<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 18, 1996
-----------------------
EQUIMED, INC.
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-27456 25-1668112
- -------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3754 LaVista Rd.
Tucker, Georgia 30084-5637
- ------------------------ ------------------------
(Address of principal (Zip Code)
executive offices)
(404) 320-6211
- -------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5: OTHER EVENTS
On March 18, 1996, EquiMed, Inc. ("EquiMed" or the "Company") consummated
mergers with each of (i) Wallace Eye Surgery, Inc., formerly known as Wallace
Eye Surgery, Ltd., (the "Wallace Practice") and (ii) Laser & Surgery, Inc. (the
"Surgery Center"). The Wallace Practice and Surgery Center are located in
Alexandria, Louisiana. The Wallace Practice provides diagnostic services and
treatment for ophthalmic patients. The Surgery Center provides ophthalmic
surgical care, including cataract surgery and other laser procedures for
cataract, retina and glaucoma. The common stock of the Wallace Practice and the
Surgery Center are wholly owned by R. Bruce Wallace, III, M. D. The two mergers
were effective as of March 1, 1996. Consideration for the acquisition consisted
of approximately 403,000 shares of EquiMed common stock valued at approximately
$5,000,000. The business combination was accounted for as a pooling of
interests.
On April 11, 1996, EquiMed consummated mergers with (i) E. Ronald Salvitti,
M.D., Inc. ( the "Salvitti Practice") and (ii) Washington Optical, Inc. (the
"Optical Shop"). The Salvitti Practice and Optical Shop are located in
Washington, Pennsylvania. The Salvitti Practice provides diagnostic services and
treatment for ophthalmic patients and also includes an ambulatory surgery center
which provides opthalmic surgical care, including cataract surgery and other
laser procedures for cataract, retina and glaucoma. The Optical Shop primarily
sells prescription eyeglasses and contact lenses. The common stock of the
Salvitti Practice and the Optical Shop are wholly owned by E. Ronald Salvitti,
M. D. The two mergers were effective as of April 1, 1996. Consideration for the
acquisition consisted of $45,000 in cash (net of cash acquired and transaction
costs), $9,115,000 in EquiMed common stock, $225,000 in assumed debt and
$259,000 in assumed liabilities. The business combination was accounted for as a
purchase, with the acquired assets being recorded at their respective market
values.
The financial statements and pro forma financial information relating to
these acquisitions contained in Item 7 are being filed to comply with Rule 3-
05.(b)(i) of Regulation S-X in contemplation of the filing of a registration
statement under the Securities Act of 1933. Such financial statements and pro
forma financial information would not otherwise be required to be filed.
1
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
The combined financial statements of E. Ronald Salvitti, M.D., Inc.,
Washington, Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser & Surgery
Center, Inc. (collectively referred to as the "Salvitti and Wallace" or
"Companies"), including the combined balance sheet as of December 31, 1995, and
the related combined statements of operation and shareholders' equity, and cash
flow for the year ended, including the report of independent auditors.
Unaudited combined condensed statements of operations and cash flow of E.
Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. (collectively referred
to as "Salvitti") for the three months ended March 31, 1996.
2
<PAGE>
Report of Independent Auditors
The Boards of Directors
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
We have audited the accompanying combined balance sheet of E. Ronald Salvitti,
M.D., Inc., Washington Optical, Inc., Wallace Eye Surgery, Ltd., and The Laser &
Surgery Center, Inc. (collectively referred to as the "Companies") as of
December 31, 1995 and the related combined statements of operations and
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined 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 financial statements referred to above present fairly, in
all material respects, the combined financial position of the Companies at
December 31, 1995 and the combined results of their operations and their cash
flows for the year then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Atlanta, Georgia
June 12, 1996
3
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Combined Balance Sheet
December 31, 1995
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 53,565
Marketable securities --
available-for-sale 210,810
Accounts receivable -- less allowance
for doubtful accounts of $115,000 943,307
Other current assets 51,817
----------
Total current assets 1,259,499
Property and equipment, at cost:
Furniture and fixtures 498,646
Equipment 2,335,393
Leasehold improvements and other 546,833
----------
3,380,872
Less accumulated depreciation 2,758,854
----------
Net property and equipment 622,018
Notes receivable 65,833
Other assets 3,593
----------
Total assets $1,950,943
==========
</TABLE>
4
<PAGE>
E. Ronald Salvitti, M.D., Inc.
Washington Optical, Inc.
