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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):
April 2, 1999
NOVACARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10875 13-3247827
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 992-7200
(Not Applicable)
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 2, 1999, the Registrant entered into a Stock Purchase
Agreement (the "Agreement") to sell the Registrant's orthotic and
prosthetic services business to Hanger Orthopedic Group, Inc.
("Hanger"). Pursuant to the terms of the Agreement, Hanger will pay the
Registrant total consideration of approximately $455 million (including
approximately $417 million in cash and the assumption of approximately
$38 million of seller notes). Subject to the satisfaction of certain
conditions, including the expiration of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the
transaction is scheduled to close during the Registrant's fourth fiscal
quarter.
Further details of the transaction are contained in the press
release dated April 5, 1999 (see Exhibit 99 hereto), which press
release is incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
NOVACARE, INC.
By /s/ Timothy E. Foster
Name: Timothy E. Foster
Title: Chief Executive Officer
Dated: April 7, 1999
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Index to Exhibits
Exhibit Sequential
Number Description Page Location
99 Press release dated April 5, 1999. 5
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5
Exhibit 99
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Susan J. Campbell
(AS OF APRIL 5, 1999) 610-992-7425
NOVACARE ANNOUNCES SALE OF ORTHOTICS & PROSTHETICS BUSINESS
NOVACARE EMPLOYEE SERVICES TO EXPLORE STRATEGIC ALTERNATIVES
KING OF PRUSSIA, Pa., -- NovaCare, Inc. (NYSE:NOV), a leading national provider
of rehabilitation and employee services, announced today a definitive agreement
to sell its orthotic and prosthetic services business to Hanger Orthopedic
Group, Inc. (NYSE:HGR), Bethesda, MD. Under the terms of the agreement, Hanger
will pay NovaCare total consideration of approximately $455 million, including
approximately $417 million of cash and the assumption of seller notes (expected
to be approximately $38 million at closing).
"We are very pleased with this transaction," said Timothy E. Foster,
NovaCare's chief executive officer. "NovaCare will realize a substantial gain.
Our employees will be joining a company with a long-term commitment to the
orthotics and prosthetics industry, with significant national presence, and able
to take advantage of economies of scale and national contracting opportunities.
"Proceeds of the transaction will be sufficient to entirely retire bank
debt," said Foster.
The transaction is subject to certain regulatory approvals and a U.S.
Justice Department review under the Hart-Scott-Rodino Act and is expected to
close during NovaCare's fiscal fourth quarter.
NovaCare also announced that its subsidiary, NovaCare Employee
Services, Inc. (Nasdaq:NCES) is evaluating strategic alternatives, including the
sale of the company. NovaCare, Inc. owns approximately 71 percent of the stock
in NovaCare Employee Services.
"We believe the proceeds from the sale of our orthotics and prosthetics
business and the unlocking of value in NovaCare Employee Services will
contribute substantially to resolving NovaCare's capital structure issue."
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Warburg Dillon Read and Wasserstein, Perella & Company, Inc. acted as
NovaCare's advisors on the transaction. BT Alex. Brown Inc. acted as financial
advisors to Hanger Orthopedic Group.
NOVACARE, INC. is a national leader in physical rehabilitation services
and employee services.
CAUTIONARY STATEMENT
Except for historical information, matters discussed above including,
but not limited to, statements concerning future growth, are forward-looking
statements that are based on management's estimates, assumptions and
projections. Important factors that could cause results to differ materially
from those expected by management include reimbursement system changes,
including customer response to the change from cost-based reimbursement to fee
schedules and per diem payments, the productivity of clinicians, pricing of
payer contracts, management retention and development, management's success in
integrating acquired businesses and in developing and introducing new products
and lines of business, the ability of the Company, its customers and suppliers
to complete assessment, testing and remediation of Year 2000 issues, the ability
of the Company to improve its cash flow from operations, adverse Internal
Revenue Service rulings with respect to the employer status of employee services
businesses and the Company's ability to implement the employee services business
model.
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