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 1, 1998
Express Scripts, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Delaware 0-20199 43-1420563
- -------------------------------------------------------------------------------
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
corporation)
14000 Riverport Drive, Maryland Heights, Missouri 63043
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 770-1666
---------------------------
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 1, 1998, Express Scripts, Inc. ("Express Scripts") completed its
acquisition of ValueRx from Columbia/HCA Healthcare Corporation ("Columbia").
The transaction was consummated pursuant to the terms of a Stock Purchase
Agreement (the "Stock Purchase Agreement") among Columbia, VH Holdings, Inc.,
Galen Holdings, Inc., and Express Scripts dated February 19, 1998, pursuant to
which Express Scripts acquired all of the outstanding capital stock of Value
Health, Inc. and Managed Prescription Network, Inc., the sole assets of which
are various subsidiaries each now or formerly conducting business as a pharmacy
benefit management ("PBM") company (collectively, the "Acquired Entities"),
including ValueRx Pharmacy Program, Inc. for approximately $445 million in cash,
said amount being subject to adjustment based on the amount of working capital
and certain balance sheet reserves of the acquired entities at closing, and the
amount of certain employee obligations, as per the Stock Purchase Agreement. The
acquisition will be accounted for under the purchase method of accounting.
The Company used approximately $100 million of its own cash and financed
the remainder of the purchase price and related acquisition costs through a five
year credit facility agented by Bankers Trust Company.
A copy of the Stock Purchase Agreement was filed with a Form 8-K dated
February 19, 1998, as Exhibit 2.1 thereto. An amendment to the Stock Purchase
Agreement is filed as Exhibit 2.1 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired. The financial statements
required by this item will be filed by amendment on or before June 15, 1998.
(b) Pro Forma Financial Information. The pro forma financial information
required by this item will be filed by amendment on or before June 15, 1998.
(c) Exhibits. The following exhibits are filed as part of this report on
Form 8-K:
Exhibit 2.1 First Amendment to Stock Purchase Agreement by and among
Columbia/HCA Healthcare Corporation, VH Holdings, Inc., Galen Holdings, Inc. and
Express Scripts, Inc., dated as of March 31, 1998, and related Exhibits (all
Exhibits are omitted from this filing, but will be filed with the Commission
supplementally upon request).
Exhibit 99.1 Press release, dated April 1, 1998, by Express Scripts, Inc.
<PAGE>
SIGNATURE
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.
EXPRESS SCRIPTS, INC.
Date: April 10, 1998 By: /S/ BARRETT A. TOAN
-------------------
Barrett A. Toan
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 First Amendment to Stock Purchase Agreement by and among
Columbia/HCA Healthcare Corporation, VH Holdings, Inc., Galen
Holdings, Inc. and Express Scripts, Inc., dated as of March
31, 1998, and related Exhibits (all Exhibits are omitted from
this filing, but will be filed with the Commission
supplementally upon request).
99.1 Press release, dated April 1, 1998, by Express Scripts, Inc.
EXHIBIT 99.1
EXPRESS SCRIPTS COMPLETES ACQUISITION
OF VALUERX FROM COLUMBIA/HCA
ST. LOUIS, April 1, 1998--Express Scripts, Inc. (NASDAQ:ESRX) today
announced that it has completed the acquisition of ValueRx from Columbia/HCA
Healthcare Corporation approximately six weeks after signing the definitive
acquisition agreement. The purchase makes Express Scripts the nation's largest
pharmacy benefit manager not controlled by a drug manufacturer.
"We are pleased that we have been able to move the acquisition of ValueRx
forward expeditiously, putting Express Scripts on track to achieve the benefits
we expect to gain from the combination," said Barrett Toan, the company's
president and chief executive officer. "The retention of key ValueRx staff will
enhance our ability to deliver the industry's leading consultative and clinical
services.
"This acquisition provides Express Scripts with additional resources and
expertise, which will allow us to better serve our clients and competitively
pursue new business in all segments of the market," he added. "We will identify
and implement the best practices from both companies to benefit our customers
and position us for future success."
With the acquisition, Express Scripts' pharmacy network claims processed
will increase by approximately 75 percent and mail service prescriptions
processed annually will double. Combined revenues for the two companies in 1997
were more than $2.7 billion and total managed annual prescription drug spend was
more than $4.0 billion.
Of the approximate $445 million purchase price for ValueRx, Express Scripts
paid roughly $100 million from its own funds and the remainder, plus acquisition
costs, was financed through a five-year bank facility agented by Bankers Trust
Company. As stated previously, the company anticipates that the combination will
not be dilutive to earnings per share in 1998 and will be accretive to earnings
per share in 1999.
