortization ............... 41,681 (1,785)(a) (833)(a)
Rent ....................................... 77,785 (838)(a) (1,885)(a)
Interest, net .............................. 64,110 (3,817)(b) (963)(b)
Non-recurring costs (income) ............... (14,457) 34,298 (c) (8,497)(d)
----------- ------------ ------------
Total costs and expenses ................. 1,324,043 (15,421) (24,631)
Earnings (loss) before equity in earnings
(loss) of affiliates, income taxes
and extraordinary items .................... 110,652 (36,910) 7,510
Equity in earnings (loss) of affiliates ...... 828 722
----------- ------------ ------------
Earnings (loss) before income taxes and
extraordinary items ...................... 111,480 $ (36,910) $ 8,232
============ ============
Federal and state income taxes ................ 63,715
-----------
Earnings before extraordinary items ......... $ 47,765
===========
Earnings per share before extraordinary items:
Primary .................................... $ 2.03
Fully-diluted .............................. 1.82
===========
Weighted average shares:
Primary .................................... 23,574
Fully-diluted .............................. 31,653
===========
</TABLE>
<TABLE>
<CAPTION>
CORAM
LITHOTRIPSY
FIRST FIRST DIVISION
AMERICAN AMERICAN CCA CCA ------------
ACTUAL(14) ADJUSTMENTS ACTUAL(15) ADJUSTMENTS ACTUAL(16)
-------------- ----------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenues:
Basic medical services ..................... $ -- $ 82,653 $ --
Specialty medical services .................. 387,547 11,367 48,958
Management services and other ............... 3,115 2,974 --
---------- --------- --------
Total revenues .......................... 390,662 96,994 48,958
Costs and expenses:
Operating, general and administrative
expenses .................................. 406,800 85,201 20,634
Depreciation and amortization ............... 5,439 $ 4,501 (e) 2,056 $ 1,854 (e) 6,773
Rent ....................................... -- 5,982 --
Interest, net .............................. 6,208 9,314 (b) 5,013 1,395 (b) 15
Non-recurring costs (income) ............... 3,468 22,062 --
---------- ---------- --------- ---------- --------
Total costs and expenses ................. 421,915 13,815 $120,314 3,249 27,422
Earnings (loss) before equity in earnings
(loss) of affiliates,
income taxes and extraordinary items ....... (31,253) (13,815) (23,320) (3,249) 21,536
Equity in earnings (loss) of affiliates ...... (671) -- 312
---------- ---------- --------- ---------- --------
Earnings (loss) before income taxes and
extraordinary items ...................... $ (31,924) $ (13,815) $(23,320) $ (3,249) $21,848
========== ========== ========= ========== ========
Federal and state income taxes ................
Earnings before extraordinary items .........
Earnings per share before extraordinary
items:
Primary ....................................
Fully-diluted ..............................
Weighted average shares:
Primary ....................................
Fully-diluted ..............................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORAM LITHOTRIPSY OTHER OTHER
DIVISION ROTECH ROTECH ACQUISITIONS ACQUISITIONS
ADJUSTMENTS ACTUAL(17)* ADJUSTMENT ACTUAL(18) ADJUSTMENTS
------------------------------ ------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Net revenues:
Basic medical services ..................... $ -- $ 292
Specialty medical services .................. 344,590 269,690
Management services and other ............... -- 3
--------- ---------
Total revenues .......................... 344,590 269,985
Costs and expenses:
Operating, general and administrative ex-
penses...................................... 258,891 259,532
Depreciation and amortization ............... $ (533)(e) 36,074 $ 2,850 (e) 2,359 $ 4,535 (e)
Rent ....................................... -- 3,474
Interest, net .............................. 9,746 (b) 9,456 475 (f) 5,039 4,683 (b)
Non-recurring costs (income) ............... -- --
---------- -------- ---------- --------- ----------
Total costs and expenses ................. 9,213 304,421 3,325 270,404 9,218
Earnings (loss) before equity in earnings
(loss) of affiliates,
income taxes and extraordinary items ....... (9,213) 40,169 (3,325) (419) (9,218)
Equity in earnings (loss) of affiliates ...... -- 1,032
---------- --------- ---------- --------- -----------
Earnings (loss) before income taxes and
extraordinary items ...................... $ (9,213) $ 40,169 $ (3,325) $ 613 $ (9,218)
============ ========= ========== ========= ==========
Federal and state income taxes ................
Earnings before extraordinary items .........
Earnings per share before extraordinary items:
Primary ....................................
Fully-diluted ..............................
