<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 8-K/A
(Amendment No. 1)
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 30, 1999 (July 16, 1999)
HEALTH POWER, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-23220 31-1145640
- ------------------------------- ------- ----------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1209 Orange Street, Wilmington, Delaware 19801
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 658-7581
No Change
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
HEALTH POWER, INC.
Form 8-K/A dated September 30, 1999
(Amendment No. 1), amending the
Current Report on Form 8-K dated July 30, 1999
Health Power, Inc., a Delaware corporation (the "Company"), hereby
amends its Current Report on Form 8-K dated July 30, 1999, to include the
financial statements and pro forma financial information set forth below which
was omitted from the original filing pursuant to Items 7(a)(4) and 7(b)(2) of
Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
ANTHEM MANAGED COMP
(A DIVISION OF COMMUNITY
INSURANCE COMPANY)
REPORT ON AUDITS OF FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND FOR THE PERIOD FROM OCTOBER 1, 1996
(DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Management of
Community Insurance Company
In our opinion, the accompanying balance sheets and the related statements of
operations and net assets and of cash flows present fairly, in all material
respects, the financial position of Anthem Managed Comp (a division of Community
Insurance Company) (the "Division") at December 31, 1998 and 1997, and the
results of its operations and its cash flows for the years then ended and for
the period from October 1, 1996 (date of commencement) to December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Division's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
September 23, 1999
<PAGE> 4
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
BALANCE SHEETS
AT DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Fees receivable $ 1,144,500 $ 4,238,468
-------------------- -----------------
Total current assets 1,144,500 4,238,468
Property and equipment, net 497,054 526,887
Goodwill, net of amortization of $675,000 in 1998
and $375,000 in 1997 2,325,000 2,625,000
Income taxes receivable from parent 1,207,342 -
-------------------- -----------------
Total assets $ 5,173,896 $ 7,390,355
==================== =================
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable - providers $ 975,488 $ 1,543,541
Deferred revenue 1,855,955
Accrued compensation 581,000 123,767
Accrued expenses - other 105,734 298,872
-------------------- -----------------
Total current liabilities 1,662,222 3,822,135
Income taxes payable to parent - 746,206
Net assets 3,511,674 2,822,014
-------------------- -----------------
Total liabilities and net assets $ 5,173,896 $ 7,390,355
==================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE> 5
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
STATEMENTS OF OPERATIONS AND NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE PERIOD FROM OCTOBER 1, 1996 (DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Revenues:
Contract revenues $ 15,094,324 $ 11,975,046 $ -
----------------- ----------------- -----------------
Operating expenses:
Employee compensation and related costs 7,795,460 4,132,850 822,356
Occupancy and equipment costs 1,069,844 380,445 18,750
Other selling, general and administrative expenses 9,084,297 5,019,734
Amortization 300,000 300,000 75,000
----------------- ----------------- -----------------
18,249,601 9,833,029 916,106
----------------- ----------------- -----------------
(Loss) income before income taxes (3,155,277) 2,142,017 (916,106)
Income tax (benefit) provision (1,207,342) 746,206 (320,637)
----------------- ----------------- -----------------
Net (loss) income (1,947,935) 1,395,811 (595,469)
Net assets - beginning of period 2,822,014 3,601,887 -
Intercompany advance (payment) 2,637,595 (2,175,684) 4,197,356
----------------- ----------------- -----------------
Net assets - end of period $ 3,511,674 $ 2,822,014 $ 3,601,887
================= ================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 6
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE PERIOD FROM OCTOBER 1, 1996 (DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,947,935) $ 1,395,811 $ (595,469)
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation expense 263,014 120,927 18,750
Amortization expense 300,000 300,000 75,000
Changes in assets and liabilities:
Deferred revenue (1,855,955) 1,855,955
Fees receivable 3,093,968 (4,238,468)
Accounts payable - providers (568,053) 1,543,541
Taxes payable - parent (1,953,548) 1,066,843 (320,637)
Accrued liabilities 264,095 422,639