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Combined Balance Sheet
December 31, 1995
<TABLE>
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 206,885
Accrued salaries and benefits 231,566
Deferred income taxes 195,575
Accrued contractual fees payable 115,635
Other accrued liabilities 19,167
Note payable to related party 225,000
Line of credit 77,467
Current portion of long-term debt 79,168
----------
Total current liabilities 1,150,463
Long-term debt 96,072
Shareholders' equity:
Common stock -- E. Ronald Salvitti,
M.D., Inc., no par value, 1,000 shares
authorized, 500 shares issued and
outstanding 17,384
Common stock -- Washington Optical,
Inc. no par value, 1,000 shares
authorized, 500 shares issued and
outstanding 500
Common stock -- Wallace Eye Surgery,
Ltd., no par value, 1,000 shares
authorized, 500 shares issued and
outstanding 10,047
Common stock -- The Laser Surgery &
Center, Inc., no par value, 1,000
shares authorized, 100 shares issued
and outstanding 1,000
Retained earnings 675,477
----------
Total shareholders' equity 704,408
----------
Total liabilities and shareholders'
equity $1,950,943
==========
</TABLE>
See accompanying notes.
5
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Combined Statement of Operations
December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Net revenues $10,444,389
Costs and Expenses:
Professional fees and expenses 6,717,392
Treatment and support services 2,890,898
General and administrative expenses 452,170
Depreciation and amortization 346,539
Interest expense, net 47,683
Other income, net (868)
-----------
Total costs and expenses 10,453,814
Loss before income taxes (9,425)
Benefit for income taxes 9,425
-----------
Net income $ --
===========
</TABLE>
See accompanying notes.
6
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Combined Statement of Shareholders' Equity
<TABLE>
<CAPTION>
COMMON RETAINED TOTAL
STOCK EARNINGS EQUITY
--------------------------------
<S> <C> <C> <C>
Balance at December 31, 1994 $28,931 $733,647 $762,578
Net income - - -
Dividends - (76,073) (76,073)
Adjustment to unrealized gains on
available-for-sale securities, net of
tax - 17,903 17,903
--------------------------------
Balance at December 31, 1995 $28,931 $675,477 $704,408
================================
</TABLE>
See accompanying notes.
7
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd.,
The Laser & Surgery Center, Inc.
Combined Statement of Cash Flows
December 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ --
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 346,539
Loss on disposal of assets 48,593
Deferred income taxes (9,425)
Changes in operating assets and
liabilities:
Accounts receivable 97,336
Other current assets (5,308)
Accounts payable (56,125)
Accrued salaries and benefits 1,829
Accrued contractual fees (266,242)
Other accrued expenses 63
---------
Net cash provided by operating activities 157,260
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (183,704)
Proceeds from disposal of property and
equipment 21,309
Purchase of marketable securities (1,955)
Payments on notes receivable 4,353
Decrease in other assets 2,245
---------
Net cash used by investing activities (157,752)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (21,117)
Payments on note payable to shareholder (151,198)
Payments of dividends (76,073)
---------
Net cash used by financing activities (248,388)
---------
Decrease in cash (248,880)
Cash -- beginning of the year 302,445
---------
Cash -- end of the year $ 53,565
=========
</TABLE>
See accompanying notes.
