<PAGE>
================================================================================
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
Date of Report (Date of Earliest Event Reported): December 10, 1996
------------------------
AMERICAN MEDICAL RESPONSE, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11196 04-3147881
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
2821 SOUTH PARKER ROAD
10th Floor
Aurora, Colorado 80014
(Address, of principal executive offices, including zip code)
(303) 614-8500
(Registrant's Telephone number including area code)
------------------------
<PAGE>
The undersigned Registrant hereby amends Item 7 of its Current Report on
Form 8-K dated December 23, 1996 as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
(i) Financial Statements of STAT Healthcare, Inc. and Subsidiaries
--------------------------------------------------------------
for the Year Ended December 31, 1995
------------------------------------
Independent Auditors' Report.
Consolidated Balance Sheet.
Consolidated Statement of Income.
Consolidated Statement of Changes in Stockholders' Equity.
Consolidated Statement of Cash Flows.
Notes to Financial Statements.
(ii) 1996 Interim Financial Statements of STAT Healthcare, Inc. and
--------------------------------------------------------------
Subsidiaries
------------
Consolidated Balance Sheets as of September 30, 1996 and 1995
(unaudited).
Consolidated Statements of Income for the Quarters Ended
September 30, 1996 and 1995 and Nine Months Ended September 30,
1996 and 1995 (unaudited).
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 (unaudited).
Notes to Interim Consolidated Financial Statements (unaudited).
(b) PRO FORMA FINANCIAL INFORMATION.
Introduction.
Pro Forma Combined Balance Sheet at September 30, 1996
(unaudited).
Pro Forma Combined Statement of Earnings for the Year Ended
December 31, 1995, and the Nine Months ended September 30, 1996
and 1995 (unaudited).
Notes to the Unaudited Pro Forma Combined Financial Statements.
-2-
<PAGE>
(c) EXHIBITS.
Exhibit Number Title
- -------------- -----
2.1 Agreement and Plan of Merger dated Previously filed
as of October 7, 1996 (the "Merger
Agreement"), by and among American
Medical Response, Inc. (the
"Registrant"), SHI Acquisition Corp.,
and STAT Healthcare, Inc., including
a list of schedules and exhibits to
the Merger Agreement.
23 Consent of KPMG Peat Marwick LLP. Filed herewith
-3-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
STAT Healthcare, Inc.:
We have audited the accompanying consolidated balance sheet of STAT
Healthcare, Inc. and subsidiaries (the Company) as of December 31, 1995, and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of STAT
Healthcare, Inc. and subsidiaries as of December 31, 1995, and the results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
August 9, 1996
4
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and cash equivalents.................... $ 2,538,000
Accounts receivable, net (notes 5 and 8)..... 4,565,000
Notes receivable (note 6).................... 266,000
Inventories (note 8)......................... 103,000
Prepaid and other current assets............. 709,000
-----------
Total current assets..................... 8,181,000
Property and equipment, net (notes 7 and 8).. 2,261,000
Other non-current assets..................... 133,000
-----------
Total assets............................. $10,575,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt (note 8)... $ 88,000
Current portion of capital lease obligations
(note 9).................................... 48,000
Accrued physicians' fees..................... 706,000
Accounts payable............................. 925,000
Accrued liabilities.......................... 513,000
Distributions payable........................ 283,000
-----------
Total current liabilities................ 2,563,000
Long-term debt (note 8)...................... 156,000
Long-term capital lease obligations (note
9).......................................... 1,484,000
-----------
Total liabilities........................ 4,203,000
-----------
Stockholders' equity (notes 8, 11 and 12):
Common stock, $.01 par value.
Authorized 40,000,000 shares; issued and
outstanding 14,823,332 shares............ 148,000
Capital in excess of par value............. 4,204,000
Retained earnings.......................... 2,020,000
-----------
Total stockholders' equity............... 6,372,000
-----------
Commitments and contingencies (notes 9, 13
and 15)
Total liabilities and stockholders'
equity.................................. $10,575,000
===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Net service revenues (note 4)............ $23,141,000
-----------
Operating expenses:
Professional medical fees.............. 9,241,000
Human resources........................ 4,640,000
Supplies............................... 1,818,000
Billing and collection costs........... 1,461,000
Outside services and other............. 970,000
Liability insurance.................... 706,000
Furniture and equipment................ 400,000
Occupancy.............................. 139,000
-----------
Total operating expenses............. 19,375,000
-----------
Operating income..................... 3,766,000
Interest income.......................... 75,000
Interest expense......................... (225,000)
Other income............................. 29,000
-----------
Income before income taxes........... 3,645,000
Income taxes (note 10)................... 347,000
-----------
Net income........................... 3,298,000
Proforma income taxes (note 2)........... 892,000
-----------
Proforma net income.................. $ 2,406,000
===========
Proforma net income per common share
(note 2)............................ $ 0.20
===========
Number of shares used in computing
proforma net income per common share.... 11,897,371
===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
------------------ -------------------
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS EQUITY
------- --------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1994................... 74,000 370,000 6,183,552 62,000 589,000 758,000 1,779,000
Initial public offering
of common stock, net of
issuance cost.......... -- -- 1,250,000 12,000 3,243,000 -- 3,255,000
Conversion of 10%
secured notes to common
stock.................. -- -- 93,332 1,000 17,000 -- 18,000
Conversion of Series A,
Convertible Preferred
stock to common stock.. (74,000) (370,000) 1,480,000 15,000 355,000 -- --
Capital contributions... -- -- 5,816,448 58,000 -- (31,000) 27,000
Distributions to
shareholders........... -- -- -- -- -- (2,005,000) (2,005,000)
Net income.............. -- -- -- -- -- 3,298,000 3,298,000
------- --------- ---------- -------- ---------- ----------- -----------
Balances at December 31,
1995................... -- $ -- 14,823,332 $148,000 $4,204,000 $ 2,020,000 $ 6,372,000
======= ========= ========== ======== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income................................ $ 3,298,000
-----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 360,000
Changes in assets and liabilities:
(Increase) in net accounts receivable... (2,183,000)
(Increase) in inventories............... (40,000)
(Increase) in prepaid and other current
assets................................. (566,000)
(Increase) in organization and start-up
costs.................................. (68,000)
(Increase) in other non-current assets.. (9,000)
Decrease in accrued physicians' fees.... (18,000)
Increase in accounts payable............ 573,000
Increase in accrued liabilities......... 245,000
Increase in distributions payable....... 283,000
-----------
Total adjustments....................... (1,423,000)
-----------
Net cash provided by operating
activities........................... 1,875,000
-----------
Cash flows from investing activities:
Increase in notes receivable.............. (258,000)
Purchase of property and equipment........ (548,000)
-----------
Net cash used in investing
activities........................... (806,000)
-----------
Cash flows from financing activities:
Capital contributions..................... 27,000
Proceeds from sale of common stock........ 3,255,000
Distributions to shareholders............. (2,005,000)
Issuance of long-term debt................ 278,000
Repayment of long-term debt............... (249,000)
Repayment of convertible secured notes.... (332,000)
Repayments of capital lease obligations... (209,000)
Decrease in deferred offering costs....... 234,000
-----------
Net cash provided by financing
activities........................... 999,000
-----------
Net increase in cash and cash equivalents.. 2,068,000
Cash and cash equivalents at beginning of
year...................................... 470,000
-----------
Cash and cash equivalents at end of year... $ 2,538,000
===========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) BUSINESS OF THE COMPANY AND ORGANIZATION
Business of the Company
STAT Healthcare, Inc. (STAT) was incorporated in the state of Delaware on
July 29, 1994. STAT provides emergency medical management services. On June
24, 1996, STAT, through a successor entity formed for the purpose of effecting
a business combination, acquired all the common stock and partnership
interests of AmHealth Corporation and its related health care entities
(AmHealth) (see note 3). AmHealth provides disease management services focused
primarily on ailments associated with diabetes. STAT and AmHealth merged into
the successor entity which became the parent and registrant and which then
changed its name to STAT Healthcare, Inc.
