UNITED STATES
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) April 27, 1999
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CHRONIMED INC.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of incorporation)
0-19952 41-1515691
(Commission File Number) (IRS Employer Identification Number)
10900 Red Circle Drive, Minnetonka, Minnesota 55343
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (612) 979-3600
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ITEM 5. OTHER EVENTS
On April 27, 1999, Chronimed Inc. announced its third quarter earnings and that
it had engaged PaineWebber Inc. to explore strategic alternatives to enhance
shareholder value. See Exhibit 20.1 filed with this Form 8-K for this
announcement.
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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 behalf of the undersigned
thereunto duly authorized.
CHRONIMED INC.
Date: May 3, 1999
By /s/ Gregory H. Keane
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Gregory H. Keane
Principal Accounting Officer
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION OF EXHIBIT PAGE NUMBER
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20.1 Announcement dated April 27, 1999 by Chronimed Inc. 6
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EXHIBIT 20.1
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NEWS RELEASE
APRIL 27, 1999
CONTACTS: PAUL S. DUNN, INVESTOR RELATIONS, OR
MAURICE R. TAYLOR, II, CHAIRMAN AND CEO,
AT CHRONIMED INC. (612) 979-3600
CHRONIMED ANNOUNCES THIRD QUARTER FISCAL 1999 RESULTS
ALSO ANNOUNCES ENGAGEMENT OF PAINE WEBBER TO EXPLORE STRATEGIC ALTERNATIVES
MINNEAPOLIS, APRIL 27, 1999 -- CHRONIMED INC. (NASDAQ: CHMD), today announced
third quarter revenue and net income for the period ended April 2, 1999.
Chronimed reported record revenue for the third quarter ended April 2,
1999 of $51.7 million, up 53 percent from $33.7 million in last year's third
quarter. Income from operations was $740,000 for the quarter compared to $2.1
million last year. Net income per diluted share for the third quarter was four
cents compared to twelve cents last year.
For the nine-month period, revenue grew 43 percent to $143.2 million,
up from $100.1 million last year. Income from operations was $6.3 million for
the nine-month period compared to $7.6 million last year. Net income per diluted
share was 36 cents per share compared to 43 cents per share last year.
Commenting on the third quarter results, Chronimed's chairman and chief
executive officer Maurice R. Taylor, II, said, "I am very happy with the
tremendous revenue growth and the increased market share we generated in the
third quarter. While our earnings this quarter have not kept pace, we know the
reasons for this situation and believe them to be correctable. Consequently, we
are absolutely focused on improving profitability in every aspect of our
business as we move into fiscal fourth quarter and beyond."
Mr. Taylor also stated, "Chronimed has engaged PaineWebber to explore
strategic alternatives to enhance shareholder value which may include a merger
or sale of all or part of the company. I want to caution, however, that we have
not entered into any agreements or commitments concerning any alternatives. In
addition, Chronimed's Board of Directors may determine, at any time, not to
proceed with any of these alternatives or their exploration. Finally, we will
not comment any further regarding these matters unless and until we decide to
proceed with a particular transaction."
(MORE)
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CHRONIMED ANNOUNCES THIRD QUARTER FISCAL 1999 RESULTS
APRIL 27, 1999 - PAGE TWO
For the third quarter, revenue from the Specialty Pharmacy Services
business grew 40 percent over last year's third quarter on the strength of the
Injectables program. Disease Management, with its focus on HIV/AIDS, grew 121
percent, from $8.0 million to $17.7 million, driven by the StatScript pharmacy
network. In the Diagnostic Products segment, revenue grew $1.3 million or 20
percent, offset by a $500,000 revenue drop from the discontinuance of the
Publishing business.
Income from operations for the third quarter was down significantly,
from $2.1 million and 6.2 percent of revenue last year to $740,000 and 1.4
percent of revenue this year. The decline is due primarily to gross profit
pressure in Diagnostic Products and Specialty Pharmacy Services. In Diagnostic
Products, most of the gross profit pressure has come from less-than-expected
revenues and profitability from newer blood glucose and urine diagnostic
products. In Specialty Pharmacy Services, gross profit pressure has come from
the high-growth Injectables program due to aggressive pricing aimed at gaining
market share and creating disease management opportunities.
Chronimed Inc. is a leading integrated healthcare company specializing
in diagnostic products, specialty pharmacy services, and disease management for
people with chronic health conditions. The Company develops, manufactures,
markets, and distributes pharmaceuticals, medical diagnostic products, and
provides specialized patient management services nationwide for people with
long-term chronic conditions such as HIV/AIDS, diabetes, organ transplants, and
diseases treated with injectable medications. Chronimed works directly with
patients, providers, and payors to improve clinical and cost-of-care outcomes.
Chronimed's web site address is www.chronimed.com.
As a cautionary note to investors, certain matters discussed in this
press release are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such matters involve risks and
uncertainties that may cause actual results to differ materially, including the
following: changes in economic conditions; general competitive factors;
pressures on gross profit margins; the Company's ability to execute its sales
and marketing plans; changes in the status of managed care contracts; changes in
ownership; material litigation; and the risks described from time to time in the
Company's public reports filed with the SEC.
(MORE)
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CHRONIMED ANNOUNCES THIRD QUARTER FISCAL 1999 RESULTS
APRIL 27, 1999 - PAGE THREE
CHRONIMED INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
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4/2/99 3/27/98 4/2/99 3/27/98
<S> <C> <C> <C> <C>
Revenue $51,683 $33,699 $143,159 $100,143
Percent increase 53% 43%
Income from operations $ 736 $ 2,084 $ 6,332 $ 7,638
Percent of revenue 1.4% 6.2% 4.4% 7.6%
Net income $ 466 $ 1,475 $ 4,415 $ 5,290
Percent of revenue 0.9% 4.4% 3.1% 5.3%
Net income per share - basic $ .04 $ .12 $ .36 $ .44
Net Income per share - diluted .04 .12 .36 .43
Average shares outstanding - basic 12,109 11,965 12,108 11,943
Average shares outstanding - diluted 12,223 12,271 12,263 12,206
</TABLE>
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