Express Scripts, Inc. is a leading specialty managed care company and one
of the largest full-service pharmacy benefit management (PBM) companies in North
America. The company serves thousands of clients that include health maintenance
organizations (HMOs), health insurers, third-party administrators, employers and
union sponsored benefit plans. The company is independent of pharmaceutical
manufacturer ownership. Express Scripts' PBM services are provided through more
than 50,000 retail pharmacies, representing more than 98 percent of all U.S.
retail pharmacies, and two mail service centers. The company provides a full
range of PBM services, including network claims processing, mail order
processing, benefit design consultation, drug utilization review and formulary
management. The company also provides disease management programs, informed
decision counseling services, medical and drug data analysis services, and
infusion therapy services. Express Scripts is headquartered in St. Louis. More
information can be found on the company's Web site at
HTTP://WWW.EXPRESS-SCRIPTS.COM.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT
LIMITED TO, STATEMENTS RELATED TO THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS
(FINANCIAL AND OTHERWISE), OR INTENTIONS. THESE STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
SIGNIFICANTLY FROM THOSE PROJECTED OR SUGGESTED. FACTORS THAT MAY IMPACT THESE
FORWARD-LOOKING STATEMENTS INCLUDE: RISKS ASSOCIATED WITH THE CONSUMMATION OF
ACQUISITIONS, INCLUDING THE ABILITY TO SUCCESSFULLY INTEGRATE THE OPERATIONS OF
ACQUIRED BUSINESSES WITH THE EXISTING OPERATIONS OF THE COMPANY, LOSS OF CLIENTS
IN THE TRANSITION PROCESS AND RISKS INHERENT IN THE ACQUIRED ENTITIES'
OPERATIONS; LOWER THAN EXPECTED SALES AND REVENUE GROWTH; HEIGHTENED
COMPETITION; CHANGES IN PRICING OR DISCOUNT PRACTICES OF PHARMACEUTICAL
MANUFACTURERS; THE ABILITY OF THE COMPANY TO CONSUMMATE CONTRACT NEGOTIATIONS
WITH PROSPECTIVE CLIENTS; COMPETITION IN THE BIDDING OF PROPOSAL PROCESS;
ADVERSE RESULTS IN CERTAIN LITIGATION AND REGULATORY MATTERS; THE ADOPTION OF
ADVERSE LEGISLATION OR A CHANGE IN THE INTERPRETATION OF EXISTING LEGISLATION OR
REGULATIONS; RISKS ASSOCIATED WITH THE DEVELOPMENT OF NEW PRODUCTS; AND OTHER
RISKS DESCRIBED FROM TIME TO TIME IN THE COMPANY'S PUBLIC FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 2.1
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is made
and entered into as of March 31, 1998, by and among COLUMBIA/HCA HEALTHCARE
CORPORATION, a Delaware corporation ("Columbia"), VH HOLDINGS, INC., a Nevada
corporation ("Holdings"), GALEN HOLDINGS, INC., a Delaware corporation
("Galen"), and EXPRESS SCRIPTS, INC., a Delaware corporation ("Purchaser").
RECITALS:
WHEREAS, the parties hereto have entered into that certain Stock Purchase
Agreement, dated as of February 19, 1998 (the "Original Agreement"); and
WHEREAS, the parties wish to amend the Original Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows.
1. DEFINITIONS.
(a) Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Original Agreement.
(b) As used herein, the following terms shall have the meanings indicated
below, and where appropriate shall include the singular and plural of the term
defined:
"Agreement" shall mean the Original Agreement as amended by this Amendment.
"Amendment" shall mean this First Amendment to Stock Purchase Agreement.
"Original Agreement" shall mean that certain Stock Purchase Agreement,
dated as of February 19, 1998, by and among the parties to this Amendment.
2. AMENDMENT. The Original Agreement is hereby amended in the following
respects:
(a) Schedule 2.2(i) to the Original Agreement is hereby amended by adding
the following corporations to such schedule: MedManagement Holdings, Inc., a
Nevada corporation, and Value Health Holdings, Inc., a Nevada corporation.
(b) Section 3.1(b) of the Original Agreement is hereby deleted and replaced
in its entirety with the following Sections 3.1(b) and (c):
"(b) Holdings is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Nevada. Holdings is a wholly-owned
subsidiary of Columbia.
(c) Galen is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Galen is a wholly-owned
subsidiary of Columbia."
Additionally, all references in the Original Agreement to Galen as a Nevada
corporation are changed to reflect that Galen is a Delaware corporation.
