<PAGE>
HORIZON HEALTHCARE CORPORATION
6001 INDIAN SCHOOL ROAD, N.E., SUITE 530
ALBUQUERQUE, NEW MEXICO 87110
June 21, 1995
To Our Stockholders:
A Joint Proxy Statement/Prospectus of Horizon Healthcare Corporation and
Continental Medical Systems, Inc. was recently delivered to you relating to a
Special Meeting of the stockholders of Horizon to be held on July 6, 1995 for
the purpose of considering approval and adoption of the Merger Agreement
described in the Joint Proxy Statement/Prospectus and, subject to consummation
of the Merger, approval of a change of the name of Horizon to Horizon/CMS
Healthcare Corporation.
As described in the accompanying Supplement to the Joint Proxy
Statement/Prospectus, Horizon announced on June 19, 1995 its intention to
dispose of eight of its existing facilities, with the result that Horizon will
record a charge of $16.9 million ($0.63 per share of Horizon Common Stock), net
of related Federal and state income tax benefit, in the fourth quarter of fiscal
year ended May 31, 1995.
Please read the accompanying Supplement carefully. If you have not already
done so, please complete and return the proxy or voting instruction card
previously delivered to you or, if you have already done so and wish to revoke
that proxy before it is voted, you may complete and return the proxy or voting
instruction card enclosed herewith. If you have executed and returned a proxy
and do not wish to revoke it, your previous proxy remains valid and no further
action on your part is necessary. If you have misplaced your copy of the Joint
Proxy Statement/Prospectus, you may obtain another copy by following the
instructions contained in the last paragraph of the Supplement. Banks, brokers,
dealers and other fiduciaries may contact Georgeson & Company Inc. at (800)
223-2064.
Sincerely,
Neal M. Elliott
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
CONTINENTAL MEDICAL SYSTEMS, INC.
600 WILSON LANE, P.O. BOX 715
MECHANICSBURG, PENNSYLVANIA 17055
June 21, 1995
To Our Stockholders:
A Joint Proxy Statement/Prospectus of Continental Medical Systems, Inc. and
Horizon Healthcare Corporation was recently delivered to you relating to a
Special Meeting of the stockholders of CMS to be held on July 6, 1995 for the
purpose of considering approval and adoption of the Merger Agreement described
in the Joint Proxy Statement/Prospectus.
As described in the accompanying Supplement to the Joint Proxy
Statement/Prospectus, Horizon announced on June 19, 1995 its intention to
dispose of eight of its existing facilities, with the result that Horizon will
record a charge of $16.9 million ($0.63 per share of Horizon Common Stock), net
of related Federal and state income tax benefit, in the fourth quarter of the
fiscal year ended May 31, 1995.
Please read the accompanying Supplement carefully. If you have not already
done so, please complete and return the proxy or voting instruction card
previously delivered to you or, if you have already done so and wish to revoke
that proxy before it is voted, you may complete and return the proxy or voting
instruction card enclosed herewith. If you have executed and returned a proxy
and do not wish to revoke it, your previous proxy remains valid and no further
action on your part is necessary. If you have misplaced your copy of the Joint
Proxy Statement/Prospectus, you may obtain another copy by following the
instructions contained in the last paragraph of the Supplement. Banks, brokers,
dealers and other fiduciaries may contact Corporate Investor Communications,
Inc. at (800) 242-4410.
Sincerely,
Rocco A. Ortenzio
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
HORIZON HEALTHCARE CORPORATION CONTINENTAL MEDICAL SYSTEMS, INC.
JOINT PROXY STATEMENT/PROSPECTUS SUPPLEMENT
This Joint Proxy Statement/Prospectus Supplement (this "Supplement")
supplements the Joint Proxy Statement/Prospectus of Horizon Healthcare
Corporation and Continental Medical Systems, Inc. dated June 6, 1995 (the "Joint
Proxy Statement/Prospectus"). Capitalized terms used herein without definition
are defined in the Joint Proxy Statement/Prospectus and are used herein as so
defined.