Weighted average shares:
Primary .................................... 25,513 (10,700) 1,985
Fully-diluted .............................. 30,063 (12,608) 1,985
======== ========== =======
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
Net revenues:
Basic medical services ..................... $ 456,617
Specialty medical services .................. 2,009,031
Management services and other ............... 50,785
-----------
Total revenues .......................... 2,516,432
Costs and expenses:
Operating, general and administrative
expenses.................................... 2,130,250
Depreciation and amortization ............... 104,971
Rent ....................................... 84,518
Interest, net .............................. 110,674
Non-recurring costs (income) ............... 36,874
-----------
Total costs and expenses ................. 2,467,287
Earnings (loss) before equity in earnings
(loss) of affiliates,
income taxes and extraordinary items ....... 49,145
Equity in earnings (loss) of affiliates ...... 2,223
----------
Earnings (loss) before income taxes and
extraordinary items ...................... 51,368
Federal and state income taxes ................ 32,634
----------
Earnings before extraordinary items ......... $ 18,734
==========
Earnings per share before extraordinary items:
Primary .................................... $ 0.46
Fully-diluted .............................. 0.64
==========
Weighted average shares:
Primary .................................... 40,372
Fully-diluted .............................. 51,093
==========
</TABLE>
- -------------
* Twelve months ended January 31, 1997
-6-
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
IHS PHARMACY ILC CCA CCA
ACTUAL(19) ADJUSTMENTS(12) ADJUSTMENTS(13) ACTUAL(15) ADJUSTMENTS
------------- ---------------- ---------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Net revenues:
Basic medical services .................. $ 268,268 $ 66,287
Specialty medical services ............... 1,093,571 1,086
Management services and other ............ 29,998 1,408
----------- --------
Total revenues ....................... 1,391,837 68,781
Costs and expenses:
Operating, general and administrative
expenses ............................... 1,095,686 60,118
Depreciation and amortization ............ 47,818 1,931 $ 1,167 (e)
Rent .................................... 75,322 5,702
Interest, net ........................... 71,991 3,918 1,046 (b)
Non-recurring charges, net ............... 20,047 $ 7,578 (c) $ 4,635 (d) --
----------- ----------- ----------- -------- ----------
Total costs and expenses .............. 1,310,864 7,578 4,635 71,669 2,213
Earnings (loss) before equity in earn-
ings of affiliates, income taxes and
extraordinary items ................... 80,973 (7,578) (4,635) (2,888) (2,213)
Equity in earnings of affiliates ......... (713) --
----------- ------------ ----------- -------- ----------
Earnings (loss) before income taxes
and extraordinary items ................ 80,260 $ (7,578) $ (4,635) $ (2,888) $ (2,213)
=========== =========== ======== ==========
Federal and state income taxes ............. 31,301
-----------
Earnings before extraordinary items ...... $ 48,959
===========
Earnings per share before extraordinary items:
Primary ................................. $ 1.78
Fully-diluted ........................... 1.57
===========
Weighted average shares:
Primary ................................. 27,512
Fully-diluted ........................... 35,803
===========
</TABLE>
<TABLE>
<CAPTION>
CORAM LITHOTRIPSY
DIVISION
-------------------------------
ROTECH ROTECH
ACTUAL(16) ADJUSTMENTS ACTUAL(17)* ADJUSTMENTS
------------ ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
Net revenues:
Basic medical services .................. $ -- $ --
Specialty medical services ............... 35,873 332,384
Management services and other ............ --
------- ---------
Total revenues ....................... 35,873 332,384
Costs and expenses:
Operating, general and administrative
expenses ............................... 14,408 245,925
Depreciation and amortization ............ 4,184 $ 89 (e) 35,007 $(1,229)(e)
Rent .................................... -- --
Interest, net ........................... (119) 7,310 (b) 11,131 667 (f)
Non-recurring charges, net ............... -- -- --
------- ----------- --------- -------
Total costs and expenses .............. 18,473 7,399 292,063 (562)
Earnings (loss) before equity in earn-
ings of affiliates, income taxes and
extraordinary items ................... 17,400 (7,399) 40,321 562
Equity in earnings of affiliates ......... 465 -- --
------- ----------- --------- -------
Earnings (loss) before income taxes $17,865 $ (7,399) $ 40,321 $ 562
and extraordinary items .................. ======= =========== ========= =======
Federal and state income taxes .............
Earnings before extraordinary items ......
Earnings per share before extraordinary items:
Primary .................................
Fully-diluted ...........................
Weighted average shares:
Primary ................................. 26,621 (11,165)
Fully-diluted ........................... 31,237 (13,101)
========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER OTHER
ACQUISITIONS ACQUISITIONS PRO FORMA
ACTUAL(20) ADJUSTMENTS CONSOLIDATED
-------------- ----------------- -------------
<C> <C> <C>
<S>
Net revenues: $ -- $ 334,555
Basic medical services .................. 95,031 1,557,945
Specialty medical services ............... -- 31,406
Management services and other ............ --------- -----------
95,031 1,923,906
Total revenues .......................