Consolidated Financial Statements
The merger of STAT and AmHealth has been accounted for as a pooling of
interests. Accordingly, the consolidated financial statements of STAT
Healthcare, Inc. and subsidiaries (the Company) have been restated to include
the accounts and results of operations of both STAT and AmHealth for all
periods presented.
Following the merger, the Company is an integrated disease management and
medical services company which provides a continuum of disease management
services primarily to patients with end-stage renal disease and also provides
physician practice management services to hospital-based emergency
departments.
Operations and Organization of STAT
Upon incorporation in July 1994, STAT negotiated a Management Agreement with
South Texas Acute Trauma Physicians, P.A. (STAT Physicians). The Management
Agreement became effective September 1, 1994 and is perpetual. The Management
Agreement has no termination or cancellation provisions. In addition, the
Company has the ability to control the designation of physician owner(s) of
STAT Physicians. Prior to the merger with AmHealth, the Company's income was
derived exclusively from revenues associated with the Management Agreement,
less direct expenses paid by the Company on behalf of STAT Physicians, as
provided in the Management Agreement and less the operating expenses of the
Company. Additionally, on September 1, 1994, the Company assumed the
employment of all personnel previously employed at STAT Physicians and the
operating costs associated therewith from that date forward.
Prior to the merger with AmHealth, the Company operated in a single business
segment, emergency medical management services. The Company's principal business
related to management and administrative services provided to those engaged in
physician staffing of hospital emergency departments. At December 1995, the
Company managed contracts for physician services with 11 hospitals primarily
located in the Houston greater metropolitan area. Under these contracts, 24-hour
physician coverage of the emergency departments is provided.
Physicians providing services are independent contractors to STAT Physicians
and are paid monthly on a basis of fixed hourly rates. As independent
contractors, these physicians are responsible for their own income and Social
Security taxes as well as workers compensation insurance.
The contracts between STAT Physicians and hospitals are generally written
for an initial term of two years and automatically renew for extended periods
after the initial term. STAT Physicians' contractual arrangements with
hospitals are principally fee-for-service contracts under which the Company
bills and collects the professional component of medical services on behalf of
STAT Physicians. At December 31, 1995, all contracts were fee-for-service
contracts.
9
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
Operations and Organization of AmHealth
AmHealth operates in two business segments, kidney dialysis services and
healthcare management services. It operates outpatient kidney dialysis
facilities, provides management services for hospital-based hyperbaric oxygen
therapy facilities, and provides management and personnel services to
outpatient home health providers in the Rio Grande Valley of south Texas.
The AmHealth entities, their pre-merger structure and their dates of
inception are as follows:
<TABLE>
<CAPTION>
ENTITY STRUCTURE DATE OF INCEPTION
------ --------- -----------------
<S> <C> <C>
Management operations:
AmHealth Corporation..................... S Corporation Oct 1992
Kidney dialysis center operations:
AmHealth Enterprises of the Valley,
Inc. ................................... S Corporation Oct 1992
AmHealth Kidney Center of the Valley,
Ltd. ................................... Partnership Apr 1993
Starr Dialysis Center, Ltd. ............. Partnership Nov 1993
Weslaco Kidney Center, Ltd. ............. Partnership Jun 1994
Mission Kidney Center, Ltd. ............. Partnership Aug 1995
Brownsville Kidney Center, Ltd. ......... Partnership Apr 1996
Healthcare management operations:
Southwestern Infusion Healthcare, Ltd. .. Partnership Jun 1994
AmHealth Ambulatory Services, Inc. ...... C Corporation Apr 1995
AmHealth Ambulatory Healthcare, Ltd. .... Partnership Apr 1995
Brownsville Hyperbaric Healthcare,
Ltd. ................................... Partnership May 1995
AmHealth Medical Management, Ltd. ....... Partnership Jun 1995
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of STAT
Healthcare, Inc., AmHealth Corporation and its related health care entities
(all wholly-owned), and the results of operations of STAT Physicians since
September 1, 1994, the effective date of the Company's Management Agreement
with STAT Physicians.
Because of the existence of a parent-subsidiary relationship by means other
than record ownership of STAT Physicians' voting stock and because of the
unilateral control, notwithstanding the lack of technical majority ownership,
which the Company has over the assets and operation of STAT Physicians,
consolidation of its results of operations is necessary to present fairly the
results of operations of the Company.
All significant intercompany balances and transactions have been eliminated
in consolidation.