(c) Section 9.4(a) of the Original Agreement is hereby deleted and replaced
in its entirety with the following Section 9.4(a):
"(a) LIABILITY THRESHOLDS. Notwithstanding anything in this Article IX to
the contrary, no indemnified Damages with respect to Claims arising out of a
breach of Sellers' representations and warranties (other than Claims arising out
of a breach of the Title Representations, as such term is defined in Section
9.4(c)(i), to which the Liability Threshold shall not apply) shall be payable
pursuant to this Article IX unless and until the aggregate amount of indemnified
Damages asserted against Sellers under this Article IX with respect to such
Claims equals or exceeds $2,600,000 (the "LIABILITY THRESHOLD"). Once the
Liability Threshold for such Claims has been reached, the Indemnitee shall be
entitled to the benefit of the indemnity under this Article IX for such Claims
to the extent of any and all Damages above the Liability Threshold; provided
that the maximum amount of Damages for which Sellers shall be responsible with
respect to Claims arising out of breaches of Sellers' representations and
warranties (including breaches of the Title Representations) shall be an amount
equal to the Purchase Price. For purposes of calculating the Liability
Threshold, Damages with respect to Claims arising out of a breach of the Title
Representations shall not be counted in determining whether the Liability
Threshold has been reached."
(d) Section 9.4(c)(i) of the Original Agreement is hereby deleted and
replaced in its entirety with the following Section 9.4(c)(i):
"(i) The representations and warranties set forth in this Agreement shall
survive the Closing and shall expire eighteen months after the Effective Time;
provided that the representations and warranties set forth in Sections
3.2(a)(iii), 3.2(a)(iv), 3.2(b)(iii), 3.2(b)(iv), 3.3(d) and 3.3(e)
(collectively, the "Title Representations") shall survive without limitation as
to time. Except with respect to the Title Representations, no claim for
indemnification arising out of a breach of such representations and warranties
may be brought after that time."
(e) Schedule 3.3 to the Original Agreement is hereby deleted and replaced
in its entirety with the form of Schedule 3.3 attached hereto as EXHIBIT A.
(f) Schedule 3.9 is hereby amended by adding the following under the
heading "Pending Lawsuits Handled by Value Rx":
MATTER VENUE TYPE SUMMARY
- -------------------------------------------------------------------------------
Sunergeo, Inc. v. District Court of Breach of Complaint filed
Health Care Services, Harris County, Contract 3/12/98, not served,
Inc. and ValueRx, Inc. Texas alleging that
ValueRx breached a
Prescription
Agreement by failing
to make payments due
February 10, 1998
and March 10, 1998
(g) Schedule 3.10 is hereby amended by adding the following as paragraph 2
thereof:
"2. See Schedule 3.9 regarding allegations by Sunergeo, Inc. that the
Company is in breach of a Prescription Agreement, dated August 26, 1992, between
Sunergeo and Health Care Services, Inc."
(h) Schedule 3.12(d) to the Original Agreement is hereby amended by (i)
changing the reference to "Schedule 3.12(b)" in such schedule to "Schedule
3.12(d)," and (ii) attaching to such schedule the letters dated January 9, 1998,
and February 4, 1998 that are referred to in such schedule (copies of which are
attached to this Amendment as EXHIBIT B).
3. ADDITIONAL AGREEMENTS.
(a) Notwithstanding the provisions of Section 2.4, the Effective Time shall
be 12:01 a.m., April 1, 1998.
(b) Columbia shall use all reasonable efforts to assist in: (i) the
reinstatement of ValueRx of Iowa, Inc. as a corporation in good standing under
the laws of the State of Illinois as promptly as practicable; and (ii) obtaining
evidence of good standing and payment of franchise taxes by the corporations
identified in Exhibit C in the jurisdictions therein specified.
4. MISCELLANEOUS.
(a) Except as otherwise specifically set forth in this Amendment, the
Original Agreement remains in full force and effect, without modification,
amendment or change.
(b) The respective representations of the parties set forth in Sections
3.4, 3.5, 4.2 and 4.3 of the Original Agreement shall apply to this Amendment.
IN WITNESS WHEREOF, the parties have caused this First Amendment to Stock
Purchase Agreement to be executed as of the date first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /S/ V. CARL GEORGE
Name: V. CARL GEORGE
Title: VICE PRESIDENT
VH HOLDINGS, INC.
By: /S/ V. CARL GEORGE
Name: V. CARL GEORGE
Title: VICE PRESIDENT
GALEN HOLDINGS, INC.
By: /S/ V. CARL GEORGE
Name: V. CARL GEORGE
Title: VICE PRESIDENT
EXPRESS SCRIPTS, INC.
By: /S/ GEORGE PAZ
Name: GEORGE PAZ
Title: SENIOR VICE PRESIDENT AND CFO
<PAGE>
List of Exhibits to the First Amendment to Stock Purchase Agreement
1. Exhibit A - Replacement Schedule 3.3 to the Stock Purchase Agreement
listing all Value Health Subsidiaries.
2. Exhibit B - Two letters from Allen Buckley of Troutman Sanders LLP to
the Internal Revenue Service regarding the Value Health, Inc. Retirement Savings
Plan
3. Exhibit C - Listing of various Value Health, Inc. subsidiaries and their
respective jurisdiction of incorporation.