Costs and expenses:
Operating, general and administrative 83,288 1,499,425
expenses ............................... 462 $ 1,749 (e) 91,178
Depreciation and amortization ............ 547 81,571
Rent .................................... 1,312 1,500 (b) 98,756
Interest, net ........................... -- 32,260
Non-recurring charges, net ............... --------- ---------- -----------
85,609 3,249 1,803,190
Total costs and expenses ..............
Earnings (loss) before equity in earn-
ings of affiliates, income taxes and .... 9,422 (3,249) 120,716
extraordinary items ................... -- (248)
Equity in earnings of affiliates ......... --------- ---------- ----------
Earnings (loss) before income taxes $ 9,422 $ (3,249) 120,468
and extraordinary items .................. ========= ==========
Federal and state income taxes ............. 56,872
----------
Earnings before extraordinary items ...... $ 63,596
==========
Earnings per share before extraordinary items:
Primary ................................. $ 1.44
Fully-diluted ........................... 1.34
==========
Weighted average shares:
Primary ................................. 1,174 44,142
Fully-diluted ........................... 1,174 55,113
========== ==========
</TABLE>
- -----------
* Nine months ended July 31, 1997
-7-
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Certain amounts have been reclassified to conform the presentation of the
Coram Lithotripsy Division, RoTech and IHS.
(2) Represents the present value of contingent payments aggregating $50,000,000
due in 2000 and 2001 relating to the First American Acquisition, which
payments IHS deems probable.
(3) Represents the excess of the purchase price for the Coram Lithotripsy
Division over the estimated fair values of the net assets acquired, as
follows:
<TABLE>
<S> <C>
Purchase price ....................................... $131,000,000
Direct costs of acquisition ........................... 5,000,000
Stockholders' equity of Coram Lithotripsy Division ... 73,622,000
-------------
$ 62,378,000
=============
</TABLE>
(4) Represents elimination of stockholders' equity of Coram Lithotripsy
Division.
(5) Represents the pay down of borrowings outstanding under RoTech's credit
facility with proceeds from IHS' term loan facility.
(6) Represents nonrecurring charges directly attributable to the RoTech
Acquisition, which will be included in IHS' statement of operations within
the 12 month period following the transaction. Such charges represent the
nonrecurring lump sum payments to certain RoTech officers aggregating
$4,750,000 less related income tax benefit of $800,000.
(7) Represents the excess of the purchase price (based on a price per share of
IHS Common Stock of $33.00 (the closing price of IHS Common Stock on
October 21, 1997 (the date the RoTech Acquisition was consummated)) and
using the 26,866,000 shares of RoTech Common Stock outstanding on October
21, 1997 (including 422,651 shares of redeemable common stock (see note 9
below)) adjusted for the exchange ratio of .5806) including estimated
direct costs of the RoTech Acquisition of $10,250,000 (see note 8 below),
over the estimated fair values of the net assets acquired, as follows:
Merger consideration for RoTech ................ $514,753,000
Direct costs of acquisition .................... 10,250,000
------------
525,003,000
Stockholders' equity of RoTech (including redeemable
common stock of $4,076,000) .................. 218,036,000
------------
$306,967,000
============
(8) Represents the estimated expenses of the RoTech Acquisition of $10,250,000
as follows: Non-compete payments to certain officers ($5,000,000);
professional fees ($2,500,000); filing fees ($500,000); and other
($2,250,000). Other primarily represents severance payments and related
benefits anticipated to be paid to identified employees whose employment
will be terminated after the RoTech Acquisition in accordance with a
restructuring plan to be adopted.
(9) Represents 422,651 shares of RoTech Common Stock (245,391 shares of IHS
Common Stock after the RoTech Acquisition) subject to put options at the
sole discretion of the RoTech stockholder at prices ranging from $9.75 to
$17.50 per share ($16.79 to $30.14 per share of IHS Common Stock). The put
options expire at various dates between October 1997 and December 1999.
Because the put price is below the current market price of the IHS Common
Stock, IHS has assumed for purposes of these pro forma financial statements
that the put options will not be exercised and, therefore, the shares of
IHS Common Stock issued in exchange for such RoTech Common Stock have not
been classified as redeemable common stock, but have been included in
stockholders' equity for purposes of the pro forma financial statements.
8
<PAGE>
(10)Represents the RoTech Acquisition consideration of $514,753,000 (see note 7
above), less $16,000 allocated to Common stock and less RoTech's Additional
paid-in capital of $131,269,000. Other adjustments represent eliminations
of RoTech's equity account balances.
