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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): October 7, 1996
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EQUIMED, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-27456 25-1668112
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(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Incorporation Identification No.)
3754 LaVista Road
Tucker, Georgia 30084-5637
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(Address of Principal (Zip Code)
Executive Offices)
(404)320-6211
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, If Changed Since Last Report)
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Item 5. Other Events
On October 7, 1996, EquiMed, Inc. (the "Company" or "EquiMed")
entered into an Asset Purchase Agreement (the "Purchase Agreement") with
Physicians Resource Group, Inc., a Delaware corporation ("PRG"), and PRG's
wholly-owned subsidiary, PRG Georgia, Inc., a Delaware corporation ("PRG
Georgia"), providing for the sale by the Company and the purchase by PRG Georgia
of the ophthalmology physician practice management and ambulatory surgery center
business of the Company (the "Ophthalmology Business"), including all items of
personal property and other assets used in connection with such business and the
Company's ownership interest in certain subsidiaries involved in the
Ophthalmology Business (the "Transaction"). The consideration to be provided by
PRG Georgia to the Company at closing is $54,563,000 in cash plus the assumption
of an estimated $14,300,000 of the Company's liabilities related to the
Ophthalmology Business, and a further contingent cash amount to be provided no
later than May 15, 1997 based upon additional acquisitions of medical practices
or centers related to the Ophthalmology Business by the Company, PRG Georgia or
another wholly-owned subsidiary of PRG, which acquisitions are consummated by
April 30, 1997 and satisfy certain conditions as provided in the Purchase
Agreement (the "Contingent Consideration"). The consummation of the Transaction
is subject to receipt of all necessary regulatory and other third party
approvals and other customary conditions. Each of the parties has certain rights
to terminate the Transaction under certain circumstances, including among
others, the right of PRG Georgia to terminate at any time prior to November 6,
1996 if, in its sole discretion, its due diligence reveals certain material
adverse conditions with respect to the Ophthalmology Business, and the right of
either PRG Georgia or the Company to terminate the Transaction if it is not
consummated by November 30, 1996, as provided in the Purchase Agreement.
If the Company were to receive only the minimum consideration of
$54,563,000 in cash and elimination of an estimated $14,300,000 in liabilities
related to the probable disposition of the Ophthalmology Business, then an
after-tax loss of approximately $34,142,000 would be incurred. This loss
however, will be reduced by any Contingent Consideration received by the
consummation of additional acquisitions of medical practices and centers by
April 30, 1997. The Company will recognize any such Contingent Consideration
when realized.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
EQUIMED, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma balance sheet as of June 30, 1996 and the
related unaudited pro forma statement of operations for the six months ended
June 30, 1996 have been prepared to give effect to the probable disposition of
the Ophthalmology Business by the Company, as if the Transaction had been
consummated as of June 30, 1996 with respect to the balance sheet, and January
1, 1996 with respect to the statement of operations. These pro forma statements
do not necessarily reflect the financial position and results of operations as
they would have been if the Company had completed this disposition on the dates
indicated above. This unaudited pro forma financial information should be read
in conjunction with the financial statements and notes of the Company.
EquiMed's statement of operations for the year ended December 31, 1995,
does not include any results of operations of the Ophthalmology Business, as
this business was acquired in February 1996 in a business combination accounted
for as a purchase. Accordingly, an unaudited pro forma statement of operations
for the year ended December 31, 1995 is not presented.
