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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 8, 1996
VALUE HEALTH, INC.
(Exact name of Registrant as Specified in Charter)
Delaware No. 0-19039 06-1194838
(State or Other (Commission File Number) (IRS Employer Identification
Jurisdiction Number)
of Incorporation)
22 Waterville Road, Avon, Connecticut 06001
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (203) 678-3400
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ITEM 5. OTHER EVENTS.
On October 8, 1996, Value Health, Inc. entered into a Stock
Purchase Agreement with Beverly Enterprises, Inc. and Spectra Rehab
Alliance, Inc. to purchase all of the issued and outstanding shares of
capital stock of Medview Services, Incorporated, Resource
Opportunities, Inc. and Insurance Software Packages, Inc. On October
9, 1996, ValueHealth announced plans to spin off ValuRx, its
prescription benefit and medication management company, to
shareholders.
A copy of the press release of Value Health, Inc., dated october
9, 1996 has been filed with this Form 8-K as Exhibit 99 and is hereby
incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(99) Press release issued by Value Health, Inc. on October
9, 1996.
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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.
Value Health, Inc.
Date: October 11, 1996 By:/s/ James E. Buncher
Its: President, Health Plans Group
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
(99) Press Release issued by Value Health, Inc. on October 9 , 1996
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Value Health To Spin Off Valuerx And Acquire Medview Services
Action Designed to Focus Company on Core Growth Markets
AVON, Conn., Oct. 9, 1996 -- In a major restructuring designed to increase
shareholder value, Value Health Inc Board of Directors has approved plans to
spin off ValueRx; its prescription benefit and medication management company,
to shareholders; acquire a workers' compensation managed care company;
and institute an open market share repurchase program of up to $100 million.
In a transaction which is expected to be tax-free, Value Health shareholders
will receive shares of ValueRx, which will become a separate publicly traded
entity. The parent company will retain its mental health management, workers'
compensation, and disease management businesses.
After the spinoff, which is projected to be completed in the first quarter of
1997, Robert E. Patricelli will remain chairman and chief executive officer of
Value Health. Steven J. Shulman, currently president of the company's Pharmacy
and Disease Management Group, will become chairman and CEO of ValueRx. Kevin L.
Roberg will continue to oversee the daily operations of ValueRx.
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Value Health also reached agreement to acquire the stock of MedView Services,
Incorporated, of Farmington Hills, Mich., a leading provider of workers'
compensation managed care services, from Beverly Enterprises Inc for $87.5
million in cash. Closing of the acquisition, which is subject to regulatory
approvals, is anticipated in the fourth quarter of 1996.
"Today's announcements follow several months of intense strategic review aimed
at better positioning our companies for growth and maximizing shareholder
value," Patricelli said. "The spinoff will create two companies, each with
a sharper focus on its markets and with management incentives more closely
aligned with company performance. It should allow for a fuller valuation
of each company by freeing each to trade independently and develop its own
investor group," he added. "At the same time, this restructuring significantly
enhances the visibility of our market-leading mental health and workers'
compensation businesses, each with strong growth prospects."
"The MedView acquisition is a strategically important one and underscores Value
Health's commitment to invest in growth businesses. Workers' compensation
medical benefits is a $30-$40 billion market and one of the fastest growing
areas of health care services," Patricelli said. "MedView is a leader in
managed workers' compensation and its combination with our rapidly growing
Community Care Network (CCN) subsidiary will make us one of the largest
companies in this key segment, with approximately $150 million in annual
revenues," he added.
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"We expect the MedView transaction to be neutral to earnings per share in 1997
and solidly accretive thereafter," said James E. Buncher, president of Value
Health's Health Plans Group, and president of CCN.
The Value Health Board also authorized the repurchase of up to $100 million of
its common stock from time to time in the open market. The authorization
represents approximately 10 percent of the company's outstanding common
shares at current prices. Shares repurchased will be used for general corporate
purposes. "This action further demonstrates our commitment to shareholder value
and to managing our capital in a way that will produce enhanced returns,"
Patricelli said.
Commenting further on the proposed spinoff, Patricelli said, "Over the past ten
months, we have recruited a talented and dynamic group of managers at ValueRx.
This team has successfully turned the company around by dramatically improving
customer service, upgrading technology, and lowering its cost structure.