8
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements
December 31, 1995
1. DESCRIPTION OF BUSINESS
E. Ronald Salvitti, M.D., Inc. (the "Salvitti Clinic and Salvitti Surgical
Center") provides diagnostic services and treatment for ophthalmic patients as
well as ophthalmic surgical care, including cataract surgery, laser procedures
for secondary cataracts, and radial keratatomy procedures. Washington Optical,
Inc. (the "Optical Shop") provides frames and lenses for ophthalmic patients.
The Salvitti Clinic, Salvitti Surgical Center, and Optical Shop are collectively
referred to as the Salvitti Companies. The Salvitti Companies are under common
ownership, and were acquired by EquiMed, Inc. on April 1, 1996. This
acquisition was recorded by EquiMed, Inc. using the purchase method of
accounting.
Wallace Eye Surgery, Ltd. (the "Wallace Clinic") provides diagnostic services
and treatment for ophthalmic patients in Alexandria, Louisiana. The Laser &
Surgery Center, Inc. (the "Wallace Surgical Center") provides ophthalmic
surgical care, including cataract surgery, laser procedures for secondary
cataracts, and radial keratotomy procedures. Revenues of the Wallace Surgical
Center are principally derived from patients of the Wallace Clinic.
The Wallace Clinic and Wallace Surgical Center are collectively referred to as
the Wallace Companies. The Wallace Companies are under common ownership, and
were acquired by EquiMed, Inc. on March 16, 1996. This acquisition was
accounted for by EquiMed, Inc. using the pooling of interests method of
accounting.
The Salvitti Companies and the Wallace Companies are collectively referred to as
the Companies.
9
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Companies' accounting records are maintained on the basis of cash receipts
and disbursements for income-tax purposes. The accompanying combined financial
statements have been prepared on the accrual basis and thus reflect accounts
receivable, prepaid expenses, and liabilities that are not recorded in the
accounting records. In addition, the combined financial statements do not
reflect any adjustments that may result from the acquisitions by EquiMed, Inc.
MARKETABLE SECURITIES - AVAILABLE-FOR-SALE
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported in a separate component of shareholders'
equity. Realized gains and losses and declines in value judged to be other-
than-temporary on available-for-sale securities are included in investment
income. The cost of securities sold is based on the specific identification
method. Interest and dividends on available-for-sale securities are included in
investment income.
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.
Although these estimates are based on management's knowledge of current events
and actions it may undertake in the future, they may ultimately differ from
actual results.
10
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET REVENUES
Net revenues consist primarily of diagnostic and treatment procedures fees
including surgical care for ophthalmic patients. Facility fees charged by the
Salvitti and Wallace Surgical Centers include all charges for the examination
room, supplies, and use of equipment. Payments for services rendered to
patients covered by Medicare, Medicaid and certain managed care organizations
are generally less than billed charges. Provisions for contractual adjustments
are made to reduce the charges to these patients to estimated receipts based
upon the programs' principles of payment. Contractual provisions are deducted
to arrive at net revenue.
The following represents amounts included in the determination of net revenues
for the year ended December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Gross revenues $20,460,704
Less provision for contractual
adjustments 10,016,315
-----------
Net revenues $10,444,389
===========
</TABLE>
The Companies derived approximately 52% of the above gross revenues from
services provided under the Medicare program.
In the ordinary course of business, the Companies render services in its
facilities to patients who are financially unable to pay for services. The
Companies have insignificant amounts of services that are identified as charity
care.
11
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
computed on the straight-line method over the estimated useful lives of the
assets for financial reporting purposes.
CONCENTRATION OF CREDIT RISK
The Companies' principal financial instrument subject to potential concentration
of credit risk is trade accounts receivable for which the Companies do not
generally require collateral. The concentration of credit risk with respect to
trade accounts receivable is limited due to the number of payors and their
dispersion across different insurance companies, individuals and geographic
locations. Substantially all accounts receivable at December 31, 1995 are due
from third party payors.