10
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
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. Management believes that the estimates utilized in
preparing its consolidated financial statements are reasonable and prudent.
Actual results could differ from these estimates.
Cash Equivalents
Investments in highly liquid, short-term instruments purchased with original
maturities of three months or less are deemed to be cash equivalents.
Service Revenues and Accounts Receivable
Patient service revenues are recorded at established billing rates, net of
an allowance for contractual adjustments and a provision for uncollectible
accounts. Management services revenue for hospital and home health agency
accounts are recorded net of an allowance for doubtful accounts.
Patient accounts receivable are reduced to an estimated realizable value
taking into consideration contractual adjustments mandated by payors
(Medicare, Medicaid and private insurers) and expected write-offs of
uncollectible accounts. These estimates are based upon management judgements
and historical experience.
Inventories
Inventories, consisting primarily of dialysis and pharmacy supplies, are
stated at the lower of cost or market. Cost is determined using the first-in,
first-out method.
Property and Equipment
Property and equipment are stated at cost and are depreciated using the
straight-line depreciation method over the estimated useful lives of the
assets by class: minor equipment, 3 years; major equipment, 5 years;
improvements, 5 years.
Equipment under capital lease is stated at the lesser of the present value
of the minimum lease payments or the fair value of the leased property at the
inception of the lease. Equipment under capital lease is amortized using the
straight-line method over the term of the leases which is 4 to 7 years.
Buildings and land under capital lease are stated at the fair value of the
properties and are amortized using the straight-line method over the term of
the lease which is 10 years.
Organization and Start-Up Costs
Organization and start-up costs have been capitalized and are being
amortized using the straight-line method over five years.
Deferred Offering Costs
Deferred offering costs totaling $234,000 at December 31, 1994 were combined
with additional offering costs incurred during 1995 and were recorded as a
reduction of the proceeds from the initial public offering of common stock
during 1995.
11
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
Deferred Acquisition Costs
Costs incurred to effect an expected pooling of interests business
combination are deferred and charged to expense in the period that the
business combination is consummated. If a plan of combination is abandoned,
costs that have been deferred are expensed. At December 31, 1995, deferred
acquisition costs of $134,000 were included in prepaid and other current
assets. These costs were combined with additional acquisition costs incurred
in 1996 and were expensed in the second quarter of 1996 when the AmHealth
merger was consummated.
Income Taxes
The Company utilizes the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Prior to consummation of the merger, each of the AmHealth entities (except
AmHealth Ambulatory Services, Inc.) was a partnership or had elected to be
treated as an S Corporation. Accordingly, each entity's income or loss was
allocated to that entity's shareholders or partners for inclusion in their
personal federal income tax returns. No federal income taxes were assessed to
any of the entities (except AmHealth Ambulatory Services, Inc.), and
accordingly, no provision for federal income taxes for these entities has been
reflected in the accompanying consolidated statements of income prior to
consummation of the merger. AmHealth Ambulatory Services, Inc. began
operations in April 1995. Taxable income of this corporation from its date of
inception through December 31, 1995 was not material.
Net Income Per Common Share
Net income per common share is computed based on the sum of STAT and
AmHealth common and common equivalent shares calculated as follows:
. STAT. From inception through the date of STAT's initial public offering,
the number of common and common equivalent shares is computed as if all
shares were outstanding for the entire period, less the number of
treasury shares assumed to have been purchased (at the initial offering
price of STAT's common stock) from the proceeds of actual sales of stock.
Following the initial public offering, the number of common and common
equivalent shares is computed based on the weighted average number of
common shares outstanding adjusted for the incremental shares attributed
to outstanding options and warrants to purchase common stock.
. AmHealth. The number of common and common equivalent shares is computed
based on the number of shares of the Company's common stock issued to the
shareholders or partners of each AmHealth entity upon consummation of the
merger, as if such shares were outstanding since the date of inception
for each entity.
Pro Forma Net Income and Pro Forma Net Income Per Share
Pro forma income taxes are calculated to reflect the effect of income taxes
not otherwise payable by the AmHealth entities which were partnerships or S
Corporations prior to consummation of the merger. The pro
12
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
forma income taxes are based on an effective rate of 34%. Pro forma net income
per share is computed based on the pro forma net income amount.
Fair Value of Financial Instruments
Methods and assumptions used to estimate the fair value of each class of
financial instruments are as follows:
. Cash equivalents, trade accounts receivable, notes receivable and
payables--The carrying amounts approximate fair value because of the
short maturity of these instruments.
. Long-term debt--The carrying amount approximates fair value because the
notes generally have an adjustable interest rate based on the prime rate.
(3) MERGER
On June 24, 1996, the Company acquired all the common stock and partnership
interests of AmHealth Corporation and its related health care entities
(AmHealth) for 11,200,000 shares of the Company's common stock. AmHealth
operates outpatient kidney dialysis facilities, provides management services
for hospital-based hyperbaric oxygen therapy facilities, and provides
management and personnel services to outpatient home health providers in the
Rio Grande Valley of south Texas. The transaction has been accounted for as a
pooling of interests and, accordingly, the consolidated financial statements
for all periods presented have been restated to include the accounts of
AmHealth.
Separate and combined results of STAT and AmHealth during the year ended
December 31, 1995 (period preceding the merger) were as follows:
<TABLE>
<CAPTION>
<S> <C>
Net service revenues:
STAT.................................. $14,124,000
AmHealth.............................. 9,017,000
-----------
Combined............................ $23,141,000
===========
Net income:
STAT.................................. $ 674,000
AmHealth.............................. 2,624,000
-----------
Combined............................ 3,298,000
Proforma income taxes................. (892,000)
-----------
Proforma net income................. $ 2,406,000
===========
</TABLE>
(4) NET SERVICES REVENUES
Under the contracts between STAT Physicians and the hospitals and under the
Company's Management Agreement with STAT Physicians, the Company has the
ability, subject to hospital concurrence, to establish the rates to be billed
to patients for services provided. Gross service revenues represent the billed
value of physician services provided at hospital locations, and patient
service and management services revenue recorded at established billing rates.
Billings discounts represent the difference between gross service revenues and
the amount which is ultimately expected to be received. These discounts relate
principally to contractual adjustments
13
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
mandated by payors such as Medicare and Medicaid and also to contracted
arrangements with private insurers. Discounts also include provisions for
indigent patients without the means of paying for services provided.
