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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): October 7, 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 22091
Registrant's telephone number, including area code: (703) 758-3600
Former name or former address, if changed since last report: Not applicable
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ITEM 5. OTHER EVENTS.
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On October 7, 1998, PHP Healthcare Corporation (the "Company") announced
that the Company had agreed to sell its 70% interest in Virginia Chartered
Health Plan, Inc. to UHS Managed Care, Inc., an affiliate of Medical College of
Virginia Hospitals Authority at Virginia Commonwealth University, and current
owner of 30% of VACHP. The sale is subject to approval by the Virginia Bureau
of Insurance. The total consideration to be received by the Company will be
$7.2 million, including repayment of a $2 million promissory note. The
consideration will consist of $6.1 million in cash and a $1.1 million promissory
note due December 31, 1999. Proceeds from the sale are expected to be used by
the Company to repay outstanding indebtedness under its senior credit facility.
On October 15, 1998, the Company announced the following changes in its
senior management and board of directors:
. Kenneth H. Weixel, currently Executive Vice President for Healthcare
Strategy, has assumed the additional role of Acting Chief Financial
Officer while the Company conducts a formal search for a new Chief
Financial Officer.
. Anthony M. Picini, former Chief Financial Officer, will continue as
Executive Vice President focusing on special projects.
. To reflect greater independence on its Board of Directors, at the
request of the Company's Executive Committee, three members of senior
management who previously held seats on the Company's Board of
Directors have resigned as board members. The three resigning
directors are Michael D. Starr, William J. Lubin and Dr. Frank L.
Provato. The seven continuing members of the Company's Board of
Directors are Jack M. Mazur, Robert L. Bowles, Charles P. Reilly,
Jerry W. Carlton, Donald J. Ruffing, John J. McDonnell and Joseph G.
Mathews.
On October 15, 1998, the Company also announced the settlement of a portion
of its $63 million claim against the District of Columbia for receivables due to
its wholly owned subsidiary, D.C. Chartered Health Plan, Inc. D.C. Chartered
Health Plan, Inc. has received $6.5 million in settlement of claims totaling
$7.7 million. The Company will pursue the remaining $55 million in claims
pursuant to the petition filed in August 1998 in the Superior Court for the
District of Columbia.
Copies of the press releases issued by the Company are filed as exhibits to
this report.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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The following exhibits are furnished as part of this report:
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
99.1 Press Release, dated October 7, 1998, issued by PHP
Healthcare Corporation.
99.2 Press Release, dated October 15, 1998, issued by PHP
Healthcare Corporation.
99.3 Press Release, dated October 15, 1998, issued by PHP
Healthcare Corporation.
</TABLE>
FORWARD LOOKING STATEMENTS
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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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHP HEALTHCARE CORPORATION
By: /s/ Kenneth H. Weixel
-----------------------------------
Name: Kenneth H. Weixel
Title: Executive Vice President and
Acting Chief Financial Officer
Dated: October 19, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
99.1 Press Release, dated October 7, 1998, issued by PHP
Healthcare Corporation.
99.2 Press Release, dated October 15, 1998, issued by PHP
Healthcare Corporation.
99.3 Press Release, dated October 15, 1998, issued by PHP
Healthcare Corporation.
</TABLE>
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Exhibit 99.1
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PHP HEALTHCARE AGREES TO SELL
VIRGINIA CHARTERED HEALTH PLAN TO MEDICAL COLLEGE OF VIRGINIA
RESTON, Va., Oct. 7 -- PHP Healthcare Corporation (NYSE: PPH) announced
today the sale of its 70% interest in Virginia Chartered Health Plan, Inc.
(VACHP) to UHS Managed Care, Inc. (UHS), an affiliate of Medical College of
Virginia Hospitals Authority at Virginia Commonwealth University, and current
owner of 30% of VACHP. The sale is subject to approval by the Virginia Bureau of
Insurance, which is anticipated within the next 60 days.
Total consideration to be received by PHP will be $7.2 million, including
the repayment of a $2.0 million statutory surplus note. The consideration will
consist of $6.1 million in cash at closing and $1.1 million in a promissory note
due December 31, 1999. Proceeds from the sale will be used by PHP to repay
outstanding indebtedness under its senior credit facility.
"VACHP was formed in 1995 and a 30% interest was sold to UHS in 1996. Our
goal was to grow VACHP into one of the largest Medicaid HMO's in the central
Virginia area," said Jack Mazur, PHP President and Chief Executive Officer.
