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): MAY 26, 2000
CHRONIMED INC.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of incorporation)
0-19952 41-1515691
(Commission File No.) (IRS Employer Identification No.)
10900 Red Circle Drive, Minnetonka, Minnesota 55343
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (952/979-3600)
<PAGE>
ITEM 5. OTHER EVENTS.
DIAGNOSTICS PRODUCTS SPINOFF; DISCONTINUED OPERATIONS
On March 13, 2000, Chronimed Inc. ("Chronimed" or the "Company") announced its
intention to spin off its diagnostic products business as an independent,
publicly owned company to be named MEDgenesis Inc. ("MEDgenesis"). MEDgenesis
became a newly formed Minnesota corporation on May 3, 2000, and will be a wholly
owned subsidiary of Chronimed until spun off. The spin-off will be effected
through a tax-free dividend of shares of MEDgenesis to Chronimed shareholders on
or about June 30, 2000 (the "Distribution"). Prior to the Distribution,
Chronimed plans to transfer to MEDgenesis substantially all of the assets and
liabilities associated with Chronimed's diagnostic products business.
MEDgenesis filed a Registration Statement on Form 10 with the Securities and
Exchange Commission ("SEC") on May 5, 2000 to register shares of its common
stock under Section 12(b) of the Securities Exchange Act of 1934. The
Registration Statement has not yet been declared effective by the SEC. The
Registration Statement includes a preliminary information statement, the final
version of which will be distributed to the Company's stockholders prior to the
Distribution date. The information statement includes information regarding the
proposed spin-off, MEDgenesis business and financial disclosures and matters
regarding the relationship between MEDgenesis and the Company following the
spin-off. A copy of the Form 10 can be obtained from the SEC's web site at the
following address: http://www.sec.gov.
The current Chronimed Board Chairman, Maurice R. Taylor, II, will serve as
Chairman of the Board and CEO of MEDgenesis.
INFORMATION PROVIDED IN THIS FORM 8-K
The primary reason for this Form 8-K is to provide historical financial
statements for each of the two businesses that currently make up Chronimed---the
diagnostic products business (which will be spun-off as MEDgenesis Inc.) and the
pharmacy services business (which will continue as Chronimed Inc.). Though much
of the financial information for MEDgenesis has already been filed with the Form
10, Chronimed management decided to provide all of the MEDgenesis financial
information and the Chronimed pharmacy financial information in one place and in
one common format. This information will assist investors in better
understanding each of the two businesses.
FOWARD-LOOKING STATEMENTS
Chronimed has provided forward-looking statements regarding the performance of
the continuing pharmacy services business in Exhibit 99.6 of this Form 8-K.
THIRD QUARTER RESULTS
On April 25, 2000, the Company announced the results for the three and nine
months ended March 31, 2000. The results of the diagnostic products division
were reflected as a discontinued operation in light of the decision to spin-off
that division to stockholders. A press release discussing results for the third
quarter was issued April 25, 2000.
The Company filed the Form 10-Q for the third quarter ended March 31, 2000 on
May 5, 2000. The financial information in the Form 10-Q presented the results of
the diagnostics products division as a discontinued operation. A copy of the
Form 10-Q can be obtained from the SEC's web site at the address listed above.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable
(b) PRO FORMA FINANICAL INFORMATION.
The objective of pro forma financial information is to provide the
reader with information about the continuing operations of Chronimed
and how it might have performed if the spin-off occurred at an earlier
date. The following pro forma financial information is intended to
assist the reader in analyzing the future prospects of Chronimed.
CASH FLOWS PROVIDED BY MEDGENESIS
MEDgenesis has generated positive cash flow, after investing
activities, in two of the last three fiscal years and in the nine month
period ended March 31, 2000, as reported in the Statements of Cash
Flows. Chronimed has invested this cash flow from MEDgenesis without
allocating investment earnings to MEDgenesis. In the future, Chronimed
will likely access debt or equity offerings to finance its growth. The
cost of this capital will be reflected in future financial results as
interest expense or reduced earnings per share due to an increase in
outstanding shares.
GENERAL AND ADMINISTRATIVE EXPENSES
In the historical financial statements, general and administrative
costs for senior management, information systems, finance, legal and
corporate services have been allocated by Chronimed to MEDgenesis.
These allocations represent a sharing of total Chronimed costs between
MEDgenesis and the other internal businesses of Chronimed prior to the
spin-off. After the spin-off, some of the costs that were allocated to
MEDgenesis will continue with Chronimed despite cost-cutting
initiatives. Chronimed expects to cover these costs through internal
growth into fiscal 2001. The impact of this unallocated overhead on
pre-tax operating income is expected to be approximately $200,000 over
each of the two quarters following the spin-off.
ASSETS AND STOCKHOLDERS' EQUITY
The financial statements filed in Chronimed's third quarter Form 10-Q
and in the exhibits that follow present the operations of MEDgenesis as
a discontinued operation. The prior period statements have been
restated to reflect MEDgenesis in a line item in each of the statements
as "Discontinued Operations." Once the spin-off occurs, the line item
on Chronimed's balance sheet "net book value of discontinued
operations" will be eliminated from the asset section and a
corresponding reduction will be made to stockholders' equity.