INCOME TAXES
The Companies account for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
12
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
3. INVESTMENTS
The following is a summary of available-for-sale securities as of December 31,
1995:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
-----------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Corporate Securities $166,726 $10,652 $ - $177,378
Other Equity Securities 33,028 404 - 33,432
----------------------------------------------------
$199,754 $11,056 $ - $210,810
=====================================================
</TABLE>
The gross realized gains on sales of available-for-sale securities totaled
$3,200. The net adjustment to unrealized holding gains on available-for-sale
securities included as a component of shareholder's equity totaled $28,903.
4. LINE OF CREDIT
On April 28, 1995, the Companies obtained a line of credit with a bank that
provides for total borrowings up to $150,000. Borrowings under this agreement
bear interest at prime plus 1% (9.25% at December 31, 1995). The line of credit
is secured by certain medical equipment and has been guaranteed by the Wallace
Companies' principal shareholder. At December 31, 1995, the Companies had
borrowings of $77,467 outstanding under this agreement.
13
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
5. LONG-TERM DEBT OBLIGATIONS
Long-term debt obligations consist of the following at December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Notes payable to an institutional
lender, bearing interest at 7.5%,
payable $1,063 per month through
September 1997 $ 20,850
Notes payable to an institutional
lender, bearing interest at 9.2%,
payable $5,596 per month through April
1998 134,439
Notes payable to an institutional
lender, bearing interest at 8.5%,
payable $540 per month through June
1998 14,951
Other 5,000
----------
175,240
Less current portion 79,168
----------
$ 96,072
==========
</TABLE>
Aggregate annual maturities of long-term debt at December 31, 1995 are:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 79,168
1997 77,841
1998 18,231
----------
$175,240
==========
</TABLE>
Interest paid during 1995 was $49,016.
14
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
6. OPERATING LEASES
The Companies lease property and equipment under operating lease agreements.
Rent expense under these agreements totaled approximately $365,000 in 1995
including the leases with related parties described in Note 8. Future minimum
lease payments are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 330,056
1997 330,056
1998 330,056
1999 330,056
2000 289,369
Thereafter 1,255,840
----------
Total future minimum lease payments $2,865,433
==========
</TABLE>
7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities of the Companies for
financial reporting purposes and the amounts used for income tax purposes. The
temporary differences giving rise to significant portions of deferred tax assets
and liabilities primarily relate to tax over book depreciation and the cash
basis versus the accrual basis of accounting.
15
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
7. INCOME TAXES (CONTINUED)
Deferred tax assets and liabilities at December 31, 1995 are:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts payable $ 82,754
Accrued contractuals payable 99,169
Property and equipment 16,689
Accrued salaries 2,810
Valuation allowance (10,422)
----------
Total deferred tax assets 191,000
Deferred tax liabilities:
Accounts receivable 377,849
Unrealized gain on marketable securities 4,442
Prepaids and others 4,284
----------
Total deferred tax liabilities 386,575
----------
Net deferred tax liability $195,575
==========
</TABLE>
Income taxes paid during 1995 was approximately $10,000.
8. RELATED PARTY TRANSACTIONS
The Companies lease on a month to month basis office space from shareholders of
the Companies. Rent expense under these leases was approximately $255,000 in
1995.
The Companies borrowed funds approximating $630,000 in 1988 for improvement of a
surgery center and purchase of medical equipment. The note payable was paid off
in 1995.
16
<PAGE>
E. Ronald Salvitti, M.D., Inc.,
Washington Optical, Inc.,
Wallace Eye Surgery, Ltd., and
The Laser & Surgery Center, Inc.
Notes to Combined Financial Statements (continued)
8. RELATED PARTY TRANSACTIONS (CONTINUED)
At December 31, 1995, the Companies had outstanding a promissory note in the
amount of $225,000 to RBW Properties Limited Partnership, a related party. The
note bears interest at 7% and is due in total on or before December 31, 1996.
