<PAGE>
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 28, 1998
PHP HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
State or other jurisdiction of incorporation: Delaware
Commission File No.: 0-16235
I.R.S. Employer Identification No.: 54-1023168
Address of principal executive offices: 11440 Commerce Park Drive
Reston, VA 20191
Registrant's telephone number, including area code: (703) 758-3600
Former name or former address, if changed since last report: Not applicable
Page 1
Exhibit Index at Page 5
<PAGE>
Item 5. Other Matters.
-------------
On April 28, 1998, PHP Healthcare Corporation ("PHP" or the "Company")
announced that its Board of Directors (the "Board") has authorized the
repurchase of up to 3 million shares of its common stock at prevailing prices at
the discretion of Company management. Common stock may be repurchased from time
to time on the open market, through block purchases, or in privately negotiated
transactions. PHP Healthcare currently has approximately 12.1 million shares of
common stock outstanding.
The Company also announced that the Board has authorized management to
explore the possibility of repurchasing some or all of PHP's Series B
Convertible Preferred Stock through privately negotiated transactions, from time
to time and at its own discretion.
PHP intends to use its available cash and borrowings under its existing
credit facility to repurchase shares in the market. The Company is seeking new,
expanded credit facilities to accomplish the entire 3 million share buy-back
program.
The number of shares to be purchased and the timing of the repurchases
will depend upon the availability of funds, the price of PHP stock, general
market conditions, and other factors. There is no guarantee as to the exact
number of shares to be repurchased, and the Company may discontinue repurchases
at any time. Any shares repurchased will be held as treasury stock and will be
available for reissuance in connection with the Company's stock option plans,
conversions of existing convertible securities, or for other corporate purposes.
Page 2
<PAGE>
Item 7. Financial Statements and Exhibits.
Exhibits. The following exhibits are furnished as part of this report:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
10.1 Letter Amendment dated as of April 23, 1998 to the Credit
Agreement dated as of October 31, 1997, as amended, among
PHP Healthcare Corporation as Borrower and the Initial
Lenders and Initial Issuing Bank named herein as Initial
Lenders and Initial Issuing Bank and NationsBank, N.A. as
Collateral Agent and Administrative Agent
99.1 Press Release dated April 28, 1998
</TABLE>
Forward Looking Statements
This Report contains forward-looking statements. The words "believe,"
"expect" and "anticipate" and similar expressions identify such forward-looking
statements. These forward-looking statements reflect the Company's views with
respect to future events and financial performance. Such statements are subject
to risks and uncertainties that could cause the Company's actual results and
financial position to differ materially from those projected in the
forward-looking statements. Risks associated with the Company's forward-looking
statements include, but are not limited to, those risk factors described in the
Company's Form 10-K under the caption "Business -- Risk Factors." Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Page 3
<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.
PHP HEALTHCARE CORPORATION
By: /s/ Anthony M. Picini
---------------------------------
Name: Anthony M. Picini
Title: Executive Vice President
Dated: April 29, 1998
Page 4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
10.1 Letter Amendment dated as of April 23, 1998 to the Credit
Agreement dated as of October 31, 1997, as amended, among
PHP Healthcare Corporation as Borrower and the Initial
Lenders and Initial Issuing Bank named herein as Initial
Lenders and Initial Issuing Bank and NationsBank, N.A. as
Collateral Agent and Administrative Agent
99.1 Press Release dated April 28, 1998
</TABLE>
<PAGE>
Exhibit 10.1
SECOND AMENDMENT
Dated as of April 23, 1998
To the banks, financial institutions and other institutional lenders
(collectively, the "Lender Parties") parties to the Credit Agreement
referred to below and to NationsBank, N.A., as administrative agent (the
"Administrative Agent") for the Lenders
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of October 31, 1997,
as amended by the Letter Amendment dated as of January 14, 1998 (as so amended,
the "Credit Agreement"), among the undersigned and you. Capitalized terms not
otherwise defined in this Letter Amendment have the same meanings as specified
in the Credit Agreement.
It is hereby agreed by you and us as follows:
The Credit Agreement is, effective as of the date of this
Letter Amendment, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by
deleting the proviso in the definition of "Leverage Ratio" and
replacing such proviso with the following:
"provided, however, that for the fiscal quarter of the
Borrower ended January 31, 1998 and for the fiscal quarters
ending on April 30, 1998 and July 31, 1998, Consolidated
EBITDA for the fiscal quarters then ended shall be the actual
Consolidated EBITDA for the period since November 1, 1997
multiplied by a fraction the numerator of which is four and
the denominator of which is the number of fiscal quarters that
have elapsed since November 1, 1997."