(c) Exhibits
CHRONIMED INC. FINANCIAL INFORMATION
99.1 Income statements for each of the three month periods ended March
31, 2000, December 31, 1999, October 1, 1999, July 2, 1999, April
2, 1999, January 1, 1999, October 2, 1998, July 3, 1998, March 27,
1998, December 26, 1997, and September 26, 1997.
3
<PAGE>
99.2 Quarterly Income Statements Supplementary Information.
99.3 Income statements for the three months ended March 31, 2000 and
April 2, 1999, the nine months ended March 31, 2000 and April 2,
1999 and the fiscal years ended July 2, 1999, July 3, 1998, June
27, 1997, June 28, 1996 and June 30, 1995.
99.4 Balance sheets as of March 31, 2000, July 2, 1999, July 3, 1998,
June 27, 1997, June 28, 1996 and June 30, 1995.
99.5 Cashflows statements for the nine month periods ended March 31,
2000 and April 2, 1999 and the fiscal years ended July 2, 1999,
July 3, 1998 and June 27, 1997.
99.6 Forward-Looking Statements.
MEDGENESIS INC. FINANCIAL INFORMATION
99.7 Income statements for the three months ended March 31, 2000,
December 31, 1999, October 1, 1999, July 2, 1999, April 2, 1999,
January 1, 1999, October 2, 1998, July 3, 1998, March 27, 1998,
December 26, 1997, and September 26, 1997.
99.8 Income statements for the three months ended March 31, 2000 and
April 2, 1999, the nine months ended March 31, 2000 and April 2,
1999 and the fiscal years ended July 2, 1999, July 3, 1998, June
27, 1997, June 28, 1996 and June 30, 1995.
99.9 Balance sheets as of March 31, 2000, July 2, 1999, July 3, 1998,
June 27, 1997, June 28, 1996 and June 30, 1995.
99.10 Cashflows statements for the nine month periods ended March 31,
2000 and April 2, 1999 and the fiscal years ended July 2, 1999,
July 3, 1998 and June 27, 1997.
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 of the
undersigned hereunto duly authorized.
CHRONIMED INC.
(Registrant)
Date: May 26, 2000
By: /s/ Maurice R. Taylor, II
-------------------------
Maurice R. Taylor, II
President and Chief
Executive Officer
/s/ Gregory H. Keane
--------------------
Gregory H. Keane
Vice President and
Chief Financial Officer
4
<PAGE>
EXHIBIT INDEX
Index
Number Description of Exhibit Page Number
- ------ ---------------------- -----------
CHRONIMED INC. FINANCIAL INFORMATION
99.1 Income statements for the three months ended March 31, 6
2000 and April 2, 1999, the nine months ended March 31,
2000 and April 2, 1999 and the fiscal years ended July 2,
1999, July 3, 1998, June 27, 1997, June 28, 1996 and June
30, 1995.
99.2 Quarterly Income Statements Supplementary Information 7
99.3 Income statements for the three months ended March 31, 8
2000 and April 2, 1999, the nine months ended March 31,
2000 and April 2, 1999 and the fiscal years ended July 2,
1999, July 3, 1998, June 27, 1997, June 28, 1996 and June
30, 1995.
99.4 Balance sheets as of the quarter ended March 31, 2000 and 9
for fiscal years ended July 2, 1999, July 3, 1998, June
27, 1997, June 28, 1996 and June 30, 1995.
99.5 Cashflows statements for the nine month periods ended 10
March 31, 2000 and April 2, 1999 and as of fiscal years
ended July 2, 1999, July 3, 1998 and June 27, 1997.
99.6 Forward-Looking Statements 11
MEDGENESIS INC. FINANCIAL INFORMATION
99.7 Income statements for the three months ended March 31, 12
2000, December 31, 1999, October 1, 1999, July 2, 1999,
April 2, 1999, January 1, 1999, October 2, 1998, July 3,
1998, March 27, 1998, December 26, 1997, and September
26, 1997.
99.8 Income statements for the three months ended March 31, 13
2000 and April 2, 1999, the nine months ended March 31,
2000 and April 2, 1999 and the fiscal years ended July 2,
1999, July 3, 1998, June 27, 1997, June 28, 1996 and June
30, 1995.
99.9 Balance sheets as of the quarter ended March 31, 2000 and 14
for fiscal years ended July 2, 1999, July 3, 1998, June
27, 1997, June 28, 1996 and June 30, 1995.
99.10 Cashflows statements for the nine month periods ended 15
March 31, 2000 and April 2, 1999 and as of fiscal years
ended July 2, 1999, July 3, 1998 and June 27, 1997.
5
EXHIBIT 99.1
CHRONIMED INC.