---------------- ---------------- ----------------
Net cash (used in) provided by operating activities (2,404,414) 2,467,248 (822,356)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (233,181) (291,564)
Acquisition of business - - (3,375,000)
---------------- ---------------- ----------------
Net cash used in investing activities (233,181) (291,564) (3,375,000)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany advance (payment) 2,637,595 (2,175,684) 4,197,356
---------------- ---------------- ----------------
Net cash provided by (used in) financing activities 2,637,595 (2,175,684) 4,197,356
---------------- ---------------- ----------------
Net increase in cash and cash equivalents - - -
Cash and cash equivalents, beginning of period - - -
---------------- ---------------- ----------------
Cash, end of period $ - $ - $ -
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 7
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE PERIOD FROM OCTOBER 1, 1996 (DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation. Anthem Managed Comp (the "Division") is a
division of Community Insurance Company ("CIC"), a wholly-owned
subsidiary of Anthem Insurance Companies, Inc. ("AIC"). Effective
October 1, 1996, CIC acquired certain assets from Bethesda Healthcare,
Inc. for $3,375,000. This acquisition was accounted for by the purchase
method of accounting. Accordingly, the purchase price was allocated
$375,000 to property and equipment and $3,000,000 to goodwill. CIC
operates the acquired assets as the Division. The Division provides
medical management services for workers' compensation claims to
employers and injured workers located in Ohio, Kentucky, and Indiana.
Services provided include, among other things, treatment guidelines and
utilization review procedures, peer review and quality assurance
programs, medical and vocational case management programs, utilization
management programs, and health care fraud detection and reporting
programs. The Division is certified as a managed care organization by
the Ohio Bureau of Workers' Compensation.
The accompanying financial statements are presented in accordance with
generally accepted accounting principles ("GAAP"). Certain allocations
were made in the financial statements for general and administrative
costs incurred by CIC, as determined by CIC management to be those
costs of the Division. These financial statements are presented on a
historical basis, and have not been adjusted for the July 16, 1999 sale
of the Division (see Note 8).
Property and equipment. Property and equipment, including betterments
and major renewals, are capitalized at cost, and expenditures for
maintenance and repairs are charged to expense as incurred. Gains and
losses on disposals and retirements of property and equipment are
recognized when they occur. Depreciation is computed using the
straight-line method over the following estimated useful lives:
Office equipment 3 - 15 years
Furniture and fixtures 7 - 10 years
Goodwill. The Division's goodwill represents the excess purchase price
paid over the fair value of net assets acquired. Goodwill is amortized
on a straight-line basis over a period of 10 years. Management
periodically evaluates the ability of the Division to recover the
carrying amounts.
Recognition of revenue. Contract revenues are derived from claims
management, administrative and consulting services which are recorded
as earned based on the requirements and duration of the related
contract. Contract revenues received in advance are included in
deferred revenues.
Income taxes. The Division joins with its parent, AIC, for income tax
reporting purposes. For purposes of these financial statements, the
Division reports income taxes as if it were a stand-alone entity, with
taxes payable or receivable due to or from the parent. Income taxes are
accounted for on the liability method. Under this method, deferred
income taxes are recognized based on the estimated future tax effects
of differences between the financial and tax basis of assets and
liabilities under the provisions of enacted tax laws. The effect on
deferred taxes of a change in tax rate is recognized in the period that
includes the enactment date.
Concentration of credit risk. Financial instruments which potentially
subject the Division to concentrations of credit risk consist primarily
of accounts receivable. Receivables arising from services provided to
clients are not collateralized and, as a result, management continually
monitors the financial condition of its clients to reduce the risk of
loss. For the years ended December 31, 1998 and 1997, contract revenue
from the Division's most significant client approximated 89% and 99% of
the Division's contract revenue, respectively.
