<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
September 11, 1996
Date of Report
(Date of earliest event reported)
OCCUPATIONAL HEALTH + REHABILITATION INC
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
02-21428 13-3464527
(Commission File Number) (IRS Employer Identification No.)
175 Derby Street, Suite 36
Hingham, Massachusetts 02043-5048
(Address of principal executive offices) (Zip Code)
(617) 741-5175
(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On September 11, 1996, Occupational Health + Rehabilitation Inc
("OH+R") executed and closed an Asset Purchase Agreement (the "Purchase
Agreement") with Argosy Health, L.P. ("Argosy"), a Pennsylvania limited
partnership. Pursuant to the terms of the Purchase Agreement, OH+R purchased a
70% undivided interest in certain assets, including, but not limited to,
equipment, physical therapy machinery and inventory and supplies (the "Purchased
Assets") of a business division of Argosy which provides industrial on-site
occupational and physical therapy and related assessments, evaluations and
injury prevention programs for employees with work related injuries and
illnesses in New Jersey, Pennsylvania, Delaware, Maryland, Northern Virginia and
the District of Columbia (the "Business"). Also on September 11, 1996, OH+R and
Argosy formed a general partnership by the name of Argosy Health Northeast (the
"Partnership") which will provide the services of the Business and may also
provide management and related services to various occupational and
rehabilitation health centers. OH+R contributed to the Partnership the Purchased
Assets (excluding goodwill) as its initial capital contribution and Argosy
contributed the 30% undivided interest in the assets of the Business (excluding
goodwill) which it retained under the Purchase Agreement.
In consideration of the sale of the Purchased Assets, OH+R agreed to
pay to Argosy: (i) $750,000 in cash, which was paid at closing; (ii) 100,502
shares of OH+R's Common Stock, which are to be delivered to Argosy on January 6,
1997; (iii) an amount equal to 24.5% of net income before taxes of the
Partnership for specified periods ending on September 11, 1999, payable on the
15th day following the end of each calendar quarter; and (iv) $50,000 in cash if
the Partnership's net income before taxes for the twelve months following
September 11, 1996 exceeds $600,000, which, if payable, will be paid no later
than November 10, 1997. The amount of consideration paid to Argosy by OH+R was
established through negotiations between the parties. The cash consideration
paid and payable to Argosy was and will be funded from working capital.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
(i) Audited financial statements of OH+R for the following periods:
Statement of Net Assets to be Acquired at December 31, 1995
Statement of Revenues and Direct Expenses for the year ended
December 31, 1995
Notes to Financial Statements
- 2 -
<PAGE> 3
(ii) Unaudited financial statements of OH+R for the following
periods:
Statement of Net Assets at August 31, 1996
Statement of Revenues and Direct Expenses for the eight
months ended August 31, 1995 and August 31, 1996
Notes to Unaudited Interim Financial Statements
The foregoing financial statements, together with the Report of
Independent Auditors, are included on pages F-1 through F-13 of this
report.
(b) Pro Forma Financial Information.
(i) Unaudited Pro Forma Combined Financial Information Introductory
Statement
(ii) Unaudited Pro Forma Combined Statement of Operations for the
year ended December 31, 1995
(iii) Unaudited Pro Forma Combined Statement of Operations for the
nine months ended September 30, 1996
(iv) Notes to Unaudited Pro Forma Combined Financial Information
The foregoing pro forma financial information is included on pages P-1
through P-4 of this report.
(c) Exhibits.
2.01 Asset Purchase Agreement by and between Argosy Health, L.P.
and Occupational Health + Rehabilitation Inc dated as of
September 11, 1996 and effective as of September 1, 1996.
(Previously filed)
23.01 Consent of Ernst & Young LLP. (Filed herewith)
- 3 -
<PAGE> 4
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.