QUARTERLY INCOME STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FISCAL 2000 FISCAL 1999
--------------------------------- --------------------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1
March 31, December 31, October 1, July 2, April 2, January 1, October 2,
2000 1999 1999 1999 1999 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $57,596 $58,346 $50,878 $48,188 $44,045 $41,021 $35,370
Cost of revenues 47,463 47,026 41,963 40,035 36,699 32,781 27,930
------- ------- ------- ------- ------- ------- -------
Gross profit 10,133 11,320 8,915 8,153 7,346 8,240 7,440
Operating expenses
Selling and marketing 1,127 1,059 1,194 951 1,091 1,223 1,293
General and administrative (a) 7,604 8,695 7,875 8,248 6,640 5,802 5,758
Other expense (b) 5,500 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total operating expenses 14,231 9,754 9,069 9,199 7,731 7,025 7,051
Income (loss) from operations (4,098) 1,566 (154) (1,046) (385) 1,215 389
Interest (expense) income (43) (59) (23) 17 28 57 317
Other income (c) -- -- -- -- -- 503 --
------- ------- ------- ------- ------- ------- -------
Income before taxes (4,141) 1,507 (177) (1,029) (357) 1,775 706
Income tax (benefit) expense (1,615) 588 (69) (401) (139) 692 275
------- ------- ------- ------- ------- ------- -------
Income (loss) from continuing
operation (2,526) 919 (108) (628) (218) 1,083 431
Income from discontinued
operations, net of tax 635 647 436 340 684 1,172 1,263
------- ------- ------- ------- ------- ------- -------
Net income (loss) $(1,891) $ 1,566 $ 328 $ (288) $ 466 $ 2,255 $ 1,694
======= ======= ======= ======= ======= ======= =======
Basic earnings (loss) per share:
Income (loss) from continuing
operations $ (0.21) $ 0.08 $ (0.01) $ (0.05) $ (0.02) $ 0.09 $ 0.04
Income from discontinued
operations 0.05 0.05 0.04 0.03 0.06 0.10 0.10
Net income (loss) per share (0.16) 0.13 0.03 (0.02) 0.04 0.19 0.14
Diluted earnings (loss) per share:
Income (loss) from continuing
operations $ (0.21) $ 0.08 $ (0.01) $ (0.05) $ (0.02) $ 0.09 $ 0.04
Income from discontinued
operations 0.05 0.05 0.04 0.03 0.06 0.09 0.10
Net income (loss) per share (0.16) 0.13 0.03 (0.02) 0.04 0.18 0.14
Average shares outstanding--Basic 12,133 12,095 12,096 12,062 12,109 12,115 12,100
Average shares outstanding--Diluted 12,133 12,106 12,155 12,069 12,223 12,316 12,336
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
FISCAL 1998
----------------------------------------------
Q4 Q3 Q2 Q1
July 3, March 22, December 26, September 26,
1998 1998 1997 1997
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $33,518 $27,352 $28,923 $25,821
Cost of revenues 26,995 22,015 22,571 20,506
------- ------- ------- -------
Gross profit 6,523 5,337 6,352 5,315
Operating expenses
Selling and marketing 1,104 1,087 1,018 866
General and administrative (a) 5,259 4,508 4,641 3,998
Other expense (b) -- -- -- --
------- ------- ------- -------
Total operating expenses 6,363 5,595 5,659 4,864
Income (loss) from operations 160 (258) 693 451
Interest (expense) income 419 354 328 352
Other income (c) -- -- -- --
------- ------- ------- -------
Income before taxes 579 96 1,021 803
Income tax (benefit) expense 238 61 398 322
------- ------- ------- -------
Income (loss) from continuing
operation 341 35 623 481
Income from discontinued
operations, net of tax 1,520 1,440 1,597 1,115
------- ------- ------- -------
Net income (loss) $ 1,861 $ 1,475 $ 2,220 $ 1,596
======= ======= ======= =======
Basic earnings (loss) per share:
Income (loss) from continuing
operations $ 0.03 $ 0.00 $ 0.05 $ 0.04
Income from discontinued
operations 0.13 0.12 0.13 0.09
Net income (loss) per share 0.16 0.12 0.18 0.13
Diluted earnings (loss) per share:
Income (loss) from continuing
operations $ 0.03 $ 0.00 $ 0.05 $ 0.04
Income from discontinued
operations 0.12 0.12 0.13 0.09
Net income (loss) per share 0.15 0.12 0.18 0.13
Average shares outstanding--Basic 11,994 11,965 11,948 11,915
Average shares outstanding--Diluted 12,344 12,271 12,327 12,165
</TABLE>
(a) During fiscal 1999 and 2000, the Company engaged PaineWebber to explore
strategic alternatives. PaineWebber and related costs charged to general and
administrative were $49, $471, $411 and $800 for the quarters ended March
31, 2000, December 31, 1999, October 1, 1999 and July 2, 1999, respectively.
(b) Represents write-off of goodwill and restructuring charges for Clinical
Partner's contracts management line.
(c) Represents gain on sale of Publishing business.
6
EXHIBIT 99.2
CHRONIMED INC.
