<PAGE> 1
===============================================================================
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 31, 1997 (October 29, 1997)
-----------------------------------
PHYCOR, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 0-19786 62-13344801
- --------------- --------------- ----------------
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification
Incorporation) Number)
30 Burton Hills Boulevard
Suite 400
Nashville, Tennessee 37015
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(615) 665-9066
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
--------------
(Former name or former address, if changed since last report)
===============================================================================
Page 1 of 4 pages
Exhibit Index located on Page 4
<PAGE> 2
ITEM 5. OTHER EVENTS.
On October 29, 1997, PhyCor, Inc., a Tennessee corporation ("PhyCor"),
entered into a Plan and Agreement of Merger (the "Plan") with MedPartners, Inc.,
a Delaware corporation ("MedPartners"), pursuant to which MedPartners will be
merged with and into PhyCor, with PhyCor to be the surviving corporation. The
Plan provides that the holders of MedPartners Common Stock will be entitled to
receive 1.18 shares of PhyCor Common Stock for each share of MedPartners Common
Stock held. The transaction is scheduled to close in the first quarter of 1998.
The press release describing the transaction attached hereto as Exhibit
99.1, is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
None Required.
(b) Pro Forma Financial Information.
None Required.
(c) Exhibits.
99.1 Form of press release issued by PhyCor, Inc. in
connection with the above referenced transaction.
2
<PAGE> 3
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.
PHYCOR, INC.
By: /s/ N. Carolyn Forehand, Esq.
--------------------------------
N. Carolyn Forehand, Esq.
Vice President
Date: October 31, 1997
3
<PAGE> 4
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
99.1 -- Form of press release issued by PhyCor, Inc. in connection with
the above referenced transaction.
4
<PAGE> 1
EXHIBIT 99.1
PHYCOR(R)
The Physicians' Corporation NEWS RELEASE
- --------------------------------------------------------------------------------
CONTACT: FOR PHYCOR, INC.: FOR MEDPARTNERS, INC.:
Joseph C. Hutts Larry R. House
Chairman, President and Chief Chairman and Chief Executive Officer
Executive Officer or
or Harold O. Knight, Jr.
John K. Crawford Chief Financial Officer
Chief Financial Officer (205) 733-8996
(615) 665-9066
Investor Relations:
Investor Relations: Randy Pittman
Shawn Carder Vice President - Finance
Director or
(615) 665-9066 Tom Bartels
Director
New York Media Contact: (205) 733-8996
Sam Ostrow
(203) 328-3018 Media Relations:
Tom Dingledy
Other Media Contact: Vice President - Corporate
Tom Lawrence Communications
(615) 665-9066 (205) 733-8996
PHYCOR ANNOUNCES AGREEMENT TO ACQUIRE MEDPARTNERS COMBINING
NATIONS'S LEADING PHYSICIAN MANAGEMENT ORGANIZATIONS
Nashville, Tennessee (October 29, 1997) -- The Boards of Directors of PhyCor,
Inc. (Nasdaq/NM:PHYC) and MedPartners, Inc. (NYSE:MDM) today unanimously
approved a definitive agreement under which PhyCor would acquire MedPartners,
forming a nationwide physician management company with revenues of more than
$8.4 billion. Under the terms of the agreement, holders of MedPartners common
stock will receive a fixed ratio of 1.18 shares of PhyCor stock for each
MedPartners share held. The transaction is valued at approximately $8.0 billion
including the assumption of $1.2 billion of debt. The transaction is expected
to be accounted for as a pooling-of-interests and to be treated as a tax-free
exchange. It is subject to the approval of shareholders of both companies,
various state and Federal regulatory agencies, and other customary conditions.
Closing of the transaction is anticipated in the first quarter of 1998.
The combined company will operate in all 50 of the United States and will
be affiliated with approximately 35,000 physicians. In addition, the combined
company will serve more than three million patients under prepaid health plans.