(b) The definition of "Applicable Margin" in Section 1.01 is
hereby amended in full to read as follows:
"`Applicable Margin' means a percentage per annum determined
by the Leverage Ratio as set forth below:
<PAGE>
2
<TABLE>
<CAPTION>
Eurodollar Rate Advances Alternate Base Rate Advances
------------------------ ----------------------------
<S> <C> <C>
Level I
less than 2.00:1 1.375% 0.375%
Level II
2.00:1 or greater,
but less than 2.50:1 1.625% 0.625%
Level III
2.50:1 or greater,
but less than 3.00:1 2.00% 1.00%
</TABLE>
The Applicable Margin for each Alternate Base Rate Advance shall be
determined by reference to the ratio in effect from time to time and
the Applicable Margin for each Eurodollar Rate Advance shall be
determined by reference to the ratio in effect on the first day of each
Interest Period for such Advance, provided, however, that no change in
the Applicable Margin shall be effective until three Business Days
after the date on which the Administrative Agent receives financial
statements pursuant to Section 5.03(c) or (d) and a certificate of the
chief financial officer of the Borrower demonstrating such ratio".
(c) Section 2.05(b)(ii) is hereby replaced in its entirety
with the phrase "[Intentionally Omitted]".
(d) Section 2.14 of the Credit Agreement is hereby amended by
adding to the end thereof the phrase "and to finance the purchase or
other acquisition of capital stock of the Borrower permitted by Section
5.02(g)".
(e) Section 5.02(g) of the Credit Agreement is hereby amended
by adding to the end thereof the following clause to the end of the
first sentence thereof:
"and (iv) the Borrower may purchase or otherwise
acquire its capital stock in an aggregate amount not
to exceed $20,000,000 from and after April 30, 1998."
(f) Section 5.04(a) of the Credit Agreement is hereby amended
by replacing the chart therein with the following chart:
<PAGE>
3
<TABLE>
<CAPTION>
"Quarter Ending On Minimum EBITDA
------------------ --------------
<S> <C>
April 30, 1998 $ 9,100,000
July 31, 1998 $10,800,000
October 31, 1998 $13,400,000
January 31, 1998 and
thereafter $13,800,000."
</TABLE>
(g) Section 5.04(f) of the Credit Agreement shall be amended
by adding to the end thereof the following proviso:
"; provided, however, that, in calculating the net
worth of the Borrower in accordance with the
provisions of this Section 5.04(f), any purchase or
other acquisition of capital stock of the Borrower
permitted by the provisions of Section 5.02(g) shall
be excluded."
This Second Amendment shall become effective as of the date
first above written when, and only when, the Administrative Agent shall have
received counterparts of this Second Amendment executed by the undersigned and
all of the Lenders or, as to any of the Lenders, advice satisfactory to the
Administrative Agent that such Lender has executed this Second Amendment, and
the consent attached hereto executed by the Loan Parties (other than the
Borrower). This Second Amendment is subject to the provisions of Section 8.01 of
the Credit Agreement.
On and after the effectiveness of this Second Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the Notes and each of the other Loan Documents to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as amended by
this Second Amendment.
The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Second Amendment, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, the Collateral
Documents and all of the Collateral described therein do and shall continue to
secure the payment of all Obligations of the Loan Parties under the Loan
Documents, in each case as amended this Second Amendment. The execution,
delivery and effectiveness of this Letter Amendment, shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender Party or the Administrative Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.
If you agree to the terms and provisions hereof, please
evidence such agreement by executing and returning at least two counterparts of
this Second Amendment to Maura E. O'Sullivan, Shearman & Sterling, 599 Lexington
Avenue, New York, New York 10022.
<PAGE>
4
This Second Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Second Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Second
Amendment.