ValueRx will have over $1.5 billion in 1996 revenues and is fully capable of
standing on its own as an independent public entity.
"At the same time, Value Health is returning to its roots," Patricelli said.
"We will be a smaller company, but one with strong growth prospects in
businesses which have been overshadowed by the size of ValueRx, which has
accounted for 80 percent of our revenues. In mental health and workers'
compensation, we have companies with leading market shares in two of the
most dynamic segments of the health care services industry, plus we have
in Value Health Sciences a leading health care information and disease
management company serving over 20 million people," Patricelli
said.
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"This restructuring presents an exciting opportunity for ValueRx," remarked
Shulman. "The pharmacy benefit management market continues to grow rapidly.
ValueRx has been rebuilt and re-energized, with a new management team led by
Kevin Roberg. This team will now be motivated by having a direct equity stake
in its business."
Shulman continued, "At ValueRx, we are focusing on our industry leading
clinical capabilities, which help control inappropriate utilization and have
a powerful effect on lowering costs. As part of this effort, we have now
integrated key clinical systems and analytic capabilities developed by our
sister company, Value Health Sciences. These capabilities allow us to develop
innovative disease management programs and give health plans a complete
picture of the impact of prescription drugs on their overall health care costs."
"This transaction enhances our position as the leading independent in the
market. We are already the largest prescription drug manager not tied to a
pharmaceutical manufacturer or provider entity. Following the spinoff, we will
be the largest company focused solely on medication management," Shulman added.
The proposed spinoff is subject to certain regulatory and governmental
approvals.
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This press release contains forward-looking statements. Any statement that is
not historic fact should be assumed to be forward-looking. There are a number
of factors which could cause actual results to differ materially from those
indicated by these forward-looking statements. A listing of these factors can
be found in the company's filings with the Securities and Exchange Commission.
Value Health, Inc. is a leading provider of specialty managed care benefit
programs to large corporations, insurance carriers, managed care organizations,
and federal, state, and local governments. The company's core businesses
include: pharmacy benefit management; mental health and substance abuse
management; workers' compensation, disability and group health management;
and disease management. Its programs provide services to more than 78 million
people nationwide.
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FACT SHEET - VALUE HEALTH, INC. - 10/9/96
About the "New" Value Health (Post-Spinoff)
Corporate Offices:
Value Health, Inc.
22 Waterville Road
Avon, Connecticut 06001
Chairman and CEO: Robert E. Patricelli
Total Revenues, Fiscal Year Ended 12/31/95: $373 million
Following the spin-off, Value Health will operate in three primary lines of
business: managed mental health, managed workers' compensation, and disease
management. The company enjoys a position among the market leaders in each
sector.
Value Behavioral Health, Inc.
3110 Fairview Park Drive So.
Falls Church, VA 22042
President and CEO: Charlton C. Tooke, III
Number of employees: 1,800
Offices: 10
Network Providers: 33,000
Covered lives: 20 million
Value Behavioral Health is one of the largest providers of managed mental
health and substance abuse services, through a 33,000 provider network
operating nationwide. The company has the largest share of the network-based
market. The company is poised to exploit two new growth markets: managed care
organizations (HMOs) and the public sector.
This year, VBH was awarded two major contracts by managed care organizations
covering nearly 1.5 million members. Further, through a 50/50 partnership,
VBH recently began providing managed mental health and substance abuse services
to over 400,000 Medicaid and other public sector beneficiaries in the
Commonwealth of Massachusetts. This is the largest program of its type currently
operating in the U.S. Over the next two to three years, VBH plans to bid on
state Medicaid mental health contracts representing total health care
spending of $4-5 billion.
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Community Care Network
5251 Viewridge Court
San Diego, CA 92123
Chairman & President & CEO: James E. Buncher
No. of employees: 1,050
Managed workers' compensation systems serving 13 million employees.
Group health preferred provider organizations serving 1.7 million
beneficiaries.