(11)Includes the results of operations of (i) its pharmacy division through
July 30, 1996, the date of the Pharmacy Sale, (ii) its assisted living
services subsidiary through October 9, 1996, the date of closing of the ILC
Offering, (iii) First American from October 17, 1996, the date of closing
of the First American Acquisition, (iv) Vintage Health Care Center from
January 29, 1996, the date of closing of the Vintage Acquisition, (v) Rehab
Management Systems, Inc. from March 19, 1996, the date of closing of the
RMS Acquisition, (vi) Hospice of the Great Lakes, Inc. from May 1, 1996,
the date of closing of the Hospice Acquisition, (vii) J.R. Rehab
Associates, Inc. from August 1, 1996, the date of closing of the J.R. Rehab
Acquisition, (viii) Extendicare of Tennessee, Inc. from August 12, 1996,
the date of closing of the Extendicare Acquisition, (ix) Edgewater Home
Infusion Services, Inc. from August 19, 1996, the date of closing of the
Edgewater Acquisition, (x) Century Home Services, Inc. from September 13,
1996, the date of closing of the Century Acquisition, (xi) Signature Home
Care, Inc. from September 25, 1996, the date of closing of the Signature
Acquisition, (xii) Mediq Mobile X-Ray Services, Inc. from November 7, 1996,
the date of closing of the Mediq Acquisition, (xiii) Total Rehab Services,
LLC and Total Rehab Services 02, LLC from November 8, 1996, the date of
closing of the Total Rehab Acquisition and (xiv) Lifeway Inc. from November
8, 1996, the date of closing of the Lifeway Acquisition. Also includes from
October 9, 1996 IHS' equity in ILC's earnings. See notes 12, 13, 14 and 18
below.
(12)In July 1996, IHS sold its pharmacy division to Capstone Pharmacy Services,
Inc. ("Capstone") for a purchase price of $150 million, consisting of cash
of $125 million and shares of Capstone common stock having a value of $25
million. IHS used the net proceeds of the sale to repay borrowings under
its revolving credit facility. IHS had a pre-tax gain of $34.3 million.
Because IHS' investment in the pharmacy division had a very small tax
basis, the taxable gain on the sale significantly exceeded the gain for
financial reporting purposes, thereby resulting in a disproportionately
higher income tax provision related to the sale. IHS' investment in
Capstone common stock of $14.7 million was recorded at carryover cost and
classified as securities available for sale. In 1997, IHS recognized the
remaining gain of $7.6 million when restrictions on transferability of such
shares were removed.
(13)On October 9, 1996, Integrated Living Communities, Inc. ("ILC"), at the
time a wholly-owned subsidiary of IHS which provides assisted living and
related services to the private pay elderly market, completed an initial
public offering of ILC common stock. IHS sold 1,400,000 shares of ILC
common stock in the offering, for which it received aggregate net proceeds
of approximately $10.4 million. In addition, ILC used approximately $7.4
million of the net proceeds received by it to repay outstanding
indebtedness to IHS. IHS used the net proceeds from the sale to repay
borrowings under its credit facility. IHS recorded a pre-tax loss of
approximately $8.5 million in the fourth quarter of 1996 as a result of
this transaction. On July 2, 1997, IHS sold the remaining 2,497,900 shares
of ILC common stock it owned, representing 37.3% of the outstanding ILC
common stock, for $11.50 per share in a cash tender offer (the "ILC Sale").
IHS recorded a gain of approximately $4.6 million from the ILC Sale in the
third quarter of 1997.
-9-
<PAGE>
(14)In October 1996, IHS acquired through merger First American. The purchase
price was $154.1 million in cash, which IHS borrowed under its credit
facility, plus contingent payments of up to $155 million payable at various
times through 2004.
(15)In September 1997 IHS acquired through a tender offer and subsequent merger
all the outstanding stock of CCA. IHS paid $34.3 million in cash, repaid
approximately $58.5 million of indebtedness assumed in the merger
(including restructuring fees of $4.9 million) and assumed approximately
$27.0 million of indebtedness. IHS incurred direct costs of acquisition of
approximately $5.2 million. In connection with the CCA Acquisition, the
Company held for sale 19 long-term care facilities. Actual results for CCA
have been adjusted as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 25,
1996 1997
--------------------- --------------------
INCREASE/(DECREASE) INCREASE/(DECREASE)
(IN THOUSANDS)
<S> <C> <C>
Revenue ...................................................... $ (30,518) $ (24,999)
Operating expense ............................................. (31,196) (23,288)
Depreciation ................................................ (965) (594)
Rent ......................................................... (3,017) (3,125)
Interest ...................................................... (323) (900)
Non-recurring costs ........................................... (66) --
--------- ---------
Adjustment to earnings (loss) before extraordinary item ...... $ 5,049 $ 2,908
========= =========
</TABLE>
(16) On October 2, 1997, IHS acquired substantially all the assets of the Coram
Lithotripsy Division for cash of approximately $131.0 million, including
the payment of $1.0 million of indebtedness.