Date: November 22, 1996 OCCUPATIONAL HEALTH +
REHABILITATION INC
/s/ Richard P. Quinlan
---------------------------
Richard P. Quinlan
Chief Financial Officer
and Treasurer
- 4 -
<PAGE> 5
Financial Statements
Midatlantic Division of
Argosy Health, L.P.
Year ended December 31, 1995
with Report of Independent Auditors
F-1
<PAGE> 6
Midatlantic Division of
Argosy Health, L.P.
Financial Statements
Year ended December 31, 1995
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................................. F-3
Audited Financial Statements
Statement of Net Assets to be Acquired..................................................... F-4
Statement of Revenues and Direct Expenses.................................................. F-5
Notes to Financial Statements.............................................................. F-6
</TABLE>
F-2
<PAGE> 7
ERNST & YOUNG LLP Two Commerce Square Phone: 215-448-5000
Suite 4000 Fax: 215-448-4069
2001 Market Street
Philadelphia
Pennsylvania 19103-7096
Report of Independent Auditors
The Partners
Argosy Health, L.P.
We have audited the accompanying statement of net assets to be acquired of the
Midatlantic Division of Argosy Health, L.P. as of December 31, 1995 and the
related statement of revenues and direct expenses for the year then ended. These
financial statements are the responsibility of Argosy Health's management. Our
responsibility is to express an opinion on their financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, the above mentioned financial statements have been
prepared solely to present the net assets to be acquired of the Midatlantic
Division of Argosy Health, L.P. by Occupational Health + Rehabilitation Inc
pursuant to the Asset Purchase Agreement described in Note 1, and are not
intended to be a complete presentation of the Midatlantic Division's assets and
liabilities.
In our opinion, the financial statements referred to above and as described in
Note 1, present fairly, in all material respects, the net assets to be acquired
of the Midatlantic Division of Argosy Health, L.P. as of December 31, 1995 and
its revenues and direct expenses for the year then ended, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
October 22, 1996
F-3
<PAGE> 8
Midatlantic Division of
Argosy Health, L.P.
Statement of Net Assets to be Acquired
December 31, 1995
<TABLE>
<S> <C>
ASSETS TO BE ACQUIRED
Furniture and equipment:
Office furniture and equipment $ 44,852
Medical equipment 25,479
--------
70,331
Less accumulated depreciation 17,181
--------
Total assets to be acquired 53,150
LIABILITIES TO BE ASSUMED
Obligations under capital leases 21,416
--------
Net assets to be acquired $ 31,734
========
</TABLE>
See accompanying notes.
F-4
<PAGE> 9
Midatlantic Division of
Argosy Health, L.P.
Statement of Revenues and Direct Expenses
Year ended December 31, 1995
<TABLE>
<S> <C>
Revenues $2,020,889
Cost of revenues 1,532,967
----------
487,922
Selling, general, and administrative expense 466,924
----------
Excess of revenues over direct expenses $ 20,998
==========
</TABLE>
See accompanying notes.
F-5
<PAGE> 10
Midatlantic Division of
Argosy Health, L.P.
Notes to Financial Statements
December 31, 1995
1. BASIS OF PRESENTATION
Argosy Health, L.P. (the "Company"), based in Horsham, Pennsylvania, is a
Pennsylvania Limited Partnership which is in the business of providing physical
and occupational therapy to injured workers. The Company's licensed therapists
deliver industrial rehabilitation directly to the workplace and integrate
rehabilitation procedures with the needs and demands of the workplace. The
purpose of industrial rehabilitation is to physically prepare injured workers
for return to pre-injury economic capacity or maximum function.
The Midatlantic Division of the Company encompasses the operations conducted in
the Northeastern part of the United States specifically Pennsylvania, New
Jersey, Delaware, Maryland, Virginia and Washington, D.C. The statement of
revenue and direct expenses includes the revenue and expenses which are directly
identifiable with the Midatlantic Division of the Company and does not include
any allocation of corporate overhead.