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EQUIMED, INC.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 3,464 $ 53,133 (A) $ 43,318
(13,279) (B)
Accounts receivable 15,927 (10,346) (A) 5,581
Receivables from
affiliates 569 - 569
Prepaid expenses and other
affiliates 2,506 (1,372) (A) 1,134
Deferred income taxes 680 - 680
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Total current assets 23,146 51,282
Property and equipment, net 19,220 (7,551) (A) 11,669
Goodwill 37,674 (37,674) (A) -
Services agreements 36,638 (31,459) (A) 5,179
Non-compete agreements 1,651 (1,605) (A) 46
Patient records 1,793 (1,756) (A) 37
Other assets 1,175 (742) (A) 433
Deferred income taxes 273 - 273
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$ 121,570 $ (52,651) $ 68,919
========= ========== =========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $ 1,713 $ (166) (A) $ 1,547
Accrued salaries and
professional fees 4,053 (1,826) (A) 2,227
Other accrued expenses 4,710 (2,504) (A) 2,206
Income taxes payable 5,675 9,079 (C) 14,754
Current portion of long-term
debt and obligations under
capital leases 15,987 (900) (A) 1,808
(13,279) (B)
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Total current
liabilities 32,138 22,542
Long-term debt and capital
lease obligations 14,108 (8,793) (A) 5,315
Deferred income taxes 2,210 - 2,210
Minority interests 1,534 (120) (A) 1,414
Stockholders' equity:
Preferred stock - - -
Common stock 82,178 - 82,178
Additional paid-capital 1,760 - 1,760
Accumulated deficit (12,358) (34,142) (46,500)
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71,580 37,438
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$ 121,570 $ (52,651) $ 68,919
========= ========== =========
</TABLE>
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EQUIMED, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(A) To record (i) cash received (net of transaction costs), (ii) elimination of
net assets of the Ophthalmology Business, and (iii) loss incurred in
connection with the disposition of the Ophthalmology Business as of
June 30, 1996. Consideration received, without giving effect to contingent
consideration which may be received, consisted of $53,564,000 in cash and
elimination of an estimated $14,300,000 in liabilities. The book value as
of June 30, 1996 of assets to be sold was $92,500,000. Transaction costs
are approximately $1,430,000. Computation of the loss on disposal of the
Ophthalmology Business is as follows:
Cash proceeds $ 54,563,000
Less: Transaction costs (1,430,000)
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Net cash proceeds 53,133,000
Less: Net assets of Ophthalmology Business (78,196,000)
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Loss before income taxes (25,063,000)
Provision for income taxes (9,079,000)
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Net loss on disposition $(34,142,000)
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(B) To record the payoff of an EquiMed revolving credit facility utilizing the
cash proceeds from the disposition of the Ophthalmology Business.
(C) To record income taxes payable in connection with the disposition of the
Ophthalmology Business. The Company has provided for income taxes of
$9,079,000 because of a permanent difference in the carrying amount of
assets sold for tax and financial reporting purposes.
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EQUIMED, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C>
Net revenues $ 50,142 $ (22,755)(A) $ 27,387
Costs and Expenses:
Professional fees and expenses 13,261 (6,582)(A) 6,679
Treatment and support services 18,579 (10,019)(A) 8,560
General and administrative expenses 5,875 (2,546)(A) 3,329
Depreciation and amortization 3,068 (1,418)(A) 1,650
Interest expense 1,717 (241)(B) 1,118
(358)(C)
Other incomes, net (280) 13 (A) (267)
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Total costs and expenses 42,220 (21,151) 21,069
Income from operations 7,922 (1,604) 6,318
Minority interest 281 (38)(A) 243
Loss on sale of Ophthalmology Business -- 25,063 (A) 25,063
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Income (loss) before income taxes and
extraordinary item 7,641 (26,629) (18,988)
Provision for income taxes:
Income tax expense 3,145 9,079 (D) 11,316
(908)(E)
Cumulative adjustment to establish deferred
income taxes for change in tax status 1,277 -- 1,277
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4,422 8,171 12,593
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Income (loss) before extraordinary item $ 3,219 $ (34,800) $ (31,581)
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Net income (loss) per share $ 0.12 $ (1.18)
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Weighted average common shares
and equivalents 26,867 26,867
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</TABLE>
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EQUIMED, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(A) To eliminate the Ophthalmology Business results of operations for the six
months ended June 30, 1996.
(B) To reduce interest expense on long-term debt and capital lease obligations
assumed by the acquiring entity. The interest expense adjustment is based
on actual interest expense of $241,000. Borrowings were at an average
interest rate of approximately 6.4%.
(C) Adjusts interest expense based on the use of proceeds from the disposition
of the Ophthalmology Business to reduce borrowings on an EquiMed revolving
credit facility. The interest expense adjustment is based on actual
interest expense of $358,000. Borrowings were at an average interest rate
of approximately 8.5%.
(D) Provides $9,079,000 for income tax expense in connection with the loss on
disposition of the Ophthalmology Business. The Company has not provided
for an income tax benefit at statutory federal and state income tax rates
because of permanent differences in the carrying amount of assets sold for
tax and financial reporting purposes.
(E) Provides $908,000 for income tax expense on the pro forma adjustments to
results of operations of the Ophthalmology Business for the six months
ended June 30, 1996.
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(c) Exhibits.
2.1 Asset Purchase Agreement dated as of October 7, 1996 by and among
EquiMed, Inc., Physicians Resource Group, Inc., and PRG Georgia,
Inc.*
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*Filed previously.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUIMED, INC.
(Registrant)
/s/ William E. Pritts II
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Date: October 14, 1996 By: William E. Pritts II
Title: Chief Financial Officer