-5-
<PAGE> 8
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE PERIOD OCTOBER 1, 1996 (DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
2. PROPERTY AND EQUIPMENT
At December 31, 1998 and 1997, property and equipment consist of the
following:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Office equipment $ 727,018 $ 649,999
Furniture & fixtures 170,529 16,565
Leasehold improvements 2,198 -
----------------- ------------------
899,745 666,564
Accumulated depreciation (402,691) (139,677)
----------------- ------------------
$ 497,054 $ 526,887
================= ==================
</TABLE>
3. RELATED PARTY TRANSACTIONS
Certain expenses of the Division are paid by CIC and the Division
remits cash generated by operations to CIC. This interest-free funding
is included in Net Assets as of December 31, 1998 and 1997. Expenses
paid by CIC and allocated to the Division amounted to $5,111,547 and
$1,241,960 for the years ended December 31, 1998 and 1997,
respectively.
4. CONTINGENCIES
The Division is, from time to time, a party to litigation arising in
the normal course of its business. Management believes that no
individual item of litigation or group of similar items is likely to
result in judgments that will have a material adverse effect on the
financial condition or operating results of the Division.
5. LEASES
The Division is allocated costs for various types of office facilities,
equipment, and furniture under noncancelable operating lease
agreements. The leases are obligations of CIC. Rental expense allocated
was approximately $1,332,000 and $281,000 for the years ending December
31, 1998 and 1997, respectively.
-6-
<PAGE> 9
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
FOR THE PERIOD OCTOBER 1, 1996 (DATE OF COMMENCEMENT) TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
6. EMPLOYEE BENEFITS PLAN
The employees are covered by the benefit plans of AIC. The management
charge for benefits includes health, pension and other employee
benefits.
7. INCOME TAXES
Under the Division's tax sharing agreement with AIC, income tax
expense/benefit is determined on a separate company basis. Income taxes
have been calculated by applying the federal statutory rate and
estimated state tax rate to the Division's pretax income or loss. The
resulting income taxes payable or receivable are settled through the
intercompany account which is included as a component of the net assets
of the Division.
8. SUBSEQUENT EVENTS
On July 16, 1999, CompManagement Health Systems, Inc., a subsidiary of
Health Power, Inc., purchased the assets of the Division for
approximately $5,750,000.
-7-
<PAGE> 10
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
BALANCE SHEET
FOR THE PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
1999
ASSETS
<S> <C>
Cash and cash equivalents $ --
Accounts receivable, net 1,451,357
Other current assets --
Property, Plant and Equip 367,054
Goodwill 2,175,000
Taxes Refundable --
Other Assets --
----------
Total Assets $3,993,411
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Deferred revenue $ --
Current liabilities of discontinued operations --
Current notes payable --
Other current liabilities 88,800
Note Payable --
Other Liabilities --
----------
Total Liabilities 88,800
Net Assets 3,904,611
Stockholders Equity --
----------
Total Liabilities and Stockholder's Equity $3,993,411
==========
</TABLE>
The accompanying note is an integral part of these financial statements.
<PAGE> 11
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDING JUNE 30, 1999 AND JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenue
Contract revenues $ 8,267,917 $ 6,543,290
Operating Expenses:
Employee compensation and related costs 4,122,360 2,765,692
Occupancy and equipment costs 604,566 414,854
Other selling, general and administrative expenses 5,546,625 3,583,685
Amortization 150,000 150,000
----------- -----------
10,423,551 6,914,231
----------- -----------
(Loss) Income before income taxes (2,155,634) (370,941)
Income tax (benefit) provision (862,254) (148,377)
----------- -----------
Net (loss) income $(1,293,380) $ (222,564)
=========== ===========
</TABLE>
The accompanying note is an integral part of these financial statements.