9. PROFESSIONAL AND LIABILITY RISKS
The Salvitti Companies are insured with respect to medical malpractice risks on
an occurrence basis. The insurance contracts specify that coverage is available
only during the term of each insurance contract. Management is not aware of any
claims which might have a material impact on the Salvitti Companies' combined
financial position.
The Wallace Companies are insured with respect to medical malpractice risks on a
claims-made basis. The insurance contracts specify that coverage is available
only during the term of each insurance contract. Management is not aware of any
claims which might have a material impact on the Companies' combined financial
position.
10. SUBSEQUENT EVENTS
The Salvitti Companies drew approximately $225,000 on a working capital loan
with a bank in March 1996.
On March 16, 1996, the Wallace Companies entered into an agreement to be
acquired by EquiMed, Inc., a national physician practice management company.
On April 1, 1996, the Salvitti Companies entered into an agreement to be
acquired by EquiMed, Inc., a national physician practice management company.
17
<PAGE>
E. Ronald Salvitti, M.D., Inc.
and
Washington Optical, Inc.
Condensed Combined Statements of Operations
Three months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Net revenues $1,566,626
Costs and Expenses:
Professional fees and expenses 1,168,733
Treatment and support services 331,676
General and administrative expenses 66,209
Depreciation and amortization 25,000
Other income, net (22,763)
------------
Total costs and expenses 1,568,855
Loss before income taxes (2,229)
Benefit for income taxes 2,229
------------
Net income $ --
============
</TABLE>
See accompanying note to condensed combined financial statements
18
<PAGE>
E. Ronald Salvitti, M.D., Inc.
and
Washington Optical, Inc.
Combined Condensed Statement of Cash Flows
Three Months Ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities $ 193,327
Cash flows from investing activities 200,800
Cash flows from financing activities (210,810)
---------
Net increase in cash 183,317
Cash at beginning of period 1,683
---------
Cash at end of period $ 185,000
=========
</TABLE>
See accompanying note to condensed financial statements
19
<PAGE>
E. Ronald Salvitti, M.D., Inc.
and
Washington Optical, Inc.
Notes to Condensed Combined Financial Statements
(Unaudited)
March 31, 1996
1. Basis of Presentation
The accompanying unaudited condensed combined financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996.
20
<PAGE>
(b) Pro Forma Financial Information
EQUIMED, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On March 18, 1996, the Company acquired Wallace Eye Surgery, Inc. and Laser
& Surgery, Inc. (the "Wallace Acquisition"), which was accounted for by the
pooling of interests method. Because this acquisition was not material, the
Company's historical finacial statements, share and per share amounts have not
been restated to included the accounts and results of operations for all periods
prior to January 1, 1996. Effective April 1, 1996, the Company consummated
mergers with E. Ronald Salvitti, M.D., Inc. and Washington Optical, Inc. (the
"Salvitti Acquisition"), which were accounted for as a purchase as of April 1,
1996.
The following unaudited pro forma statement of operations for the year ended
December 31, 1995 has been prepared to reflect the Company's results of
operations to give effect to the Wallace Acquisition and Salvitti Acquisition,
as if such acquisitions had been consummated as of January 1, 1995. The
unaudited pro forma statement of operations for the six month period ended June
30, 1996 has been prepared to reflect the Salvitti Acquisition as if such
acquisition had been consummated on January 1, 1996. The results of operations
of the Wallace Eye Surgery, Inc. and Laser & Eye, Inc. for the six month period
ended June 30, 1996 are included in the Company's results of operations for the
same period. These pro forma statements do not necessarily reflect the results
of operations as they would have been if the Company had completed the
acquistions on the dates indicated above. This unaudited pro forma financial
information should be read in conjunction with the separate financial statements
and notes of EquiMed, the Companies, and Salvitti.
The Company's most recently filed balance sheet is as of June 30, 1996 and
is subsequent to the dates of the Wallace Acquisition and Salvitti Acquisition.
Accordingly, an unaudited pro forma combined balance sheet as of June 30, 1996
is not presented.
