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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
____________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): NOVEMBER 18, 1996
_____________________________
HORIZON/CMS HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 1-9369 91-1346899
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or org- Identification No.)
anization)
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6001 INDIAN SCHOOL ROAD, N.E.
SUITE 530
ALBUQUERQUE, NEW MEXICO
(Address of principal
executive offices)
87110
(Zip Code)
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ITEM 5. OTHER EVENTS
PACIFIC REHABILITATION & SPORTS MEDICINE ACQUISITION ANNOUNCEMENT
Horizon/CMS Healthcare Corporation ("Horizon/CMS") (NYSE:HHC) and Pacific
Rehabilitation & Sports Medicine, Inc. ("Pacific Rehab") (NASDAQ:PRHB)
jointly announced on Monday, November 18, 1996, that they entered into a
definitive merger agreement pursuant to which Horizon/CMS will offer to
purchase all of the outstanding shares of common stock of Pacific Rehab for
$6.50 per share in cash. Following the completion of the offer and subject to
the terms and conditions set forth in the agreement, any shares of common
stock not purchased in the tender offer will be acquired at the same price in
a cash merger. The consummation of the tender offer and the merger are
conditioned upon, among other things, the valid tender of a majority of the
outstanding shares of common stock of Pacific Rehab.
Horizon/CMS intends to commence the offer no later than November 22,
1996. The full terms and conditions of the offer, as well as important
related information, will be contained in the parties' filings with the
Securities and Exchange Commission and mailings to Pacific Rehab stockholders.
Questions relating to the tender offer should be directed to Georgeson &
Company Inc., (800-223-2064) information agent for the tender offer.
The aggregate price of the transaction is approximately $56.0 million
plus acquired debt.
Pacific Rehab provides outpatient physical therapy services at 66
outpatient rehabilitation clinics in ten states. Pacific Rehab's annualized
revenues, based on the nine months ended September 30, 1996, are
approximately $38.5 million. Pacific Rehab derived over 90% of its revenues
from insurance and private payment sources during such quarter.
CALIFORNIA ACUTE REHABILITATION HOSPITAL DISPOSITION ANNOUNCEMENT
Horizon/CMS announced on November 19, 1996, that it has signed definitive
agreements to sell to Regency Health Services, Inc. ("Regency") (NYSE:RHS)
its interest in four acute rehabilitation hospitals, with a total of 292
beds, and 11 hospital based or free-standing outpatient rehabilitation
clinics located in the state of California. Regency will also purchase
Horizon/CMS's Meridian Neuro Care business, which operates six congregate
care facilities in California.
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Horizon/CMS anticipates receiving approximately $36.3 million in cash and
approximately $7.0 million original principal amount of promissory notes for
working capital retained by Regency at the closing of these transactions.
Horizon/CMS will also retain net working capital of approximately $11.2
million. The companies expect to complete this transaction by the end of the
calendar year, assuming approvals take place as anticipated.
This sale greatly reduces Horizon/CMS's presence in the State of
California and is consistent with the Company's business strategy to
concentrate on geographic regions where it can have critical mass or
prospects for a continuum of care across its lines of business. The sale
includes the Robert H. Ballard Rehabilitation Hospital, a 60-bed hospital
located in San Bernadino, California; the Kentfield Rehabilitation Hospital,
a 60-bed hospital located in Kentfield, California; the Rehabilitation
Hospital of San Diego, a 110-bed hospital located in San Diego, California;
and the San Joaquin Valley Rehabilitation Hospital, a 62-bed hospital located
in Fresno, California. Meridian Neuro Care, based in Newport Beach,
California, operates six congregate care living health facilities in the
State of California with 53 beds providing nursing care and therapy services
to victims of traumatic accidents. Lastly, included in the transaction are
ten outpatient rehabilitation clinics (of which five are free-standing) and
one non-hospital based free-standing outpatient rehabilitation clinic located
in the San Francisco, California area.
While these operations generated about $66 million in net revenues during
fiscal 1996, their operating margins were below those achieved by the
hospital division, taken as a whole. Thus, assuming the historical operating
results of Horizon/CMS's rehab hospital division are indicators of future
operating performance, completion of this transaction with Regency should
have a positive effect on the operating margins of this division as a whole.
Completion of the transaction is subject to, among other things, (i)
receipt of all applicable health care regulatory approvals, (ii) expiration
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and (iii) the receipt of consents from certain
third parties including lenders, landlords and joint venture partners. The
proceeds of this sale will initially be used to pay down outstanding debt on
Horizon/CMS's revolving credit facility.
FORWARD LOOKING STATEMENTS
Certain of the matters discussed in these press releases and in this
Current Report contain forward-looking statements that involve risks and
uncertainties. Although Horizon/CMS believes that the assumptions accompanying
such forward-looking statements are reasonable, Horizon/CMS cannot give any
assurance that expected results will occur. A
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significant variation between actual results and any of such assumptions may
cause actual results to differ materially from expectations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
HORIZON/CMS HEALTHCARE CORPORATION
By: /S/ SCOT SAUDER
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Scot Sauder
VICE PRESIDENT OF LEGAL AFFAIRS,
SECRETARY AND GENERAL COUNSEL
Date: November 21, 1996.
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