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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported) March 26, 1997.
HEALTH MANAGEMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-18472 75-2096632
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
1371-A Abbott Court, Buffalo Grove, Illinois 60089
(Address of principal executive offices) (Zip Code)
(847) 913-2700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Page 1 of ___
Sequentially Numbered Pages
Exhibit Index on page 5
1
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Item 1. Change of Control of Registrant.
See Item 5 "Other Events" for information regarding a potential change of
control of Health Management, Inc. (the "Company").
Item 5. Other Events.
On March 26, 1996, the Company and Transworld Home HealthCare, Inc., a New
York corporation ("Transworld"), amended (the "March Amendment") the Agreement
and Plan of Merger, dated as of November 13, 1996 (the "Merger Agreement"), as
amended by letter agreements, dated November 27, 1996, December 12, 1996,
December 23, 1996, January 10, 1997 and January 13, 1997, among the Company,
Transworld and IMH Acquisition Corp., a Delaware corporation which is a wholly
owned subsidiary of Transworld ("IMH"), pursuant to which IMH will be merged
(the "Merger") into the Company and the stockholders of the Company (other than
Transworld and its subsidiaries) will receive cash consideration for their
shares. Pursuant to the March Amendment, the cash consideration payable to the
stockholders of the Company in the Merger has been reduced to $0.30 per share
from $1.50 per share. In addition, the condition to the consummation of the
Merger relating to the settlement of the stockholder class action lawsuits was
amended to require final court approval of a settlement agreement providing for
a $4.55 million, rather than a $7.2 million, cash settlement.
The consummation of the Merger continues to be subject to certain
conditions including, without limitation, the approval of the Company's
stockholders and Transworld's lenders, and the expiration or termination period
of any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
The above summary of the March Amendment is not intended to be complete and
is qualified in its entirety by reference to the detailed provisions of the
March Amendment, which is attached hereto as Exhibit 2.1. In addition, a copy of
the press release issued by the Company in connection with the above-described
transaction is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
- -------------- -----------
2.1 Amendment to the Merger Agreement, dated March 26,
1997, between the Company, Transworld Home Healthcare,
Inc., and IMH Acquisition Corp.
99.1 Press release, dated March 17, 1997, issued
by the Company.
2
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Exhibit 2.1 listed above omits certain schedules, which are referred to
therein. The Company agrees to furnish a copy of any such omitted schedule or
exhibit supplementally upon request from the Commission's staff.
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 thereunto duly authorized.
HEALTH MANAGEMENT, INC.
(Registrant)
/s/ W. James Nicol
--------------------------
Name: W. James Nicol
Date: March 28, 1997 Its: Chief Executive Officer,
President, Chief Financial
Officer, Treasurer and
Secretary
4
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Index to Exhibits
Exhibit Sequential
Number Description Page No.
- ------- ------------ ---------
2.1 Amendment to the Merger Agreement,
dated March 26, 1997 between the Company,
Transworld Home Healthcare, Inc. and IMH
Acquisition Corp.
99.1 Press release, dated March 27, 1997
issued by the Registrant.
5
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Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
March 26, 1997
Health Management, Inc.
1371-A Abbott Court
Buffalo Grove, Illinois 60089
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of November
13, 1996, as amended by letter agreements, dated November 27, 1996, December 12,
1996, December 23, 1996, January 10, 1997 and January 13, 1997, among Transworld
Home HealthCare, Inc. ("Transworld"), IMH Acquisition Corp. ("Newco"), and
Health Management, Inc. (the "Company") (as amended, the "Merger Agreement").
Terms defined in the Merger Agreement shall have their defined meanings herein,
unless otherwise defined herein.
The parties have agreed that in view of the Company's publicly announced
restatement of its financial statements for the quarterly periods ended July 31,
1996 and October 31, 1996, and the Company's publicly announced charge for the
quarterly period ended January 31, 1997, it is appropriate to further amend the
Merger Agreement, among other things, to further reduce the Merger
Consideration.
Accordingly, the parties hereto agree as follows:
1. Section 1.6(b) of the Merger Agreement is hereby amended by changing the
amount "$1.50" to "$0.30".
2. Section 7.1(e) of the Merger Agreement is hereby deleted (it being
acknowledged by Transworld for purposes hereof and Section 7.3(b) of the Merger
Agreement that the Company will not obtain a fairness opinion with respect to
the Merger Consideration, as reduced by this amendment).
3. Section 7.3(b) of the Merger Agreement is hereby amended in its entirety
and, as so amended, shall read as follows:
"The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time, except for changes
contemplated by this Agreement and by the Disclosure Schedule, the Deferred
Schedules, the Supplemental Disclosure Schedule dated January 13, 1997 and the
Supplemental Disclosure Schedule dated March 26, 1997 and changes
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Health Management, Inc.
March 26, 1997
Page 2
reflecting historical facts and current trends disclosed in the Company's
Quarterly Reports on Form 10-Q for the quarterly period ended January 31, 1997,
on Form 10-Q/A-2 for the quarterly period ended October 31, 1996 and on Form
10-Q/A for the quarterly period ended July 31, 1996 (it being agreed, however,
that (i) all descriptions therein as to the effect of Olanzapine or other
antipsychotic drugs shall be deemed superseded and replaced by the description
set forth in item A. of Section 3.19 of the Supplemental Disclosure Schedule
dated January 13, 1997 and (ii) notwithstanding the disclosure of a current
trend, a Material Adverse Effect may nevertheless be deemed to have occurred by
reason of a material change in such current trend), and except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct in
all material respects as of such date."