(17)In October 1997, IHS acquired through merger RoTech. IHS issued
approximately 15,350,670 shares of Common Stock in the merger, repaid
$199.7 million of indebtedness assumed in the merger and assumed $110
million of indebtedness. The actual RoTech results of operations for the 12
months ended January 31, 1997 and the nine months ended July 31, 1997 both
include RoTech's results of operations for the three months ended January
31, 1997.
(18) Consists of the following acquisitions:
Vintage Acquisition. In January 1996, IHS purchased Vintage Health Care
Center, a 220 bed skilled nursing and assisted living facility in Denton,
Texas, for $6.9 million. A condominium interest in the assisted living
portion of this facility (valued at $3.5 million) was contributed to ILC on
June 1, 1996.
RMS Acquisition. In March 1996, IHS acquired all of the outstanding
capital stock of Rehab Management Systems, Inc. ("RMS"), which operates
outpatient rehabilitation therapy clinics in central Florida. RMS also
managed one therapy and one physician clinic. Total purchase price was $10.0
million, including $8.0 million representing the issuance of 385,542 shares
of IHS Common Stock. In addition, IHS incurred direct costs of acquisition
of $2.9 million. Total goodwill at the date of acquisition was $12.8
million.
Hospice of the Great Lakes Acquisition. In May 1996, IHS acquired
substantially all the assets of Hospice of the Great Lakes, Inc., a hospice
company in Northbrook, Illinois. Total purchase price was $8.2 million
representing the issuance of 304,822 shares of IHS Common Stock. IHS
incurred direct costs of acquisition of $1.0 million. Total goodwill at the
date of acquisition aggregated $9.0 million.
J.R. Rehab Acquisition. In August 1996, IHS acquired all of the
outstanding capital stock of J.R. Rehab Associates, Inc., an inpatient and
outpatient rehabilitation clinic in Mooresville, North Carolina. Total
purchase price was approximately $2.1 million. IHS incurred direct costs of
acquisition of $200,000. Total goodwill at the date of acquisition
aggregated $3.2 million.
Extendicare Acquisition. In August 1996, IHS acquired substantially all of
the assets of Extendicare of Tennessee, Inc., a home healthcare company in
Memphis, Tennessee. Total purchase price was approximately $3.4 million. IHS
incurred direct costs of acquisition of $200,000. Total goodwill at the date
of acquisition aggregated $1.9 million.
Edgewater Acquisition. In August 1996, IHS acquired substantially all the
assets of Edgewater Home Infusion Services, Inc., a home infusion company in
Miami, Florida. Total purchase price was approximately $8.0 million. IHS
incurred direct costs of acquisition of $300,000. Total goodwill at the date
of acquisition aggregated $7.7 million.
-10-
<PAGE>
Century Acquisition. In August 1996, IHS acquired substantially all the
assets of Century Health Services, Inc., a home healthcare company in
Murfreesboro, Tennessee. Total purchase price was approximately $2.4
million. In addition, IHS used borrowings under its revolving credit
facility to repay approximately $1.6 million of debt of Century assumed in
the acquisition. IHS incurred direct costs of acquisition of $200,000. Total
goodwill at the date of acquisition aggregated $12.1 million.
Signature Acquisition. In September 1996, IHS acquired all of the
outstanding capital stock of Signature Home Care, Inc., a home care company
in Dallas, Texas. Total purchase price was approximately $9.2 million,
including $4.7 million representing the issuance of 196,374 shares of IHS
Common Stock. In addition, IHS used borrowings under its revolving credit
facility to repay approximately $1.9 million of Signature's debt. IHS
incurred direct costs of acquisition of $2.5 million. Total goodwill at the
date of acquisition aggregated $21.1 million.
Mediq Acquisition. In November 1996, the Company acquired the assets of
Mediq Mobile X-Ray Services, Inc., which provides mobile diagnostic
services. The total purchase price was $10.1 million, including $5.2 million
representing the issuance of 143,893 shares of the Company's Common Stock
(after giving effect to the return of 59,828 shares of IHS Common Stock
because of an increase in the share price of the Company's Common Stock
between the date of issuance and the date such shares were registered for
resale). In addition, the Company incurred direct costs of acquisition of
$5.5 million. Total goodwill at the date of acquisition was $15.6 million.
Total Rehab Acquisition. In November 1996, the Company acquired the assets
of Total Rehab Services, LLC and Total Rehab Services 02, LLC, which provide
contract rehabilitative and respiratory services. The total purchase price
was $8.0 million, including $2.7 million representing the issuance of
106,559 shares of the Company's Common Stock. In addition, the Company
repaid approximately $3.9 million of Total Rehab's debt. In addition, the
Company incurred direct costs of acquisition of $1.3 million. Total goodwill
at the date of acquisition was $12.0 million.