Gross service revenues and billings discounts for the year ended December
31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross service revenues.............. $ 40,143,000
Billings discounts.................. (17,002,000)
------------
Net service revenues................ $ 23,141,000
============
</TABLE>
Service revenues have been primarily generated in south Texas and the Houston
greater metropolitan area. Although subject to individual contracts, net service
revenues derived from hospitals which, at December 31, 1995, were owned by
Columbia/HCA Healthcare Corporation accounted for 41% of 1995 net service
revenues.
(5) ACCOUNTS RECEIVABLE
Accounts receivable at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross patient accounts receivable....... $ 8,892,000
Allowance for contractual adjustments... (2,938,000)
-----------
Estimated accounts receivable......... 5,954,000
Allowance for doubtful accounts......... (1,882,000)
-----------
Net patient accounts receivable....... 4,072,000
Other accounts receivable............... 371,000
Due from STAT Physicians................ 122,000
-----------
Accounts receivable, net.............. $ 4,565,000
===========
</TABLE>
(6) NOTES RECEIVABLE
Notes receivable at December 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Non interest-bearing note receivable from Mission
Medical Properties................................. $ 50,000
Note receivable from officer/shareholders, interest
at 6%, due October 31, 1996........................ 200,000
Other............................................... 16,000
--------
Notes receivable.................................. $266,000
========
</TABLE>
Mission Medical Properties leases buildings and land under capital leases to
the Company and is owned by certain stockholders of the Company.
14
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
(7) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Land and buildings....................... $ 969,000
Equipment and furnishings................ 1,705,000
Improvements............................. 155,000
----------
2,829,000
Less accumulated depreciation and amor-
tization.............................. (568,000)
----------
Property and equipment, net.......... $2,261,000
==========
</TABLE>
Depreciation and amortization of property and equipment charged to operations
was $338,000 during the year ended December 31, 1995.
(8) LONG-TERM DEBT
Long-term debt at December 31, 1995 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Revolving credit payable to bank, due in
quarterly installments of $9,375 plus
interest through March 1999; interest at
prime plus .5%............................. 122,000
Note payable to TransAmerican Insurance
Finance, due January 1, 1996; interest at
11.64%..................................... 4,000
Note payable to bank, due April 2, 1996;
interest at prime plus 1%.................. 10,000
Noninterest-bearing note payable to Palmco,
Inc., for construction allowance on leased
building, due April 1, 1996................ 4,000
Note payable to bank, due October 30, 1997;
interest at prime plus 1%.................. 6,000
Note payable to bank, due June 15, 1998;
interest at prime plus 1%.................. 48,000
Note payable to bank, due November 6, 1999;
interest at prime plus 1%.................. 50,000
--------
Total debt................................ 244,000
Less current portion...................... (88,000)
========
Long-term debt............................ $156,000
========
</TABLE>
Convertible secured notes were issued for $350,000 in October and November
1994 in connection with a bridge financing. A total of $332,000 was repaid and
the balance of $18,000 was converted to common stock in connection with STAT's
initial public offering during 1995. The conversion of convertible secured notes
to common stock is a non cash investing and financing transaction and is
excluded from the 1995 consolidated statement of cash flows.
15
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
The revolving credit payable to bank and notes payable to bank are secured
by the Company's accounts receivable, inventories and equipment. Long-term
debt totaling $240,000 at December 31, 1995 was guaranteed by a stockholder of
the Company.
Future payments of long-term debt at December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996.............................................................. $ 88,000
1997.............................................................. 66,000
1998.............................................................. 68,000
1999.............................................................. 22,000
--------
$244,000
========
</TABLE>
Cash paid for interest was $214,000 during the year ended December 31, 1995.
(9) LEASE OBLIGATIONS
Future minimum lease payments under capital leases, together with the
present value of the net minimum lease payments, at December 31, 1995 are as
follows:
<TABLE>
<S> <C>
1996........................................................... $ 476,000
1997........................................................... 426,000
1998........................................................... 341,000
1999........................................................... 261,000
2000........................................................... 203,000
Later years.................................................... 781,000
----------
Total minimum lease payments................................... 2,488,000
Less amount representing interest.............................. (956,000)
----------
Present value of net minimum lease payments.................... 1,532,000
Less current portion......................................... (48,000)
----------
Long-term capital lease obligations.......................... $1,484,000
==========
</TABLE>
At December 31, 1995, the Company's capital lease obligations include
amounts payable to entities owned or controlled by stockholders of the
Company. Total payments to these entities under the capital leases were
$147,000 for the year ended December 31, 1995.
On September 10, 1995, the Company entered into an agreement to lease a
facility located in Brownsville, Texas, to be constructed and owned by an
entity owned by stockholders of the Company. Lease payments begin 45 days
after completion and are $7,600 per month for a term of 120 months. Based on
an estimated fair market value of $490,000 and the terms of the lease, the
lease will be a capital lease.
Future minimum rental payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year at
December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996............................................................. $265,000
1997............................................................. 268,000
1998............................................................. 121,000
1999............................................................. 16,000
--------
Total minimum lease payments..................................... $670,000
========
</TABLE>
16
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
Rental expense under operating leases was $60,000 for the year ended
December 31, 1995.
Obligations under capital lease incurred for property and equipment were
$605,000 during the year ended December 31, 1995. These non cash investing and
financing transactions have been excluded from the consolidated statements of
cash flows.
(10) INCOME TAXES
Income taxes for the years ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Federal................................................ $330,000
State.................................................. 17,000
--------
Total................................................ $347,000
========
</TABLE>
The actual income tax expense for the years ended December 31, 1995 differs
from the expected federal income tax computed by applying the U.S. corporate
rate of 34% to income before income taxes as follows:
<TABLE>
<CAPTION>
<S> <C>
Computed "expected" tax expense............ $1,239,000
Taxes on income earned and reported by
shareholders of S corporations and
partners of partnerships.................. (892,000)
Increase in tax resulting from
nondeductible expenses.................... 2,000
State tax provision, net of federal
benefit................................... 11,000
Other...................................... (13,000)
----------
Actual income tax expense................ $ 347,000
==========
</TABLE>
For the year ended December 31, 1995, there were no significant temporary
differences which created deferred tax assets or liabilities. Refundable income
taxes of $31,000 are included in other current assets at December 31, 1995.