On June 19, 1995, Horizon announced that it plans to sell the assets and
leasehold improvements at eight of its facilities. Horizon anticipates that the
intended dispositions will occur during fiscal 1996. Pending disposition, the
operations of these facilities will be reported in Horizon's financial
statements as discontinued operations commencing with its consolidated financial
statements for the fiscal year ended May 31, 1995.
Horizon will record a charge for discontinued operations of $16.9 million
($0.63 per share of Horizon Common Stock), net of related Federal and state
income tax benefit, in the fourth quarter of the fiscal year ended May 31, 1995.
This charge will record the expense related to adjustment of the carrying cost
of these facilities, the reclassification of the losses from the operation of
these facilities during fiscal year 1995 and the accrual of anticipated future
losses from the operation of the facilities.
The consolidated financial statements of Horizon for the fiscal year ended
May 31, 1995 are currently being audited by Horizon's independent accountants.
Horizon does not anticipate that it will announce its results of operations for
the fiscal year ended May 31, 1995 until after July 10, 1995. Nonetheless, based
on the information now available to management, Horizon estimates that fully
diluted earnings per share of Horizon Common Stock from continuing operations
will be $1.40 for the year (as compared with $0.91 per share for the year ended
May 31, 1994) before the charge for discontinued operations. Based on the
information now available to management, Horizon expects no further charges for
these discontinued operations during fiscal year 1996.
The properties that are the subject of the planned dispositions, in the
aggregate, incurred a net loss in fiscal year 1995 in excess of $10.5 million.
Through these facilities, Horizon provides services for neuro-behaviorally
impaired patients (four facilities), long-term chronic ventilator care patients
(two facilities), personal care patients (one facility) and patients with mild
mental disorders (one facility). These services are deemed by management of
Horizon to be inconsistent with Horizon's emphasis on long-term rehabilitation
services and its concentration on high acuity patient services. Four of these
facilities, of which three are located in Michigan and one in Ohio, accommodate
664 licensed beds. The remaining four, located in Massachusetts, operate with
provisional licenses and accommodate 640 probationary licensed beds. The
probationary licenses under which the latter four facilities are operated are
discussed in the Joint Proxy Statement/Prospectus under "The Merger --
Governmental and Regulatory Approvals and Matters -- MASSACHUSETTS."
Only holders of record of shares of Horizon Common Stock at the close of
business on May 19, 1995 are entitled to vote at the Horizon Special Meeting,
and only holders of record of shares of CMS Common Stock at the close of
business on May 12, 1995 are entitled to vote at the CMS Special Meeting. If you
have executed and returned a proxy and wish to revoke it before it is voted at
the appropriate Special Meeting on July 6, 1995, you may execute and return the
enclosed proxy card. If you have executed and returned a proxy and do not wish
to revoke it, your previous proxy remains valid and no further action on your
part is necessary. If you have misplaced your copy of the Joint Proxy
Statement/Prospectus, you may receive another copy by contacting, in the case of
Horizon stockholders, Michael H. Seeliger, Vice President of Investor and Public
Relations, Horizon Healthcare Corporation, 6001 Indian School Road, N.E., Suite
530, Albuquerque, New Mexico 87110 (telephone (505) 881-4961) or, in the case of
CMS stockholders, Lisa Case, Investor Relations Department, Continental Medical
Systems, Inc., 600 Wilson Lane, P.O. Box 715, Mechanicsburg, Pennsylvania 17055
(telephone (717) 790-8300).