QUARTERLY INCOME STATEMENTS SUPPLEMENTARY INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL 2000 FISCAL 1999
------------------------------------ --------------------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1
March 31, December 31, October 1, July 2, April 2, January 1, October 2,
2000 1999 1999 1999 1999 1999 1998
------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $57,596 $58,346 $50,878 $48,188 $44,045 $41,021 $35,370
INCOME (LOSS) FROM OPERATIONS
as adjusted - base 1,451 (1) 2,037 (2) 257 (3) (246)(4) (385) 712 (5) 389
as reported (4,098) 1,566 (154) (1,046) (385) 1,215 389
NET INCOME (LOSS)
Continuing Operations - base $ 885 $ 1,242 $ 157 $ (150) $ (235) $ 741 $ 238
Interest income (expense) (26) (36) (14) 10 17 35 193
PaineWebber and related expense (30) (287) (251) (488) -- -- --
Write-off of Clinical Partners
contracts line (3,355) -- -- -- -- -- --
Gain on sale of publishing business -- -- -- -- -- 307 --
------- ------- ------- ------- ------- ------- -------
Total Continuing Operations (2,526) 919 (108) (628) (218) 1,083 431
Discontinued Operations - base 346 647 436 340 684 1,172 1,263
Gain on sale of securities 289 (6) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total Discontinued Operations 635 647 436 340 684 1,172 1,263
Total Net Income as reported $(1,891) $ 1,566 $ 328 $ (288) $ 466 $ 2,255 $ 1,694
======= ======= ======= ======= ======= ======= =======
DILUTED EARNINGS (LOSS) PER SHARE
Continuing Operations - base $ 0.07 $ 0.10 $ 0.01 $ (0.01) $ (0.02) $ 0.06 $ 0.02
Interest income (expense) 0.00 (0.00) (0.00) 0.00 0.00 0.00 0.02
PaineWebber and related expense (0.00) (0.02) (0.02) (0.04) -- -- --
Write-off of Clinical Partners
contracts line (0.28) -- -- -- -- -- --
Gain on sale of publishing business -- -- -- -- -- 0.03 --
------- ------- ------- ------- ------- ------- -------
Total Continuing Operations (0.21) 0.08 (0.01) (0.05) (0.02) 0.09 0.04
Discontinued Operations - base 0.03 0.05 0.04 0.03 0.06 0.09 0.10
Gain on sale of securities 0.02 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total Discontinued Operations 0.05 0.05 0.04 0.03 0.06 0.10 0.10
Total Net Income as reported $ (0.16) $ 0.13 $ 0.03 $ (0.02) $ 0.04 $ 0.18 $ 0.14
======= ======= ======= ======= ======= ======= =======
AVERAGE SHARES OUTSTANDING--DILUTED 12,133 12,106 12,155 12,069 12,223 12,316 12,336
</TABLE>
(1) Excludes the charge of $5,500 before tax ($3,355 after tax) to write-off
goodwill and record restructuring charges for Clinical Partner's contracts
management line and $49 before tax ($30 after tax) for PaineWebber & related
strategic alternative expense.
(2) Excludes expenses of $471 before tax ($287 after tax) for PaineWebber &
related strategic alternative expense.
(3) Excludes expenses of $411 before tax ($251 after tax) for PaineWebber &
related strategic alternative expense.
(4) Excludes expenses of $800 before tax ($488 after tax) for PaineWebber &
related strategic alternative expense.
(5) Excludes gain of $503 before tax ($307 after tax) for the prior year nine
months related to the Company's sale of its publishing business.
(6) Gain of $474 before tax ($289 after tax) on the sale of available-for-sale
securities this quarter.
7
EXHIBIT 99.3
CHRONIMED INC.
INCOME STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Three months ended Nine months ended
----------------------- -----------------------
March 31, April 2, March 31, April 2,
2000 1999 2000 1999
- ---------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 57,596 $ 44,045 $166,820 $120,436
Cost of revenues 47,463 36,699 136,452 97,410
-------- -------- -------- --------
Gross profit 10,133 7,346 30,368 23,026
Operating expenses
Selling and marketing 1,127 1,091 3,380 3,607
General and administrative 7,604 6,640 24,174 18,200
Other expense 5,500 -- 5,500 --
-------- -------- -------- --------
Total operating expenses 14,231 7,731 33,054 21,807
Income (loss) from operations (4,098) (385) (2,686) 1,219
Interest (expense) income (43) 28 (125) 402
Other income -- -- -- 503
-------- -------- -------- --------
Income before taxes (4,141) (357) (2,811) 2,124
Income tax (benefit) expense (1,615) (139) (1,096) 828
-------- -------- -------- --------
Income (loss) from continuing operation (2,526) (218) (1,715) 1,296
Income from discontinued operations, net of tax 635 684 1,718 3,119
-------- -------- -------- --------
Net income (loss) $ (1,891) $ 466 $ 3 $ 4,415
======== ======== ======== ========
Basic earnings (loss) per share:
Income (loss) from continuing operations $ (0.21) $ (0.02) $ (0.14) $ 0.11
Income from discontinued operations 0.05 0.06 0.14 0.25
Net income (loss) per share (0.16) 0.04 0.00 0.36
Diluted earnings (loss) per share:
Income (loss) from continuing operations (0.21) (0.02) (0.14) 0.11
Income from discontinued operations 0.05 0.06 0.14 0.25
Net income (loss) per share (0.16) 0.04 0.00 0.36
Average shares outstanding--Basic 12,133 12,109 12,106 12,108
Average shares outstanding--Diluted 12,133 12,109 12,106 12,263
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Year ended
---------------------------------------------------------
July 2, July 3, June 27, June 28, June 30,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $168,624 $115,614 $ 88,207 $ 61,536 $ 48,574
Cost of revenues 137,445 92,087 69,130 48,436 37,512
-------- -------- -------- -------- --------
Gross profit 31,179 23,527 19,077 13,100 11,062
Operating expenses
Selling and marketing 4,558 4,075 3,768 4,549 3,802
General and administrative 26,448 18,406 14,616 9,065 7,886
Other expense -- -- -- -- --
-------- -------- -------- -------- --------
Total operating expenses 31,006 22,481 18,384 13,614 11,688
Income (loss) from operations 173 1,046 693 (514) (626)
Interest (expense) income 419 1,453 798 1,327 1,024
Other income 503 -- 1,700 -- --
-------- -------- -------- -------- --------
Income before taxes 1,095 2,499 3,191 813 398
Income tax (benefit) expense 427 1,019 1,169 (4) (163)
-------- -------- -------- -------- --------
Income (loss) from continuing operation 668 1,480 2,022 817 561
Income from discontinued operations, net of tax 3,459 5,671 5,022 4,642 1,042
-------- -------- -------- -------- --------
Net income (loss) $ 4,127 $ 7,151 $ 7,044 $ 5,459 $ 1,603
======== ======== ======== ======== ========
Basic earnings (loss) per share:
Income (loss) from continuing operations $ 0.06 $ 0.12 $ 0.17 $ 0.07 $ 0.05
Income from discontinued operations 0.28 0.48 0.42 0.38 0.09
Net income (loss) per share 0.34 0.60 0.59 0.45 0.14
Diluted earnings (loss) per share:
Income (loss) from continuing operations 0.05 0.12 0.16 0.06 0.04
Income from discontinued operations 0.29 0.47 0.40 0.36 0.08
Net income (loss) per share 0.34 0.59 0.56 0.42 0.13
Average shares outstanding--Basic 12,096 11,955 12,019 12,221 11,685
Average shares outstanding--Diluted 12,256 12,221 12,659 13,137 12,612
</TABLE>
NOTE: See footnotes on quarterly income statements for explanation of
nonrecurring items.
8
EXHIBIT 99.4
CHRONIMED INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
As of As of As of As of As of As of
March 31, July 2, July 3, June 27, June 28, June 30,
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 533 $ 3,312 $ 1,027 $ 5,038 $11,434 $ 2,203
Available-for-sale securities -- -- 6,509 10,274 12,803 11,596
Accounts receivable 43,650 32,533 19,780 17,600 15,377 12,952
Income taxes receivable 2,211 -- 1,011 294 49 1,398
Inventories 6,735 5,395 5,806 4,303 2,822 3,708
Other current assets 720 1,358 788 274 543 298
Deferred taxes 929 929 152 977 905 900
------- ------- ------- ------- ------- -------
Total current assets 54,778 43,527 35,073 38,760 43,933 33,055
Available-for-sale securities -- -- -- -- 9,069 11,606
Property and equipment 14,674 13,850 12,156 8,594 5,752 3,309
Allowance for depreciation (7,781) (5,993) (4,007) (2,694) (1,790) (1,196)
------- ------- ------- ------- ------- -------
6,893 7,857 8,149 5,900 3,962 2,113
Goodwill, net 9,315 (a) 15,373 15,627 10,894 280 95
Net assets of discontinued operations 11,743 11,624 12,269 6,304 7,120 3,532
Other assets, net 107 161 162 1,127 33 --
------- ------- ------- ------- ------- -------
Total assets $82,836 $78,542 $71,280 $62,985 $64,397 $50,401
======= ======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 9,151 $ 9,917 $ 5,898 $ 4,233 $ 3,285 $ 1,826
Accrued expenses 2,090 1,952 3,028 4,365 2,307 1,006
Income taxes payable -- 186 -- -- 571 --
Deferred taxes -- -- -- 350 404 --
Short-term debt 4,200 -- -- -- -- --
------- ------- ------- ------- ------- -------
Total current liabilities 15,441 12,055 8,926 8,948 6,567 2,832
Long-term debt -- -- -- -- 350 --
Deferred taxes -- -- 35 677 318 --
Stockholders' equity
Common stock 121 121 121 118 124 119
Additional paid-in capital 52,763 52,499 51,668 49,838 49,569 45,357
Retained earnings 13,712 13,709 10,559 3,408 7,476 2,016
------- ------- ------- ------- ------- -------
66,596 66,329 62,348 53,364 57,169 47,492
Accumulated other comprehensive income 799 158 (29) (4) (7) 77
------- ------- ------- ------- ------- -------
Total shareholders' equity 67,395 66,487 62,319 53,360 57,162 47,569
------- ------- ------- ------- ------- -------
$82,836 $78,542 $71,280 $62,985 $64,397 $50,401
======= ======= ======= ======= ======= =======
</TABLE>
(a) Reduction in goodwill mainly due to write-off of Clinical Partners contracts
management line.
9
EXHIBIT 99.5
CHRONIMED INC.