Income taxes of $440,000 were paid during the year ended December 31, 1995.
(11) CAPITAL STOCK
Authorized capital stock of the Company consists of 5,000,000 shares of $.01
par value preferred stock and 40,000,000 shares of $.01 par value common
stock. In September 1994, STAT sold 74,000 shares of Series A convertible
preferred stock (Preferred Stock) to STAT Physicians for $370,000. The
Preferred Stock was converted into common stock at a rate of 20 shares of
common stock for each share of Preferred Stock (1,480,000 common shares) upon
the completion of STAT's initial public offering of common stock in 1995. The
conversion of Preferred Stock into common stock is a non cash investing and
financing transaction and is excluded from the 1995 consolidated statement of
cash flows.
17
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
At December 31, 1995, shares of common stock are reserved for issuance in
connection with the future exercise of Class A warrants to purchase common
stock at the price of $4.50 per share (734,166 shares) and underwriter
warrants for 125,000 shares of common stock at $5.44 per share. These warrants
were issued in connection with STAT's initial public offering of common stock
and the related conversion of 10% convertible secured notes. Additionally, at
December 31, 1995, 300,000 shares of common stock are reserved for issuance in
connection with the Company's stock option plan.
(12) STOCK OPTION PLAN
The Company has a stock option plan, providing for the granting of incentive
stock options or nonqualified stock options, for the benefit of its employees
and directors. Under this plan, options may be granted to purchase an
aggregate of 300,000 shares of common stock at no less than 100% (90% in the
event of a nonqualified stock option) of the fair market value of the common
stock at the time of the grant. At December 31, 1995, 10,000 unoptioned shares
were available for granting. All options which have been granted expire five
years from the date of grant. Information relating to stock options is as
follows:
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS OPTION PRICE PER SHARE
--------- ----------------------
<S> <C> <C>
Outstanding at December 31, 1994........... -- --
Granted.................................... 290,000 $2.88-3.17
-------
Outstanding at December 31, 1995........... 290,000 $2.88-3.17
=======
Shares exercisable at December 31, 1995.... 2,500 $3.00
======= ==========
</TABLE>
(13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has certain pending and threatened litigation and claims
incurred in the ordinary course of business; however, management believes that
the probable resolution of such contingencies will not materially affect the
liquidity, the financial position, or the results of the Company's operations.
The Company procures professional liability insurance on behalf of STAT
Physicians which provides coverage on a claims-made basis during the policy
period. The coverage is purchased on a "slot" basis and extends to the
Company, to STAT Physicians and to contract physicians who perform services.
Individual policies are not provided to physicians; however, they must be
prequalified for coverage as a routine credentialing process. If a claims-made
policy is not renewed or replaced by a new policy which provides coverage
retroactively, it becomes necessary to purchase an extended reporting period
endorsement. Management intends to renew the existing claims-made policy and
in the past has either renewed or successfully purchased retroactive coverage.
Although the Company does not directly contract with hospitals or physicians
for the provision or procurement of medical services, its contractual
relationship with STAT Physicians exposes it to potential claims from
litigants. Accordingly, the Company is named as an additional insured under
the professional liability coverage of STAT Physicians.
Effective October 1, 1995, the Company established a 401(k) plan (the Plan)
for its employees. The Plan allows participants with at least one year of
prior service to make elective deferrals of up to 15% of their
18
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
compensation. The Plan also allows discretionary matching employer
contributions as well as additional discretionary contributions which shall be
allocated to each eligible employee in proportion to his or her compensation as
a percentage of the compensation of all eligible employees. Employer
contributions vest at the rate of 20% per year of service. No discretionary
contributions were made to the Plan by the Company during the year ended
December 31, 1995.
(14) BUSINESS SEGMENTS
The Company operates in three business segments; emergency services, kidney
dialysis services and health care management services. Information by business
segment as of and for the year ended December 31, 1995 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Net service revenues:
Emergency services....................... $14,124,000
Kidney dialysis.......................... 6,262,000
Healthcare management.................... 2,755,000
-----------
Total.................................. $23,141,000
===========
Operating income:
Emergency services....................... $ 977,000
Kidney dialysis.......................... 1,715,000
Healthcare management.................... 1,120,000
General corporate........................ (46,000)
-----------
Total.................................. $ 3,766,000
===========
Identifiable assets:
Emergency services....................... $ 5,860,000
Kidney dialysis.......................... 3,642,000
Healthcare management.................... 970,000
General corporate........................ 103,000
-----------
Total.................................. $10,575,000
===========
Depreciation and amortization:
Emergency services....................... $ 16,000
Kidney dialysis.......................... 301,000
Healthcare management.................... 40,000
General corporate........................ 3,000
-----------
Total.................................. $ 360,000
===========
Capital expenditures:
Emergency services....................... $ 112,000
Kidney dialysis.......................... 742,000
Healthcare management.................... 282,000
General corporate........................ 17,000
-----------
Total.................................. $ 1,153,000
===========
</TABLE>
19
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995
(15) SUBSEQUENT EVENTS
In January 1996 the Company reached an agreement with the Greater Houston
Division of Columbia/HCA Healthcare Corporation (Columbia) to provide
emergency medicine services to all but one of Columbia's emergency departments
in the Greater Houston Division. This agreement will result in the addition of
nine hospitals to the Company's service base between February 1 and July 1,
1996 resulting in a total of 18 hospitals served (16 of which are owned by
Columbia). The contract for services relating to this agreement was finalized
in April 1996. The Houston Division hospitals (15) are covered by this
contract which has an initial term of two years and which renews
automatically. This contract will account for a significant portion of the
Company's net service revenues and operating expenses.
On January 31, 1996, and in conjunction with the Columbia agreement noted
above, the Company acquired the rights to a one-hospital contract for the
provision of emergency department medical services. Consideration paid for the
contract and certain non-competition covenants consisted of $960,000 in cash
and 52,174 shares of the Company's common stock. Up to an additional $100,000
may be paid in each of the three twelve-month periods following the
acquisition of the contract based on profits realized at that hospital.