-MORE-
PHYCOR, Inc. - 30 Burton Hills Blvd. - Suite 400
Nashville, Tenn. 37215 - 615-665-9066
<PAGE> 2
PHYC to Acquire MDM
October 29, 1997
Page 2
"This is an extraordinary and unique opportunity," said Joseph C. Hutts,
chairman, president and chief executive officer of PhyCor. "The purpose of
PhyCor has always been to make a fundamental contribution to our healthcare
system. This combination positions us to attain our goal. Despite the combining
of the two largest physician management companies, we will only represent
approximately 5% of all physicians in America. We have plenty of work to do. In
an increasingly competitive environment, physicians need organizational
strength and resources to make a positive difference in healthcare cost and
quality. This transaction creates the most compelling physician organization in
our nation -- one that meets the needs of physicians, employers, payors, and
especially patients."
Larry R. House, MedPartners' chairman and chief executive officer,
commented, "These are the two preeminent physician practice companies in the
industry, and each has been on the leading edge of developing strong physician
networks to improve patient service and outcomes. The companies' complementary
strategies accelerate our opportunity to continue building the premier
physician-driven healthcare delivery system in the United States. This merger
is in the best interests of shareholders, physicians, and employees and will
result in an enterprise that is uniquely positioned to meet the needs of
patients and payors nationwide."
Mr. Hutts will remain chairman, president and chief executive officer of
the combined entity. Mr. House will join PhyCor's current 11-member board along
with another current MedPartners director, Richard M. Scrushy, chairman and
chief executive officer of HEALTHSOUTH (NYSE:HRC) of Birmingham, Alabama.
PhyCor, Inc. is a physician practice management company that operates
multi-specialty clinics and manages independent practice associations (IPAs).
The Company operates 53 clinics with approximately 3,780 physicians in 28
states and manages IPAs with over 17,800 physicians in 27 markets.
MedPartners, Inc. is a physician practice management company operating in
40 states. The company develops, consolidates and manages healthcare delivery
systems. Through the company's network of affiliated group and IPA physicians,
MedPartners provides primary and specialty healthcare services to prepaid
managed care enrollees and fee-for-service patients. MedPartners also manages
the nation's largest independent prescription management company.
BT Alex. Brown Incorporated and Smith Barney Inc. acted as financial
advisors to PhyCor and MedPartners, respectively.
This press release contains forward-looking information. 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 impacted by certain risks and uncertainties
described herein and in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1996.
-MORE-
<PAGE> 3
PHYCOR, INC./MEDPARTNERS, INC. MERGER
FACT SHEET
COMBINED COMPANY HIGHLIGHTS:
- - Approximately 35,000 affiliated physicians
- - Over 36,000 employees in 44 states
- - $8.4 billion in annualized revenue (third quarter annualized)
- - $717 million in annualized EBITDA (third quarter annualized)
TERMS OF THE MERGER:
- - PhyCor will issue approximately 236 million shares in connection with the
merger
- - Transaction valued at $8.0 billion including $1.2 billion in assumed debt
(10/28/97 price)
- - Each MedPartners share will convert into 1.18 shares of PhyCor common stock
- - Transaction expected to be accounted for as a pooling-of-interests and a
tax-free exchange
- - Customary break-up fees for a transaction of this size
KEY OPERATING STATISTICS:
<TABLE>
<CAPTION>
PHYCOR MEDPARTNERS COMBINED
------ ----------- --------
<S> <C> <C> <C>
Physicians:
Group Physicians 3,780 3,385 7,165
Hospital-Based and Other Physicians - 2,475 2,475
IPA Physicians 17,800 7,482 25,282
---------- --------- ---------
TOTAL 21,580 13,342 34,922
========== ========= =========
Practices 53 289 342
Locations 495 674 1,169
Markets 73 51 110
States 28 40 44
Prepaid Enrollment:
Professional Only 968,405 1,174,221 2,142,626
Global 155,862 962,645 1,118,507
---------- ---------- ----------
TOTAL PREPAID ENROLLMENT 1,124,267 2,136,866 3,261,133
========== ========== ==========
Senior Enrollment 169,733 248,000 417,733
RUN-RATE FINANCIALS (THIRD QUARTER ANNUALIZED - IN MILLIONS):
Net Health Services Revenue $ 2,220 $ 6,220 $ 8,440
Revenue Net of Payments and
Pass-Through Costs $ 1,137 $ 3,308 $ 4,445
EBITDA $ 192 $ 525 $ 717
Net Income $ 60 $ 218 $ 278
</TABLE>