CASHFLOWS STATEMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Nine months ended Year ended
------------------------ ----------------------------------
March 31, April 2, July 2, July 3, June 27,
2000 1999 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES (Unaudited)
<S> <C> <C> <C> <C> <C>
Net income $ 3 $ 4,415 $ 4,127 $ 7,151 $ 7,044
Less income from discontinued operations 1,718 3,119 3,459 5,671 5,022
------- ------- ------- ------- -------
Income (loss) from continuing operations (1,715) 1,296 668 1,480 2,022
Adjustments to reconcile net income to net
cash (used in) provided by operating activities
Depreciation and amortization 3,229 2,831 3,838 2,349 1,775
Write off of Clinical Partners contract management line l5,500 -- -- -- --
Income tax benefit of stock option plans -- -- 256 152 1,920
Deferred income taxes -- -- (825) 183 287
Gain on sale of OMI rights -- -- -- -- (1,700)
Changes in operating assets and liabilities
Accounts receivable (11,117) (10,502) (14,070) (1,637) (1,838)
Inventory (2,397) 1,011 411 (1,428) (1,481)
Accounts payable (1,340) 642 4,019 (2,568) (336)
Accrued expenses (1,297) 2,825 (1,076) 3,770 1,091
Income taxes -- -- 1,197 (2,055) (816)
Other assets 656 (382) (554) 564 243
------- ------- ------- ------- -------
Net cash (used in) provided by operating activities (8,481) (2,279) (6,136) 810 1,167
INVESTING ACTIVITIES
Acquisitions, net of cash acquired -- -- (1,444) (5,893) (9,234)
Proceeds from sale of OMI rights -- -- 1,317 133 250
Purchases of property and equipment (1,002) (2,824) (1,848) (3,329) (2,841)
Purchases of available-for-sale securities -- -- -- (15,377) (9,085)
Sales and maturities of available-for-sale securities -- 6,536 6,536 19,117 20,682
------- ------- ------- ------- -------
Net cash (used in) provided by investing activities (1,002) 3,712 4,561 (5,349) (228)
FINANCING ACTIVITIES
Repurchase of Common Stock -- (1,841) (1,841) -- (14,452)
Net proceeds from issuance of Common Stock 264 1,256 1,439 822 1,279
Net proceeds from borrowing 4,200 -- -- -- --
------- ------- ------- ------- -------
Net cash (used in) provided by financing activities 4,464 (585) (402) 822 (13,173)
CASH PROVIDED (USED) BY DISCONTINUED OPERATIONS 2,240 2,659 4,262 (294) 5,838
Cash and cash equivalents (decrease) increase (2,779) 3,507 2,285 (4,011) (6,396)
Cash and cash equivalents at beginning of year 3,312 1,027 1,027 5,038 11,434
------- ------- ------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 533 $ 4,534 $ 3,312 $ 1,027 $ 5,038
======= ======= ======= ======= =======
</TABLE>
10
EXHIBIT 99.6
CHRONIMED INC.
PHARMACY CONTINUING OPERATIONS
FORWARD-LOOKING STATEMENTS
EARNINGS AND REVENUE PROJECTIONS
For fiscal fourth quarter 2000, the continuing Chronimed pharmacy business
expects revenue to be in the $58 to $60 million range, with earnings per share
in the $.06 to $.08 range. EBITDA for the quarter is expected to be
approximately $2 million.
For total fiscal 2000, the continuing Chronimed pharmacy business expects
revenue to be in the $227 - $229 million range, with earnings per share,
excluding unusual or infrequent items during the year, in the $0.24 to $0.26
range. EBITDA for total fiscal 2000 is expected to be approximately $9 million.
For fiscal 2001, the continuing Chronimed pharmacy business believes revenue
will grow at approximately 30% over fiscal 2000, and earnings and EBITDA will
outpace revenue growth.
Chronimed reminds investors that these projections exclude the discontinued
operations of diagnostic products (to be spun-off as MEDgenesis Inc.) and any
unusual or infrequent items, including spin-off and related costs of separating
the two businesses, costs related to the PaineWebber initiative, and the
Clinical Partners write-off. Also, as a cautionary note to investors, these
projections are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These projections involve risks and
uncertainties that may cause actual results to differ materially, including the
following changes in economic condition; 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; changes in status of the intended spin-off of the diagnostic products
business; material litigation; and the risks described from time to time in the
Company's public reports filed with the SEC.
11
EXHIBIT 99.7
MEDGENESIS INC.
