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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): February 15, 1999
Healthcare Recoveries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-22585
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(Commission File Number)
61-1141758
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(IRS Employer Identification Number)
1400 Watterson Tower, Louisville, Kentucky 40218
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(Address of principal executive offices)
Registrant's telephone number, including area code: (502) 454-1340
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page: 5
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Total Number of Pages: 7
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Item 2. Acquisition
Healthcare Recoveries, Inc., a Delaware corporation ("HRI"), acquired
the assets and assumed certain of the liabilities of MedCap Medical Cost
Management, Inc., a California corporation ("MedCap"), in an asset acquisition
(the "Asset Purchase") on February 15, 1999. The Asset Purchase was consummated
in accordance with the terms of that certain asset purchase agreement (the
"Asset Purchase Agreement"), dated December 4, 1998 among HRI, MedCap and
Marcia Deutsch, an individual resident of the State of California. HRI paid
$10,000,000 in cash at closing and 50% of the Gross Profits (as such term is
defined in the Asset Purchase Agreement) of the MedCap business for each of the
twelve month periods ending December 31, 1999 and December 31, 2000 pursuant to
an earn-out arrangement. The payment at closing was derived partially from cash
on hand and partially from funds obtained through HRI's existing $50,000,000
credit agreement, dated as of February 1, 1998 ("Credit Agreement"), among HRI,
as Borrower, the lending institutions named in the Credit Agreement, as Lenders
and National City Bank of Kentucky, a Kentucky banking association, as
Administrative Agent for the Lenders. The total consideration paid by HRI in
the Asset Purchase was determined through arm's length negotiations among
representatives of the parties to the Asset Purchase Agreement. Through the
Asset Purchase, HRI acquired substantially all of the tangible and intangible
assets of MedCap, consisting, in part, of the cost management engagements with
customers and associated computer hardware and software.
Neither HRI nor any of its affiliates had, nor the knowledge of HRI
did any director or officer or any associate of any such director or officer of
HRI have, any material relationship with MedCap prior to the Asset Purchase.
MedCap provides a variety of medical cost management services to health
insurers and HMOs. The tangible and intangible assets acquired in the Asset
Purchase were used prior to the Asset Purchase to provide cost management
services and HRI intends to use such assets for substantially the same purpose.
On February 16, 1999, HRI issued a press release (the "Press Release")
announcing the consummation of the Asset Purchase. The Press Release is filed
herewith as Exhibit 99.2 and is incorporated herein by reference thereto.
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Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(a) The financial statements required by this Item 7(a) are not
currently available. Such financial statements will be filed as soon as
practicable and in no event later than 60 days after the date of this Current
Report.
(b) The financial statements required by this Item 7(b) are not
currently available. Such financial statements will be filed as soon as
practicable and in no event later than 60 days after the date of this Current
Report.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No.
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<S> <C>
2.1 Asset Purchase Agreement by and among Healthcare Recoveries, Inc.,
MedCap Medical Cost Management, Inc. and Marcia Deutsch, dated as of
December 4, 1998. The Exhibits and Disclosure Letters which are
referenced in the table of contents and elsewhere in the Asset
Purchase Agreement are hereby incorporated by reference. Such Exhibits
and Disclosure Letters have been omitted for purposes of this filing,
but will be furnished supplementally to the Commission upon request
(incorporated herein by reference to Exhibit 2.1 of HRI's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on December 11, 1998).
99.1 Text of Press Release of Healthcare Recoveries, Inc., dated December
7, 1998 (incorporated herein by reference to Exhibit 99.1 of HRI's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 11, 1998).
99.2 Text of Press Release of Healthcare Recoveries, Inc., dated February
16, 1999.
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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 thereunto duly authorized.
Date: February 26, 1999
HEALTHCARE RECOVERIES, INC.
By: /s/ Douglas R. Sharps
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Douglas R. Sharps
Executive Vice President -- Finance and
Administration, and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page No.
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<S> <C> <C>
2.1 Asset Purchase Agreement by and among Healthcare
Recoveries, Inc., MedCap Medical Cost Management,
Inc. and Marcia Deutsch, dated as of December 4,
1998. The Exhibits and Disclosure Letters which are
referenced in the Table of Contents of the Asset
Purchase Agreement are hereby incorporated by
reference. Such Exhibits and Disclosure Letters have
been omitted for purposes of this filing, but will be
furnished supplementally to the Commission upon
request (incorporated herein by reference to Exhibit
2.1 of HRI's Current Report on Form 8-K filed with
the Securities and Exchange Commission on
December 11, 1998).
99.1 Text of Press Release of Healthcare Recoveries, Inc.,
dated December 7, 1998 (incorporated herein by
reference to Exhibit 99.1 of HRI's Current Report on
Form 8-K filed with the Securities and Exchange
Commission on December 11, 1998).
99.2 Text of Press Release of Healthcare Recoveries, Inc.,
dated February 16, 1999.
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[HRI Logo] EXHIBIT 99.2
NEWS RELEASE
Contact: Douglas R. Sharps
Chief Financial Officer
502) 454-1365
HEALTHCARE RECOVERIES ANNOUNCES CONSUMMATION OF THE ACQUISITION
OF MEDCAP MEDICAL COST MANAGEMENT, INC.
LOUISVILLE, Ky.--(BW HealthWire)--Feb. 16, 1999--Healthcare
Recoveries, Inc. (Nasdaq:HCRI) today consummated the
purchase of MedCap Medical Cost Management, Inc., a
California corporation (MedCap). HCRI paid $10,000,000 in
cash at closing and may pay additional amounts over two
years pursuant to an earn-out arrangement.
Headquartered in Encino, California, MedCap provides cost
management services to third party payors in the health care
industry. Medical cost management services focus primarily
on audit and cost management and include hospital bill
audit, DRG audit, credit balance and cost management
consulting services. MedCap has approximately 70 employees.
MedCap's revenue for 1997 was approximately $4.7 million and
1998 revenue was approximately $5.3 million.
The transaction will allow HCRI to expand the types of
services provided by HCRI from subrogation and other
recovery services to include the provision of medical cost
management services.
Patrick B. McGinnis, Chairman and CEO of HCRI, said: "We are
excited to join forces with MedCap and look forward to
expanding our existing subrogation business and the
opportunity to offer these complementary services to our
existing clients."
Marcia Deutsch stated: "We are delighted to have the
transaction consummated and the continued opportunity to
better serve our customers."
HCRI is the leading provider of health insurance subrogation
and related recovery services for healthcare payors.
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* HEALTHCARE RECOVERIES, INC. * 1400 Watterson Tower
Louisville, Kentucky 40218 *
* 502/454-1340 * www.hcrec.com *
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This press release contains forward-looking information
regarding HCRI. The forward-looking statements are made
pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may be significantly affected by certain risks
and uncertainties, including the ability of HCRI to
integrate acquisitions. Other risk factors are described in
HCRI's Annual Report on Form 10-K for the year ended
December 31, 1997, 1st Quarter 1998 Report on Form 10-Q, 2nd
Quarter 1998 Report on Form 10-Q, and 3rd Quarter 1998
Report on Form 10-Q, all on file with the Securities and
Exchange Commission.
Page 2 of 2
* HEALTHCARE RECOVERIES, INC. * 1400 Watterson Tower
Louisville, Kentucky 40218 *
* 502/454-1340 * www.hcrec.com *