Lifeway Acquisition. In November 1996, the Company acquired all of the
outstanding stock of Lifeway, Inc., which provides physician and disease
management services. The total purchase price was $900,000 representing the
issuance of 38,502 shares of the Company's Common Stock. IHS also issued
48,129 shares of Common Stock to Robert Elkins, Chairman and Chief Executive
Officer of the Company, in payment of outstanding loans of $1.1 million from
Mr. Elkins to Lifeway. In addition, the Company incurred direct costs of
acquisition of $275,000.
In-Home Acquisition. In January 1997, IHS acquired all the outstanding
capital stock of In-Home Health Care, Inc. ("In-Home"), a home health
company in Salt Lake City, Utah. Total purchase price was $3.2 million. IHS
incurred direct costs of acquisition of $250,000. Total goodwill at the date
of acquisition aggregated $3.9 million.
Portable X-Ray Acquisition. In February 1997, IHS acquired substantially
all the assets of Portable X-Ray Labs, Inc. ("Portable X-Ray"), a mobile
diagnostics company in Anaheim, California. Total purchase price was $4.9
million. IHS incurred direct costs of acquisition of $1.3 million. Total
goodwill at the date of acquisition aggregated $5.7 million.
Coastal Acquisition. In April 1997, IHS acquired substantially all the
assets of Coastal Rehabilitation, Inc. ("Coastal"), an inpatient
rehabilitation company in Indian Harbour, Florida. Total purchase price was
$1.3 million. IHS incurred direct costs of acquisition of $200,000. Total
goodwill at the date of acquisition aggregated $1.8 million.
Health Care Industries Acquisition. In June 1997, IHS acquired all the
outstanding capital stock of Health Care Industries, Inc. ("Health Care
Industries"), a home health company in Florida. Total purchase price was
$1.8 million. IHS incurred direct costs of acquisition of $500,000. Total
goodwill at the date of acquisition aggregated $2.5 million.
Rehab Dynamics Acquisition. In June 1997, IHS acquired substantially all
the assets of Rehab Dynamics, Inc. and Restorative Therapy, Ltd.
(collectively "Rehab Dynamics"), related contract rehab companies. Total
purchase price was $19.7 million, including $11.5 million representing the
issuance of 322,472 shares of the Company's Common Stock. IHS incurred
direct costs of acquisition of $2.5 million. Total goodwill at the date of
acquisition aggregated $21.5 million.
-11-
<PAGE>
Arcadia Acquisition. In August 1997, IHS acquired all the outstanding
capital stock of Arcadia Services, Inc. ("Arcadia"), a home health company.
Total purchase price was $27.0 million, including $17.2 million representing
the issuance of 531,198 shares of IHS Common Stock. IHS incurred direct
costs of acquisition of $3.0 million. Total goodwill at the date of
acquisition aggregated $39.2 million.
APS Acquisition. In August 1997, IHS acquired all the outstanding capital
stock of Ambulatory Pharmaceutical Services, Inc. and APS American, Inc.
(collectively, "APS"), related home health companies. Total purchase price
was $34.3 million, including $16.1 million representing the issuance of
532,240 shares of IHS Common Stock. IHS incurred direct costs of acquisition
of $2.0 million. Total goodwill at the date of acquisition aggregated $39.6
million.
Barton Creek Acquisition. In September 1997, IHS acquired all the
outstanding capital stock of Barton Creek Health Care, Inc. ("Barton
Creek"), a home health company. Total purchase price was $4.9 million. IHS
incurred direct costs of acquisition of $300,000. Total goodwill at the date
of acquisition aggregated $7.3 million.
(19) Includes the results of operations from the respective dates of acquisition
as follows: (i) In-Home from January 10, 1997, (ii) Portable X-Ray from
February 5, 1997, (iii) Coastal from April 7, 1997, (iv) Health Care
Industries from June 10, 1997, (iv) Rehab Dynamics from June 20, 1997, (v)
Arcadia from August 29, 1997, (vi) APS from August 30, 1997, (vii) Barton
Creek from September 23, 1997 and (viii) CCA from September 25, 1997.
(20) Consists of the In-Home Acquisition, the Portable X-Ray Acquisition, the
Coastal Acquisition, the Health Care Industries Acquisition, the Rehab
Dynamics Acquisition, the Arcadia Acquisition, the APS Acquisition and the
Barton Creek Acquisition.
----------------
For purposes of determining the effects of the acquisitions and divestitures
described in Notes 11 through 20 above, including those events which are (i)
directly attributable to the transaction, (ii) expected to have a continuing
impact on IHS, and (iii) factually supportable, the following estimates and
adjustments have been made:
(a) Represents actual revenues and expenses of divisions sold.