<PAGE> 12
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDING JUNE 30, 1999 AND JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(1,293,380) $ (222,565)
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation expense 48,707 131,507
Amortization expense 150,000 150,000
Changes in assets and liabilities:
Deferred revenue -- (927,978)
Fees receivable (306,857) 1,546,984
Accounts payable - providers (886,688) (284,027)
Taxes payable - parent (976,774)
Accrued liabilities (686,734) 132,048
----------- -----------
Net cash (used in) provided by operating activities (2,974,952) (450,805)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment -- (116,591)
----------- -----------
Net cash used in investing activities -- (116,591)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany advance (payments) 2,974,952 567,395
----------- -----------
Net cash provided by (used in) financing activities 2,974,952 567,396
----------- -----------
Net increase in cash and cash equivalents -- --
Cash and cash equivalents, beginning of period -- --
----------- -----------
Cash and cash equivalents, end of period $ -- $ --
----------- -----------
</TABLE>
The accompanying note is an integral part of these financial statements.
<PAGE> 13
ANTHEM MANAGED COMP (A DIVISION OF COMMUNITY INSURANCE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements are unaudited and have
been prepared by Anthem Managed Comp (a division of Community Insurance
Company). In the opinion of management, they contain the adjustments (all
of which are normal and recurring in nature) necessary to present fairly
the financial position, results of operations, and cash flows for the
periods presented. The results of operations for the period ended June 30,
1999 are not necessarily indicative of operating results for a full year.
The accompanying unaudited financial statements have been prepared in
accordance with instructions for Form 8-K and, therefore, do not include
all information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles. These financial statements should be read in conjunction with
the December 31, 1998, financial statements and notes included elsewhere in
this filing.
<PAGE> 14
ITEM 7. (b) Pro Forma Financial Information.
The following unaudited proforma combined financial statements
give effect to the acquisition by Health Power, Inc. and
subsidiaries (HPI), of the assets of Anthem Managed Comp, a
division of Community Insurance Company, Inc. (AMC), in a
transaction to be accounted for as a purchase. The unaudited
proforma balance sheet is based on the individual balance sheets
of HPI and AMC and has been prepared to reflect the acquisition
by HPI of AMC as of December 31, 1998. The unaudited proforma
statement of income is based on the individual statements of
income of HPI and AMC and combine the results of operations of
HPI and AMC for the year ended December 31, 1998 and the six
months ended June 30, 1999, as if the acquisition occurred on
January 1, 1998 and January 1, 1999, respectively. These
unaudited proforma financial statements should be read in
conjunction with the historical financial statements and notes
thereto of HPI and AMC included elsewhere in this filing.
The pro forma financial statements do not purport to be
indicative of the results that actually would have occurred if
the acquisition of Anthem Managed Comp had occurred on the date
indicated or that may be obtained in the future.
<PAGE> 15
<TABLE>
Health Power, Inc. and Subsidiaries
Pro Forma Combined Balance Sheet (Unaudited)
December 31, 1998
<CAPTION>
Health Power, Inc. Anthem Managed Pro Forma Pro Forma
and Subsidiaries Comp Division Adjustments(A) Combined
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $11,714,169 $ -- $(1,710,000) $10,004,169
Accounts receivable, net 5,671,074 1,144,500 (1,144,500) 5,671,074
Other current assets 3,375,693 3,375,693
Property, Plant and Equip 2,931,414 497,054 52,946 3,481,414
Goodwill 5,526,736 2,325,000 2,755,457 10,607,193
Taxes Refundable - Parent -- 1,207,342 (1,207,342) --
Other Assets 1,450,249 -- -- 1,450,249
----------- ----------- ----------- -----------
Total Assets $30,669,335 $ 5,173,896 $(1,253,439) $34,589,792
=========== =========== =========== ===========
Liabilities and Stockholder's Equity
Deferred revenue $ 8,378,113 $ -- $ -- $ 8,378,113
Current liabilities of discontinued operations 9,163,635 -- -- 9,163,635
Current notes payable 3,526,736 -- -- 3,526,736
Other current liabilities 4,272,827 1,662,222 (1,662,222) 4,272,827
Note Payable 2,000,000 -- 3,920,457 5,920,457
Other Liabilities 222,481 -- 222,481
----------- ----------- ----------- -----------
Total Liabilities 27,563,792 1,662,222 2,258,235 31,484,249
Net Assets 3,511,674 (3,511,674) --
Stockholders Equity 3,105,543 3,105,543
----------- ----------- ----------- -----------
Total Liabilities and Stockholder's Equity $30,669,335 $ 5,173,896 $(1,253,439) $34,589,792
=========== =========== =========== ===========
</TABLE>
(A) Adjustment to reflect asset purchase price.