QUARTERLY INCOME STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FISCAL 2000 FISCAL 1999
----------------------------------- ----------------------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1
March 31, December 31, October 1, July 2, April 2, January 1, October 2,
2000 1999 1999 1999 1999 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 8,083 $ 8,825 $ 8,072 $ 7,066 $ 7,638 $ 7,659 $ 7,426
Cost of revenues 4,948 5,156 4,934 4,358 4,287 3,727 3,483
------- ------- ------- ------- ------- ------- -------
Gross profit 3,135 3,669 3,138 2,708 3,351 3,932 3,943
Operating expenses
Selling and marketing 1,231 1,310 1,298 1,104 1,209 1,128 1,066
Research and development 316 351 267 292 254 212 176
General and administrative 1,021 947 859 754 767 672 629
------- ------- ------- ------- ------- ------- -------
Total operating expenses 2,568 2,608 2,424 2,150 2,230 2,012 1,871
Income from operations 567 1,061 714 558 1,121 1,920 2,072
Other income (a) 474 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Income before taxes 1,041 1,061 714 558 1,121 1,920 2,072
Income tax expense 406 414 278 218 437 748 809
------- ------- ------- ------- ------- ------- -------
Net income $ 635 $ 647 $ 436 $ 340 $ 684 $ 1,172 $ 1,263
======= ======= ======= ======= ======= ======= =======
Pro forma net income per share
Basic earnings per share (b) $ 0.16 $ 0.16 $ 0.11 $ 0.08 $ 0.17 $ 0.29 $ 0.31
Basic weighted average
shares 4,044 4,032 4,030 4,021 4,036 4,038 4,033
Diluted earnings per share (b) $ 0.16 $ 0.16 $ 0.11 $ 0.08 $ 0.17 $ 0.29 $ 0.31
Diluted weighted average
shares 4,044 4,035 4,052 4,023 4,074 4,105 4,112
</TABLE>
[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
FISCAL 1998
-------------------------------------------------
Q4 Q3 Q2 Q1
July 3, March 22, December 26, September 26,
1998 1998 1997 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 6,994 $ 6,347 $ 5,849 $ 5,852
Cost of revenues 2,757 2,380 1,723 2,485
------- ------- ------- -------
Gross profit 4,237 3,967 4,126 3,367
Operating expenses
Selling and marketing 1,129 995 902 805
Research and development 118 106 40 114
General and administrative 518 524 587 635
------- ------- ------- -------
Total operating expenses 1,765 1,625 1,529 1,554
Income from operations 2,472 2,342 2,597 1,813
Other income (a) -- -- -- --
------- ------- ------- -------
Income before taxes 2,472 2,342 2,597 1,813
Income tax expense 952 902 1,000 698
------- ------- ------- -------
Net income $ 1,520 $ 1,440 $ 1,597 $ 1,115
======= ======= ======= =======
Pro forma net income per share
Basic earnings per share (b) $ 0.38 $ 0.36 $ 0.40 $ 0.28
Basic weighted average
shares 3,998 3,988 3,983 3,972
Diluted earnings per share (b) $ 0.37 $ 0.35 $ 0.39 $ 0.27
Diluted weighted average
shares 4,115 4,090 4,109 4,055
</TABLE>
(a) Represents gain on sale of securities.
(b) Basic and diluted pro forma earnings per share has been calculated using pro
forma basic and diluted weighted average shares outstanding for each of the
periods presented. Pro forma basic weighted average shares have been
calculated by adjusting Chronimed's historical basic weighted average shares
outstanding for the applicable period to reflect the number of MEDgenesis
shares that would have been outstanding at the time assuming the
distribution of one share of MEDgenesis common stock for three shares of
Chronimed common stock. Pro forma weighted average shares for MEDgenesis
reflect an estimate of the potential dilutive effect for common stock
equivalents. Such estimate is calculated based on Chronimed's dilutive
effect of stock options divided by three to reflect the distribution ratio.
12
EXHIBIT 99.8
MEDGENESIS INC.
INCOME STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended Year ended
-------------------- -------------------- -----------------------------------------------------
March 31, April 2, March 31, April 2, July 2, July 3, June 27, June 28, June 30,
2000 1999 2000 1999 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $8,083 $7,638 $24,980 $22,723 $29,789 $25,041 $28,964 $28,975 $13,953
Cost of revenues 4,948 4,287 15,038 11,497 15,855 9,345 13,699 16,716 9,468
------ ------ ------- ------- ------- ------- ------- ------- -------
Gross profit 3,135 3,351 9,942 11,226 13,934 15,696 15,265 12,259 4,485
Operating expenses
Selling and marketing 1,231 1,209 3,839 3,403 4,507 3,830 3,085 3,003 1,733
Research and development 316 254 934 642 934 377 511 348 182
General and administrative 1,021 767 2,827 2,068 2,822 2,265 3,486 1,421 890
------ ------ ------- ------- ------- ------- ------- ------- -------
Total operating expenses 2,568 2,230 7,600 6,113 8,263 6,472 7,082 4,772 2,805
Income from operations 567 1,121 2,342 5,113 5,671 9,224 8,183 7,487 1,680
Other income 474 -- 474 -- -- -- -- -- --
------ ------ ------- ------- ------- ------- ------- ------- -------
Income before taxes 1,041 1,121 2,816 5,113 5,671 9,224 8,183 7,487 1,680
Income tax expense 406 437 1,098 1,994 2,212 3,553 3,161 2,845 638
------ ------ ------- ------- ------- ------- ------- ------- -------
Net income $ 635 $ 684 $ 1,718 $ 3,119 $ 3,459 $ 5,671 $ 5,022 $ 4,642 $ 1,042
====== ====== ======= ======= ======= ======= ======= ======= =======
Pro forma net income per share
Basic earnings per share (a) $ 0.16 $ 0.17 $ 0.42 $ 0.77 $ 0.86 $ 1.42 $ 1.25 $ 1.14 $ 0.27
Basic weighted average
shares 4,044 4,036 4,044 4,036 4,032 3,985 4,006 4,074 3,895
Diluted earnings per share (a) $ 0.16 $ 0.17 $ 0.42 $ 0.76 $ 0.85 $ 1.39 $ 1.19 $ 1.06 $ 0.25
Diluted weighted average
shares 4,044 4,074 4,044 4,088 4,085 4,074 4,220 4,379 4,204
</TABLE>
(a) Basic and diluted pro forma earnings per share has been calculated using pro
forma basic and diluted weighted average shares outstanding for each of the
periods presented. Pro forma basic weighted average shares have been
calculated by adjusting Chronimed's historical basic weighted average shares
outstanding for the applicable period to reflect the number of MEDgenesis
shares that would have been outstanding at the time assuming the
distribution of one share of MEDgenesis common stock for three shares of
Chronimed common stock. Pro forma diluted weighted average shares for
MEDgenesis reflect an estimate of the potential dilutive effect for common
stock equivalents. Such estimate is calculated based on Chronimed's dilutive
effect of stock options divided by three to reflect the distribution ratio.