MedView Services, Inc. (Pending Acquisition)
32991 Hamilton Court
Suite 300 Farmington Hills, MI 48334-3316
No. of Employees: approximately 600
Community Care Network (CCN) operates one of the largest workers' compensation
specialty managed care systems in the nation, covering 14 states. The company
provides a full range of managed workers' compensation services, including
network management, case management, utilization review, bill review,
and early notification and intervention. CCN is well positioned as
a leader in one of the fastest growing segments of managed care. In addition,
CCN operates group health preferred provider networks in 42 states. The
company's networks include more than 105,000 physicians, 1,600 hospitals,
and 23,000 ancillary providers.
MedView also provides a full range of workers' compensation managed care
services, including preferred provider networks, utilization review, telephonic
and field case management, bill review, first notice of injury, and
vocational rehabilitation services. MedView operates group health and
workers' compensation preferred provider networks in 22 states, with 110,000
physicians, 2,500 hospitals, and 14,000 ancillary providers. The company offers
on-site medical case management and vocational rehabilitation services
through 24 offices.
Once MedView and CCN are combined, the new organization will have near-
nationwide capabilities in network management, bill review, case management,
vocational rehabilitation, and telephonic injury reporting. The combined
company will have approximately $150 million in annual revenues, making
it one of the largest workers' compensation managed care companies in
the country.
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Value Health Sciences (VHS)
2400 Broadway - Suite 100
Santa Monica, CA 90404
Chairman and Co-CEO: Leslie D. Michelson
President and Co-CEO: Jacqueline Kosecoff
No. of employees: 200
Value Health Sciences is a leading developer of disease management programs and
information systems. The company is also a leading source of applied research
and clinical protocols.
VHS has developed two leading clinical software programs designed to help
health care providers and payors manage costs. The Medical Review System is
an interactive pre-certification system which determines the clinical
appropriateness of high-cost procedures. The Practice Review System is an
automated system which profiles providers and networks by linking data into
episodes of care.
VHS has built one of the largest applied research teams in the managed care
industry. The company's Research, Analytics, and Consulting Services group
focuses on treatment protocols and outcomes management to help clients
improve decision making and improve outcomes.
VHS has entered into strategic alliances with three leading pharmaceutical
manufacturers to develop disease management programs. Among the tools VHS
supplies are diagnostic aids, treatment guidelines, educational programs
and materials, patient advocacy, case management, and outcomes measures.
VHS has also produced the key clinical management tools for Value Oncology
Sciences (VOS), Value Health's developmental physician practice management
operation, which will specialize in cancer care. VOS has been jointly funded
by E.M. Warburg, Pincus & Company and Value Health.
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About the "New" ValueRx (Post Spinoff)
ValueRx, Inc.
4700 Nathan Lane No.
Plymouth, MI 55442
Chairman & CEO: Steven J. Shulman
No. of Employees: 1,800
Over 3,000 customers
Covers 27 million lives
Total Revenues, Fiscal Year Ended 12/31/95: $1.5 billion
ValueRx is one of the largest managers of prescription drug benefits in the
country, and the largest not affiliated with a pharmaceutical manufacturer
or provider entity. The company processes over 60 million prescriptions
annually. ValueRx provides service through a nationwide network of 46,000
retail pharmacies, and is the third largest distributor of mail-order
prescription drugs through its state-of-the-art facilities. The company employs
a staff of over 550 pharmacists and manages over $2.2 billion of annual drug
spending.
ValueRx is a leader in the development of clinical tools to help manage the
medication process. The company has internalized key clinical and analytic
capabilities of its sister company, Value Health Sciences, to help health
plans understand the effect of prescription drugs on their total health
costs. The company's clinical expertise has resulted in its becoming one of
the FDA's leading non-academic advisors on drug efficacy.
Through its joint venture with Allegiance Corp., ValueRx is the second largest
contract manager of hospital pharmacies. Institutional medication management
is a sizable market, with direct in-patient drug spending estimated at $15
billion annually, and total medication process expenses estimated at $50 billion
per year. It is estimated that less than 15% of all institutions currently
outsource their medication management services, making this a promising
growth market. ValueRx is the only company which can provide medication
management services across both the inpatient and outpatient settings.
This Fact Sheet contains forward-looking statements. Any statement that is not
historic fact should be assumed to be forward-looking. There are a number of
factors which could cause actual results to differ materially from those
indicated by these forward-looking statements. A listing of these factors
can be found in the company's filings with the Securities and Exchange
Commission. SOURCE Value Health, Inc.