Effective September 1, 1996, Occupational Health + Rehabilitation Inc (OH+R)
acquired a 70% undivided interest in the assets and liabilities presented, which
are related to the Midatlantic Division of the Company as set forth in an "Asset
Purchase Agreement." Prior to the purchase, the assets and liabilities, and
revenues and direct expenses presented herein of the Midatlantic Division, a
component of the Company, did not constitute a legal or reporting entity for
which financial statements were prepared.
Concurrent with the purchase, the Company and OH+R have agreed to enter into a
joint venture to operate the Midatlantic Division of the Company whereby the
Company and OH+R will have a 30% and 70% undivided ownership interest,
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-6
<PAGE> 11
Midatlantic Division of
Argosy Health, L.P.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FURNITURE AND EQUIPMENT
Furniture and equipment is depreciated on a straight-line basis over its
estimated useful life of 3 to 7 years for office furniture and equipment and 7
years for medical equipment.
REVENUES AND DIRECT EXPENSES
Revenues, costs, and expenses not directly related to the Midatlantic Division
have been excluded from the statement of revenues and direct expenses. These
costs include corporate and administrative expenses, interest income and
expense, and federal and state income taxes which have not been allocated by the
Company.
Payment for services are primarily received from insurance companies who provide
Workers' Compensation insurance for the insured employer/customer or from Third
Party Administrators which provide administrative services for the self-insured
employers/customers.
INCOME TAX STATUS
In accordance with federal and state tax regulations, all items of taxable
income or loss are passed through the Partnership to the individual partners.
Accordingly, no provision for federal or state taxes is required.
3. FURNITURE AND EQUIPMENT
Depreciation and amortization expense related to furniture and equipment was
$7,610 in 1995.
4. CAPITAL LEASES
Certain equipment leased under a capital lease agreement is included in office
furniture and equipment, net of accumulated amortization.
F-7
<PAGE> 12
Midatlantic Division of
Argosy Health, L.P.
Notes to Financial Statements (continued)
4. CAPITAL LEASES (CONTINUED)
At December 31, 1995, the future minimum lease payments on the obligations under
capital leases are as follows:
<TABLE>
<S> <C>
1996 $ 6,480
1997 6,480
1998 6,480
1999 6,480
2000 535
-------
Total future minimum lease payments 26,455
Less amount representing interest 5,039
-------
Net future minimum lease payments $21,416
=======
</TABLE>
F-8
<PAGE> 13
Midatlantic Division of
Argosy Health, L.P.
Unaudited Financial Statements
F-9
<PAGE> 14
Midatlantic Division of
Argosy Health, L.P.
Statement of Net Assets
(UNAUDITED)
August 31, 1996
<TABLE>
<S> <C>
ASSETS
Furniture and equipment:
Office furniture and equipment $44,803
Medical equipment 38,603
-------
83,406
Less accumulated depreciation 36,495
-------
Total assets 46,911
LIABILITIES
Obligations under capital leases 18,531
-------
NET ASSETS $28,380
=======
</TABLE>
See accompanying notes
F-10
<PAGE> 15
Midatlantic Division of
Argosy Health, L.P.
Statement of Revenues and Direct Expenses
(UNAUDITED)
<TABLE>
<CAPTION>
Eight months ended August 31,
-----------------------------
1996 1995
---------- -----------
<S> <C> <C>
Revenues $1,463,992 $ 1,318,685
Cost of revenues 911,536 1,309,147
---------- -----------
552,456 9,538
---------- -----------
Selling, general and administrative expenses 179,962 255,331
---------- -----------
Excess of revenues over direct expenses $ 372,494 $ (245,793)
========== ===========
</TABLE>
See accompanying notes
F-11
<PAGE> 16
MIDATLANTIC DIVISION OF
ARGOSY HEALTH, L.P.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 1996
1. REVENUES AND DIRECT EXPENSES
Revenues, costs and expenses not directly related to the Midatlantic Division of
Argosy Health, L.P. ("Argosy" or the "Company") have been excluded from the
Statement of Revenues and Direct Expenses. These costs include corporate and
administrative expenses, interest income and expense and federal and state
income taxes which have not been allocated by Argosy.