-12-
<PAGE>
(b) Represents (reduction in) additional interest expense resulting from
(repayment) borrowings under IHS' credit facility to finance
acquisitions based on the interest rate under the credit facility on
the date of (repayment) borrowings, as follows:
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DEBT MONTHS INTEREST INTEREST
(PROCEEDS) IN 1996 RATE ADJUSTMENT
------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
Pharmacy ............................................. $ (91,000) 7.0 7.19% $ (3,817)
ILC Offering ....................................... (17,851) 9.0 7.19% (963)
First American ....................................... 165,000 9.5 7.13% 9,314
CCA borrowings(1) .................................... 98,000 12.0 7.44% 7,291
CCA borrowings repaid(1) ............................. (53,600) 12.0 11.00% (5,896)
Coram Lithotripsy Division ........................... 131,000 12.0 7.44% 9,746
--------- ----- ------ --------
Other Acquisitions
In-Home Health .................................... 3,200 12.0 7.38% 236
Portable X-Ray .................................... 4,900 12.0 7.25% 355
Coastal .......................................... 1,250 12.0 7.19% 90
Health Care Industries ........................... 1,825 12.0 7.19% 131
Rehab Dynamics .................................... 8,203 12.0 7.19% 590
APS ............................................. 18,125 12.0 7.19% 1,303
Barton Creek .................................... 4,400 12.0 7.44% 327
Total Rehab ....................................... 5,300 10.0 7.13% 315
Mediq ............................................. 4,942 10.0 7.13% 294
Century .......................................... 2,390 8.5 7.25% 123
Signature ....................................... 4,519 9.0 7.19% 244
Edgewater ....................................... 7,974 7.5 7.25% 361
Extendicare ....................................... 3,410 7.5 7.25% 155
J.R. Rehab ....................................... 2,100 7.0 7.25% 89
RMS ............................................. 2,000 2.5 6.88% 29
Vintage .......................................... 6,932 1.0 7.06% 41
--------- --------
Total Other ....................................... 81,470 4,683
Total ............................................. $ 313,019 $ 20,358
========= ========
Effect of 1/8% reduction in interest expense ... $ 313,019 $ 19,978
Effect of 1/8% increase in interest expense ...... $ 313,019 $ 20,739
</TABLE>
- ----------
(1) In connection with the CCA Acquisition, IHS borrowed an aggregate of
$98,000,000, of which $53,600,000 was used to repay outstanding indebtedness
of CCA bearing interest at 11% per annum.
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MONTHS INTEREST INTEREST
DEBT IN 1997 RATE ADJUSTMENT
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
CCA borrowings(1).................................... $ 98,000 9.0 7.44% $ 5,468
CCA borrowings repaid(1) ............................ (53,600) 9.0 11.00% (4,422)
Coram Lithotripsy Division ........................ 131,000 9.0 7.44% 7,310
--------- ---- ------ --------
Other Acquisitions
In-Home Health ................................. $ 3,200 .5 7.38% 10
Portable X-Ray ................................. 4,900 1.3 7.25% 37
Coastal .......................................... 1,250 3.3 7.19% 24
Health Care Industries ........................... 1,825 5.3 7.19% 57
Rehab Dynamics ................................. 8,203 5.5 7.19% 271
APS ............................................. 18,125 8.0 7.19% 869
Barton Creek .................................... 4,400 8.5 7.44% 232
--------- --------
Total Other .................................... 41,903 1,500
Total ............................................. $217,303 $ 9,856
========= ========
Effect of 1/8% reduction in interest expense ...... $217,303 $ 9,668
Effect of 1/8% increase in interest expense ...... $217,303 $10,049
</TABLE>
- ----------
(1) In connection with the CCA Acquisition, IHS borrowed an aggregate of
$98,000,000, of which $53,600,000 was used to repay outstanding indebtedness
of CCA bearing interest at 11% per annum.
-13-
<PAGE>
(c) Represents gain on the sale of the pharmacy division of $34,298,000 and
$7,578,000 recorded in 1996 and 1997, respectively.
(d) Represents loss on sale of shares in the ILC Offering in 1996 and gain
on sale of shares in the ILC Sale in 1997.