<PAGE> 16
<TABLE>
Health Power, Inc. and Subsidiaries
Pro Forma Combined Balance Sheet (Unaudited)
June 30, 1999
<CAPTION>
Health Power, Inc. Anthem Managed Pro Forma Pro Forma
and Subsidiaries Comp Division Adjustments(A) Combined
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $10,834,648 $ -- $(1,710,000) $ 9,124,648
Accounts receivable, net 5,993,872 1,451,357 (1,451,357) 5,993,872
Other current assets 1,196,687 -- 1,196,687
Property, Plant and Equip 2,884,217 367,054 182,946 3,434,217
Goodwill 5,419,488 2,175,000 2,905,457 10,499,945
Taxes Refundable - Parent -- -- -- --
Other Assets 1,311,898 -- -- 1,311,898
----------- ----------- ----------- -----------
Total Assets $27,640,810 $ 3,993,411 $ (72,954) $31,561,267
=========== =========== =========== ===========
Liabilities and Stockholder's Equity
Deferred revenue $ 6,495,876 $ -- $ -- $ 6,495,876
Current liabilities of discontinued operations 7,495,462 -- -- 7,495,462
Current notes payable 3,526,736 -- -- 3,526,736
Other current liabilities 3,103,308 88,800 (88,800) 3,103,308
Note Payable 2,000,000 -- 3,920,457 5,920,457
Other Liabilities 365,601 -- 365,601
----------- ----------- ----------- -----------
Total Liabilities 22,986,983 88,800 3,831,657 26,907,440
Net Assets 3,904,611 (3,904,611) --
Stockholders Equity 4,653,827 -- -- 4,653,827
----------- ----------- ----------- -----------
Total Liabilities and Stockholder's Equity $27,640,810 $ 3,993,411 $ (72,954) $31,561,267
=========== =========== =========== ===========
</TABLE>
(A) Adjustment to reflect asset purchase price.
<PAGE> 17
<TABLE>
Health Power, Inc. and Subsidiaries
Pro Forma Combined Income Statement (Unaudited)
Year Ended December 31, 1998
<CAPTION>
Health Power, Inc. Anthem Managed Pro Forma Pro Forma
and Subsidiaries Comp Division Adjustments Combined
<S> <C> <C> <C> <C>
Revenue $24,861,454 $15,094,324 $ -- $39,955,778
Expenses:
General and Administrative 21,271,805 18,249,601 254,023(1) 39,775,429
----------- ----------- --------- -----------
Income from operations 3,589,649 (3,155,277) (254,023) 180,349
Interest income and other, net 444,290 -- (332,265)(2) 112,025
----------- ----------- --------- -----------
Income from continuing operations
before income taxes 4,033,939 (3,155,277) (586,288) 292,374
Federal, state and local income tax expense (1,570,204) 1,207,342 234,515(3) (128,347)
----------- ----------- --------- -----------
Income from continuing operations $ 2,463,735 $(1,947,935) $(351,773) $ 164,027
=========== =========== ========= ===========
Earnings per share (basic and diluted):
Income from continuing operations $ 0.64 $ 0.04
=========== ===========
Weighted average share used in calculation
of earnings per share:
Basic 3,828,564 3,828,564
=========== ===========
Diluted 3,834,858 3,834,858
=========== ===========
</TABLE>
(1) Amortization of goodwill over a 20-year period.
(2) Imputed interest calculated on purchase price deferred payments.
(3) Tax effects on the federal, state, and local effective rate of 40%.