On February 1, 1996, the Company acquired intangible assets of Amedica, Ltd.
(Amedica) in a transaction that will be accounted for by the purchase method
of accounting. Amedica provides healthcare services relating to the management
of independent physician associations. Consideration paid consisted of
$200,000 in cash and 15,730 shares of the Company's common stock.
Unaudited financial information of Amedica as of December 31, 1995 and for
the year then ended is as follows:
<TABLE>
<S> <C>
Balance sheet information:
Current assets................................................ $ 128,000
Total assets.................................................. 135,000
Current liabilities........................................... 25,000
Total liabilities............................................. 150,000
Partners' capital............................................. (15,000)
===========
Operations information:
Revenue....................................................... $ 439,000
Expenses...................................................... 518,000
Net loss...................................................... (79,000)
===========
Unaudited proforma results of operations for the year ended December 31,
1995, giving effect to the Amedica acquisition as though it had occurred on
January 1, 1995, are as follows:
Net service revenues............................................ $23,580,000
Net income...................................................... 3,222,000
===========
Net income per common share..................................... $ 0.20
===========
</TABLE>
STAT was advised in May 1996 that the common stock (67,904 shares, with an
ascribed value of $310,000) issued in connection with the acquisitions
described in this note, may have been issued in violation of Section 5 of the
Securities Act. Such a violation would entitle the recipients to recission
rights. In July 1996, the Company offered the right of recission, which right
included the payment of the ascribed value plus accrued interest from
20
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
DECEMBER 31, 1995
the acquisition dates, to the recipients. The recipients declined such offer
and asserted their right to exchange their STAT common stock for common stock
of the Company pursuant to the merger and exchange agreement between STAT and
AmHealth. Accordingly, the $310,000 will be reported as permanent equity.
In June 1996, stockholders of STAT and stockholders and partners of AmHealth
approved the New STAT Healthcare, Inc. 1996 Stock Incentive Plan under which
1,500,000 shares of common stock of the Company became reserved for future
issuance to officers, employees, consultants and non-employee directors of the
Company. The 290,000 options outstanding at December 31, 1995 (see note 12)
are considered to be options outstanding under this 1996 plan.
On July 22, 1996, the Company signed a commitment letter for a $6,500,000
bank credit facility comprised of a $3,000,000 revolving line of credit and a
$3,500,000 three year, non-revolving line of credit. The formal agreement is
expected to be finalized during August 1996 and pursuant to the commitment
agreement will provide for interest at prime. Borrowings under the lines will
be collateralized by security interests in the Company's accounts receivable
and in capital assets.
21
<PAGE>
STAT Healthcare, Inc. and Subsidiaries
Interim Financial Statements
September 30, 1996
22
<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
Sep 30, Dec 31,
1996 1995
(unaudited) (audited)
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................................. $ 1,376,000 $ 2,538,000
Accounts receivable, net.................................................. 8,962,000 4,565,000
Notes receivable.......................................................... 200,000 266,000
Inventories............................................................... 102,000 103,000
Prepaid and other current assets.......................................... 148,000 709,000
----------- -----------
Total current assets............................................. 10,788,000 8,181,000
Property and equipment, net............................................... 3,494,000 2,261,000
Intangible assets, net.................................................... 1,931,000 --
Other non-current assets.................................................. 425,000 133,000
----------- -----------
Total assets..................................................... $16,638,000 $10,575,000
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current portion of long-term debt......................................... $ 2,482,000 $ 88,000
Current portion of capital lease obligations.............................. 343,000 48,000
Accrued physicians' fees.................................................. 1,346,000 706,000
Accounts payable.......................................................... 1,120,000 925,000
Accrued liabilities....................................................... 1,401,000 513,000
Distributions payable..................................................... -- 283,000
----------- -----------
Total current liabilities............................................. 6,692,000 2,563,000
Long-term debt............................................................ 283,000 156,000
Long-term capital lease obligations....................................... 1,620,000 1,484,000
----------- ------------
Total liabilities..................................................... 8,595,000 4,203,000
----------- -----------
Stockholders' equity:
Preferred stock, $.01 par value. Authorized
5,000,000 shares; no shares outstanding................................ -- --
Common Stock, $.01 par value. Authorized
40,000,000 shares; issued and outstanding,
14,975,412 and 14,823,332, respectively................................ 150,000 148,000
Capital in excess of par value........................................... 4,890,000 4,204,000
Retained earnings........................................................ 3,003,000 2,020,000
----------- -----------
Total stockholders' equity............................................ 8,043,000 6,372,000
Commitments and contingencies
Total liabilities and stockholders' equity $16,638,000 $10,575,000
=========== ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
23
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Quarter Nine months Nine months
ended ended ended ended
Sep 30, 1996 Sep 30, 1995 Sep 30, 1996 Sep 30, 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net service revenues.................................................. $10,643,000 $ 6,148,000 $27,304,000 $16,523,000
------------ ------------ ------------ ------------
Operating expenses:
Professional medical fees............................................ 4,746,000 2,367,000 11,440,000 6,915,000
Human resources...................................................... 2,000,000 1,352,000 5,513,000 2,979,000
Supplies............................................................. 589,000 473,000 1,726,000 1,296,000
Billing and collection costs......................................... 617,000 395,000 1,613,000 1,092,000
Liability insurance.................................................. 254,000 195,000 707,000 519,000
Other costs.......................................................... 683,000 453,000 1,674,000 1,006,000
------------ ------------ ------------ ------------
Total operating expenses.......................................... 8,889,000 5,235,000 22,673,000 13,807,000
------------ ------------ ------------ ------------
Operating income.................................................. 1,754,000 913,000 4,631,000 2,716,000
Interest income....................................................... 5,000 25,000 23,000 26,000
Interest expense...................................................... (110,000) (81,000) (255,000) (130,000)
Reorganization costs.................................................. -- -- (1,269,000) --
------------ ------------ ------------ ------------
Income before income taxes........................................ 1,649,000 857,000 3,130,000 2,612,000