(e) Represents additional amortization relating to goodwill and other
intangibles recorded as a result of the acquisition, amortized using
the straight line method over 15-40 years, as follows:
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LESS: PREVIOUSLY ADJUSTED MONTHS
ANNUAL RECORDED ANNUAL IN
COMPANY GOODWILL LIFE AMORTIZATION AMORTIZATION AMORTIZATION 1996 ADJUSTMENT
- --------------------------------- ----------- ------ -------------- ------------------ -------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
First American ............ $ 227,406 40 $ 5,685 $ 0 $ 5,685 9.5 $4,501
CCA ........................ 97,009 40 2,425 (571) 1,854 12.0 1,854
Coram Lithotripsy Division ... 140,123 40 3,503 (4,036) (533) 12.0 (533)
RoTech goodwill ............ 574,762 40 14,369 (11,853) 2,516 12.0 2,516
RoTech non-compete ........... 5,000 15 334 0 334 12.0 334
----------- -- -------- ---------- -------- ----- -------
Other Acquisitions
Lifeway .................. 0 40 0 0 0 10.0 0
Total Rehab ............... 11,982 40 300 0 300 10.0 250
Mediq ..................... 15,600 40 390 0 390 10.0 325
Century .................. 12,140 40 304 (5) 299 8.5 211
Signature ............... 21,122 40 528 (24) 504 9.0 378
Edgewater ............... 7,685 40 192 (1) 191 7.5 119
Extendicare ............... 1,945 40 49 0 49 7.5 30
J.R. Rehab ............... 3,159 40 79 (2) 77 7.0 45
Hospice of Great Lakes . 9,031 40 226 (2) 224 4.0 75
RMS ..................... 12,832 40 321 0 321 2.5 67
Vintage .................. 0 40 0 0 0 1.0 0
In Home Health ............ 3,856 40 96 0 96 12.0 96
Portable X-Ray ............ 5,653 40 141 0 141 12.0 141
Coastal .................. 1,764 40 44 0 44 12.0 44
Health Care Industries ... 2,505 40 63 0 63 12.0 63
Rehab Dynamics ............ 21,478 40 537 0 537 12.0 537
Arcadia .................. 39,233 40 981 0 981 12.0 981
APS ........................ 39,624 40 991 0 991 12.0 991
Barton Creek ............... 7,292 40 182 0 182 12.0 182
----------- -- -------- ---------- -------- ------ -------
216,901 5,423 (34) 5,389 4,535
---------- -------- ---------- -------- -------
Total ..................... $1,261,201 $ 31,739 $ (16,494) $15,245 $13,207
========== ======== ========== ======== =======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LESS: PREVIOUSLY NINE MONTHS MONTHS
NINE MONTHS RECORDED ADJUSTED IN
COMPANY GOODWILL LIFE AMORTIZATION AMORTIZATION AMORTIZATION 1997 ADJUSTMENT
- -------------------------------- ---------- ------ -------------- ------------------ -------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CCA .......................... $ 97,009 40 $ 1,819 $ (652) $ 1,167 9.0 $ 1,167
Coram Lithotripsy Division .. 140,123 40 2,627 (2,538) 89 9.0 89
RoTech goodwill ............ 574,762 40 10,777 $(12,256) $ (1,479) 9.0 $ (1,479)
RoTech non-compete .......... 5,000 15 250 0 250 9.0 250
--------- -- -------- -------- -------- ---- --------
Other Acquisitions
In Home Health ............ 3,856 40 72 0 72 .5 4
Portable X-Ray ............ 5,653 40 106 0 106 1.3 15
Coastal .................. 1,764 40 33 0 33 3.3 12
Health Care Industries ... 2,505 40 47 0 47 5.3 29
Rehab Dynamics ............ 21,478 40 404 0 404 5.5 247
Arcadia ..................... 39,233 40 736 0 736 8.0 654
APS ........................ 39,624 40 743 0 743 8.0 660
Barton Creek ............... 7,292 40 137 0 137 8.5 129
--------- -- -------- -------- -------- ---- --------
121,405 2,278 0 2,278 1,749
--------- -------- -------- -------- --------
Total ..................... $938,299 $17,751 $(15,446) $ 2,305 $ 1,776
========= ======== ======== ======== ========
</TABLE>
-14-
<PAGE>
(f) Represents additional interest on borrowing by IHS to repay RoTech's credit
facility as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, 1997 JULY 31, 1997
--------------------- -----------------
<S> <C> <C>
Credit facility:
Average borrowings outstanding during the period . $ 85,290,000 $ 138,855,000
IHS average borrowing rate during the period ... 7.13% 7.17%
Pro forma interest .............................. $ 6,081,000 $ 7,467,000
Less actual interest .............................. 5,606,000 6,800,000
------------ -------------
Pro forma adjustment .............................. $ 475,000 $ 667,000
============ =============
</TABLE>
-15-
<PAGE>
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.
INTEGRATED HEALTH SERVICES, INC.
Date: November 24, 1997 By: /s/ W. Bradley Bennett
---------------------------------------
Name: W. Bradley Bennett
Title: Executive Vice President--Chief
Accounting Officer
-16-
<PAGE>
Exhibit Index
2. Agreement and Plan of Merger, dated as of July 6, 1997, among
Integrated Health Services, Inc., IHS Acquisition XXIV, Inc. and
RoTech Medical Corporation (incorporated herein by reference to
Exhibit 2 to Current Report on Form 8-K dated July 6, 1997 of
Integrated Health Services, Inc.).
-17-