This Letter Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
PHP HEALTHCARE
CORPORATION
By /s/ Anthony M. Picini
--------------------------------
Title: Executive Vice President and
Chief Financial Officer
Agreed as of the date first above written:
NATIONSBANK, N.A.
as Administrative Agent and as Lender
By /s/ Kevin Wagley
----------------------------
Title: Vice President
<PAGE>
CONSENT
Dated as of April 23, 1998
Each of the undersigned, as a Loan Party under the Loan Documents (as
defined in the Credit Agreement referred to in the foregoing Letter Amendment)
hereby consents to such Second Amendment and hereby confirms and agrees that (a)
notwithstanding the effectiveness of such Second Amendment, each Loan Document
to which such Loan Party is a party is, and shall continue to be, in full force
and effect and is hereby ratified and confirmed in all respects, except that, on
and after the effectiveness of such Second Amendment, each reference in each
such Loan Document to the "Credit Agreement", "thereunder", "thereof" or words
of like import shall mean and be a reference to the Credit Agreement, as amended
by such Second Amendment, and (b) the Collateral Documents to which such Loan
Party is a party and all of the Collateral described therein do, and shall
continue to, secure the payment of all of the Secured Obligations (as defined
therein).
HEALTH COST CONSULTANTS, INC.
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
PHP/CHE, INC.
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
PHP/IHS, INC.
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
<PAGE>
PHP LOUISIANA, INC.
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
PHP NJ MSO, INC.
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
PINNACLE HEALTH ENTERPRISES, L.L.C.
By PHP HEALTHCARE CORPORATION
as Member
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
By PHP NJ MSO, Inc.
as Member
By /s/ Anthony M. Picini
-------------------------------
Title: Chief Financial Officer
Address:
<PAGE>
<PAGE>
EXHIBIT 99.1
[Letterhead]
FOR IMMEDIATE RELEASE
Contact:
Jack M. Mazur, President and CEO
(703) 758-3600
Kenneth H. Weixel
Executive VP for Health Strategy
(703) 758-3686
PHP HEALTHCARE ANNOUNCES STOCK REPURCHASE PLAN
Reston, Virginia, April 28, 1998 - PHP Healthcare Corporation (NYSE:PPH)
announced today that its Board of Directors has authorized the repurchase of up
to 3 million shares of its common stock at prevailing prices at the discretion
of Company management. Common stock may be repurchased from time to time on the
open market through block purchase, or in privately negotiated transactions. PHP
Healthcare currently has 12.1 million shares of common stock outstanding.
PHP Healthcare also announced that its Board has authorized management to
explore the possibility of repurchasing some or all of PHP's Series B
Convertible Preferred Stock through privately negotiated transactions, from time
to time and at its own discretion.
Jack M. Mazur, PHP's President and Chief Executive Officer, stated, "This action
reflects our confidence in PHP's long-term growth prospects. The Company has
demonstrated in its most recent quarter the medical management capabilities of
its global capitation agreements. We are meeting or exceeding our goals for this
fourth quarter in lowering medical costs, while improving quality of care for
our patients."
PHP intends to use its available cash and borrowings under its existing credit
facility to repurchase shares in the market. The Company is seeking new,
expanded credit facilities to accomplish the entire 3 million share buy-back
program.
The number of shares to be purchased and the timing of the repurchases will
depend upon the availability of funds, the price of PHP Healthcare stock,
general market conditions, and other factors. There is no guarantee as to the
exact number of shares to be repurchased, and the Company may discontinue
repurchases at any time. Any shares repurchased will be held as treasury stock
and will be available for reissuance in connection with the Company's stock
option plans, conversions of existing convertible securities, or for other
corporate purposes.
<PAGE>
Charles P. Reilly, Chairman of the PHP Board, noted, "We believe that the market
price of our shares does not fairly represent the value of our Company. These
actions by the PHP Board provide us the opportunity to protect and enhance
shareholder value."
A medical management company, PHP Healthcare Corporation manages medical risk
through the acceptance of global capitation arrangements with HMOs and other
healthcare payors. The Company also offers a full range of management services
to the physician groups and hospitals that participate in provider-based
networks developed by PHP Healthcare. Because health care is a local service,
PHP's managed delivery systems are tailored to the needs of individual
communities and patient populations. Operating primarily along the Northeast,
mid-Atlantic, and Southeast corridors of the United States, PHP Healthcare has
more than 10,000 physicians employed or under contract and responsibility for
more than 300,000 covered lives.
###
Except for historical information, the statements preceding are forward-looking
statements that involve risks and uncertainties. Investors are cautioned that
such statements are only predictions and the actual events or results may differ
materially. These forward-looking statements speak only as of this date. The
Company undertakes no obligation to publicly release the results of any
revisions to the forward-looking statements made today to reflect events or
circumstances after today, or to reflect the occurrence of unanticipated events.