2. BASIS OF PRESENTATION
The accompanying unaudited interim Statement of Net Assets and Statement of
Revenues and Direct Expenses have been prepared in accordance with Rule 10.01 of
Regulation S-X pertaining to interim financial statements and do not include all
the financial information and disclosures required by generally accepted
accounting principles. The financial statements presented herein reflect all
adjustments (consisting of normal recurring adjustments) which, in the opinion
of management, are considered necessary for a fair presentation of the Company's
financial condition and operating results as of August 31, 1996 and for the
eight months ended August 31, 1996 and 1995, on the basis described above. The
results of operations for the interim periods may not necessarily be indicative
of the results that may be expected for a full year.
3. SUBSEQUENT EVENTS
Sale of Midatlantic Division:
On September 11, 1996, Occupational Health + Rehabilitation Inc ("OH+R")
executed and closed an Asset Purchase Agreement ("Purchase Agreement") with
Argosy. Pursuant to the terms of the Purchase Agreement, OH+R purchased a 70%
undivided interest in certain assets, including, but not limited to, equipment,
physical therapy machinery and inventory and supplies of a business division of
Argosy which provides industrial on-site occupational and physical therapy and
related assessments, evaluations and injury prevention programs for employees
with work related injuries and illnesses in New Jersey, Pennsylvania, Delaware,
Maryland, Northern Virginia and the District of Columbia (the "Business"). Also
on September 11, 1996, OH+R and Argosy formed a
F-12
<PAGE> 17
3. SUBSEQUENT EVENTS (CONTINUED)
general partnership by the name of Argosy Health Northeast which will provide
the services of the Business and may also provide management and related
services to various occupational and rehabilitation health centers. OH+R
contributed to the Partnership the assets purchased (excluding goodwill) as its
initial capital contribution and Argosy contributed the 30% undivided interest
in the assets of the Business which it retained under the Purchase Agreement
(excluding goodwill).
F-13
<PAGE> 18
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
OCCUPATIONAL HEALTH + REHABILITATION INC
The following Unaudited Pro Forma Combined Statements of Operations for
the year ended December 31, 1995 and the nine months ended September 30, 1996
give effect to the merger with Telor Ophthalmic Pharmaceuticals, Inc. (Telor)
accounted for under the reverse acquisition purchase method of accounting and
the purchase of certain assets of Argosy Health, L.P. (Argosy). The financial
information for the year ended December 31, 1995 for Telor has been obtained
from the financial statements of Telor which have been audited by Arthur
Andersen LLP. The consolidated financial information for the year ended December
31, 1995 for OH+R has been obtained from the consolidated financial statements
of OH+R which have been audited by Ernst & Young LLP. The financial information
for the year ended December 31, 1995 for Argosy has been obtained from the
financial statements of Argosy which have been audited by Ernst & Young LLP.
The Unaudited Pro Forma Combined Financial Information is based on the
historical financial statements of Telor, OH+R and Argosy under the assumptions
and adjustments set forth in the accompanying Notes to the Unaudited Pro Forma
Combined Financial Information. No Pro Forma Balance Sheet as of September 30,
1996 is presented as both the Telor merger and the Argosy acquisition are
reflected in the September 30, 1996 Balance Sheet contained in OH+R's Form 10-Q
for the quarter ended September 30, 1996 dated November 13, 1996 and filed on
November 14, 1996. The Unaudited Pro Forma Combined Statements of Operations
assume that the merger was consummated at the beginning of the periods
indicated.