13
EXHIBIT 99.9
MEDGENESIS INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
As of As of As of As of As of As of
March 31, July 2, July 3, June 27, June 28, June 30,
2000 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets
Accounts receivable $ 4,642 $ 3,741 $ 3,410 $ 2,772 $ 4,466 $ 2,152
Available-for-sale securities 1,104 -- -- -- -- --
Inventories 3,087 4,391 5,112 3,555 2,654 782
Other current assets 463 171 9 -- 17 --
Deferred taxes -- -- 123 -- -- --
------- ------- ------- ------- ------- -------
Total current assets 9,296 8,303 8,654 6,327 7,137 2,934
Property and equipment 14,287 12,104 8,957 4,322 2,790 1,793
Allowance for depreciation (10,541) (7,752) (4,108) (2,772) (1,307) (433)
------- ------- ------- ------- ------- -------
3,746 4,352 4,849 1,550 1,483 1,360
Notes receivable -- -- -- -- 1,374 928
Available-for-sale securities -- 608 -- -- -- --
Goodwill, net 958 869 632 745 1,049 343
------- ------- ------- ------- ------- -------
Total assets $14,000 $14,132 $14,135 $ 8,622 $11,043 $ 5,565
======= ======= ======= ======= ======= =======
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 1,270 $ 1,313 $ 934 $ 1,166 $ 1,769 $ 1,451
Accrued expenses 832 1,040 775 1,140 2,060 542
Deferred taxes 72 72 -- 12 94 40
------- ------- ------- ------- ------- -------
Total current liabilities 2,174 2,425 1,709 2,318 3,923 2,033
Deferred taxes 83 83 157 -- -- --
Equity -- -- -- -- -- --
Accumulated other comprehensive income 799 158 -- -- -- --
Net investment by Chronimed 10,944 11,466 12,269 6,304 7,120 3,532
------- ------- ------- ------- ------- -------
11,743 11,624 12,269 6,304 7,120 3,532
------- ------- ------- ------- ------- -------
Total liabilities and equity $14,000 $14,132 $14,135 $ 8,622 $11,043 $ 5,565
======= ======= ======= ======= ======= =======
</TABLE>
14
EXHIBIT 99.10
MEDGENESIS INC.
CASHFLOWS STATEMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Nine months ended Year ended
---------------------- ---------------------------------
March 31, April 2, July 2, July 3, June 27,
2000 1999 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $1,718 $3,119 $3,459 $5,671 $5,022
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 3,027 2,688 3,894 1,611 1,769
Gain on sale of securities (474) -- -- -- --
Write off of HCI note -- -- -- -- 1,374
Deferred income taxes -- -- 121 22 (82)
Changes in operating assets and liabilities
Accounts receivable (901) (944) (331) (638) 1,694
Inventory 1,304 865 721 (1,557) (901)
Accounts payable (43) (134) 379 (846) (370)
Accrued expenses (208) 216 265 249 (1,153)
Other assets (292) (114) (162) (9) 17
------ ------ ------ ------ ------
Net cash provided by operating activities 4,131 5,696 8,346 4,503 7,370
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (327) (237) (487) (1,869) --
Purchases of property and equipment (2,183) (2,500) (3,147) (2,928) (1,532)
Purchases of available-for-sale securities -- (300) (450) -- --
Proceeds from sale of securities 619 -- -- -- --
------ ------ ------ ------ ------
Net cash used in investing activities (1,891) (3,037) (4,084) (4,797) (1,532)
FINANCING ACTIVITIES
Net cash provided (to) from Chronimed Inc. (2,240) (2,659) (4,262) 294 (5,838)
------ ------ ------ ------ ------
Net cash (used in) provided by financing activities (2,240) (2,659) (4,262) 294 (5,838)
Increase (decrease) in cash -- -- -- -- --
------ ------ ------ ------ ------
CASH AT BEGINNING AND END OF YEAR $ -- $ -- $ -- $ -- $ --
====== ====== ====== ====== ======
</TABLE>
15