------------------------
THE DATE OF THIS SUPPLEMENT IS JUNE 21, 1995
<PAGE>
PROXY
HORIZON HEALTHCARE CORPORATION
SPECIAL MEETING OF STOCKHOLDERS -- JULY 6, 1995
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned appoints Klemett L. Belt, Jr. and Michael H. Seeliger as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote as designated below, all the shares of
Common Stock of Horizon Healthcare Corporation, held of record by the
undersigned on May 19, 1995, at the Special Meeting of Stockholders of Horizon
Healthcare Corporation to be held on July 6, 1995 at the Albuquerque Marriott
Hotel at 2102 Louisiana Ave., N.E., Albuquerque, New Mexico, commencing at 10:00
a.m., local time, or any adjournment(s) or postponement(s) thereof.
The undersigned hereby revokes any proxy to vote said shares heretofore
given. THE UNDERSIGNED ACKNOWLEDGES THAT THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER AND THAT
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF PROPOSALS 1 AND 2.
Please sign exactly as your name appears on your stock certificates. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
I plan to attend the meeting. (Please check if yes) / /
<TABLE>
<S> <C> <C>
1. Approval and adoption of the Amended and Restated FOR / / AGAINST / / ABSTAIN / /
Agreement and Plan of Merger dated as of May 23, 1995
among Horizon Healthcare Corporation, CMS Merger
Corporation and Continental Medical Systems, Inc.,
pursuant to which CMS Merger Corporation would be
merged with Continental Medical Systems, Inc. and each
outstanding share of common stock of Continental
Medical Systems, Inc. would be converted into 0.5397
shares of common stock of Horizon Healthcare
Corporation, all as described in the accompanying Joint
Proxy Statement/ Prospectus.
2. Approval, subject to consummation of the Merger, of the FOR / / AGAINST / / ABSTAIN / /
Amendment to the Restated Certificate of Incorporation
to change the name of Horizon Healthcare Corporation to
Horizon/ CMS Healthcare Corporation.
</TABLE>
3. In their discretion, the proxies are authorized to vote upon other
business as may properly come before the meeting, or any adjournment(s)
or postponement(s) thereof.
(CONTINUED ON REVERSE SIDE)
<PAGE>
If you receive more than one proxy card, please sign and return all cards in the
accompanying envelope.
Date ________________________, 1995
___________________________________
Signature
___________________________________
Signature if held jointly
This proxy may be revoked at any
time prior to the voting of the
proxy by the execution and
submission of a revised proxy, by
written notice to the Secretary of
the Company or by voting in person
at the meeting.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
CONTINENTAL MEDICAL SYSTEMS, INC.
600 WILSON LANE MECHANICSBURG, PA 17055
The undersigned holder of Common Stock of Continental Medical Systems,
Inc. (the "Corporation"), revoking all prior proxies, hereby appoints Rocco
A. Ortenzio, Robert A. Ortenzio and David G. Nation, and each of them acting
individually, as the attorney and proxy of the undersigned, with full power
of substitution, to vote all shares of Common Stock of the Corporation which
the undersigned would be entitled to vote if personally present at the
special meeting of the stockholders of the Corporation to be held at the
offices of the Corporation, 600 Wilson Lane, Mechanicsburg, Pennsylvania,
17055 at 11:00 a.m. on July 6, 1995, and at any adjournment(s) and
postponement(s) thereof. Said proxies are specifically authorized and
directed to vote as indicated with respect to the matters set forth on the
reverse hereof.
(continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
1. Proposal to approve and adopt the Amended and Restated Agreement and Plan
of Merger dated as of May 23, 1995 among the Corporation, Horizon Healthcare
Corporation and CMS Merger Corporation and the merger of CMS Merger
Corporation with and into the Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
2. In their discretion upon the transaction of such other business as may
properly come before the meeting, and any adjournment(s) or postponement(s)
thereof.
Please sign exactly as your name(s)
appear(s) below. When shares are held
by joint tenants, both should sign.
When signing as attorney-in-fact,
executor, administrator, trustee, or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated _________________________, 1995
______________________________________
Signature
______________________________________
Signature if held jointly
Please SIGN, DATE and RETURN the proxy
card promptly in the enclosed
envelope.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
FOLD AND DETACH HERE