"With approximately 15,000 Medicaid members, VACHP is well on its way to
reaching this goal and UHS now would like to take on additional operational
responsibilities. PHP's core markets are New Jersey and the District of
Columbia, so the sale of our 70% interest makes sense for us. Under the sale
agreement, we have retained the right to expand our DC Chartered Health Plan
into Northern Virginia, and we will be considering this in this near future."
A medical management company, PHP Healthcare Corporation manages medical
risk through the acceptance of global capitation arrangements with HMO's 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. Because health care is a local service, PHP's
managed healthcare delivery systems are tailored to the needs of individual
communities and patient populations. PHP has more than 7,500 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.
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Exhibit 99.2
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PHP HEALTHCARE NAMES KENNETH WEIXEL
ACTING CHIEF FINANCIAL OFFICER
RESTON, Va., Oct. 15 -- PHP Healthcare Corporation (NYSE: PPH) today
announced that Kenneth H. Weixel, currently Executive Vice President for
Healthcare Strategy, has assumed the additional role of Acting Chief Financial
Officer while the Company conducts a formal search for a new Chief Financial
Officer. Anthony M. Picini, PHP's former CFO, will remain with the Company as an
Executive Vice President focusing on special projects and working with Mr.
Weixel and Jack M. Mazur, President and Chief Executive Officer.
"We have asked Ken to take on the additional role of Acting Chief Financial
Officer because of his strong background in healthcare finance," said Mr. Mazur.
"His experience with all aspects of managed care accounting will prove
invaluable to the Board of Directors, as well as to myself, in making important
financial decisions over the next several months." Mr. Weixel joined PHP last
year after more than 17 years at Deloitte & Touche LLP, including several years
leading the accounting firm's healthcare practice on the West Coast.
"Although I joined PHP to develop strategic growth opportunities, my
primary focus has shifted to accounting and finance because PHP's singular
emphasis now is to operate profitably in its core markets of New Jersey and the
District of Columbia," commented Mr. Weixel. "Once PHP returns to profitability
and the Company has recruited a new CFO, I will concentrate on growth again."
In a related action, PHP's Executive Committee requested that the Board of
Directors reflect more independence. Accordingly, several members of senior
management who held seats on the Board have submitted resignations. They are:
Michael D. Starr, William J. Lubin, and Dr. Frank L. Provato. The seven
continuing members of PHP's Board are: Jack M. Mazur, Robert L. Bowles, Charles
P. Reilly, Jerry W. Carlton, Donald J. Ruffing, John J. McDonnell, and Joseph G.
Mathews.
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. Because health care is a local service, PHP's
managed delivery systems are tailored to the needs of individual communities and
patient populations. PHP has more than 7,500 physicians employed or under
contract, and responsibility for approximately 300,000 covered lives.
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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.
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Exhibit 99.3
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PHP HEALTHCARE ANNOUNCES PARTIAL SETTLEMENT
OF CLAIMS WITH DISTRICT OF COLUMBIA
RESTON, Va., Oct. 15 -- PHP Healthcare Corporation (NYSE: PPH) today
announced the settlement of a portion of the $63 million claim against the
District of Columbia for receivables due to its wholly owned subsidiary, D.C.
Chartered Health Plan, for Medicaid services provided during the 1992 through
1996 contract periods. D.C. Chartered has received $6.5 million against claims
totaling $7.7 million. PHP will pursue the remaining $55 million in claims
pursuant to a petition filed in August 1998 in the Superior Court for the
District of Columbia.
Dr. Robert Bowles, President of D.C. Chartered Health Plan, said that he is
satisfied with this portion of the settlement. "This is a fair resolution to
the $7.7 million in claims involved, and it is reflective of the potential for
further cooperation between D.C. Chartered and the District of Columbia."
The majority of the unresolved claims against the District of Columbia
evolved from a discrepancy between interim payments made to D.C. Chartered
during contract periods 1992-1994 and final settlement based on D.C. Charter's
status as a full "risk" provider of Medicaid services. In February 1997, PHP and
the D.C. Commission on Health Care Finance reached an agreement to settle
outstanding claims for $18.9 million; however, payment was refused by the
District's Chief Financial Officer. Subsequently, PHP filed suit for these
claims with the District aggregating $62 million for all amounts due from the
District of Columbia.
"I hope the remaining portion of our claims against the District can be
resolved as fully and expeditiously as the segment we now have settled," said
Jack M. Mazur, President and Chief Executive Officer of PHP Healthcare. "D.C.
Chartered represents one of our core market activities. We are committed to
serving the District of Columbia and look forward to continuing our mutually
beneficial relationship."
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. Because health care is a local service, PHP's
managed delivery systems are tailored to the needs of individual communities and
patient populations. PHP has more than 7,500 physicians employed or under
contract, and responsibility for approximately 300,000 covered lives.
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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.
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