21
<PAGE>
EQUIMED, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SALVITTI
EQUIMED, AND PRO FORMA
INC. WALLACE ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenue $ 58,884 $ 10,444 $ - $ 69,328
Costs and Expenses:
Professional fees and expenses 15,054 6,717 (2,612)(A) 19,159
Treatment and support services 18,120 2,891 - 21,011
General and administrative expenses 7,383 452 - 7,835
Depreciation and amortization 2,682 346 182 (B) 3,210
Interest expense 2,849 48 - 2,897
Other incomes, net (637) (1) - (638)
---------- -------- --------- ---------
Total costs and expenses 45,451 10,453 (2,430) 53,474
Income (loss) before income taxes
and minority interest 13,433 (9) 2,430 15,854
Minority interest 831 - - 831
---------- -------- --------- ---------
Income (loss) before income taxes 12,602 (9) 2,430 15,023
Provision (benefit) for income taxes 2,404 (9) 1,045 3,440
---------- -------- --------- ---------
Net income $ 10,198 $ - $ 1,385 $ 11,583
========== ======== ========= =========
Supplemental unaudited pro forma information:
Net income, as above 10,198 - 1,385 11,583
Pro forma adjustment to income tax expense 3,391 - - 3,391
---------- -------- --------- ---------
Pro forma net income $ 6,807 $ - $ 1,385 $ 8,192
========== ======== ========= =========
Pro forma net income per share $ 0.33 $ 0.37
========== =========
Weighted average common shares
and equivalents 20,784 1,110 21,894
========== ========= =========
</TABLE>
22
<PAGE>
EQUIMED, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EQUIMED, PRO FORMA
INC. SALVITTI ADJUSTMENTS PRO FORMA
---------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenue $ 50,142 $ 1,567 $ - $ 51,709
Costs and Expenses:
Professional fees and expenses 13,261 1,169 (473)(A) 13,957
Treatment and support services 18,579 332 - 18,911
General and administrative expenses 5,875 66 - 5,941
Depreciation and amortization 3,068 25 46 (B) 3,139
Interest expense 1,717 - - 1,717
Other incomes, net (280) (23) - (303)
--------- -------- --------- ---------
Total costs and expenses 42,220 1,569 (427) 43,362
Income (loss) before income taxes
and minority interest 7,922 (2) 427 8,347
Minority interest 281 - - 281
--------- -------- --------- ---------
Income (loss) before income taxes and
extraordinary item 7,641 (2) 427 8,066
Provision (benefit) for income taxes 4,422 (2) 189 4,609
--------- -------- --------- ---------
Income before extraordinary item $ 3,219 $ - $ 238 $ 3,457
========= ======== ========= =========
Net income per share $ 0.12 $ 0.13
========= =========
Weighted average common shares
and equivalents 26,867 177 27,044
========= ========= =========
</TABLE>
23
<PAGE>
EQUIMED, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(A) Reflects an adjustment in physician fees and expenses from those earned
prior to acquisition, to physician fees and expenses earned pursuant to the
terms of new compensation agreements entered into with EquiMed, Inc. at the
time of acquisition. Prior to acquisition, professional fees and expenses
represent the difference between center net revenues and center operating
expenses, depreciation and amortization and interest expense. Subsequent to
acquisition, physicians are typically compensated on either a percentage of
professional fees generated or the profitability of an individual center.
(B) Reflects an adjustment in depreciation and amortization expense arising from
the acquisition of the center by EquiMed based upon an allocation of the
acquisition purchase price. Depreciation for property and equipment is being
computed for a period of 5-6 years. Amortization of patient records and
service agreements is being computed for periods of ten and 40 years,
respectively.
24
<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 thereunto duly authorized.
EQUIMED, INC.
------------------------------------
(Registrant)
September 24, 1996 /s/ William E. Pritts II
------------------------------------
William E. Pritts II
Chief Financial Officer
25