The Unaudited Pro Forma Combined Financial Information may not be
indicative of the results that actually would have occurred if the Telor merger
and the Argosy acquisition had been in effect on the dates indicated or which
may be expected in the future. The Unaudited Pro Forma Combined Financial
Information should be read in conjunction with the historical financial
statements and accompanying notes of Telor, OH+R and Argosy.
P-1
<PAGE> 19
OCCUPATIONAL HEALTH + REHABILITATION INC
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Midatlantic
Division of Argosy Pro Forma
OH+R Telor Health, L.P. Adjustments Pro Forma
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total revenue $ 6,023,947 $ -- $ 2,020,889 $ $ 8,044,836
Operating and administrative expenses (7,697,903) (7,718,628) (1,992,281) (17,408,812)
Depreciation and amortization (365,486) (219,605) (7,610) (592,701)
Interest expense (96,746) -- 0 (96,746)
Interest income 37,566 383,721 0 421,287
Minority interest in net loss of subsidiary 322,211 -- 0 322,211
----------- ----------- ----------- ------------ ------------
Net loss $(1,776,411) $(7,554,512) $ 20,998 $ 0 $ (9,309,925)
=========== =========== =========== ============ ============
Net loss available to common stock $(2,337,087) $(7,554,512) $ 20,998 $ 0 $ (9,309,925)
=========== =========== =========== ============ ============
Net loss per share $ (3.53) $ (9.67) $ -- $ 0 $ (6.46)
=========== =========== =========== ============ ============
Weighted average common shares and
common share equivalents outstanding 661,855 780,886 -- (549) 1,442,192
=========== =========== =========== ============ ============
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information
P-2
<PAGE> 20
OCCUPATIONAL HEALTH + REHABILITATION INC
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Midatlantic
Division of Argosy Pro Forma
OH+R Telor Health, L.P. Adjustments Pro Forma
----------- --------- ------------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenue $ 6,447,520 $ 0 $ 1,463,992 $ $ 7,911,512
Operating and administrative expenses (7,363,765) (683,404) (1,091,498) (9,138,667)
Depreciation and amortization (317,321) 0 (317,321)
Interest expense (205,496) 0 0 (205,496)
Interest income 56,531 107,603 0 164,134
Minority interest in net loss of subsidiary 193,879 0 0 193,879
----------- --------- ----------- ----------- -----------
Net loss $(1,188,652) $(575,801) $ 372,494 $ 0 $(1,391,959)
=========== ========= =========== =========== ===========
Net loss per share $ (1.74) $ (1.73) $ -- $ 0 $ (1.37)
=========== ========= =========== =========== ===========
Weighted average common shares and
common share equivalents outstanding 682,088 332,760 -- 0 1,014,848
=========== ========= =========== =========== ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information
P-3
<PAGE> 21
OCCUPATIONAL HEALTH + REHABILITATION INC
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
A. BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Statements of Operations assume that
the merger with Telor and the Asset Purchase Agreement with Argosy Health, L.P.
were consummated at the beginning of the periods indicated. The merger has been
accounted for in the accompanying Unaudited Pro Forma Combined Financial
Information under the reverse acquisition purchase method of accounting.
B. ADJUSTMENTS TO STATEMENT OF OPERATIONS
The adjustment to weighted average common shares and common share
equivalents outstanding for purposes of computing pro forma net loss per share
reflects the conversion of shares of OH+R Common Stock and OH+R Preferred Stock
into Telor Stock at a conversion ratio of 0.1415957.
P-4
<PAGE> 22
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
23.01 Consent of Ernst & Young LLP
<PAGE> 1
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-15191) pertaining to the Occupational Health + Rehabilitation Inc
1996 Stock Plan of our report dated October 22, 1996, with respect to the
statement of net assets to be acquired of the Midatlantic Division of Argosy
Health, L.P. as of December 31, 1995 and the related statement of revenues and
direct expenses for the year then ended included in the Current Report on Form
8-K dated September 11, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
November 25, 1996