Income taxes.......................................................... 594,000 111,000 550,000 292,000
------------ ------------ ------------ ------------
Net income........................................................ $ 1,055,000 $ 746,000 $ 2,580,000 $ 2,320,000
=========== ============ ============ ============
Proforma income taxes................................................. -- 180,000 577,000 596,000
------------ ------------ ------------ ------------
Proforma net income............................................... $ 1,055,000 $ 566,000 $ 2,003,000 $ 1,724,000
============ ============ ============ ============
Proforma net income per common share.............................. $0.07 $0.04 $0.13 $0.16
============ ============ ============ ============
Number of shares used in computing
proforma net income per share......................................... 15,444,000 14,465,000 15,402,000 10,893,000
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
24
<PAGE>
STAT HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
Sep 30, 1996 Sep 30, 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................... $ 2,580,000 $ 2,320,000
------------ ------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:-
Depreciation and amortization......................................... 412,000 237,000
Increase in deferred tax liability.................................... 50,000 --
Changes in assets and liabilities:
Increase in net accounts receivable.................................. (4,397,000) (1,850,000)
Decrease (increase) in inventories................................... 1,000 (18,000)
Decrease in prepaid and other current assets......................... 561,000 59,000
Decrease (increase) in other non-current assets...................... 133,000 (76,000)
Increase (decrease) in accrued physicians' fees...................... 640,000 (16,000)
Increase in accounts payable......................................... 195,000 78,000
Increase in accrued liabilities...................................... 888,000 259,000
Increase (decrease) in distributions payable......................... (283,000) 420,000
------------ ------------
Total Adjustments.................................................... (1,800,000) (907,000)
------------ ------------
Net cash provided by
operating activities............................................... 780,000 1,413,000
------------ ------------
Cash flows from investing activities:
Purchase of HEMA assets................................................ (960,000) --
Purchase of Amedica assets............................................. (200,000) --
Increase (decrease) in notes receivable................................ 66,000 (56,000)
Purchase of property and equipment..................................... (1,533,000) (518,000)
------------ ------------
Net cash used in investing activities............................... (2,627,000) (574,000)
------------ ------------
Cash flows from financing activities:
Proceeds from sale of common stock..................................... 328,000 3,516,000
Distributions to shareholders.......................................... (1,415,000) (1,426,000)
Net borrowings under line of credit agreement.......................... 1,835,000 --
Issuance of long-term debt............................................. 317,000 228,000
Repayment of long-term debt............................................ (243,000) (552,000)
Repayments of capital lease obligations................................ (137,000) (131,000)
------------ ------------
Net cash provided by financing activities........................... 685,000 1,635,000
------------ ------------
Net decrease in cash and cash equivalents................................. (1,162,000) 2,474,000
Cash and cash equivalents at beginning of period.......................... 2,538,000 470,000
------------ ------------
Cash and cash equivalents at end of period................................ $ 1,376,000 $ 2,944,000
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
25
<PAGE>
STAT HEALTHCARE, INC.
AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
September 30, 1996
(1) Financial Statement Presentation
The accompanying consolidated financial statements of STAT Healthcare,
Inc. and subsidiaries (the Company) present financial information as of
September 30, 1996 and December 31, 1995, and for the three and nine month
periods ended September 30, 1996 and 1995. Because these financial statements
are unaudited and do not include all disclosures required by generally accepted
accounting principles, they should be read in conjunction with the Company's
audited supplemental consolidated financial statements which were filed on the
Company's Form 8-K dated August 9, 1996. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the financial information for the periods reported have been
made. Results of operations for the three and nine month periods ended September
30, 1996 are not necessarily indicative of the results that may be achieved for
the year ending December 31, 1996.
Consolidated income statement and cash flow information combines the
results of operations and cash flows of the Company, its subsidiaries and its
affiliated physician groups.
(2) Net Income Per Common Share
Net income per common share is computed based on the number of common
and common equivalent shares of the Company. Equivalent shares are attributable
to outstanding warrants and options to purchase common shares.
26
<PAGE>
PRO FORMA
COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect to
the merger of American Medical Response, Inc. and STAT Healthcare, Inc. as if
the transaction was accounted for as a pooling of interests and occurred, for
balance sheet purposes, on September 30, 1996 and, for statements of earnings
purposes, on January 1, 1995. These unaudited pro forma combined financial
statements should be read in conjunction with American's and STAT's consolidated
financial statements and notes thereto that are either incorporated herein by
reference or included elsewhere herein. The pro forma information is not
necessarily indicative of the results that would have been reported had such
events actually occurred on the dates specified, nor is it indicative of
American's future results.
The pro forma combined financial statements do not include any one-time,
nonrecurring Merger-related costs, nor do they incorporate any benefits from
any potential cost savings or synergies following the Merger.
27
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMERICAN STAT COMBINED
-------- ------- --------
<S> <C> <C> <C>
ASSETS
Cash................................................. $ 15,042 $ 1,376 $ 16,418
Accounts receivable.................................. 129,873 8,962 138,835
Other current assets................................. 45,217 450 45,667
-------- ------- --------
Total current assets............................... 190,132 10,788 200,920
-------- ------- --------
Property & equipment................................. 76,458 3,494 79,952
-------- ------- --------
Goodwill............................................. 307,951 1,931 309,882
Other assets......................................... 9,444 425 9,869
-------- ------- --------
Total assets....................................... $583,985 $16,638 $600,623
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses................ $ 94,538 $ 3,867 $ 98,405
Current maturities of debt........................... 23,660 2,825 26,485
-------- ------- --------
Total current liabilities.......................... 118,198 6,692 124,890
-------- ------- --------
Long-term debt....................................... 34,824 1,903 36,727
Convertible subordinated notes....................... 125,000 -- 125,000
Other liabilities.................................... 11,621 -- 11,621
-------- ------- --------
Total liabilities.................................. 289,643 8,595 298,238
-------- ------- --------
Stockholders' equity................................. 294,342 8,043 302,385
-------- ------- --------
Total liabilities and stockholders' equity......... $583,985 $16,638 $600,623
======== ======= ========
</TABLE>
See notes to pro forma combined financial statements.