<PAGE> 18
<TABLE>
Health Power, Inc. and Subsidiaries
Pro Forma Combined Income Statement (Unaudited)
For The Period Ended June 30, 1999
<CAPTION>
Health Power, Inc. Anthem Managed Pro Forma Pro Forma
and Subsidiaries Comp Division Adjustments Combined
<S> <C> <C> <C> <C>
Revenue $15,418,069 $ 8,267,917 $ -- $23,685,986
Expenses:
General and Administrative 13,041,072 10,423,551 254,023(1) 23,718,646
----------- ----------- --------- -----------
Income from operations 2,376,997 (2,155,634) (254,023) (32,660)
Interest income and other, net 37,385 -- (166,132)(2) (128,747)
----------- ----------- --------- -----------
Income from continuing operations
before income taxes 2,414,382 (2,155,634) (420,155) (161,407)
Federal, state and local income tax expense (905,723) 862,254 168,062(3) 124,593
----------- ----------- --------- -----------
Income from continuing operations $ 1,508,659 $(1,293,380) $(252,093) $ (36,814)
=========== =========== ========= ===========
Earnings per share (basic and diluted):
Income from continuing operations $ 0.39 $ (0.01)
=========== ===========
Weighted average share used in calculation
of earnings per share:
Basic 3,828,564 3,828,564
=========== ===========
Diluted 3,834,858 3,834,858
=========== ===========
</TABLE>
(1) Amortization of goodwill over a 20-year period.
(2) Imputed interest calculated on purchase price deferred payments.
(3) Tax effects on the federal, state, and local effective rate of 40%.
<PAGE> 19
ITEM 7 (c) Exhibits.
Exhibit
No. Description of Exhibit
- ------- ----------------------
2 Asset Purchase Agreement dated May 12, 1999, between
CompManagement Health Systems, Inc. and Community Insurance
Company, as amended by the First Amendment to Asset Purchase
Agreement dated June 30, 1999, as further amended by the Second
Amendment to Asset Purchase Agreement dated July 16, 1999.
23 Consent of PricewaterhouseCoopers LLP
99 Press release issued by CompManagement Health Systems, Inc. on
July 19, 1999.
<PAGE> 20
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.
HEALTH POWER, INC.
Date: September 30, 1999 By /s/ Bernard F. Master, D.O.
---------------------------
Bernard F. Master, D.O.
Chairman, President, and Chief
Executive Officer
<PAGE> 21
<TABLE>
EXHIBIT INDEX
<CAPTION>
- ---------------------------------------------------------------------------------------------------
If Incorporated by Reference,
Document with which
Exhibit was Previously
Exhibit No. Description of Exhibit Filed with SEC
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
2 Asset Purchase Agreement dated May 12, 1999, Current Report on Form 8-K
between CompManagement Health Systems, Inc. and dated July 30, 1999
Community Insurance Company, as amended by the
First Amendment to Asset Purchase Agreement dated
June 30, 1999, as further amended by the Second
Amendment to Asset Purchase Agreement dated July
16, 1999.
- ---------------------------------------------------------------------------------------------------
23 Consent of PricewaterhouseCoopers LLP Contained herein
- ---------------------------------------------------------------------------------------------------
99(b) Press release issued by CompManagement Health Current Report on Form 8-K
Systems, Inc. on July 19, 1999. dated July 30, 1999
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF PRICEWATERHOUSECOOPERS LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Health Power, Inc. on Form S-8 (File No. 33-91956), Form S-8 (File No.
33-91958), Form S-8 (33-91852), Form S-8 (File No. 333-20535), Form S-8 (File
No. 333-45857), and Form S-3 (File No. 33-80035) of our report dated September
23, 1999, on our audits of the financial statements of Anthem Managed Comp as of
December 31, 1998 and 1997, and for the years ended December 31, 1998 and 1997,
and for the period from October 1, 1996 (date of commencement) to December
31, 1996, which report is included in this Form 8-K/A filing of Health Power,
Inc.
Columbus, Ohio /s/ PricewaterhouseCoopers LLP
September 29, 1999 -------------------------------
PricewaterhouseCoopers LLP