4. Section 7.3(h) of the Merger Agreement is hereby amended in its entirety
and, as so amended, shall read as follows:
"At or prior to April 11, 1997, the Amended Stipulation of Partial
Settlement of the consolidated class actions under the caption In re Health
Management, Inc. Securities Litigation, Master File No. 96-CV-889 (ADS), dated
December 19, 1996, shall have been further amended, in form and substance
satisfactory to Transworld and Newco, to provide for the settlement of such
actions for a reduced settlement amount not to exceed $4.55 million, and at or
prior to the Effective Time, such Amended Stipulation of Partial Settlement, as
so amended, shall have been finally approved by the United States District Court
and such Court shall have entered a judgment (including a bar order)
substantially in the form of Exhibit B to such Amended Stipulation and all
applicable proceedings for review, appeals, and rights of appeal of such
judgment (other than a proceeding or order, or any appeal or petition for a writ
of certiorari, pertaining solely to any plan of allocation and/or application
for attorneys' fees, costs, or expenses) shall have been exhausted or all
applicable waiting periods during which any appeal or other request for review
of such judgment (other than a proceeding or order, or any appeal or petition
for a writ of certiorari, pertaining solely to any plan of allocation and/or
application for attorneys' fees, costs, or expenses) may be made shall have
expired without any appeal having been filed."
5. Section 7.3(k) of the Merger Agreement is hereby deleted (it being
acknowledged by the Company that Transworld will not obtain an updated opinion
of UBS Securities LLC as to the fairness of the consideration being paid by
Transworld).
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Health Management, Inc.
March 26, 1997
Page 3
* * *
Except to the extent amended hereby, the Merger Agreement shall remain in
full force and effect and nothing herein shall affect, or be deemed to be a
waiver of, the other terms and provisions of the Merger Agreement.
The effectiveness of this amendment shall be subject, at the option of
Transworld and Newco, to the receipt by Transworld of the written consent to
this amendment by the lenders (the "Banks") party to the Credit Agreement, dated
as of July 31, 1996, as amended, among Transworld, the Banks and Bankers Trust
Company, as agent. If the written consent of the Banks has not been obtained on
or prior to April 11, 1997, then at any time thereafter Transworld may, in its
sole discretion, terminate this amendment (in which case this amendment shall be
null and void ab initio) and terminate the Merger Agreement.
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Health Management, Inc.
March 26, 1997
Page 4
If this letter correctly sets forth our understanding with respect to the
foregoing matters, kindly execute and return the enclosed copy of this letter
to evidence our binding agreement.
Very truly yours,
TRANSWORLD HOME HEALTHCARE, INC.
By /s/ Robert W. Fine
Name: Robert W. Fine
Title: President
IMH ACQUISITION CORP.
By /s/ Robert W. Fine
Name: Robert W. Fine
Title: President
AGREED TO:
HEALTH MANAGEMENT, INC.
By /s/ W. James Nicol
----------------------
Name: W. James Nicol
Title: President and Chief
Executive Officer
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Exhibit 99.1
FOR IMMEDIATE RELEASE
HEALTH MANAGEMENT, INC. ANNOUNCES
RENEGOTIATED MERGER AGREEMENT
Buffalo Grove, IL -- March 27, 1997 . . . Health Management, Inc. ("HMI")
(NASDAQ SmallCap market:HMIS) announced today that it has renegotiated
its Merger Agreement with Transworld Home HealthCare, Inc.
("Transworld") (NASDAQ:TWHH) and a further amendment to the Merger
Agreement between Transworld, Transworld's wholly-owned subsidiary and
HMI has been executed.
Under the Merger Agreement, a newly formed subsidiary of Transworld will
merge into HMI. Under the new amendment to the Merger Agreement, the
cash consideration to be paid to stockholders of HMI (other than
Transworld) in the merger has been reduced to $0.30 per share in cash
from $1.50 per share. The new amendment to the Merger Agreement
requires, among other things, that as a condition to closing the merger,
the settlement agreement with the plaintiffs in the stockholder class
action lawsuit be further amended to provide for a $4.55 million, rather
than a $7.2 million, cash settlement and that final court approval of
such revised settlement be obtained. The amendment to the Merger
Agreement followed an assessment by Transworld in light of HMI's
restatements of its 1997 first and second quarter financial results and
the approximately $13 million charge in the third quarter ended January
31, 1997.
The closing of the Merger Agreement remains subject to certain other
conditions including, among others, approval by the Company's
stockholders and Transworld's lenders, as well as certain governmental
approvals.
Health Management, Inc. is a national provider of integrated pharmacy
management services to patients with chronic medical conditions and to
health care professionals, drug manufacturers and third-party payers
involved in their care.
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Transworld is a regional provider of broad range of alternate site
healthcare services and products. It also operates a specialized mail
order pharmacy and provides medical supplies to patients nationwide.
Except for historical information contained herein, the statements made
in this release constitute forward looking statements that involve
certain risks and uncertainties. Certain factors may cause actual
results to differ materially from those contained in the forward looking
statements, including those risks detailed from time to time in the
Company's reports on file at the Securities and Exchange Commission.
# # #
For additional information:
At HMI: Jim
Nicol President & CEO
847-913-2404
At Edelman Financial:
Diane Perry or Joe Kist (Investors)
212-704-8293 or 212-704-8239