28
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
PRO FORMA COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMERICAN STAT(1) COMBINED
-------- ------- --------
<S> <C> <C> <C>
Total revenue.................................... $483,846 $29,802 $513,648
-------- ------- --------
Operating expenses:
Salaries and benefits.......................... 245,142 14,047 259,189
Uncompensated care............................. 92,345 6,661 99,006
Other operating expenses....................... 77,875 4,940 82,815
Depreciation................................... 15,671 388 16,059
Amortization of intangibles.................... 5,288 -- 5,288
Restructuring.................................. 23,000 -- 23,000
-------- ------- --------
Total operating expenses..................... 459,321 26,036 485,357
-------- ------- --------
Earnings from operations......................... 24,525 3,766 28,291
Interest expense, net.......................... 3,222 121 3,343
-------- ------- --------
Earnings before income taxes..................... 21,303 3,645 24,948
Income taxes................................... 10,866 347 11,213
-------- ------- --------
Net earnings................................. $ 10,437 $ 3,298 $ 13,735
======== ======= ========
PRO FORMA DATA
Historical net earnings.......................... $ 10,437 $ 3,298 $ 13,735
Salaries and benefits............................ (96) -- (96)
Income taxes..................................... (417) 892 475
-------- ------- --------
Net earnings................................... $ 10,950 $ 2,406 $ 13,356
======== ======= ========
Earnings per common share:
Primary........................................ $ 0.60 $ 0.01 $ 0.61
======== ======= ========
Fully diluted.................................. $ 0.60 $ 0.01 $ 0.61
======== ======= ========
Weighted average common shares outstanding:
Primary........................................ 18,126 3,920(2) 22,046
======== ======= ========
Fully diluted.................................. 18,126 3,920(2) 22,046
======== ======= ========
</TABLE>
See notes to pro forma combined financial statements.
29
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
PRO FORMA COMBINED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMERICAN STAT(1) COMBINED
-------- -------- --------
<S> <C> <C> <C>
Total revenue...................................... $490,177 $ 38,122 $528,299
-------- -------- --------
Operating expenses:
Salaries and benefits............................ 244,296 16,814 261,110
Uncompensated care............................... 93,862 10,816 104,678
Other operating expenses......................... 76,805 5,443 82,248
Depreciation..................................... 16,158 412 16,570
Amortization of intangibles...................... 7,086 -- 7,086
Merger costs..................................... -- 1,269 1,269
-------- -------- --------
Total operating expenses....................... 438,207 34,754 472,961
-------- -------- --------
Earnings from operations........................... 51,970 3,368 55,338
Interest expense, net............................ 7,587 238 7,825
-------- -------- --------
Earnings before income taxes....................... 44,383 3,130 47,513
Income taxes..................................... 19,804 550 20,354
-------- -------- --------
Net earnings................................... $ 24,579 $ 2,580 $ 27,159
======== ======== ========
PRO FORMA DATA
Historical net earnings............................ $ 24,579 $ 2,580 $ 27,159
Income taxes....................................... -- 577 577
-------- -------- --------
Net earnings................................... $ 24,579 $ 2,003 $ 26,582
======== ======== ========
Earnings per common share:
Primary.......................................... $ 1.20 $ (0.11) $ 1.09
======== ======== ========
Fully diluted.................................... $ 1.18 $ (0.10) $ 1.08
======== ======== ========
Weighted average common shares outstanding:
Primary.......................................... 20,398 3,920(2) 24,318
======== ======== ========
Fully diluted.................................... 23,299 3,920(2) 27,219
======== ======== ========
</TABLE>
See notes to pro forma combined financial statements.
30
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
PRO FORMA COMBINED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMERICAN STAT (1) COMBINED
-------- -------- --------
<S> <C> <C> <C>
Total revenue................................... $337,647 $23,132 $360,779
-------- ------- --------
Operating expenses:
Salaries and benefits......................... 171,396 10,007 181,403
Uncompensated care............................ 64,938 6,609 71,547
Other operating expenses...................... 54,743 3,569 58,312
Depreciation.................................. 10,756 250 11,006
Amortization of intangibles................... 3,004 -- 3,004
-------- ------- --------
Total operating expenses.................... 304,837 20,435 325,272
-------- ------- --------
Earnings from operations........................ 32,810 2,697 35,507
Interest expense, net......................... 1,403 85 1,488
-------- ------- --------
Earnings before income taxes.................... 31,407 2,612 34,019
Income taxes.................................. 14,527 292 14,819
-------- ------- --------
Net earnings................................ $ 16,880 $ 2,320 $ 19,200
======== ======= ========
PRO FORMA DATA
Historical net earnings......................... $ 16,880 $ 2,320 $ 19,200
Salaries and benefits........................... (96) -- (96)
Income taxes.................................... (417) 596 179
-------- ------- --------
Net earnings................................ $ 17,393 $ 1,724 $ 19,117
======== ======= ========
Earnings per common share:
Primary....................................... $ 0.99 $ (0.10) $ 0.89
======== ======= ========
Fully diluted................................. $ 0.99 $ (0.10) $ 0.89
======== ======= ========
Weighted average common shares outstanding:
Primary....................................... 17,622 3,920(2) 21,542
======== ======= ========
Fully diluted................................. 17,622 3,920(2) 21,542
======== ======= ========
</TABLE>
See notes to pro forma combined financial statements.
31
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Certain amounts of STAT Healthcare, Inc. have been reclassified to conform
with American Medical Response, Inc.'s financial statement presentation.
(2) Represents the number of shares issued in exchange for each share of STAT
Healthcare, Inc.'s common stock outstanding.
32
<PAGE>
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.
AMERICAN MEDICAL RESPONSE, INC.
By __________________________________
William George
General Counsel and Vice President
Date: January __, 1997
33
<PAGE>
EXHIBITS INDEX
Exhibit Number Description
- -------------- -----------
2.1 Agreement and Plan of Merger dated Previously filed
as of October 7, 1996 (the "Merger
Agreement"), by and among American
Medical Response, Inc. (the
"Registrant"), SHI Acquisition Corp.,
and STAT Healthcare, Inc., including
a list of schedules and exhibits to
the Merger Agreement.
23 Consent of KPMG Peat Marwick LLP. Filed herewith
34
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
STAT Healthcare, Inc.:
We consent to the inclusion of our report dated August 9, 1996, with respect to
the consolidated balance sheet of STAT Healthcare, Inc. and subsidiaries as of
December 31, 1995, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the year then ended, which report
appears in the Form 8-K/A of American Medical Response, Inc. dated January 31,
1997.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Houston, Texas
January 31, 1997
